Exhibit 4.2.1
Execution Copy
NUMATICS, INCORPORATED
CERTAIN BORROWING SUBSIDIARIES
-----------------------------
AMENDED AND RESTATED LOAN AGREEMENT
dated as of March 23, 1998
THE LENDERS PARTY HERETO,
and
NBD BANK, as Administrative Agent
BANKBOSTON, N.A., as Documentation Agent
Syndication arranged by First Chicago Capital Markets, Inc.
TABLE OF CONTENTS
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Section Page
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ARTICLE I DEFINITIONS................................................. 1
1.1 Certain Definitions............................................. 1
1.2 Other Definitions; Rules of Construction........................ 19
1.3 Accounting Terms and Determinations............................. 20
ARTICLE II THE COMMITMENTS AND THE ADVANCES........................... 20
2.1 Commitments of the Lenders...................................... 20
2.2 Termination and Reduction of Commitments........................ 20
2.3 Fees............................................................ 23
2.4 Disbursement of Advances........................................ 24
2.5 Conditions for First Disbursement............................... 26
2.6 Further Conditions for Disbursement............................. 29
2.7 Subsequent Elections as to Borrowings........................... 30
2.8 Limitation of Requests and Elections............................ 30
2.9 Minimum Amounts; Limitation on Number of Borrowings............. 30
2.10 Security and Collateral......................................... 31
ARTICLE III PAYMENTS AND PREPAYMENTS OF ADVANCES...................... 31
3.1 Principal Payments.............................................. 31
3.2 Interest Payments............................................... 34
3.3 Letter of Credit Reimbursement Payments......................... 34
3.4 Payment Method.................................................. 37
3.5 No Setoff or Deduction.......................................... 38
3.6 Payment on Non-Business Day; Payment Computations............... 38
3.7 Additional Costs................................................ 38
3.8 Illegality and Impossibility.................................... 39
3.9 Indemnification................................................. 39
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................. 40
4.1 Corporate Existence and Power................................... 40
4.2 Corporate Authority............................................. 40
4.3 Binding Effect.................................................. 40
4.4 Subsidiaries.................................................... 40
4.5 Litigation...................................................... 41
4.6 Financial Condition............................................. 41
4.7 Use of Advances................................................. 41
4.8 Consents, Etc................................................... 41
4.9 Taxes........................................................... 41
4.10 Title to Properties............................................. 42
4.11 ERISA........................................................... 42
LOAN AGREEMENT Page i
Section Page
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4.12 Disclosure...................................................... 42
4.13 Environmental and Safety Matters................................ 42
4.14 Borrowing Base.................................................. 42
4.15 No Default...................................................... 43
4.16 Intellectual Property........................................... 43
4.17 No Burdensome Restrictions...................................... 43
4.18 Labor Matters................................................... 43
4.19 Solvency........................................................ 43
4.20 Not an Investment Company....................................... 43
4.21 Management Group................................................ 43
4.22 Subordinated Debt Documents..................................... 43
ARTICLE V COVENANTS................................................... 44
5.1 Affirmative Covenants............................................ 44
(a) Preservation of Corporate Existence, Etc......................... 44
(b) Compliance with Laws, Etc........................................ 44
(c) Maintenance of Properties; Insurance............................. 45
(d) Reporting Requirements........................................... 45
(e) Accounting, Access to Records, Books, Etc........................ 46
(f) Additional Security and Collateral............................... 47
(g) Further Assurances............................................... 47
5.2 Negative Covenants............................................... 48
(a) Fixed Charge Coverage Ratio...................................... 48
(b) Net Funded Debt to EBITDA........................................ 48
(c) Interest Coverage Ratio.......................................... 48
(d) Net Worth........................................................ 49
(e) Indebtedness..................................................... 49
(f) Liens............................................................ 49
(g) Merger; Acquisitions; Etc........................................ 50
(h) Disposition of Assets; Etc....................................... 51
(i) Nature of Business............................................... 51
(j) Dividends and Other Restricted Payments.......................... 51
(k) Investments, Loans and Advances.................................. 52
(l) Transactions with Affiliates..................................... 52
(m) Contingent Liabilities........................................... 52
(n) Inconsistent Agreements.......................................... 52
(o) Negative Pledge Limitation....................................... 52
(p) Subsidiary Dividends............................................. 53
(q) Payments and Modification of Subordinated Debt................... 53
(r) Additional Covenants............................................. 53
(s) Capital Expenditures............................................. 54
ARTICLE VI DEFAULT.................................................... 54
6.1 Events of Default................................................ 54
6.2 Remedies......................................................... 56
6.3 Distribution of Proceeds of Collateral........................... 57
LOAN AGREEMENT Page ii
Section Page
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6.4 Letter of Credit Liabilities.................................... 58
ARTICLE VII THE AGENTS AND THE LENDERS................................ 59
7.1 Appointment and Authorization................................... 59
7.2 Agents and Affiliates........................................... 59
7.3 Scope of Agents' Duties......................................... 59
7.4 Reliance by Agents.............................................. 59
7.5 Default......................................................... 59
7.6 Liability of Agents............................................. 60
7.7 Nonreliance on the Agents and Other Lenders..................... 60
7.8 Indemnification................................................. 60
7.9 Resignation of Agents........................................... 61
7.10 Sharing of Payments............................................. 61
7.11 Withholding Tax Exemption....................................... 62
ARTICLE VIII MISCELLANEOUS............................................ 62
8.1 Amendments, Etc................................................. 62
8.2 Notices......................................................... 63
8.3 No Waiver By Conduct; Remedies Cumulative....................... 63
8.4 Reliance on and Survival of Various Provisions.................. 64
8.5 Expenses; Indemnification....................................... 64
8.6 Successors and Assigns.......................................... 65
8.7 Counterparts.................................................... 67
8.8 Governing Law................................................... 68
8.9 Table of Contents and Headings.................................. 68
8.10 Construction of Certain Provisions.............................. 68
8.11 Integration and Severability.................................... 68
8.12 Independence of Covenants....................................... 68
8.13 Interest Rate Limitation........................................ 68
8.14 Unification of Certain Currencies............................... 69
8.15 Year 2000 Problem............................................... 69
8.16 WAIVER OF JURY TRIAL............................................ 69
EXHIBITS
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Exhibit A...................... Borrowing Base Certificate
Exhibit B...................... Environmental Certificate
Exhibit C...................... Guaranty
Exhibit D...................... Pledge Agreement
Exhibits E-1 and E-2........... Revolving Credit Notes
Exhibit E-3.................... Swingline Note
Exhibits E-4, E-5 and E-6...... Term Loan A Note
Exhibits E-7 and E-8........... Term Loan B Note
Exhibit F...................... Request for Advance and Swingline Loan
Exhibit G...................... Opinion of Counsel
Exhibit H...................... Request for Continuation or Conversion of Loan
Exhibit I...................... Assignment and Acceptance
LOAN AGREEMENT Page iii
SCHEDULES
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Schedule 4.4................. Subsidiaries
Schedule 4.5................. Litigation
Schedule 4.16................ Intellectual Property
Schedule 4.21-A.............. Stock Ownership
Schedule 4.21-B.............. Shareholder Agreements
Schedule 4.22-A.............. Notes Documents
Schedule 4.22-B.............. Harvard Documents
Schedule 5.2(e).............. Indebtedness
Schedule 5.2(f).............. Liens
Schedule 5.2(g).............. Ultra Air Products, Inc. Note
Schedule 5.2(k).............. Investments, Loans and Advances
LOAN AGREEMENT Page iv
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of March 23, 1998 (this
"Agreement"), is by and among NUMATICS, INCORPORATED, a Michigan corporation
(the "Company"), NUMATICS LTD., a corporation organized and existing under the
laws of Canada ("Numatics Ltd."), and NUMATICS, GMBH, a corporation organized
and existing under the laws of the Federal Republic of Germany ("Numatics GmbH")
(the Company, Numatics Ltd. and Numatics GmbH may each be referred to as a
"Borrower" and, collectively, as the "Borrowers"), and the LENDERS party hereto
(collectively, the "Lenders" and, individually, a "Lender"), NBD BANK, a
Michigan banking corporation, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and BANKBOSTON, N.A., a national banking
association, as documentation agent for the Lenders (in such capacity, the
"Documentation Agent", and together with the Administrative Agent, collectively,
the "Agents" and, individually, an "Agent").
INTRODUCTION
------------
A. The Borrowers, the lenders identified therein (collectively, the
"Existing Lenders" and, individually, an "Existing Lender"), The First National
Bank of Boston, as managing agent for the Existing Lenders, and NBD Bank, as
administrative agent for the Existing Lenders, are parties to that certain Loan
Agreement, dated as of January 3, 1996, as amended by the First Amendment to
Loan Agreement dated as of March 31, 1996, the Second Amendment to Loan
Agreement, dated as of April 15, 1997, the Third Amendment to Loan Agreement,
dated as of November 17, 1997, and the Fourth Amendment to Loan Agreement, dated
as of March 4, 1998 (the "Existing Loan Agreement"), pursuant to which the
Existing Lenders provided to the Borrowers (or certain of the Borrowers as
further described therein) a six-year amortizing term loan in the original
principal amount of $45,000,000 ("Existing Term Loan A"), an eight-year
amortizing term loan in the original principal amount of $45,000,000 ("Existing
Term Loan B") and a $30,000,000 six-year revolving credit, including letters of
credit (the "Existing Revolving Credit"), all for the purposes, and on the terms
and conditions, therein set forth.
B. The Company is now issuing $115,000,000 in aggregate principal amount
of Subordinated Notes (as hereinafter defined), a portion of the proceeds of
which will be used, among other things, to repay a portion of Existing Term Loan
A and Existing Term Loan B, and in connection therewith the Borrowers desire to
refinance the remaining portion of Existing Term Loan A with a new $20,000,000
six-year amortizing term loan, to refinance the remaining portion of Existing
Term Loan B with a new $15,000,000 seven and one-half-year amortizing term loan,
to replace the Existing Revolving Credit and refinance the indebtedness
outstanding thereunder with a new $35,000,000 six-year revolving credit,
including letters of credit, to modify the terms of the Existing Loan Agreement
in certain other respects, and therefor to amend and restate the Existing Loan
Agreement hereby, and the Lenders and the Agents are willing to do so on the
terms and conditions herein set forth.
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Certain Definitions. As used herein the following terms shall have
the following respective meanings:
LOAN AGREEMENT Page 1
"Adjusted Prime Rate" shall mean the per annum rate equal to the sum of
(a) the Applicable Margin, plus (b) the Prime Rate in effect from time to time,
which Adjusted Prime Rate shall change simultaneously with any change in such
Prime Rate.
"Adjusted Prime Rate Loan" shall mean any Loan which bears interest at the
Adjusted Prime Rate.
"Advance" shall mean any Loan and any Letter of Credit Advance.
"Affiliate", when used with respect to any person, shall mean any other
person which, directly or indirectly, controls or is controlled by or is under
common control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
"Applicable Lending Office" shall mean, with respect to any Advance made
by any Lender or with respect to such Lender's Commitment, the office of such
Lender or of any Affiliate of such Lender located at the address specified as
the applicable lending office for such Lender set forth next to the name of such
Lender in the signature pages hereof or any other office or Affiliate of such
Lender or of any Affiliate of such Lender hereafter selected and notified to the
Company and the Administrative Agent by such Lender.
"Applicable Margin" shall mean, with respect to any Adjusted Prime Rate
Loan, LIBOR Loan, S/L/C fee and commitment fee, as the case may be, the
applicable percentage set forth in the applicable table below based upon the
ratio of Net Funded Debt as of the most recent fiscal quarter end of the Company
to EBITDA for the period of four fiscal quarters then ending, as adjusted up or
down, as the case may be, on the date on which the financial statements and
compliance certificate required pursuant to Section 5.1(d) are delivered to the
Lenders, and shall remain in effect until the next change to be effected
pursuant to this definition, provided, that, if any financial statements
referred to above are not delivered within the time period required under
Section 5.1(d), then, until the financial statements are delivered, the ratio of
Net Funded Debt to EBITDA as calculated as of the end of the fiscal quarter that
would have been covered thereby shall for the purposes of this definition be
deemed to be greater than 4.5 to 1.0:
LOAN AGREEMENT Page 2
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Net Funded Debt to Each Adjusted Each Revolving Term S/L/C Commitment
EBITDA Prime Rate Loan Credit Loan and Term Loan B Fee Fee
Loan A that is a
LIBOR Loan
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Less than 2.5:1.0 0.00% 1.25% 2.50% 1.25% 0.25%
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Greater than or 0.00% 1.50% 2.50% 1.50% 0.375%
equal to 2.5:1.0
but less than
3.0:1.0
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Greater than or 0.00% 1.75% 2.50% 1.75% 0.375%
equal to 3.0:1.0
but less than
3.5:1.0
- ----------------------------------------------------------------------------------------------------------------------
Greater than or 0.25% 2.00% 2.50% 2.00% 0.375%
equal to 3.5:1.0
but less than
4.0:1.0
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Greater than or 0.50% 2.25% 2.50% 2.25% 0.50%
equal to 4.0:1.0
but less than
4.5:1.0
- ----------------------------------------------------------------------------------------------------------------------
Greater than or 0.75% 2.50% 2.75% 2.50% 0.50%
equal to 4.5:1.0
======================================================================================================================
"BankBoston" shall mean BankBoston, N.A., a national banking association,
including any of its branches and affiliates.
"Borrowing" shall mean the aggregation of Advances, including each Letter
of Credit issuance, of the Lenders to be made to a Borrower, or continuations
and conversions of such Loans, made pursuant to Article II on a single date and,
in the case of any Loans, for a single LIBOR Interest Period, which Borrowings
may be classified for purposes of this Agreement by reference to the type of
Loans or the type of Advances comprising the related Borrowing, e.g., a "LIBOR
Borrowing" is a Borrowing comprised of LIBOR Loans and a "Letter of Credit
Borrowing" is an Advance comprised of a single Letter of Credit.
"Borrowing Base" shall mean, as of any date, the sum of (a) an amount
equal to 85% of the amount of Eligible Accounts Receivable, plus (b) an amount
equal to the lesser of (i) 60% of the amount of Eligible Inventory or (ii)
$15,000,000; provided, the aggregate value of assets of Numatics Ltd. included
in the Borrowing Base shall not exceed $6,000,000.
"Borrowing Base Certificate" for any date shall mean an appropriately
completed report as of such date and substantially in the form of Exhibit A
hereto, certified as true and correct as of such date by a duly authorized
officer of the Company.
LOAN AGREEMENT Page 3
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which (a) banks in Boston, Chicago or Detroit are not open to the public for
carrying on substantially all of their banking functions, or (b) if such
reference relates to the date for payment or purchase of any amount denominated
in any currency other than Dollars, banks are not generally open to the public
for carrying on substantially all of their banking functions in the principal
financial center of the country issuing such currency.
"Canadian Dollars" or "CDN$" shall mean the lawful currency of Canada.
"Capital Expenditures" shall mean, for any period, the additions to
property, plant and equipment and other capital expenditures of the Company and
its Subsidiaries for such period, as the same are (or should be) set forth, in
accordance with Generally Accepted Accounting Principles, in consolidated
financial statements of the Company and its Subsidiaries for such period.
"Capital Lease" of any person shall mean any lease which, in accordance
with Generally Accepted Accounting Principles, is or should be capitalized on
the books of such person.
"Capital Stock" shall mean all capital stock and any securities
exchangeable for or convertible into capital stock and any warrants, rights or
other options to purchase or otherwise acquire capital stock or such securities
or any other form of equity securities.
"Cash and Cash Equivalents" shall mean (i) cash in Dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (iii) 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 one year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (iv) certificates of deposit with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not exceeding
six months and overnight bank deposits, in each case with any Lender or with any
domestic commercial bank having capital and surplus in excess of $250,000,000
and a Keefe Bank Watch Rating of "B" or better, (v) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii), (iii) and (iv) above entered into with any financial
institution meeting the qualifications specified in clause (iv) above, (vi)
commercial paper having one of the two highest ratings obtained from Moody's or
S&P and in each case maturing within six months after the date of acquisition
and (vii) investments in money market funds which invest substantially all their
assets in securities of the type described in clauses (i) through (vi) above.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
"C/L/C" shall mean any commercial letter of credit issued hereunder.
"Commitments" shall mean, collectively, the Revolving Credit Commitments,
the Term Loan A Commitments and the Term Loan B Commitments.
LOAN AGREEMENT Page 4
"Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more persons of
the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Consolidated Interest Expense" means, for any period, total interest and
related expense (including, without limitation, that portion of any Capitalized
Lease obligation attributable to interest expense in conformity with Generally
Accepted Accounting Principles, amortization of debt discount, all capitalized
interest, the interest portion of any deferred payment obligations, all
commissions, discounts and other fees and charges owed with respect to letter of
credit and bankers acceptance financing, the net costs and net payments under
any interest rate hedging, cap or similar agreement or arrangement, prepayment
charges, agency fees, administrative fees, commitment fees and capitalized
transaction costs allocated to interest expense) paid, payable or accrued during
such period, without duplication for any period, with respect to all outstanding
Indebtedness of the Company and its Subsidiaries, all as determined for the
Company and its Subsidiaries on a consolidated basis for such period in
accordance with Generally Accepted Accounting Principles; provided, however,
except as otherwise expressly provided in this Agreement, (a) interest on
Subordinated Debt which is not paid in cash or cash equivalents but is paid by
the issuance by the Company of a promissory note, (b) amortization of original
issue discount relating to such Subordinated Debt and (c) any prepayment premium
or fee paid by the Company with respect to the prepayment of any such
Subordinated Debt under the Harvard Subordinated Debt Documents (as defined in
the Existing Loan Agreement) shall be excluded from the calculation of
"Consolidated Interest Expense" hereunder.
"Consolidated Net Income" means, for any period, the net income (or loss)
of the Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period, determined in accordance with Generally
Accepted Accounting Principles; provided that in determining Consolidated Net
Income there shall be excluded, without duplication: (a) the income of any
Person (other than a Subsidiary of the Company) in which any Person other than
the Company or any of its Subsidiaries has a joint interest or partnership
interest, except to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Subsidiaries by such Person during
such period, (b) the income of any Person accrued prior to the date it becomes a
Subsidiary of the Company or is merged into or consolidated with the Company or
any of its Subsidiaries or that Person's assets are acquired by the Company or
any of its Subsidiaries, (c) the proceeds of any insurance policy, (d) gains
from the sale, exchange, transfer or other disposition of property or assets not
in the ordinary course of business of the Company and its Subsidiaries, and
related tax effects in accordance with Generally Accepted Accounting Principles,
(e) any other extraordinary or non-recurring gains of the Company or its
Subsidiaries, and related tax effects in accordance with Generally Accepted
Accounting Principles, and (f) the income of any Subsidiary of the Company to
the extent that the declaration or payment of dividends or similar distributions
by that Subsidiary of that income is not at the time permitted by operation of
the terms of its charter or of any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Subsidiary.
"Contingent Liabilities" of any person shall mean, as of any date, all
contingent obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor or in any other capacity, or in
respect of which obligations such person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such person in
respect of any letters of credit, surety bonds or similar obligations and all
obligations of such person to advance funds to, or to purchase assets, property
or services from, any other person in order to maintain the financial condition
of such other person.
LOAN AGREEMENT Page 5
"Contractual Obligation" shall mean, as to any person, any provision of
any security issued by such person or of any agreement, instrument or other
undertaking to which such person is a party or by which it or any of its
property is bound.
"Current Asset" and "Current Liabilities" of any person shall mean, as of
any date, all assets or liabilities, respectively, of such person which, in
accordance with Generally Accepted Accounting Principles, should be classified
as current assets or current liabilities, respectively, on a balance sheet of
such person.
"Deutschemark" or "DM" shall mean the lawful currency of the Federal
Republic of Germany.
"Dollar Equivalent" shall mean, with respect to each Loan in a Permitted
Currency other than Dollars, the sum in Dollars resulting from the conversion of
the amount of such Advance from the Permitted Currency in which such Advance is
denominated into Dollars at the spot exchange rate determined by the
Administrative Agent to be available to it for the purchase of such Permitted
Currency with Dollars at approximately 11:00 a.m. local time of the Applicable
Lending Office on the date any such Advance is disbursed or rolled over, or on
such other date as a determination of the Dollar Equivalent is made.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Domestic Subsidiary" shall mean each present and future Subsidiary of the
Company which is not a Foreign Subsidiary.
"EBIT" means, for any period, Consolidated Net Income for such period plus
all amounts deducted in determining such Consolidated Net Income on account of
(a) Consolidated Interest Expense (without giving effect to the proviso at the
end of such definition) and (b) income taxes and the State of Michigan single
business tax, and (c) unrealized foreign currency gains and losses, all as
determined for the Company and its Subsidiaries on a consolidated basis in
accordance with Generally Accepted Accounting Principles.
"EBITDA" means, for any period, EBIT for such period plus, to the extent
deducted in determining such EBIT, (a) depreciation expense, (b) amortization
expense (including non-cash amortization of post-retirement health benefits
pursuant to FASB 106 and any non-cash amortization of interest in respect of a
management deferral compensation plan), and (c) with respect to any such periods
(and only such periods) that include any of the fiscal quarters of the Company
ending on or about March 31, 1997 ("1st Quarter '97"), June 30, 1997 ("2nd
Quarter '97"), September 30, 1997 ("3rd Quarter '97") or December 31, 1997 ("4th
Quarter '97"), (i) consulting expense in connection with the Company's "GROWTTH"
project, in amounts not exceeding $139,270, $373,442, $585,553 and $41,735 for
1st Quarter '97, 2nd Quarter '97, 3rd Quarter '97 and 4th Quarter '97,
respectively, (ii) expenses associated with the aborted acquisition of Univer,
S.p.A., in amounts not exceeding $80,914, $140,663, $306,553 and $2,870 for 1st
Quarter '97, 2nd Quarter '97, 3rd Quarter '97 and 4th Quarter '97, respectively,
and (iii) relocation and other moving expenses incurred in the relocation of the
Company's Actuator business, in amounts not exceeding $0, $0, $293,447 and
$13,553 for 1st Quarter '97, 2nd Quarter '97, 3rd Quarter '97 and 4th Quarter
'97, respectively, all as determined for the Company and its Subsidiaries on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
LOAN AGREEMENT Page 6
"Eligible Accounts Receivable" shall mean, as of any date, those accounts
receivable owned by the Company, Numatics Ltd. or any Guarantor which are
payable in Dollars or any other freely traded currency and in which the Company,
Numatics Ltd. or any Guarantor has granted to the Administrative Agent, for the
benefit of the Agents and the Lenders, an enforceable, perfected security
interest which is not void or voidable pursuant to a Security Agreement and all
representations and warranties pertaining to such accounts receivable in such
Security Agreement are true and correct, valued at the face amount thereof less
sales, excise or similar taxes outstanding and less returns, discounts, credits
and allowances of any nature at any time claimed in writing or issued, owing or
granted; but shall not include any such account receivable (a) that is not a
bona fide existing obligation created by the sale and actual delivery of
inventory, goods or other property or the furnishing of services or other good
and sufficient consideration to customers of the Company, Numatics Ltd. or any
Guarantor, as the case may be, in the ordinary course of business, (b) that is
more than 120 days past the original due date, (c) that is subject to any
dispute, contra-account, defense, offset or counterclaim or any Lien (except
those in favor of the Administrative Agent under the Security Documents), or the
inventory, goods, property, services or other consideration of which such
account receivable constitutes proceeds is subject to any such Lien, but only to
the extent of such dispute, contra-account, defense, offset, counterclaim or
Lien, (d) in respect of which the inventory, goods, property, services or other
consideration have been rejected or the amount is in dispute, but only to the
extent of such dispute, (e) that is due from any Affiliate or Subsidiary of the
Company, Numatics Ltd. or any Guarantor, (f) that is payable by any person
located outside the United States (which shall not be deemed to include any
territories of the United States) or Canada; provided, however, that such
accounts receivable shall be considered Eligible Accounts Receivable in an
aggregate amount not exceeding $5,000,000, (g) that is payable by the United
States or any of its departments, agencies or instrumentalities or by any state
or other governmental entity or by any foreign government unless the Company,
Numatics Ltd. or such Guarantor, as the case may be, fully complies with the
Assignment of Claims Act and executes all documents and agreements and causes
all documents and agreements to be executed in connection therewith as requested
by the Administrative Agent or any similar foreign statute in the case of
accounts receivable payable by a foreign government, (h) that is payable by any
person as to which 25% or more of the aggregate amount of such accounts
receivable payable by such person to the Company, Numatics Ltd. or any
Guarantor, as the case may be, do not otherwise constitute Eligible Accounts
Receivable, (i) that is payable by any person that is the subject of any
proceeding seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or seeking the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, or that is not generally paying
its debts as they become due or has admitted in writing its inability to pay its
debts generally or has made a general assignment for the benefit of creditors,
(j) which is evidenced by a promissory note or other instrument, or (k) that for
any other reason is at any time reasonably deemed by the Administrative Agent to
be ineligible, and the Administrative Agent shall give 45 days' prior notice of,
and the reason determined by the Administrative Agent in its sole reasonable
discretion for, any such determination of ineligibility under this clause to the
Company and each Lender.
"Eligible Inventory" shall mean, as of any date, that inventory owned by
the Company, Numatics Ltd. or any Guarantor that constitutes raw materials,
work-in-process or finished goods and in which the Company, Numatics Ltd. or
such Guarantor has granted to the Administrative Agent, for the benefit of the
Lenders, an enforceable, perfected security interest which is not void or
voidable pursuant to a Security Agreement and all representations and warranties
pertaining to such inventory in such Security Agreement are true and correct,
but shall not include any such inventory (a) that does not constitute inventory
readily salable or usable in the business of the Company, Numatics Ltd. or any
Guarantor, (b) that is located outside the United States (which shall not be
deemed to include any
LOAN AGREEMENT Page 7
territories of the United States) or Canada, (c) that is subject to, or any
accounts or other proceeds resulting from the sale or other disposition thereof
could be subject to, any Lien (except those in favor of the Administrative Agent
under the Security Documents), including any sale on approval or sale or return
transaction or any consignment, (d) that is not in the possession of the
Company, Numatics Ltd. or any Guarantor, (e) that is held for lease or is the
subject of any lease, (f) that is subject to any trademark, trade name or
licensing arrangement, or any law, rules or regulation, that could limit or
impair the ability of the Administrative Agent to promptly exercise all rights
of the Administrative Agent under the security agreements, (g) if such inventory
is located on premises not owned by the Company, Numatics Ltd. or any Guarantor
and the landlord or other owner of such premises has not waived its distraint,
lien and similar rights with respect to such inventory and shall not have agreed
to permit the Administrative Agent to enter such premises pursuant to a waiver
and agreement of such person in favor of and in form and substance acceptable to
Administrative Agent, (h) with respect to which any insurance proceeds are not
payable to the Administrative Agent as a loss payee or are payable to any loss
payee other than the Administrative Agent, the Company, Numatics Ltd. or any
Guarantor, as the case may be, or (i) that for any other reason is at any time
reasonably deemed by the Administrative Agent to be ineligible, and the
Administrative Agent shall give 45 days' prior notice of, and the reason
determined by the Administrative Agent in its sole reasonable discretion for,
any such determination of ineligibility under this clause to the Company and
each Lender.
"Environmental Certificate" shall mean an appropriately completed
environmental certificate in the form of Exhibit B attached hereto delivered by
each of the Borrowers (other than Numatics GmbH) and Guarantors, certified as
true and correct as of such date by an executive officer of each Borrower (other
than Numatics GmbH) and Guarantor acceptable to the Administrative Agent.
"Environmental Laws" at any date shall mean all provisions of law,
statute, ordinances, rules, regulations, judgments, writs, injunctions, decrees,
orders, awards and standards promulgated by the government of the United States
of America or any foreign government or by any state, province, municipality or
other political subdivision thereof or therein or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of, or regulating the discharge of substances into,
the environment.
"Equivalent" of an amount of one currency (the "first currency")
denominated in another currency (the "second currency"), as of any date of
determination, shall mean the amount of the second currency which could be
purchased with the amount of the first currency at the spot exchange rate quoted
by the Administrative Agent (or the Documentation Agent if the Administrative
Agent is unable to quote such spot exchange rate) at approximately 11:00 a.m.
local time of the Applicable Lending Office on such date.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which, together with the Company or any Subsidiary of the Company,
would be treated as a single employer under Section 414 of the Code.
"Event of Default" shall mean any of the events or conditions described in
Section 6.1.
"Excess Cash Flow" for any period means the total of the following for
Company and its Subsidiaries on a consolidated basis: (a) Consolidated Net
Income, plus (b) depreciation and amortization for financial reporting purposes,
plus (c) increases in deferred income taxes, plus (d)
LOAN AGREEMENT Page 8
decreases in Working Capital, plus (e) all other noncash charges against
Consolidated Net Income, including without limitation all interest and related
expense which is not paid in cash, plus (f) tax refunds actually received, plus
(g) to the extent deducted from Consolidated Net Income, unrealized foreign
exchange losses, less (h) Capital Expenditures, less (i) scheduled amortization
of long term Indebtedness actually paid during such period, less (j) cash
dividends paid on Company's capital stock to the extent permitted under Section
5.2(j), less (k) decreases in deferred income taxes resulting from tax payments
actually made during such period, less (l) increases in Working Capital, and
less (m) to the extent added to Consolidated Net Income, unrealized foreign
exchange gains; provided that for purposes of this definition of Excess Cash
Flow only, calculations of changes in Working Capital shall exclude cash, cash
equivalents and the Revolving Credit Loans.
"Existing Assignment of Life Insurance" shall mean the Assignment of
Policy as Collateral Security, dated January 3, 1996, made by the Company in
favor of NBD, as collateral agent, as amended or modified from time to time.
"Existing Guaranty" shall mean the Guaranty Agreement, dated as of January
3, 1996, made by the Company and the Guarantors in favor of NBD, as
administrative agent, as amended or modified from time to time.
"Existing Letter of Credit" shall mean Irrevocable Letter of Credit No.
500 in the amount of $2,590,411 dated December 16, 1996 issued by NBD in favor
of NBD Bank, as trustee, for the account of the Company.
"Existing Mortgages" shall mean (a) the Tennessee Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Rents, dated as of January 3, 1996,
made by the Company in favor of James G. Lackey III, trustee, for the use and
benefit of NBD, for the benefit of the Lenders, recorded on _____________, 1996
in Book _____, Page ______, in the Register's Office for Williamson County,
Tennessee, as amended or modified from time to time, (b) the Mortgage, Security
Agreement and Assignment of Rents, dated as of November 30, 1993, made by the
Company in favor of NBD, as collateral agent, recorded on December 16, 1993 in
Liber 14264, Page 839, in the records of the Oakland County Register of Deeds,
as amended or modified from time to time, (c) the Mortgage, Security Agreement
and Assignment of Rents, dated as of November 30, 1993, made by the Company in
favor of NBD, as collateral agent, recorded on December 16, 1993 in Liber 14264,
Page 822, in the records of the Oakland County Register of Deeds, as amended or
modified from time to time, (d) the Mortgage, Security Agreement and Assignment
of Rents, dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 14, 1993 in Liber 777, Page 234, in the
records of the Shiawassee County Register of Deeds, as amended or modified from
time to time, (e) the Mortgage, Security Agreement and Assignment of Rents,
dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 13, 1993, in Liber 450, Page 744, in the
records of the Sanilac County Register of Deeds, as amended or modified from
time to time, (f) the Mortgage, Security Agreement and Assignment of Rents,
dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 16, 1993, in Liber 14264, Page 805, in
the records of the Oakland County Register of Deeds, as amended or modified from
time to time, and (g) the Mortgage, Security Agreement and Assignment of Rents,
dated as of November 30, 1993, made by the Company in favor of NBD, as
collateral agent, recorded on December 10, 1993, in Liber 149, Page 202, in the
records of the Steuben County Register of Deeds, as amended or modified from
time to time.
LOAN AGREEMENT Page 9
"Existing Pledge Agreement" shall mean the Pledge Agreement and
Irrevocable Proxy, dated as of January 3, 1996, made by the Company in favor of
NBD, as collateral agent, as amended or modified from time to time.
"Existing Security Agreements" shall mean (a) the Security Agreement,
dated as of January 3, 1996, made by the Company in favor of NBD, as collateral
agent, as amended or modified from time to time, (b) the Subsidiary Security
Agreement, dated as of January 3, 1996, made by the Guarantors (other than the
Company) in favor of NBD, as collateral agent, as amended or modified from time
to time, and (c) the General Security Agreement, dated as of January 3, 1996,
made by Numatics Ltd. in favor of NBD, as administrative agent, as amended or
modified from time to time.
"Existing Security Documents" shall mean the Existing Assignment of Life
Insurance, the Existing Guaranty, the Existing Mortgages, the Existing Pledge
Agreement, the Existing Security Agreements and all existing collateral and
security documents made or assumed by Numatics GmbH and on file with NBD's
Frankfurt branch, as amended or modified from time to time.
"Federal Funds Rate" shall mean the per annum rate that is equal to the
per annum rate established and announced by the Administrative Agent from time
to time as the opening federal funds rate paid by the Administrative Agent in
its regional federal funds market for overnight borrowings from other banks; all
as conclusively determined by the Administrative Agent, such sum to be rounded
up, if necessary, to the nearest whole multiple of one one-hundredth of one
percent (1/100 of 1%), which Federal Funds Rate shall change simultaneously with
any change in such announced rates.
"Fixed Charge Coverage Ratio" shall mean, as of the end of any fiscal
quarter, the ratio of (a) EBITDA for the four fiscal quarters then ending minus
Capital Expenditures for such period of four fiscal quarters, to (b) without
duplication, Consolidated Interest Expense, plus cash tax payments, plus all
payments on Funded Debt (excluding prepayments required pursuant to 3.1(d)),
plus all cash dividends paid or required to be paid with respect to any Capital
Stock of the Company and all redemptions of any Capital Stock.
"FNBC" shall mean The First National Bank of Chicago, a national banking
association, including any of its branches and affiliates.
"Foreign Borrower" shall mean any Borrower incorporated or formed in any
jurisdiction other than any State of the United States of America or any
political subdivision of any such State.
"Foreign Currency Lenders" shall mean FNBC and NBD Canada.
"Foreign Currency Loan" shall mean any Revolving Credit Loan, any portion
of Term Loan A or any portion of Term Loan B denominated in a Permitted Currency
other than Dollars.
"Foreign Subsidiary" shall mean any Subsidiary incorporated or formed in
any jurisdiction other than any State of the United States of America.
"Funded Debt" of any person, as of any date, shall mean: (i) all debt for
borrowed money and similar monetary obligations evidenced by bonds, notes,
debentures, Capital Lease obligations or otherwise, including without limitation
obligations in respect of the deferred purchase price of properties or assets,
in each case whether direct or indirect, other than obligations of the Company
for the balance of the purchase price of the stock of Ultra Air Products, Inc.,
as further described on Schedule 5.2(e) to the extent such obligations do not
exceed $603,602; (ii) all liabilities secured by any Lien existing on
LOAN AGREEMENT Page 10
property owned or acquired subject thereto, whether or not the liability secured
thereby shall have been assumed; (iii) all reimbursements obligations under
outstanding letters of credit in respect of drafts which (A) may be presented to
the extent the aggregate amount thereof exceeds $4,000,000 or (B) have been
presented and have not yet been paid and are not included in clause (i) above.
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Company's independent public
accountants) with the most recent audited consolidated financial statements of
the Company and its Subsidiaries delivered to the Lenders.
"Guaranties" shall mean the Existing Guaranties and each other guaranty
entered into by any of the Guarantors for the benefit of the Agents and the
Lenders pursuant to this Agreement in substantially the form of Exhibit C
hereto, as amended or modified from time to time.
"Guarantor" shall mean the Company (as guarantor with respect to the
Borrowers other than the Company), Micro-Filtration, Inc., a Michigan
corporation, Numation, Inc., a Michigan corporation, Numatech, Inc., a Michigan
corporation, Ultra Air Products, Inc., a Michigan corporation, Microsmith, Inc.,
an Arizona corporation, I.A.E. Incorporated, a Michigan corporation, and each
future Domestic Subsidiary of the Company.
"Harvard" shall mean Harvard Private Capital Holdings, Inc., a
Massachusetts corporation.
"Harvard Documents" shall mean the Harvard Securities Purchase Agreement
and all agreements and documents executed or delivered in connection therewith,
including, without limitation, those agreements and documents identified on
Schedule 4.22-B.
"Harvard Put Notes" shall mean the Put Notes (as defined in the Harvard
Securities Purchase Agreement as in effect on the Effective Date).
"Harvard Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of January 3, 1996, between the Company and Harvard, as
amended by that certain Agreement entered into as of March 23, 1998 between the
Company and Harvard, and as further amended or modified from time to time.
"Indebtedness" of any person shall mean, as of any date, (a) all
obligations of such person for borrowed money and similar monetary obligations
evidenced by bonds, notes, debentures or otherwise, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person, (d) the
unpaid purchase price for goods, property or services acquired by such person,
except for trade accounts payable arising in the ordinary course of business
that are not past due within customary payment terms, (e) all obligations of
such person in respect of any interest rate or currency swap, rate cap or other
similar transaction (valued in an amount equal to the highest termination
payment, if any, that would be payable by such person upon termination for any
reason on the date of determination), and (f) all obligations of others similar
in character to those described in clauses (a) through (e) of this definition
for which such person is contingently liable, as obligor, guarantor, surety or
in any other capacity, or in respect of which obligations such person assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of such person in respect of letters of credit, surety bonds or
similar
LOAN AGREEMENT Page 11
obligations and all obligations of such person to advance funds to, or to
purchase assets, property or services from, any other person in order to
maintain the financial condition of such other person.
"Interest Coverage Ratio" shall mean, as of the end of any fiscal quarter,
the ratio of (a) EBITDA for the four fiscal quarters then ending to (b)
Consolidated Interest Expense for the four fiscal quarters then ending.
"Interest Payment Date" shall mean (a) with respect to any LIBOR Loan, the
last day of each LIBOR Interest Period with respect to such LIBOR Loan, and, in
the case of any LIBOR Interest Period exceeding three months, those days that
occur during such LIBOR Interest Period at intervals of three months after the
first day of such LIBOR Interest Period and (b) in all other cases, the last
Business Day of each March, June, September and December occurring after the
date hereof, commencing with the first such Business Day occurring after the
date of this Agreement.
"Lender Indebtedness" shall mean (a) the Advances and any other amounts
owing under this Agreement, the Notes, the Security Documents or any other
agreement evidencing or relating to the Advances or this Agreement, and (b) all
indebtedness, obligations and liabilities of any Borrower to any Lender in
respect of any Swaps.
"Letter of Credit" shall mean a C/L/C or S/L/C having a stated expiry date
or a date upon which the draft must be reimbursed not later than twelve months
after the date of issuance and not later than the fifth Business Day before the
Termination Date, issued by an L/C Issuer on behalf of the Revolving Credit
Lenders for the account of the Company or any of its Subsidiaries under an
application and related documentation acceptable to the L/C Issuer issuing such
Letter of Credit requiring, among other things, immediate reimbursement by the
Company or such Subsidiary to such L/C Issuer in respect of all drafts or other
demand for payment honored thereunder and all expenses paid or incurred by such
L/C Issuer relative thereto. Each Existing Letter of Credit shall for all
purposes of this Agreement be deemed a Letter of Credit issued for the account
of the existing account party(ies) therefor pursuant to a Letter of Credit
Advance under this Agreement.
"Letter of Credit Advance" shall mean any issuance of a Letter of Credit
under Section 2.4 made pursuant to Section 2.1 in which each Revolving Credit
Lender acquires a pro rata risk participation.
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(b).
"L/C Issuer" shall mean NBD or BankBoston.
"LIBOR" shall mean, with respect to any LIBOR Loan and the related LIBOR
Interest Period, the per annum rate that is equal to the sum of:
(a) the Applicable Margin, plus
(b) (i) except as provided in clause (ii) below, the rate per annum
obtained by dividing (A) the per annum rate of interest at which deposits in
Dollars (or in any Permitted Currency in the case of any Foreign Currency Loan)
for such LIBOR Interest Period and in an aggregate amount comparable to the
amount of such LIBOR Loan to be made by the Administrative Agent in its capacity
as a Lender hereunder (or, in the case of any Revolving Credit Loan, Term Loan A
or Term Loan B made to Numatics GmbH, by FNBC) are offered to the Administrative
Agent (or FNBC, as the case may be) by other prime banks in the London interbank
market at approximately 11:00 a.m. local time in London on
LOAN AGREEMENT Page 12
the second LIBOR Business Day prior to the first day of such LIBOR Interest
Period by (B) an amount equal to one minus the stated maximum rate (expressed as
a decimal) of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is specified
on the first day of such LIBOR Interest Period by the Board of Governors of the
Federal Reserve System (or any successor agency thereto) for determining the
maximum reserve requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System;
(ii) with respect to Term Loan A made to Numatics Ltd., the rate per
annum at which NBD Canada is able to raise funds in the Canadian interbank
market at approximately 11:00 a.m. Detroit time on the Business Day prior to the
first day of such LIBOR Interest Period;
all as conclusively determined by the Administrative Agent (or FNBC, as the case
may be) or, with respect to rates determined pursuant to clause (ii) above, NBD
Canada, such sum to be rounded up, if necessary, to the nearest whole multiple
of one one-hundredth of one percent (1/100 of 1%).
"LIBOR Business Day" shall mean, with respect to any LIBOR Loan, a day
which is both a Business Day and a day on which dealings in Dollar deposits or,
in the case of Foreign Currency Loans in any Permitted Currency other than
Dollars, such Permitted Currency deposits are carried out in the London
interbank market with respect to such LIBOR Loan.
"LIBOR Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the day such LIBOR Loan is made or converted to a LIBOR
Loan and ending on the date one, two, three or six months thereafter, as a
Borrower may elect under Section 2.4 or 2.7, and each subsequent period
commencing on the last day of the immediately preceding LIBOR Interest Period
and ending on the date one, two, three or six months thereafter, as a Borrower
may elect under Section 2.4 or 2.7, provided, however, that (a) the LIBOR
Interest Period for all Term Loans shall be three months and the Company shall
not have the ability to request any other LIBOR Interest Period with respect to
the Term Loans or any portion thereof, (b) any LIBOR Interest Period which
commences on the last LIBOR Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last LIBOR Business Day of the appropriate
subsequent calendar month, (c) each LIBOR Interest Period which would otherwise
end on a day which is not a LIBOR Business Day shall end on the next succeeding
LIBOR Business Day or, if such next succeeding LIBOR Business Day falls in the
next succeeding calendar month, on the next preceding LIBOR Business Day, and
(d) no LIBOR Interest Period which would end after Maturity Date A with respect
to Term Loan A, Maturity Date B with respect to Term Loan B or the Termination
Date with respect to any Revolving Credit Loans shall be permitted.
"LIBOR Loan" shall mean any Loan which bears interest at LIBOR.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement
or other claim or right.
"Loan" shall mean any Revolving Credit Loan, any Term Loan and any
Swingline Loan. Any such Loan or portion thereof may also be denominated as an
Adjusted Prime Rate Loan or a LIBOR Loan, and such Adjusted Prime Rate Loans and
LIBOR Loans are referred to herein as "types" of Loans.
LOAN AGREEMENT Page 13
"Management Group" shall mean all employees of the Company or its
Subsidiaries who own Class A Common Stock of the Company (including revocable
living trusts of which the employee is the grantor and initial trustee).
"Management Group Equity Documents" shall mean the Stock Transfer
Agreement, the Voting Agreement and the Deferred Compensation Plan applicable to
the members of the Management Group as of the Effective Date.
"Material Adverse Effect" shall mean a material adverse effect on the
property, business, operations, financial condition, liabilities or
capitalization of the Company and its Subsidiaries taken as a whole.
"Maturity Date A" shall mean the earlier to occur of (a) the date on which
the maturity of Term Loan A is accelerated pursuant to Section 6.2 and (b) March
19, 2004.
"Maturity Date B" shall mean the earlier to occur of (a) the date on which
the maturity of Term Loan B is accelerated pursuant to Section 6.2 and (b)
September 19, 2005.
"Mortgages" shall mean the Existing Mortgages each other mortgage or deed
of trust entered into by any Borrower or any Guarantor for the benefit of the
Agents and the Lenders pursuant to this Agreement substantially in the form of
any Existing Mortgage or such other form as approved by the Required Lenders, as
amended or modified from time to time.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Net Worth" shall mean, as of any date, (a) the amount of any capital
stock, paid in capital and similar equity accounts plus (or minus in the case of
a deficit) the capital surplus and retained earnings of the Company and its
Subsidiaries and the amount of any foreign currency translation adjustment
account shown as a capital account of the Company and its Subsidiaries, less (b)
treasury stock of the Company and its Subsidiaries, all determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Net Cash Proceeds" shall mean, (a) in connection with any sale or other
disposition of any asset or any settlement by, or receipt of payment in respect
of, any property insurance claim or condemnation award, the cash proceeds
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such sale, settlement
or payment, net of reasonable and documented attorneys' fees, accountants' fees,
investment banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset which
is the subject of such sale, insurance claim or condemnation award (other than
any Lien in favor of the Administrative Agent for the benefit of the Agents and
the Lenders) and other customary fees actually incurred in connection therewith
and net of taxes paid or reasonably estimated to be payable as a result thereof
and (b) in connection with any issuance or sale of any equity securities or debt
securities or instruments or the incurrence of loans, the cash proceeds received
from such issuance or incurrence, net of investment banking fees, reasonable and
documented attorneys' fees, accountants' fees, underwriting discounts and
commissions and other reasonable and customary fees and expenses actually
incurred in connection therewith.
LOAN AGREEMENT Page 14
"Net Funded Debt" shall mean all Funded Debt, less all Cash and Cash
Equivalents, all as determined for the Company and its Subsidiaries on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"NBD" shall mean NBD Bank, a Michigan banking corporation, including any
of its branches and affiliates.
"NBD Canada" shall mean First Chicago NBD Bank, Canada, a Canadian
chartered bank.
"Note" shall mean any Revolving Credit Note, any Term Loan A Note, any
Term Loan B Note or the Swingline Note.
"Numatics GmbH Borrowing Base" shall mean the borrowing base established
by FNBC with respect to the Revolving Credit Loans that may be obtained by
Numatics GmbH pursuant to Section 2.1(a)(ii).
"Overdue Rate" shall mean (a) in respect of principal of Adjusted Prime
Rate Loans, a rate per annum that is equal to the sum of three percent (3%) per
annum plus the Adjusted Prime Rate, (b) in respect of principal of LIBOR Loans,
a rate per annum that is equal to the sum of three percent (3%) per annum plus
the per annum rate in effect thereon until the end of the then current LIBOR
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Adjusted Prime Rate, and (c) in
respect of other amounts payable by any Borrower hereunder (other than
interest), a per annum rate that is equal to the sum of three percent (3%) per
annum plus the Adjusted Prime Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Currency" shall mean Canadian Dollars, Deutschemarks or any
other foreign currency approved by the Administrative Agent.
"Permitted Liens" shall mean Liens permitted by Section 5.2(f) hereof.
"Person" or "person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock company, an
unincorporated organization, a joint venture, a trade or business (whether or
not incorporated), a government (foreign or domestic) and any agency or
political subdivision thereof, or any other entity.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to Title IV of ERISA or to the minimum funding standards of Section 412
of the Code which has been established or maintained by the Company, any
Subsidiary of the Company or any ERISA Affiliate, or by any other person if the
Company, any Subsidiary of the Company or any ERISA Affiliate could have
liability with respect to such pension plan.
"Pledge Agreements" shall mean the Existing Pledge Agreements and each
other Pledge Agreement entered into by any Borrower or any Guarantor for the
benefit of the Agents and the Lenders pursuant to this Agreement substantially
in the form attached hereto as Exhibit D, as amended or modified from time to
time.
LOAN AGREEMENT Page 15
"Prime Rate" shall mean the per annum rate announced by the Administrative
Agent from time to time as its "prime rate" (it being acknowledged that such
announced rate may not necessarily be the lowest rate charged by the
Administrative Agent to any of its customers), which Prime Rate shall change
simultaneously with any change in such announced rate.
"Prohibited Transaction" shall mean any transaction involving any Plan
which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
"Remaining Harvard Obligations" shall mean the Warrants (as defined in the
Harvard Securities Purchase Agreement as in effect on the Effective Date) and
the Harvard Put Notes issued from time to time in accordance with the terms of
the Harvard Securities Purchase Agreement as in effect on the Effective Date.
"Reportable Event" shall mean a reportable event as described in Section
4043(b) of ERISA including those events as to which the thirty (30) day notice
period is waived under Part 2615 of the regulations promulgated by the PBGC
under ERISA.
"Required Lenders" shall mean Lenders holding not less than 66-2/3% of the
Commitments (or 66-2/3% of the Advances if the Commitments have been
terminated). For purposes of this definition, the amount of each Commitment and
Loan in any currency other than Dollars shall be measured based on the Dollar
Equivalent thereof and assuming the spot exchange rate is identical to the spot
exchange rate existing on the Effective Date.
"Required Revolving Credit Lenders" shall mean Revolving Credit Lenders
holding not less than 66-2/3% of the Revolving Credit Commitments (or 66-2/3% of
the Revolving Credit Advances if the Revolving Credit Commitments have been
terminated). For purposes of this definition, the amount of each Commitment and
Loan in any currency other than Dollars shall be measured based on the Dollar
Equivalent thereof and assuming the spot exchange rate is identical to the spot
exchange rate existing on the Effective Date.
"Requirement of Law" shall mean as to any person, the certificate of
incorporation and by-laws or other organization or governing documents of such
person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such person or any of its property or to which such person or
any of its property is subject.
"Revolving Credit Advance" shall mean any Revolving Credit Loan and any
Letter of Credit Advance.
"Revolving Credit Commitments" shall mean, with respect to each Lender,
the commitment of each such Lender to make Revolving Credit Loans, and to
participate in Letter of Credit Advances, in amounts not exceeding in the
aggregate principal or face amount outstanding at any time the Revolving Credit
Commitment amount for such Lender set forth next to the name of such Lender on
the signature pages hereof, or, as to any Lender becoming a party hereto after
the Effective Date, as set forth in the applicable Assignment and Acceptance, in
each case as reduced pursuant to Section 2.2 or modified pursuant to Section
8.6. The Revolving Credit Commitments shall be composed of the "Tranche A
Revolving Credit Commitments" and "Tranche B Revolving Credit Commitments".
"Revolving Credit Lenders" shall mean those Lenders which have a Revolving
Credit Commitment or, if such Commitments shall have been terminated, have
outstanding Revolving Credit Advances.
LOAN AGREEMENT Page 16
"Revolving Credit Loan" shall mean any borrowing under Section 2.4
evidenced by the Revolving Credit Notes and made pursuant to Section 2.1(a).
"Revolving Credit Notes" shall mean the promissory notes of the Company
and Numatics GmbH evidencing the Revolving Credit Loans, in substantially the
form annexed hereto as Exhibit E-1 and E-2, respectively, as amended or modified
from time to time and together with any promissory note or notes issued in
exchange or replacement therefor, and "Revolving Credit Note" shall mean any one
of such Revolving Credit Notes.
"Revolving Credit Percentage" shall mean, with respect to any Revolving
Credit Lender at any time, the percentage of the aggregate Revolving Credit
Commitments of all Revolving Credit Lenders then constituted by such Revolving
Credit Lender's Revolving Credit Commitment.
"Security Agreements" shall mean the Existing Security Agreements and each
other Security Agreement entered into by any Borrower or any Guarantor for the
benefit of the Agents and the Lenders pursuant to this Agreement substantially
in the form of any Existing Security Agreement, as applicable, as amended or
modified from time to time, and any other agreement executed by any Borrower
granting a Lien for the benefit of the Agents and the Lenders in form or
substance satisfactory to the Administrative Agent, as amended or modified from
time to time.
"Security Documents" shall mean the Mortgages, the Pledge Agreements, the
Security Agreements, the Guaranties, the Existing Assignment of Life Insurance,
all other Existing Security Documents, any other agreements or documents
pledging any life insurance and all other agreements and documents delivered
pursuant to this Agreement or otherwise entered into by any person to secure or
guaranty the obligations of any Borrower under this Agreement.
"S/L/C" shall mean any standby letter of credit issued hereunder.
"Solvent" when used with respect to any person, means that, as of any date
of determination, (a) the amount of the "present fair salable value" of the
assets of such person will, as of such date, exceed the amount of all
"liabilities of such person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
salable value of the assets of such person will, as of such date, be greater
than the amount that will be required to pay the liability of such person on its
debts as such debts become absolute and matured, (c) such person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Subordinated Debt" shall mean, for any person, (a) all indebtedness,
obligations and liabilities of such person under the Remaining Harvard
Obligations, (b) all indebtedness, obligations and liabilities of such person
under the Subordinates Notes and the Subordinated Notes Indenture, and (c) any
other Indebtedness of such person, so long as, in each of such cases (a), (b)
and (c), such indebtedness, obligations and liabilities are fully subordinated
to all Indebtedness of such person owing to the Agents, the L/C Issuers and the
Lenders, by written agreements and documents in form and substance
LOAN AGREEMENT Page 17
satisfactory to the Required Lenders and are governed by terms and provisions,
including without limitation maturities, covenants, defaults, rates and fees,
acceptable to the Required Lenders.
"Subordinated Debt Documents" shall mean the Harvard Documents, the
Subordinated Notes, the Subordinated Notes Indenture and any other agreement or
document evidencing or relating to any Subordinated Debt, whether under the
Remaining Harvard Obligations, the Subordinated Notes or any other Subordinated
Debt, including, without limitation, those agreements and documents identified
on Schedule 4.22-A and Schedule 4.22-B.
"Subordinated Notes" shall mean the 9-5/8% Senior Subordinated Notes due
2008 and all other notes or debt securities, if any, issued pursuant to the
Subordinated Notes Indenture at any time.
"Subordinated Notes Indenture" shall mean the Indenture, dated as of March
23, 1998, among the Company, the Domestic Subsidiaries that provide Subsidiary
Guarantees (as defined therein), and First Trust National Association, as
trustee.
"Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof.
"Swaps" shall mean any interest rate or currency swaps, rate caps or
similar transactions, provided that such transactions are entered into by the
Company or any of its Subsidiaries to protect against fluctuations in interest
rates on Indebtedness of the Company and its Subsidiaries or in exchange rates,
and not for speculative purposes.
"Swingline Loan" shall mean any loan under Section 2.4 evidenced by the
Swingline Note and made by the Administrative Agent to the Company pursuant to
Section 2.1(e).
"Swingline Note" shall mean any promissory note of the Company evidencing
the Swingline Loans in substantially the form of Exhibit E-3 hereto, as amended
or modified from time to time and together with any promissory note or notes
issued in exchange or replacement therefor.
"Termination Date" shall mean the earlier to occur of (a) March 19, 2004,
and (b) the date on which the Revolving Credit Commitments shall be terminated
pursuant to Section 2.2 or 6.2.
"Term Loan A" shall mean the single borrowing under Section 2.4 evidenced
by the Term Loan A Notes and made to the Borrowers pursuant to Section 2.1(b).
"Term Loan A Commitment" shall mean, with respect to each Lender, the
commitment of each Lender to make Term Loan A in an amount not exceeding in the
aggregate principal amount outstanding at any time the Term A Commitment
amount(s) for such Lender set forth next to the name of such Lender on the
signature pages hereof, or, as to any Lender becoming a party hereto after the
Effective Date, as set forth in the applicable Assignment and Acceptance, in
each case as reduced pursuant to Section 2.2 or modified pursuant to Section
8.6. The Term Loan A Commitments shall be composed of the "Company Term Loan A
Commitments", the "Numatics Ltd. Term Loan A Commitments" and the "Numatics GmbH
Term Loan A Commitments".
LOAN AGREEMENT Page 18
"Term Loan A Lenders" shall mean those Lenders which have a Term Loan A
Commitment or, if such Commitments have been terminated, have an outstanding
Term Loan A.
"Term Loan A Notes" shall mean the promissory notes of each Borrower
evidencing the Term Loan A, in substantially the form annexed hereto as Exhibit
E-4, E-5 and E-6, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor, and "Term
Loan A Note" shall mean any one of such Term Loan A Notes.
"Term Loan B" shall mean the single borrowing under Section 2.4 evidenced
by the Term Loan B Notes and made to the Company and Numatics pursuant to
Section 2.1(c).
"Term Loan B Commitment" shall mean, with respect to each Lender, the
commitment of each Lender to make Term Loan B in an amount not exceeding in the
aggregate principal amount outstanding at any time the Term B Commitment
amount(s) for such Lender set forth next to the name of such Lender on the
signature pages hereof, or, as to any Lender becoming a party hereto after the
Effective Date, as set forth in the applicable Assignment and Acceptance, in
each case as reduced pursuant to Section 2.2 or modified pursuant to Section
8.6. The Term Loan B Commitments shall be composed of the "Company Term Loan B
Commitments" and the "Numatics GmbH Term Loan B Commitments."
"Term Loan B Lenders" shall mean those Lenders which have a Term Loan B
Commitment or, if such Commitments have been terminated, have an outstanding
Term Loan B.
"Term Loan B Notes" shall mean the promissory notes of the Company and
Numatics GmbH evidencing the Term Loan B, in substantially the form of Exhibits
E-7 and E-8, respectively, as amended or modified from time to time and together
with any promissory note or notes issued in exchange or replacement therefor,
and "Term Loan B Note" shall mean any one of such Term Loan B Notes.
"Term Loans" shall mean Term Loan A and Term Loan B.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as of
any date, the amount of the unfunded benefit liabilities determined in
accordance with Generally Accepted Accounting Principles.
"Unmatured Event" shall mean any event or condition which might become an
Event of Default with notice or lapse of time or both.
"Working Capital" of any person shall mean, as of any date, the amount, if
any, by which Current Assets of such person exceeds the Current Liabilities of
such person.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"this Agreement", "Company", "Numatics Ltd.", "Numatics GmbH", "Borrower",
"Borrowers", "Lenders", "Lender", "Administrative Agent", "Documentation Agent",
"Agents", "Agent", "Existing Lenders", "Existing Lender", "Existing Loan
Agreement", "Existing Term Loan A", "Existing Term Loan B" and "Existing
Revolving Credit" shall have the respective meanings ascribed thereto in the
initial and introductory paragraph of this Agreement. Such terms, together with
the other terms defined in Section 1.1, shall include both the singular and the
plural forms thereof and shall be construed accordingly. Use of the terms
"herein", "hereof", and "hereunder" shall be deemed references to this Agreement
in its entirety and not to the Section or clause in which such term appears.
References to "Sections" and "subsections"
LOAN AGREEMENT Page 19
shall be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided.
1.3 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with Generally Accepted Accounting Principles; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers wish
to amend any covenant in Article V to eliminate the effect of any change in
Generally Accepted Accounting Principles (or if the Administrative Agent
notifies the Borrowers that the Required Lenders wish to amend Article V for
such purpose), then the Borrowers' compliance with such covenants shall be
determined on the basis of Generally Accepted Accounting Principles in effect
immediately before the relevant change in Generally Accepted Accounting
Principles became effective until either such notice is withdrawn or such
covenant or any such defined term is amended in a manner satisfactory to the
Borrowers and the Required Lenders. Except as otherwise expressly provided
herein, all references to a time of day shall be references to Detroit, Michigan
time.
(b) The Company shall deliver to the Lenders at the same time as the
delivery of any annual or monthly financial statement under Section 5.1(d)
hereof (i) a description in reasonable detail of any material variation between
the application or other modification of accounting principles employed in the
preparation of such statement and the application or other modification of
accounting principles employed in the preparation of the immediately prior
annual or monthly financial statements as to which no objection has been made in
accordance with the last sentence of subsection (a) above and (ii) reasonable
estimates of the difference between such statements arising as a consequence
thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 5.2 hereof, the Company will not change
the last day of its fiscal year from December 31 of each year, or the last days
of the first three fiscal quarters in each of its fiscal years from March 31,
June 30, and September 30 of each year, respectively.
ARTICLE II
THE COMMITMENTS AND THE ADVANCES
2.1 Commitments of the Lenders.
(a) Revolving Credit Advances. (i) Each Revolving Credit Lender
agrees, for itself only, subject to the terms and conditions of this Agreement,
to make Revolving Credit Loans denominated in Dollars to the Company pursuant to
Section 2.4 and to participate in Letter of Credit Advances to the Company
pursuant to Section 3.3, from time to time from and including the Effective Date
to but excluding the Termination Date, not to exceed in aggregate principal
amount at any time outstanding the amount determined pursuant to Section 2.1(d).
The Commitment of each Revolving Credit Lender to make Revolving Credit Advances
to the Company under this Section 2.1(a)(i) shall be its "Tranche A Revolving
Credit Commitment".
(ii) FNBC agrees, for itself only, subject to the terms and
conditions of this Agreement and other agreements among FNBC and Numatics GmbH,
to make Revolving Credit Loans
LOAN AGREEMENT Page 20
denominated in Deutschemarks to Numatics GmbH pursuant to Section 2.4, from time
to time from and including the Effective Date to but excluding the Termination
Date, not to exceed in aggregate principal amount at any time outstanding the
amount determined pursuant to Section 2.1(d). The Commitment of FNBC to make
Revolving Credit Loans to Numatics GmbH under this Section 2.1(a)(ii) shall be
its "Tranche B Revolving Credit Commitment."
(b) Term Loan A. Each Term Loan A Lender agrees, for itself only,
subject to the terms and conditions of this Agreement, to make a portion of the
Term Loan A to the Company, Numatics Ltd. and Numatics GmbH on the Effective
Date in an amount equal to its Company Term Loan A Commitment, Numatics Ltd.
Term Loan A Commitment and Numatics GmbH Term Loan A Commitment, respectively.
Term Loan A shall be comprised of the following three disbursements: (i) a Loan
to the Company by the Term Loan A Lenders (in the amount, for each such Term
Loan A Lender, of its Company Term Loan A Commitment) denominated in Dollars in
an aggregate principal amount equal to $16,000,000; (ii) a Loan by NBD Canada to
Numatics Ltd. denominated in Canadian Dollars in an aggregate amount equal to
the Dollar Equivalent on the Effective Date of $2,000,000; and (iii) a Loan by
FNBC to Numatics GmbH, denominated in Deutschemarks in an aggregate amount equal
to the Dollar Equivalent on the Effective Date of $2,000,000.
(c) Term Loan B. Each Term Loan B Lender agrees, for itself only,
subject to the terms and conditions of this Agreement, to make a portion of the
Term Loan B to the Company and Numatics GmbH on the Effective Date in an amount
equal to its Company Term Loan B Commitment and Numatics GmbH Term Loan B
Commitment, respectively. Term Loan B shall be comprised of the following two
disbursements: (i) a Loan to the Company by the Term Loan B Lenders (in the
amount, for each such Term Loan B Lender, of its Company Term Loan B Commitment)
in an aggregate principal amount equal to $13,000,000; and (ii) a Loan by FNBC
to Numatics GmbH, denominated in Deutschemarks in an aggregate amount equal to
the Dollar Equivalent on the Effective Date of $2,000,000.
(d) Limitation on Amount of Advances. Notwithstanding anything in this
Agreement to the contrary, (i) the aggregate principal amount of the Revolving
Credit Advances at any time outstanding to the Company shall not exceed the
lesser of (A) the amount of the Borrowing Base as of the most recently received
Borrowing Base Certificate and (B) the aggregate amount of the Tranche A
Revolving Credit Commitments as of the date any such Advance is made, provided,
however, that the aggregate principal amount of Letter of Credit Advances
outstanding at any time shall not exceed $5,000,000, (ii) the Dollar Equivalent
of the aggregate principal amount of Revolving Credit Loans at any time
outstanding to Numatics GmbH shall not exceed the lesser of (A) the aggregate
amount of the Tranche B Revolving Credit Commitments and (B) the amount of the
Numatics GmbH Borrowing Base as determined by the Administrative Agent, (iii)
the principal amount of the portion of Term Loan A made by each such Lender to
the Company shall not exceed the amount of its respective Company Term Loan A
Commitment, (iv) the Dollar Equivalent of the principal amount of the portion of
Term Loan A made by each such Lender to Numatics Ltd. shall not exceed the
amount of its respective Numatics Ltd. Term Loan A Commitment, (v) the Dollar
Equivalent of the principal amount of the portion of Term Loan A made by each
such Lender to Numatics GmbH shall not exceed the amount of its respective
Numatics GmbH Term Loan A Commitment, (vi) the principal amount of the portion
of Term Loan B made by each such Lender to the Company shall not exceed the
amount of its respective Company Term Loan B Commitment and (vii) the Dollar
Equivalent of the principal amount of the portion of Term Loan B made by each
such Lender to Numatics GmbH shall not exceed the amount of its respective
Numatics GmbH Term Loan B Commitment.
LOAN AGREEMENT Page 21
(e) Swingline Loans. (i) The Company may request the Administrative
Agent to make, and the Administrative Agent may, in its sole discretion, make
Swingline Loans to the Company from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an aggregate
principal amount not to exceed at any time the lesser of (A) $5,000,000 (the
"Swingline Facility") and (B) the aggregate amount of Revolving Credit Advances
that could be but is not borrowed as of such date. Each Lender's Revolving
Credit Commitment shall be deemed utilized by an amount equal to such Lender's
pro rata share (based on such Lender's Revolving Credit Commitment) of each
Swingline Loan for purposes of determining the amount of Revolving Credit
Advances required to be made by such Lender, but no Lender's Revolving Credit
Commitment, including NBD's, shall be deemed utilized for purposes of
determining commitment fees under Section 2.3(a). Swingline Loans shall bear
interest at the Adjusted Prime Rate. Within the limits of the Swingline
Facility, so long as the Administrative Agent, in its sole discretion, elects to
make Swingline Loans, the Company may borrow and reborrow under this Section
2.1(e)(i).
(ii) The Administrative Agent may at any time in its sole and absolute
discretion; provided that the Administrative Agent agrees to do so not less
frequently than weekly; provided, further, that the failure of the
Administrative Agent to do so with such frequency shall not relieve the
Revolving Credit Lenders of their obligations hereunder; require that any
Swingline Loan be refunded by a Revolving Credit Loan which is an Adjusted Prime
Rate Borrowing from the Revolving Credit Lenders, and upon written notice
thereof by the Administrative Agent to the Revolving Credit Lenders and the
Company, the Company shall be deemed to have requested a Revolving Credit Loan
which is an Adjusted Prime Rate Borrowing in an amount equal to the amount of
such Swingline Loan, and such Adjusted Prime Rate Borrowing shall be made to
refund such Swingline Loan. Each Revolving Credit Lender shall be absolutely and
unconditionally obligated to fund its pro rata share (based on such Revolving
Credit Lender's Revolving Credit Commitment) of such Adjusted Prime Rate
Borrowing or, if applicable, purchase a participating interest in the Swingline
Loans pursuant to Section 2.1(e)(iii) and such obligation shall not be affected
by any circumstance, including, without limitation, (A) any set-off,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender has or may have against the Administrative Agent or the Company or any if
its Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or
continuance of an Unmatured Event or an Event of Default, subject to Section
2.1(e)(iii); (C) any adverse change in the condition (financial or otherwise) of
the Company or any of its Subsidiaries; (D) any breach of this Agreement or any
other agreement by any other Lender, any Borrower or any Guarantor; or (E) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing (including without limitation the Company's failure to satisfy
any conditions contained in Article II or any other provision of this
Agreement). Nothing in this Section shall limit the liability, if any, of the
Administrative Agent to any Lender under Section 7.6.
(iii) If, due to any Event of Default (including without limitation as
a result of the occurrence of an Event of Default with respect to the Company or
any of its Subsidiaries pursuant to Section 6.1(h)) Adjusted Prime Rate Loans
may not be made by the Revolving Credit Lenders as described in Section
2.1(e)(ii), then (A) the Company agrees that each Swingline Loan not paid
pursuant to Section 2.1(e)(ii) shall bear interest, payable on demand by the
Administrative Agent, at the Overdue Rate, and (B) effective on the date each
such Adjusted Prime Rate Loan would otherwise have been made, each Revolving
Credit Lender severally agrees that it shall unconditionally and irrevocably,
without regard to the occurrence of any Unmatured Event or Event of Default or
any other circumstances, in lieu of deemed disbursement of loans, to the extent
of such Revolving Credit Lender's Revolving Credit Commitment, purchase a
participating interest in the Swingline Loans by paying its participation
percentage thereof. Each Revolving Credit Lender will immediately transfer to
the Administrative Agent, in same day funds, the amount of its participation.
After such payment to the Administrative Agent, each Revolving Credit Lender
shall share on a pro rata basis (calculated by
LOAN AGREEMENT Page 22
reference to its Revolving Credit Commitment) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any Revolving
Credit Lender shall not have so made the amount of such participating interest
available to the Administrative Agent, such Revolving Credit Lender and the
Company severally agree to pay to the Administrative Agent forthwith on demand
such amount together with interest thereon, for each day from the date of demand
by the Administrative Agent until the date such amount is paid to the
Administrative Agent, at (x) in the case of the Company, the interest rate
specified above and (y) in the case of such Lender, the Federal Funds Rate for
the first five days after the date of demand by the Administrative Agent and
thereafter at the interest rate specified above.
2.2 Termination and Reduction of Commitments. (a) The Company shall have
the right to terminate or reduce the Revolving Credit Commitments at any time
and from time to time, provided that (i) the Company shall give notice of such
termination or reduction to the Administrative Agent specifying the amount and
effective date thereof, (ii) each partial reduction of the Revolving Credit
Commitment shall be in a minimum amount of $1,000,000 and in an integral
multiple of $500,000 and shall reduce the Revolving Credit Commitments of all of
the Lenders proportionately in accordance with the respective commitment amounts
for each such Lender set forth in the signature pages hereof next to name of
each such Lender, and shall reduce the Tranche A Revolving Credit Commitments
and the Tranche B Revolving Credit Commitments proportionately, (iii) no such
termination or reduction shall be permitted with respect to any portion of the
Revolving Credit Commitments as to which a request for an Advance pursuant to
Section 2.4 is then pending, and (iv) the Revolving Credit Commitments may not
be terminated if any Revolving Credit Advances are then outstanding and may not
be reduced below the principal amount of Revolving Credit Advances then
outstanding. The Revolving Credit Commitments or any portion thereof terminated
or reduced pursuant to this Section 2.2, whether optional or mandatory, may not
be reinstated.
(b) For purposes of this Agreement, a Letter of Credit Advance (i)
shall be deemed outstanding in an amount equal to the sum of the maximum amount
available to be drawn under the related Letter of Credit on or after the date of
determination and on or before the stated expiry date thereof plus the amount of
any draws under such Letter of Credit that have not been reimbursed as provided
in Section 3.3 and (ii) shall be deemed outstanding at all times on and before
such stated expiry date or such earlier date on which all amounts available to
be drawn under such Letter of Credit have been fully drawn, and thereafter until
all related reimbursement obligations have been paid pursuant to Section 3.3. As
provided in Section 3.3, upon each payment made by an L/C Issuer in respect of
any draft or other demand for payment under any Letter of Credit, the amount of
any Letter of Credit Advance outstanding immediately prior to such payment shall
be automatically reduced by the amount of each Revolving Credit Loan deemed
advanced in respect of the related reimbursement obligation of the Company.
2.3 Fees. (a) The Company agrees to pay to the Lenders a commitment fee on
the daily average unused amount of the Revolving Credit Commitment, for the
period from the Effective Date to but excluding the Termination Date, at a rate
equal to the Applicable Margin. For the purpose of calculating the commitment
fee under this Section 2.3(a), C/L/Cs shall not be considered usage of the
Revolving Credit Commitment. All Letters of Credit shall be considered usage of
the Revolving Credit Commitment for all other purposes hereunder, including
without limitation calculation of the Borrowing Base. Accrued commitment fees
shall be payable quarterly in arrears on the last Business Day of each March,
June, September and December, commencing on March 31, 1998 and on the
Termination Date.
(b) The Company agrees to pay to the Administrative Agent (i) with
respect to S/L/Cs, a fee computed at the Applicable Margin calculated on the
maximum amount available to be
LOAN AGREEMENT Page 23
drawn from time to time under a S/L/C, which fee shall be paid annually in
advance at the time such S/L/C is issued for the period from and including the
date of issuance of such S/L/C to and including the stated expiry date of such
S/L/C, which fees shall be for the pro rata benefit of the Revolving Credit
Lenders, (ii) with respect to C/L/Cs, fees to be agreed upon between each L/C
Issuer and the Company, which fee shall be paid at each time as any C/L/C is
presented or drawn upon, in whole or in part, and if any C/L/C or portion
thereof is not drawn upon the Company shall pay an expiry fee to be agreed upon
between the Company and each L/C Issuer, which fees shall be for the pro rata
benefit of the Revolving Credit Lenders, and (iii) with respect to all Letters
of Credit, a fee computed at the rate of 1/8 of 1% per annum calculated on the
face amount of each Letter of Credit, which fee shall be paid at the time each
Letter of Credit is issued and shall be solely for the account of the L/C Issuer
issuing such Letter of Credit. Such fees are nonrefundable and the Company shall
not be entitled to any rebate of any portion thereof if such Letter of Credit
does not remain outstanding through its stated expiry date or for any other
reason. The Company further agrees to pay to the L/C Issuers, on demand, such
other customary administrative fees, charges and expenses of the L/C Issuers in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(c) The Company agrees to pay to the Administrative Agent agency fees
for its services as Administrative Agent under this Agreement in such amounts as
may from time to time be agreed to in writing by the Company and the
Administrative Agent.
2.4 Disbursement of Advances. (a) With respect to Loans under Section
2.1(a)(i), the Company shall give the Administrative Agent notice of its request
for each Revolving Credit Advance in substantially the form of Exhibit F hereto
not later than 10:00 a.m. Detroit time (i) three LIBOR Business Days prior to
the date such Advance is requested to be made if such Advance is to be made as a
LIBOR Borrowing, (ii) five Business Days prior to the date any Letter of Credit
Advance is requested to be made, and (iii) on the Business Day such Advance is
requested to be made in all other cases, which notice shall specify whether a
LIBOR Borrowing, an Adjusted Prime Rate Borrowing, a Swingline Loan or a Letter
of Credit Advance is requested and, in the case of each requested LIBOR
Borrowing, the LIBOR Interest Period to be initially applicable to such
Borrowing and, in the case of each Letter of Credit Advance, such information as
may be necessary for the issuance thereof by the Administrative Agent. All
notices and other administrative matters with respect to Foreign Currency Loans
shall be as agreed between the Foreign Currency Lenders and the Borrowers.
Except as provided in Sections 2.8 and 3.8 and the following sentence, the Term
Loans shall bear interest at LIBOR and the LIBOR Interest Period applicable to
the Term Loans shall be three months. No Borrower shall have the ability to
request, under this Section 2.4 or under Section 2.7, that any Term Loan or any
portion thereof bear interest at the Adjusted Prime Rate or that such Loans, or
any portion thereof, have an applicable LIBOR Interest Period other than three
months. The Administrative Agent, not later than 12:00 noon the same Business
Day such notice is given, shall provide notice of such requested Advance (other
than any Swingline Loan) to each Revolving Credit Lender. Subject to the terms
and conditions of this Agreement, the proceeds of each such requested Advance
shall be made available to the Borrower requesting such Advance by depositing
the proceeds thereof, in immediately available funds, in an account maintained
and designated by such Borrower at the principal office of the Administrative
Agent. Subject to the terms and conditions of this Agreement, the L/C Issuer
requested to issue a Letter of Credit shall, on the date such Letter of Credit
Advance is requested to be made, issue the related Letter of Credit on behalf of
the Revolving Credit Lenders for the account of the Company. Notwithstanding
anything herein to the contrary, an L/C Issuer may decline to issue any
requested Letter of Credit on the basis that the beneficiary, the purpose of
issuance or the terms or the conditions of drawing are unacceptable to it in its
reasonable discretion.
LOAN AGREEMENT Page 24
(b) Each Lender, not later than 2:00 p.m. on the date any Borrowing in
the form of a Loan for which such Lender has a Commitment is required to be
made, shall make its pro rata share of such Borrowing available in immediately
available funds at the principal office of the Administrative Agent for
disbursement to the Borrower. Unless the Administrative Agent shall have
received notice from any Lender prior to the date such Borrowing is requested to
be made under this Section 2.4 that such Lender will not make available to the
Administrative Agent such Lender's pro rata portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date such Borrowing is requested to be made
in accordance with this Section 2.4. If and to the extent such Lender shall not
have so made such pro rata portion available to the Administrative Agent, the
Administrative Agent may (but shall not be obligated to) make such amount
available to the Borrower requesting such Borrowing, and such Lender and such
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such amount together with interest thereon, for each day from the date such
amount is made available to such Borrower by the Administrative Agent until the
date such amount is repaid to the Administrative Agent, at a rate per annum
equal to, in the case of such Borrower, the interest rate applicable to such
Borrowing during such period and, in the case of any Lender, at the Federal
Funds Rate. If such Lender shall pay such amount to the Administrative Agent
together with interest, such amount so paid shall constitute a Loan by such
Lender as a part of such Borrowing for purposes of this Agreement. The failure
of any Lender to make its pro rata portion of any such Borrowing available to
the Administrative Agent shall not relieve any other Lender of its obligations
to make available its pro rata portion of such Borrowing on the date such
Borrowing is requested to be made, but no Lender shall be responsible for
failure of any other Lender to make such pro rata portion available to the
Administrative Agent on the date of any such Borrowing.
(c) All Revolving Credit Loans made under this Section 2.4 shall be
evidenced by the Revolving Credit Notes, the Term Loan A made under this Section
2.4 shall be evidenced by the Term Loan A Notes, the Term Loan B made under this
Section 2.4 shall be evidenced by the Term Loan B Notes, the Swingline Loans
shall be evidenced by the Swingline Note and all such Loans shall be due and
payable and bear interest as provided in Article III. Each Lender and the
Administrative Agent is hereby authorized by each Borrower to record on the
schedule attached to the Notes, or in its books and records, the date, and
amount and type of each Loan and the duration of the related LIBOR Interest
Period (if applicable), the amount of each payment or prepayment of principal
thereon, and the other information provided for on such schedule, which schedule
or books and records, as the case may be, shall constitute prima facie evidence
of the information so recorded, provided, however, that failure of any Lender or
the Administrative Agent to record, or any error in recording, any such
information shall not relieve any Borrower of its obligation to repay the
outstanding principal amount of the Loans, all accrued interest thereon and
other amounts payable with respect thereto in accordance with the terms of the
Notes and this Agreement. Subject to the terms and conditions of this Agreement,
the Company may borrow Revolving Credit Advances under this Section 2.4 and
under Section 3.3, prepay Revolving Credit Advances pursuant to Section 3.1 and
reborrow Revolving Credit Advances but not Term Loans under this Section 2.4.
(d) Nothing in this Agreement shall be construed to require or
authorize any Lender to issue any Letter of Credit, it being recognized that the
L/C Issuers have the sole obligation under this Agreement to issue Letters of
Credit for the risk of the Lenders. Upon issuance of a Letter of Credit by an
L/C Issuer, each Lender shall automatically acquire a pro rata risk
participation interest in such Letter of Credit Advance based on its respective
Revolving Credit Commitment. If an L/C Issuer shall honor a draft or other
demand for payment presented or made under any Letter of Credit, such L/C Issuer
shall provide notice thereof to each Lender on the date such draft or demand is
honored unless the Company or any of its Subsidiaries shall have satisfied its
reimbursement obligation under Section 3.3 by payment to such L/C Issuer on such
date. Each Lender, on such date, shall make its pro rata share of the amount
LOAN AGREEMENT Page 25
paid by such L/C Issuer available in immediately available funds at the
principal office of the Administrative Agent for the account of such L/C Issuer.
If and to the extent such Lender shall not have made any required pro rata
portion available to the Administrative Agent, such Lender and the Company,
unconditionally and irrevocably, severally agree to pay to the Administrative
Agent forthwith on demand such amount together with interest thereon, for each
day from the date such amount was paid by such L/C Issuer until such amount is
so made available to the Administrative Agent at a per annum rate equal to the
interest rate applicable during such period to the related Loan disbursed under
Section 3.3 in respect of the reimbursement obligation of the Company. If such
Lender shall pay such amount to the Administrative Agent together with such
interest, if any, accrued, such amount so paid shall constitute a Revolving
Credit Loan by such Lender as part of the Revolving Credit Borrowing disbursed
in respect of the reimbursement obligation of the Company under Section 3.3 for
purposes of this Agreement. The failure of any Lender to make its pro rata
portion of any such amount paid by such L/C Issuer available to the
Administrative Agent shall not relieve any other Lender of its obligation to
make available its pro rata portion of such amount, but no Lender shall be
responsible for failure of any other Lender to make such pro rata portion
available to the Administrative Agent. Notwithstanding anything herein to the
contrary, it is acknowledged and agreed that Letters of Credit hereunder may be
issued for the account of any of the Subsidiaries of the Company, provided that
for all purposes of this Agreement both the Company and such Subsidiary shall be
deemed the account party thereon and shall be jointly and severally liable for
all obligations in connection therewith and the Company shall have obtained an
agreement from such Subsidiary that such Subsidiary shall be bound by all of the
terms and provisions of this Agreement with respect to Letters of Credit, such
agreement to be in form and substance satisfactory to the L/C Issuers.
2.5 Conditions for First Disbursement. The obligation of the Lenders,
the L/C Issuers or the Administrative Agent, as applicable, to make the first
Advance hereunder is subject to receipt by each Lender and the Administrative
Agent of the following documents and completion of the following matters, in
form and substance satisfactory to each Lender and the Administrative Agent:
(a) Charter Documents. Certificates of recent date of the appropriate
authority or official of each Borrower's and each Guarantor's respective
jurisdiction of incorporation listing all charter documents of each Borrower or
each Guarantor, respectively, on file in that office and certifying as to the
good standing and corporate existence of each Borrower or each Guarantor,
respectively, together with copies of such charter documents of each Borrower or
each Guarantor certified as of a recent date by such authority or official and
certified as true and correct as of the Effective Date by a duly authorized
officer of each Borrower or each Guarantor, respectively;
(b) By-Laws and Corporate Authorizations; Management Group Equity
Agreements. Copies of the by-laws of each Borrower and each Guarantor together
with all authorizing resolutions and evidence of other corporate action taken by
each Borrower and each Guarantor to authorize the execution, delivery and
performance by each Borrower and each Guarantor of this Agreement, the Notes and
the Security Documents to which such Borrower or such Guarantor, respectively,
is a party and the consummation by such Borrower or such Guarantor,
respectively, of the transactions contemplated hereby, and copies of all
Management Group Equity Agreements, certified as true and correct as of the
Effective Date by a duly authorized officer of each Borrower or each Guarantor,
respectively;
(c) Incumbency Certificate. Certificates of incumbency of each
Borrower and each Guarantor containing, and attesting to the genuineness of, the
signatures of those officers authorized to act on behalf of each Borrower or
each Guarantor in connection with this Agreement, the Notes and the Security
Documents to which such Borrower and such Guarantor is a party and the
consummation by
LOAN AGREEMENT Page 26
such Borrower or such Guarantor of the transactions contemplated hereby,
certified as true and correct as of the Effective Date by a duly authorized
officer of each Borrower and each Guarantor;
(d) Notes. The Notes duly executed on behalf of the Company and each
other Borrower, as the case may be, for each Lender;
(e) Security Documents. The Security Documents duly executed on
behalf of the Borrowers and the Guarantors, as the case may be, together with
all assignments, amendments, amendments and restatements, confirmations and/or
extensions of the Existing Security Documents as the Administrative Agent may
reasonably request in connection with the amendment and restatement of the
Existing Loan Agreement pursuant to this Agreement, duly executed on behalf of
the parties thereto, granting to the Lenders and the Agents the collateral and
security intended to be provided pursuant to Section 2.10, together with:
(i) Recording, Filing, Etc. Recordation, filing and other action
(including payment of any applicable taxes or fees) in such jurisdictions as the
Lenders or the Administrative Agent may deem necessary or appropriate with
respect to the Security Documents, including the filing of financing statements,
financing statement amendments and assignments and similar documents which the
Lenders or the Administrative Agent may deem necessary or appropriate to create,
preserve, maintain or perfect the liens, security interests and other rights
intended to be granted to the Lenders or the Agents thereunder, together with
Uniform Commercial Code record searches in such offices as the Lenders or the
Administrative Agent may request;
(ii) Title Insurance. Policies of mortgage title insurance
issued by an insurer and in amounts satisfactory to the Lenders and the
Administrative Agent, insuring the interest of the Lenders and the Agents under
the Mortgages without standard exceptions and without any special exceptions not
acceptable to the Lenders and the Administrative Agent and containing such
further endorsements, affirmative coverage and other terms as the Lenders and
the Administrative Agent may request;
(iii) Surveys. Surveys of the property subject to the Mortgages
made by a land surveyor licensed in the State in which such property is located
and acceptable to the Lenders and the Administrative Agent complying with the
Minimum Standard Detail Requirements for Land Title Surveys as adopted by the
American Title Association and the American Congress on Surveying and Mapping
and showing such details as the Lenders and the Administrative Agent may
request, certified to the Lenders and the Administrative Agent and the issuer of
such mortgage title insurance policy in form acceptable to the Lenders and the
Administrative Agent, or such surveys recertified by such a surveyor sufficient
to permit the issuers of all mortgage title insurance policies to remove their
standard exceptions; provided, that, without limiting any of the other terms,
conditions or requirements of this Agreement or any of the Security Documents,
it shall not be a condition to the first Advance hereunder that the Lenders and
the Administrative Agent receive anything described in subparagraph (ii) above
or this subparagraph (iii) in addition to that which they have already received
in connection with the Existing Loan Agreement;
(iv) Leased Property; Landlord Waivers. A schedule setting forth
all real property leased by each Borrower and each Guarantor, together with
copies of the related leases, certified as true and correct as of the Effective
Date by a duly authorized officer of the Company, and an agreement of each
landlord under such leases, in form and substance acceptable to the Lender and
the Administrative Agent, waiving its distraint, lien and similar rights with
respect to any property subject to
LOAN AGREEMENT Page 27
the Security Documents and agreeing to permit the Lenders and the Administrative
Agent to enter such premises in connection therewith;
(v) Casualty and Other Insurance. Evidence that the casualty and
other insurance required pursuant to Section 5.1(c), paragraph 1(e) of the
Security Agreement and paragraph 6 of each Mortgage is in full force and effect;
and
(vi) Keyman Life Insurance. Deliver the original key man life
insurance policy with insurers satisfactory to the Administrative Agent covering
the life of John H. Welker in the aggregate amount of $7,500,000 (it being
acknowledged and agreed by all parties hereto that such key man life insurance
may exceed such amount and such amount in excess of $7,500,000 does not need to
be subject to a Lien in favor of the Lenders and the Agents provided that such
amount in excess of $7,500,000 is not subject to any Lien), and all documents in
connection therewith requested by the Administrative Agent, including all
agreements and documents evidencing the grant of a first priority security
interest therein to the Administrative Agent, for the benefit of the Lenders and
the Agents;
(f) Legal Opinions. The favorable written opinion of counsel for each
Borrower and each Guarantor, substantially in the form of Exhibit G attached
hereto and as to such other matters as the Lenders and the Administrative Agent
may reasonably request;
(g) Consents, Approvals, Etc. Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations, registrations
or filings, if any, required on the part of any Borrower or any Guarantor in
connection with the execution, delivery and performance of this Agreement, the
Notes, the Security Documents or the transactions contemplated hereby or as a
condition to the legality, validity or enforceability of this Agreement, the
Notes or any of the Security Documents, certified as true and correct in full
force and effect as of the Effective Date by a duly authorized officer of the
Company, or if none is required, a certificate of such officer to that effect;
(h) New Subordinated Debt. Evidence satisfactory to the
Administrative Agent that the Company has received Subordinated Debt in an
amount equal to or greater than $115,000,000 pursuant to its issuance of the
Subordinated Notes, the Company and all other parties thereto shall have
executed all Subordinated Debt Documents relating thereto and other documents
and agreements satisfactory to the Administrative Agent, and all Subordinated
Debt Documents, including, without limitation, those relating to the
Subordinated Notes and the Remaining Harvard Obligations, shall have been
delivered to the Administrative Agent and the Lenders and approved by the
Required Lenders;
(i) Environmental Certificate. An Environmental Certificate dated no
earlier than seven days prior to the Effective Date;
(j) Stock Purchase and Shareholder Agreements. All agreements and
documents relating to the repurchase of the Capital Stock as further detailed on
Schedule 4.21-A to the Existing Loan Agreement and all shareholder agreements
and other agreements described on Schedule 4.21-B hereto; and
(k) Payments. Evidence satisfactory to the Required Lenders that,
simultaneously with the first Advance hereunder, all transactions and conditions
relating to the repayment in full of all Indebtedness of the Company to Harvard
under the Harvard Documents other than the Remaining Harvard Obligations, and to
the release by Harvard of all collateral for such Indebtedness and of NBD, as
collateral agent with respect to Harvard in connection therewith, and to the
repayment in full of all indebtedness and other liabilities pursuant to the
Existing Loan Agreement, are being accomplished or
LOAN AGREEMENT Page 28
have been completed (and it is acknowledged and agreed by the Borrowers that all
commitments to lend or make other advances pursuant to the Existing Loan
Agreement are terminated as of the Effective Date and that the Advances
hereunder refinance and replace the indebtedness and other liabilities pursuant
to the Existing Loan Agreement and all liens and security interests pursuant to
the Existing Loan Agreement and the Existing Security Documents shall continue
in full force and effect and secure all Advances and other indebtedness and
obligations pursuant hereto and otherwise secured by the Security Documents);
and
(l) Other Conditions. Such other documents and completion of such
other matters, including, without limitation, a subrogation and contribution
agreement among the Guarantors, in form and substance satisfactory to the
Administrative Agent, as the Administrative Agent or any Lender may reasonably
request.
2.6 Further Conditions for Disbursement. The obligation of the Lenders,
the L/C Issuers or the Administrative Agent, as applicable, to make any Advance
(including the first Advance), or any continuation or conversion under Section
2.7, is further subject to the satisfaction of the following conditions
precedent:
(a) The representations and warranties contained in Article IV hereof
and in the Security Documents shall be true and correct on and as of the date
such Advance is made (both before and after such Advance is made) as if such
representations and warranties were made on and as of such date;
(b) No Event of Default or Unmatured Event shall exist or shall have
occurred and be continuing on the date such Advance is made and the making of
such Advance shall not cause an Event of Default or Unmatured Event;
(c) The Administrative Agent shall have received the Borrowing Base
Certificate pursuant to Section 5.1(d)(v) as of the close of business on the
last day of the month next preceding the date such Advance is made;
(d) In the case of any Letter of Credit Advance, the Company shall
have delivered to the L/C Issuer issuing the related Letter of Credit an
application for such Letter of Credit and other related documentation requested
by and acceptable to such L/C Issuer appropriately completed and duly executed
on behalf of the Company;
(e) The fact that there shall have been no material adverse change in
the business properties, operations, or financial condition of the Company and
its Subsidiaries taken as a whole since December 31, 1997 on or prior to the
date such Advance is made, continued or converted; and
(f) The Company is in compliance with the covenant contained in
Section 4.09 of the Subordinated Notes Indenture.
Each Borrower shall be deemed to have made a representation and warranty to the
Lenders at the time of the making of, and the continuation or conversion of,
each Advance to the effects set forth in clauses (a) and (b) of this Section
2.6. For purposes of this Section 2.6, the representations and warranties
contained in Section 4.6 hereof shall be deemed made with respect to both the
financial statements referred to therein and the most recent financial
statements delivered pursuant to Section 5.1(d)(ii) and (iii).
LOAN AGREEMENT Page 29
2.7 Subsequent Elections as to Borrowings. As to Revolving Credit Loans,
the Company or Numatics GmbH may elect (a) to continue a LIBOR Borrowing of one
type, or a portion thereof, as a LIBOR Borrowing of the then existing type or
(b) may elect to convert a LIBOR Borrowing of one type, or a portion thereof, to
a Borrowing of another type or (c) elect to convert an Adjusted Prime Rate
Borrowing, or a portion thereof, to a LIBOR Borrowing, in each case by giving
notice thereof to the Administrative Agent in substantially the form of Exhibit
H hereto not later than 10:00 a.m. Detroit time three LIBOR Business Days prior
to the date any such continuation of or conversion to a LIBOR Borrowing is to be
effective and not later than 10:00 a.m. Detroit time on the Business Day date
such continuation or conversion is to be effective in all other cases, provided
that an outstanding LIBOR Borrowing may only be converted on the last day of the
then current LIBOR Interest Period with respect to such Borrowing, and provided,
further, if a continuation of a Borrowing as, or a conversion of a Borrowing to,
a LIBOR Borrowing is requested, such notice shall also specify the LIBOR
Interest Period to be applicable thereto upon such continuation or conversion.
Except with respect to Foreign Currency Loans, the Administrative Agent, not
later than 1:00 p.m. on the Business Day such notice is given, shall provide
notice of such election to the Revolving Credit Lenders. If any Borrower shall
not timely deliver such a notice with respect to any outstanding LIBOR
Borrowing, such Borrower shall be deemed to have elected to convert such LIBOR
Borrowing to an Adjusted Prime Rate Borrowing on the last day of the then
current LIBOR Interest Period with respect to such Borrowing.
2.8 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
LIBOR Borrowing pursuant to Section 2.4, or a request for a continuation of a
LIBOR Borrowing, or a request for a conversion of an Adjusted Prime Rate
Borrowing to a LIBOR Borrowing pursuant to Section 2.7, (a) in the case of any
LIBOR Borrowing, deposits in Dollars or the requested Permitted Currency for
periods comparable to the LIBOR Interest Period elected are not available to any
Lender in the relevant interbank or market, or (b) the applicable interest rate
will not adequately and fairly reflect the cost to any Lender of making, funding
or maintaining the related LIBOR Borrowing or (c) by reason of national or
international financial, political or economic conditions or by reason of any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect, or the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender with any guideline, request or directive of
such authority (whether or not having the force of law), including without
limitation exchange controls, it is impracticable, unlawful or impossible for
any Lender (i) to make or fund the relevant LIBOR Borrowing or (ii) to continue
such LIBOR Borrowing or (iii) to convert a Borrowing to such a LIBOR Borrowing,
then the Company shall not be entitled, so long as such circumstances continue,
to request a LIBOR Borrowing pursuant to Section 2.4 or a continuation of or
conversion to a LIBOR Borrowing pursuant to Section 2.7 and the Term Loans shall
be converted to Adjusted Prime Rate Borrowings. In the event that such
circumstances no longer exist, the Lenders shall again consider requests for
LIBOR Borrowings pursuant to Section 2.4, and requests for continuations of and
conversions to LIBOR Borrowings of the affected type pursuant to Section 2.7 and
the Term Loans shall convert back to LIBOR Borrowings.
2.9 Minimum Amounts; Limitation on Number of Borrowings. Except for (a)
Advances and conversions thereof which exhaust the entire remaining amount of
the Commitments and (b) payments required pursuant to Section 3.8, each
Borrowing and each continuation or conversion pursuant to Section 2.7 and each
prepayment thereof shall be in a minimum amount of, in the case of LIBOR
Borrowings, $1,000,000 and in integral multiples of $250,000, and in the case of
Adjusted Prime Rate Borrowings, $250,000 and in integral multiples of $50,000.
No more than four LIBOR Interest Periods shall be permitted to exist at any one
time with respect to all Revolving Credit Borrowings outstanding hereunder from
time to time.
LOAN AGREEMENT Page 30
2.10 Security and Collateral. To secure the payment when due of the Notes
and all other obligations of the Borrowers under this Agreement to the Lenders
and the Agents, the Company shall execute and deliver, or cause to be executed
and delivered, to the Lenders and the Agents Security Documents granting the
following:
(a) Security interests in all present and future accounts, inventory,
equipment, fixtures and all other personal property of each Borrower;
(b) Mortgage liens on all real property and fixtures of the Company
and Numatics Ltd.;
(c) Pledges of 100% of the capital stock of all Domestic Subsidiaries
owned by the Company and 66% of all capital stock of all Foreign Subsidiaries of
the Company;
(d) Guarantees of all Domestic Subsidiaries of the Company;
(e) Security interests in all present and future accounts, inventory,
equipment, fixtures and all other personal property of the Guarantors;
(f) Mortgage liens on all real property and fixtures of the
Guarantors;
(g) Security interests in a key man life insurance policy covering the
life of John H. Welker in an aggregate amount of not less than $7,500,000; and
(h) All other security and collateral described in the Security
Documents.
ARTICLE III
PAYMENTS AND PREPAYMENTS OF ADVANCES
------------------------------------
3.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement, the
Company and Numatics GmbH shall severally pay to the Revolving Credit Lenders on
the Termination Date the entire outstanding principal amount of the Revolving
Credit Loans outstanding to it. If the Revolving Credit Advances at any time
exceed the amount allowed pursuant to Section 2.1(d), the Company and Numatics
GmbH, as the case may be, shall prepay the Revolving Credit Advances by an
amount equal to or greater than such excess.
(b) Unless earlier payment is required under this Agreement, each
Borrower shall severally pay to the Term Loan A Lenders the principal of the
Term Loan A in 24 consecutive quarterly installments payable on the last
Business Day of each March, June, September and December, commencing with the
last Business Day of June, 1998, as follows:
LOAN AGREEMENT Page 31
============================================================================================
Borrower
- --------------------------------------------------------------------------------------------
Company Numatics Ltd. Numatics GmbH
---------- ------------- -------------
- --------------------------------------------------------------------------------------------
Four principal installments on the last $ 400,000 $ 50,000 $ 50,000
Business Day of June, 1998, September, 1998,
December, 1998 and March, 1999 [aggregating
$2,000,000]
- --------------------------------------------------------------------------------------------
Four principal installments on the last $ 500,000 $ 62,500 $ 62,500
Business day of June, 1999, September, 1999,
December, 1999 and March, 2000 [aggregating
$2,500,000]
- --------------------------------------------------------------------------------------------
Four principal installments on the last $ 600,000 $ 75,000 $ 75,000
Business Day of June, 2000, September, 2000,
December, 2000 and March 2001 [aggregating
$3,000,000]
- --------------------------------------------------------------------------------------------
Four principal installments on the last $ 700,000 $ 87,500 $ 87,500
Business Day of June, 2001, September, 2001,
December, 2001 and March, 2002 [aggregating
$3,500,000]
- --------------------------------------------------------------------------------------------
Four principal installments on the last $ 800,000 $100,000 $100,000
Business Day of June, 2002, September, 2002,
December, 2002 and March, 2003 [aggregating
$4,000,000]
- --------------------------------------------------------------------------------------------
Four principal installments on the last $1,000,000 $125,000 $125,000
Business Day of June, 2003, September, 2003,
December, 2003 and March, 2004 [aggregating
$5,000,000]
============================================================================================
(c) Unless earlier payment is required under this Agreement, the
Company and Numatics GmbH shall severally pay to the Term Loan B Lenders the
principal of the Term Loan B in 30 consecutive quarterly installments payable on
the last Business Day of each March, June, September and December, commencing
with the last Business Day of June, 1998, as follows:
LOAN AGREEMENT Page 32
==================================================================================
Borrower
- ----------------------------------------------------------------------------------
Company Numatics GmbH
---------- -------------
- ----------------------------------------------------------------------------------
Twenty-four principal installments on the last $ 32,500 $ 5,000
Business Day of June, 1998 and each March, June,
September and December thereafter through and
including March, 2004 [aggregating $900,000]
- ----------------------------------------------------------------------------------
Six principal installments on the last Business day $2,036,667 $313,333
of June, 2004 and each March, June, September and
December thereafter through and including
September, 2005 [aggregating $14,100,000]
==================================================================================
(d) In addition to all other payments required hereunder, the Company
shall make a mandatory prepayment of principal on the Term Loans in an amount
equal to 50% of the Excess Cash Flow for any fiscal year, commencing with fiscal
year 1998, due and payable on or before the date 90 days after each such fiscal
year of the Company. Such mandatory prepayments shall be applied pro rata
between the Term Loans and applied to installments due thereon in the inverse
order of maturities until paid in full, and thereafter applied to other
indebtedness and liabilities hereunder in such order as determined by the
Required Lenders.
(e) In addition to all other payments of the Term Loans required
hereunder, the Company shall prepay the Term Loans by an amount equal to 100% of
all of the Net Cash Proceeds from any sale or other disposition of any assets
(other than such Net Cash Proceeds which are used to replace the asset so sold
or otherwise disposed of with an asset of comparable value) in excess of
$5,000,000 in aggregate amount, which payments shall be due 10 days after the
end of each month for all such sales and other dispositions during such month.
Such mandatory prepayments shall be applied pro rata between the Term Loans and
applied to installments due thereon in the inverse order of maturities until
paid in full, and thereafter applied to other indebtedness and liabilities
hereunder in such order as determined by the Required Lenders.
(f) In addition to all other payments of the Term Loans required
hereunder, the Company shall prepay the Term Loans by an amount equal to 75% of
all Net Cash Proceeds of any Subordinated Debt incurred at any time, excluding
the Subordinated Debt incurred on the Effective Date pursuant to the
Subordinated Notes. Such mandatory prepayments shall be applied pro rata
between the Term Loans and applied to installments due thereon in the inverse
order of maturities until paid in full, and thereafter applied to the other
indebtedness and liabilities hereunder in such order as determined by the
Required Lenders.
(g) In addition to all other payments of the Term Loans required
hereunder, the Company shall prepay the Term Loans by an amount equal to 50% of
the Net Cash Proceeds from the issuance or other sale of any Capital Stock of
the Company or any of its Subsidiaries up to an amount of $50,000,000 applied to
the Term Loans until paid in full and thereafter to the Revolving Credit Loans
(provided that any such payments on the Revolving Credit Loans shall also
permanently reduce the Revolving Credit Commitments), and 0% of any such Net
Cash Proceeds received thereafter. Such
LOAN AGREEMENT Page 33
mandatory prepayment shall be applied pro rata between the Term Loans and
applied to installments due thereon in the inverse order of maturities until
paid in full, and thereafter applied to other indebtedness and liabilities
hereunder in such order as determined by the Required Lenders.
(h) The Company may at any time and from time to time prepay all or a
portion of the Loans, without premium or penalty, provided that (i) the Company
may not prepay any portion of any Loan as to which an election of or a
conversion to a LIBOR Loan is pending pursuant to 2.7, (ii) the Company shall
comply with all requirements of Section 3.9 in connection with any payment of
any LIBOR Loan, and (iii) all optional prepayments of the Term Loans shall be
applied to installments due thereon in the inverse order of maturities.
(i) Notwithstanding anything herein to the contrary, the percentage
set forth in clauses (d), (f) and (g) shall be 100% on or after the later of
Maturity Date A or Maturity Date B.
3.2 Interest Payments. The Borrowers shall pay interest to the Lenders
(or the Administrative Agent, in the case of Swingline Loans) on the unpaid
principal amount of each Loan, for the period commencing on the date such Loan
is made until such Loan is paid in full, on each Interest Payment Date and at
maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum:
(a) With respect to Revolving Credit Loans:
(i) During such periods that such Loan is an Adjusted Prime Rate
Loan, the Adjusted Prime Rate.
(ii) During such periods that such Loan is a LIBOR Loan, the
LIBOR applicable to such Loan for each related LIBOR Interest Period.
(b) With respect to the Term Loans, the LIBOR applicable to such Loan
for each related LIBOR Interest Period.
(c) With respect to Swingline Loans, the Adjusted Prime Rate.
Notwithstanding the foregoing paragraphs (a), (b) and (c), the Borrowers shall
pay interest on demand at the Overdue Rate on the outstanding principal amount
of any Loan and any other amount payable by the Borrowers hereunder (other than
interest) upon and during the continuance of any Event of Default if required by
the Required Lenders.
3.3 Letter of Credit Reimbursement Payments. (a) (i) The Company
agrees to pay to the respective L/C Issuer, not later than 1:00 p.m. Detroit
time on the date on which such L/C Issuer shall honor a draft or other demand
for payment presented or made under such Letter of Credit, an amount equal to
the amount paid by such L/C Issuer in respect of such draft or other demand
under such Letter of Credit and all expenses paid or incurred by such L/C Issuer
relative thereto (the "Reimbursement Amount"). The L/C Issuer which issued the
relevant Letter of Credit shall, on the date of each demand for payment under
any Letter of Credit issued by such L/C Issuer, give the Company notice thereof
and of the amount of the Company's reimbursement obligation and liability for
expenses relative thereto; provided that the failure of such L/C Issuer to give
such notice shall not affect the reimbursement and other obligations of the
Company under this Section 3.3. Unless the Company shall have made such payment
to such L/C Issuer on such day, upon each such payment by such L/C Issuer, the
Company shall be deemed to have elected to satisfy its reimbursement obligation
by an Adjusted Prime Rate Borrowing
LOAN AGREEMENT Page 34
in an amount equal to the amount so paid by such L/C Issuer in respect of such
draft or other demand under such Letter of Credit, and such L/C Issuer shall be
deemed to have disbursed to the Company, for the account of the Revolving Credit
Lenders, the Adjusted Prime Rate Loans comprising such Adjusted Prime Rate
Borrowing, and each Revolving Credit Lender shall make its share of each such
Adjusted Prime Rate Borrowing available to such L/C Issuer in accordance with
this Agreement. Such Adjusted Prime Rate Loans shall be deemed disbursed
notwithstanding any failure to satisfy any conditions for disbursement of any
Loan and, to the extent of the Adjusted Prime Rate Loans so disbursed, the
reimbursement obligation of the Company under this subsection (a)(i) shall be
deemed satisfied.
(ii) If, for any reason (including without limitation as a result
of the occurrence of an Event of Default with respect to the Company pursuant to
Section 6.1(h)), Adjusted Prime Rate Loans may not be made by the Revolving
Credit Lenders as described in subsection (a)(i) of this Section 3.3, then (A)
the Company agrees that each Reimbursement Amount not paid pursuant to the first
sentence of subsection (a)(i) of this Section 3.3 shall bear interest, payable
on demand by such L/C Issuer, at the interest rate then applicable to Adjusted
Prime Rate Loans, and (B) effective on the date each such Adjusted Prime Rate
Loan would otherwise have been made, each Revolving Credit Lender severally
agrees that it shall unconditionally and irrevocably, without regard to the
occurrence of any Event of Default or Unmatured Event to the extent of such
Revolving Credit Lender's Revolving Credit Percentage, purchase a participating
interest in each Reimbursement Amount. Each Revolving Credit Lender will
immediately transfer to the Administrative Agent, in same day funds, the amount
of its participation. Each Revolving Credit Lender shall share on a pro rata
basis (calculated by reference to its Commitment percentage) in any interest
which accrues thereon and in all repayments thereof. If and to the extent that
any Lender shall not have so made the amount of such participating interest
available to such L/C Issuer, such Revolving Credit Lender agrees to pay to such
L/C Issuer forthwith on demand such amount together with interest thereon, for
each day from the date of demand by such L/C Issuer until the date such amount
is paid to such L/C Issuer, at the Federal Funds Rate.
(iii) Each Revolving Credit Lender shall be obligated, absolutely
and unconditionally, to make Adjusted Prime Rate Loans pursuant to Section
3.3(a)(i) and to purchase and fund participation interests in Letters of Credit
pursuant to Section 2.4(d) and 3.3(a)(ii) and the obligation shall not be
affected by any circumstance whatsoever, including, without limitation, (i) any
set off, counterclaim, recoupment, defense or other right which such Lender or
the Company may have against either L/C Issuer, the Company or anyone else for
any reason whatsoever, (ii) the occurrence of any Event of Default or Unmatured
Event, (iii) any adverse change in the condition (financial or otherwise) of the
Company or any of their Subsidiaries, (iv) any breach of this Agreement by the
Company, any of its Subsidiaries, any Agent, or any other Lender, or (v) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing, including without limitation any limitation on the Revolving
Credit Commitments or any failure to satisfy any conditions precedent to any
Loan contained herein or any other provision of this Agreement.
(b) The reimbursement obligation of the Company under this Section 3.3
shall be absolute, unconditional and irrevocable and shall remain in full force
and effect until all obligations of the Company to the Lenders hereunder shall
have been satisfied, and such obligations of the Company shall not be affected,
modified or impaired upon the happening of any event, including without
limitation, any of the following, whether or not with notice to, or the consent
of, the Company:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
LOAN AGREEMENT Page 35
(ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
(iii) The existence of any claim, setoff, defense or other right
which the Company may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting), either Agent, either L/C
Issuer or any Lender or any other person or entity, whether in connection with
any of the Letter of Credit Documents, the transactions contemplated herein or
therein or any unrelated transactions;
(iv) Any draft or other statement or document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(v) Payment by either L/C Issuer to the beneficiary under any
Letter of Credit against presentation of documents which do not comply with the
terms of the Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the part of either
L/C Issuer, either Agent or any Lender or any party to any of the Letter of
Credit Documents to enforce, assert or exercise any right, power or remedy
conferred upon either L/C Issuer, either Agent, any Lender or any such party
under this Agreement or any of the Letter of Credit Documents, or any other acts
or omissions on the part of either L/C Issuer, either Agent, any Lender or any
such party; or
(vii) Any other event or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law or
otherwise of the Company from the performance or observance of any obligation,
covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Company
against either L/C Issuer, either Agent or any Lender. Nothing in this Section
3.3 shall limit the liability, if any, of either L/C Issuer, either Agent or any
of the Lenders to the Company pursuant to Section 3.3(c).
(c) The Company hereby indemnifies and agrees to hold harmless the
Lenders, the L/C Issuers, the Agents and their respective officers, directors,
employees and agents, from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever which the
Lenders, the L/C Issuers, the Agents or any such person may incur or which may
be claimed against any of them by reason of or in connection with any Letter of
Credit, and neither any Lender, the Agents or any of their respective officers,
directors, employees or agents shall be liable or responsible for: (i) the use
which may be made of any Letter of Credit or for any acts or omissions of any
beneficiary in connection therewith; (ii) the validity, sufficiency or
genuineness of documents or of any endorsement thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by either L/C Issuer to the beneficiary
under any Letter of Credit against presentation of documents which do not comply
with the terms of any Letter of Credit, including failure of any documents to
bear any reference or adequate reference to such Letter of Credit; (iv) any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit; or (v) any other event or circumstance whatsoever arising in connection
with any Letter of Credit; provided, however, that the Company shall
LOAN AGREEMENT Page 36
not be required to indemnify the Lenders, the L/C Issuers, the Agents and such
other persons, and each L/C Issuer shall be severally liable to the Company to
the extent, but only to the extent, of any direct, as opposed to consequential
or incidental, damages suffered by the Company which were caused by (A) such L/C
Issuer's wrongful dishonor of any Letter of Credit after the presentation to it
by the beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit, or (B) the payment by such L/C Issuer to the beneficiary under any
Letter of Credit against presentation of documents which do not comply with the
terms of the Letter of Credit to the extent, but only to the extent, that such
payment constitutes gross negligence or willful misconduct of the Agent;
provided that none of either Agent, any L/C Issuer, any Lender or any such
person shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. It is understood that in making any payment under a Letter of
Credit each L/C Issuer will rely on documents presented to it under such Letter
of Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary, and
such reliance and payment against documents presented under a Letter of Credit
substantially complying with the terms thereof shall not be deemed gross
negligence or willful misconduct of either L/C Issuer in connection with such
payment. It is further acknowledged and agreed that the Company may have rights
against the beneficiary or others in connection with any Letter of Credit with
respect to which the Lenders, the L/C Issuers or the Agents are alleged to be
liable and it shall be a precondition of the assertion of any liability of the
Lenders, the L/C Issuers or the Agents under this Section that the Company shall
first have exhausted all remedies in respect of the alleged loss against such
beneficiary and any other parties obligated or liable in connection with such
Letter of Credit and any related transactions.
3.4 Payment Method. (a) Except with respect to Foreign Currency Loans, all
payments to be made by a Borrower hereunder will be made in Dollars and in
immediately available funds to the Administrative Agent for the account of the
Lenders (or for the Administrative Agent's account, in the case of Swingline
Loans) at its address set forth on the signature pages not later than 1:00 p.m.
Detroit time on the date on which such payment shall become due. Payments
received after 1:00 p.m. Detroit time shall be deemed to be payments made prior
to 1:00 p.m. Detroit time on the next succeeding Business Day. With respect to
Foreign Currency Loans, all payments are to be made by the Borrowers as agreed
between the Foreign Currency Lenders and the Borrowers. Each Borrower hereby
authorizes the Administrative Agent to charge its account with the
Administrative Agent in order to cause timely payment of amounts due hereunder
to be made (subject to sufficient funds being available in such account for that
purpose).
(b) At the time of making each such payment, the Borrower shall,
subject to the other terms and conditions of this Agreement, specify to the
Administrative Agent that Loan or other obligation of the Borrower hereunder to
which such payment is to be applied. In the event that such Borrower fails to so
specify the relevant obligation or if an Event of Default shall have occurred
and be continuing, the Administrative Agent may apply such payments to the next
payment due hereunder or, if applicable, to cure any Event of Default; provided,
however, upon acceleration of amounts due hereunder, the Administrative Agent
may apply such payments as it may determine in its sole discretion.
(c) On the day such payments are deemed received, the Administrative
Agent shall remit to the Lenders their pro rata shares of such payments in
immediately available funds, (i) in the case of payments of principal and
interest on any Borrowing, determined with respect to each such Lender by the
ratio which the outstanding principal balance of its Loan included in such
Borrowing bears to the outstanding principal balance of the Loans of all the
Lenders included in such Borrowing and (ii) in the case of fees paid pursuant to
Section 2.3 and other amounts payable hereunder (other than the Administrative
Agent's fees payable pursuant to Section 2.3(c) and amounts payable to any
Lender under
LOAN AGREEMENT Page 37
Section 2.4 or 3.7) determined with respect to each such Lender by
the ratio which the Commitment of such Lender bears to the Commitments of all
the Lenders; provided, however, that notwithstanding anything herein to the
contrary, the Administrative Agent shall forward C/L/Cs fees paid by the Company
to the Administrative Agent for the benefit of the Revolving Credit Lenders
pursuant to Section 2.3(b)(ii) on the last day of March, June, September and
December.
3.5 No Setoff or Deduction. All payments of principal and interest on the
Loans and other amounts payable by the Borrowers hereunder shall be made by the
Borrowers without setoff or counterclaim, and free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes,
levies, imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority.
3.6 Payment on Non-Business Day; Payment Computations. Except as otherwise
provided in this Agreement to the contrary, whenever any installment of
principal of, or interest on, any Loan or any other amount due hereunder becomes
due and payable on a day which is not a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, in the case of any
installment of principal, interest shall be payable thereon at the rate per
annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days for the actual number of days elapsed,
including the first day but excluding the last day of the relevant period.
3.7 Additional Costs. (a) In the event that any applicable law, treaty,
rule or regulation (whether domestic or foreign) now or hereafter in effect and
whether or not presently applicable to any Lender or either Agent, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
or either Agent with any guideline, request or directive of any such authority
(whether or not having the force of law), shall (i) directly affect the basis of
taxation of payments to any Lender or either Agent of any amounts payable by any
Borrower under this Agreement (other than taxes imposed on the overall net
income of any Lender or either Agent, by the jurisdiction, or by any political
subdivision or taxing authority of any such jurisdiction, in which any Lender or
either Agent, as the case may be, has its principal office), or (ii) shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any Lender or either Agent, or (iii) shall impose any other
condition with respect to this Agreement, the Commitments, the Notes or the
Loans or any Letter of Credit, and the result of any of the foregoing (i.e.,
(i), (ii) or (iii)) is to increase the cost to any Lender or either Agent, as
the case may be, of making, funding or maintaining any LIBOR Loan or any Letter
of Credit or to reduce the amount of any sum receivable by any Lender or either
Agent, as the case may be, thereon, then the Borrowers shall pay to such Lender
or such Agent, as the case may be, from time to time, upon request by such
Lender (with a copy of such request to be provided to each Agent) or such Agent,
additional amounts sufficient to compensate such Lender or such Agent, as the
case may be, for such increased cost or reduced sum receivable to the extent, in
the case of any LIBOR Loan, such Lender or such Agent is not compensated
therefor in the computation of the interest rate applicable to such LIBOR Loan.
A statement as to the amount of such increased cost or reduced sum receivable,
prepared in good faith and in reasonable detail by such Lender or such Agent, as
the case may be, and submitted by such Lender or such Agent, as the case may be,
to the Borrowers, shall be conclusive and binding for all purposes absent
manifest error in computation.
(b) In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Lender, either L/C Issuer or either Agent, or any
interpretation or administration thereof by any governmental authority
LOAN AGREEMENT Page 38
charged with the interpretation or administration thereof, or compliance by any
Lender, either L/C Issuer or either Agent with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects or would affect the amount
of capital required or expected to be maintained by such Lender, such L/C Issuer
or such Agent (or any corporation controlling such Lender or such Agent) and
such Lender, such L/C Issuer or such Agent, as the case may be, determines that
the amount of such capital is increased by or based upon the existence of such
Lender's, such L/C Issuer's or such Agent's obligations hereunder and such
increase has the effect of reducing the rate of return on such Lender's, such
L/C Issuer's or such Agent's (or such controlling corporation's) capital as a
consequence of such obligations hereunder to a level below that which such
Lender, such L/C Issuer or such Agent (or such controlling corporation) could
have achieved but for such circumstances (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Lender, such L/C
Issuer or such Agent to be material, then the Borrowers shall pay to such
Lender, such L/C Issuer or such Agent, as the case may be, from time to time,
upon request by such Lender or such L/C Issuer (with a copy of such request to
be provided to the Agents) or such Agent, additional amounts sufficient to
compensate such Lender, such L/C Issuer or such Agent (or such controlling
corporation) for any increase in the amount of capital and reduced rate of
return which such Lender, such L/C Issuer or such Agent reasonably determines to
be allocable to the existence of such Lender's, such L/C Issuer's or such
Agent's obligations hereunder. A statement as to the amount of such
compensation, prepared in good faith and in reasonable detail by such Lender,
such L/C Issuer or such Agent, as the case may be, and submitted by such Lender,
such L/C Issuer or such Agent to the Borrowers, shall be conclusive and binding
for all purposes absent manifest error in computation.
3.8 Illegality and Impossibility. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Lender, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, shall
make it unlawful or impossible for any Lender to maintain any LIBOR Loan under
this Agreement, each Borrower shall upon receipt of notice thereof from such
Lender, in the case of Revolving Credit Loans, repay in full the then
outstanding principal amount of each LIBOR Loan so affected, together with all
accrued interest thereon to the date of payment and all amounts owing to such
Lender under Section 3.9, and, in the case of the Term Loans, be deemed to elect
to convert such Term Loans to Adjusted Prime Rate Loans, in each case (a) on the
last day of the then current LIBOR Interest Period applicable to such Loan if
such Lender may lawfully continue to maintain such Loan to such day, or (b)
immediately if such Lender may not continue to maintain such Loan to such day.
3.9 Indemnification. If any Borrower makes any payment of principal with
respect to any LIBOR Loan on any other date than the last day of a LIBOR
Interest Period applicable thereto (whether pursuant to Section 3.8, Section 6.2
or otherwise), or if any Borrower fails to borrow any LIBOR Loan after notice
has been given to the Lenders in accordance with Section 2.4, or if any Borrower
fails to make any payment of principal or interest in respect of a LIBOR Loan
when due, such Borrower shall reimburse each Lender on demand for any resulting
loss or expense incurred by each such Lender, including without limitation any
loss incurred in obtaining, liquidating or employing deposits from third
parties, whether or not such Lender shall have funded or committed to fund such
Loan. A statement as to the amount of such loss or expense, prepared in good
faith and in reasonable detail by such Lender and submitted by such Lender to
such Borrower, shall be conclusive and binding for all purposes absent manifest
error in computation. Calculation of all amounts payable to such Lender under
this Section 3.9 shall be made as though such Lender shall have actually funded
or committed to fund the relevant LIBOR Loan through the purchase of an
underlying deposit in an amount equal to the amount of such
LOAN AGREEMENT Page 39
Loan and having a maturity comparable to the related LIBOR Interest Period and
through the transfer of such deposit from an offshore office of such Lender to a
domestic office of such Lender in the United States of America; provided,
however, that such Lender may fund any LIBOR Loan in any manner it sees fit and
the foregoing assumption shall be utilized only for the purpose of calculation
of amounts payable under this Section 3.9.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers represents and warrants that:
4.1 Corporate Existence and Power. Each Borrower is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and is duly qualified to do
business, and is in good standing, in all additional jurisdictions where such
qualification is necessary under applicable law, except for those jurisdictions
where the failure to so qualify or be in good standing could not result in any
Material Adverse Effect. Each Borrower has all requisite corporate power to own
or lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be conducted, and to execute and deliver this
Agreement, the Notes and the Security Documents to which it is a party and to
engage in the transactions contemplated by this Agreement.
4.2 Corporate Authority. The execution, delivery and performance by each
of the Borrowers and the Guarantors of this Agreement, the Notes and the
Security Documents to which it is a party have been duly authorized by all
necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of any Borrower's
or any Guarantor's charter or by-laws, or of any contract or undertaking to
which any Borrower or any Guarantor is a party or by which any Borrower or any
Guarantor or their respective property may be bound or affected or result in the
imposition of any Lien except for Permitted Liens. Other than the Company's by-
laws and articles of incorporation and the Management Group Equity Documents,
there are no other agreements or documents that govern the election of directors
of the Company and the direction of its management.
4.3 Binding Effect. This Agreement and the Security Documents to which any
Borrower or any Guarantor is a party are, and the Notes to which it is a party
when delivered hereunder will be, legal, valid and binding obligations of the
Borrowers and the Guarantors, respectively, enforceable against the Borrowers
and the Guarantors in accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and by general principles of
equity.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the corporate
name, jurisdiction of incorporation and ownership of each Subsidiary of the
Company. Each such Subsidiary and each corporation becoming a Subsidiary of the
Company after the date hereof is and will be a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is and will be duly qualified to do business in each
additional jurisdiction where such qualification is or may be necessary under
applicable law, except for those jurisdictions where the failure to so qualify
or be in good standing could not result in any Material Adverse Effect. Each
Subsidiary of the Company has and will have all requisite corporate power to own
or lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be conducted, except where the failure
LOAN AGREEMENT Page 40
to have such power could not result in a Material Adverse Effect. All
outstanding shares of capital stock of each class of each Subsidiary of the
Company have been and will be validly issued and are and will be fully paid and
nonassessable and, except as otherwise indicated in Schedule 4.4 hereto, are and
will be owned, beneficially and of record, by the Company or another Subsidiary
of the Company free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority or arbitrator, which if adversely decided
might result, either individually or collectively, in any Material Adverse
Effect and, to the best of the Company's knowledge, there is no basis for any
such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the Company and
its Subsidiaries and the consolidated statements of income, retained earnings
and cash flows of the Company and its Subsidiaries for the fiscal year ended
December 31, 1997 and reported on by Ernst & Young, independent certified public
accountants, the interim consolidated balance sheet and interim consolidated
statements of income, retained earning and cash flows of the Company and its
Subsidiaries for the one-month period ended January 31, 1998, and the pro forma
projections of consolidated financial results of the Company and its
Subsidiaries for each of the fiscal years ended December 31, 1998 through 2002,
copies of which have been furnished to the Lenders, fairly present, and the
financial statements of the Company and its Subsidiaries delivered pursuant to
Section 5.1(d) will fairly present, the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof, and the
consolidated results of operations of the Company and its Subsidiaries for the
respective periods indicated, all in accordance with Generally Accepted
Accounting Principles (subject, in the case of said interim statements, to year-
end audit adjustments). There has been no material adverse change in the
business, properties, operations or condition, financial or otherwise, of the
Company or any of its Subsidiaries since December 31, 1997. There is no material
Contingent Liability of the Company that is not reflected in such financial
statements or in the notes thereto.
4.7 Use of Advances. Each Borrower will use the proceeds of the initial
Advances hereunder to refinance the remaining portion of such Borrower's
corresponding indebtedness outstanding under the Existing Loan Agreement after
applying a portion of the proceeds of the Subordinated Notes to such
indebtedness, and will use all other Advances for general corporate purposes.
Neither the Company nor any of its Subsidiaries extends or maintains, in the
ordinary course of business, credit for the purpose, whether immediate,
incidental, or ultimate, of buying or carrying margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Advance will be used for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying any such margin stock
or maintaining or extending credit to others for such purpose.
4.8 Consents, Etc. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Borrowers pursuant to
Section 2.5(g), if any, each of which is in full force and effect, no consent,
approval or authorization of or declaration, registration or filing with any
governmental authority or any nongovernmental person or entity, including
without limitation any creditor, lessor or stockholder of the Company or any of
its Subsidiaries, is required on the part of any Borrower or Guarantor in
connection with the execution, delivery and performance of this Agreement, the
Notes, the Security Documents or the transactions contemplated hereby or as a
condition to the legality, validity or enforceability of this Agreement, the
Notes or any of the Security Documents.
4.9 Taxes. The Company and its Subsidiaries have filed all tax returns
(federal, state and local) required to be filed and have paid all taxes shown
thereon to be due and required to be paid
LOAN AGREEMENT Page 41
including interest and penalties, or have established adequate financial
reserves on their respective books and records for payment thereof. Neither the
Company nor any of its Subsidiaries knows of any actual or proposed tax
assessment or any basis therefor, and no extension of time for the assessment of
deficiencies in any federal or state tax has been granted by the Company or any
Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this Agreement, the
Company or one or more of its Subsidiaries have good and marketable fee simple
title to all of the real property reflected in said balance sheet, and a valid
and indefeasible ownership interest in all of the other properties and assets
reflected in said balance sheet or subsequently acquired by the Company or any
Subsidiary. All of such properties and assets are free and clear of any Lien
except for Permitted Liens.
4.11 ERISA. The Company, its Subsidiaries, the ERISA Affiliates and the
Plans are in compliance in all material respects with those provisions of ERISA
and of the Code which are applicable with respect to any Plan. No Prohibited
Transaction and no Reportable Event has occurred with respect to any Plan. None
of the Company, any of its Subsidiaries or any of the ERISA Affiliates is an
employer with respect to any Multiemployer Plan. The Company, its Subsidiaries
and the ERISA Affiliates have met the minimum funding requirements under ERISA
and the Code with respect to each of the respective Plans, if any, other than
obligations in the ordinary course of business to make Plan contributions and
pay PBGC premiums which have been paid when due, have not incurred any liability
to the PBGC or any Plan. Assuming the funds provided by each Lender do not
constitute the plan assets of any pension plan, the execution, delivery and
performance of this Agreement, the Notes and the Security Documents does not
constitute a Prohibited Transaction. There is no material Unfunded Benefit
Liability with respect to any Plan.
4.12 Disclosure. No report or other information furnished in writing by or
on behalf of any Borrower or any Guarantor to any Lender or either Agent in
connection with the negotiation or administration of this Agreement contains to
the best of its knowledge any material misstatement of fact or omits to state
any material fact or any fact necessary to make the statements contained therein
not misleading. Neither this Agreement, the Notes, the Security Documents nor
any other document, certificate, or report or statement or other information
furnished to any Lender or either Agent by or on behalf of any Borrower or any
Guarantor in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact in order
to make the statements contained herein and therein not misleading. There is no
fact known to any Borrower or any Guarantor which materially and adversely
affects, or which in the future may materially and adversely affect, the
business, properties, operations or condition, financial or otherwise, of any
Borrower or any Subsidiary, which has not been set forth in this Agreement or in
the other documents, certificates, statements, reports and other information
furnished in writing to the Lenders by or on behalf of any Borrower or any
Guarantor in connection with the transactions contemplated hereby.
4.13 Environmental and Safety Matters. All representations and warranties
made by the Borrowers and the Guarantors in the Environmental Certificate
delivered pursuant to Section 2.5(i) and Section 5.1(d)(x) are true and correct.
4.14 Borrowing Base. All trade accounts receivable and inventory of each
Borrower and each Guarantor represented or reported by any Borrower to be, or
are otherwise included in, Eligible Accounts Receivable and Eligible Inventory
comply in all respects with the requirements therefor set forth in the
definition thereof, and the computations of the Borrowing Base set forth in each
Borrowing Base Certificate are true and correct.
LOAN AGREEMENT Page 42
4.15 No Default. Neither the Company nor any Subsidiary is in default or
has received any written notice of default under or with respect to any of its
Contractual Obligations in any respect which is reasonably likely to result in a
Material Adverse Effect. No Unmatured Event or Event of Default has occurred and
is continuing.
4.16 Intellectual Property. Set forth on Schedule 4.16 is a complete and
accurate list of all patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses thereof, of the Company
and each of its Subsidiaries showing as of the Effective Date the jurisdiction
in which registered, the registration number and the date of registration. The
Company and each of its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, service marks, copyrights, technology, know-how and
processes necessary for the conduct of its business as currently conducted (the
"Intellectual Property") except for those the failure to own or license which
could not reasonably be expected to have a Material Adverse Effect. No claim has
been asserted and is pending by any person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does the Company or any of its Subsidiaries know of
any valid basis for any such claim, the use of such Intellectual Property by the
Company and each of its Subsidiaries does not infringe on the rights of any
Person, and, to the knowledge of the Company, no Intellectual Property has been
infringed, misappropriated or diluted by any other Person except for such
claims, infringements, misappropriation and dilutions that, in the aggregate,
could not have a Material Adverse Effect.
4.17 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to the Company or any Subsidiary could have a Material
Adverse Effect.
4.18 Labor Matters. There are no strikes or other labor disputes against
the Company or any Subsidiary pending or, to the knowledge of the Company,
threatened that (individually or in the aggregate) could have a Material Adverse
Effect. Hours worked by and payment made to employees of the Company and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters that (individually
or in the aggregate) could have a Material Adverse Effect. All payments due from
the Company and each of its Subsidiaries on account of employee health and
welfare insurance that (individually or in the aggregate) could have a Material
Adverse Effect if not paid have been paid or accrued as a liability on the books
of the Company and its Subsidiaries.
4.19 Solvency. The Company and each Subsidiary is and, after giving effect
to the transactions described herein and to the incurrence or assumption of all
Indebtedness and obligations being incurred or assumed in connection herewith
and therewith, will be Solvent.
4.20 Not an Investment Company. Neither Company nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.21 Management Group. The Management Group owns 100% of the issued and
outstanding Capital Stock of the Company as described on Schedule 4.21-A, and
Harvard owns warrants exercisable for 6% of the Capital Stock of the Company.
All shareholder agreements and other agreements relating to the ownership,
transfer, control or otherwise relating to the Capital Stock of the Company or
any of the Guarantors are listed on Schedule 4.21-B hereto.
4.22 Subordinated Debt Documents. All representations and warranties of
the Company contained in the Subordinated Debt Documents are true and correct in
all material respects. The Company will be receiving net proceeds in the
approximate amount of $111,837,500 on the Effective
LOAN AGREEMENT Page 43
Date from its issuance of the Subordinated Notes, all agreements, instruments
and documents executed or delivered pursuant to the issuance of the Subordinated
Notes are described on Schedule 4.22-A hereto, and all other Subordinated Debt
Documents relating to the Subordinated Notes and the Remaining Harvard
Obligations are described on Schedule 4.22-A hereto and Schedule 4.22-B hereto,
respectively. All Lender Indebtedness is "Senior Indebtedness" and "Designated
Senior Indebtedness" as defined in the Subordinated Notes Indenture, this
Agreement and the other Loan Documents are the "New Credit Facility" as defined
in the Subordinated Notes Indenture. Other than the Lender Indebtedness, there
is no "Designated Senior Indebtedness" as defined in the Subordinated Notes
Indenture. Other than the Lender Indebtedness and "Permitted Debt" as defined in
the Subordinate Notes Indenture that is not prohibited under Section 5.2(e) of
this Agreement, there is no "Senior Indebtedness" as defined in the Subordinated
Notes Indenture. There is no "Default" or "Event of Default" as defined in the
Subordinated Notes Indenture. All Lender Indebtedness is "Senior Indebtedness"
as defined in the Harvard Put Notes. This Agreement and the other Loan Documents
are the "Bank Credit Agreement" as defined in the Harvard Securities Purchase
Agreement. Other than the Lender Indebtedness, the Indebtedness of the Company
under the Subordinated Notes and the Subordinated Notes Indenture and "Permitted
Debt" as defined in the Subordinated Notes Indenture that is not prohibited
under Section 5.2(e) of this Agreement, there is no "Senior Indebtedness" as
defined in the Harvard Put Notes. There is no "Default" or "Event or Default" as
defined in the Harvard Securities Purchase Agreement. Each of the Subordinated
Debt Documents is in full force and effect. Other than pursuant to the
Subordinated Notes and the Subordinated Notes Indenture and under the Remaining
Harvard Obligations, there is no obligation pursuant to any Subordinated Debt
Document or other document or agreement evidencing or relating to any
Subordinated Debt outstanding or to be outstanding on the Effective Date which
obligates the Company to pay any principal or interest or redeem any of its
warrants or other Capital Stock or incur any other monetary obligation.
ARTICLE V
COVENANTS
5.1 Affirmative Covenants. Each Borrower covenants and agrees that, until
the later of the Termination Date, Maturity Date A or Maturity Date B and
thereafter until payment in full of the principal of and accrued interest on the
Notes and the performance of all other obligations of the Borrowers under this
Agreement, unless the requisite Lenders pursuant to Section 8.1 shall otherwise
consent in writing, it shall, and shall cause each of its Subsidiaries to:
(a) Preservation of Corporate Existence, Etc. Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence and its qualification as a foreign corporation in good standing
in each jurisdiction in which such qualification is necessary under applicable
law and the rights, licenses, permits (including those required under
Environmental Laws), franchises, patents, copyrights, trademarks and trade names
material to the conduct of its businesses; and defend all of the foregoing
against all claims, actions, demands, suits or proceedings at law or in equity
or by or before any governmental instrumentality or other agency or regulatory
authority.
(b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental authority
whether federal, state, local or foreign (including without limitation ERISA,
the Code and Environmental Laws), in effect from time to time; and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income, revenues or property, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise, which, if unpaid,
LOAN AGREEMENT Page 44
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of such
Borrower or such Subsidiary.
(c) Maintenance of Properties; Insurance. Maintain, preserve and
protect all property that is material to the conduct of the business of the
Borrower or any of its Subsidiaries and keep such 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 in accordance with customary and prudent
business practices for similar businesses; and maintain in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried by companies
engaged in similar businesses and owning similar properties similarly situated
and maintain in full force and effect public liability insurance, insurance
against claims for personal injury or death or property damage occurring in
connection with any of its activities or any of any properties owned, occupied
or controlled by it, in such amount as it shall reasonably deem necessary, and
maintain such other insurance as may be required by law or as may be reasonably
requested by the Required Lenders for purposes of assuring compliance with this
Section 5.1(c).
(d) Reporting Requirements. Furnish to the Lenders and the Agents the
following:
(i) Promptly and in any event within three calendar days after
becoming aware of the occurrence of (A) any Unmatured Event or Event of Default,
(B) the commencement of any material litigation against, by or affecting the
Company or any of its Subsidiaries, and any material developments therein, or
(C) entering into any material contract or undertaking that is not entered into
in the ordinary course of business or (D) any development in the business or
affairs of the Company or any of its Subsidiaries which has resulted in or which
is likely in the reasonable judgment of the Company, to result in a Material
Adverse Effect, a statement of the chief financial officer of the Company
setting forth details of such Unmatured Event or Event of Default and the action
which the Company or such Subsidiary, as the case may be, has taken and proposes
to take with respect thereto;
(ii) As soon as available and in any event within 30 days after
the end of each fiscal month of the Company, the consolidated and, after the end
of each fiscal quarters, consolidating balance sheet of the Company and its
Subsidiaries as of the end of such month, and the related consolidated and,
after the end of each fiscal quarter, consolidating, statements of income,
statement of changes in financial position and statement of operations for such
month or quarter, as the case may be, and for the period commencing at the end
of the previous fiscal year and ending with the end of such month, or quarter,
as the case may be, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of the preceding
fiscal year and the variances, if any, from the business plan delivered pursuant
to Section 5.1(d)(ix), all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the chief financial officer of the Company as
having been prepared in accordance with Generally Accepted Accounting
Principles, together with a certificate of the chief financial officer of the
Company stating (A) that no Unmatured Event or Event of Default, has occurred
and is continuing or, if an Unmatured Event or Event of Default has occurred and
is continuing, a statement setting forth the details thereof and the action
which the Company has taken and proposes to take with respect thereto, and (B)
that a computation (which computation shall accompany such certificate and shall
be in reasonable detail) showing compliance with Section 5.2 (a), (b), (c) and
(d) hereof is in conformity with the terms of this Agreement;
LOAN AGREEMENT Page 45
(iii) As soon as available and in any event within 120 days after
the end of each fiscal year of each Borrower, a copy of the consolidated balance
sheet of the Company and its Subsidiaries and each other Borrower as of the end
of such fiscal year and the related consolidated statements of income and
statement of changes in financial position for such fiscal year, with a
customary audit report of Ernst & Young, or any of the six largest independent
certified public accounting firms in the United States, without qualifications
unacceptable to the Required Lenders, together with, in the case of the audit of
the Company, a certificate or opinion of such accountants stating (A) that they
have reviewed this Agreement and stating further whether, in the course of their
review of such financial statements, they have become aware of any Event of
Default or any Unmatured Event, and, if such an Unmatured Event or Event of
Default then exists and is continuing, a statement setting forth the nature and
status thereof, and (B) that a computation by the Company (which computation
shall accompany such certificate and shall be in reasonable detail) showing
compliance with Section 5.2 (a), (b), (c) and (d) hereof is in conformity with
the terms of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of all
publicly available reports, proxy statements and financial statements which the
Company or any of its Subsidiaries sends to or files with any of their
respective security holders or any securities exchange or the Securities and
Exchange Commission or any successor agency thereof;
(v) Within 10 Business Days after the end of each month, a
Borrowing Base Certificate prepared as of the close of business on the last day
of each month, certified as true and correct by the chief financial officer of
the Company;
(vi) As soon as available and in any event within 45 days after
the end of each month, a report containing an aging as of the end of the
preceding month of accounts receivable and accounts payable of the Company, in a
form satisfactory to each Lender, if requested by any Lender;
(vii) As soon as available and in any event within 45 days after
the end of each month, a report identifying the inventory of the Company, and
cost and location thereof as of the end of the preceding month, in a form
satisfactory to each Lender, if requested by any Lender;
(viii) Promptly and in any event within 10 days after receipt, a
copy of any management letter or comparable analysis prepared by the auditors
for the Company or any of its Subsidiaries;
(ix) Between 120 days and 30 days before the end of each fiscal
year of the Company, the business plan, budget and projected consolidated
financial results prepared by the Company for the Company and its Subsidiaries
for the following fiscal year;
(x) Within 30 calendar days after the end of each fiscal year
of the Company, a duly executed Environmental Certificate; and
(xi) Promptly, such other information respecting the business,
properties, operations or condition, financial or otherwise, of each Borrower or
any of their respective Subsidiaries as any Lender or the Administrative Agent
may from time to time reasonably request.
(e) Accounting, Access to Records, Books, Etc. Maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
Generally Accepted Accounting Principles and to comply with
LOAN AGREEMENT Page 46
the requirements of this Agreement and, at any reasonable time and from time to
time, (i) permit any Lender or the Administrative Agent, or any agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Company and
its Subsidiaries, and to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with their respective directors and officers, and,
after notice to the Company, employees and independent auditors, and by this
provision the Company does hereby authorize such persons to discuss such
affairs, finances and accounts with any Lender or the Administrative Agent, and
(ii) permit the Administrative Agent or any of its agents or representatives to
conduct a comprehensive field audit of its books, records, properties and
assets, including without limitation all collateral subject to the Security
Documents, real estate appraisals and site access, at the Company's expense,
provided that prior to the occurrence and continuance of an Event of Default the
aggregate amount charged for any of the foregoing shall not exceed $10,000 in
any calendar year.
(f) Additional Security and Collateral. Promptly (i) execute and
deliver and cause each Domestic Subsidiary and each Guarantor to execute and
deliver, additional Security Documents, within 30 days after request therefor by
the Lenders and the Administrative Agent, sufficient to grant to the
Administrative Agent for the benefit of the Lenders and the Agents liens and
security interests in any after acquired property, and (ii) cause each person
becoming a Domestic Subsidiary of the Company or any Guarantor from time to time
to execute and deliver to the Lenders and the Agents, within 30 days after such
person becomes a Domestic Subsidiary, a Guaranty and a Security Agreement,
together with other related documents described in Section 2.5 sufficient to
grant to the Administrative Agent for the benefit of the Lenders and the Agents
liens and security interests in all collateral of the type described in Section
2.10. Each Borrower shall notify the Lenders and the Administrative Agent,
within 10 days after the occurrence thereof, of the acquisition of any property
by any Borrower or any Guarantor that is not subject to the existing Security
Documents, any person becoming a Domestic Subsidiary and any other event or
condition that may require additional action of any nature in order to preserve
the effectiveness and perfected status of the liens and security interests of
the Lenders and the Agents with respect to such property pursuant to this
Security Document, including without limitation delivering the originals of all
promissory notes and other instruments payable to the Company or any Domestic
Subsidiary to the Administrative Agent and delivering the originals of all stock
certificates or other certificates evidencing any Capital Stock owned by the
Company or any Domestic Subsidiary at any time, except for the original stock
certificates of Ultra Air Products, Inc. which are currently pledged, provided
that the Company shall cause the original stock certificates of Ultra Air
Products, Inc. to be delivered to the Administrative Agent promptly upon their
release from the existing lien thereon permitted under this Agreement. Upon the
occurrence and during the continuance of an Event of Default, the Company shall,
upon request of the Required Lenders, (i) promptly cause each Foreign Subsidiary
to execute and deliver to the Lenders and the Agents a Guaranty and a Security
Agreement, together with other related documents described in Section 2.5
sufficient to grant to the Administrative Agent for the benefit of the Lenders
and the Agents liens and security interests in all collateral of the type
described in Section 2.10 and (ii) deliver to the Administrative Agent for the
benefit of the Lenders and the Agents 100% of the capital stock of each Foreign
Subsidiary.
(g) Further Assurances. Will execute and deliver within 30 days after
request therefor by the Lenders and the Administrative Agent, all further
instruments and documents and take all further action that may be necessary or
desirable, or that the Administrative Agent may reasonably request, in order to
give effect to the intent of, and to aid in the exercise and enforcement of the
rights and remedies of the Lenders under, this Agreement, the Notes and the
Security Documents, including without limitation causing each lessor of real
property to any Borrower, any Guarantor or any of their respective Subsidiaries
to execute and deliver to the Administrative Agent, prior to or upon the
commencement of any tenancy, an agreement in form and substance acceptable to
the Administrative
LOAN AGREEMENT Page 47
Agent duly executed on behalf of such lessor waiving any distraint, liens and
similar rights with respect to any property subject to the Security Documents
and agreeing to permit the Lenders and the Administrative Agent to enter such
premises in connection therewith. In addition, each Borrower and each Guarantor
agrees to deliver to the Administrative Agent from time to time upon the
acquisition or creation of any subsidiary not listed in Schedule 4.4 hereto
supplements to Schedule 4.4 such that such Schedule, together with such
supplements, shall at all times accurately reflect the information provided for
thereon.
5.2 Negative Covenants. Until the later of the Termination Date, Maturity
Date A or Maturity Date B and thereafter until payment in full of the principal
of and accrued interest on the Notes and the performance of all other
obligations of the Borrowers under this Agreement, each Borrower agrees that,
unless the requisite Lenders pursuant to Section 8.1 shall otherwise consent in
writing, it shall not, and shall not permit any of its Subsidiaries to:
(a) Fixed Charge Coverage Ratio. Permit or suffer the Fixed Charge
Coverage Ratio to be less than the respective ratio set forth below as
determined as of any fiscal quarter end during the periods indicated:
=======================================================================================
Fixed Charge Coverage Ratio
---------------------------
- ---------------------------------------------------------------------------------------
Effective Date to and including March 30, 1999 1.0 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 1999 to and including March 30, 2001 1.05 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2001 to and including March 30, 2003 1.10 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2003 and thereafter 1.15 to 1.0
=======================================================================================
(b) Net Funded Debt to EBITDA . Permit or suffer, as of the last day
of any fiscal quarter of the Company, the ratio of (i) Net Funded Debt as of the
last day of each such fiscal quarter of the Company to (ii) EBITDA as calculated
for the four fiscal quarters of the Company then ending, to be greater than the
respective ratio set forth below during the periods indicated:
=======================================================================================
Net Funded Debt to EBITDA
-------------------------
- ---------------------------------------------------------------------------------------
Effective Date to and including December 30, 1998 5.85 to 1.0
- ---------------------------------------------------------------------------------------
December 31, 1998 to and including March 30, 1999 5.5 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 1999 to and including September 29, 1999 5.25 to 1.0
- ---------------------------------------------------------------------------------------
September 30, 1999 to and including March 30, 2000 5.0 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2000 to and including March 30, 2001 4.5 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2001 to and including March 30, 2002 4.0 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2002 and thereafter 3.5 to 1.0
=======================================================================================
(c) Interest Coverage Ratio. Permit or suffer the Interest Coverage
Ratio, as calculated as of the last day of each fiscal quarter of the Company
for the four fiscal quarters then ending, to be less than the respective ratio
set forth below during the periods indicated:
LOAN AGREEMENT Page 48
=======================================================================================
Interest Coverage Ratio
-----------------------
- ---------------------------------------------------------------------------------------
Effective Date and to including March 30, 1999 1.75 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 1999 to and including March 30, 2001 2.0 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2001 to and including March 30, 2003 2.25 to 1.0
- ---------------------------------------------------------------------------------------
March 31, 2003 and thereafter 2.5 to 1.0
=======================================================================================
(d) Net Worth. Permit or suffer the Net Worth of the Company to at
any time be less than the sum of (i) negative $91,891,000 plus (ii) 50% of net
income of the Company and its Subsidiaries, determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles, added as of the end
of each fiscal year of the Company, commencing with the fiscal year ending
December 31, 1998, provided that if such net income is negative in any fiscal
year the amount added for such fiscal year shall be zero and shall not reduce
the amount added for any other fiscal year.
(e) Indebtedness. Create, incur, assume or in any manner become
liable in respect of, or suffer to exist, or permit or suffer any Subsidiary to
create, incur, assume or in any manner become liable in respect of, or suffer to
exist, any Indebtedness other than:
(i) The Advances;
(ii) The Indebtedness described in Schedule 5.2(e) hereto,
having the same terms as those existing on the date of this Agreement, but no
extension or renewal thereof shall be permitted;
(iii) Indebtedness of any Subsidiary of the Company owing to the
Company or to any other Subsidiary of the Company;
(iv) Unsecured current Indebtedness constituting obligations for
the unpaid purchase price of goods, property or services incurred in the
ordinary course of business (A) to a seller of inventory purchased for sale or
lease in the ordinary course of business of the Company or any of its
Subsidiaries (B) to a seller of other property used in the business of the
Company or any of its Subsidiaries or (C) to a provider of services to the
Company or any of its Subsidiaries;
(v) Swaps;
(vi) Subordinated Debt in the aggregate principal amount not to
exceed $115,000,000 under the Subordinated Notes, the Remaining Harvard
Obligations, and reasonable and customary fees currently allowed under the
provisions of the Subordinated Debt Documents; and
(vii) Indebtedness other than (i) through (vi) above not
exceeding in aggregate principal amount outstanding (A) for the period from and
including the Effective Date to and including December 31, 1998, $3,000,000
("Base Indebtedness") and (B) for each calendar year thereafter, the Base
Indebtedness plus $500,000 to be added to the Base Indebtedness as of each
January 1 thereafter, commencing January 1, 1999.
(f) Liens. Create, incur or suffer to exist any Lien on any of the
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of the Borrower or any of
its Subsidiaries, other than:
LOAN AGREEMENT Page 49
(i) Liens for taxes not delinquent or for taxes being contested
in good faith by appropriate proceedings and as to which adequate financial
reserves have been established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA) created and
maintained in the ordinary course of business which are not material in the
aggregate, and which would not have a Material Adverse Effect and which
constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the Company or any
of its Subsidiaries is a party for a purpose other than borrowing money or
obtaining credit, including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen and mechanics, if payment of the
obligation secured thereby is not yet due, (D) liens securing taxes, assessments
or other governmental charges or levies not yet subject to penalties for
nonpayment, and (E) pledges or deposits to secure public or statutory
obligations of the Company or any of its Subsidiaries, or surety, customs or
appeal bonds to which the Company or any of its Subsidiaries is a party;
(iii) Liens affecting real property which constitute minor survey
exceptions or defects or irregularities in title, minor encumbrances, easements
or reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of such real property, provided that all of the
foregoing, in the aggregate, do not at any time materially detract from the
value of said properties or materially impair their use in the operation of the
businesses of the Borrower or any of its Subsidiaries;
(iv) Liens created pursuant to the Security Documents and Liens
expressly permitted by the Security Documents;
(v) Each Lien described in Schedule 5.2(f) hereto may be
suffered to exist upon the same terms as those existing on the date hereof, but
no extension or renewal thereof shall be permitted;
(vi) Any Lien created to secure payment of a portion of the
purchase price of, or existing at the time of acquisition of, any tangible fixed
asset acquired by the Borrower or any of its Subsidiaries may be created or
suffered to exist upon such fixed asset if the outstanding principal amount of
the Indebtedness secured by such Lien does not at any time exceed the purchase
price paid by the Borrower or such Subsidiary for such fixed asset, provided
that such Lien does not encumber any other asset at any time owned by the
Borrower or such Subsidiary, and provided, further, that not more than one such
Lien shall encumber such fixed asset at any one time;
(vii) The existing Lien on the Ultra Air Products, Inc. stock
securing the obligations of the Company as described on Scheduled 5.2(g) hereto,
but no modification of the obligations secured thereby; and
(viii) The interest or title of a lessor under any lease
otherwise permitted under this Agreement with respect to the property subject to
such lease to the extent performance of the obligations of the Borrower or its
Subsidiary thereunder are not delinquent.
(g) Merger; Acquisitions; Etc. Purchase or otherwise acquire, or
permit or suffer any Subsidiary to purchase or otherwise acquire, whether in one
or a series of transactions, all or a substantial portion of the business
assets, rights, revenues or property, real, personal or mixed, tangible
LOAN AGREEMENT Page 50
or intangible, of any person, or all or a substantial portion of the capital
stock of or other ownership interest in any other person; nor merge or
consolidate or amalgamate with any other person or take any other action having
a similar effect, nor enter into any joint venture or similar arrangement with
any other person, provided, however, that this Section 5.2(g) shall not prohibit
(i) any merger, acquisition or joint venture if (A) in the case of any such
merger or acquisition, the Company shall be the surviving or continuing
corporation thereof, and immediately before and after such merger or acquisition
or entering into a joint venture no Unmatured Event or Event of Default shall
exist or shall have occurred and be continuing and the representations and
warranties contained in Article IV hereof and in the Security Documents shall be
true and correct on and as of the date hereof (both before and after such merger
or acquisition or joint venture is consummated) as if made on the date such
merger or acquisition or joint venture is consummated, and prior to the
consummation of such merger or acquisition or joint venture, the Company shall
have provided to the Lenders an opinion of counsel and a certificate of the
chief financial officer of the Company (attaching computations to demonstrate
compliance with all financial covenants hereunder), each stating that such
merger or acquisition or joint venture complies with this Section 5.2(g) and
that any other conditions under this Agreement relating to such transaction have
been satisfied, and (B) the purchase price or investment for any such
transaction (or aggregate purchase price for any related series of such
transactions) does not exceed $5,000,000 and the aggregate purchase price and
investment for all such transactions does not exceed $15,000,000 in the
aggregate in any fiscal year of the Company, and (ii) the payment by the Company
of the obligations due under the documents executed by the Company for the
purchase of the stock of Ultra Air Products, Inc. as described on Schedule
5.2(g) hereto.
(h) Disposition of Assets; Etc. Sell, lease, license, transfer,
assign or otherwise dispose of all or a material portion of its business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether in one or a series of transactions, other than inventory
sold in the ordinary course of business upon customary credit terms and sales of
scrap or obsolete material or equipment, and shall not permit or suffer any
Subsidiary to do any of the foregoing; provided, however, that this Section
5.2(h) shall not prohibit (A) any such sale, lease, license, transfer,
assignment or other disposition if the aggregate book value (disregarding any
write-downs of such book value other than ordinary depreciation and
amortization) of all of the business, assets, rights, revenues and property
disposed of after the Effective Date of this Agreement shall be less than
$2,000,000 in the aggregate and if, immediately after such transaction, no
Unmatured Event or Event of Default shall exist or shall have occurred and be
continuing or (B) sales as to which proceeds are used to purchase or construct
assets of at least equivalent value to those sold or (C) sales as to which
proceeds are used to make optional prepayments on the Term Loans pursuant to
Section 3.1 or (D) the sale of the approximately 31 acre parcel of real property
owned by the Company located southeast of the Company's headquarters on Milford
Road for the sum of approximately $280,000.
(i) Nature of Business. Make or suffer any substantial change in the
nature of its business from that engaged in on the Effective Date or engage in
any other businesses other than those in which it is engaged on the Effective
Date.
(j) Dividends and Other Restricted Payments. Make, pay, declare or
authorize any dividend, payment or other distribution in respect of any class of
its capital stock or any dividend, payment or distribution in connection with
the redemption, purchase, retirement or other acquisition, directly or
indirectly, of any shares of its Capital Stock other than such dividends,
payments or other distributions to the extent payable solely in shares of
Capital Stock of the Borrower, provided, however, that, (i) if no Unmatured
Event or Event of Default shall exist or shall have occurred and be continuing
and no Unmatured Event or Event of Default would result therefrom, the Company
may repurchase or redeem Capital Stock of any member of the Management Group in
the case of the death, disability,
LOAN AGREEMENT Page 51
retirement or termination of such member, and (ii) this Section 5.2(j) shall not
prohibit the payment by the Company to the Management Group and Harvard to the
extent they are then shareholders of a cash dividend in an aggregate amount not
exceeding $6,000,000 within 30 days after the Effective Date.
(k) Investments, Loans and Advances. Purchase or otherwise acquire
any Capital Stock of or other ownership interest in, or debt securities of or
other evidences of Indebtedness of, any other person; nor make any loan or
advance of any of its funds or property or make any other extension of credit
to, or make any investment or acquire any interest whatsoever in, any other
person; nor incur any Contingent Liability; nor permit any Subsidiary to do any
of the foregoing; other than (i) extensions of trade credit made in the ordinary
course of business on customary credit terms and commission, travel and similar
advances made to officers and employees in the ordinary course of business, and
(ii) commercial paper of any Lender or any other United States issuer having the
highest rating then given by Moody's Investors Service, Inc., or Standard &
Poor's Ratings Group, direct obligations of and obligations fully guaranteed by
the United States of America or any agency or instrumentality thereof, or
certificates of deposit of any commercial bank which is a member of the Federal
Reserve System having a rating of A1 or P1 or better by Standard & Poor's
Ratings Group or Moody's Investor Services, respectively, and which has capital,
surplus and undivided profit (as shown on its most recently published statement
of condition) aggregating not less than $100,000,000, provided, however, that
each of the foregoing investments has a maturity date not later than 180 days
after the acquisition thereof by the Company or any of its Subsidiaries, (iii)
acquisitions and investments permitted pursuant to Section 5.2(g), (iv)
investments, loans and advances in and to any Subsidiary of the Company, (v)
investments, loans and advances after the Effective Date of this Agreement in
aggregate amount not exceeding $1,000,000, and (vi) those investments, loans,
advances and other transactions described in Schedule 5.2(k) hereto, having the
same terms as existing on the date of this Agreement, but no extension or
renewal thereof shall be permitted.
(l) Transactions with Affiliates. Enter into, become a party to, or
become liable in respect of, or permit or suffer any Subsidiary to enter into,
become a party to, or become liable in respect of, any contract or undertaking
with any Affiliate not included in the consolidated financial statements of the
Company delivered to the Administrative Agent pursuant to Section 5.1(d) except
in the ordinary course of business and on terms not less favorable to the
Borrower or such Subsidiary than those which could be obtained if such contract
or undertaking were an arms length transaction with a person other than an
Affiliate.
(m) Contingent Liabilities. Create, incur, assume, or in any manner
become liable in respect of, or suffer to exist, Contingent Liabilities in
excess of $500,000.
(n) Inconsistent Agreements. Enter into any agreement or permit or
suffer any Subsidiary to enter into any agreement containing any provision which
would be violated or breached by this Agreement or any of the transactions
contemplated hereby or by performance by the Borrower or any of its Subsidiaries
of its obligations in connection therewith; provided that, without limiting any
of the other terms, conditions or requirements of this Agreement, this Section
5.2(n) shall not prohibit the Company or any of its Subsidiaries from entering
into or being party to the Subordinated Notes Indenture, the Subordinated Notes,
the Harvard Documents, the guarantees by the Subsidiaries of the Company
contemplated by the foregoing or any of the agreements identified on Schedule
4.21-B hereto, in each case as in effect on the Effective Date.
(o) Negative Pledge Limitation. Enter into any agreement with any
person other than the Lenders pursuant hereto which prohibits or limits the
ability of any Borrower or any Subsidiary
LOAN AGREEMENT Page 52
to create, incur, assume or suffer to exist any Lien upon any of its assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether now owned or hereafter acquired.
(p) Subsidiary Dividends. The Company covenants that it will not
permit any of its Subsidiaries directly or indirectly to create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction which by its terms materially restricts the ability of any such
Subsidiary to (i) pay dividends or make any other distributions on such
Subsidiary's capital stock, (ii) pay any Indebtedness owed to the Company or any
of its other Subsidiaries, (iii) make any loans or advances to the Company or
any of such other Subsidiaries or (iv) transfer any material portion of its
assets to the Company or any of such other Subsidiaries.
(q) Payments and Modification of Subordinated Debt. Make, or permit
any Subsidiary to make, any optional payment, prepayment or redemption of any of
its or any of its Subsidiaries' Subordinated Debt or amend or modify, or consent
or agree to any amendment or modification of, any instrument or agreement under
which any of its Subordinated Debt is issued or created or otherwise related
thereto, including, without limitation, the Subordinated Notes, the Subordinated
Notes Indenture and the Harvard Debt Documents, or enter into any agreement or
arrangement providing for the defeasance of any of its Subordinated Debt, or
designate any Indebtedness (other than Lender Indebtedness) as "Designated
Senior Indebtedness" under the Subordinated Debt Documents; provided, however,
that amendments, modifications, refinancings and other alterations thereof shall
be permitted if no more restrictive covenants or terms are imposed thereby,
including without limitation any shorter maturities, increased rates or fees or
more restrictive covenants or defaults, and the subordination provisions of such
Indebtedness are not rendered less favorable to the Lenders thereby, as
determined by the Required Lenders; and provided, further, that the form of the
Warrant, the Tag-Along Agreement and the Registration Agreement with respect to
the Remaining Harvard Obligations may be amended, modified or altered as long as
additional monetary obligations of the Company or any of its Subsidiaries are
not created by such amendment, modification or alteration. In addition to the
ability of the Lenders to block payments on the Subordinated Debt pursuant to
the terms of the Subordinated Debt Documents, it is acknowledged and agreed by
the Company that all payments due under any of the Harvard Documents which may
be prohibited by the terms of this Agreement are hereby prohibited, including
without limitation prohibiting any payment in cash or otherwise pursuant to the
put rights and other rights under Section 7.2 of Exhibit 7 to the Harvard
Securities Purchase Agreement (other than payments by the issuance of Harvard
Put Notes, provided that it is acknowledged and agreed that no payments of
principal may be paid, directly or indirectly, or be due on any of the Harvard
Put Notes until after the final maturity of all indebtedness and obligations
pursuant to this Agreement); provided, that nothing in this Section 5.2(q) shall
be deemed to prohibit the payment of regularly scheduled quarterly interest
payments on the Harvard Put Notes in accordance with the terms thereof other
than prohibitions pursuant to the terms of the Harvard Documents.
(r) Additional Covenants. If at any time any Borrower shall enter
into or be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided for
in this Agreement or more favorable to the lender or lenders thereunder than
those provided for in this Agreement, then the Borrowers shall promptly so
advise the Administrative Agent and the Lenders. Thereupon, if the
Administrative Agent shall request, upon notice to the Borrowers, the Agents and
the Lenders shall enter into an amendment to this Agreement or an additional
agreement (as the Administrative Agent may request), providing for substantially
the same
LOAN AGREEMENT Page 53
covenants, terms, conditions and defaults as those provided for in such
instrument or agreement to the extent required and as may be selected by the
Administrative Agent. In addition to the foregoing, any covenants, terms,
conditions or defaults in the Subordinated Debt Documents not substantially
provided for in this Agreement or more favorable to the holders of Subordinated
Debt issued in connection therewith, all of which shall be listed on a schedule
sent by the Administrative Agent to the Company on or prior to the date 60 days
after the Effective Date, are hereby incorporated by reference into this
Agreement to the same extent as if set forth fully herein, and no subsequent
amendment, waiver or modification thereof shall effect any such covenants,
terms, conditions or defaults as incorporated herein.
(s) Capital Expenditures. Make any Capital Expenditures if the
aggregate amount thereof made by the Company or any of its Subsidiaries during
any fiscal year of the Company would exceed, on a consolidated basis, the
amounts set forth below during the respective fiscal year; provided, however,
the Company may carry forward to the following fiscal years the excess, if any,
of the permitted Capital Expenditures over the actual amount of Capital
Expenditures incurred in such fiscal year:
Fiscal Year Capital Expenditures
----------- --------------------
1998 $ 9,000,000
1999 10,000,000
2000 11,000,000
2001 12,000,000
2002 14,000,000
2003 15,000,000
2004 15,000,000
2005 15,000,000
ARTICLE VI
DEFAULT
-------
6.1 Events of Default. The occurrence of any one of the following
events or conditions shall be deemed an "Event of Default" hereunder unless
waived by the requisite Lenders pursuant to Section 8.1:
(a) Nonpayment. Any Borrower shall fail to pay when due any principal
of the Notes, or any reimbursement obligation under Section 3.3 (whether by
deemed disbursement of a Revolving Credit Loan or otherwise), or, within 5 days
after becoming due, any interest on the Notes or any fees or any other amount
payable hereunder;
(b) Misrepresentation. Any representation or warranty made by any
Borrower or any Guarantor in Article IV hereof or in any Security Document or
any other certificate, report, financial statement or other document furnished
by or on behalf of any Borrower or any Guarantor in connection with this
Agreement, shall prove to have been incorrect in any material respect when made
or deemed made and such misrepresentation shall not be remedied, if possible,
within 5 calendar days after notice thereof shall have been given by the
Administrative Agent to the Company;
LOAN AGREEMENT Page 54
(c) Certain Covenants. Any Borrower or any Guarantor shall fail to
perform or observe any term, covenant or agreement contained in Section 5.1(d),
(f) or (g) or Section 5.2 hereof;
(d) Other Defaults. Any Borrower or any Guarantor shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement or in any Security Document, and any such failure shall remain
unremedied for 30 calendar days after notice thereof shall have been given to
the Company by the Administrative Agent (or such longer or shorter period of
time as may be specified in such Security Document);
(e) Other Indebtedness. Any Borrower or any of its Subsidiaries shall
fail to pay any part of the principal of, the premium, if any, or the interest
on, or any other payment of money due under any of its Indebtedness (other than
Indebtedness hereunder), beyond any period of grace provided with respect
thereto, which individually or together with other such Indebtedness as to which
any such failure exists has an aggregate outstanding principal amount in excess
of $500,000; or if any Borrower or any of its Subsidiaries fails to perform or
observe any other term, covenant or agreement contained in any agreement,
document or instrument evidencing or securing any such Indebtedness having such
aggregate outstanding principal amount, or under which any such Indebtedness was
issued or created, beyond any period of grace, if any, provided with respect
thereto if the effect of such failure is either (i) to cause, or permit the
holders of such Indebtedness (or a trustee on behalf of such holders) to cause,
any payment in respect of such Indebtedness to become due prior to its due date
or (ii) to permit the holders of such Indebtedness (or a trustee on behalf of
such holders) to elect a majority of the board of directors of such Borrower;
(f) Judgments. One or more judgments or orders for the payment of
money (not fully paid or covered without dispute by insurance) in an aggregate
amount of $1,000,000 in any fiscal year shall be rendered against a Borrower or
any of its Subsidiaries, or any other judgment or order (whether or not for the
payment of money) shall be rendered against or shall affect a Borrower or any of
its Subsidiaries which causes or could cause or could have a Material Adverse
Effect, and either (i) such judgment or order shall have remained unsatisfied
and such Borrower or such Subsidiary shall not have taken action necessary to
stay enforcement thereof by reason of pending appeal or otherwise, prior to the
expiration of the applicable period of limitations for taking such action or, if
such action shall have been taken, a final order denying such stay shall have
been rendered, or (ii) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order;
(g) ERISA. The occurrence of a Reportable Event that results in or
could result in liability of the Company, any Subsidiary of the Company or any
ERISA Affiliate to the PBGC or to any Plan and such Reportable Event is not
corrected within thirty (30) days after the occurrence thereof; or the
occurrence of any Reportable Event which could constitute grounds for
termination of any Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the filing by the Company, any Subsidiary of the Company or any
ERISA Affiliate of a notice of intent to terminate a Plan or the institution of
other proceedings to terminate a Plan; or the Company, any Subsidiary of the
Company or any ERISA Affiliate shall fail to pay when due any liability to the
PBGC or to a Plan; or the PBGC shall have instituted proceedings to terminate,
or to cause a trustee to be appointed to administer, any Plan; or any person
engages in a Prohibited Transaction with respect to any Plan which results in or
could result in liability of the Company, any Subsidiary of the Company, any
ERISA Affiliate to make a required installment or other payment to any Plan
within the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that
results in or could result in liability of the Company, any Subsidiary of the
Company or any ERISA Affiliate to the PBGC or any Plan; or the withdrawal of the
Company, any of its Subsidiaries or any ERISA Affiliate
LOAN AGREEMENT Page 55
from a Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA; or the Company, any of its Subsidiaries
or any ERISA Affiliate becomes an employer with respect to any Multiemployer
Plan without the prior written consent of the Required Lenders; provided,
however, that the aggregate liability caused by any of the foregoing exceeds
$250,000;
(h) Insolvency, Etc.. A Borrower or any of its Subsidiaries shall be
dissolved or liquidated (or any judgment, order or decree therefor shall be
entered), or shall generally not pay its debts as they become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors, or shall institute, or there
shall be instituted against a Borrower or any of its Subsidiaries, any
proceeding or case seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief or protection of debtors or seeking the
entry of an order for relief, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
assets, rights, revenues or property, and, if such proceeding is instituted
against such Borrower or such Subsidiary and is being contested by such Borrower
or such Subsidiary, as the case may be, in good faith by appropriate
proceedings, such proceeding shall remain undismissed or unstayed for a period
of 60 days; or the Company or such Subsidiary shall take any action (corporate
or other) to authorize or further any of the actions described above in this
subsection;
(i) Security Documents. Any event of default described in any
Security Document or any Subordinated Debt Document shall have occurred and be
continuing, or any material provision of any Security Document or any
Subordinated Debt Document shall at any time for any reason cease to be valid
and binding and enforceable against any obligor thereunder, or the validity,
binding effect or enforceability thereof shall be contested by any person, or
any obligor, shall deny that it has any or further liability or obligation
thereunder, or any Security Document or any Subordinated Debt Document shall be
terminated, invalidated or set aside, or be declared ineffective or inoperative
or in any way cease to give or provide to the Lenders and the Agents the
benefits purported to be created thereby; or
(j) Control. (A) John Welker (or a person or persons acceptable to
the Required Lenders and appointed within 120 days after John Welker shall not
have such positions) shall not be the Chief Executive Officer and President of
the Company with all responsibilities normally associated with those positions,
(B) John Welker (or a person or persons acceptable to the Required Lenders and
appointed within 120 days after John Welker shall not have such ability) shall
not have the ability, free of any Lien or other restriction of any kind, to
direct the selection of a majority of the directors of the Company, (C) the
board of directors of the Company shall not have the same powers and rights as
it has on the Effective Date, or (D) the Management Group shall cease to own and
control, free and clear of any Liens, at least (x) 75% of the issued and
outstanding shares of Capital Stock of the Company, or (y) if the reason the
Management Group shall cease to own and control, free and clear of any Liens, at
least 75% is due to a primary initial public offering of Capital Stock of the
Company, at least 51% of the issued and outstanding shares of Capital Stock of
the Company.
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, by notice to the Borrowers (i) the Administrative Agent may, and upon
being directed to do so by the Required Revolving Credit Lenders shall,
terminate the Revolving Credit Commitments or (ii) the Administrative Agent may,
and upon being directed to do so by the Required Lenders, shall declare the
outstanding principal of, and accrued interest on, the Notes, all unpaid
reimbursement obligations in respect of drawings under Letters of Credit and all
other amounts owing under this Agreement to be
LOAN AGREEMENT Page 56
immediately due and payable, or (iii) the Administrative Agent may, and upon
being directed to do so by the Required Lenders, shall demand immediate delivery
of cash collateral, and the Company agrees to deliver such cash collateral upon
demand, in an amount equal to the maximum amount that may be available to be
drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Revolving Credit
Commitments shall terminate forthwith and all such amounts, including such cash
collateral, shall become immediately due and payable, as the case may be,
provided that in the case of any event or condition described in Section 6.1(h),
the Revolving Credit Commitments shall automatically terminate forthwith and all
such amounts, including such cash collateral, shall automatically become
immediately due and payable without notice; in all cases without demand,
presentment, protest, diligence, notice of dishonor or other formality, all of
which are hereby expressly waived. Such cash collateral delivered in respect of
outstanding Letters of Credit shall be deposited in a special cash collateral
account to be held by the Administrative Agent as collateral security for the
payment and performance of the Company's obligations under this Agreement to the
Lenders and the Agents.
(b) The Administrative Agent may and, upon being directed to do so by
the Required Lenders, shall, in addition to the remedies provided in Section
6.2(a), exercise and enforce any and all other rights and remedies available to
it or the Lenders, whether arising under this Agreement, the Notes or any
Security Document or under applicable law, in any manner deemed appropriate by
the Administrative Agent, including suit in equity, action at law, or other
appropriate proceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this Agreement or in
the Notes or any Security Document or in aid of the exercise of any power
granted in this Agreement, the Notes or any Security Document.
(c) Upon the occurrence and during the continuance of any Event of
Default, each Lender may, subject to Section 7.10, at any time and from time to
time, without notice to any Borrower (any requirement for such notice being
expressly waived by each Borrower) set off and apply against any and all of the
obligations of such Borrower now or hereafter existing under this Agreement,
whether owing to such Lender or any other Lender or either Agent, any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Borrower and any property of the Company from time
to time in possession of such Lender, irrespective of whether or not such Lender
shall have made any demand hereunder and although such obligations may be
contingent and unmatured. Each of the Lenders agrees to provide notice to such
Borrower within a reasonable period of time after the exercise of its set off
rights. Each of the Borrowers hereby grants to the Lenders and the Agents a
lien on and security interest in all such deposits, indebtedness and property as
collateral security for the payment and performance of the obligations of such
Borrower under this Agreement. The rights of such Lender under this Section
6.2(c) are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Lender may have.
(d) In addition to other amounts payable pursuant to this Agreement,
each Borrower confirms that it shall further pay, together with any payment of
the Term Loans hereunder after the occurrence and during the continuance of any
Event of Default, all amounts required to be paid pursuant to Section 3.9. Each
Borrower agrees that such amounts are a reasonable pre-estimate of loss and not
a penalty. Such amounts are payable as liquidated damages for the loss of
bargain and payment of such amount shall not in any way reduce, affect or impair
any other obligations of the Borrowers under this Agreement.
6.3 Distribution of Proceeds of Collateral. All proceeds of any
realization on the collateral pursuant to the Security Documents and any
payments received by either Agent or any Lender pursuant
LOAN AGREEMENT Page 57
to the Guaranties subsequent to and during the continuance of any Event of
Default, shall be allocated and distributed by the Administrative Agent as
follows:
(a) First, to the payment of all costs and expenses, including
without limitation all attorneys' fees, of the Administrative Agent in
connection with the enforcement of the Security Documents and otherwise
administering this Agreement;
(b) Second, to the payment of all fees, including commitment fees,
owing to the Lenders and Agents pursuant to the Lender Indebtedness on a pro
rata basis in accordance with the Lender Indebtedness consisting of fees owing
to the Lenders and Agents under the Lender Indebtedness, for application to
payment of such liabilities;
(c) Third, to the Lenders and Agents on a pro rata basis in
accordance with the Lender Indebtedness consisting of interest owing to the
Lenders and Agents under the Lender Indebtedness, for application to payment of
such liabilities;
(d) Fourth, to the Lenders and the Agents on a pro rata basis in
accordance with the Lender Indebtedness consisting of principal (including
without limitation any cash collateral for any outstanding letters of credit)
and obligations and liabilities relating to Swaps owing to the Lenders and the
Agents under the Lender Indebtedness, for application to payment of such
liabilities;
(e) Fifth, to the payment of any and all other amounts owing to the
Lenders and the Agents on a pro rata basis in accordance with the total amount
of such Indebtedness owing to each of the Lenders and the Agents, for
application to payment of such liabilities; and
(f) Sixth, to the Company, its Subsidiaries or such other person as
may be legally entitled thereto.
6.4 Letter of Credit Liabilities. For the purposes of payments and
distributions under Section 6.3, the full amount of Lender Indebtedness on
account of any letter of credit then outstanding but not drawn upon shall be
deemed to be then due and owing. Amounts distributable to the Lenders or Agents
on account of such Lender Indebtedness under such letters of credit shall be
deposited in a separate interest bearing collateral account in the name of and
under the control of the Administrative Agent and held by the Administrative
Agent first as security for such letter of credit Lender Indebtedness and then
as security for all other Lender Indebtedness and the amount so deposited shall
be applied to the letter of credit Lender Indebtedness at such times and to the
extent that such letter of credit Lender Indebtedness become absolute
liabilities and if and to the extent that the letter of credit Lender
Indebtedness fail to become absolute Lender Indebtedness because of the
expiration or termination of the underlying letters of credit without being
drawn upon then such amounts shall be applied to the remaining Lender
Indebtedness in the order provided in Section 6.3. Each Borrower hereby grants
to the Administrative Agent, for the benefit of the Lenders and Agents, a lien
and security interest in all such funds deposited in such separate interest
bearing collateral account, as security for all the Lender Indebtedness as set
forth above.
LOAN AGREEMENT Page 58
ARTICLE VII
THE AGENTS AND THE LENDERS
--------------------------
7.1 Appointment and Authorization. Each Lender hereby irrevocably appoints
and authorizes each Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement, the Notes and the Security Documents
as are delegated to such Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto. The provisions of this Article
VII are solely for the benefit of the Agents and the Lenders, and no Borrower
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, each Agent
shall act solely as agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Borrowers.
7.2 Agents and Affiliates. NBD Bank and BankBoston, N.A. in their
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise or refrain from exercising the same as
though it were not an Agent. NBD Bank and BankBoston, N.A. and their respective
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, and generally engage in any kind of banking,
trust, financial advisory or other business with the Company or any Subsidiary
of the Company as if it were not acting as an Agent hereunder, and may accept
fees and other consideration therefor without having to account for the same to
the Lenders.
7.3 Scope of Agents' Duties. The Agents shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Lender, beyond
the agency created herein and subject to the terms herein, and no implied
covenants, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or shall otherwise exist against either Agent. As to any
matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement actioned under the Notes and the Security
Documents), neither Agent shall be required to exercise any discretion or take
any action, but the Administrative Agent shall take such action or omit to take
any action pursuant to the reasonable written instructions of the Required
Lenders and may request instructions from the Required Lenders. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, pursuant to the written instructions of the Required
Lenders, which instructions and any action or omission pursuant thereto shall be
binding upon all of the Lenders; provided, however, that the Administrative
Agent shall not be required to act or omit to act if, in the judgment of the
Administrative Agent, such action or omission may expose the Administrative
Agent to personal liability or is contrary to this Agreement, the Notes or the
Security Documents or applicable law.
7.4 Reliance by Agents. Each Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it to
be genuine and correct and to have been sent or given by or on behalf of a
proper person. Each Agent may treat the payee of any Note as the holder
thereof. Each Agent may employ agents (including, without limitation,
collateral agents) and may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable to the
Lenders, except as to money or property received by it or its authorized agents,
for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
7.5 Default. Neither Agent shall be deemed to have knowledge of the
occurrence of any Unmatured Event or Event of Default, unless such Agent has
received written notice from a Lender or a
LOAN AGREEMENT Page 59
Borrower specifying such Unmatured Event or Event of Default and stating that
such notice is a "Notice of Default". In the event that either Agent receives
such a notice, such Agent shall promptly give written notice thereto to the
Lenders.
7.6 Liability of Agents. Neither of the Agents nor any of their respective
directors, officers, agents, or employees shall be liable to the Lenders for any
action taken or not taken by it or them in connection herewith with the consent
or at the request of the Required Lenders or in the absence of its or their own
gross negligence or willful misconduct. Neither of the Agents nor any of their
respective directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (i) any recital, statement,
warranty or representation contained in this Agreement, any Note or any Security
Document, or in any certificate, report, financial statement or other document
furnished in connection with this Agreement, (ii) the performance or observance
of any of the covenants or agreements of any Borrower or any Guarantor, (iii)
the satisfaction of any condition specified in Article II hereof, (iv) the
validity, effectiveness, legal enforceability, value or genuineness of this
Agreement, the Notes or the Security Documents or any collateral subject thereto
or any other instrument or document furnished in connection herewith.
7.7 Nonreliance on the Agents and Other Lenders. Each Lender acknowledges
and agrees that it has, independently and without reliance on either Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of each Borrower and decision to enter
into this Agreement and that it will, independently and without reliance upon
either Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decision in taking or not taking action under this Agreement. Neither Agent
shall be required to keep itself informed as to the performance or observance by
the Borrowers of this Agreement, the Notes or the Security Documents or any
other documents referred to or provided for herein or to inspect the properties
or books of the Borrowers and, except for notices, reports and other documents
and information expressly required to be furnished to the Lenders by either
Agent hereunder, neither Agent shall have any duty or responsibility to provide
any Lender with any information concerning the affairs, financial condition or
business of the Company or any of its Subsidiaries which may come into the
possession of either Agent or any of their respective Affiliates.
7.8 Indemnification. The Lenders agree to indemnify each Agent (to the
extent not reimbursed by the Borrowers, but without limiting any obligation of
the Borrowers to make such reimbursement), ratably according to the respective
principal amounts of the Advances then outstanding made by each of them (or if
no Advances are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including, without limitation, fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against either Agent in any way relating to
or arising out of this Agreement or the transactions contemplated hereby or any
action taken or omitted by either Agent under this Agreement, provided, however,
that no Lender shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from such Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse each Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including, without limitation, fees and expenses of counsel)
incurred by such Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that such Agent
is not reimbursed for such expenses by the Borrowers, but without limiting the
obligation of the Borrowers to make such reimbursement. Each Lender agrees to
reimburse each Agent promptly upon demand for its ratable share of any amounts
owing to such Agent by the Lenders pursuant to this Section. If the indemnity
furnished to either Agent
LOAN AGREEMENT Page 60
under this Section shall, in the judgment of such Agent, be insufficient or
become impaired, such Agent may call for additional indemnity from the Lenders
and cease, or not commence, to take any action until such additional indemnity
if furnished.
7.9 Resignation of Agents. Either Agent may resign as such at any time
upon thirty (30) days' prior written notice to the Borrowers and the Lenders. In
the event of any such resignation, the Required Lenders shall, by an instrument
in writing delivered to the Borrowers and the Agents, appoint a successor, with
the consent of the Company, which shall be a commercial bank organized under the
laws of the United States or any State thereof and having a combined capital and
surplus of at least $500,000,000. Each of the other Lenders shall be given the
right of first refusal to act as successor, subject to the Company's consent. If
a successor is not so appointed or does not accept such appointment before such
Agent's resignation becomes effective, such resigning Agent may appoint a
temporary successor to act until such appointment by the Required Lenders is
made and accepted or if no such temporary successor is appointed as provided
above by such resigning Agent, the Required Lenders shall thereafter perform all
the duties of such Agent hereunder until such appointment by the Required
Lenders is made and accepted. Any successor to such Agent shall execute and
deliver to the Borrowers and the Lenders an instrument accepting such
appointment and thereupon such successor Agent, without further act, deed,
conveyance or transfer shall become vested with all of the properties, rights,
interests, powers, authorities and obligations of its predecessor hereunder with
like effect as if originally named as such Agent hereunder. Upon request of such
successor Agent, the Borrowers and such resigning Agent shall execute and
deliver such instruments of conveyance, assignment and further assurance and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in such successor Agent all such properties, rights,
interests, powers, authorities and obligations. The provisions of this Article
VII shall thereafter remain effective for such resigning Agent with respect to
any actions taken or omitted to be taken by such Agent while acting as such
Agent hereunder.
7.10 Sharing of Payments. The Lenders agree among themselves that, in
the event that any Lender shall obtain payment in respect of any Advance or any
other obligation owing to the Lenders under this Agreement through the exercise
of a right of set-off, banker's lien, counterclaim or otherwise in excess of its
ratable share of payments received by all of the Lenders on account of the
Advances and other obligations (or if no Advances are outstanding, ratably
according to the respective amounts of the Commitments), such Lender shall
promptly purchase from the other Lenders participations in such Advances and
other obligations in such amounts, and make such other adjustments from time to
time, as shall be equitable to the end that all of the Lenders share such
payment in accordance with such ratable shares. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of
participations theretofore sold, return its share of that benefit to each Lender
whose payment shall have been rescinded or otherwise restored. Each Borrower
agrees that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including set-off,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Advance or other obligation in the amount of
such participation. The Lenders further agree among themselves that, in the
event that amounts received by the Lenders and the Agents hereunder are
insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Agents in such
capacity shall be paid therefrom before payment of obligations owing to the
Lenders under this Agreement. Except as otherwise expressly provided in this
Agreement, if any Lender or Agent shall fail to remit to either Agent or any
other Lender an amount payable by such Lender or Agent to such Agent or such
other Lender pursuant to this Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to
LOAN AGREEMENT Page 61
such Agent or such other Lender at a rate per annum equal to the rate at which
borrowings are available to the payee in its overnight federal funds market. It
is further understood and agreed among the Lenders and the Agents that if either
Agent shall engage in any other transactions with a Borrower and shall have the
benefit of any collateral or security therefor which does not expressly secure
the obligations arising under this Agreement except by virtue of a so-called
dragnet clause or comparable provision, such Agent shall be entitled to apply
any proceeds of such collateral or security first in respect of the obligations
arising in connection with such other transaction before application to the
obligations arising under this Agreement.
7.11 Withholding Tax Exemption. Each Lender that is not organized and
incorporated under the laws of the United States or any State thereof agrees to
file with the Administrative Agent and the Borrowers, in duplicate, (a) on or
before the later of (i) the Effective Date and (ii) the date such Lender becomes
a Lender under this Agreement and (b) thereafter, for each taxable year of such
Lender (in the case of a Form 4224) or for each third taxable year of such
Lender (in the case of any other form) during which interest or fees arising
under this Agreement and the Notes are received, unless not legally able to do
so as a result of a change in United States income tax enacted, or treaty
promulgated, after the date specified in the preceding clause (a), on or prior
to the immediately following due date of any payment by any Borrower hereunder,
a properly completed and executed copy of either Internal Revenue Service Form
4224 or Internal Revenue Service Form 1001 and Internal Revenue Service Form W-8
or Internal Revenue Service Form W-9 and any additional form necessary for
claiming complete exemption from United States withholding taxes (or such other
form as is required to claim complete exemption from Unites States withholding
taxes), if and as provided by the Code or other pronouncements of the United
States Internal Revenue Service, and such Lender warrants to any Borrower that
the form so filed will be true and complete; provided that such Lender's failure
to complete and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as
the case may be, and any such additional form (or any successor form or forms)
shall not relieve any Borrower of any of its obligations under this Agreement,
except as otherwise provided in this Section 7.11.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Amendments, Etc. (a) No amendment, modification, termination or waiver
of any provision of this Agreement nor any consent to any departure therefrom
shall be effective unless the same shall be in writing and signed by the
Required Lenders and, to the extent any rights or duties of either Agent may be
affected thereby, such Agent, provided, however, that no such amendment,
modification, termination, waiver or consent shall, without the consent of the
Administrative Agent and all of the Lenders, (i) authorize or permit the
extension of time for, or any reduction of the amount of, any payment of the
principal of, or interest on, the Notes or any Letter of Credit reimbursement
obligation, or any fees or other amount payable hereunder, (ii) amend or
terminate the respective Commitments of any Lender set forth on the signature
pages hereof or modify the provisions of this Section regarding the taking of
any action under this Section or the provisions of Section 7.10 or the
definition of Required Lenders, or (iii) release any material amount of the
collateral or release any material Guarantor, and provided, further, that no
such amendment, modification, termination, waiver or consent, shall, without the
consent of the Required Revolving Credit Lenders, allow the Company to obtain a
Revolving Credit Advance if it would otherwise be unable to absent such
amendment, modification, termination, waiver or consent. All the terms and
agreements contained herein are solely for the benefit of the Lenders, and there
are no other parties who are intended to be benefited in any way whatsoever by
this Agreement.
LOAN AGREEMENT Page 62
(b) Any such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, no Lender that is
in default of any of its obligations, covenants or agreements under this
Agreement shall be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of this Agreement or any departure therefrom or any direction from
the Lenders to either Agent, and, for purposes of determining the Required
Lenders at any time when any Lenders are in default under this Agreement, the
Commitments and Advances of such defaulting Lenders shall be disregarded;
provided that no action of a type described in the proviso in Section 8.1(a)
shall be binding on a defaulting Lender without its written consent thereto.
8.2 Notices. (a) Except as otherwise provided in Section 8.2(c) hereof, all
notices and other communications hereunder shall be in writing and shall be
delivered or sent to the Borrowers, the Agents and the Lenders at the respective
addresses and numbers for notices set forth on the signature pages hereof, or to
such other address as may be designated by any Borrower, any Agent or any Lender
by notice to the other parties hereto. All notices and other communications
shall be deemed to have been given at the time of actual delivery thereof to
such address, or if sent by certified or registered mail, postage prepaid, to
such address, on the third day after the date of mailing, or in the case of
telex notice, upon receipt of the appropriate answerback, or, in the case of
facsimile notice, upon receipt of a confirmation mechanically produced by the
facsimile machine, provided, however, that notices to the Agent shall not be
effective until received.
(b) Notices by a Borrower to the Administrative Agent with respect to
terminations or reductions of the Commitments pursuant to Section 2.2, requests
for Advances pursuant to Section 2.4, requests for continuations or conversions
of Loans pursuant to Section 2.7 and notices of prepayment pursuant to Section
3.1 shall be irrevocable and binding on such Borrower.
(c) Any notice to be given by a Borrower to the Administrative Agent
pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by either Agent
or any Lender hereunder, may be given by telephone, and all such notices given
by a Borrower must be immediately confirmed in writing in the manner provided in
Section 8.2(a). Any such notice given by telephone shall be deemed effective
upon receipt thereof by the party to whom such notice is to be given.
8.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on the
part of either Agent or any Lender, nor any delay or failure on the part of
either Agent or any Lender in exercising any right, power or privilege hereunder
shall operate as a waiver of such right, power or privilege or otherwise
prejudice either Agent's or such Lender's rights and remedies hereunder; nor
shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to either Agent or any Lender under this
Agreement, the Notes or any Security Document is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right or remedy granted thereunder or now or hereafter
existing under any applicable law. Every right and remedy granted by this
Agreement, the Notes or any Security Document or by applicable law to either
Agent or any Lender may be exercised from time to time and as often as may be
deemed expedient by either Agent or any Lender and, unless contrary to the
express provisions of this Agreement, the Notes or any Security Document,
irrespective of the occurrence or continuance of any Unmatured Event or Event of
Default.
LOAN AGREEMENT Page 63
8.4 Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of any Borrower and any Guarantor
made herein or in any Security Document or in any certificate, report, financial
statement or other document furnished by or on behalf of any Borrower and any
Guarantor in connection with the negotiation and modification of this Agreement
shall be deemed to be material and to have been relied upon by the Lenders,
notwithstanding any investigation heretofore or hereafter made by any Lender or
on such Lender's behalf, and those covenants and agreements of the Borrowers set
forth in Section 3.7, 3.9 and 8.5 hereof shall survive the repayment in full of
the Advances and the termination of the Commitments.
8.5 Expenses; Indemnification. (a) The Company agrees to pay, or reimburse
the Administrative Agent for the payment of, on demand, (i) the reasonable fees
and expenses of counsel to the Administrative Agent, including without
limitation the fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman
and any other counsel retained by the Administrative Agent in connection with
the preparation, execution, delivery and administration of this Agreement, the
Notes, the Security Documents and the consummation of the transactions
contemplated hereby, and in connection with advising the Administrative Agent as
to its rights and responsibilities with respect thereto, and in connection with
any amendments, waivers or consents in connection therewith, and (ii) all stamp
and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing or recording of this Agreement, the Notes, the
Security Documents and the consummation of the transactions contemplated hereby,
and any and all liabilities with respect to or resulting from any delay in
paying or omitting to pay such taxes or fees, and (iii) all reasonable costs and
expenses of the Administrative Agent (including reasonable fees and expenses of
counsel and whether incurred through negotiations, legal proceedings or
otherwise) in connection with any Unmatured Event or Event of Default or the
enforcement of, or the exercise or preservation of any rights under, this
Agreement or the Notes or any Security Document or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement and (iv) all reasonable costs and expenses of the Administrative Agent
(including reasonable fees and expenses of counsel) in connection with any
action or proceeding relating to a court order, injunction or other process or
decree restraining or seeking to restrain the Administrative Agent from paying
any amount under, or otherwise relating in any way to, any Letter of Credit and
any and all costs and expenses which any of them may incur relative to any
payment under any Letter of Credit.
(b) The Company agrees to indemnify each Lender, each Agent and each
of their respective officers, directors, employees and agents (collectively, the
"Indemnified Parties") and hold each Indemnified Party harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind,
including, without limitation, the reasonable fees and disbursements of counsel,
which may be incurred by any Indemnified Party in connection with any
investigative, administrative or judicial proceeding (whether or not such
Indemnified Party shall be designated a party thereto) (collectively, the
"Indemnified Liabilities") at any time relating to or arising out of this
Agreement, the Notes, the Security Document or any related agreement or any
actual or proposed use of proceeds of Advance hereunder or without limiting the
foregoing, any of the following:
(i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Advance;
(ii) the entering into and performance of this Agreement and any
other agreement or instrument executed in connection herewith by any of the
Indemnified Parties (including any action brought by or on behalf of the Company
as the result of any determination by any Lender not to make any Advance);
LOAN AGREEMENT Page 64
(iii) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Company or any of its Subsidiaries of
any portion of the stock or assets of any Person, whether or not any Indemnified
Party is a party thereto;
(iv) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to any release
by the Company or any of its Subsidiaries of any Hazardous Material or any
violations of Environmental Laws; or
(v) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real property
owned or operated by the Company or any Subsidiary thereof of any Hazardous
Material (including any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under any Environmental Law), regardless of
whether caused by, or within the control of, the Company or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of the Company conducted subsequent to a foreclosure on
such property by any Indemnified Party or by reason of the relevant Indemnified
Party's gross negligence or willful misconduct or breach of this Agreement, and
if and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The Company shall be obligated to indemnify
the Indemnified Parties for all Indemnified Liabilities subject to and pursuant
to the foregoing provisions, regardless of whether the Company or any of its
Subsidiaries had knowledge of the facts and circumstances giving rise to such
Indemnified Liability.
Provided that no Indemnified Party shall have the right to be indemnified
hereunder for its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction, or any disputes solely amongst the Indemnified
Parties or any of them or for any breach by any Indemnified Party of this
Agreement.
8.6 Successors and Assigns. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided that a Borrower may not, without the prior consent of all the
Lenders, assign its rights or obligations hereunder or under the Notes or any
Security Document and the Lenders shall not be obligated to make any Advance
hereunder to any entity other than a Borrower.
(b) Any Lender may sell a participation interest to any financial
institution or institutions, and such financial institution or institutions may
further sell, a participation interest (undivided or divided) in, the Advances
and such Lender's rights and benefits under this Agreement, the Notes and the
Security Documents, and to the extent of that participation, such participant or
participants shall have the same rights and benefits against the Borrowers under
Section 6.2(c) as it or they would have had if participation of such participant
or participants were the Lender making the Advances to the Borrowers hereunder,
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unmodified and fully effective and enforceable against such Lender, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
its Notes for all purposes of this Agreement, (iv) the Borrowers, the Agents and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (v)
such Lender shall not grant to its participant any rights to consent or withhold
consent to any action taken by such Lender or either Agent under this Agreement
other than action requiring the consent of all of the Lenders hereunder and (iv)
such participation shall in no event be less than $5,000,000 and in integral
multiples of $1,000,000 thereafter.
LOAN AGREEMENT Page 65
The Administrative Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement and the
transactions contemplated hereby and enforcing or exercising any rights or
remedies of the Administrative Agent provided under this Agreement, the Notes,
any Security Documents or otherwise. In furtherance of such agency, the
Administrative Agent may from time to time direct that the Borrower provide
notices, reports and other documents contemplated by this Agreement (or
duplicates thereof) to such agent. Each of the Borrowers hereby consents to the
appointment of such agent and agrees to provide all such notices, reports and
other documents and to otherwise deal with such agent acting on behalf of the
Administrative Agent in the same manner as would be required if dealing with the
Administrative Agent itself.
(c) Each Lender may, with the prior written consent of the Borrowers
(except in the case of any assignment to another Lender) and the Administrative
Agent, which consent from the Borrowers shall not be unreasonably withheld and
may not be withheld if any Event of Default has occurred and is continuing,
assign to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Advances owing to it and the Note or Notes held
by it); provided, however, that (i) each such assignment shall be of a uniform,
and not a varying, percentage of all rights and obligations, (ii) except in the
case of an assignment of all of a Lender's rights and obligations under this
Agreement, (A) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $5,000,000 (except in the case of any assignment to another Lender, in
which case no minimum shall apply), and in integral multiples of $1,000,000
thereafter, or such lesser amount as the Borrowers and the Administrative Agent
may consent to and (B) after giving effect to each such assignment, the amount
of the Commitment of the assigning Lender shall in no event be less than
$5,000,000, and (iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of Exhibit I hereto (an
"Assignment and Acceptance") and execute such agreements required by the
Administrative Agent to become parties to any intercreditor agreement and
participation agreement to which the Lenders are a party, together with any Note
or Notes subject to such assignment and a processing and recordation fee of
$3,000. Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.6 and such other
LOAN AGREEMENT Page 66
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance on either Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such assignee
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement as are delegated
to such Agent by the terms hereof, together with such powers and discretion as
are reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender.
(e) The Administrative Agent shall maintain at its address designated
on the signature pages hereof a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agents and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrowers. Within five Business Days after its receipt of
such notice, the appropriate Borrower(s), at their own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Note or
Notes a new Note or Notes to the order of such assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained a Commitment hereunder, a new Note to the
order of the assigning Lender in an amount equal to the Commitment retained by
it hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit I hereto.
(g) No Borrower shall be liable for any costs or expenses of any
Lender in effectuating any participation or assignment under this Section 8.6.
(h) The Lenders may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.6, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in, or assign, all or any
portion of its rights under this Agreement (including, without limitation, the
Loans owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Lender in accordance with Regulation A of the Board of Governors of the
Federal Reserve System; provided that such creation of a security interest or
assignment shall not release such Lender from its obligations under this
Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
LOAN AGREEMENT Page 67
8.8 Governing Law. This Agreement is a contract made under, and shall be
governed by and construed in accordance with, the law of the State of Michigan
in the same manner applicable to contracts made and to be performed entirely
within such State and without giving effect to choice of law principles of such
State. Each of the Borrowers further agrees that any legal action or proceeding
with respect to this Agreement, the Notes or any Security Document or the
transactions contemplated hereby may be brought in any court of the State of
Michigan, or in any court of the United States of America sitting in Michigan,
and each of the Borrowers hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property and irrevocably consents to the service of process in connection with
any such action or proceeding by personal delivery to such Borrower or by the
mailing thereof by registered or certified mail, postage prepaid to such
Borrower at its address set forth on the signature pages hereof or as provided
pursuant to Section 8.2. Nothing in this paragraph shall affect the right of the
Lenders and the Agents to serve process in any other manner permitted by law or
limit the right of the Lenders or the Agents to bring any such action or
proceeding against a Borrower or property in the courts of any other
jurisdiction. Each of the Borrowers hereby irrevocably waives any objection to
the laying of venue of any such suit or proceeding in the above described
courts.
8.9 Table of Contents and Headings. The table of contents and the headings
of the various subdivisions hereof are for the convenience of reference only and
shall in no way modify any of the terms or provisions hereof.
8.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.
8.11 Integration and Severability. This Agreement embodies the entire
agreement and understanding between each of the Borrowers and the Agents and the
Lenders, and supersedes all prior agreements and understandings, relating to the
subject matter hereof. In case any one or more of the obligations of a Borrower
under this Agreement, the Notes or any Security Document shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining obligations of such Borrower shall not in any
way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of such Borrower under this Agreement, the
Notes or any Security Document in any other jurisdiction.
8.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of an Unmatured Event or an Event of Default or any event or
condition which with notice or lapse of time, or both, could become such an
Unmatured Event or an Event of Default if such action is taken or such condition
exists.
8.13 Interest Rate Limitation. Notwithstanding any provision of this
Agreement, the Notes or any Security Document, in no event shall the amount of
interest paid or agreed to be paid by a Borrower exceed an amount computed at
the highest rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Agreement, the
Notes or any Security Document at the time performance of such provision shall
be due, shall involve exceeding the interest rate limitation validly prescribed
by law which a court of competent jurisdiction may deem
LOAN AGREEMENT Page 68
applicable hereto, then, ipso facto, the obligations to be fulfilled shall be
reduced to an amount computed at the highest rate of interest permissible under
applicable law, and if for any reason whatsoever the Lender shall ever receive
as interest an amount which would be deemed unlawful under such applicable law
such interest shall be automatically applied to the payment of principal of the
Advances outstanding hereunder (whether or not then due and payable) and not to
the payment of interest, or shall be refunded to such Borrower if such principal
and all other obligations of such Borrower to the Lenders have been paid in
full.
8.14 Unification of Certain Currencies. Notwithstanding the commencement of
the third stage of European Monetary Union ("EMU") (which as of the date of this
Agreement is scheduled to occur on January 1, 1999), all Advances denominated in
any Permitted Currency subject to the EMU shall continue to be so denominated,
interest rates with respect to Loans denominated in any Permitted Currency
subject to the EMU shall continue to be determined by reference to such
Permitted Currency in accordance with the procedures specified herein, all
calculations with respect to Advances outstanding in such Permitted Currency
shall continue to be made in units of such currency, and the obligations of the
Borrowers with respect to payments of principal and interest on Advances
outstanding in such Permitted Currency shall continue to be payable in such
currency, all without regard to the conversion rates or rounding rules referred
to in European Council Regulation 96/0249 (CNS). Following the commencement of
the third stage of EMU and prior to the first issuance of euro-bank notes by the
European Central Bank pursuant to Article 105A(1) of the Treaty Establishing the
European Community, as amended (which as of the date of this Agreement is
scheduled to occur on January 1, 2002), each of the Borrowers, the Lenders, and
the Agents agrees to negotiate in good faith an amendment to this Agreement,
satisfactory in form and substance to each of the Borrowers, the Lenders, and
the Agents to modify this Agreement in light of EMU.
8.15 Year 2000 Problem. The Company and its Subsidiaries have reviewed
the areas within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the "Year 2000 Problem" (that is, the risk that computer applications used by
the Company and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999). Based on such review and program, the Company reasonably
believes that the "Year 2000 Problem" will not have a Material Adverse Effect.
8.16 WAIVER OF JURY TRIAL . THE LENDERS AND THE AGENTS AND EACH OF THE
BORROWERS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER OF THEM. NEITHER ANY LENDER,
EITHER AGENT NOR ANY BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY ANY
PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY SUCH PARTY.
[The rest of this page intentionally left blank.]
LOAN AGREEMENT Page 69
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the 23rd day of March, 1998, which shall be the
Effective Date of this Agreement.
Address for Notices: NUMATICS, INCORPORATED
1450 North Milford Road
Highland, Michigan 48357
Attention: Chief Financial Officer By: /s/ John H. Welker
Facsimile No.: (810) 887-2142 --------------------------
Its: President
-------------------------
Address for Notices: NUMATICS, LTD.
c/o Numatics, Incorporated
1450 North Milford Road By: /s/ Robert P. Robeson
Highland, Michigan 48357 --------------------------
Attn: Chief Financial Officer Its: Secretary
Facsimile No.: (810) 887-2142 -------------------------
Address for Notices: NUMATICS GMBH
c/o Numatics, Incorporated
1450 North Milford Road By: /s/ John H. Welker
Highland, Michigan 48357 --------------------------
Attn: Chief Financial Officer Its: General Manager
Facsimile No.: (810) 887-2142 -------------------------
By:
--------------------------
Its:
-------------------------
LOAN AGREEMENT Page 70
611 Woodward Avenue NBD BANK, as Administrative Agent
Detroit, Michigan 48226 and as a Lender
Attention: Thomas A. Lakocy By: /s/ Thomas A. LaKocy
Facsimile No.: (313) 225-2290 -----------------------------
Its: Senior Vice President
Revolving Credit Commitments: ----------------------
(a) Tranche A Revolving
Credit Commitment: $16,000,000
(b) Tranche B Revolving
Credit Commitment: $ 0
Term Loan A Commitments:
(a) Company Term Loan
A Commitment: $8,000,000
(b) Numatics Ltd. Term
Loan A Commitment: $ 0
(c) Numatics GmbH Term
Loan A Commitment: $ 0
Term Loan B Commitments:
(a) Company Term Loan
B Commitment: $6,500,000
(b) Numatics GmbH Term
Loan B Commitment: $ 0
LOAN AGREEMENT Page 71
The First National Bank of Chicago THE FIRST NATIONAL BANK OF CHICAGO
c/o NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Thomas A. Lakocy By: /s/ Thomas A. LaKocy
Facsimile No.: (313) 225-2290 ----------------------------
Its: Senior Vice President
-----------------------
Revolving Credit Commitments:
(a) Tranche A Revolving
Credit Commitment: $ 0
(b) Tranche B Revolving
Credit Commitment: $3,000,000
Term Loan A Commitments:
(a) Company Term Loan
A Commitment: $ 0
(b) Numatics Ltd. Term
Loan A Commitment: $ 0
(c) Numatics GmbH Term
Loan A Commitment: $2,000,000
Term Loan B Commitments:
(a) Company Term Loan
B Commitment: $ 0
(b) Numatics GmbH Term
Loan B Commitment: $2,000,000
LOAN AGREEMENT Page 72
First Chicago NBD Bank, Canada FIRST CHICAGO NBD BANK, CANADA
c/o NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: R. Ross Matthews By: /s/ R. Ross Mathews
Facsimile No.: (313) 225-1689 --------------------------
Its: Vice President
--------------------
Revolving Credit Commitments:
(a) Tranche A Revolving
Credit Commitment: $ 0
(b) Tranche B Revolving
Credit Commitment: $ 0
Term Loan A Commitments:
(a) Company Term Loan
A Commitment: $ 0
(b) Numatics Ltd. Term
Loan A Commitment: $2,000,000
(c) Numatics GmbH Term
Loan A Commitment: $ 0
Term Loan B Commitments:
(a) Company Term Loan
B Commitment: $ 0
(b) Numatics GmbH Term
Loan B Commitment: $ 0
LOAN AGREEMENT Page 73
BankBoston, N.A. BANKBOSTON, N.A.,
100 Federal as Documentation Agent and as a Lender
Boston, Massachusetts 02106-2016
Attention: Christopher Holtz By: /s/ Christopher Holtz
Facsimile No. (617) 434-6685 --------------------------
Its: Vice President
---------------------
Revolving Credit Commitments:
(a) Tranche A Revolving
Credit Commitment: $16,000,000
(b) Tranche B Revolving
Credit Commitment: $ 0
Term Loan A Commitments:
(a) Company Term Loan
A Commitment: $8,000,000
(b) Numatics Ltd. Term
Loan A Commitment: $ 0
(c) Numatics GmbH Term
Loan A Commitment: $ 0
Term Loan B Commitments:
(a) Company Term Loan
B Commitment: $6,500,000
(b) Numatics GmbH Term
Loan B Commitment: $ 0
LOAN AGREEMENT Page 74
EXHIBIT 4(2)(1)
EXHIBIT A
BORROWING BASE CERTIFICATE
--------------------------
[Date]
NBD Bank, as Administrative Agent for the Lenders
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
Reference is made to the Amended and Restated Loan Agreement, dated as of
March 23, 1998 (the "Loan Agreement"), among Numatics, Incorporated, a Michigan
corporation (the "Company"), Numatics Ltd., a corporation organized and existing
under the laws of Canada, Numatics GmbH, a corporation organized and existing
under the laws of the Federal Republic of Germany, the lenders named therein
(the "Lenders"), Bank Boston, N.A., as documentation agent for the lenders, and
you, as administrative agent for the lenders. Capitalized terms used but not
defined herein shall have the respective meanings assigned to them in the Loan
Agreement.
The Company hereby represents and warrants to the Lenders that the
following figures and computations are true and accurate as of the close of
business on ___________, 19__:
Numatics Numatics
Consolidated Inc. Ltd.
Gross Accounts
- --------------------------------------------------------------------------------
Less:
Commissions
- --------------------------------------------------------------------------------
Net Accounts (A)
Less:
(a) Accounts which remain unpaid
more than 120 days after
invoice date
- --------------------------------------------------------------------------------
(b) Accounts with respect to
which the customer is an
Affiliate of Company,
Numatics Ltd. or any
Guarantor or a director
officer, agent, stockholder
or employee of Company or and
their respective Affiliates
- --------------------------------------------------------------------------------
(c) Accounts with respect to
which there is any unresolved
dispute with the respective
customer (but only to the
extent of such dispute),
except for those included
above
- --------------------------------------------------------------------------------
(d) Accounts evidenced by an
instrument (as defined in
Article 9 of the UCC) not in
the possession of
Administrative Agent
- --------------------------------------------------------------------------------
(e) Accounts with respect to
which the Collateral Agent,
on behalf of the Lenders,
does not have a valid, first
priority and fully perfected
security interest
- --------------------------------------------------------------------------------
(f) Accounts subject to any lien
except those in
2
favor of Collateral Agent
- --------------------------------------------------------------------------------
(g) Accounts with respect to
which the customer is the
subject of any bankruptcy or
other insolvency proceeding
- --------------------------------------------------------------------------------
(h) Accounts with respect to
which the customer's
obligation to pay is
conditional or subject to a
repurchase obligation or
right to return, including
bill and hold sales,
guaranteed sales, sale or
return transactions, sales on
approval or consignment
- --------------------------------------------------------------------------------
Total ineligible Accounts (B)
- --------------------------------------------------------------------------------
Eligible Accounts: (A-B)
- --------------------------------------------------------------------------------
Eligible Accounts Borrowing Base:
(C) (80% of Eligible Accounts)
Gross FIFO inventory
- --------------------------------------------------------------------------------
3
Less:
Total Reserves
- --------------------------------------------------------------------------------
Net Inventory (D)
Less:
(a) Finished goods which do not
meet the specifications of
the purchase order for such
goods
- --------------------------------------------------------------------------------
(b) Inventory with respect to
which Collateral Agent does
not have a valid, first
priority and fully perfected
security interest
- --------------------------------------------------------------------------------
(c) Inventory subject to lien
except those in favor of
Collateral Agent
- --------------------------------------------------------------------------------
(d) Inventory produced in
violation of the Fair Labor
Standards Act and subject to
the so called "hot-goods"
provisions contained in Title
U.S. 215
- --------------------------------------------------------------------------------
Total Ineligible Inventory (E)
- --------------------------------------------------------------------------------
4
Eligible Inventory (D-E)
Eligible Inventory Borrowing Base
(The lesser of 60% of Eligible
Inventory or $15,000,000) (F)
- --------------------------------------------------------------------------------
Total Borrowing Base (C+F) ====================
Determination of Mandatory Prepayment
1. Borrowing Base (item C+F above) ..................... $
-----------
2. Less: Aggregate principal amount of Revolving
Credit Advances outstanding to or for the
benefit of the Company pursuant to the
Tranche A Revolving Credit Commitments .............. $
-----------
3. Excess (or deficiency) in Borrowing Base
(if deficiency, prepayment required in amount
of deficiency) ...................................... $
===========
5
The Company hereby further represents and warrants to the Lenders that as
of the close of business on _____________, ______:
1. The representations and warranties contained in Article IV of the Loan
Agreement and in the Security Documents are true and accurate on and as of such
date, as if such representations and warranties were made on and as of such
date.
2. No Event of Default or Unmatured Event has occurred and is continuing.
NUMATICS, INCORPORATED
By:___________________________________
Its:_______________________________
6
EXHIBIT B
ENVIRONMENTAL CERTIFICATE
-------------------------
This Environmental Certificate (this "Certificate") is delivered by each
of the undersigned pursuant to Section 2.5(i) of the Amended and Restated Loan
Agreement dated as of March 23, 1998 (the "Loan Agreement") by and among
Numatics, Incorporated, a Michigan corporation (the "Company"), Numatics Ltd., a
corporation organized and existing under the laws of Canada ("Numatics LTD"),
Numatics GmbH, a corporation organized and existing under the laws of the
Federal Republic of Germany ("Numatics GmbH", together with the Company and
Numatics Ltd., the "Borrowers"), the lenders who are parties thereto
(collectively, the "Lenders" and individually, a "Lender"), BankBoston, N.A, a
national banking association, as documentation agent for the Lenders, and NBD
Bank a Michigan banking corporation, as administrative agent for the Lenders
(the "Administrative Agent" and, collectively with the Collateral Agent (as
defined below), the "Agents").
In consideration of and in order to induce the Lenders to loan money or
extend credit in connection with certain transactions to the Borrowers, pursuant
to the requirements of the Loan Agreement, each of the undersigned makes the
representations, warranties and covenants set forth in this Certificate to the
Agents and the Lenders with respect to all Property and activities of it and its
Subsidiaries.
I. Definitions
-----------
A. "Collateral Agent" shall mean NBD Bank, a Michigan banking corporation.
B. "Governmental Regulation" means any law, regulation, ordinance or
similar requirement of the United States, any state, and any county, city or
other agency or subdivision of the United States or any state.
C. "Hazardous Materials" includes, without limitation, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances or related materials defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
-------
amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and
-------
Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and in the
-------
regulations adopted and publications promulgated pursuant thereto, or any other
federal, state or local government law, ordinance, rule or regulation.
D. "Indebtedness" means all loans made or credit extended to the Borrowers
by any of the Lenders or the Agents at any time, including all Loans made, and
Letters of Credit issued, pursuant to the Loan Agreement.
E. "Property" means all property now or hereafter owned, leased, or used
by the Company or any of its Subsidiaries, including but not limited to land
(including soil, ground water and surface water located on, in or under the
Property), buildings, equipment and/or inventory.
F. Other capitalized terms that are used, but not defined herein, shall
have the meanings set forth in the Loan Agreement.
II. Representations and Warranties.
------------------------------
Except as set forth on the attached Schedule A as previously reviewed by
the Agents and the Lenders, each of the undersigned represents and warrants to
the Agents and the Lenders as follows:
A. Violation. (1) Neither it nor any of its Subsidiaries has used
---------
Hazardous Materials (as defined above) on, from or affecting the Property in any
manner which violates any Governmental Regulation governing the use, storage,
treatment transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials and, to the best of it's knowledge, no prior
owner of the Property or any existing or prior tenant or occupant has used
Hazardous Materials on, from or affecting the Property in any manner which
violates any Governmental Regulation governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials; and (2) neither it nor any of its Subsidiaries has any
outstanding notice of any violation of any Governmental Regulation governing the
use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials at the Property and, to the best
of it's and each of its Subsidiary's knowledge, there have been no actions
commenced or threatened by any party for noncompliance which affects the
Property.
B. Facilities. The Property has adequate water supply, sewage and waste
----------
disposal facilities.
C. Contamination and Pollution. It shall keep or cause the Property to be
---------------------------
kept free of Hazardous Materials except to the extent that such Hazardous
Materials are stored and/or used in compliance with all applicable Governmental
Regulations; and, without limiting the foregoing, it shall not cause or permit
the Property to be used to generate, manufacture, refine, transport, treat,
store, handle, dispose of, transfer, produce, or process Hazardous Materials,
except in compliance with all applicable Governmental Regulations, nor shall it
cause or permit, as a result of any intentional or unintentional act or omission
on the part of it, any Subsidiary or any tenant, subtenant or occupant, a
release, spill, leak or emission of Hazardous Materials onto the Property or
onto any other contiguous property.
D. Clean-up. The Property does not appear on the National Priority List
--------
(as defined under federal law) or any state listing which identifies sites for
remedial clean-up and/or investigatory actions. To the best of it's and each of
it's knowledge, information and belief, the
ENVIRONMENTAL CERTIFICATE
-------------------------
-2-
Property has not been contaminated with substances which would give rise to a
clean-up obligation under any Governmental Regulation or under common law.
E. Licenses. All federal, state and local permits, licenses and
--------
authorizations required for present or past use of the Property or activities of
it and each of it's Subsidiary have been obtained, are presently in effect and
are listed on the attached Schedule A. There is and has been full compliance
with all such permits, licenses or authorizations.
F. Audit, Remedial Action. The Company shall conduct and complete all
----------------------
investigations reasonably requested by the Required Lenders, including a
comprehensive environmental audit, studies, sampling, and testing, and all
remedial, removal and other actions necessary to clean up and remove all
Hazardous Materials on, under, from or affecting the Property as required by all
applicable Governmental Regulations and in accordance with the orders and
directives of all federal, state and local governmental authorities. Such
testing, remedial, removal and other actions shall include those required by
federal and state regulations governing underground storage tank systems. If the
Company fails to conduct any such investigations or environmental audit required
above, then the Agents or the Required Lenders may at their option and at the
expense of the Company, conduct such audit.
III. Affirmative covenants.
---------------------
Each of the undersigned shall:
-----
A. Do all things necessary to assure that the representations, warranties
and covenants set forth in this Certificate are met and continue to be accurate
and correct.
B. Provide a newly executed copy of this Certificate to the Agents each
year within 30 calendar days after the end of each fiscal year of the Company.
C. Assure that all entities acting on behalf of it are aware of and comply
with the obligations of it under this Certificate.
D. Conduct periodic reviews of the use of the Property and it's activities
to assure compliance with it's obligations under this Certificate.
E. Promptly (i) notify the Agents in writing of any occurrence or
development or claim filed by it or against it which would cause any
representation, warranty or covenant set forth in this Certificate to be
incorrect and (ii) take steps necessary to mitigate the effect of such
noncompliance.
IV. Negative Covenant. None of the undersigned shall take any action or allow
-----------------
the Property to be used in such a manner that any representation, warranty or
covenant set forth in this Certificate becomes incorrect or is not complied
with.
ENVIRONMENTAL CERTIFICATE
-------------------------
-3-
V. Indemnification. Subject to the limitations set forth below, each of the
---------------
undersigned shall defend, indemnify and hold harmless each Agent and each
Lender, their employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs or
expenses, including, without limitation, attorneys' and consultants' fees,
investigation and laboratory fees, court costs and litigation expenses, known or
unknown, contingent or otherwise, arising out of or in any way related to (a)
the presence, disposal, release or threatened release of any Hazardous Materials
on, over, under, from or affecting the Property or the soil, water, vegetation,
buildings, personal property, persons or animals thereon, (b) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to such Hazardous Materials on the Property, (c) any lawsuit
brought or threatened, settlement reached or government order relating to such
Hazardous Materials with respect to the Property, and/or (d) any violation of
laws, orders, regulations, requirements or demands of government authorities, or
any policies or requirements of the Agent, which have been disclosed in writing
to the Company, which are based upon or in any way related to such Hazardous
Materials used on the Property. The indemnity obligations under this paragraph
are specifically limited as follows:
(i) None of the undersigned shall have any indemnity obligations with
respect to Hazardous Materials that are first introduced to the Property or any
part of the Property subsequent to the date that it's or its Subsidiary's
interest in and possession of the Property or any part of the Property shall
have ended or have been fully terminated by foreclosure of any mortgage held by
the Collateral Agent or acceptance by the Collateral Agent of a deed in lieu of
foreclosure or other collateral liquidation procedure;
(ii) None of the undersigned shall have any indemnity obligation with
respect to Hazardous Materials that are first introduced to the Property by any
Agent, any Lender, or any of their employees, agents, officers, directors or any
of their successors or assigns.
Each of the undersigned agrees that in the event any mortgage held by the
Collateral Agent is foreclosed or any Borrower or any Guarantor tenders a deed
in lieu of foreclosure, such Borrower or Guarantor shall deliver the Property to
the Collateral Agent free of any and all Hazardous Materials which are then
required to be removed (whether over time or immediately) pursuant to applicable
Governmental Regulations affecting the Property.
The provisions of this paragraph shall be in addition to any and all other
obligations and liabilities the undersigned may have to the Agents and the
Lenders (or any of them) under the Indebtedness, any loan document, and in
common law, and shall survive (a) the repayment of all sums due for the
Indebtedness, (b) the satisfaction of all of the other obligations of the
Borrowers under any loan document, (c) the discharge of any mortgage held by the
Collateral Agent or any Lenders and (d) the foreclosure of any mortgage held by
the Collateral Agent or any Lender or acceptance of a deed in lieu of
foreclosure. It is the intention of the undersigned, the Agents and the Lenders
that the indemnity provisions of this paragraph shall only apply to an action
commenced against any owner or operator of the Property in which any interest of
any
ENVIRONMENTAL CERTIFICATE
-------------------------
-4-
Agent or any Lender is threatened or any claim is made against any Agent or any
Lender for the payment of money.
VI. Miscellaneous.
-------------
All of the representations, warranties and covenants set forth in this
Certificate shall be continuing and shall survive the execution of this
Certificate until all of the Indebtedness is fully paid and the Borrowers'
obligations to the Agents and the Lenders in connection with the Indebtedness
are fully performed.
This Environmental Certificate is executed on March 23, 1998.
NUMATICS, INCORPORATED
By:__________________________
Its:______________________
NUMATICS LTD.
By:__________________________
Its:______________________
MICRO-FILTRATION, INC.
By:__________________________
Its:______________________
NUMATECH, INC.
By:__________________________
Its:______________________
ENVIRONMENTAL CERTIFICATE
-------------------------
-5-
NUMATION, INC.
By:__________________________
Its:______________________
ENVIRONMENTAL CERTIFICATE
-------------------------
-6-
ULTRA AIR PRODUCTS, INC.
By:__________________________
Its:______________________
MICROSMITH, INC.
By:__________________________
Its:______________________
I.A.E. INCORPORATED
By:__________________________
Its:______________________
ENVIRONMENTAL CERTIFICATE
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EXHIBIT C
AMENDED AND RESTATED GUARANTY AGREEMENT
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THIS AMENDED AND RESTATED GUARANTY AGREEMENT, dated as of March 23,
1998 (this "Guaranty"), made by NUMATICS, INCORPORATED, a Michigan corporation
(the "Company"), NUMATION, INC., a Michigan corporation, NUMATECH, INC., a
Michigan corporation, MICRO-FILTRATION, INC., a Michigan corporation, ULTRA AIR
PRODUCTS, INC., a Michigan corporation, I.A.E. INCORPORATED, a Michigan
corporation, and MICROSMITH, INC., an Arizona corporation (each of the above
corporations including the Company referred to as a "Guarantor"), in favor of
---------
NBD BANK, a Michigan banking corporation, as administrative agent (in such
capacity, the "Administrative Agent") for the benefit of itself, BANKBOSTON,
N.A., a national banking association, as documentation agent (in such capacity,
the "Documentation Agent" and, collectively with the Administrative Agent, the
"Agents") and the lenders (the "Lenders") now or hereinafter parties to the Loan
Agreement described below.
W I T N E S S E T H:
A. The Agents and the Lenders have entered into the Amended and
Restated Loan Agreement dated as of March 23, 1998 (as amended or modified from
time to time, including any agreement entered into in substitution therefor, the
"Loan Agreement") with the Company, Numatics GmbH, a corporation organized and
existing under the laws of the Federal Republic of Germany ("Numatics GmbH"),
and Numatics Ltd., a corporation organized and existing under the laws of Canada
("Numatics Ltd." and, collectively with the Company and Numatics GmbH, the
"Borrowers") pursuant to which, among other things, the Lenders agreed, subject
to the terms and conditions thereof, to extend credit to the Borrowers.
B. The Guarantors and the Borrowers and the Company's other
subsidiaries are engaged as an integrated group and the integrated operation
requires financing on such a basis that credit supplied to the Borrowers can be
made available from time to time to the Company and its subsidiaries, including
without limitation the Guarantors, as required for the continued successful
operation of the Company and its subsidiaries and the integrated operation as a
whole. The Company and the Borrowers have requested that the Lenders lend and
make credit available to the Borrowers for the purpose of financing the
integrated operations of the Company and its subsidiaries with the Guarantors
expecting to derive benefit, directly or indirectly, from the loans and letters
of credit extended by the Lenders to the Borrowers, both in their separate
capacity and as a member of the integrated group, inasmuch as the successful
operation and condition of each Guarantor is dependent upon the continued
successful performance of the functions of the integrated group as a whole.
C. The Guarantors desire that the Agents and the Lenders enter into
the Loan Agreement for the purposes described above and are willing to enter
into this Guaranty in order to provide inducement to the Lenders to enter into
the Loan Agreement, each Guarantor has
reviewed and is familiar with the Loan Agreement, the Notes, the Security
Documents and all documents, agreements, instruments and certificates evidencing
or otherwise pertaining thereto and to any other indebtedness, obligations and
liabilities of to Borrowers to the Lenders, being herein collectively referred
to as the "Operative Documents") and each Guarantor has determined that it is in
its best interest and to its financial benefit that the Borrowers enter into the
Loan Agreement and the transactions contemplated thereby, and that it enter into
this Guaranty.
D. This Guaranty amends and restates in full that certain Guaranty
Agreement, dated as of January 3, 1996, made by all Guarantors, with the
exception of I.A.E. Incorporated, in favor of NBD Bank, a Michigan banking
corporation, as administrative agent (the "Original Guaranty").
NOW, THEREFORE, as an inducement to the Lenders to enter into such
transactions with the Borrowers, the parties agree with the Lenders as follows:
1. Guarantee of Obligations. A. Each Guarantor hereby, jointly and
------------------------
severally;
(i) guarantees to the Lenders, as principal obligor and not as
surety only, the prompt payment, when due, whether by scheduled maturity,
acceleration or otherwise, any and all Advances made to the Borrowers pursuant
to the Loan Agreement and accrued and unpaid interest thereon (including
interest which may otherwise cease to accrue by operation of any insolvency law,
rule, regulation or interpretation thereof) when due, whether by scheduled
maturity, acceleration or otherwise, and all other indebtedness of the Borrowers
to the Lenders, whether now existing or hereafter arising, including, without
limitation, default interest, indemnification payments and all reasonable costs
and expenses incurred by the Administrative Agent in connection with enforcing
any obligations of any Borrower thereunder, including without limitation the
reasonable fees and disbursements of counsel;
(ii) guarantees to the Agents and the Lenders the prompt and
punctual performance and observance of each and every term, covenant or
agreement contained in the Operative Documents, within any grace period
applicable thereto, to be performed or observed on the part of the Borrowers;
(iii) guarantees to the Lenders the prompt payment of all
indebtedness, obligations and liabilities of the Borrowers or any Subsidiary in
respect of any interest rate or currency swap agreements or other similar
transactions with any Lender;
(iv) guarantees to the Lenders the prompt and complete payment
of any and all other indebtedness, obligations and liabilities of each of the
Borrowers and their respective Subsidiaries to any Agent or any Lender, whether
now existing or hereafter arising, direct or indirect (including without
limitation, any participation interest acquired by any Lender in such
indebtedness, obligations or liabilities of any Borrower to any other person),
absolute or contingent, joint and/or several, secured or unsecured, arising by
operation of law or otherwise, and whether incurred by any Borrower as
principal, surety, endorser, guarantor,
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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accommodation party or otherwise, including without limitation any increase in
the indebtedness, obligations and liabilities guaranteed hereby (and each
Guarantor hereby acknowledges and agrees that any such increase shall be
guaranteed hereby); and
(v) agrees to make prompt payment to the Administrative Agent,
on demand, of any and all reasonable costs and expenses incurred by the
Administrative Agent in connection with enforcing the obligations of the
Guarantors hereunder, including, without limitation, the reasonable fees and
disbursements of counsel.
All of the above-described indebtedness, obligations, liabilities and
undertakings are collectively referred to as the "Guaranteed Obligations". It is
----------------------
expressly understood and agreed that, for purposes of this Guaranty, references
to the Lenders shall include, and the benefit of this Guaranty shall extend to,
all foreign branches and all foreign affiliates of each of the Lenders and the
Guaranteed Obligations shall include all of the above-described indebtedness,
obligations, liabilities and undertakings whether owed to each of the Lenders or
to any of such foreign branches or foreign affiliates.
(b) If for any reason any duty, agreement or obligation of any
Borrower contained in the Operative Documents shall not be performed or observed
by any Borrower as provided therein, or if any amount payable under or in
connection with the Operative Documents shall not be paid in full when the same
becomes due and payable, each Guarantor undertakes, but without duplication, to
perform or cause to be performed, within any grace period applicable thereto,
each of such duties, agreements and obligations and to pay forthwith each such
amount to the Administrative Agent for the benefit of the Lenders regardless of
any defense or setoff or counterclaim which any Borrower may have or assert, and
regardless of any other condition or contingency.
(c) The books and records of each of the Lenders and any
certificate delivered by any Lender to the Guarantors in respect thereof, shall
be prima facie evidence of the amount owing and unpaid in respect of the
Guaranteed Obligations. The failure to record any such information on such books
and records shall not, however, limit or otherwise affect the obligations of any
Borrower to pay such amount or the obligations of the Guarantors hereunder with
respect thereto.
2. Nature of Guaranty. This Guaranty is an absolute, unconditional
------------------
and irrevocable guaranty of payment and not a guaranty of collection and is
wholly independent of and in addition to other rights and remedies of the
Lenders and the Agents and is not contingent upon the pursuit by any Agent or
any Lender of any such rights and remedies, such pursuit being hereby waived by
each Guarantor. The obligations of each Guarantor under this Guaranty are joint
and several with any other guarantor of the Guaranteed Obligations, and such
obligations of each Guarantor may be enforced against each Guarantor separately
or against any two or more jointly, or against some separately or some jointly.
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-3-
3. Waivers and Other Agreements. Each Guarantor hereby
----------------------------
unconditionally (a) waives any requirement that the Lenders or the Agents upon
the occurrence of any default under any of the Operative Documents by any
Borrower, first make demand upon, or seek to enforce remedies against, such
Borrower before demanding payment under or seeking to enforce this Guaranty, (b)
covenants that this Guaranty will not be discharged except by complete
performance of all obligations of the Borrowers contained in the Operative
Documents, (c) agrees that this Guaranty shall remain in full force and effect
without regard to, and shall not be affected or impaired, without limitation, by
any invalidity, irregularity or unenforceability in whole or in part of the
Operative Documents or any limitation on the liability of any Borrower
thereunder, or any limitation on the method or terms of payment thereunder which
may now or hereafter be caused or imposed in any manner whatsoever (including,
without limitation, usury laws), (d) waives diligence, presentment and protest
with respect to, and any notice of default or dishonor in the payment of any
amount at any time payable by any Borrower under or in connection with the
Operative Documents, and further waives any requirement of notice of acceptance
of, or other formality relating to, this Guaranty and (e) agrees that the
Guaranteed Obligations shall include any amounts paid by any Borrower to the
Lenders which may be required to be returned to any Borrower, or to any
representative or to a trustee, custodian or receiver for any Borrower. The
obligations of each of the Guarantors hereunder shall be complete and binding
forthwith upon the execution of this Guaranty by it and subject to no condition
whatsoever, precedent or otherwise.
4. Obligations Absolute. The obligations, covenants, agreements and
--------------------
duties of each Guarantor under this Guaranty shall not be released, affected or
impaired by any of the following whether or not undertaken with notice to or
consent of the Guarantor: (a) any assignment or transfer, in whole or in part,
of any of the Guaranteed Obligations or the Operative Documents although made
without notice to or consent of the Guarantor, or (b) any waiver by the Lenders
or the Agents, or by any other person, of the performance or observance by any
Borrower of any of the agreements, covenants, terms or conditions contained in
the Operative Documents, or (c) any indulgence in or the extension of the time
for payment by any Borrower of any amounts payable under or in connection with
the Operative Documents or of the time for performance by any Borrower of any
other obligations under or arising out of the Operative Documents, or the
extension or renewal thereof, or (d) the modification, amendment or waiver
(whether material or otherwise) of any duty, agreement or obligation of any
Borrower set forth in the Operative Documents (the modification, amendment or
waiver from time to time of the Operative Documents being expressly authorized
without further notice to or consent of the Guarantor), or (e) the voluntary or
involuntary liquidation, sale or other disposition of all or substantially all
of the assets of any Borrower, or any receivership, insolvency, bankruptcy,
reorganization, or other similar proceedings, affecting any Borrower or any of
its assets, or (f) the release of any security, if any, for the obligations of
any Borrower under any of the Operative Documents, or the impairment of or
failure to perfect an interest in any such security, or (g) the merger or
consolidation of any Borrower or any of the Guarantors with any other person, or
(h) the release or discharge of any Borrower or any Guarantor from the
performance or observance of any agreement, covenant, term or condition
contained in the Operative Documents or this Guaranty, by operation of law or
otherwise, or (i) the running of any limitation period otherwise
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-4-
applicable, or (j) any exercise or non-exercise of any right, remedy, power or
privilege in respect of this Guaranty or any of the Operative Documents,
including without limitation the release, discharge or variance of the liability
of any Guarantor, or (k) any other cause whether similar or dissimilar to the
foregoing which would release, affect or impair the obligations, covenants,
agreements or duties of the Guarantor hereunder.
5. Indemnity. As a separate, additional and continuing obligation,
---------
each Guarantor, jointly and severally, unconditionally and irrevocably
undertakes and agrees with the Lenders and the Agents that, should the
Guaranteed Obligations not be recoverable from any Guarantor under paragraph 1
for any reason whatsoever (including, without limitation, by reason of any
provision of the Operative Documents or any other undertaking or obligation
arising by law or otherwise in connection therewith being or becoming void,
unenforceable, or otherwise invalid under any applicable law) then,
notwithstanding any knowledge thereof by the Lenders or the Agents at any time,
each Guarantor as sole, original and independent obligor, upon demand by the
Administrative Agent, will make payment to the Administrative Agent for the
benefit of the Lenders of the Guaranteed Obligations by way of a full indemnity
in such currency and otherwise in such manner as is provided in the Operative
Documents or in accordance with such other undertaking or obligation, as the
case may be.
6. International Transaction. This Guaranty arises in the context of
-------------------------
an international transaction, and the specification of payment to any Agent or
any Lender in a specific currency at a specific place and time pursuant to the
Operative Documents is of the essence. Such specified currency shall be the
currency of account and payment. The obligation of the Guarantors hereunder
shall not be discharged by an amount paid in any other currency or at another
place or time, whether pursuant to a judgment or otherwise, to the extent that
the amount so paid, on prompt conversion into the applicable currency and
transfer to the Administrative Agent at the place for payment under normal
banking procedure, does not yield the amount of such currency due under this
Guaranty and the related Operative Documents. In the event that any payment,
whether pursuant to a judgment or otherwise, upon conversion and transfer, does
not result in payment of the amount of such currency due under the Operative
Documents, the Lenders and the Agents shall have an independent cause of action
against the Guarantors for the currency deficiency.
7. Judgements. If for purposes of obtaining judgment in any court it
----------
becomes necessary to convert any currency due hereunder or under any Operative
Document, as the case may be, into any other currency, the conversion shall be
made at the Administrative Agent's spot rate of exchange prevailing on the day
before the day on which the judgment is given. In the event there is a change in
the Administrative Agent's spot rate of exchange between the day before the day
on which the judgment is given and the date of payment of such judgment, the
Guarantors will pay such additional amount, if any, or be credited for such
lesser amount as may be necessary to ensure that the amount paid on such date is
the amount in such other currency which when converted at the Administrative
Agent's spot rate of exchange prevailing on the date of payment would yield the
same amount of the currency due hereunder or under any Operative Document, as
the case may be, as would have resulted from a conversion on the day before the
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-5-
day on which such judgment was given. Any amount due from the Guarantors under
this paragraph 7 will be due as a separate debt and shall not be affected by
judgment being obtained for any other sum due under or in respect of this
Guaranty.
8. No Setoff or Deduction. All payments of the Guaranteed
----------------------
Obligations hereunder shall be made by the Guarantors without setoff or
counterclaim, and free and clear of, and without deduction or withholding for,
or on account of, any present or future taxes, levies, imposts, duties, fees,
assessments, or other charges of whatever nature, imposed by any governmental
authority, or by any department, agency or other political subdivision or taxing
authority. If such taxes, levies, imposts, duties, fees, assessments or other
charges are imposed, the Guarantors will pay such additional amounts as may be
necessary so that payment of the Guaranteed Obligations, after withholding or
deduction for or on account thereof, will not be less than any amount provided
to be paid hereunder or under any Operative Document, as the case may be, and,
in any such case, the Guarantors will furnish to the Administrative Agent
certified copies of all tax receipts evidencing the payment of such amounts
within 45 days after the date any such payment is due pursuant to applicable
law.
9. Defaults. The occurrence of any one or more of the following
--------
events or conditions shall be deemed an "Event of Default" under this Guaranty:
(a) Any Guarantor shall fail to pay when due any amount
payable under this Guaranty; or
(b) Any representation or warranty made by the Guarantor in
this Guaranty, or in any certificate, report, financial statement or other
document furnished by or on behalf of any Guarantor shall prove to have been
incorrect in any material respect when made or deemed made; or
(c) Any Guarantor shall fail to perform or observe any term,
covenant or agreement contained in this Guaranty beyond any period of grace, if
any, provided with respect thereto; or
(d) Any event of default under the Loan Agreement.
10. Remedies. (a) Upon the occurrence and during the continuance of
--------
any Event of Default, the Administrative Agent on behalf of the Lenders may, in
addition to the remedies provided in the Operative Documents, exercise and
enforce any and all other rights and remedies available to the Agents or any
Lender, whether arising under this Guaranty or the Operative Documents or under
applicable law, in any manner deemed appropriate by the Administrative Agent and
the Lenders, including suit in equity, action at law, or other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Guaranty or the Operative
Documents or in aid of the exercise of any power granted in this paragraph 10.
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-6-
(b) Upon the occurrence and during the continuance of any
Event of Default, each of the Lenders may at any time and from time to time,
without notice to any Guarantor or any Borrower (any requirement for such notice
being expressly waived by each Guarantor and each Borrower) set off and apply
against any and all of the obligations of any Guarantor or each Borrower now or
hereafter existing under this Guaranty or any Operative Document any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Lenders to or for the
credit or the account of any Guarantor or any Borrower and any property of any
Guarantor or any Borrower from time to time in possession of any Lender,
irrespective of whether or not such Lender shall have made any demand hereunder
and although such obligations may be contingent and unmatured. Each of the
Lenders agrees to provide notice to such Guarantor or such Borrower, as the case
may be, within a reasonable period of time after the exercise of its set off
rights. The Guarantors and the Borrowers each hereby grant to each Lender a lien
on and security interest in all such deposits, indebtedness and property as
collateral security for the payment and performance of the obligations of the
Guarantors and the Borrower under this Guaranty and the Operative Documents.
(c) The rights of the Lenders and the Agents under this paragraph 10
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which any Agent or any Lender may have. After the
occurrence and during the continuance of any Event of Default, the Lenders and
the Administrative Agent may apply any payments and other amounts received in
respect of the Guaranteed Obligations in such manner as they may determine to
any obligations of the Borrowers, the Guarantors [or any of their respective
subsidiaries or affiliates owing to the Lenders].
11. Waiver. Each Guarantor agrees that it will not at any time
------
insist upon or plead, or in any manner whatever claim or take any benefit or
advantage of any applicable present or future stay, extension or moratorium law,
which may affect observance or performance of the provisions of this Guaranty or
any Operative Document; nor will it claim, take or insist upon any benefit or
advantage of any present or future law providing for the evaluation or appraisal
of any security for its obligations hereunder or of the Borrowers under this
Guaranty or any Operative Document prior to any sale or sales thereof which may
be made under or by virtue of any instrument governing the same; nor will it,
after any such sale or sales claim or exercise any right, under any applicable
law, to redeem any portion of such security so sold.
12. Amendments. Etc. No amendment or waiver of any provision of this
---------------
Guaranty, nor consent to any departure by any Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by the Lenders and the
Administrative Agent, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Each such amendment, waiver or consent shall be binding upon the
Borrowers, whether or not undertaken with notice to or the consent of the
Borrowers. Each Borrower, by accepting and entering into any loans, credit and
other banking transactions with the Lenders, shall be deemed to have
acknowledged and agreed to the terms and conditions
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-7-
hereof, including without limitation paragraphs 9 and 10 hereof. Each Guarantor
agrees from time to time to provide to the Lenders such confirmation thereof as
any Lender may request.
13. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be delivered or sent to the Guarantors at the respective
address set forth next to the name of each Guarantor on the signature pages
hereof and in the manner, and with respect to the Administrative Agent at the
address, provided in accordance with Section 8.2 of the Loan Agreement.
14. Conduct No Waiver; Remedies Cumulative. The obligations of the
--------------------------------------
Guarantors under this Guaranty are continuing obligations and a fresh cause of
action shall arise in respect of each default hereunder. No course of dealing on
the part of any Agent or any Lender, nor any delay or failure on the part of any
Agent or any Lender in exercising any right, power or privilege hereunder or
under any Operative Document shall operate as a waiver of such right, power or
privilege or otherwise prejudice any Agent's or any Lender's rights and remedies
hereunder or thereunder; nor shall any single or partial exercise thereof
preclude any further exercise thereof or the exercise of any other right, power
or privilege. No right or remedy conferred upon or reserved to any Agent or any
Lender under this Guaranty is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in addition to every
other right or remedy given hereunder or under any Operative Document or now or
hereafter existing under any applicable law. Every right and remedy given by
this Guaranty or under any Operative Document or by applicable law to any Agent
or any Lender may be exercised from time to time and as often as may be deemed
expedient by any Agent or any Lender.
15. Reliance on and Survival of Various Provisions. All terms,
----------------------------------------------
covenants, agreements, representations and warranties of the Guarantors made
herein or in any certificate or other document delivered pursuant hereto shall
be deemed to be material and to have been relied upon by the Agents and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agents and the Lenders or on their behalf.
16. No Investigation. Each Guarantor hereby waives unconditionally
----------------
any obligation which, in the absence of this provision, the Agents and the
Lenders might otherwise have to investigate or to assure that there has been
compliance with the law of any jurisdiction with respect to the Guaranteed
Obligations recognizing that, to save both time and expense, the Guarantors have
requested that the Agents and the Lenders not undertake such investigation.
17. Governing Law. This Guaranty is a contract made under, and the
-------------
rights and obligations of the parties hereunder, shall be governed by and
construed in accordance with, the laws of the State of Michigan applicable to
contracts to be made and to be performed entirely within such State without
regard to the choice of law principles of such State. Each Guarantor agrees that
any legal action or proceeding with respect to this Guaranty or the transactions
contemplated hereby or by the Operative Documents or related hereto or thereto
shall be brought in a court in the State of Michigan, or a court of the United
States of America sitting in the State
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-8-
of Michigan, and each Guarantor hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably consents to the service of process in connection with
any such action or proceeding by personal delivery to the Guarantors or by
mailing thereof by registered or certified mail, postage prepaid, to the
Guarantors at the address as provided from time to time in paragraph 13. Each
Guarantor further agrees upon the request of the Administrative Agent to appoint
an agent for service of process and to maintain such an agent in the State of
Michigan for such purpose. Notwithstanding the foregoing, nothing in this
paragraph shall affect the right of the Agents or the Lenders to serve process
in any other manner permitted by law or limit the right of the Agents or the
Lenders to bring any such action or proceeding against any Guarantor or its
property in the courts of any other jurisdiction. Each Guarantor hereby
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above-described courts.
18. Headings Etc. The headings of the various subdivisions hereof
------------
are for convenience of reference only and shall in no way modify any of the
terms or provisions hereof. If any provision of this Guaranty refers to any
action to be taken by any person, or which such person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such person, whether or not expressly specified in such
provision.
19. Intention and Severability; Enforceability. This Guaranty and
------------------------------------------
the Operative Documents embody the entire agreement and understanding between
the Guarantors and the Lenders, and supersede all prior agreements and
understandings, relating to the subject matter hereof. In any case one or more
of the obligations of any Guarantor or any Borrower under this Guaranty or any
Operative Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of such Guarantor or any Borrower shall not in any way be affected
or impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of any Guarantor or any Borrower under this Guaranty or any
Operative Document in any other jurisdiction. It is expressly acknowledged and
agreed that the obligations of any Guarantor under this Guaranty shall not in
any way be affected or impaired by any invalidity, illegality or
unenforceability of any obligation of any Borrower under any Operative Document.
If at any time all or any portion of the obligation of any Guarantor under this
Guaranty would otherwise be determined by a court of competent jurisdiction to
be invalid, unenforceable or avoidable under Section 548 of the federal
Bankruptcy Code or under a similar applicable law of any jurisdiction, then
notwithstanding any other provisions of this Guaranty to the contrary such
obligation or portion thereof of such Guarantor under this Guaranty shall be
limited to the greatest of (i) the value of any quantifiable economic benefits
accruing to such Guarantor as a result of this Guaranty, (ii) an amount equal to
95% of the excess on the date the relevant liabilities were incurred of the
present fair saleable value of the assets of such Guarantor over the amount of
all liabilities of such Guarantor, contingent or otherwise, and (iii) the
maximum amount for which this Guaranty is determined to be enforceable.
20. Subordination, Subrogation, Etc. Each Guarantor agrees that any
-------------------------------
present or future indebtedness, obligations or liabilities of the Borrowers to
the Guarantor shall be fully
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-9-
subordinate and junior in right and priority of payment to any present or future
indebtedness, obligations or liabilities of the Borrowers to the Lenders. Each
Guarantor waives any right of subrogation, reimbursement, indemnity,
exoneration, assignment, implied contract or any other claim whatsoever it may
now or hereafter have against any Borrower, including without limitation any
rights of recourse to security for the debts and obligations of any Borrower,
unless and until the Guaranteed Obligations shall have been irrevocably paid in
full.
21. Counterpart Execution. This Guaranty may be signed upon any
---------------------
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Guaranty shall become effective as to each Guarantor when a counterpart hereof
shall have been signed by such Guarantor.
22. Waiver of Jury Trial. The Lenders and the Agents in accepting
--------------------
this Guaranty, and each Guarantor, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Guaranty, any Operative Document or any related
instrument or agreement or any of the transactions contemplated by this Guaranty
or any Operative Document or related hereto or thereto. Neither the Lenders and
the Agents nor any Guarantor shall seek to consolidate, by counterclaim or
otherwise, any such action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by the
Lenders, the Agents or the Guarantors except by a written instrument executed by
all of them.
[The rest of this page intentionally left blank.]
AMENDED AND RESTATED GUARANTY AGREEMENT
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IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be
duly executed and to be delivered as of the day and year first set forth above.
Address for Notice: NUMATICS, INCORPORATED
1450 Milford Road By:
Highland, Michigan 48357 -------------------------------
Attention: Chief Financial Officer
Facsimile No: (810) 887-2142 Its:
---------------------------
Address for Notice: NUMATION, INC.
c/o Numatics Incorporated By:
1450 Milford Road -------------------------------
Highland, Michigan 48357
Attention: Chief Financial Officer Its:
Facsimile No: (810) 887-2142 ---------------------------
Address for Notice: NUMATECH, INC.
1450 Milford Road By:
Highland, Michigan 48357 -------------------------------
Attention: Chief Financial Officer
Facsimile No: (810) 887-2142 Its:
---------------------------
Address for Notice: MICRO-FILTRATION, INC.
1450 Milford Road By:
Highland, Michigan 48357 -------------------------------
Attention: Chief Financial Officer
Facsimile No: (810) 887-2142 Its:
---------------------------
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-11-
Address for Notice: ULTRA AIR PRODUCTS, INC.
c/o Numatics Incorporated By:
1450 Milford Road --------------------------------
Highland, Michigan 48357
Attention: Chief Financial Officer Its:
Facsimile No: (810) 887-2142 -------------------------------
Address for Notice: MICROSMITH, INC.
c/o Numatics Incorporated By:
1450 Milford Road --------------------------------
Highland, Michigan 48357
Attention: Chief Financial Officer Its:
Facsimile No: (810) 887-2142 ----------------------------
I.A.E. INCORPORATED
c/o Numatics Incorporated By:
1450 Milford Road --------------------------------
Highland, Michigan 48357
Attention: Chief Financial Officer Its:
Facsimile No: (810) 887-2142 ----------------------------
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
-12-
EXHIBIT D
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
THIS AMENDED AND RESTATED PLEDGE AGREEMENT dated as of March 23,
1998 (this "Pledge Agreement"), is given by NUMATICS, INCORPORATED, a Michigan
corporation (the "Company"), in favor of NBD BANK, a Michigan banking
corporation, as collateral agent (in such capacity, the "Collateral Agent") for
the benefit of the Lenders (as defined below).
RECITALS
--------
A. The Company, Numatics GmbH, a corporation organized and existing
under the laws of the Federal Republic of Germany ("Numatics GmbH"), and
Numatics Ltd., a corporation organized and existing under the laws of Canada
("Numatics Ltd." and, collectively with the Company and Numatics GmbH, the
"Borrowers"), NBD Bank, as administrative agent (in such capacity, the
"Administrative Agent"), BankBoston, N.A., as documentation agent (in such
capacity, the "Documentation Agent") (the Collateral Agent, the Administrative
Agent and the Documentation Agent may be collectively referred to as the
"Agents") and the lenders named therein (the "Lenders") have entered into an
Amended and Restated Loan Agreement dated as of March 19, 1998 (as amended or
modified from time to time, including any agreement entered into in substitution
therefor, the "Loan Agreement") pursuant to which the Lenders agreed, subject to
the terms and conditions thereof, to extend credit to the Borrowers.
B. The Company has issued a guaranty in favor of the Lenders
guaranteeing the obligations of Numatics Ltd. and Numatics GmbH to the Lenders
(as amended or modified from time to time, including any guaranty given in
substitution therefor, the "Guaranty").
C. Under the Loan Agreement, the Company has agreed to pledge to the
Collateral Agent, for the benefit of the Lenders, and grant a first-priority
security interest to the Collateral Agent, for the benefit of the Lenders, in
and to, 100% of the issued and outstanding capital stock owned by the Company of
all present and future Subsidiaries of the Company.
D. This Pledge Agreement amends and restates that certain Pledge
Agreement and Irrevocable Proxy dated as of January 3, 1996 given by the Company
in favor of NBD Bank, as collateral agent.
E. Due to tax reasons, the Collateral Agent has temporarily agreed
to take only 66% of the outstanding capital stock owned by the Company of
Foreign Subsidiaries (although the Collateral Agent will be taking 100% of the
capital stock owned by the Company of Domestic Subsidiaries, and is not waiving,
and hereby reserves, its right to obtain a pledge at any time in the remainder
of the capital stock of Foreign Subsidiaries). Accordingly, pursuant hereto, the
Company is granting a first-priority security interest to the Collateral Agent
for the benefit of the Lenders, in and to 100% of the issued and outstanding
capital stock owned by the
Company of all present and future subsidiaries of the Company which are
organized under the laws of the United States or any state or other political
subdivision thereof (the "Domestic Subsidiaries") and 66% of the issued and
outstanding capital stock owned by the Company of all other present and future
subsidiaries of the Company (the "Foreign Subsidiaries", and the Domestic
Subsidiaries and Foreign Subsidiaries collectively referred to as the "Pledged
Subsidiaries"); provided, however, that the Required Lenders have the ability
-------- -------
under certain circumstances pursuant to the terms of the Loan Agreement to
require the Company to grant a first priority security interest to the Lenders
in 100% of the issued and outstanding capital stock owned by the Company of the
Foreign Subsidiaries.
For value received the Company hereby grants a first-priority
security interest in and to, and herewith delivers to the Collateral Agent, for
the benefit of the Lenders, stock certificates representing, 100% of the issued
and outstanding capital stock owned by the Company of each Domestic Subsidiary
and 66% of the issued and outstanding capital stock owned by the Company of each
Foreign Subsidiary (said shares of stock, together with any other shares and
securities from time to time receivable or otherwise distributed in respect of
or in exchange for any or all of such shares, being called the "Pledged Stock");
provided, however, that upon delivery of stock certificates representing the
- -------- -------
remaining 34% of the capital stock of each Foreign Subsidiary pursuant to the
terms of the Loan Agreement, the Company shall be deemed to have granted a first
priority security interest to the Collateral Agent for the benefit of the Senior
Lenders in and to such stock, such stock shall automatically become subject to
the terms of this Agreement and such stock shall constitute "Pledged Stock"; to
secure the "Secured Obligations". The term "Secured Obligations" shall mean all
of the following, whether now or hereafter outstanding or incurred: (i) the
principal amount of all Indebtedness of the Company outstanding under the Loan
Agreement, (ii) all interest on and fees relating to the Secured Obligations
described in clause (i) above, including such interest and fees as may accrue
after the filing of a petition with respect to the Company under Title 11 of the
United States Code or any successor statute, whether or not an allowable claim,
(iii) all reimbursement obligations pursuant to any letters of credit, bank
acceptances, bank guarantees or similar documents issued or arranged for
pursuant to the Loan Agreement, (iv) guarantees with respect to any obligations
of the types described in this definition of Subsidiaries of the Company, (v)
all charges, fees, expenses and other amounts in respect of the Loan Agreement
or any other agreement, instrument or document executed in connection therewith,
including without limitation attorneys fees, any interest rate protection
obligations (including without limitation all obligations pursuant to any
interest rate swap agreements or any other similar agreements) incurred in
connection therewith, all premiums, indemnities and all other obligations of any
kind relating thereto, (vi) all guarantees executed by the Company or other
obligations of the Company for any indebtedness of any Subsidiary of the Company
incurred under the Loan Agreement and (vii) all renewals, extensions,
refinancing, refundings, amendments and modifications of the Secured Obligations
described in clauses (i) and (ii) above.
All of the documents, agreements and instruments between the
Borrowers, the Subsidiaries, any Lender and any Agent, or any of them,
evidencing or securing the repayment of, or otherwise pertaining to the Secured
Obligations, including without limitation the Loan
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-2-
Agreement, the Notes, the Security Documents and this Agreement are collectively
called the "Operative Documents".
The Company represents and warrants to, and agrees with, the
Collateral Agent for the benefit of the Lenders as follows:
1. Representations and Warranties. The Company represents and
------------------------------
warrants that (a) the Pledged Stock is represented by the stock certificate or
certificates described on Schedule 1 hereto, and that such stock certificate or
certificates, accompanied by an instrument of assignment or transfer duly
executed in blank by the Company as the owner named in such stock certificate or
certificates, have been delivered to the Collateral Agent by the Company; (b)
the Pledged Stock is duly authorized and validly issued, fully paid and
nonassessable and constitutes 66% of all of the issued and outstanding shares of
the capital stock of each Foreign Subsidiary and 100% of all of the issued and
outstanding shares of the capital stock of each Domestic Subsidiary owned by the
Company (and it is acknowledged and agreed that if more than 66% of the
outstanding capital stock of any Foreign Subsidiary is delivered to the
Collateral Agent, the Collateral Agent shall have a security interest in such
capital stock only up to an amount equal to 66% of all of the issued and
outstanding shares of the capital stock of such Foreign Subsidiary) that the
Company is the legal and beneficial owner of the Pledged Stock, free and clear
of all Liens other than the Lien of the Collateral Agent hereunder, with full
right and power to deliver, pledge and assign the Pledged Stock to the
Collateral Agent hereunder; and (c) to the best of the Company's knowledge, the
pledge of the Pledged Stock pursuant to this Pledge Agreement creates in favor
of the Collateral Agent, for the benefit of the Lenders, a valid and perfected
first priority security interest in the Pledged Stock enforceable against the
Company and all third parties and securing the payment of the Secured
Obligations.
2. Title; Stock Rights, Dividends, Etc. The Company will warrant and
-----------------------------------
defend the Collateral Agent's title to the Pledged Stock, and the security
interest herein created, against all claims of all persons, and will maintain
and preserve such security interest. It is understood and agreed that the
collateral hereunder includes any stock rights, stock dividends, liquidating
dividends, new securities, payments, distributions and proceeds (including cash
dividends and sale proceeds) and other property to which the Company may become
entitled by reason of the ownership of the Pledged Stock during the existence of
this Pledge Agreement, and any such property received by the Company shall be
held in trust and forthwith delivered to the Collateral Agent to be held
hereunder in accordance with the terms of this Pledge Agreement.
3. Registration Rights. If any Pledged Subsidiary at any time or
-------------------
from time to time proposes to register any of its securities under the
Securities Act of 1933, the Company will at each such time give notice to the
Collateral Agent of such Pledged Subsidiary's intentions so to do. Upon the
request of the Collateral Agent given 30 days after receipt of such notice, the
Company will cause all Pledged Stock of such Pledged Subsidiary to be included
in the registration statement proposed to be filed, all to the extent requisite
to permit the public sale or other public disposition of such Pledged Stock so
registered by the holders thereof. The costs and expenses of all such
registrations and qualifications under said Act shall be paid by the
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-3-
Company or such Pledged Subsidiary, except that underwriting discounts and
commissions in respect of any Pledged Stock sold pursuant to any such
registration statement shall be borne by the sellers thereof. As expeditiously
as possible after the effective date of any such registration statement, the
Company will deliver in exchange for any certificates representing shares of
Pledged Stock so registered pursuant to such registration, which bear any
restrictive legend, new Pledged Stock certificates not bearing such legend or
any similar legend. In the event of any such registration, the Company hereby
agrees to indemnify and hold harmless the Collateral Agent and the Lenders as
pledgee of the Pledged Stock against any losses, claims, damages or liabilities
to which the Collateral Agent and the Lenders may become subject to the extent
that such losses, claims, damages or liabilities arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any such registration statement, and any preliminary prospectus or filed
prospectus, or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Collateral Agent and the Lenders for any
legal or other expenses reasonably incurred by the Collateral Agent and the
Lenders in connection with investigating or defending any such loss, claim,
damage or liability. The indemnifications contained in this paragraph shall
include each person, if any, who controls any Agent or any Lender.
4. Events of Default; Remedies. (a) Upon the occurrence of any Event
---------------------------
of Default (as defined in the Loan Agreement) under the Loan Agreement, an Event
of Default shall be deemed to have occurred hereunder and the Collateral Agent
shall have all of the rights and remedies provided by law and/or by this Pledge
Agreement, including but not limited to all of the rights and remedies of a
secured party under the Michigan Uniform Commercial Code, and the Company hereby
authorizes the Collateral Agent to sell all or any part of the Pledged Stock at
public or private sale and to apply the proceeds of such sale to the costs and
expenses thereof (including the reasonable attorneys' fees and disbursements
incurred by the Collateral Agent) and then to the payment of the other Secured
Obligations. Any requirement of reasonable notice shall be met if the Collateral
Agent sends such notice to the Company, by registered or certified mail, at
least 5 days prior to the date of sale, disposition or other event giving rise
to the required notice. Either Agent or any Lender may be the purchaser at any
such sale. The Company expressly authorizes such sale or sales of the Pledged
Stock in advance of and to the exclusion of any sale or sales of or other
realization upon any other collateral securing indebtedness or other obligations
owed to the Lenders. The Collateral Agent shall be under no obligation to
preserve rights against prior parties.
(b) The Company hereby waives as to the Collateral Agent and the
Lenders any right of subrogation or marshalling of such stock and other
collateral for indebtedness or other obligations owed to the Agents and the
Lenders. To this end, the Company hereby expressly agrees that any such
collateral or other security of the Company or any other party which either
Agent or any Lender may hold, or which may come to any of their possession, may
be dealt with in all respects and particulars as though this Pledge Agreement
were not in existence. The Company agrees and acknowledges that because of
applicable securities laws, the Collateral Agent may not be able to effect a
public sale of the Pledged Stock and sales at a
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-4-
private sale may be on terms less favorable than if such securities were sold at
a public sale and may be at a price less favorable than a public sale. The
Company agrees that all such private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(c) The Company irrevocably designates, makes, constitutes and
appoints the Collateral Agent (and all persons designated by the Collateral
Agent) as its true and lawful attorney (and agent-in-fact) and the Collateral
Agent, or the Collateral Agent's agent, may, upon and after an Event of Default
hereunder which has not been waived, with notice to the Company if the Secured
Obligations have not been accelerated and without notice if the Secured
Obligations have been accelerated, take any action as the Collateral Agent
reasonably deems necessary under the circumstances to enforce or otherwise take
action in respect to the Pledged Stock as required hereby, or to carry out any
other obligation or duty of the Company under this Agreement. The Company shall
pay all reasonable fees and expenses, including reasonable attorneys' fees and
expenses, incurred by the Collateral Agent in connection with such action.
5. Additional Remedies; Irrevocable Proxy. (a) Upon the occurrence
--------------------------------------
of any Event of Default, the Collateral Agent shall have also the right to vote
the Pledged Stock on all questions after giving notice to the Company of its
election to exercise such rights. In the absence of any such Event of Default,
the Company shall have the right to vote the Pledged Stock on all questions,
provided that voting by the Company of the Pledged Stock shall be in conformity
with performance of the obligations of the Company under the Operative
Documents.
(b) Whenever an Event of Default has occurred, the Collateral Agent
may transfer into its name, or into the name of its nominee or nominees, any or
all of the Pledged Stock and, as provided above, may vote any or all of the
Pledged Stock (whether or not so transferred) and may otherwise act with respect
thereto as though it were the outright owner thereof, the Company hereby
irrevocably constituting and appointing the Collateral Agent as the proxy and
attorney-in-fact of the Company, with full power of substitution, to do so.
(c) In furtherance of the foregoing, it is acknowledged that the
Collateral Agent may vote the Pledged Stock to remove the directors and officers
of any Pledged Subsidiary, and to elect new directors and officers of any
Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged
Subsidiary, operate its properties and carry on its business and otherwise take
any action with respect to the business, properties and affairs of such Pledged
Subsidiary which such new directors shall deem necessary or appropriate,
including, but not limited to, the maintenance, repair, renewal or alteration of
any or all of the properties of such Pledged Subsidiary, the leasing,
subleasing, sale or other disposition of any or all of such properties, the
borrowing of money on the credit of such Pledged Subsidiary, and the employment
of attorneys, agents or other employees deemed by such new directors to be
necessary for the proper operation, conduct, winding up or liquidation of the
business, properties and affairs of such Pledged Subsidiary, and all revenues
from the operation, conduct, winding up or liquidation of the business,
properties and affairs of such Pledged Subsidiary after the payment of expenses
thereof shall be applied to the payment of the Secured Obligations.
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-5-
(d) The Company agrees that the proxy granted in this paragraph 5 is
coupled with an interest and is and shall be both valid and irrevocable so long
as the Pledged Stock is subject to this Pledge Agreement. The Company further
acknowledges that the term of said proxy may exceed three years from the date
hereof.
6. Remedies Cumulative. No right or remedy conferred upon or
-------------------
reserved to the Agents and the Lenders under any Operative Document is intended
to be exclusive of any other right or remedy, and every right and remedy shall
be cumulative in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy of the
Agents and the Lenders under any Operative Document or under applicable law may
be exercised from time to time and as often as may be deemed expedient by the
Agents and the Lenders. To the extent that it lawfully may, the Company agrees
that it will not at any time insist upon, plead, or in any manner whatever claim
or take any benefit or advantage of any applicable present or future stay,
extension or moratorium law, which may affect observance or performance of any
provisions of any Operative Document; nor will it claim, take or insist upon any
benefit or advantage of any present or future law providing for the valuation or
appraisal of any security for its obligations under any Operative Document prior
to any sale or sales thereof which may be made under or by virtue of any
instrument governing the same; nor will it, after any such sale or sales, claim
or exercise any right, under any applicable law to redeem any portion of such
security so sold.
7. Conduct No Waiver. No waiver of default shall be effective unless
-----------------
in writing executed by the Collateral Agent and waiver of any default or
forbearance on the part of the Collateral Agent in enforcing any of its rights
under this Pledge Agreement shall not operate as a waiver of any other default
or of the same default on a future occasion or of such right.
8. Governing Law; Definitions. This Pledge Agreement is a contract
--------------------------
made under, and shall be governed by and construed in accordance with, the law
of the State of Michigan applicable to contracts made and to be performed
entirely within such State and without giving effect to choice of law principles
of such State. The Company agrees that any legal action or proceeding with
respect to this Pledge Agreement or the transactions contemplated hereby may be
brought in any court of the State of Michigan, or in any court of the United
States of America sitting in Michigan, and the Company hereby submits to and
accepts generally and unconditionally the jurisdiction of those courts with
respect to its person and property, and irrevocably appoints the Chief Financial
Officer of the Company, at 1450 North Milford Road, Highland, Michigan 48357, as
its agent for service of process and irrevocably consents to the service of
process in connection with any such action or proceeding by personal delivery to
such agent or to the Company or by the mailing thereof by registered or
certified mail, postage prepaid to the Company at its address set forth in the
Loan Agreement. Nothing in this paragraph shall affect the right of the Agents
to serve process in any other manner permitted by law or limit the right of the
Agents to bring any such action or proceeding against the Company or its
property in the courts of any other jurisdiction. The Company hereby irrevocably
waives any objection to the laying of venue of any such suit or proceeding in
the
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-6-
above described courts. Terms used but not defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement. Unless otherwise
defined herein or in the Loan Agreement, terms used in Article 9 of the Uniform
Commercial Code in the Stare of Michigan are used herein as therein defined on
the date hereof. The headings of the various subdivisions hereof are for
convenience of reference only and shall in no way modify any of the terms or
provisions hereof.
9. Notices. All notices, demands, requests, consents and other
-------
communications hereunder shall be delivered in the manner described in the Loan
Agreement.
10. Rights Not Construed as Duties. The Collateral Agent neither
------------------------------
assumes nor shall it have any duty of performance or other responsibility under
any contracts in which the Collateral Agent has or obtains a security interest
hereunder. If the Company fails to perform any agreement contained herein, the
Collateral Agent may but is in no way obligated to itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Company under
paragraph 13. The powers conferred on the Collateral Agent hereunder are solely
to protect its interests in the Pledged Stock and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any Pledged Stock
in its possession and accounting for monies actually received by it hereunder,
the Collateral Agent shall have no duty as to any Pledged Stock or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Pledged Stock.
11. Amendments. None of the terms and provisions of this Pledge
----------
Agreement may be modified or amended in any way except by an instrument in
writing executed by the Company and the Collateral Agent.
12. Severability. If any one or more provisions of this Pledge
------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby. If at
any time any portion of the obligations of the Company hereunder shall be
determined by a court of competent jurisdiction to be invalid, unenforceable or
avoidable, the remaining portion of the obligations of the Company hereunder
shall not in any way be affected, impaired, prejudiced or disturbed thereby and
shall remain valid and enforceable to the fullest extent permitted by applicable
law. The Company hereby expressly and irrevocably waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution, assignment or
implied contract or any other claim which it may now or hereafter have against
the other Borrower or any other person directly or contingently liable for the
Secured Obligations, or against or with respect to the other Borrower's or such
other person's assets, arising from the existence or performance of this Pledge
Agreement or any other present or future agreement of the Company with or in
favor of any Lender. This Pledge Agreement and all the obligations hereunder
shall remain in full force and effect without regard to, and shall not be
released, affected or impaired by: (a) any amendment, assignment, transfer,
modification or increase or supplement to the Secured Obligations or any
Operative Document; (b) any surrender,
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-7-
impairment or other alteration of any collateral or guaranties or other support
for the Secured Obligations, including without limitation the failure to perfect
any security interest or abstaining from taking advantage or realizing upon any
rights or remedies; (c) any default by any Borrower or any of the Company's
Subsidiaries under, or lack of due execution, invalidity or enforceability of,
any of the Operative Documents; (d) any waiver or other modification of any
right or remedy of any Lender or any exercise or non-exercise thereof; or (e)
any other cause, whether similar or dissimilar to any of the foregoing which, in
the absence of this provision, would release, affect or impair the obligations
of the Company hereunder, and in each case described herein whether or not the
Company shall have notice or knowledge thereof.
13. Expenses. (a) The Company agrees to indemnify the Collateral
--------
Agent from and against any and all claims, losses and liabilities growing out of
or resulting from this Pledge Agreement (including, without limitation,
enforcement of this Pledge Agreement), except claims, losses or liabilities
resulting from the Collateral Agent's gross negligence or willful misconduct.
(b) The Company will, upon demand, pay to the Collateral Agent an
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Collateral
Agent may incur in connection with (i) the administration of this Pledge
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Pledged Stock, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent hereunder
or under the Operative Documents, or (iv) the failure of the Company to perform
or observe any of the provisions hereof.
14. Successors and Assigns; Termination. This Pledge Agreement shall
-----------------------------------
create a continuing security interest in the Pledged Stock and shall be binding
upon the Company, its successors and assigns, and inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and its successors, transferees and assigns. Upon the payment
in full in immediately available funds of all of the principal, interest, fees
and other amounts owing under the Secured Obligations and under the credit
facilities or other agreements of the Subsidiaries of the Company owing to any
of the Lenders and the termination of all commitments to lend under the
Operative Documents and any commitments to lend of any of the Lenders under the
credit facilities or other agreements established for the Subsidiaries of the
Company, the security interest granted hereunder shall terminate and all rights
to the Pledged Stock shall revert to the Company.
15. Waiver of Jury Trial. The Collateral Agent and the Lenders, in
--------------------
accepting this Pledge Agreement, and the Company, after consulting or having had
the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right any of them may have to a trial by jury in any
litigation based upon or arising out of this Pledge Agreement or any related
instrument or agreement or any of the transactions contemplated by this Pledge
Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. Neither the Agents, the Lenders nor the
Company shall seek to consolidate, by counterclaim or otherwise, any such action
in which a jury trial has been waived with any other
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-8-
action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by
either the Agents and the Lenders or the Company except by a written instrument
executed by all of them.
[The rest of this page intentionally left blank.]
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-9-
IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to
be duly executed as of the day and year first above written.
NUMATICS, INCORPORATED
By:
--------------------------------------
Its:
----------------------------------
Accepted and Agreed:
NBD BANK, as Collateral Agent
By:
------------------------------
Its:
--------------------------
AMENDED AND RESTATED PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-----------------------------------------------------------
-10-
EXHIBIT E-1
REVOLVING CREDIT NOTE
---------------------
$_____________ March __, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics, Incorporated, a Michigan corporation
(the "Company"), hereby promises to pay to the order of ______________________
(the "Lender"), at the principal banking office of the Administrative Agent in
lawful money of the United States of America and in immediately available funds,
the principal sum of ______________ Dollars ($______________), or such lesser
amount as is recorded on the schedule attached hereto, or in the books and
records of the Lender, on the Termination Date; and to pay interest on the
unpaid principal balance hereof from time to time outstanding, in like money and
funds, for the period from the date hereof until the Revolving Credit Loans
evidenced hereby shall be paid in full, at the rates per annum and on the dates
provided in the Loan Agreement referred to below.
The Lender is hereby authorized by the Company to record on the
schedule attached to this Revolving Credit Note, or on its books and records,
the date, amount and type of each Revolving Credit Loan, the duration of the
related LIBOR Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon and the other information provided for on such
schedule, which schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the information so recorded, provided,
--------
however, that any failure by the Lender to record any such information shall not
- -------
relieve the Company of its obligation to repay the outstanding principal amount
of such Revolving Credit Loans, all accrued interest thereon and any amount
payable with respect thereto in accordance with the terms of this Revolving
Credit Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Credit Note. Should the indebtedness evidenced by
this Revolving Credit Note or any part thereof be collected in any proceeding or
be placed in the hands of attorneys for collection, the Company agrees to pay,
in addition to the principal, interest and other sums due and payable hereon,
all costs of collecting this Revolving Credit Note, including attorneys' fees
and expenses.
This Revolving Credit Note evidences one or more Revolving Credit
Loans made under the Amended and Restated Loan Agreement, dated as of March __,
1998 (the "Loan Agreement"), by and among the Company, Numatics Ltd., Numatics
GmbH, the lenders (including the Lender) named therein, BankBoston, N.A., as
documentation agent for the Lenders, and NBD Bank, as administrative agent for
the lenders, to which reference is hereby made for a statement of the
circumstances under which this Revolving Credit Note is subject to prepayment
and under which its due date may be accelerated and for a description of the
collateral and security securing this Revolving Credit Note. Capitalized terms
used but not
defined in this Revolving Credit Note shall have the respective meanings
assigned to them in the Loan Agreement.
This Revolving Credit Note is made under, and shall be governed by
and construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS, INCORPORATED
By:
--------------------------------------
Its:
-----------------------------------
REVOLVING CREDIT NOTE
---------------------
-2-
Schedule to Revolving Credit Note, dated
March __, 1998, made by Numatics, Incorporated
in favor of __________________________.
Principal
Amount
Trans- Principal Type Interest Paid, Pre- Principal
action Amount of of Interest Period (if paid or Balance Notation
Date Loan Loan* Rate applicable) Converted Outstanding Made by
- ---- ---- ----- ---- ----------- --------- ----------- -------
- ----------
* L - Libor Rate
F - Adjusted Floating Rate
REVOLVING CREDIT NOTE
---------------------
-3-
REVOLVING CREDIT NOTE
---------------------
$3,000,000 March 23, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics GmbH, a corporation organized and
existing under the laws of the Federal Republic of Germany (the "Borrower"),
hereby promises to pay to the order of The First National Bank of Chicago (the
"Lender"), at the place for payment specified by the Administrative Agent in
Deutschemarks and in immediately available funds, the principal sum of the
Deutschemark Equivalent of Three Million Dollars ($3,000,000), or such lesser
amount as is recorded on the schedule attached hereto, or in the books and
records of the Lender, on the Termination Date; and to pay interest on the
unpaid principal balance hereof from time to time outstanding, in like money and
funds, for the period from the date hereof until the Revolving Credit Loans
evidenced hereby shall be paid in full, at the rates per annum and on the dates
provided in the Loan Agreement referred to below.
The Lender is hereby authorized by the Borrower to record on the
schedule attached to this Revolving Credit Note, or on its books and records,
the date, amount and type of each Revolving Credit Loan, the duration of the
related LIBOR Interest Period (if applicable), the amount of each payment or
prepayment of principal thereon and the other information provided for on such
schedule, which schedule or such books and records, as the case may be, shall
constitute prima facie evidence of the information so recorded, provided,
--------
however, that any failure by the Lender to record any such information shall not
- -------
relieve the Borrower of its obligation to repay the outstanding principal amount
of such Revolving Credit Loans, all accrued interest thereon and any amount
payable with respect thereto in accordance with the terms of this Revolving
Credit Note and the Loan Agreement.
The Borrower and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Credit Note. Should the indebtedness evidenced by
this Revolving Credit Note or any part thereof be collected in any proceeding or
be placed in the hands of attorneys for collection, the Borrower agrees to pay,
in addition to the principal, interest and other sums due and payable hereon,
all costs of collecting this Revolving Credit Note, including attorneys' fees
and expenses.
This Revolving Credit Note evidences one or more Revolving Credit
Loans made under the Amended and Restated Loan Agreement, dated as of March 23,
1998 (the "Loan Agreement"), by and among the Borrower, Numatics, Incorporated
and Numatics Ltd., the lenders (including the Lender) named therein, BankBoston,
N.A., as documentation agent for the lenders, and NBD Bank, as administrative
agent for the lenders, to which reference is hereby made for a statement of the
circumstances under which this Revolving Credit Note is subject to prepayment
and under which its due date may be accelerated and for a description of the
collateral and security securing this Revolving Credit Note. Capitalized terms
used but not defined in this Revolving Credit Note shall have the respective
meanings assigned to them in the Loan Agreement.
This Revolving Credit Note is made under, and shall be governed by
and construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS GMBH
By:
--------------------------------------
Its:
----------------------------------
REVOLVING CREDIT NOTE
---------------------
-2-
Schedule to Revolving Credit Note, dated
March 23, 1998, made by Numatics GmbH
in favor of The First National Bank of Chicago
Principal
Amount
Trans- Principal Type Interest Paid, Pre- Principal
action Amount of of Interest Period (if paid or Balance Notation
Date Loan Loan* Rate applicable) Converted Outstanding Made by
- ---- ---- ----- ---- ----------- --------- ----------- -------
- ----------
* L - Libor Rate
REVOLVING CREDIT NOTE
---------------------
-3-
SWINGLINE NOTE
$5,000,000 March 23, 1998
Detroit, Michigan
FOR VALUE RECEIVED, NUMATICS, INCORPORATED, a Michigan corporation
(the "Company"), hereby unconditionally promises to pay to the order of NBD
Bank, a Michigan banking corporation (the "Lender"), at the principal banking
office of the Administrative Agent in lawful money of the United States of
America and in immediately available funds, the unpaid principal amount of the
Swingline Loans as evidenced by the books and records of the Lender, on the
Termination Date or such earlier date as the Lender may require under the Loan
Agreement referred to below, when the entire outstanding principal amount of the
Swingline Loans evidenced hereby, and all accrued interest thereon, shall be due
and payable; and to pay interest on the unpaid principal balance hereof from
time to time outstanding, in like money and funds, for the period from the date
hereof until the Swingline Loans evidenced hereby shall be paid in full, at the
rates per annum on and the dates provided in the Loan Agreement referred to
below.
The Lender is hereby authorized by the Company to record on its
books and records the date and the amount of each Swingline Loan, the applicable
interest rate, the amount of each payment or prepayment of principal thereon,
and the other information provided for in such books and records, which books
and records shall constitute prime facie evidence of the information so recorded
absent manifest error in computation, provided, however, that any failure by the
-------- -------
Lender to record any such notation shall not relieve the Company of its
obligation to repay the outstanding principal amount of this Swingline Note, all
accrued interest hereon and any amount payable with respect hereto in accordance
with the terms of this Swingline Note and the Credit Agreement.
The Company and each endorser or guarantor hereof waive presentment,
protest, notice of dishonor and any other formality in connection with this
Swingline Note. Should the indebtedness evidenced by this Swingline Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Company agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Swingline Note, including reasonable attorneys' fees and
expenses.
This Swingline Note evidences Swingline Loans made under the Amended
and Restated Loan Agreement, dated as of March 23, 1998, by and among the
Company, Numatics Ltd., Numatics GmbH, the lenders (including the Lender) named
therein, BankBoston, N.A., as documentation agent for the lenders, and NBD Bank,
as administrative agent for the lenders, to which reference is hereby made for a
statement of the circumstances under which this Swingline Note is subject to
prepayment and under which its due date may be accelerated and a description of
the collateral and security securing this Swingline Note. Capitalized terms used
but not defined in this Swingline Note shall have the respective meanings
assigned to them in the Loan Agreement.
This Swingline Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS, INCORPORATED
By:
--------------------------------------
Its:
----------------------------------
SWINGLINE NOTE
--------------
-2-
EXHIBIT E-4
TERM LOAN A NOTE
----------------
$________________ March __, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics, Incorporated, a Michigan corporation (the
"Borrower"), hereby promises to pay to the order of_________ (the "Lender"), at
the principal banking office of the Administrative Agent in lawful money of the
United States of America and in immediately available funds, the principal sum
of ___________ Dollars ($_____________), or such lesser amount as is recorded on
the schedule attached hereto or in the books and records of the Lender in 24
quarterly installments for the pro rata benefit of the Lenders in the amounts
provided in the Loan Agreement referred to below payable on the last Business
Day of each March, June, September and December, commencing on the last Business
Day of June, 1998, to and including the Maturity Date A when the entire
outstanding principal amount of the Term Loan A evidenced hereby, and all
accrued interest thereon, shall be due and payable; and to pay interest on the
unpaid principal balance hereof from time to time outstanding, in like money and
fluids, for the period from the date hereof until the Term Loan A evidenced
hereby shall be paid in full, at the rate per annum and on the dates provided in
the Loan Agreement
The Lender is hereby authorized by the Borrower to record on the schedule
attached to this Term Loan A Note, or on its books and records, the date and the
amount of the Tern, Loan A, the applicable interest rate and type and the
duration of the related LIBOR Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon, and the other information
provided for on such schedule, which schedule or such books and records, as the
case may be, shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
-------- -------
notation shall not relieve the Borrower of its obligation to repay the
outstanding principal amount of this Term Loan A, all accrued interest hereon
and any amount payable with respect hereto in accordance with the terms of this
Term Loan A Note and the Loan Agreement.
The Borrower and each endorser or guarantor hereof waives presentment,
protest, notice of dishonor and any other formality in connection with this Term
Loan A Note. Should the indebtedness evidenced by this Term Loan A Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Term Loan A Note, including attorneys' fees and expenses.
This Term Loan A Note evidences a Term Loan A made under the Amended and
Restated Loan Agreement, dated as of March __, 1998 (the "Loan Agreement"), by
and among the Company, Numatics Ltd., Numatics GmbH, the lenders (including the
Lender) named therein, BankBoston, NA., as documentation agent for the lenders,
and NBD Bank, as administrative agent for the lenders, to which reference is
hereby made for a statement of the
circumstances under which this Term Loan A Note is subject to prepayment and
under which its due date may be accelerated and a description of the collateral
and security securing this Term Loan A Note. Capitalized terms used but not
defined in this Term Loan A Note shall have the respective meanings assigned to
them in the Loan Agreement.
This Term Loan A Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS, INCORPORATED
By:
--------------------------------------
Its:
----------------------------------
TERM LOAN A NOTE
----------------
-2-
Schedule to Term Loan A Note dated March __, 1998
made by Numatics, Incorporated
in favor of ____________________
Principal Principal Principal
Transaction Amount of Applicable Interest Amount Paid Balance
Date Loan Interest Rate Period or Prepaid Outstanding
- ---- ---- ------------- ------ ---------- -----------
TERM LOAN A NOTE
----------------
-3-
EXHIBIT E-5
TERM LOAN A NOTE
----------------
$2,000,000 March __, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics Ltd., a corporation organized and existing
under the laws of Canada (the "Borrower"), hereby promises to pay to the order
of First Chicago NBD Bank, Canada (the "Lender"), at the place for payment
specified by the Administrative Agent in lawful money of Canada and in
immediately available funds, the principal sum of the Canadian Dollar Equivalent
on the Effective Date of Two Million Dollars ($2,000,000), or such lesser amount
as is recorded on the schedule attached hereto or in the books and records of
the Lender in 24 quarterly installments in the amounts provided in the Loan
Agreement referred to below payable on the last Business Day of each March,
June, September and December, commencing on the last Business Day of June, 1998,
to and including the Maturity Date A when the entire outstanding principal
amount of the Term Loan A evidenced hereby, and all accrued interest thereon,
shall be due and payable; and to pay interest on the unpaid principal balance
hereof from time to time outstanding, in like money and funds, for the period
from the date hereof until the Term Loan A evidenced hereby shall be paid in
full, at the rate per annum and on the dates provided in the Loan Agreement.
The Lender is hereby authorized by the Borrower to record on the schedule
attached to this Term Loan A Note, or on its books and records, the date and the
amount of the Term Loan A, the applicable interest rate and type and the
duration of the related LIBOR Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon, and the other information
provided for on such schedule, which schedule or such books and records, as the
case may be, shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
-------- -------
notation shall not relieve the Borrower of its obligation to repay the
outstanding principal amount of this Term Loan A, all accrued interest hereon
and any amount payable with respect hereto in accordance with the terms of this
Term Loan A Note and the Loan Agreement.
The Borrower and each endorser or guarantor hereof waives presentment,
protest, notice of dishonor and any other formality in connection with this Term
Loan A Note. Should the indebtedness evidenced by this Term Loan A Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Term Loan A Note, including attorneys' fees and expenses.
This Term Loan A Note evidences a Term Loan A made under the Amended and
Restated Loan Agreement, dated as of March __, 1998 (the "Loan Agreement"), by
and among the Company, Numatics, Incorporated, Numatics GmbH, the lenders
(including the Lender) named therein, BankBoston, N.lA., as documentation agent
for the lenders, and NBD Bank, as
administrative agent for the lenders, to which reference is hereby made for a
statement of the circumstances under which this Term Loan A Note is subject to
prepayment and under which its due date may be accelerated and a description of
the collateral and security securing this Term Loan A Note. Capitalized terms
used but not defined in this Term Loan A Note shall have the respective
meanings assigned to them in the Loan Agreement
This Term Loan A Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS, LTD.
By:
--------------------------------------
Its:
----------------------------------
TERM LOAN A NOTE
----------------
-2-
Schedule to Term Loan A Note dated March __, 1998
made by Numatics Ltd.
in favor of First Chicago NBD Bank, Canada
Principal Principal Principal
Transaction Amount of Applicable Interest Amount Paid Balance
Date Loan Interest Rate Period or Prepaid Outstanding
- ---- ---- ------------- ------ ---------- -----------
TERM LOAN A NOTE
----------------
-3-
EXHIBIT E-6
TERM LOAN A NOTE
----------------
$2,000,000 March __, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics GmbH, a corporation organized and existing
under the laws of the Federal Republic of Germany (the "Borrower"), hereby
promises to pay to the order of The First National Bank of Chicago (the
"Lender"), at the place for payment specified by the Administrative Agent in
Deutschemarks and in immediately available funds, the principal sum of the
Deutschemark Equivalent on the Effective Date of Two Million Dollars
($2,000,000), or such lesser amount as is recorded on the schedule attached
hereto or in the books and records of the Lender in 24 quarterly installments
for the pro rata benefit of the Lenders in the amounts provided in the Loan
Agreement referred to below payable on the last Business Day of each March,
June, September and December, commencing on the last Business Day of June, 1998,
to and including the Maturity Date A when the entire outstanding principal
amount of the Term Loan A evidenced hereby, and all accrued interest thereon,
shall be due and payable; and to pay interest on the unpaid principal balance
hereof from time to time outstanding, in like money and funds, for the period
from the date hereof until the Term Loan A evidenced hereby shall be paid in
full, at the rate per annum and on the dates provided in the Loan Agreement.
The Lender is hereby authorized by the Borrower to record on the schedule
attached to this Term Loan A Note, or on its books and records, the date and the
amount of the Term Loan A, the applicable interest rate and type and the
duration of the related LIBOR Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon, and the other information
provided for on such schedule, which schedule or such books and records, as the
case may be, shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
-------- -------
notation shall not relieve the Borrower of its obligation to repay the
outstanding principal amount of this Term Loan A, all accrued interest hereon
and any amount payable with respect hereto in accordance with the terms of this
Term Loan A Note and the Loan Agreement.
The Borrower and each endorser or guarantor hereof waives presentment,
protest, notice of dishonor and any other formality in connection with this Term
Loan A Note. Should the indebtedness evidenced by this Term Loan A Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Term Loan A Note, including attorneys' fees and expenses.
This Term Loan A Note evidences a Term Loan A made under the Amended and
Restated Loan Agreement, dated as of March ___, 1998 (the "Loan Agreement"), by
and among the Company, Numatics, Incorporated and Numatics Ltd., the lenders
(including the Lender) named therein, BankBoston, N.A., as documentation agent
for the lenders, and NBD Bank, as
administrative agent for the lenders, to which reference is hereby made for a
statement of the circumstances under which this Term Loan A Note is subject to
prepayment and under which its due date may be accelerated and a description of
the collateral and security securing this Term Loan A Note. Capitalized terms
used but not defined in this Term Loan A Note shall have the respective meanings
assigned to them in the Loan Agreement.
This Term Loan A Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS GMBH
By:
-------------------------------
Its:
------------------------
TERM LOAN A NOTE
----------------
-2-
Schedule to Term Loan A Note dated March __, 1998
made by Numatics GmbH
in favor of The First National Bank of Chicago
Principal Principal Principal
Transaction Amount of Applicable Interest Amount Paid Balance
Date Loan Interest Rate Period or Prepaid Outstanding
----------- --------- ------------- -------- ----------- -----------
TERM LOAN A NOTE
----------------
-3-
EXHIBIT E-7
TERM LOAN B NOTE
----------------
$__________________ March __, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics, Incorporated, a Michigan corporation (the
"Company"), hereby promises to pay to the order of ___________________________
(the "Lender"), at the principal banking office of the Administrative Agent in
lawful money of the United States of America and in immediately available funds,
the principal sum of _________________________Dollars ($____________________),
or such lesser amount as is recorded on the schedule attached hereto or in the
books and records of the Lender in 30 consecutive quarterly installments for the
pro rata benefit of the Term Loan B Lenders in the amounts provided in the Loan
Agreement referred to below payable on the last Business Day of each March,
June, September and December, commencing on the last Business Day of June, 1998,
to and including Maturity Date B when the entire outstanding principal amount of
the Term Loan B evidenced hereby, and all accrued interest thereon, shall be due
and payable; and to pay interest on the unpaid principal balance hereof from
time to time outstanding, in like money and funds, for the period from the date
hereof until the Term Loan B evidenced hereby shall be paid in full, at the rate
per annum and on the dates provided in the Loan Agreement referred to below.
The Lender is hereby authorized by the Company to record on the schedule
attached to this Term Loan B Note, or on its books and records, the date and the
amount of the Term Loan B, the applicable interest rate and type and the
duration of the related LIBOR Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon, and the other information
provided for on such schedule, which schedule or such books and records, as the
case may be, shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
-------- -------
notation shall not relieve the Company of its obligation to repay the
outstanding principal amount of this Term Loan B, all accrued interest hereon
and any amount payable with respect hereto in accordance with the terms of this
Term Loan B Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives presentment,
protest, notice of dishonor and any other formality in connection with this Term
Loan B Note. Should the indebtedness evidenced by this Term Loan B Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Company agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Term Loan B Note, including attorneys' fees and expenses.
This Term Loan B Note evidences a Term Loan B made under the Amended and
Restated Loan Agreement, dated as of March __, 1998 (the "Loan Agreement"), by
and among the Company, Numatics Ltd., Numatics GmbH, the lenders (including the
Lender) named therein,
BankBoston, N.A., as documentation agent for the lenders, and NBD Bank, as
administrative agent for the lenders, to which reference is hereby made for a
statement of the circumstances under which this Term Loan B Note is subject to
prepayment and under which its due date may be accelerated and a description of
the collateral and security securing this Term Loan B Note. Capitalized terms
used but not defined in this Term Loan B Note shall have the respective meanings
assigned to them in the Loan Agreement.
This Term Loan B Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS, INCORPORATED
By:
-------------------------------
Its:
------------------------
TERM LOAN B NOTE
----------------
-2-
Schedule to Term Loan B Note dated March __, 1998
made by Numatics, Incorporated
in favor of ___________________________
Principal Principal Principal
Transaction Amount of Applicable Interest Amount Paid Balance
Date Loan Interest Rate Period or Prepaid Outstanding
----------- --------- ------------- -------- ----------- -----------
TERM LOAN B NOTE
----------------
-3-
EXHIBIT E-7
TERM LOAN B NOTE
----------------
$__________________ March __, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics, Incorporated, a Michigan corporation (the
"Company"), hereby promises to pay to the order of ___________________________
(the "Lender"), at the principal banking office of the Administrative Agent in
lawful money of the United States of America and in immediately available funds,
the principal sum of _______________________ Dollars ($______________), or such
lesser amount as is recorded on the schedule attached hereto or in the books and
records of the Lender in 30 consecutive quarterly installments for the pro rata
benefit of the Term Loan B Lenders in the amounts provided in the Loan Agreement
referred to below payable on the last Business Day of each March, June,
September and December, commencing on the last Business Day of June, 1998, to
and including Maturity Date B when the entire outstanding principal amount of
the Term Loan B evidenced hereby, and all accrued interest thereon, shall be due
and payable; and to pay interest on the unpaid principal balance hereof from
time to time outstanding, in like money and funds, for the period from the date
hereof until the Term Loan B evidenced hereby shall be paid in full, at the rate
per annum and on the dates provided in the Loan Agreement referred to below.
The Lender is hereby authorized by the Company to record on the schedule
attached to this Term Loan B Note, or on its books and records, the date and the
amount of the Term Loan B, the applicable interest rate and type and the
duration of the related LIBOR Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon, and the other information
provided for on such schedule, which schedule or such books and records, as the
case may be, shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
-------- -------
notation shall not relieve the Company of its obligation to repay the
outstanding principal amount of this Term Loan B, all accrued interest hereon
and any amount payable with respect hereto in accordance with the terms of this
Term Loan B Note and the Loan Agreement.
The Company and cash endorser or guarantor hereof waives presentment,
protest, notice of dishonor and any other formality in connection with this Term
Loan B Note. Should the indebtedness evidenced by this Term Loan B Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Company agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Term Loan B Note, including attorneys' fees and expenses.
This Term Loan B Note evidences a Term Loan B made under the Amended and
Restated Loan Agreement, dated as of March __, 1998 (the "Loan Agreement"), by
and among the Company, Numatics Ltd., Numatics GmbH, the lenders (including the
Lender) named therein,
BankBoston, N.A., as documentation agent for the lenders, and NBD Bank, as
administrative agent for the lenders, to which reference is hereby made for a
statement of the circumstances under which this Term Loan B Note is subject to
prepayment and under which its due date may be accelerated and a description of
the collateral and security securing this Term Loan B Note. Capitalized terms
used but not defined in this Term Loan B Note shall have the respective meanings
assigned to them in the Loan Agreement.
This Term Loan B Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS, INCORPORATED
By:
-------------------------------
Its:
------------------------
TERM LOAN B NOTE
----------------
-2-
Schedule to Term Loan B Note dated March __, 1998
made by Numatics, Incorporated
in favor of__________________________
Principal Principal Principal
Transaction Amount of Applicable Interest Amount Paid Balance
Date Loan Interest Rate Period or Prepaid Outstanding
----------- --------- ------------- -------- ----------- -----------
TERM LOAN B NOTE
----------------
-3-
EXHIBIT E-8
TERM LOAN B NOTE
----------------
$2,000,000 March 23, 1998
Detroit, Michigan
FOR VALUE RECEIVED, Numatics GmbH, a corporation organized and existing
under the laws of the Federal Republic of Germany (the "Borrower"), hereby
promises to pay to the order of The First National Bank of Chicago (the
"Lender"), at the place for payment specified by the Administrative Agent in
Deutschemarks and in immediately available funds, the principal sum of the
Deutschemark Equivalent on the Effective Date of Two Million Dollars
($2,000,000), or such lesser amount as is recorded on the schedule attached
hereto or in the books and records of the Lender in 30 consecutive quarterly
installments for the pro rata benefit of the Term Loan B Lenders in the amounts
provided in the Loan Agreement referred to below payable on the last Business
Day of each March, June, September and December, commencing on the last Business
Day of June, 1998, to and including Maturity Date B when the entire outstanding
principal amount of the Term Loan B evidenced hereby, and all accrued interest
thereon, shall be due and payable; and to pay interest on the unpaid principal
balance hereof from time to time outstanding, in like money and funds, for the
period from the date hereof until the Term Loan B evidenced hereby shall be paid
in full, at the rate per annum and on the dates provided in the Loan Agreement
referred to below.
The Lender is hereby authorized by the Company to record on the schedule
attached to this Term Loan B Note, or on its books and records, the date and the
amount of the Term Loan B, the applicable interest rate and type and the
duration of the related LIBOR Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon, and the other information
provided for on such schedule, which schedule or such books and records, as the
case may be, shall constitute prime facie evidence of the information so
recorded, provided, however, that any failure by the Lender to record any such
-------- -------
notation shall not relieve the Company of its obligation to repay the
outstanding principal amount of this Term Loan B, all accrued interest hereon
and any amount payable with respect hereto in accordance with the terms of this
Term Loan B Note and the Loan Agreement.
The Company and each endorser or guarantor hereof waives presentment,
protest, notice of dishonor and any other formality in connection with this Term
Loan B Note. Should the indebtedness evidenced by this Term Loan B Note or any
part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Company agrees to pay, in addition to the
principal, interest and other sums due and payable hereon. all costs of
collecting this Term Loan B Note, including attorneys' fees and expenses.
This Term Loan B Note evidences a Term Loan B made under the Amended and
Restated Loan Agreement dated as of March 23, 1998 (the "Loan Agreement"), by
and among the Company, Numatics Ltd., Numatics GmbH, the lenders (including the
Lender) named therein, BankBoston, N.A., as documentation agent for the lenders,
and NBD Bank, as administrative agent
for the lenders, to which reference is hereby made for a statement of the
circumstances under which this Term Loan B Note is subject to prepayment and
under which its due date may be accelerated and a description of the collateral
and security securing this Term Loan B Note. Capitalized terms used but not
defined in this Term Loan B Note shall have the respective meanings assigned to
them in the Loan Agreement.
This Term Loan B Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
NUMATICS GMBH
By:
-------------------------------
Its:
------------------------
TERM LOAN B NOTE
----------------
-2-
Schedule to Term Loan B Note dated March 23, 1998
made by Numatics GmbH
in favor of The First National Bank of Chicago
Principal Principal Principal
Transaction Amount of Applicable Interest Amount Paid Balance
Date Loan Interest Rate Period or Prepaid Outstanding
----------- --------- ------------- -------- ----------- -----------
TERM LOAN B NOTE
----------------
-3-
EXHIBIT F
REQUEST FOR ADVANCE
-------------------
NBD Bank,
as Administrative Agent for the Lenders
611 Woodward Avenue
Detroit, Michigan 48226
[Insert requesting Borrower], hereby requests a (insert Revolving Credit
Loan, Term Loan A, Term Loan B or Letter of Credit Advance] pursuant to Section
2.4 of the Amended and Restated Loan Agreement, dated as of March __, 1998 (the
"Loan Agreement"), among Numatics, Incorporated, Numatics Ltd., Numatics GmbH,
the Lenders referenced therein, BankBoston, N.A., as documentation agent for the
Lenders, and you, as Administrative Agent for the Lenders.
If a Loan is requested, such Loan is to be made in the amount of
$_________, to be made on __________, 19__ and evidenced by the Borrower's
Revolving Credit Notes, Term Loan A Notes, or Term Loan B Notes, as the case may
be. Such Loan shall be a (insert LIBOR Loan or Adjusted Floating Rate Rate Loan]
and the initial LIBOR Interest Period, if such requested Loan is a LIBOR Loan,
shall be [insert permitted LIBOR Interest Period].
If a Letter of Credit Advance is requested, such Letter of Credit Advance
shall be made by issuance by [insert requested L/C Issuer] of a Letter of Credit
on ____________, 19__ in the maximum amount of $____________ to and for the
benefit of _________________ with a stated expiry date of ____________ 19__, and
containing the further terms and conditions set forth in the attached letter of
credit application and other agreements of the L/C Issuer.
In support of this request, the Borrower hereby represents and warrants to
the Agents and the Lenders that:
1. The representations and warranties contained in Article IV of the Loan
Agreement are true and correct in all material respects on and as of the date
hereof, and will be true and correct in all material respects on the date such
Advance is made (both before and after such Advance is made), as if such
representations and warranties were made on and as of such dates.
REQUEST FOR ADVANCE
-1-
2. No Event of Default or Unmatured Event has occurred and is continuing
or will exist on the date such Advance is made and such Advance shall not cause
an Event of Default or Unmatured Event.
Acceptance of the proceeds of such Advance by the Borrower shall be deemed
to be a further representation and warranty that the representations and
warranties made herein are true and correct in all material respects at the time
such proceeds are disbursed.
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Loan Agreement.
[Signature of requesting Borrower]
By:
--------------------------------------
Its:
----------------------------------
Dated:
----------------------, ----
REQUEST FOR ADVANCE
-2-
EXHIBIT G
[LETTERHEAD OF MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.]
March 23, 1998
First Chicago Capital Markets, Inc.
BancBoston Securities Inc.
c/o First Chicago Capital Markets, Inc.
One First National Plaza
Suite 0701, 8th Floor
Chicago, Illinois 60670
Ladies and Gentlemen:
We have acted as counsel to Numatics, Incorporated, a Michigan corporation
(the "Company"), and its subsidiaries, Numation, Inc., a Michigan corporation,
Numatech, Inc., a Michigan corporation, Micro-Filtration, Inc., a Michigan
corporation, Ultra Air Products, Inc., a Michigan corporation, Microsmith, Inc.,
an Arizona corporation, and I.A.E. Incorporated, a Michigan corporation
(collectively, the "Guarantors"), in connection with the Company's issuance and
sale to you today of $115,000,000 principal amount of its 9 5/8% Senior
Subordinated Notes due 2008 (the "Notes"). The Notes are being issued and sold
pursuant to the Purchase Agreement dated March 18, 1998 among you (the "Initial
Purchasers"), the Company, and the Guarantors (the "Purchase Agreement"). This
letter is provided to you at the request of the Company pursuant to Section 9(e)
of the Purchase Agreement In connection with such representation, we have
examined the following:
(a) The final Offering Memorandum dated March 18, 1998 relating to
the Notes (the "Final Memorandum");
(b) The Purchase Agreement;
(c) The Registration Rights Agreement dated as of March 23, 1998
among the Company, the Guarantors, and the Initial Purchasers (the
"Registration Rights Agreement");
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-2-
(d) The Notes;
(e) The Indenture dated as of March 23, 1998 among the Company, the
Guarantors, and First Trust National Association, as Trustee (the
"Trustee"), under which the Notes are being issued (the "Indenture");
(f) Copies of the Company's and each Guarantor's articles or
certificate of incorporation, certified by the appropriate governmental
authorities in their respective states of incorporation;
(g) Certified copies of the Company's and each Guarantor's bylaws
and resolutions adopted by its board of directors relating to the Notes,
the Indenture, the Purchase Agreement, the Registration Rights Agreement,
and related matters;
(h) Certificates of good standing for the Company and each Guarantor
issued by the appropriate governmental authorities in their respective
states of incorporation;
(i) Certificates of good standing or certificates of similar import
with respect to the Company's qualification to do business as a foreign
corporation issued by the appropriate governmental authorities in the
states of Indiana and Tennessee and Numation, Inc.'s qualification to do
business as a foreign corporation issued by the appropriate governmental
authorities in the state of Ohio;
(j) The contracts listed in Exhibit A to this letter (the "Other
Contracts"), which an officer of the Company has certified as being a
complete list of (i) all of the contracts to which the Company or any
Guarantor is a party which, under applicable Securities and Exchange
Commission rules, would be required to be flied as exhibits to an annual
report on Form 10-K filed immediately after the issuance of the Notes and
the consummation of the related transactions being consummated today as
described in the Final Memorandum and (ii) all agreements to which the
Company is a party relating to its rights and obligations to purchase any
capital stock of a Guarantor owned by a person other than the Company; and
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-3-
(k) Such other certificates of officers or other representatives of
the Company and the Guarantors and other documents as we have considered
necessary or appropriate for us to examine in connection with the opinions
set forth in this letter.
In rendering the opinions and providing the other information contained in
this letter, we have relied on the certificates described above as to the
factual matters set forth in them.
Unless otherwise indicated, capitalized terms used in this letter have the
definitions given them in the Purchase Agreement.
References in this letter to our "knowledge," "awareness," or similar
references mean the conscious awareness of facts or other information by those
lawyers in our firm who had active involvement in negotiating or preparing the
Final Memorandum, the Notes, the Indenture, the Purchase Agreement, the
Registration Rights Agreement, or this letter.
Assumption and Covered Law
- --------------------------
For purposes of the opinions set forth herein, we have assumed that:
(a) Each party to the Indenture, the Purchase Agreement, and the
Registration Rights Agreement other than the Company and the Guarantors
has satisfied those legal requirements that are applicable to it to the
extent necessary to make those agreements enforceable against it.
(b) Each party to the Indenture, the Purchase Agreement, and the
Registration Rights Agreement other than the Company and the Guarantors
has complied with all legal requirements pertaining to its status as such
status relates to its rights to enforce those agreements.
(c) Each document submitted to us for review is accurate and
complete, each such document that is an original is authentic, each such
document that is a copy conforms to an authentic original, and all
signatures on each such document are genuine.
(d) There has not been any mutual mistake of fact or
misunderstanding, fraud, duress, or undue influence.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-4-
(e) The conduct of the parties to the Indenture, the Purchase
Agreement, and the Registration Rights Agreement has complied with any
applicable requirements of good faith, fair dealing, or conscionability.
(f) The Trustee, the Initial Purchasers, and any agent acting for
any of them in connection with the transactions described in the Notes,
the Indenture, the Purchase Agreement, and the Registration Rights
Agreement have acted in good faith and without notice of any defense
against the enforcement of any rights created by any of those documents.
(g) Neither the Company nor any Guarantor will in the future take
any discretionary action (including a decision not to act) permitted but
not required under the Notes, the Indenture, the Purchase Agreement, or
the Registration Rights Agreement that would result in a violation of law
or constitute a breach or default under any other agreement to which such
person is a party.
The law covered by the opinions expressed herein is limited to the federal
law of the United States of America and the law of the State of Michigan. The
Notes, the form of the Series B Notes, the Indenture, and the Registration
Rights Agreement all provide that they are to be governed by the law of the
State of New York; however, our opinions as to their validity, binding effect,
and enforceability are given as if they were governed by the law of the State of
Michigan. For purposes of our opinions with respect to Microsmith, Inc., with
your permission we have assumed that the law of the State of Arizona (including
its business corporation law) would be identical to the law of the State of
Michigan.
Opinions
- --------
Based upon and subject to the foregoing and to the qualifications and
limitations hereinafter set forth, we are of the opinion that:
1. Each of the Company and the Guarantors has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and has the corporate power and authority to
carry on its business and to own, lease, and operate its properties as described
in the Final Memorandum.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-5-
2. Based solely on the certificates of good standing or certificates of
similar import described above, and to the extent set forth in such
certificates, the Company is duly qualified to do business as a foreign
corporation in the states of Indiana and Tennessee, and Numation, Inc. is duly
qualified to do business as a foreign corporation in the state of Ohio.
3. All of the outstanding shares of capital stock of each of the
Guarantors have been duly authorized and validly issued and are fully paid and
nonassessable, and each Guarantor's stock records, stock certificates, and
minute books indicate that such Guarantor's shares are owned by the Company in
the percentage set forth on Schedule A to the Purchase Agreement. To our
knowledge, none of such shares is subject to any Lien except as set forth in the
Final Memorandum.
4. The Notes have been duly authorized and, when duly executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of the
Purchase Agreement, will be entitled to the benefits of the Indenture and will
constitute the valid and legally binding obligations of the Company, enforceable
in accordance with their terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and (ii) equitable principles of general applicability
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
5. The Subsidiary Guarantees have been duly authorized by each Guarantor.
When the Notes are executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement, the Subsidiary Guarantees
endorsed thereon will be entitled to the benefits of the Indenture and will
constitute the valid and legally binding obligations of the Guarantors,
enforceable in accordance with their terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and (ii) equitable principles of general
applicability (regardless of whether enforceability is considered in a
proceeding at law or in equity).
6. The Indenture has been duly authorized, executed, and delivered by the
Company and each Guarantor and is a valid and legally binding agreement of the
Company and each Guarantor, enforceable against the Company, and
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-6-
each Guarantor in accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and (ii) equitable principles of general
applicability (regardless of whether enforceability is considered in a
proceeding at law or in equity).
7. The Purchase Agreement has been duly authorized, executed, and
delivered by the Company and each Guarantor.
8. The Registration Rights Agreement has been duly authorized, executed,
and delivered by the Company and each Guarantor and is a valid and legally
binding agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency, or similar
laws affecting creditors' rights generally and (ii) equitable principles of
general applicability (regardless of whether enforceability is considered in a
proceeding at law or in equity).
9. The Series B Notes have been duly authorized.
10. The statements under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Management and Directors," "Description of Other Indebtedness,"
"Description of Notes," and "Plan of Distribution" in the Final Memorandum,
insofar as such statements constitute a summary of the legal matters or
documents referred to therein, fairly present in all material respects such
legal matters or documents.
11. The summary contained in the Final Memorandum under the caption
"Certain Federal Tax Consequences for Foreign Persons" is an accurate summary of
the issues described therein in all material respects.
12. The execution, delivery, and performance of the Purchase Agreement and
the other Operative Documents by the Company and each of the Guarantors, the
compliance by the Company and each of the Guarantors with all provisions
thereof, and the consummation of the transactions described therein will not (i)
require any consent, approval, authorization, or other order of, or
qualification with, any court or governmental body or agency (except such as may
be required under the securities or Blue Sky laws of the various states), (ii)
conflict with or constitute a breach of any of the terms or
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-7-
provisions of, or a default under, the charter or bylaws of the Company or any
of the Guarantors or (except as described in the Final Memorandum) any Other
Contract, (iii) violate or conflict with any applicable law, rule, or
regulation, or any judgment, order, or decree known to us of any court or any
governmental body or agency having jurisdiction over the Company or any of its
subsidiaries or their respective property, (iv) result in the imposition or
creation of (or any obligation to create or impose) a Lien under any Other
Contract.
13. Neither the Company nor any of its subsidiaries is, nor after giving
effect to the offering and sale of the Notes and the application of the net
proceeds thereof as described in the Final Memorandum will be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
14. To the best of our knowledge, other than the rights granted to Harvard
Private Capital Holdings, Inc. with respect to the Company's capital stock,
there are no contracts, agreements, or understandings between the Company or any
Guarantor and any person granting such person the right to require the Company
or such Guarantor to file a registration statement under the Securities Act of
1933, as amended (the "Act"), with respect to any securities of the Company or
such Guarantor or to require the Company or such Guarantor to include such
securities with the Notes and Subsidiary Guarantees registered pursuant to any
Registration Statement.
15. The Indenture complies as to form in all material respects with the
requirements of the TIA and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder. It is not necessary in
connection with the offer, sale, and delivery of the Notes to the Initial
Purchasers in the manner contemplated by the Purchase Agreement or in connection
with the Exempt Resales to qualify the Indenture under the TIA.
16. No registration under the Act is required for the sale of the Notes to
the Initial Purchasers as contemplated by the Purchase Agreement or for the
Exempt Resales assuming (i) that each Initial Purchaser is a QIB or an
Accredited Institution, (ii) the accuracy of and compliance with the Initial
Purchasers' representations and agreements contained in Section 7 of the
Purchase Agreement, and (iii) the accuracy of the representations of the Company
and the Guarantors set forth in Sections 5(h) and 6(bb), (dd), (ee), and (hh) of
the Purchase Agreement.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-8-
Qualifications and Limitations
- ------------------------------
The foregoing opinions are subject to the following qualifications and
limitations:
A. Our opinions are subject to generally applicable rules of law which:
(1) limit or affect the enforcement of provisions of a contract that
purport to require waiver of the obligations of good faith, fair dealing,
diligence, and reasonableness;
(2) provide that forum selection clauses in contracts are not
necessarily binding on the courts in the forum selected;
(3) limit the availability of a remedy under certain circumstances
where another remedy has been elected;
(4) limit the enforceability of provisions releasing, exculpating,
or exempting a party from, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves negligence, recklessness, willful misconduct, or
unlawful conduct;
(5) may, where less than all of a contract may be unenforceable,
limit the enforceability of the balance of the contract to circumstances
in which the unenforceable portion is not an essential part of the agreed
exchange;
(6) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs; or
(7) may permit a party who has materially failed to render or offer
performance required by the contract to cure that failure unless (a)
permitting a cure would unreasonably hinder the aggrieved party from
making substitute arrangements for performance, or (b) it was important in
the circumstances to the aggrieved party that performance occur by the
date stated in the contract.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-9-
B. Our opinions deal only with the specific legal issues explicitly
addressed herein and do not address any other matters.
C. Our opinions do not address any of the following legal issues:
(1) federal and state securities laws and regulations, except to the
extent expressly set forth in paragraphs 10, 11, 13, 15, and 16 above;
(2) federal and state antitrust and unfair competition laws and
regulations;
(3) the statutes and ordinances, the administrative decisions, and
the rules and regulations of counties, cities, municipalities, and
political subdivisions, and judicial decisions to the extent that they
deal with any of the foregoing;
(4) fraudulent transfer and fraudulent conveyance laws;
(5) federal and state tax laws and regulations, except to the extent
expressly set forth in paragraph 11 above; and
(6) federal and state laws, regulations, and policies concerning (a)
national and local emergency or (b) possible judicial deference to acts of
sovereign states.
D. We express no opinion as to the validity or enforceability of any
provisions of the Notes or the Indenture requiring the payment of interest on
interest at a rate higher than 10 percent per annum simple interest or requiring
the payment of prepayment premiums or premiums payable upon acceleration of
indebtedness.
Confirmation as to Legal Proceedings
- ------------------------------------
We hereby confirm that we do not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject, other than any disclosed in the Final Memorandum or in
Exhibit B to this letter. Please be advised, however, that we have not conducted
any search of any court docket or other governmental records in connection with
the confirmation contained in this paragraph.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-10-
Confirmation as to Final Memorandum
- -----------------------------------
In connection with the offering of the Notes, we rendered certain legal
advice and assistance in the course of the preparation of the Final Memorandum.
Rendering such assistance involved, among other things, discussions and
inquiries concerning various legal and related subjects and reviews of and
reports on certain corporate records, documents, and proceedings. We also
participated in conferences with representatives of the Company, its independent
accountants, the Initial Purchasers, and the Initial Purchasers' counsel, at
which conferences prior to the date of the Final Memorandum the contents of the
Final Memorandum and related matters were discussed. Between the date of the
Final Memorandum and the time of delivery of this letter, among other things, we
had discussions with, and made inquiries of, representatives of the Company and
its independent accountants with regard to the Company and the contents of
certain portions of the Final Memorandum, and we reviewed certificates of
certain representatives of the Company and a letter from the Company's
independent accountants.
On the basis of the information which was developed in the course of the
performance of the services referred to above and on the basis of the
information we have gained in the course of our representation of the Company,
considered in the light of our understanding of the applicable law and the
experience we have gained through our practice under the Act and the Securities
Exchange Act of 1934, as amended, and relying as to materiality to a large
extent upon the statements of officers and other representatives of the Company,
we confirm to you that nothing has come to our attention in the course of our
representation which causes us to believe that, either as of the date of the
Final Memorandum or as of the date of this letter, the Final Memorandum
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading.
The limitations inherent in the independent verification of factual
matters and the character of determinations involved in the offering process are
such, however, that we do not assume any responsibility for the accuracy,
completeness, or fairness of the statements contained in the Final Memorandum
(except to the extent set forth in paragraphs 10 and 11 above).
We express no opinion or belief as to the financial statements and other
financial data contained in the Final Memorandum.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
-11-
----------------------------
This letter speaks only as of its date. We undertake no obligation to
advise you (or any third party) of changes of law or fact that occur after the
date hereof - even though the change may affect the conclusions herein.
A copy of this letter may be delivered by you to the Trustee in connection
with the Trustee's execution and delivery of the Indenture and authentication of
the Notes, and the Trustee may rely on this letter as if it were addressed and
had been delivered to it on the date hereof. Subject to the foregoing, this
letter may be relied on only by you and only for the purpose contemplated by the
Purchase Agreement and may not be used or relied on by you or any other person
for any other purpose whatsoever without our prior written consent.
Very truly yours,
/s/ Miller, Canfield, Paddock and Stone, P.L.C.
Exhibit A
1.1 Amended and Restated Loan Agreement, dated as of March 23, 1998, among
Numatics, Incorporated (the "Company"), Numatics GmbH, Numatics, Ltd., NBD
Bank, as Administrative Agent, BankBoston, N.A., as Documentation Agent,
and the Lenders party thereto
1.2 Amended and Restated Guaranty Agreement, dated as of March 23, 1998, by
Numation, Inc., Numatech, Inc., Micro-Filtration, Inc., Ultra Air
Products, Inc., Microsmith, Inc., and I.A.E. Incorporated (the
"Guarantors") and the Company in favor of NBD Bank, as Administrative
Agent, and BankBoston, N.A., as Documentation Agent
2.1 Purchase Agreement, dated March 18, 1998, among First Chicago Capital
Markets, Inc. and BancBoston Securities Inc. (the "Initial Purchasers"),
the Company, and the Guarantors
2.2 Indenture, dated as of March 23, 1998, among the Company, the Guarantors,
and First Trust National Association, as Trustee
2.3 A/B Exchange Registration Rights Agreement, dated as of March 23, 1998,
among the Company, the Guarantors, and the Initial Purchasers
3.1 Securities Purchase Agreement, dated as of January 3, 1996, between the
Company and Harvard Private Capital Holdings, Inc. ("Harvard")
3.2 Numatics, Incorporated Class A Common Stock Purchase Warrant, dated
January 3, 1996
3.3 Numatics, Incorporated Tag-Along and Drag-Along Agreement, dated January
3, 1996, among the Company, Harvard and shareholders of the Company
3.4 Registration Agreement, dated as of January 3, 1996, between the Company
and Harvard
3.5 Amended and Restated Guarantee Agreements between Harvard and each of the
Guarantors other than I.A.E. Incorporated, each dated as of March 23, 1998
3.6 Guaranty Agreement between Harvard and I.A.E. Incorporated, dated as of
March 23, 1998
A-1
3.7 Agreement, dated as of March 23, 1998, between the Company and Harvard
4.1 Amended and Restated Stock Transfer Agreement, dated December 28, 1995,
among the Company, John H. Welker, individually and as trustee of the John
H. Welker Trust u/a dtd December 28, 1995, David K. Dodds, Donald E.
McGeachey, Henry Fleischer, individually and as trustee of the Henry
Fleischer Trust u/a dtd March 10, 1993, Robert P. Robeson, John A. Acuff,
Bruce W. Hoppe, David King, and Philip Robinson
5.1 Voting Agreement, dated as of November 29, 1990, among the Company (under
its former name, Numatics Acquisition Corporation) and shareholders of the
Company
6.1 Employment Agreement, dated January 3, 1996, between the Company and John
H. Welker
7.1 Employment Agreement, dated September 15, 1996, between the Company and
David M. Tenniswood
8.1 Numatics, Incorporated Amended and Restated Deferred Compensation Plan,
adopted December 28, 1995, and related acknowledgements by Eligible
Employees (as therein defined)
9.1 Stock Purchase and Transfer Restriction Agreement, dated as of September
25, 1995, among William S. Smith, Dawn C. Smith and the Company
10.1 Asset Purchase Agreement, dated January 24, 1995, between Robert McKay and
the Company, and first amendment thereto dated the same date
11.1 Stock Transfer Agreement, dated as of September 1, 1994, among Jeffrey R.
Schneid, the Company and Numation, Inc.
12.1 Stock Transfer Agreement, dated as of September 1, 1994, between Richard
L. Dalton, Jr. and the Company
13.1 Stock Purchase and Transfer Restriction Agreement, dated as of July 31,
1992, among Robert D. and Pamela S. Nuckles and the Company
A-2
Exhibit B
The Company is one of three defendants in a product liability case, Toledo
v. N.J. Malin & Associates (Case No. 94L-4158), pending in the Circuit Court of
Cook County, Illinois. The plaintiff in that case alleges that he was injured
when a conveyor gate unexpectedly descended and struck him on the head, injuring
his back, and that the Company's valves were components of the conveyor gate.
The trial is scheduled for August 24, 1998. The case is being defended by the
Company's products liability insurance carrier. The lawyer engaged by the
insurance carrier has advised the Company that it is highly unlikely that the
Company's liability, if any, will exceed the limits of its insurance coverage.
In McKenzie Banking Company v. Numatics, Incorporated (Civ. Action No.
97CVIII), pending in the Chancery Court of Carroll County, Tennessee, the
Company is being sued for $19,754.90 by a factor to which one of the Company's
suppliers sold its accounts receivable. The Company did not pay this amount due
to setoffs it had against the supplier and intends to defend vigorously.
B-1
EXHIBIT H
REQUEST FOR CONTINUATION OR
---------------------------
CONVERSION OF LOAN
------------------
[Date]
NBD Bank,
as Administrative Agent for the Lenders
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michigan Banking Division
[Insert requesting Borrower] hereby requests that $___________ of the
principal amount of the Revolving Credit Loan originally made on _________,
which Revolving Credit Loan is currently a [insert type of Loan], be continued
as or converted to, as the case may be, a [insert type of Loan requested] on
_____________, 19__. If such Revolving Credit Loan is requested to be converted
to a LIBOR Loan, the Borrower hereby elects a LIBOR Interest Period for such
Revolving Credit Loan of [insert permitted LIBOR Interest Period].
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Amended and Restated Loan Agreement dated as of
March __, 1998, among Numatics, Incorporated, Numatics Ltd., Numatics GmbH, the
lenders named therein, BankBoston, N.A., as documentation agent for the lenders,
and you, as administrative agent for the lenders.
[Signature of requesting Borrower]
By:
--------------------------------------
Its:
----------------------------------
EXHIBIT I
ASSIGNMENT AND ACCEPTANCE
-------------------------
Reference is made to the Amended and Restated Loan Agreement dated as of
March __, 1998 (the "Loan Agreement") among NUMATICS, INCORPORATED, a Michigan
corporation, NUMATICS LTD., a corporation organized and existing under the laws
of Canada and Numatics GmbH, a corporation organized and existing under the laws
of the Federal Republic of Germany (collectively, the "Borrowers"), the lenders
named therein (the "Lenders"), BANKBOSTON, N.A., as documentation agent for the
Lenders (the "Documentation Agent"), and NBD BANK, as administrative agent for
the Lenders (the "Administrative Agent" and collectively with the Documentation
Agent, the "Agents"). Terms defined in the Loan Agreement are used herein with
the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns (without recourse) to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Loan
Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Loan Agreement.
After giving effect to such sale and assignment the Assignee's Commitments and
the amounts of the Advances owing to the Assignee will be as set forth on
Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by any Borrower of any of its obligations under the
Loan Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note or Notes held by the Assignor and requests that the
Administrative Agent exchange such Note or Notes for a new Note or Notes payable
to the order of the Assignee in an amount equal to the Commitments assumed by
the Assignee pursuant hereto and the Assignor in an amount equal to the
Commitments retained by the Assignor under the Loan Agreement, respectively, as
specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Loan
Agreement, together with copies of the financial statements referred to in
Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon either Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own
credit decisions in taking or not taking action under the Loan Agreement; (iii)
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers and discretion under the Loan Agreement as are
delegated to each Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms of all of the obligations that by the
terms of the Loan Agreement are required to be performed by it as a Lender; and
(v) if the Assignee is organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue Service of
the United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Loan Agreement and the Notes or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance and recording by the
Administrative Agent. The effective date for this Assignment and Acceptance (the
"Effective Date") shall be the date of acceptance hereof by the Administrative
Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Administrative Agent as of
the Effective Date, (i) the Assignee shall be a party to the Loan Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Agreement.
6. Upon such acceptance and recording by the Administrative Agent, from
and after the Effective Date, the Administrative Agent shall make all payments
under the Loan Agreement and the Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Loan Agreement and
the Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
ASSIGNMENT AND ACCEPTANCE
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IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
[ASSIGNOR]
BY:
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ITS:
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[ASSIGNEE]
BY:
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ITS:
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ASSIGNMENT AND ACCEPTANCE
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