<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1998
REGISTRATION NO. 33-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
NUMATICS, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MICHIGAN 3492 38-2955710
(STATE OR OTHER JURISDICTION
OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR
ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
AND THE FOLLOWING ADDITIONAL REGISTRANTS, EACH A GUARANTOR:
MICHIGAN NUMATION, INC. 38-3165223
MICHIGAN NUMATECH, INC. 38-3170243
MICHIGAN MICRO-FILTRATION, INC 38-2796518
MICHIGAN ULTRA AIR PRODUCTS, INC 38-2565104
ARIZONA MICROSMITH, INC. 86-0639032
MICHIGAN I.A.E. INCORPORATED -
(STATE OR OTHER JURISDICTION OF (EXACT NAME OF GUARANTOR (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) AS SPECIFIED IN ITS CHARTER) IDENTIFICATION NUMBER)
</TABLE>
1450 NORTH MILFORD ROAD, HIGHLAND, MICHIGAN 48357, (248) 887-4111
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
For Each Registrant:
JOHN H. WELKER
1450 NORTH MILFORD ROAD
HIGHLAND, MICHIGAN 48357
(248) 887-4111
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
with copies to:
KENT E. SHAFER, ESQ.
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
150 WEST JEFFERSON AVENUE
DETROIT, MICHIGAN 48226
(313) 963-6420
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the Exchange Offer referred to herein.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
9 5/8% Series B Senior Subordinated Notes due
2008........................................... $115,000,000 101.8125% $117,084,375 $34,539.89
Guarantees of the Guarantors.................... $0 0% $0 (2)
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</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(1) based on the average of the bid and asked prices for the
Notes on April 24, 1998.
(2) Pursuant to Rule 457(n), no separate fee is payable for the Guarantees.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
DATED APRIL 29, 1998
OFFER TO EXCHANGE
ALL OUTSTANDING LOGO
($115,000,000 PRINCIPAL AMOUNT OUTSTANDING)
9 5/8% SENIOR SUBORDINATED NOTES DUE 2008
FOR
9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
($115,000,000 PRINCIPAL AMOUNT)
OF
NUMATICS, INCORPORATED
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED.
----------
Numatics, Incorporated, a Michigan corporation (the "Issuer"), hereby offers
(the "Exchange Offer"), upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), to exchange up to an aggregate principal amount of $115,000,000
of its 9 5/8% Series B Senior Subordinated Notes due 2008 (the "Exchange
Notes") for an equal principal amount of its outstanding 9 5/8% Senior
Subordinated Notes due 2008 (the "Notes"), in integral multiples of $1,000. The
Exchange Notes will be substantially identical (including principal amount,
interest rate, maturity and redemption rights) to the Notes for which they may
be exchanged pursuant to the Exchange Offer, except that (i) the offer and sale
of the Exchange Notes will have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and (ii) holders of Exchange Notes
will not be entitled to certain rights of holders of the Notes under the A/B
Exchange Registration Rights Agreement of the Issuer and the Guarantors (as
defined) dated as of March 23, 1998 (the "Registration Rights Agreement"). The
Notes have been, and the Exchange Notes will be, issued under an indenture (the
"Indenture") dated as of March 23, 1998 among the Issuer, the Guarantors and
U.S. Bank Trust National Association (formerly known as First Trust National
Association), as trustee (the "Trustee"). See "Description of Exchange Notes."
There will be no proceeds to the Issuer from this offering; however, pursuant
to the Registration Rights Agreement, the Issuer will bear certain offering
expenses. The Exchange Notes mature on April 1, 2008, unless previously
redeemed. Interest on the Exchange Notes is payable semi-annually on April 1
and October 1 of each year, commencing October 1, 1998. The Exchange Notes will
be redeemable at the option of the Company, in whole or in part, on or after
April 1, 2003, at the redemption prices set forth herein, plus accrued and
unpaid interest and Liquidated Damages (as defined), if any, to the redemption
date. In addition, on or prior to April 1, 2001, the Company may redeem up to
$40,250,000 aggregate principal amount of Notes and Exchange Notes with the net
proceeds of a public offering of common stock of the Company at the redemption
prices set forth herein, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date; provided that at least $74,750,000
aggregate principal amount of Notes and Exchange Notes will remain outstanding
immediately after the occurrence of such redemption. Upon a Change of Control
(as defined), the Company will be required to offer to repurchase all
outstanding Exchange Notes at 101% of the principal amount thereof plus accrued
and unpaid interest and Liquidated Damages, if any, to the date of repurchase.
The Exchange Notes will be general unsecured obligations of the Company and
will rank pari passu with all existing and future senior subordinated
indebtedness of the Company and subordinated in right of payment to all
existing and future Senior Debt (as defined) of the Company, including
indebtedness under the New Credit Facility (as defined). The obligations of the
Company under the New Credit Facility are secured by substantially all of the
assets of the Company and its domestic subsidiaries, as well as all of the
outstanding capital stock of the domestic subsidiaries of the Company and 66%
of the capital stock of the foreign subsidiaries of the Company, and such
indebtedness ranks senior in right of payment to the Exchange Notes. The
Company's payment of principal, premium, if any, interest and Liquidated
Damages, if any, on the Exchange Notes will be fully and unconditionally,
jointly and severally guaranteed on a senior subordinated basis (the
"Subsidiary Guarantees") by all existing and future domestic Restricted
Subsidiaries (as defined) of the Company and each other Restricted Subsidiary
of the Company that guarantees debt of the Company or of any other domestic
Restricted Subsidiary of the Company (the "Guarantors"). The Subsidiary
Guarantees will rank pari passu in right of payment with all existing and
future senior subordinated indebtedness of the Guarantors and subordinated to
all existing and future Senior Debt of the Guarantors. The Exchange Notes and
the Notes will rank equally with one another, and each Guarantor's guarantee of
the Exchange Notes will rank equally with its guarantee of the Notes. As of
December 31, 1997, on a pro forma basis after giving effect to the issuance of
the Notes, borrowings under the New Credit Facility and the application of the
net proceeds therefrom, the Company would have had approximately $43.0 million
of Senior Debt outstanding (including approximately $38.7 million of secured
indebtedness outstanding under the New Credit Facility), and the Company would
have had an additional approximately $31.3 million of Senior Debt available to
be incurred under the New Credit Facility, subject to borrowing base
limitations. In addition, the Company conducts certain operations through
foreign subsidiaries which will not guarantee the Exchange Notes and the Notes
will be effectively subordinated to all liabilities of such subsidiaries (which
aggregated $12.7 million as of December 31, 1997). See "Description of Exchange
Notes" and "Description of Other Indebtedness." The terms of the Indenture
permit the Company and its subsidiaries to incur additional indebtedness
(including Senior Debt), subject to certain limitations.
(Cover text continued on next page)
----------
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE EXCHANGE NOTES.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is , 1998.
<PAGE>
The Issuer will accept for exchange any and all validly tendered Notes on or
prior to 5:00 p.m., New York City time, on , 1998 (the "Expiration
Date"), unless the Exchange Offer is extended. Tenders of Notes may be
withdrawn at any time prior to 5:00 p.m. on the Expiration Date; otherwise,
such tenders are irrevocable. U.S. Bank Trust National Association will act as
exchange agent (in such capacity, the "Exchange Agent") in connection with the
Exchange Offer. The Exchange Offer is not conditioned on any minimum principal
amount of Notes being tendered for exchange but is subject to certain other
customary conditions.
The Notes were sold by the Issuer on March 23, 1998 (the "Offering") in
transactions not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act. The Notes were
subsequently resold to qualified institutional buyers in reliance upon Rule
144A under the Securities Act, to a limited number of other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act) that executed and delivered a letter containing certain
representations and agreements and pursuant to offers and sales that occurred
outside the United States within the meaning of Regulation S under the
Securities Act. Accordingly, the Notes may not be reoffered, resold or
otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered in order to satisfy certain obligations of the Issuer under the
Registration Rights Agreement. See "The Exchange Offer."
The Company employed the net proceeds of the Offering and of the initial
borrowing under the New Credit Facility by using approximately $98.7 million
to repay its indebtedness under its prior bank credit facility (the "Old
Credit Facility"), approximately $46.6 million to prepay its previously
outstanding senior subordinated notes (the "Old Subordinated Notes") and
approximately $6.0 million to pay a dividend on its common shares.
The Exchange Offer is being made in reliance on certain no-action positions
that have been published by the staff of the Securities and Exchange
Commission (the "Commission") which require each tendering noteholder to
represent that it is acquiring the Exchange Notes in the ordinary course of
its business and that such holder noes not intend to participate and has no
arrangement or understanding with any person to participate in a distribution
of the Exchange Notes. In some cases, certain broker-dealers may be required
to deliver a prospectus in connection with the resale of Exchange Notes that
they receive in the Exchange Offer. See "The Exchange Offer" and "Plan of
Distribution."
There has not previously been any public market for the Exchange Notes. The
Issuer does not intend to list the Exchange Notes on any securities exchange
or to seek approval for quotation through any automated quotation system.
There can be no assurance that an active market for the Exchange Notes will
develop. To the extent that an active market for the Exchange Notes does
develop, the market value of the Exchange Notes will depend on market
conditions (such as yields on alternative investments), general economic
conditions, the Issuer's financial condition and other factors. Such
conditions might cause the Exchange Notes, to the extent that they are
actively traded, to trade at a significant discount from face value. See "Risk
Factors--Absence of a Public Market."
ANY NOTES NOT TENDERED AND ACCEPTED IN THE EXCHANGE OFFER WILL REMAIN
OUTSTANDING. TO THE EXTENT ANY NOTES ARE TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED NOTES COULD BE ADVERSELY
AFFECTED. FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, THE HOLDERS OF NOTES
WILL CONTINUE TO BE SUBJECT TO THE EXISTING RESTRICTIONS ON TRANSFER THEREOF.
HOLDERS WHO DO NOT TENDER THEIR NOTES GENERALLY WILL NOT HAVE ANY FURTHER
REGISTRATION RIGHTS UNDER THE REGISTRATION RIGHTS AGREEMENT OR OTHERWISE. SEE
"THE EXCHANGE OFFER--CONSEQUENCES OF FAILURE TO EXCHANGE."
The Exchange Notes generally will be issued in registered, global form
without interest coupons (the "Global Exchange Notes"), which will be
deposited with, or on behalf of, The Depository Trust Company ("DTC") and
registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Exchange Notes representing the Exchange Notes will be
shown on, and transfers thereof will be effected through, records maintained
by DTC and its participants. After the initial issuance of the Global Exchange
Notes, Exchange Notes in certificated form will be issued in exchange for the
Global Exchange Notes only on the terms set forth in the Indenture. See
"Description of Exchange Notes--Book Entry, Delivery and Form."
--------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER OR SUBSIDIARY GUARANTORS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE EXCHANGE NOTES OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
OF THE EXCHANGE NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER),
ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
<PAGE>
ADDITIONAL INFORMATION
As a result of the Exchange Offer, the Issuer will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, will file reports and
other information with the Commission. Such reports and other information
filed by the Issuer can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and the regional offices of the Commission located at 7 World Trade Center,
New York, New York 10048 and 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at its public reference facilities in New York, New
York and Chicago, Illinois at prescribed rates. The Issuer will make its
filings with the Commission electronically. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically, which information
can be accessed at http://www.sec.gov.
The Guarantors' obligations under the informational requirements of the
Exchange Act will be fulfilled by including information regarding the
Guarantors in the Issuer's periodic reports.
The Issuer has agreed in the Indenture that, whether or not required by the
rules of the Commission, so long as any Notes or Exchange Notes are
outstanding, it will furnish to the holders of Notes and Exchange Notes (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Issuer
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of the Issuer and its
consolidated subsidiaries and, with respect to the annual information only, a
report thereon by the Issuer's independent accountants and (ii) all current
reports that would be required to be filed with the Commission if the Issuer
were required to file such reports. The Issuer has also agreed that, following
consummation of the Exchange Offer, whether or not required by the rules of
the Commission, it will file a copy of all such information and reports with
the Commission for public availability within the time periods specified in
the Commission's rules (unless the Commission will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request.
In addition, the Issuer and the Guarantors have agreed that, for so long as
any Notes or Exchange Notes remain outstanding, they will furnish to the
holders of the Notes and Exchange Notes and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
The Issuer has filed with the Commission a Registration Statement on Form S-
4 under the Securities Act for the registration of the Exchange Notes offered
hereby (the "Registration Statement"). This Prospectus, which constitutes a
part of the Registration Statement, does not contain all the information set
forth in the Registration Statement, certain items of which are contained in
exhibits and schedules to the Registration Statement as permitted by the rules
and regulations of the Commission. For further information about the Issuer
and the Exchange Notes offered hereby, reference is made to the Registration
Statement, including the exhibits and financial statement schedules thereto,
which may be inspected without charge at the public reference facility
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies of which may be obtained from the Commission at prescribed
rates or from the Web site described above. Statements made in this Prospectus
concerning the contents of any documents referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement is qualified in its entirety by such reference.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the "Summary," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
sections, contains forward-looking statements, which can
i
<PAGE>
be identified by the use of the future tense or other forward-looking terms
such as "may," "intend," "will," "expect," "anticipate," "plan," "management
believes," "estimate," "continue," "should," "strategy" or "position" or the
negatives of those terms or other variations on them or by comparable
terminology. In particular, any statements, express or implied, concerning
future operating results or the ability to generate net sales, income or cash
flow to service the Exchange Notes are forward-looking statements. Investors
in the Exchange Notes are cautioned that reliance on any forward-looking
statements involves risks and uncertainties and that, although the Company
believes that the assumptions on which the forward-looking statements
contained herein are based are reasonable, any of those assumptions could
prove to be inaccurate. As a result, the forward-looking statements based on
those assumptions also could be incorrect, and actual results may differ
materially from any results indicated or suggested thereby. The uncertainties
in this regard include, but are not limited to, those identified herein under
"Risk Factors." In light of these and other uncertainties, the inclusion of a
forward-looking statement herein should not be regarded as a representation by
the Company that the Company's plans and objectives will be achieved. All
forward-looking statements are expressly qualified by the cautionary
statements contained in this paragraph and in the "Risk Factors" section
below. The Company undertakes no duty to update such forward-looking
statements.
ii
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data, including
the notes thereto, appearing elsewhere in this Prospectus. Unless the context
requires otherwise, the terms "Numatics" or the "Company" hereafter refer to
Numatics, Incorporated (or, with respect to events occurring prior to its
incorporation in 1990, its predecessor) and its subsidiaries. Prospective
investors should carefully consider the information set forth under the caption
"Risk Factors."
THE COMPANY
The Company is a leading global manufacturer and marketer of pneumatic valves
and related products. According to the most recently available information from
the National Fluid Power Association ("NFPA"), the worldwide market, as of
1995, for all pneumatic components was approximately $8.8 billion. The Company
has the largest U.S. market share, approximately 29.0%, in directional control,
base mounted, 4-way pneumatic valves. This type of valve is the Company's core
product and represents the largest segment of the pneumatic valve market in the
United States. The Company's products are key components in automated and other
manufacturing processes in industries as diverse as packaging, consumer
products, semiconductor and automotive. The Company's customers include over
9,000 direct customers and over 110 specialized distributors, with no one
customer representing more than 3.0% of total net sales in 1997. The Company's
products are used by such well known corporations as Stone Container, Johnson &
Johnson, Hewlett Packard and the "Big 3" automotive manufacturers. The Company
has increased its net sales from 1993 to 1997 at a compound annual growth rate
of 14.7%, outpacing the overall pneumatic components industry growth rate in
that period. For the fiscal year ended December 31, 1997, the Company's net
sales and Adjusted EBITDA (as defined) were $147.1 million and $27.9 million,
respectively.
The Company provides a full line of pneumatic products to address its
customers' fluid power needs worldwide. In the late 1980s, the Company began
expanding its product line to complement its traditional leadership position in
valve products. The Company now engineers, manufactures and markets a wide
range of pneumatic components used in automated and other manufacturing
processes. The Company's complementary set of products includes valves,
actuators and specialty products. While the Company's net sales in core valve
products have increased significantly over the past five years, its overall
dependence on valves has decreased through its product diversification
strategy. For 1997, valves represented 61.2% of the Company's total net sales,
and actuators and specialty products represented 38.8%.
Since its inception in 1945, Numatics has earned a reputation as an innovator
in engineering, manufacturing and new product development. The Company's
proprietary "lapped spool and sleeve" manufacturing technology for pneumatic
valves has been continuously refined and continues to provide a competitive
advantage in terms of product quality, reliability and durability. By working
closely with its customers to meet their specific needs, the Company has
introduced numerous industry firsts in manufacturing and new product
technologies.
The Company has greatly enhanced its international presence since it opened a
manufacturing facility in Germany in 1965. Other non-U.S. facilities include a
manufacturing plant in Ontario, Canada and sales and distribution facilities in
Canada, England, Italy, France, the Netherlands, Hungary, Taiwan and Mexico. In
1997, the Company's products were sold internationally to customers in over 45
countries. International net sales grew to $47.6 million in 1997 from $22.8
million in 1993.
THE FLUID POWER INDUSTRY
The fluid power industry has grown out of manufacturers' need to automate
repetitive tasks that had previously been performed manually. The industry can
generally be divided into two major segments: hydraulics
1
<PAGE>
(use of liquids) and pneumatics (use of air or inert gas). While hydraulics can
produce higher forces and, in some applications, better control, pneumatics
generally provide faster speeds, lower cost, greater ease of use and a more
environmentally clean process. The Company competes only in the pneumatics
segment of the fluid power market.
The Company believes there are a number of general industry trends favoring
the increasing use of automation, such as greater emphasis on productivity,
factory utilization and continuing cost reduction efforts. Additionally,
certain market segments to which the Company sells its products have been
reducing the number of suppliers they deal with, including pneumatic component
suppliers. As a result, companies within these market segments have
increasingly used suppliers that can provide a full line of pneumatic
components. The Company believes its array of products provides a competitive
advantage against single component suppliers.
COMPETITIVE STRENGTHS
Market Leadership Position. The Company has the largest U.S. market share,
approximately 29.0%, in its core product, directional control, base mounted, 4-
way pneumatic valves. The Company believes it has become a leader primarily
because of its innovative engineering, consistently high quality products and
customer service. Additionally, the Company has significantly increased its
market presence in related products, including actuators and specialty products
such as filters, regulators and lubricators ("FRLs") and specialty valves. The
Company believes its market leadership position in valve products has
benefitted and will continue to benefit its non-valve product sales.
Additionally, the Company believes it can further enhance its position as a
market leader by continuing to expand its pneumatic product line to offer
complete pneumatic systems to its customers.
Innovative Manufacturing and Engineering Processes. The Company has developed
a long-standing reputation as a leader in pneumatic valve technology due to its
history of manufacturing, design and engineering innovations. The Company's
proprietary "lapped spool and sleeve" valve manufacturing technology, first
developed over 45 years ago and continuously refined, still provides a
competitive advantage in terms of product quality, durability and reliability.
As an example, a "lapped spool and sleeve" used by Proctor & Gamble was still
within original specifications (which are expressed in millionths of an inch)
after operating in excess of one billion cycles. The Company closely guards the
"lapped spool and sleeve" process and limits the number of its own employees
who have access to its proprietary production method. Recent engineering
innovations have included on-board electronics, new generation direct solenoid
products, die cast magnesium valves and the development of smaller, more
compact valves for specific applications. In addition, the Company has
developed a customer focused, empirically based, analytic sizing system, called
"Numasizing," which allows the Company to assist customers in tailoring their
pneumatic systems.
Strong Customer Relationships. The Company enjoys strong, interactive
relationships with its direct customers and distributors. The Company has
maintained relationships with the Big 3 automotive manufacturers for over 40
years and has several long-term relationships with other customers, such as 3M
and Frito-Lay, which have been customers for over 20 years. The Company has
established a network of over 110 distributors worldwide, including 78 in North
America, 14 in Europe, 14 in Asia and 6 in South America. The Company's North
American distributors carry exclusively the Company's pneumatic valves among
their overall product offerings. These distributors have been identified by the
Company as specialists in fluid power technology. A number of distributors have
been customers of the Company for at least 40 years, with the average tenure of
the Company's U.S. distributors being 20 years. Since 1990, no U.S. distributor
has voluntarily discontinued the Numatics product line in favor of a
competitor's product. The Company holds periodic distributor meetings and
intensive training sessions to enhance communication, introduce new products
and discuss strategy. The distributors provide service support and application
knowledge to customers, which gives Numatics a competitive advantage in
introducing new products. The Company believes its expanded product line has
further enhanced its already strong distributor network and its relationships
with direct customers.
2
<PAGE>
Diversity of Products and Markets. In recent years, the Company has
introduced several products which complement its traditional pneumatic valve
business. These products are actuators and specialty products, such as FRLs and
other air preparation equipment, specialty valves and grippers and guiding
units for material handling applications. As a result, the Company has enhanced
its ability to provide a full line of products for its customers, many of which
are increasingly looking to a single source provider of pneumatic components.
Net sales from actuators and specialty products constituted 38.8% of total net
sales for the fiscal year ended December 31, 1997, as compared to 20.7% in
1993. The Company's products have applications in almost every industry,
particularly those utilizing automated manufacturing processes. As Numatics has
broadened its product line, it has also expanded the number of markets it
serves. For example, in recent years the Company has developed customized
pneumatic components for applications in industries such as medical equipment
and semiconductor. Additionally, the Company has expanded its presence in
foreign markets through additional sales and distribution facilities.
Management believes this diversification could reduce the impact on the Company
of a downturn in any single industry or market.
BUSINESS STRATEGY
Expand Product Lines and Industries Served. The Company believes there are
numerous additional opportunities to build upon its successful product line
expansion. The Company is taking advantage of recent trends toward more
widespread automation, on-board electronics, non-lubricated (dry air) fluid
power systems and miniaturization by designing, manufacturing and marketing
products meeting such customer needs. The Company believes it is well-
positioned to capitalize on these opportunities because of its proven
engineering expertise, manufacturing capabilities and strong distribution
network.
Emphasize Optimizing Manufacturing Efficiencies. The Company has adopted
"lean manufacturing" and "kaizen" initiatives to improve quality, production
efficiencies and customer service by reducing waste, inventory levels, floor
space and lead times. The Company believes its commitment to continuous
improvement will further enhance its competitive position and allow the Company
to execute its growth strategy while minimizing the need for significant
additional capacity. Although in the relatively early stage of implementation,
the Company's lean manufacturing initiatives have already resulted in facility
consolidation, improved manufacturing throughput, increased on time shipping
performance and supplier rationalization. As an example, in 1997, the Company
moved the production of solenoids from its 12,250 square foot facility in
Angola, Indiana into 5,000 square feet within its Sandusky, Michigan facility.
This move allowed the Company to close its Angola facility with no decrease in
solenoid production.
Increase Global Presence. In response to existing customer needs and new
opportunities, the Company plans to continue to increase its presence
internationally. The Company believes the market for international sales of
pneumatic products is even larger than the U.S. market, particularly in Europe
and Asia. The Company already has established manufacturing plants in Germany
and Canada and sales and distribution facilities in Canada, England, Italy,
France, the Netherlands, Hungary, Taiwan and Mexico. The Company plans to add
distribution facilities in several more countries in Europe and believes it can
capture additional market share in Asia and South America, where the Company
currently has minimal presence.
Pursue Selective Acquisitions. The Company's product line expansion has
primarily resulted from start-up operations. In some instances, however, the
Company has complemented existing product offerings through selective
acquisitions, such as its 1995 acquisition of Ultra Air Products, Inc. ("Ultra
Air"), a manufacturer of air preparation products. In 1995, the Company also
acquired a minority stock ownership interest in Univer S.p.A. ("Univer"),
Italy's largest pneumatic components manufacturer, which has allowed it, among
other things, to benefit from Univer's rodless cylinder technologies which have
worldwide applications. The Company intends to pursue selective strategic
acquisitions that can enhance its ability to deliver total pneumatic system
solutions.
3
<PAGE>
MANAGEMENT AND OWNERSHIP
In 1990, the Company's senior management, led by current Chairman, CEO and
President, John Welker, purchased the Company from its founder William Carls
(the "1990 Buyout"). Mr. Welker, who has been President of the Company since
1983, and his management team held a 20.0% ownership interest in the Company
subsequent to the 1990 Buyout, with the remaining 80.0% held primarily by two
venture capital investors. The 1990 Buyout, for a total consideration of $85.0
million, was funded with $61.8 million in debt, $8.0 million in junior
subordinated convertible debt, $6.0 million in equity contributions and $9.2
million in cash.
By 1995, through performance incentives, senior management had earned an
additional 10.0% ownership interest, increasing its share of the Company's
common equity to 30.0%. Effective December 31, 1995, the Company redeemed the
remaining equity interests of the outside investors (the "1995
Recapitalization"), and the management team, again led by Mr. Welker, became
100.0% owners of the outstanding shares. The redemption of such equity
interests in the 1995 Recapitalization was funded with $97.3 million in debt,
including $30.0 million in senior subordinated notes (which were repaid with
proceeds of the Offering) with a detachable warrant for 6.0% of the Company's
common shares (which was exercised on March 24, 1998).
From December 31, 1991 through December 31, 1997, the Company's management
team has more than doubled net sales and operating income and greatly enhanced
the diversity of the Company's product lines and markets served, while
operating through a variety of economic conditions and leverage created from
the 1990 Buyout and the 1995 Recapitalization.
The Company's and Guarantors' principal executive offices are located at 1450
North Milford Road, Highland, Michigan 48357. The telephone number for each of
them is (248) 887-4111.
4
<PAGE>
THE NOTES OFFERING
The Notes................. The Notes were sold by the Issuer in the Offering
on March 23, 1998 to First Chicago Capital Markets,
Inc. and BancBoston Securities Inc. (the "Initial
Purchasers") and were subsequently resold by the
Initial Purchasers to qualified institutional
buyers pursuant to Rule 144A under the Securities
Act, to a limited number of other institutional
"accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities
Act) and pursuant to offers and sales that occurred
outside the United States within the meaning of
Regulation S under the Securities Act.
Registration Rights In connection with the Offering, the Issuer and the
Agreement................. Guarantors entered into the Registration Rights
Agreement, which grants owners of the Notes certain
exchange and registration rights. The Exchange
Offer is intended to satisfy such exchange and
registration rights, which generally terminate upon
the consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered........ $115,000,000 aggregate principal amount of 9 5/8%
Series B Senior Subordinated Notes due 2008.
The Exchange Offer........ $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of Notes.
As of the date hereof, $115,000,000 aggregate
principal amount of Notes are outstanding. The
Issuer will issue the Exchange Notes on or promptly
after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Issuer believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Notes may be offered for resale,
resold and otherwise transferred by any owner
thereof (other than any such owner which is an
"affiliate" of the Issuer within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the
ordinary course of such owner's business and that
such owner does not intend to participate and has
no arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes.
Each broker-dealer that receives Exchange Notes for
its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales
of Exchange Notes received in exchange for Notes
where such Notes were acquired by such broker-
dealer as a result of market-making activities or
other trading activities. The Issuer has agreed
that for a period of one year after the Exchange
Offer is consummated it will make this Prospectus
available to any broker-dealer for use in
connection with any such resale.
5
<PAGE>
Any owner of Notes who tenders in the Exchange
Offer with the intention to participate, or for
the purpose of participating, in a distribution
of the Exchange Notes could not rely on the
position of the staff of the Commission
enunciated in Exxon Capital Corporation (April
13, 1988) and Morgan Stanley & Co., Incorporated
(June 5, 1991) or similar no-action letters and,
in the absence of an exemption therefrom, must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with the resale of the Exchange Notes.
Failure to comply with such requirements in such
instance may result in liability under the
Securities Act for which the seller of the
Exchange Notes is not indemnified by the Issuer
or any Guarantor.
In any state where the Exchange Offer does not
fall under a statutory exemption to such state's
blue sky laws, the Issuer has filed the
appropriate registrations and notices and has
made the appropriate requests to permit the
Exchange Offer to be made in such state.
Expiration Date........... 5:00 p.m., New York City time, on , 1998,
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Interest on the Exchange
Notes and the Notes......
The Exchange Notes will bear interest from March
23, 1998, the date of issuance of the Notes that
are tendered in exchange for the Exchange Notes
(or the most recent interest payment date to
which interest on such Notes has been paid).
Accordingly, holders of Notes that are accepted
for exchange will not receive interest on the
Notes that is accrued but unpaid at the time of
tender, but such interest will be payable on the
first interest payment date after the Expiration
Date.
Conditions to the The Exchange Offer is subject to certain
Exchange Offer............ customary conditions, which may be waived by the
Issuer. See "The Exchange Offer--Conditions." No
federal or state regulatory requirements (other
than securities laws) must be complied with and
no approvals must be obtained in connection with
the Exchange Offer.
Procedures for Tendering Each holder of Notes (or, in the case of
Notes..................... interests in the Global Notes held by DTC, each
DTC participant listed in an official DTC proxy)
wishing to accept the Exchange Offer must
complete, sign and date the accompanying Letter
of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or such facsimile,
together with the Notes and any other required
documentation, to the Exchange Agent at the
address set forth in the Letter of Transmittal.
By executing the Letter of Transmittal, such
holder or DTC participant will represent to the
Issuer and Guarantors that, among other things,
the holder or DTC participant or the person
receiving the Exchange Notes, whether or not such
person is the holder of the Notes or DTC
participant, is acquiring
6
<PAGE>
the Exchange Notes in the ordinary course of
business and neither the holder or DTC
participant nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes. In lieu of physical delivery of the
certificates representing Notes, tendering DTC
participants may transfer Notes pursuant to the
procedure for book-entry transfer as set forth
under "The Exchange Offer--Book Entry Transfer;
ATOP."
Special Procedures for
Beneficial Owners........
Any beneficial owner whose Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such nominee promptly and
instruct such nominee to tender on such
beneficial owner's behalf. Such instructions
should be given in sufficient time to ensure that
the nominee will be able to take the necessary
steps to tender such Notes before the Expiration
Date.
Guaranteed Delivery Holders of Notes who wish to tender their Notes
Procedures................ and whose Notes are not immediately available or
who cannot deliver their Notes, the Letter of
Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent
(or comply with the procedures for book-entry
transfer) prior to the Expiration Date must
tender their Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
Withdrawal Rights......... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date pursuant to the procedures described under
"The Exchange Offer--Withdrawals of Tenders."
Acceptance of Notes and
Delivery of Exchange
Notes.................... The Issuer will accept for exchange any and all
Notes that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City time, on
the Expiration Date. However, the Issuer reserves
the right to make any determination, in its sole
discretion, as to whether or not Notes have been
properly tendered. The Exchange Notes issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Federal Income Tax The issuance of the Exchange Notes to holders of
Consequences.............. the Notes pursuant to the terms set forth in this
Prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no
gain or loss would be recognized by holders of
the Notes upon receipt of the Exchange Notes. See
"Certain Federal Income Tax Consequences of the
Exchange Offer."
Effect on Holders of As a result of the making of the Exchange Offer,
Notes..................... the Issuer and the Guarantors will have fulfilled
certain of their obligations under the
Registration Rights Agreement, and holders of
Notes who do not
7
<PAGE>
tender their Notes will generally not have any
further registration rights under the
Registration Rights Agreement or otherwise. Such
holders will continue to hold the untendered
Notes and will be entitled to all the rights and
subject to all the limitations applicable thereto
under the Indenture, except to the extent such
rights or limitations by their terms terminate or
cease to have further effectiveness as a result
of the Exchange Offer. All untendered Notes will
continue to be subject to certain restrictions on
transfer. Accordingly, if any Notes are tendered
and accepted in the Exchange Offer, the trading
market for the untendered Notes could be
adversely affected.
Exchange Agent............ U.S. Bank Trust National Association
SUMMARY OF TERMS OF EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes (which they replace) except that (i) the Exchange Notes have been
registered under the Securities Act and therefore will not bear legends
restricting the transfer thereof, and (ii) the holders of Exchange Notes
generally will not be entitled to further registration rights under the
Registration Rights Agreement, which rights generally will be satisfied when
the Exchange Offer is consummated. The Exchange Notes will evidence the same
debt as the Notes and will be entitled to the benefits of the Indenture. See
"Description of Exchange Notes."
Securities Offered........ $115,000,000 aggregate principal amount of 9 5/8%
Series B Senior Subordinated Notes due 2008 (the
"Exchange Notes").
Maturity Date............. April 1, 2008.
Interest Payment Dates.... Interest on the Exchange Notes will accrue at the
rate of 9 5/8% per annum, payable semi-annually in
cash in arrears on April 1 and October 1 of each
year, commencing October 1, 1998.
Optional Redemption....... On or after April 1, 2003, the Company may redeem
the Exchange Notes, at the redemption prices set
forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of
redemption. Notwithstanding the foregoing, at any
time prior to April 1, 2001, the Company may redeem
up to $40,250,000 of the aggregate principal amount
of the Notes and Exchange Notes with the net
proceeds of one or more public equity offerings of
the Company at a redemption price equal to 109.625%
of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, to
the date of redemption; provided that at least
$74,750,000 aggregate principal amount of the Notes
and Exchange Notes remains outstanding after each
such redemption and that any such redemption occurs
within 45 days of such equity offering. See
"Description of Exchange Notes--Optional
Redemption."
8
<PAGE>
Ranking................... The Exchange Notes will be subordinated in right of
payment to all existing and future Senior Debt of
the Company, including all obligations under the
New Credit Facility, and pari passu in right of
payment to all existing and future subordinated
indebtedness of the Company. At December 31, 1997,
on a pro forma basis, the Company would have had
approximately $43.0 million of Senior Debt
outstanding (including approximately $38.7 million
of secured Senior Debt outstanding under the New
Credit Facility) and an additional approximate
$31.3 million of Senior Debt available to be
incurred under the New Credit Facility, subject to
borrowing base limitations. In addition, the
Company conducts certain operations through foreign
subsidiaries which will not guarantee the Exchange
Notes and the Exchange Notes will be effectively
subordinated to all liabilities of such
subsidiaries (which aggregated $12.7 million as of
December 31, 1997). The Exchange Notes and the
Notes will rank equally with one another.
Subsidiary Guarantees..... The Exchange Notes will be fully and
unconditionally, jointly and severally guaranteed
on a senior subordinated basis by all of the
Guarantors. The Subsidiary Guarantees will be
subordinated in right of payment to all Senior Debt
of the Guarantors to the same extent that the
Exchange Notes are subordinated to Senior Debt of
the Company, and pari passu in right of payment to
all existing or future senior subordinated
indebtedness of the Guarantors. Each Guarantor's
guarantee of the Exchange Notes will rank equally
with its guarantee of the Notes.
Change of Control......... Upon a Change of Control, each holder of Exchange
Notes will have the right to require the Company to
make an offer to purchase all of such holder's
Exchange Notes at a price equal to 101% of the
principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, to the
date of repurchase. See "Description of Exchange
Notes--Certain Covenants--Repurchase of Exchange
Notes at the Option of Holders upon a Change of
Control."
Certain Covenants......... The Indenture contains certain covenants which,
among other things, limit the ability of the
Company and its Restricted Subsidiaries to: (i) pay
dividends or make certain other distributions; (ii)
repurchase equity interests; (iii) prepay
subordinated Indebtedness; (iv) incur additional
Indebtedness and issue preferred stock; (v) incur
liens; (vi) merge or consolidate with any other
person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of
the assets of the Company; (vii) consummate certain
asset sales; (viii) enter into certain transactions
with affiliates; or (ix) enter into sale and
leaseback transactions. In addition, under certain
circumstances, the Company will be required to make
an offer to purchase the Exchange Notes at a price
equal to the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any,
to the date of purchase, with the proceeds of
certain asset sales. See "Description of Exchange
Notes."
9
<PAGE>
Exchange Offer;
Registration Rights......
Pursuant to the Registration Rights Agreement, the
Company and the Guarantors have agreed to: (i) file
with the Securities and Exchange Commission (the
"Commission") within 45 days of the consummation of
the Offering a registration statement with respect
to an offer to exchange the Notes for a new issue
of debt securities of the Company, including the
related Subsidiary Guarantees, registered under the
Securities Act, with terms substantially identical
to those of the Notes (which agreement has been
satisfied by filing the Registration Statement);
(ii) use their best efforts to cause the
Registration Statement to become effective within
135 days of the consummation of the Offering; and
(iii) cause the Exchange Offer to be consummated
within 30 business days after the Registration
Statement has been declared effective. In addition,
the Company and the Guarantors may be required to
provide a resale shelf registration statement for
the Notes and/or the Exchange Notes (the "Shelf
Registration Statement") under certain
circumstances. If the Company fails to satisfy
these registration obligations, the Company will be
required to pay Liquidated Damages to affected
holders of the Notes and/or Exchange Notes under
certain circumstances. See "Registration Rights;
Liquidated Damages."
RISK FACTORS
Holders of the Notes should carefully consider the information set forth
under the caption "Risk Factors" and all other information set forth in this
Prospectus in evaluating the Exchange Offer and an investment in the Exchange
Notes.
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The summary historical and pro forma financial data presented below have been
derived from the Company's audited consolidated financial statements for each
of the three years ended December 31, 1995, 1996 and 1997. The operating data
for all periods presented has been derived from the accounting and financial
records of the Company. The summary pro forma financial data are included to
show the effect of the Offering and the application of the proceeds therefrom
as if they had occurred on January 1, 1997. The summary pro forma balance sheet
data is included to show the effect of the Offering and the application of the
proceeds therefrom as if they had occurred on December 31, 1997. The pro forma
data is presented for informational purposes only and may not be indicative of
the results of operations or financial position of the Company that would have
been obtained had the Offering and the application of the proceeds therefrom in
fact been completed as of those dates or to project the results of operations
or financial condition of the Company for any future date or period. The
information set forth below should be read in conjunction with, and is
qualified by reference to, "Capitalization," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the Company's
audited consolidated financial statements and the notes thereto and other
financial information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales....................................... $125,808 $132,015 $147,097
Cost of sales................................... 77,967 81,676 93,785
-------- -------- --------
Gross profit.................................. 47,841 50,339 53,312
Marketing, engineering, general and
administrative expenses........................ 29,567 28,253 31,830
Michigan Single Business Tax.................... 872 885 945
-------- -------- --------
Operating income................................ 17,402 21,201 20,537
Interest expense................................ 5,040 15,999 16,470
Amortization of deferred financing costs........ 520 764 551
Other expenses.................................. 1,436 535 1,348
-------- -------- --------
Income before income taxes...................... 10,406 3,903 2,168
Income tax provision............................ 4,837 1,895 904
-------- -------- --------
Net income.................................... $ 5,569 $ 2,008 $ 1,264
======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(1)....................................... $ 24,167 $ 25,811 $ 25,931
EBITDA margin(2)................................ 19.2% 19.6% 17.6%
Adjusted EBITDA(3).............................. 27,909
Adjusted EBITDA margin(4)....................... 19.0%
Depreciation and amortization................... 6,413 4,489 5,000
Capital expenditures............................ 3,744 5,594 7,881
PRO FORMA FINANCIAL DATA:
Ratio of Adjusted EBITDA to pro forma interest
expense(5)..................................... 1.9x
Ratio of total debt to Adjusted EBITDA.......... 5.7x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------
ACTUAL PRO FORMA
-------- ---------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................ $ 27,469 $ 31,384
Total assets............................................... 98,535 100,124
Total debt................................................. 142,756 157,952
Total shareholders' equity (deficit)(6).................... (69,930) (83,537)
</TABLE>
11
<PAGE>
- --------
(1) "EBITDA" represents the sum of operating income plus depreciation and
amortization (less amortization of deferred financing costs) and Michigan
Single Business Tax. Information regarding EBITDA is presented because
management believes that certain investors use EBITDA as one measure of an
issuer's ability to service its debt. EBITDA is not a measure of
performance or financial condition under generally accepted accounting
principles but is presented to provide additional information related to
debt service capability.
(2) Represents the ratio of EBITDA to net sales.
(3) "Adjusted EBITDA" represents EBITDA plus special charges in 1997,
consisting of: (a) fees related to a onetime lean manufacturing consulting
project of $1.1 million; (b) costs related to an unsuccessful acquisition
attempt of $0.5 million; and (c) facility closing and moving costs totaling
$0.3 million.
(4) Represents the ratio of Adjusted EBITDA to net sales.
(5) Represents the ratio of pro forma (a) Adjusted EBITDA to (b) interest
expense. Interest expense excludes amortization of debt financing costs,
which on a pro forma basis would be $0.5 million. Pro forma interest
expense was $14.4 million and was calculated using the interest rate of
9.625% on the Notes.
(6) Actual shareholders' deficit results primarily from the 1995
Recapitalization. Adjustments to shareholders' deficit result from a write
off of unamortized deferred financing costs of $3.4 million, the
unamortized original issue discount on Old Subordinated Notes of $2.5
million, a prepayment premium on the Old Subordinated Notes of $1.7 million
and a dividend to shareholders of $6.0 million.
12
<PAGE>
RISK FACTORS
Holders of Notes should carefully consider the Risk Factors set forth below
prior to tendering their Notes for Exchange Notes in the Exchange Offer. This
Prospectus, including the "Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business" sections,
includes forward-looking statements. See "Cautionary Statements Regarding
Forward-Looking Statements" above. Although the Company believes that its
plans, intentions and expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such plans,
intentions or expectations will be achieved. Important factors that could
cause actual results to differ materially from those included in or suggested
by any forward-looking statements are set forth below and elsewhere in this
Prospectus. All forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
Risk Factors set forth below.
LEVERAGE
The Company is highly leveraged. On December 31, 1997, on a pro forma basis,
the Company would have had total indebtedness of approximately $158.0 million
and shareholders' equity would have been a deficit of approximately $83.5
million. The Company will be permitted to incur additional indebtedness in the
future subject to certain limitations. See "Capitalization," "Selected
Consolidated Financial Information" and "Description of Exchange Notes."
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on or to refinance its
indebtedness (including the Exchange Notes) will depend on its future
performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond its control. Based upon the Company's current level of operations and
future business which has been awarded, management believes that cash flow
from operations and available cash, together with available borrowings under
the New Credit Facility, will be adequate to meet the Company's future
liquidity needs until the scheduled expiration of the New Credit Facility, at
which time the Company would expect to replace the New Credit Facility. There
can be no assurance that the Company's business will generate sufficient cash
flow from operations, that anticipated growth opportunities and operating
improvements will be realized or that future borrowings will be available
under the New Credit Facility in an amount sufficient to enable the Company to
service its indebtedness, including the Exchange Notes, or to fund its other
liquidity needs. The New Credit Facility, the term loans thereunder and the
IRB mature prior to the maturity of the Exchange Notes, and there can be no
assurance that the Company will be able to replace the New Credit Facility, or
refinance any other indebtedness, on commercially reasonable terms or at all.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources."
The degree to which the Company is leveraged could have important
consequences to holders of the Exchange Notes, including, but not limited to:
(i) making it more difficult for the Company to satisfy its obligations with
respect to the Exchange Notes, (ii) increasing the Company's vulnerability to
general adverse economic and industry conditions, (iii) limiting the Company's
ability to obtain additional financing to fund future working capital, capital
expenditures and other general corporate requirements, or to fund
acquisitions, (iv) requiring the dedication of a substantial portion of the
Company's cash flow from operations to the payment of principal of, and
interest on, its indebtedness, thereby reducing the availability of such cash
flow to fund working capital, capital expenditures, research and development
or other general corporate purposes, (v) limiting the Company's flexibility in
planning for, or reacting to, changes in its business and the industries it
serves, and (vi) placing the Company at a competitive disadvantage compared to
less leveraged competitors. In addition, the Indenture and the New Credit
Facility contain financial and other restrictive covenants that limit the
ability of the Company to, among other things, borrow additional funds.
Failure by the Company to comply with such covenants could result in an event
of default which, if not cured or waived, could have a material adverse effect
on the Company. See "Description of Exchange Notes" and "Description of Other
Indebtedness--New Credit Facility."
13
<PAGE>
SUBORDINATION
The Note are, and the Exchange Notes will be, subordinated in right of
payment to all current and future Senior Debt of the Company, and the
Subsidiary Guarantees of the Notes are, and the Subsidiary Guarantees of the
Exchange Notes will be, subordinated in right of payment to all current and
future Senior Debt of the Guarantors. Upon any distribution to creditors of
the Company or any Guarantor in a liquidation or dissolution of the Company or
any Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or such Guarantor or its property,
the holders of Senior Debt of the Company or such Guarantor, respectively,
will be entitled to be paid in full before any payment may be made with
respect to the Exchange Notes or the related Subsidiary Guarantee. In
addition, the subordination provisions of the Indenture provide that payments
with respect to the Exchange Notes and the Subsidiary Guarantees will be
blocked in the event of a payment default on Designated Senior Debt (as
defined) and may be blocked for up to 179 days each year in the event of
certain non-payment defaults on Designated Senior Debt. In the event of a
bankruptcy, liquidation or reorganization of the Company, holders of the Notes
and Exchange Notes will participate ratably with all holders of subordinated
indebtedness of the Company that is deemed to be of the same class as the
Notes and Exchange Notes, and potentially with all general creditors of the
Company other than holders of Senior Debt, based upon the respective amounts
owed to each holder or creditor, in the remaining assets of the Company. In
any of the foregoing events, there can be no assurance that the Company or the
Guarantors would have sufficient assets to pay amounts due on the Notes and
Exchange Notes. As a result, holders of Exchange Notes may receive less,
ratably, than the holders of other debt of the Company or of a Guarantor,
including Senior Debt.
The Company derives a significant portion of its revenue from its foreign
subsidiaries, which will not guarantee the Exchange Notes. Holders of
indebtedness of, and trade creditors of, such foreign subsidiaries of the
Company would generally be entitled to payment of their claims from the assets
of the affected subsidiaries before such assets were made available for
distribution to the Company. The Indenture permits the incurrence of
substantial additional indebtedness by such foreign subsidiaries and permits
investments by the Company in such subsidiaries. In the event of a bankruptcy,
liquidation or reorganization of a subsidiary that does not guarantee the
Exchange Notes, holders of any of such subsidiary's indebtedness will have a
claim to the assets of the subsidiary that is prior to the Company's interest
in those assets. As of December 31, 1997, the total liabilities of
subsidiaries that will not guarantee the Exchange Notes was $12.7 million.
As of December 31, 1997, on a pro forma basis, the aggregate Senior Debt of
the Company (including borrowings under the New Credit Facility) would have
been approximately $43.0 million, and approximately $31.3 million would have
been available for additional borrowing under the New Credit Facility, subject
to borrowing base limitations. The Indenture permits the incurrence of
additional indebtedness, including Senior Debt, by the Company and its
subsidiaries in the future, subject to certain limitations. See "Description
of Exchange Notes--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock" and "Description of Other Indebtedness--New Credit
Facility."
RESTRICTIVE DEBT COVENANTS
The New Credit Facility contains a number of significant covenants. Among
other things, it restricts the ability of the Company and its subsidiaries to
(i) declare dividends or redeem or repurchase capital stock, (ii) prepay,
redeem or purchase debt, including the Exchange Notes, (iii) incur liens and
engage in sale-leaseback transactions, (iv) make loans and investments, (v)
incur additional indebtedness, (vi) amend or otherwise alter debt and other
material agreements, (vii) make capital expenditures, (viii) engage in
mergers, acquisitions and asset sales, (ix) enter into transactions with
affiliates and (x) alter the business it conducts. There can be no assurance
that those restrictive covenants will not adversely affect the Company's
ability to operate its business. In addition, the New Credit Facility contains
restrictive covenants and requires the Company to maintain specified financial
ratios and satisfy certain financial tests. If the Company is unable to meet
those tests or is otherwise unable to borrow under the New Credit Facility due
to a default or failure to meet certain specified borrowing base prerequisites
for borrowing, the Company could be materially adversely affected.
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COST OF RAW MATERIALS
The principal raw materials on which the Company depends are stainless steel
and aluminum. Although these materials are available from a number of sources,
there can be no assurance that the Company will continue to receive these raw
materials on favorable terms. A substantial interruption in the Company's
supply of stainless steel or aluminum could have a material adverse effect on
the Company. In addition, although the prices of stainless steel and aluminum
have not been volatile in recent periods, and the Company has had success in
passing through any price increases to its customers, there can be no assurance
that there will not be rapid and significant changes in the prices of these
materials or that the Company will be able to pass on any such increases to its
customers.
COMPETITION
The Company operates in an industry which is highly competitive.
Manufacturers compete on the basis of quality, price, timeliness of delivery
and service. While the Company believes it is one of the largest suppliers of
directional control pneumatic valves in North America, there can be no
assurance that it will continue to compete successfully for this business or
that its actuators and specialty products will be successful in further
penetrating their respective markets. Many of the Company's competitors are
significantly larger and have greater financial and other resources than the
Company. See "Business--Competition."
DEPENDENCE ON SENIOR MANAGEMENT AND CONTROLLING SHAREHOLDER
The Company's continued success will be substantially dependent upon the
efforts of Mr. John Welker, its Chairman, President and Chief Executive
Officer, and of the other members of its senior management team. The Company
maintains $15.0 million of key-man life insurance on the life of Mr. Welker.
The Company could be adversely affected, however, if Mr. Welker were unwilling
or unable to continue to be employed by the Company. Mr. Welker owns over 74.0%
and controls the vote of 94.0% of the Company's outstanding shares. As a
result, he is in a position to elect the Company's Board of Directors and to
control its management, policies and operations. Mr. Welker does not owe
fiduciary duties to the holders of the Exchange Notes when acting in his
capacity as a shareholder. In addition, it is an event of default under the New
Credit Facility if Mr. Welker ceases to be the President and Chief Executive
Officer of the Company or ceases to have the ability to elect a majority of its
directors and if he is not replaced by a person satisfactory to the New Credit
Facility lenders. See "Management and Directors," "Security Ownership of
Certain Beneficial Owners and Management" and "Description of Other
Indebtedness--New Credit Facility."
FOREIGN OPERATIONS AND CURRENCY FLUCTUATIONS
International sales accounted for approximately 32.4% of the Company's 1997
net sales, and international assets accounted for approximately 30.7% of its
total assets as of December 31, 1997. International sales and operations are
subject to significant risks, including political and economic instability,
restrictive trade policies, economic conditions in local markets, the
imposition of product tariffs and the burden of complying with a wide variety
of international and U.S. export laws. Additionally, to the extent the
Company's net sales and expenses are denominated in currencies other than U.S.
dollars, changes in exchange rates could have a material adverse impact on the
Company. Approximately 32.1% of the Company's net sales and approximately 22.8%
of its expenses for 1997 are denominated in currencies other than U.S. dollars.
The Company currently engages only in limited currency hedging programs because
its international assets and liabilities in a given geographic area are
denominated in substantially the same currencies.
INTELLECTUAL PROPERTY PROTECTION
The Company relies on unpatented proprietary technology to produce its core
products, particularly its "lapped spool and sleeve" valve manufacturing
technology, and there can be no assurance that others may not independently
develop the same or similar technology or otherwise obtain access to the
Company's unpatented technology. To protect its trade secrets and other
proprietary information, the Company requires employees, consultants, advisors
and collaborators who have access to this technology to enter into
confidentiality
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agreements and limits access to certain of its proprietary processes. There
can be no assurance that these agreements or procedures will provide
meaningful protection for the Company's trade secrets, know-how or other
proprietary information in the event of any unauthorized use, misappropriation
or disclosure of such trade secrets, know-how or other proprietary
information. If the Company is unable to maintain the proprietary nature of
its technology, particularly its "lapped spool and sleeve" valve manufacturing
technology, the Company could be materially adversely affected.
POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES
The Company's operations are subject to various foreign, federal, state and
local environmental laws, ordinances and regulations, including those
governing discharges into the air and water, the storage, handling and
disposal of solid and hazardous wastes, the remediation of soil and
groundwater contaminated by petroleum products or hazardous substances or
wastes and the health and safety of employees ("Environmental Laws"). The
nature of the Company's current and former operations and the history of
industrial uses at some of its facilities expose the Company to the risk of
liabilities or claims with respect to environmental and related worker health
and safety matters. The Company is currently engaged in a ground water
remediation program at its site located on North Milford Road in Highland,
Michigan (for which the Company has spent approximately $110,000 annually over
the last two years and expects to spend approximately $70,000 annually for
approximately ten additional years). Although the cost of this cleanup is
currently expected to be relatively modest, continued compliance with
Environmental Laws, stricter interpretations of or amendments to such laws or
more vigorous enforcement policies by regulatory agencies may require material
expenditures by the Company, this site or others. See "Business--Environmental
Matters."
In addition, under certain Environmental Laws a current or previous owner or
operator of property may be liable for the costs of removal or remediation of
certain hazardous substances or petroleum products on, under or in such
property, without regard to whether the owner or operator knew of, or caused,
the presence of the contaminants, and regardless of whether the practices that
resulted in the contamination were legal at the time they occurred. The
presence of, or failure to remediate properly, such substances may adversely
affect the ability to sell or rent such property or to borrow using such
property as collateral. Most of the Company's facilities have been in
operation for many years, and several of such facilities have undergone little
or no invasive testing to determine the presence or absence of environmental
contamination. Persons who generate, arrange for the disposal or treatment of,
or dispose of hazardous substances may be liable for the costs of
investigation, remediation or removal of such hazardous substances at or from
the disposal or treatment facility, regardless of whether such facility is
owned or operated by such person. Finally, the owner of a site may be subject
to common law claims by third parties based on damages and costs resulting
from environmental contamination emanating from a site.
The Company cannot predict what Environmental Laws will be enacted in the
future, how existing or future Environmental Laws will be administered or
interpreted or what environmental conditions may be found to exist on its
properties. Compliance with more stringent Environmental Laws, as well as more
vigorous enforcement policies of the regulatory agencies or stricter
interpretation of those Laws, and discovery of new conditions may require
additional expenditures by the Company. There can be no assurance that one or
more of the foregoing will not have a material adverse affect on the Company.
FRAUDULENT CONVEYANCE AND LIMITATIONS ON AMOUNT GUARANTEED
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer or conveyance law, if, among other
things, the Company or any Guarantor, at the time it incurred the indebtedness
evidenced by the Notes and Exchange Notes, the Indenture, or its Subsidiary
Guarantee, (i) (a) was or is insolvent or rendered insolvent by reason of such
occurrence or (b) was, is, or was about to be, engaged in a business or
transaction for which the assets remaining with the Company or such Guarantor
constituted unreasonably small capital or (c) intended or intends to incur, or
believed or believes that it would incur, debts beyond its ability to pay such
debts as they mature, and (ii) the Company, or such Guarantor, received or
receives less than reasonably equivalent value or fair consideration for the
incurrence of such indebtedness, then the Notes
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and Exchange Notes, the Indenture and a Subsidiary Guarantee, and any pledge
or other security interest securing such indebtedness, could be voided or
avoided, or claims in respect of the Notes and Exchange Notes, the Indenture
or a Subsidiary Guarantee could be subordinated to all other debts of the
Company or such Guarantor, as the case may be. Furthermore, applicable state
law may limit the amount which a Guarantor can lawfully guarantee pursuant to
its Subsidiary Guarantee. In addition, the payment of interest and principal
by the Company pursuant to the Notes and Exchange Notes or the payment of
amounts by a Guarantor pursuant to a Subsidiary Guarantee could be voided or
avoided and required to be returned to the person making such payment, or to a
fund for the benefit of the creditors of the Company or such Guarantor, as the
case may be.
The measures which a court would apply for purposes of determining the
foregoing considerations will vary depending upon the law applied in any
proceeding with respect to the foregoing. Generally, however, the Company or a
Guarantor would be considered insolvent and the issuance of the guarantee not
be permitted if (i) the sum of its debts, including contingent liabilities,
unliquidated liabilities and unmatured liabilities, were greater than the
saleable value of all of its assets at a fair valuation or if the present fair
saleable value of its assets were less than the amount that would be required
to pay its probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature or (ii) it could not pay its
debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, the Company and each Guarantor believes that, after giving
effect to the indebtedness incurred in connection with the Offering and the
establishment of the New Credit Facility, it was not insolvent, did not have
unreasonably small capital for the business in which it is engaged and did not
incur debts beyond its ability to pay such debts as they mature. There can be
no assurance, however, as to what standard a court would apply in making such
determinations or that a court would agree with the Company's or the
Guarantors' conclusions in this regard. In addition, the liability of each
Guarantor under the Indenture is limited to the amount that will result in its
Subsidiary Guarantee not constituting a fraudulent conveyance or improper
corporate distribution, and there can be no assurance as to what standard a
court would apply in making a determination as to what would be the maximum
liability of each Guarantor. See "Description of Exchange Notes--Subsidiary
Guarantees."
POSSIBLE INABILITY TO REPURCHASE EXCHANGE NOTES UPON A CHANGE OF CONTROL OFFER
Upon a Change of Control, the Company will be required to offer to
repurchase all outstanding Exchange Notes at 101% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of repurchase. However, there can be no assurance that sufficient
funds will be available at the time of any Change of Control to make any
required repurchases of Exchange Notes tendered or that restrictions in the
New Credit Facility will allow the Company to make such required repurchases.
In addition, the Company could enter into certain transactions, including
certain recapitalizations, that would not constitute a Change of Control but
would increase the amount of debt outstanding at such time. See "Description
of Exchange Notes--Certain Covenants--Repurchase of Exchange Notes at the
Option of Holders upon a Change in Control."
ABSENCE OF A PUBLIC MARKET
The Exchange Notes will constitute a new class of securities with no
established trading market. Although the Exchange Notes will generally be
permitted to be resold or otherwise transferred by nonaffiliates of the Issuer
without compliance with the registration requirements of the Securities Act,
there is no existing market for the Exchange Notes, and there can be no
assurance as to the liquidity of any markets that may develop for the Exchange
Notes, the ability of holders of the Exchange Notes to sell their Exchange
Notes or the prices at which holders would be able to sell their Exchange
Notes. Future trading prices of the Exchange Notes will depend on many
factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. The Initial
Purchasers have advised the Company that they currently intend to make a
market in the Exchange Notes. However, they are not obligated to do so, and
any market making may be discontinued at any time without notice. The Company
does not intend to apply for listing of the Exchange Notes on any securities
exchange.
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EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Exchange Agent
of such Notes, a properly completed and duly executed Letter of Transmittal
and all other required documents. Therefore, owners of the Notes desiring to
tender such Notes in exchange for Exchange Notes should allow sufficient time
to ensure timely delivery. The Issuer is under no duty to give notification of
defects or irregularities with respect to the tenders of Notes for exchange.
Notes that are not tendered or are tendered but not accepted will, following
the consummation of the Exchange Offer, continue to be subject to the existing
restrictions on transfer thereof, and on consummation of the Exchange Offer,
the registration rights under the Registration Rights Agreement generally will
terminate. In addition, any owner of Notes who tenders in the Exchange Offer
for the purpose of participating in a distribution of the Exchange Notes, in
the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes. Each broker-dealer that receives Exchange Notes
for its own account in exchange for Notes, where such Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. To the extent that Notes are tendered
and accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Notes could be adversely affected. See "The Exchange
Offer."
RESTRICTIONS ON TRANSFER
The Notes were offered and sold by the Issuer in a private offering exempt
from registration under the Securities Act and have been resold pursuant to
Rule 144A under the Securities Act, to a limited number of other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act) and pursuant to offers and sales that occurred outside the
United States within the meaning of Regulation S under the Securities Act. As
a result, the Notes may not be reoffered or resold by purchasers except
pursuant to an effective registration statement under the Securities Act or
pursuant to an applicable exemption from the requirement for such
registration, and the Notes bear legends reflecting those restrictions. Each
owner of Notes (other than any owner who is an affiliate of the Issuer) who
duly exchanges Notes for Exchange Notes in the Exchange Offer generally will
receive Exchange Notes that are freely transferable under the Securities Act.
Owners of Notes who participate in the Exchange Offer should be aware,
however, that if they accept the Exchange Offer for the purpose of engaging in
a distribution, the Exchange Notes may not be publicly reoffered or resold
without complying with the registration and prospectus delivery requirements
of the Securities Act. As a result, each owner of Notes accepting the Exchange
Offer will be deemed to have represented, by its acceptance of the Exchange
Offer, that it acquired the Exchange Notes in the ordinary course of business
and that it is not engaged in, and does not intend to engage in, a
distribution of the Exchange Notes.
The Notes currently may be sold pursuant to the restrictions set forth in
Rule 144A under the Securities Act or pursuant to another available exemption
under the Securities Act without registration under the Securities Act. To the
extent that Notes are tendered and accepted in the Exchange Offer, the trading
market for the untendered and tendered but unaccepted Notes could be adversely
affected.
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THE EXCHANGE OFFER
The following discussion sets forth or summarizes what the Company believes
to be the material terms of the Exchange Offer, including those set forth in
the Letter of Transmittal distributed with this Prospectus. This summary is
qualified in its entirety by reference to the full text of the documents
underlying the Exchange Offer, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part and are incorporated
herein by reference. The term "Holder" with respect to the Exchange Offer
means any person in whose name the Notes are registered on the books of the
Issuer or any other person who has obtained a properly completed bond power
from the registered holder.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were sold by the Issuer on the Issue Date and were subsequently
resold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act, to a limited number of other institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) and pursuant to offers and sales that occurred outside the United States
within the meaning of Regulation S under the Securities Act. In connection
with the Offering, the Issuer and the Guarantors entered into the Registration
Rights Agreement, which requires, among other things, that the Issuer and the
Guarantors (i) file with the Commission a registration statement under the
Securities Act with respect to the Exchange Notes (which obligation has been
satisfied by the filing of the Registration Statement), (ii) use their best
efforts to cause such registration statement to become effective under the
Securities Act at the earliest possible time and in any event within 135 days
after the Issue Date and (iii) upon the effectiveness of that registration
statement, commence and consummate the Exchange Offer. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement.
Any Notes tendered and exchanged in the Exchange Offer will reduce the
principal amount of Notes outstanding. Following the consummation of the
Exchange Offer, Holders of the Notes who did not tender their Notes generally
will not have any further registration rights under the Registration Rights
Agreement, and such Notes will continue to be subject to certain restrictions
on transfer. Accordingly, the liquidity of the market for such Notes could be
adversely affected. The Notes are currently eligible for sale pursuant to Rule
144A through the PORTAL System of the National Association of Securities
Dealers, Inc. Because the Issuer anticipates that most Holders will elect to
exchange their Notes for Exchange Notes due to the absence of restrictions on
the resale of Exchange Notes under the Securities Act, the Issuer anticipates
that the liquidity of the market for any Notes remaining after the
consummation of the Exchange Offer may be substantially limited.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuer will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m. New York City time on
the Expiration Date. The Issuer will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Notes
accepted in the Exchange Offer. Holders may tender some or all of their Notes
pursuant to the Exchange Offer. However, Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that (i) the Exchange Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer
thereof and (ii) the holders of the Exchange Notes generally will not be
entitled to certain rights under the Registration Rights Agreement, which
rights generally will terminate upon consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Notes and will be entitled
to the benefits of the Indenture.
Holders of Notes do not have any appraisal or dissenters' rights under the
Michigan Business Corporation Act or the Indenture in connection with the
Exchange Offer. The Issuer intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, including Rule 14e-1 thereunder.
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The Issuer will be deemed to have accepted validly tendered Notes when, as
and if the Issuer has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering Holders for the
purpose of receiving the Exchange Notes from the Issuer.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Issuer will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange
Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on the
expiration date for the Exchange Offer set forth on the cover page of this
Prospectus unless the Issuer, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" will mean the latest date and
time to which the Exchange Offer is extended.
To extend the Exchange Offer, the Issuer will notify the Exchange Agent of
any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
The Issuer reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under
"--Conditions" shall not have been satisfied, by giving oral or written notice
of such delay, extension or termination to the Exchange Agent or (ii) to amend
the terms of the Exchange Offer in any manner. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as
practicable by a public announcement thereof. If the Exchange Offer is amended
in a manner determined by the Issuer to constitute a material change, the
Issuer will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered Holders, and depending
upon the significance of the amendment and the manner of disclosure to the
registered Holders, the Issuer will extend the Exchange Offer for a period of
five to ten business days if the Exchange Offer would otherwise expire during
such five to ten business-day period.
If the Issuer does not consummate the Exchange Offer or, in lieu thereof,
the Issuer does not file and cause to become effective the Shelf Registration
Statement within the time periods set forth herein, liquidated damages will
accrue and be payable to Holders of affected Notes in the amounts specified in
the Registration Rights Agreement ("Liquidated Damages"). See "Registration
Rights; Liquidated Damages."
Without limiting the manner in which the Issuer may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Issuer shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely
release to the Dow Jones News Service.
INTEREST ON EXCHANGE NOTES
The Exchange Notes will bear interest from the Issue Date (or the most
recent interest payment date to which interest on the Notes has been paid).
Accordingly, holders of Notes that are accepted for exchange will not receive
interest that is accrued but unpaid on the Notes at the time of tender, but
such interest will be payable on the first interest payment date after the
Expiration Date. Interest on the Exchange Notes will be payable semiannually
on each April 1 and October 1, commencing on October 1, 1998.
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PROCEDURES FOR TENDERING
Only a Holder of Notes (or, in the case of Global Notes held by DTC, a DTC
participant listed in an official DTC proxy) may tender such Notes in the
Exchange Offer. To tender in the Exchange Offer, a Holder or DTC participant
must complete, sign and date the Letter of Transmittal, or a facsimile
thereof, have the signatures thereon guaranteed if required by the Letter of
Transmittal and mail or otherwise deliver such Letter of Transmittal or such
facsimile, together with the Notes and any other required documents, to the
Exchange Agent so as to be received by the Exchange Agent at the address set
forth below prior to 5:00 p.m., New York City time, on the Expiration Date.
Delivery of the Notes may be made by book-entry transfer in accordance with
the procedures described below. Confirmation of such book-entry transfer must
be received by the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each Holder or DTC participant will
make to the Issuer and Guarantors the representation set forth below in the
second paragraph under the heading "--Resale of Exchange Notes."
The tender by a Holder or DTC participant and the acceptance thereof by the
Issuer will constitute an agreement between such Holder or DTC participant and
the Issuer in accordance with the terms and subject to the conditions set
forth herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER OR DTC PARTICIPANT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT
HOLDERS AND DTC PARTICIPANTS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE
SENT TO THE ISSUER. BENEFICIAL OWNERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH BENEFICIAL OWNERS.
Any beneficial owner whose Notes are held through a broker, dealer,
commercial bank, trust company or other nominee and who wishes to tender
should contact such nominee promptly and instruct such nominee to tender on
such beneficial owner's behalf. Such instructions should be given in
sufficient time to ensure that the nominee will be able to take the necessary
steps to tender such Notes before the Expiration Date.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined later
in this paragraph) unless the Notes tendered pursuant thereto are tendered (i)
by a registered Holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be by a member
firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange
Act (an "Eligible Institution").
If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and unless waived by the Issuer, evidence
satisfactory to the Issuer of their authority to so act must be submitted with
the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will
be determined by the Issuer in its sole discretion, which determination will
be final and binding. The Issuer reserves the absolute right to reject any and
all Notes not properly tendered
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or any Notes the Issuer's acceptance of which would, in the opinion of counsel
for the Issuer, be unlawful. The Issuer also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Notes. The
Issuer's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Issuer
determines. Although the Issuer intends to notify Holders of defects or
irregularities with respect to tenders of Notes, none of the Issuer, any
Guarantor, the Exchange Agent or any other person will incur any liability for
failure to give such notification. Tenders of Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
BOOK-ENTRY TRANSFER; ATOP
The Issuer understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish an account with respect to the
Notes at DTC for the purpose of facilitating the Exchange Offer, and subject
to the establishment thereof, any financial institution that is a participant
in DTC may make book-entry delivery of the Notes by causing DTC to transfer
such Notes into the Exchange Agent's account with respect to the Notes in
accordance with DTC's procedures for such transfer.
The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for the Book-Entry Facility Automated Tender Offer Program ("ATOP").
Accordingly, DTC participants listed on an official DTC proxy may
electronically transmit their acceptance of the Exchange Offer by causing DTC
to transfer Notes to the Exchange Agent in accordance with DTC's ATOP
procedures for transfer. DTC will then send an Agent's Message to the Exchange
Agent.
The term "Agent's Message" means a message transmitted by DTC, received by
the Exchange Agent and forming part of the confirmation of a book-entry
transfer, which states that DTC has received an express acknowledgement from
the participant in DTC tendering Notes which are the subject of such book-
entry confirmation, that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Issuer and Guarantors
may enforce such agreement against the participant. In the case of an Agent's
Message relating to guaranteed delivery, the term means a message transmitted
by DTC and received by the Exchange Agent which states that DTC has received
an express acknowledgement from the participant in DTC tendering Notes that
such participant has received and agrees to be bound by the Notice of
Guaranteed Delivery.
Each DTC participant transmitting an acceptance of the Exchange Offer
through the ATOP procedures will be deemed to have agreed to be bound by the
terms of the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Notes and the principal amount of Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within three New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or
22
<PAGE>
facsimile thereof), together with the certificate(s) representing the Notes
(or a confirmation of book-entry transfer of such Notes into the Exchange
Agent's account at DTC) and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at DTC) and all other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at
the address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes or, in the case of Notes transferred by book-
entry transfer, the name and number of the account at DTC to be credited),
(iii) be signed by the Holder or DTC participant in the same manner as the
original signature on the Letter of Transmittal by which such Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee register the transfer of
such Notes into the name of the person withdrawing the tender and (iv) specify
the name in which any such Notes are to be registered, if different from that
of the Depositor. All questions as to the validity, form and eligibility
(including time or receipt) of such notices will be determined by the Issuer,
whose determination will be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no Exchange Notes will be issued with respect thereto
unless the Notes so withdrawn are validly retendered. Any Notes which have
been tendered but which are not accepted for exchange will be returned to the
Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Notes may be retendered by following one of the procedures described
above under "--Procedures for Tendering" at any time prior to the Expiration
Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuer will not be
required to accept for exchange, or to exchange Exchange Notes for, any Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Notes, if:
(a) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted which, in the reasonable
judgment of the Issuer, might materially impair the ability of the Issuer
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Issuer; or
(b) any governmental approval has not been obtained, which approval the
Issuer, in its reasonable judgment, deems necessary for the consummation of
the Exchange Offer as contemplated hereby.
23
<PAGE>
If the Issuer determines in its reasonable judgment that any of the
conditions are not satisfied, the Issuer may (i) refuse to accept any Notes
and return all tendered Notes to the tendering Holders, (ii) extend the
Exchange Offer and retain all Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of Holders to withdraw such
Notes (see "--Withdrawals of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, the Issuer will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
Holders, and depending upon the significance of the waiver and the manner of
disclosure to the registered Holders, the Issuer will extend the Exchange
Offer for a period of five to ten business days if the Exchange Offer would
otherwise expire during such five to ten business-day period.
EXCHANGE AGENT
U.S. Bank Trust National Association will act as Exchange Agent for the
Exchange Offer with respect to the Notes.
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal for the Notes and requests for
copies of Notice of Guaranteed Delivery should be directed to the Exchange
Agent, addressed as follows:
By Registered,
Certified, or Overnight By Hand: By First Class Mail:
Mail or Courier: U.S. Bank Trust N.A. U.S. Bank Trust N.A.
U.S. Bank Trust N.A. 4th Floor Bond Drop P.O. Box 64485
Attn: Specialized Window 180 East Fifth St. Paul, MN 55164-
Finance SPFT0414 Street 9549
180 East Fifth Street St. Paul, MN 55101
St. Paul, MN 55101
By facsimile:
612-244-1537
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuer. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telephone, facsimile or in person by employees of the Issuer
and its affiliates.
The Issuer has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or other persons
soliciting acceptances of the Exchange Offer. However, the Issuer will pay the
Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith
and pay other registration expenses, including fees and expenses of the
Trustee, filing fees, blue sky fees and printing and distribution expenses.
The Issuer will pay all transfer taxes, if any, applicable to the exchange
of the Notes pursuant to the Exchange Offer. If, however, Exchange Notes or
the Notes for principal amounts not tendered or accepted for exchange are to
be delivered to, or are to be issued in the name of, any person other than the
registered Holder of the Notes tendered, or if tendered Notes are registered
in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of the Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder.
24
<PAGE>
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Notes,
which is the aggregate principal amount of the Notes, as reflected in the
Company's accounting records on the date of exchange. Accordingly, no gain or
loss for accounting purposes will be recognized in connection with the Exchange
Offer. The expenses of the Exchange Offer will be amortized over the term of
the Exchange Notes.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Issuer believes that Exchange Notes
issued pursuant to the Exchange Offer in exchange for Notes may be offered for
resale, resold and otherwise transferred by any owner of such Exchange Notes
(other than any such owner which is an "affiliate" of the Issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such owner's
business and such owner does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of such
Exchange Notes. Any owner of Notes who tenders in the Exchange Offer with the
intention to participate, or for the purpose of participating, in a
distribution of the Exchange Notes may not rely on the position of the staff of
the Commission enunciated in Exxon Capital Holdings Corporation (April 13,
1988) and Morgan Stanley & Co., Incorporated (June 5, 1991) or similar no-
action letters but rather must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. In addition, any such resale transaction should be covered by an
effective registration statement containing the selling security holders
information required by Item 507 of Regulation S-K under the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, may be a statutory
underwriter and must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes.
By tendering in the Exchange Offer, each Holder (or DTC participant, in the
case of tenders of interests in the Global Notes held by DTC) will represent to
the Issuer and Guarantors that, among other things, (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the registered Holder or DTC participant, (ii) neither the
Holder or DTC participant nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and (iii) the Holder or DTC participant and such other person
acknowledge that if they participate in the Exchange Offer for the purpose of
distributing the Exchange Notes (a) they must, in the absence of an exemption
therefrom, comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale of the Exchange Notes and
cannot rely on the no-action letters referenced above and (b) failure to comply
with such requirements in such instance could result in such Holder or DTC
participant or such other person incurring liability under the Securities Act
for which such Holder or DTC participant or such other person is not
indemnified by the Issuer or any Guarantor. Further, by tendering in the
Exchange Offer, each Holder or DTC participant and such other person that may
be deemed an "affiliate" (as defined under Rule 405 of the Securities Act) of
the Issuer will represent to the Issuer and Guarantors that such Holder or DTC
participant and such other person understand and acknowledge that the Exchange
Notes may not be offered for resale, resold or otherwise transferred by that
Holder or DTC participant or such other person without registration under the
Securities Act or an exemption therefrom.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Issuer and Guarantors
will have fulfilled one of their obligations under the Registration Rights
Agreement, and Holders of Notes who do not tender their Notes generally will
not have any further registration rights under the Registration Rights
Agreement or otherwise. Accordingly, any Holder of Notes that does not exchange
that Holder's Notes for Exchange Notes will continue
25
<PAGE>
to hold the untendered Notes and will be entitled to all the rights and
limitations applicable thereto under the Indenture, except to the extent that
such rights or limitations, by their terms, terminate or cease to have further
effectiveness as a result of the Exchange Offer.
The Notes that are not exchanged for Exchange Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Notes may be
reoffered, resold, pledged or otherwise transferred only (i) to a person whom
the Holder reasonably believes is a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, (ii) in an offshore
transaction complying with Rule 903 or 904 of Regulation S, (iii) pursuant to
an exemption from registration under the Securities Act provided by Rule 144
thereunder (if available), (iv) to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) that, prior to such transfer, furnishes the Trustee with a
signed letter containing certain representations and agreements relating to
such transfer and an opinion of counsel acceptable to the Issuer that such
transfer is in compliance with the Securities Act, (v) in accordance with
another exemption from the registration requirements of the Securities Act
(and in based upon an opinion of counsel acceptable to the Issuer), (vi) to
the Issuer or any of its subsidiaries, (vii) pursuant to an effective
registration statement under the Securities Act, and, in each case, in
accordance with all applicable securities laws of the states of the United
States. See "Risk Factors--Restrictions on Transfer."
OTHER
Participation in the Exchange Offer is voluntary, and Holders should
carefully consider whether to accept. Holders of the Notes are urged to
consult their financial and tax advisers in making their own decision on what
action to take.
The Issuer may in the future seek to acquire untendered Notes in open market
or privately negotiated transactions, through subsequent exchange offers or
otherwise. The Issuer has no present plans to acquire any Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resales of any untendered Notes.
In any state where the Exchange Offer does not fall under a statutory
exemption to the blue sky rules, the Issuer by the date the Exchange Offer
commences will have filed the appropriate registrations and notices and will
have made the appropriate requests to permit the Exchange Offer to be made in
such state.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "IRS") will not take a contrary view,
and no ruling from the IRS has been or will be sought. Legislative, judicial
or administrative changes or interpretations may be forthcoming that could
alter or modify the statements and conditions set forth herein. Any such
changes or interpretations may or may not be retroactive and could affect the
tax consequences to Holders. Certain Holders of the Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the
United States) may be subject to special rules not discussed below. Each
Holder of a Note should consult its own tax adviser as to the particular tax
consequences of exchanging such Holder's Notes for Exchange Notes, including
the applicability and effect of any state, local or foreign tax laws.
The issuance of the Exchange Notes to Holders of the Notes pursuant to the
terms set forth in this Prospectus will not constitute an exchange for United
States federal income tax purposes. Consequently, no gain or loss would be
recognized by Holders of the Notes upon receipt of the Exchange Notes, and
ownership of the
26
<PAGE>
Exchange Notes will be considered a continuation of ownership of the Notes.
For purposes of determining gain or loss on the subsequent sale or exchange of
the Exchange Notes, a Holder's basis in the Exchange Notes should be the same
as such Holder's basis in the Notes exchanged therefor. A Holder's holding
period for the Exchange Notes should include the Holder's holding period for
the Notes exchanged therefor. The issue price, original issue discount
inclusion and other tax characteristics of the Exchange Notes should be
identical to the issue price, original issue discount inclusion and other tax
characteristics of the Notes exchanged therefor.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company on an actual basis and on a pro forma basis as adjusted to give effect
to the issuance of the Notes and the application of the net proceeds thereof
as if they had occurred on December 31, 1997. This table should be read in
conjunction with "Selected Consolidated Financial Information," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements and the notes thereto,
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
--------------------------
ACTUAL PRO FORMA
----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................ $ 701 $ 701
=========== ===========
Long-Term Debt:
Old Credit Facility................................ $ 98,119 $ --
New Credit Facility(1)............................. -- 38,680
Other Debt......................................... 4,272 4,272
Old Subordinated Notes(2).......................... 40,365 --
The Notes.......................................... -- 115,000
----------- -----------
Total long-term debt............................... 142,756 157,952
Redeemable warrant(3)................................ 3,102 3,102
Shareholders' equity (deficit)(4).................... (69,930) (83,537)
----------- -----------
Total capitalization................................. $ 75,928 $ 77,517
=========== ===========
</TABLE>
- --------
(1) The New Credit Facility provides for borrowings up to $70.0 million.
Availability under a portion of the New Credit Facility is subject to
satisfaction of a borrowing base requirement. See "Description of Other
Indebtedness--New Credit Facility."
(2) The face amount of the Old Subordinated Notes was $42.8 million. The
difference between the face amount and the amount carried on the Company's
balance sheet at December 31, 1997 ($2.5 million) represents unamortized
original issue discount.
(3) Represents the fair value of a then exercisable warrant (which
subsequently was exercised), which was redeemable at the option of the
holder, issued in connection with the Old Subordinated Notes.
(4) Actual shareholders' deficit results primarily from the 1995
Recapitalization. Adjustments to shareholders' deficit result from a write
off of unamortized deferred financing costs of $3.4 million, the
unamortized original issue discount on the Old Subordinated Notes of $2.5
million, a prepayment premium on the Old Subordinated Notes of $1.7
million and a dividend to shareholders of $6.0 million.
27
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected historical and pro forma financial data presented below have
been derived from the Company's audited consolidated financial statements for
each of the five years ended December 31, 1993, 1994, 1995, 1996 and 1997. The
operating data for all periods presented has been derived from the accounting
and financial records of the Company. The summary pro forma financial data are
included to show the effect of the Offering and the application of the
proceeds therefrom as if they had occurred on January 1, 1997. The summary pro
forma balance sheet data is included to show the effect of the Offering and
the application of the proceeds therefrom as if they had occurred on December
31, 1997. The pro forma data is presented for informational purposes only and
may not be indicative of the results of operations or financial position of
the Company that would have been obtained had the Offering and the application
of the proceeds therefrom in fact been completed as of those dates or to
project the results of operations or financial condition of the Company for
any future date or period. The information set forth below should read in
conjunction with, and is qualified by reference to, "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Company's audited consolidated financial statements and the
notes thereto and other financial information included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................... $85,025 $104,649 $125,808 $132,015 $147,097
Cost of sales................. 52,921 64,284 77,967 81,676 93,785
------- -------- -------- -------- --------
Gross profit................ 32,104 40,365 47,841 50,339 53,312
Marketing, engineering,
general and administrative
expenses..................... 20,075 23,964 29,567 28,253 31,830
Michigan Single Business
Tax(1)....................... 662 708 872 885 945
------- -------- -------- -------- --------
Operating income............ 11,367 15,693 17,402 21,201 20,537
Interest expense.............. 4,370 2,905 5,040 15,999 16,470
Amortization of deferred
financing costs.............. 173 131 520 764 551
Other (income) expenses....... 818 (119) 1,436 535 1,348
------- -------- -------- -------- --------
Income before income taxes and
extraordinary loss........... 6,006 12,776 10,406 3,903 2,168
Income tax provision.......... 2,237 5,358 4,837 1,895 904
------- -------- -------- -------- --------
Income before extraordinary
item......................... 3,769 7,418 5,569 2,008 1,264
Extraordinary loss, net of
income tax(2)................ 1,065 -- -- -- --
------- -------- -------- -------- --------
Net income.................. $ 2,704 $ 7,418 $ 5,569 $ 2,008 $ 1,264
======= ======== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(3)..................... $18,803 $ 23,090 $ 24,167 $ 25,811 $ 25,931
Adjusted EBITDA(4)............ 27,909
Depreciation and
amortization................. 8,585 6,820 6,413 4,489 5,000
Capital expenditures.......... 3,004 4,379 3,744 5,594 7,881
Ratio of earnings to fixed
charges(5)................... 2.32x 5.21x 2.87x 1.23x 1.13x
PRO FORMA FINANCIAL DATA:
Ratio of Adjusted EBITDA to
pro forma interest
expense(6)................... 1.9x
Ratio of total debt to
Adjusted EBITDA.............. 5.7x
BALANCE SHEET DATA:
Working capital............... $18,441 $ 22,495 $ 28,109 $ 28,189 $ 27,469
Total assets.................. 71,115 75,967 93,441 93,987 98,535
Total debt.................... 43,392 38,937 141,816 140,805 142,756
Total shareholders' equity
(deficit)(7)................. 13,478 19,944 (72,637) (70,864) (69,930)
Preferred stock dividend(8)... 1,023 1,023 1,200 -- --
</TABLE>
28
<PAGE>
- --------
(1) The Michigan Single Business Tax is a state tax which is calculated based
on operating activity and capital expenditure levels and is in lieu of a
state income tax.
(2) Represents write off of $1.1 million (net of income taxes) for unamortized
debt issuance costs.
(3) "EBITDA" represents the sum of operating income plus depreciation and
amortization (less amortization of deferred financing costs) and Michigan
Single Business Tax. Information regarding EBITDA is presented because
management believes that certain investors use EBITDA as one measure of an
issuer's ability to service its debt. EBITDA is not a measure of
performance or financial condition under generally accepted accounting
principles but is presented to provide additional information related to
debt service capability. In 1993, the extraordinary loss of $1.1 million
(net of income taxes) is deducted from the calculation of EBITDA.
(4) "Adjusted EBITDA" represents EBITDA plus special charges in 1997. Special
charges include: (a) fees related to a onetime lean manufacturing
consulting project of $1.1 million; (b) costs related to an unsuccessful
acquisition attempt of $0.5 million; and (c) facility closing and moving
costs totaling $0.3 million.
(5) For purposes of calculating this ratio, "earnings" represents earnings from
continuing operations before income taxes plus fixed charges. "Fixed
charges" consists of interest expense and amortization of debt issuance
costs.
(6) Represents the ratio of pro forma (a) Adjusted EBITDA to (b) interest
expense. Interest expense excludes amortization of debt financing costs,
which on a pro forma basis would be $0.5 million. Pro forma interest
expense was $14.4 million and was calculated using the interest rate of
9.625% on the Notes.
(7) Actual shareholders' deficit results primarily from the 1995
Recapitalization.
(8) Preferred stock was redeemed in 1995.
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
financial statements and the notes thereto, included elsewhere in this
Prospectus.
OVERVIEW
The Company is a leading global manufacturer and marketer of pneumatic
components. The Company's net sales are principally derived from the sale of
its products worldwide to over 9,000 customers, including a network of over 110
distributors. In recent years, the Company has diversified its revenue base
through its expanded product lines and increase in international sales. In the
U.S., the Company's products are principally sold through a network of 48
distributors who purchase and stock Numatics' products. In non-U.S. markets, a
majority of sales are derived from direct customers.
The Company's cost of sales consists primarily of raw materials, labor,
manufacturing overhead and purchased product costs. The Company has generally
had success in passing through price increases in raw materials to its
customers, although there can be no assurance that it will be able to continue
to do so. The Company has recently implemented "lean manufacturing" and
"kaizen" initiatives which it believes can provide benefits through reduced
waste, lower inventory levels and better utilization of plant floor space.
While the Company has experienced growth through its expanded product lines,
certain newer products generally have lower gross margins during periods of
development and introduction than the Company's traditional valve products.
Marketing, engineering, general and administrative expenses have been
impacted in recent years by, among other things, the opening of certain sales
offices in Europe, as the Company identifies opportunities to further grow its
international net sales. In 1997, marketing, engineering, general and
administrative expenses included costs related to a facility closure and the
move of a major facility.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the Company's
consolidated statements of income expressed as a percentage of net sales.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF NET SALES
-------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Net sales.................................... 100.0% 100.0% 100.0%
Cost of sales................................ 62.0 61.9 63.8
--------- --------- ---------
Gross profit................................. 38.0 38.1 36.2
Marketing, engineering, general and
administrative.............................. 23.5 21.4 21.6
Michigan Single Business Tax................. 0.7 0.6 0.6
--------- --------- ---------
Operating income............................. 13.8% 16.1% 14.0%
========= ========= =========
</TABLE>
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
Net Sales. The Company's net sales for 1997 increased 11.4%, or $15.1
million, to $147.1 million from $132.0 million in 1996. Net sales of
traditional valve products increased 7.4%, or $6.2 million, and net sales of
other products increased 18.5%, or $8.9 million, including a 24.4% increase in
net sales of actuators. International net sales increased 19.9%, or $7.9
million despite the strengthening of the U.S. dollar relative to the German
mark and certain other foreign currencies. North American net sales increased
7.8%, or $7.2 million.
30
<PAGE>
Gross Profit. Gross profit for 1997 increased 5.9%, or $3.0 million, to $53.3
million from $50.3 million in 1996. The increase in gross profit was
attributable to higher net sales in 1997 compared to 1996. As a percentage of
net sales, gross profit declined to 36.2% in 1997 compared to 38.1% in 1996.
The decline in gross profit percentage was primarily the result of pricing
pressures on product sales at the Company's European operations due to
difficult economic conditions in Europe. Additionally, costs associated with a
facility move and the write off of certain product development costs
contributed to the lower gross margin percentage in 1997.
Marketing, Engineering, General and Administrative. Marketing, engineering,
general and administrative expenses for 1997 increased 12.7%, or $3.6 million,
to $31.8 million from $28.3 million in 1996. As a percentage of net sales,
marketing, engineering, general and administrative expenses increased to 21.6%
in 1997 compared to 21.4% in 1996. The increase in marketing, engineering,
general and administrative expenses for 1997 was primarily attributable to
expenses associated with a special lean manufacturing project consulting fee,
costs related to the closure of a facility and the move of a facility. The
remainder of the increase was principally due to higher marketing and
engineering costs to support the Company's product lines and geographic
expansion.
Operating Income. Principally as a result of the foregoing, operating income
in 1997 decreased 3.1%, or $0.7 million, to $20.5 million from $21.2 million in
1996. As a percentage of net sales, operating income decreased to 14.0% in 1997
compared to 16.1% in 1996.
Interest Expense. Interest expense increased 3.1%, or $0.5 million, to $16.5
million from $16.0 million in 1996 due to the issuance of additional Old
Subordinated Notes in 1997. This increase was partially offset by a reduction
of bank debt in 1997.
Other (Income) Expenses. Other expenses increased 152.0%, or $0.8 million, to
$1.3 million from $0.5 million in 1996. Included in other expenses for 1997 is
a $1.2 million unrealized foreign exchange loss related to intercompany loans.
Net Income. Due to the factors discussed above, net income decreased 37.1%,
or $0.7 million, to $1.3 million from $2.0 million in 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
Net Sales. The Company's net sales increased 4.9%, or $6.2 million, to $132.0
from $125.8 million in 1995. The increase in net sales was due to the growth in
net sales of grippers and guiding units and other specialty products, which
collectively increased 15.5%, or $4.7 million, and an increase in net sales of
actuators, of 23.6%, or $2.5 million. These increases were partially offset by
a decrease in traditional valve products of 1.2%, or $1.0 million due to major
customers' projects which were completed in 1995. International net sales
increased 1.4%, or $0.5 million, while North American net sales increased 6.5%,
or $5.7 million.
Gross Profit. Gross profit for 1996 increased 5.2%, or $2.5 million, to $50.3
million from $47.8 million in 1995. The increase in gross profit was
attributable to higher net sales. As a percentage of net sales, gross profit
remained substantially unchanged at 38.1% in 1996 compared to 38.0% in 1995.
Marketing, Engineering, General and Administrative. Marketing, engineering,
general and administrative expenses decreased 4.4%, or $1.3 million, to $28.3
million from $29.6 million in 1995. As a percentage of sales, marketing,
engineering, general and administrative expenses decreased to 21.4% in 1996
compared to 23.5% in 1995. This decrease was primarily due to cost reduction
efforts by the Company.
Operating Income. Principally as a result of the foregoing, operating income
increased 21.8%, or $3.8 million, to $21.2 million from $17.4 million in 1995.
As a percentage of net sales, operating income increased to 16.1% in 1996 from
13.8% in 1995.
Interest Expense. Interest expense increased 217.4%, or $11.0 million, to
$16.0 million from $5.0 million in 1995, as a result of increased bank debt and
the issuance of Old Subordinated Notes related to the 1995 Recapitalization.
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<PAGE>
Other (Income) Expenses. Other expenses decreased 62.7%, or $0.9 million, to
$0.5 million from $1.4 million in 1995. In 1995, other expenses included an
accrual of $1.1 million for a deferred compensation plan which was adopted.
Net Income. Due to the factors described above, net income decreased 63.9%,
or $3.6 million, to $2.0 million from $5.6 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has utilized cash from operations and borrowings
under its credit facilities to satisfy its operating and capital needs and to
service its indebtedness.
Cash provided by operating activities was $11.0 million in 1997 compared to
$13.1 million in 1996. The decrease in cash provided by operating activities
was primarily the result of increased inventories relating to initial
inventory buildups associated with new product introductions during 1997.
Cash used in investing activities was $7.8 million in 1997 compared to $5.4
million in 1996. The increase was principally the result of greater capital
expenditures, primarily due to the construction of the new 68,000 square foot
manufacturing facility for the Actuator Division in Franklin, Tennessee. The
Company does not have any material commitments for capital expenditures.
Net cash used in financing activities was $3.3 million in 1997 compared to
$7.3 million in 1996. This represents the net paydown of outstanding debt. The
decreased paydown in 1997 compared to 1996 was the result of increased capital
expenditures in 1997 relating to the new manufacturing facility in Franklin,
Tennessee.
Working capital was $27.5 million at December 31, 1997 compared to $28.2
million at December 31, 1996, and total assets were $98.5 million at December
31, 1997 compared to $94.0 million at December 31, 1996.
Total debt outstanding was $142.8 million at December 31, 1997 compared to
$140.8 million at December 31, 1996. This increase was caused by $7.3 million
of payment-in-kind interest on the Company's subordinated debt in 1997 which
was partially offset by payments made during the year on bank debt.
The New Credit Facility includes (i) term loans of $29.0 million, $4.0
million, and $2.0 million to the Company and its German and Canadian
subsidiaries, respectively and (ii) revolving credit facilities, including
letters of credit, of $32.0 million and $3.0 million to the Company and its
German subsidiary, respectively. The revolving credit facilities permit each
of the Company and its German subsidiary to borrow up to the lesser of the
total amount of its respective revolving credit facility or a borrowing base
computed as a percentage of inventory and accounts receivable. Interest on
term loans to the Company's Canadian and German subsidiaries and the revolving
facilities accrues at an annual rate based on an applicable margin over NBD
Bank's prime rate, or LIBOR. The Company estimates that the borrowing base
limitation would have limited the Company's revolving credit availability to
approximately $26.4 million as of March 31, 1998. All borrowings under the
Revolving Credit Facilities will mature six years after the Issue Date. The
term loans are payable in quarterly installments which quarterly installments
in 1998 will aggregate $1.6 million, in 1999, $2.5 million, in 2000, $3.0
million, in 2001, $3.5 million, in 2002, $4.0 million, in 2003, $4.9 million,
in 2004, $8.4 million, and in 2005, $7.1 million. This credit facility, and
the guarantees thereof by the Company's domestic subsidiaries, is secured by
substantially all of the Company's domestic and, with respect to the loans to
the Company's foreign subsidiaries, substantially all the assets of such
subsidiaries. This credit facility includes certain financial and operating
covenants which, among other things, restrict the ability of the Company to
incur additional indebtedness, make investments and take other actions. See
"Description of Other Indebtedness--New Credit Facility".
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On March 26, 1998, the Company paid a dividend of $6.0 million in respect of
its common stock.
Harvard Private Capital Holdings, Inc. ("Harvard") owns 6.0% of the
outstanding common stock of the Company. The Company has entered into an
agreement with Harvard which requires the Company to purchase those shares (i)
upon a change in control of the Company, (ii) upon Mr. Welker's no longer
performing the duties of Chief Executive Officer of the Company or failing to
devote substantially all of his professional time and efforts to the Company,
and (iii) on January 3, 2003, if certain liquidity events specified in such
agreement have not occurred. Upon the occurrence of any such event, the
Company will be required to purchase the shares for a price based on a
multiple of earnings less total indebtedness. Harvard has agreed with the
Company that to the extent the Company is prohibited by the Indenture or the
New Credit Facility from consummating any such purchase in cash, Harvard will
accept a note in consideration for the shares. Such note will rank pari passu
with the Exchange Notes, will contain covenants no more restrictive than those
of the Indenture, will mature one year after the Exchange Notes and will bear
interest at 18.0% per annum payable in cash increasing to 25.0% per annum on
the first anniversary of the note. The Company estimates that the formula
price for the shares currently is less than $4.0 million. However, there can
be no assurance that the purchase of the Harvard shares in the future would
not have a material adverse effect on the Company.
The Company and its shareholders other than Harvard are parties to an
agreement which requires the Company to redeem the shares of any such
shareholder upon the happening of certain events, including death, disability
or termination of employment, at a formula price based on a multiple of the
Company's earnings. For each such shareholder other than Mr. Welker, the
Company is excused from this obligation to the extent redeeming shares would
be unlawful or would violate another agreement of the Company. For Mr. Welker,
while the Company is required to redeem all of his shares, the cash portion of
the redemption price is limited to the maximum amount which can be lawfully
paid without violating another agreement (including the Indenture), and the
balance is payable pursuant to a subordinated five-year installment note, with
interest at the applicable federal rate. Failure to pay principal of or
interest on such a promissory note would not be a default if making the
payment would be unlawful or would violate another agreement (including the
Indenture). This agreement covers 94.0% of the Company's shares, 74.12% of
which are held by Mr. Welker, so the redemption price in the event of Mr.
Welker's death, disability or termination of employment could be very
substantial.
The management shareholders of certain subsidiaries of the Company
(Numation, Numatech, Micro-Filtration, Ultra Air and Microsmith) are required
to sell their shares to the Company upon such shareholder's (i) death, (ii)
permanent disability or (iii) termination of employment with the Company. The
price to be paid by the Company for such shares will be determined by a
formula based upon a multiple of earnings of the relevant subsidiary. The
obligations of the Company to purchase such shares are not subject to any
limitations. However, the payment of these amounts may be prohibited by the
terms of the Indenture. Currently, the amounts that would be payable under
these agreements are not material to the Company. However, no assurance can be
given that these subsidiaries will not grow in such a manner that payment of
these amounts (or required payment of these amounts) would not violate the
terms of the Indenture or otherwise have a material adverse effect on the
Company.
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on, or to refinance, its
indebtedness (including the Exchange Notes), or to fund planned capital
expenditures will depend on its future performance, which, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. Based upon the
current level of operations and anticipated cost savings and revenue growth,
management believes that cash flow from operations and available cash,
together with available borrowings under the New Credit Facility, will be
adequate to meet the Company's anticipated liquidity needs over the next year.
The Company may, however, need to refinance all or a portion of the principal
of the Exchange Notes on or prior to maturity. There can be no assurance that
the Company's business will generate sufficient cash flow from operations,
that anticipated
33
<PAGE>
revenue growth and operating improvements will be realized or that future
borrowings will be available under the New Credit Facility in an amount
sufficient to enable the Company to service its indebtedness, including the
Exchange Notes, or to fund its other liquidity needs. In addition, there can be
no assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based on a recent assessment, the Company has determined that it will be
required to modify or replace significant portions of its software so that its
computer system will properly utilize dates beyond December 31, 1999. The
Company presently believes that with modifications to existing software and
conversions to new software, the Year 2000 Issue can be mitigated. However, if
such modifications and conversions are not made, or not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Company.
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
Issue. The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of a third
party's Year 2000 Issue, and are based on presently available information.
However, there can be no guarantee that the systems of other companies on which
the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have material adverse effect on the Company. The
Company has determined it has no exposure to contingencies related to the Year
2000 Issue for the products it has sold.
The Company will utilize both internal and external resources to reprogram,
or replace, and test the software for Year 2000 modifications. The Company
plans to complete the Year 2000 project not later than December 31, 1998. The
total remaining cost of the Year 2000 project is estimated at $3.0 million and
is being funded through operating cash flows. Of the total project cost,
approximately $2.5 million is attributable to the purchase of new software
which will be capitalized. The remaining $0.5 million will be expensed as
incurred over the next year. To date, the Company has incurred and expensed
approximately $0.2 million related to the assessment of, and preliminary
efforts in connection with, its Year 2000 project and the development of a
remediation plan.
The costs of the project and the date on which the Company plans to complete
the Year 2000 modifications are based on management's best estimates, which
were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
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<PAGE>
BUSINESS
THE COMPANY
The Company is a leading global manufacturer and marketer of pneumatic valves
and related products. According to the most recently available information from
the NFPA, the worldwide market, as of 1995, for all pneumatic components was
approximately $8.8 billion. The Company has the largest U.S. market share,
approximately 29.0%, in directional control, base mounted, 4-way pneumatic
valves. This type of valve is the Company's core product and represents the
largest segment of the pneumatic valve market in the United States. The
Company's products are key components in automated and other manufacturing
processes in industries as diverse as packaging, consumer products,
semiconductor and automotive. The Company's customers include over 9,000 direct
customers and over 110 specialized distributors, with no one customer
representing more than 3.0% of total net sales in 1997. The Company's products
are used by such well known corporations as Stone Container, Johnson & Johnson,
Hewlett Packard and the Big 3 automotive manufacturers. The Company has
increased its net sales from 1993 to 1997 at a compound annual growth rate of
14.7%, outpacing the overall pneumatic components industry growth rate in that
period. For the fiscal year ended December 31, 1997, the Company's net sales
and Adjusted EBITDA were $147.1 million and $27.9 million, respectively.
The Company provides a full line of pneumatic products to address its
customers' fluid power needs worldwide. In the late 1980s, the Company began
expanding its product line to complement its traditional leadership position in
valve products. The Company now engineers, manufactures and markets a wide
range of pneumatic components used in automated and other manufacturing
processes. The Company's complementary set of products includes valves,
actuators and specialty products. While the Company's net sales in core valve
products have increased significantly over the past five years, its overall
dependence on valves has decreased through its product diversification
strategy. For 1997, valves represented 61.2% of the Company's total net sales,
and actuators and specialty products represented 38.8%.
Since its inception in 1945, Numatics has earned a reputation as an innovator
in engineering, manufacturing and new product development. The Company's
proprietary "lapped spool and sleeve" manufacturing technology for pneumatic
valves has been continuously refined and continues to provide a competitive
advantage in terms of product quality, reliability and durability. By working
closely with its customers to meet their specific needs, the Company has
introduced numerous industry firsts in manufacturing and new product
technologies.
The Company has greatly enhanced its international presence since it opened a
manufacturing facility in Germany in 1965. Other non-U.S. facilities include a
manufacturing plant in Ontario, Canada and sales and distribution facilities in
Canada, England, Italy, France, the Netherlands, Hungary, Taiwan and Mexico. In
1997, the Company's products were sold internationally to customers in over 45
countries. International net sales grew to $47.6 million in 1997 from $22.8
million in 1993.
COMPETITIVE STRENGTHS
Market Leadership Position. The Company has the largest U.S. market share,
approximately 29.0%, in its core product, directional control, base mounted, 4-
way pneumatic valves. The Company believes it has become a leader primarily
because of its innovative engineering, consistently high quality products and
customer service. Additionally, the Company has significantly increased its
market presence in related products, including actuators and specialty products
such as FRLs and specialty valves. The Company believes its market leadership
position in valve products has benefitted and will continue to benefit its non-
valve product sales. Additionally, the Company believes it can further enhance
its position as a market leader by continuing to expand its pneumatic product
line to offer complete pneumatic systems to its customers.
Innovative Manufacturing and Engineering Processes. The Company has developed
a long-standing reputation as a leader in pneumatic valve technology due to its
history of manufacturing, design and engineering innovations. The Company's
proprietary "lapped spool and sleeve" valve manufacturing technology, first
developed over 45 years ago and continuously refined, still provides a
competitive advantage in terms of product quality, durability and reliability.
As an example, a "lapped spool and sleeve" used by Proctor & Gamble was still
within original specifications (which are expressed in millionths of an inch)
after operating in excess of one
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billion cycles. The Company closely guards the "lapped spool and sleeve"
process and limits the number of its own employees who have access to its
proprietary production method. Recent engineering innovations have included on-
board electronics, new generation direct solenoid products, die cast magnesium
valves and the development of smaller, more compact valves for specific
applications. In addition, the Company has developed a customer focused,
empirically based, analytic sizing system, called "Numasizing," which allows
the Company to assist customers in tailoring their pneumatic systems.
Strong Customer Relationships. The Company enjoys strong, interactive
relationships with its direct customers and distributors. The Company has
maintained relationships with the Big 3 automotive manufacturers for over 40
years and has several long-term relationships with other customers, such as 3M
and Frito-Lay, which have been customers for over 20 years. The Company has
established a network of over 110 distributors worldwide, including 78 in North
America, 14 in Europe, 14 in Asia and 6 in South America. The Company's North
American distributors carry exclusively the Company's pneumatic valves among
their overall product offerings. These distributors have been identified by the
Company as specialists in fluid power technology. A number of distributors have
been customers of the Company for at least 40 years, with the average tenure of
the Company's U.S. distributors being 20 years. Since 1990, no U.S. distributor
has voluntarily discontinued the Numatics product line in favor of a
competitor's product. The Company holds periodic distributor meetings and
intensive training sessions to enhance communication, introduce new products
and discuss strategy. The distributors provide service support and application
knowledge to customers, which gives Numatics a competitive advantage in
introducing new products. The Company believes its expanded product line has
further enhanced its already strong distributor network and its relationships
with direct customers.
Diversity of Products and Markets. In recent years, the Company has
introduced several products which complement its traditional pneumatic valve
business. These products are actuators and specialty products, such as FRLs and
other air preparation equipment, specialty valves and grippers and guiding
units for material handling applications. As a result, the Company has enhanced
its ability to provide a full line of products for its customers, many of which
are increasingly looking to a single source provider of pneumatic components.
Net sales from actuators and specialty products constituted 38.8% of total net
sales for the fiscal year ended December 31, 1997, as compared to 20.7% in
1993. The Company's products have applications in almost every industry,
particularly those utilizing automated manufacturing processes. As Numatics has
broadened its product line, it has also expanded the number of markets it
serves. For example, in recent years the Company has developed customized
pneumatic components for applications in industries such as medical equipment
and semiconductor. Additionally, the Company has expanded its presence in
foreign markets through additional sales and distribution facilities.
Management believes this diversification could reduce the impact on the Company
of a downturn in any single industry or market.
BUSINESS STRATEGY
Expand Product Lines and Industries Served. The Company believes there are
numerous additional opportunities to build upon its successful product line
expansion. The Company is taking advantage of recent trends toward more
widespread automation, on-board electronics, non-lubricated (dry air) fluid
power systems and miniaturization by designing, manufacturing and marketing
products meeting such customer needs. The Company believes it is well-
positioned to capitalize on these opportunities because of its proven
engineering expertise, manufacturing capabilities and strong distribution
network.
Emphasize Optimizing Manufacturing Efficiencies. The Company has adopted
"lean manufacturing" and "kaizen" initiatives to improve quality, production
efficiencies and customer service by reducing waste, inventory levels, floor
space and lead times. The Company believes its commitment to continuous
improvement will further enhance its competitive position and allow the Company
to execute its growth strategy while minimizing the need for significant
additional capacity. Although in the relatively early stage of implementation,
the Company's lean manufacturing initiatives have already resulted in facility
consolidation, improved manufacturing throughput, increased on time shipping
performance and supplier rationalization. As an example, in 1997, the Company
moved the production of solenoids from its 12,250 square foot facility in
Angola, Indiana into 5,000 square feet within its Sandusky, Michigan facility.
This move allowed the Company to close its Angola facility with no decrease in
solenoid production.
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Increase Global Presence. In response to existing customer needs and new
opportunities, the Company plans to continue to increase its presence
internationally. The Company believes the market for international sales of
pneumatic products is even larger than the U.S. market, particularly in Europe
and Asia. The Company already has established manufacturing plants in Germany
and Canada and sales and distribution facilities in Canada, England, Italy,
France, the Netherlands, Hungary, Taiwan and Mexico. The Company plans to add
distribution facilities in several more countries in Europe and believes it can
capture additional market share in Asia and South America, where the Company
currently has minimal presence.
Pursue Selective Acquisitions. The Company's product line expansion has
primarily resulted from start-up operations. In some instances, however, the
Company has complemented existing product offerings through selective
acquisitions, such as its 1995 acquisition of Ultra Air, a manufacturer of air
preparation products. In 1995, the Company also acquired a minority stock
ownership interest in Univer, Italy's largest pneumatic components
manufacturer, which has allowed it, among other things, to benefit from
Univer's rodless cylinder technologies which have worldwide applications. The
Company intends to pursue selective strategic acquisitions that can enhance its
ability to deliver total pneumatic system solutions.
INDUSTRY OVERVIEW
The fluid power industry has grown out of manufacturers' need to automate
repetitive tasks that had previously been performed manually. The industry can
generally be divided into two major segments: hydraulics (use of liquids) and
pneumatics (use of air or inert gas). While hydraulics can produce higher
forces and, in some applications, better control, pneumatics generally provide
faster speeds, lower cost, greater ease of use and a more environmentally clean
process. The Company competes only in the pneumatic segment of the fluid power
market.
Major components utilized in the pneumatic fluid power process include
valves, actuators (cylinders) and air preparation equipment. A more detailed
description of this process is set forth below:
Pneumatic Fluid Power Process
LOGO
The pneumatic system begins when air enters a compressor and the
volume of air is reduced. The air then flows through a dryer and excess
moisture is removed. Typically, a pneumatic system contains a single
compressor and an air dryer. The dry air then flows through a system
header to multiple workstations in a plant. At a workstation, the dry
air flows initially through a FRL (filter, regulator and lubricator).
In the FRL, a filter removes particulates from the air, a regulator
reduces and stabilizes downstream pressure and a lubricator adds the
appropriate amount of oil to the air, when necessary. This conditioned
air then enters a valve. A valve is the primary pneumatic component
that controls the
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intake and withdrawal of air into the actuator, with the valve's
movement typically controlled by a solenoid. In the Company's "lapped
spool and sleeve" valve, the position of the spool determines the
direction of the air as it flows into the actuator. The flow of air
from the valve causes the actuator rod to extend or retract, thereby
moving a specific load. In many cases, an automated component, such as
a gripper or guiding unit, may be attached to the actuator for material
handling purposes.
Applications for pneumatic fluid power are numerous and diverse and can be
found in virtually every major industry. Some of the largest industries that
use pneumatic fluid power systems in their manufacturing processes include
packaging, automotive, machine tool, material handling, food and beverage,
textile, printing, electronics/semiconductor, robotics, paper and medical
equipment. Pneumatic components are primarily used in automated manufacturing
applications, but can also serve other functions, as do certain of the
Company's specialty valves used in oxygen concentrators sold by medical
equipment manufacturers. The Company believes there are a number of general
industry trends favoring the increasing use of automation, such as greater
emphasis on productivity, factory utilization and continuing cost reduction
efforts.
The Company is a leading global manufacturer and marketer of pneumatic valves
and related products. The Company's principal market is the United States, in
which it is the largest manufacturer in its core product of directional
control, base mounted, 4-way pneumatic valves. In the U.S., sales of
directional control valves make up the largest segment of pneumatic valve
sales, and 4-way valves are the dominant type of directional control valves
utilized. Because of their versatility, base mounted valves make up the large
majority of pneumatic valve sales in the United States.
In the United States, it is common for manufacturers of pneumatic components
to market their products through a distributor network. While some competitors
of the Company work with distributors that carry both hydraulic and pneumatic
components, all of the Company's North American distributors handle exclusively
pneumatic components and, importantly, sell only the Company's pneumatic
valves.
Certain market segments to which the Company sells its products have been
reducing the number of suppliers they deal with, including pneumatic component
suppliers. As a result, companies within these market segments have
increasingly used suppliers that can provide a full line of pneumatic
components. The Company began a product line expansion in the late 1980s and
now offers its customers a full line of pneumatic components, including valves,
actuators and specialty products such as air preparation products, specialty
valves and grippers and guiding units. The Company believes its array of
products provides a competitive advantage against single component suppliers.
PRODUCTS
The Company offers a complete line of pneumatic components, which can be
described in three groups: valves, actuators and specialty products. The
Company's core product historically has been pneumatic valves. Over recent
years, the Company has expanded into additional product lines. While the
Company's net sales in core valve products have increased significantly over
the past five years, its overall dependence on valves has decreased through its
product diversification strategy. The table illustrates this diversification
trend since 1993.
<TABLE>
<CAPTION>
1993 1997
----- ------
<S> <C> <C>
Net Sales..................................... $85.0 million $147.1 million
Valves...................................... 79.3% 61.2%
Actuators................................... 7.3% 11.1%
Specialty Products.......................... 13.4% 27.7%
----- ------
Total......................................... 100.0% 100.0%
</TABLE>
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Valves
The Company is widely regarded as a leading manufacturer of high quality
pneumatic valves used in fluid power applications. In a pneumatic system, the
valve controls the flow of compressed air to an actuator (cylinder). The valve
is the most important and complex component in any pneumatic system.
The Company's success is largely derived from its proprietary "lapped spool
and sleeve" technology developed by the Company's founder in the 1950s. The
original design is used in the Company's valves today. However, the "lapped
spool and sleeve" manufacturing process has been improved continuously. The
inner (spool) and outer (sleeve) components are a matched set, with the sleeve
remaining stationary and the spool moving inside it to produce the switching of
air flow. The sealing of the spool and sleeve is accomplished by the minute
clearance between the two parts, measured in millionths of an inch, rather than
by using soft rubber seals as in other designs. This minute clearance provides
an air bearing, which avoids any metal-to-metal contact and allows frictionless
movements, virtually eliminating heat and wear. This results in extremely long
product life. Numatics' "lapped spool and sleeve" has been found to operate
within original manufacturing tolerances after more than one billion cycles.
The patent on the "lapped spool and sleeve" product expired in 1973. However,
the process for manufacturing the "lapped spool and sleeve" to the required
tolerances remains a trade secret. The Company continues to closely guard this
trade secret and limits the number of visitors and employees who have access to
the manufacturing process. Several competitors have attempted to imitate the
process, but the Company believes none has been able to duplicate the "lapped
spool and sleeve" to the same high quality tolerances.
The Company manufactures a wide variety of valves, most of which can broadly
be described as directional control, 4-way valves. Additionally, the Company
manufactures and markets 3-way valves and a variety of other valves for
specific customer applications. As part of its product line expansion strategy,
the Company has recently increased its offering of both 4-way and 3-way valves.
The Company's valve sales were $84.9 million, $83.9 million and $90.0 million
in 1995, 1996 and 1997, respectively.
Actuators
In 1988, Numatics began offering actuators (cylinders) to complement its
well-established line of valves. In the pneumatic system, the actuator serves
as an "arm" for an automated task, allowing an object to be moved.
The Company's first actuators were standard tie-rod cylinders, made to NFPA
specifications. During 1994, the Company introduced its "M" series actuator, a
non-repairable miniature cylinder. In 1995, it introduced a new rodless
cylinder based on technology acquired in connection with its purchase for $2.0
million of 12.0% of the stock of Univer, the largest manufacturer of pneumatic
products in Italy with sales in 1996 of approximately $30.0 million.
The Company's actuator sales have grown each year since 1988. The Company
believes this is due to its ability to manufacture and deliver high quality
products on a consistent basis and to successfully launch new products. New
products include rotary actuators and a variety of small actuators. The Company
believes that actuators will continue to be an area of growth as it further
leverages its existing distribution network and strong name recognition in
valves.
The Company's actuator sales were $10.6 million, $13.1 million and $16.3
million in 1995, 1996 and 1997, respectively.
Specialty Products
The Company's specialty products include air preparation products, such as
FRLs and air dryers, and other specialty products, such as specialty valves and
grippers and guiding units. Air preparation products condition
39
<PAGE>
the air for use in the pneumatic system. Specialty valves are miniature valves
for custom applications. Grippers and guiding units are material handling
components, often serving as the "hands" of an automated process.
The Company began offering FRLs in 1987. For several years, FRLs have been
produced for the Company under a private label arrangement by an independent
manufacturer. In 1997, the Company began manufacturing some of its own FRL
products, which are expected to replace a majority of the private label
products within the next few years.
In 1995, Numatics acquired for $2.9 million an 80.0% equity interest in Ultra
Air, a manufacturer of air dryers used to remove water from compressed air
systems. Ultra Air distributes its products primarily through industrial
compressor distributors, rather than through the Company's valve distribution
network, which has presented the Company with some opportunities for cross-
selling between the two distributor groups. Also in 1995, the Company acquired
an 80.0% equity interest in MicroSmith, Inc. ("MicroSmith"), a designer and
fabricator of electronic componentry. The Company uses this componentry in its
valve products and also markets it to independent customers.
Through its 88.0%-owned subsidiary Numatech, Inc. ("Numatech"), formed in
1994, the Company manufactures specialty valves, many of which have been
designed by the Company for specific customer applications. Numatech's
principal products include miniature valves used primarily in the medical and
electronics industries. The Company believes these valves have potential
applications in other industries. Through its 90.0%-owned subsidiary Numation,
Inc. ("Numation"), also formed in 1994, the Company manufactures grippers and
guiding units for the materials handling industry.
In 1992, the Company acquired an 80.0% equity interest in Micro Filtration,
Inc. ("Micro Filtration"), a manufacturer of coalescing filtration products
that remove contaminants from an air line.
In accordance with the Company's management philosophy, the managers of Ultra
Air, MicroSmith, Numatech, Numation and Micro Filtration own all of the equity
in these subsidiaries not owned by the Company.
The Company's specialty products sales were $30.4 million, $35.0 million and
$40.7 million in 1995, 1996 and 1997, respectively.
ENGINEERING INNOVATIONS
The Company is widely recognized as an innovator in the design, engineering
and manufacture of pneumatic components. The Company has a dedicated group of
engineers, both domestically and internationally. Beginning with the "lapped
spool and sleeve," the Company has continued to produce engineering innovations
which include the following:
. On-board electronics, which allows electronic signals to be passed
through a single input/output source at faster transmission speeds.
.Electrical plug-in connections, which allow assembly of systems without
the need for costly wiring.
. Integral speed controls and integral pressure controls, which are mounted
between the valve and manifold to provide a complete control package.
.Manifolding, which reduced piping and space and allowed factory assembly,
reducing cost.
.Direct solenoid, which eliminated unnecessary pilot valves, improving
reliability due to fewer parts.
.Die cast magnesium valves, providing maximum weight reduction and cost
savings.
. ""Nu-Plex," the first fully integrated serial control system for fluid
power applications.
. Aluminum cast valve bodies, which reduced the weight and cost of valves
that had previously been made of bronze, cast iron and brass.
. ""Numasizing," the first precise method of determining component size so
as to accurately match desired performance with a valve configuration
that uses the smallest amount of energy to get the job done.
40
<PAGE>
The Numasizing process is based on a computerized database containing
empirical data from more than 250,000 test firings of pneumatic cylinders under
different conditions. Numasizing is used at all of the Company's locations
throughout the world. The Company conducts seminars on Numasizing for its
customers, and offers its distributors a proprietary program to enable them to
use Numasizing in helping to design efficient systems for their customers.
CUSTOMERS, MARKETING AND DISTRIBUTION
The Company's customers consist of end users, machinery manufacturers (which
incorporate the Company's products in their machines) and distributors. As is
common practice in the U.S. market, end users and machinery manufacturers
generally purchase the Company's products through its network of distributors.
Alternatively, in international markets, customers typically purchase directly
from the Company. In some cases, the end user will specify the Company's
products, regardless of distribution channel. The products sold by the Company
are utilized in a diverse group of industries, and no one customer accounted
for more than 3.0% of total net sales in 1997.
Approximately 59.0% of the Company's net sales in 1997 were from sales to
distributors. The Company believes it maintains excellent relationships with
its distributor network, which consists of over 110 distributors, including
over 78 in North America, 14 in Europe, 14 in Asia and 6 in South America. Some
of these distributors have been with the Company at least 40 years, and the
average tenure of its distributors in the United States is 20 years.
The Company's North American distributors are pneumatics specialists who sell
only pneumatic components and do not sell hydraulic components. In most cases,
the Company's products represent these distributors' principal source of
income. Additionally, the only pneumatic valves these distributors carry are
Numatics' valves. The Company maintains an interactive relationship with its
distributors, conducting periodic meetings in several cities and intensive
training programs while encouraging feedback. The Company employs 8 regional
managers in North America to train and assist its distributors. The Company's
distributors purchase products from the Company and maintain their own
inventories.
The Company has a direct sales force of 107 employees, who sell to over 9,000
direct customers worldwide, of which a significant portion are outside the
United States. The Company has also maintained direct selling efforts with
certain large end users and machinery manufacturers in North America. Some of
the Company's largest direct customers include Sunrise Medical, Progressive
Tool & Manufacturing and the Big 3 automotive manufacturers.
MANUFACTURING
The Company has eight domestic manufacturing facilities, including six in
Michigan and one each in Ohio and Tennessee. The Company also has manufacturing
plants in Ontario, Canada and in Germany. The Company's core valve products are
primarily manufactured in its Highland, Michigan facility, which is also the
Company's headquarters. The final machining and matching of the Company's
proprietary "lapped spool and sleeve" valve components are carried out in a
specially designed, temperature and humidity controlled area. This process is
highly confidential. Visitors and employees who do not require access are not
permitted in the facility, nor are equipment suppliers. All equipment setup for
such operations is performed by the Company's own employees.
The Company has adopted "lean manufacturing" and "kaizen" initiatives to
improve quality, production efficiencies and customer service by reducing
waste, inventory levels, floor space and lead times. The Company believes its
commitment to continuous improvement will further enhance its competitive
position and allow the Company to execute its growth strategy while minimizing
the need for significant additional capacity. The Company has converted many
facilities from a traditional batch process to a flow system utilizing
manufacturing "cells" based on specific product categories. Although in the
relatively early stage of implementation, the Company's lean manufacturing
initiatives have already resulted in facility consolidation, improved
manufacturing throughput, increased on time shipping performance and supplier
rationalization.
41
<PAGE>
The Company stresses quality control in all of its manufacturing and
distribution facilities, and each valve is individually tested to meet specific
tolerances before it can be shipped. Currently, the facilities in Germany and
Canada are ISO certified. The majority of the Company's domestic facilities are
anticipated to be ISO certified by the end of 1998, and all its facilities are
scheduled to be ISO certified by the end of 1999. The Company believes that
achieving ISO certification at each of its manufacturing facilities is a
significant factor in maintaining its competitive position.
COMPONENTS AND RAW MATERIALS
The principal raw materials and components used in manufacturing the
Company's products are aluminum castings, stainless steel, solenoids and screw
machine parts. All of these items are readily available from multiple
suppliers, and the Company also produces a substantial portion of its own
requirements of solenoids and screw machine parts. The Company purchases a
significant portion of its aluminum castings from Taiwanese suppliers through
its subsidiary in Taiwan, which has a dedicated staff of professionals
responsible for sourcing and quality control. The Company has never experienced
significant difficulty in acquiring needed parts and raw materials and does not
believe it is substantially dependent on any particular supplier.
COMPETITION
The markets in which the Company operates are highly competitive. Competition
is based primarily on quality, price, timely delivery and breadth of product
line. The markets in which the Company competes are highly fragmented, and many
of its competitors do not currently offer the full range of products sold by
the Company. Certain of the Company's competitors, however, are significantly
larger and have greater financial and other resources than the Company.
Nevertheless, the Company has competed successfully in its core pneumatic valve
business, and it has been able to increase net sales with its actuators and
specialty products as well.
The Company has the largest U.S. market share in its core product of
directional control, base mounted, 4-way pneumatic valves. The Company's most
significant competitors in North America are Parker Hannifin, SMC Pneumatics
and MAC Valves. Some of the Company's major competitors in the valve market
outside North America are SMC Pneumatics, Festo and CKD. The actuator and
specialty products markets have different competitors such as Norgren IMI,
Wilkerson, Phd., Robohand, Lee and Clippard.
INTERNATIONAL OPERATIONS
The Company conducts operations in several foreign countries including
Germany, Canada, England, Italy, France, the Netherlands, Hungary, Taiwan and
Mexico. International net sales represented 32.4% of net sales in 1997.
Numatics, Ltd. in Ontario, Canada and Numatics GmbH in Germany operate
manufacturing facilities, both of which are ISO certified. Numatics, Ltd.
markets a full line of the Company's products to the Canadian market and
manufactures, among other products, lockout valves for the Company's worldwide
needs. Numatics GmbH manufactures certain of the Company's products and markets
a full line of Numatics' components to customers in Europe and Africa. Numatics
GmbH maintains a dedicated engineering staff which works together with the
Company's North American engineering personnel. The Company's other foreign
operations are primarily sales and distribution facilities. For additional
financial information regarding foreign sales and exports, see Note 7 of the
notes to the Company's audited consolidated financial statements included
elsewhere in this Offering Memorandum.
EMPLOYEES
As of December 31, 1997, the Company had 941 employees. Approximately 100 of
those employees at that time were represented by the United Auto Workers under
a contract expiring in March 1999. The Company considers its employee relations
to be good.
42
<PAGE>
PROPERTIES
The Company conducts its business in Company-owned facilities, totaling
approximately 299,850 square feet, and leased facilities, totaling
approximately 111,800 square feet, of office, engineering, manufacturing and
warehouse space. All of these facilities are suitable to meet the current
capacity needs of the Company's various business units. Leases expire at
various times through 2003, and the Company generally has extension options.
The table below provides additional information concerning each of these
facilities.
<TABLE>
<CAPTION>
LOCATION SQUARE FOOTAGE TYPE OF INTEREST DESCRIPTION OF USES
-------- -------------- ---------------- -------------------
<S> <C> <C> <C>
United States
N. Milford Rd., High- 76,000 Owned Company headquarters;
land, MI............... valve components
Franklin, TN............ 68,000 Owned Actuators
Sandusky, MI............ 46,800 Owned Valves and solenoids
Detroit, MI............. 36,000 Leased Air dryers
Owosso, MI.............. 22,100 Owned Valve part processing;
warehousing
FRLs and specialty
Wixom, MI............... 20,900 Leased valves
E. Highland Rd., High-
land, MI............... 12,250 Owned Warehousing
Grippers and guiding
Westlake, OH............ 12,000 Leased units
Wixom, MI............... 8,400 Owned Distribution facility
Lapeer, MI.............. 5,000 Leased Filters
Scottsdale, AZ.......... 2,000 Leased Electronic componentry
design and fabrication
International
St. Augustin, Germany... 33,300 Owned Valves and actuators
London, ON, Canada...... 21,700 Owned Valves and actuators
Leighton Buzzard, En-
gland.................. 11,300 Owned Distribution and sales
Taipei, Taiwan.......... 8,000 Leased Distribution and sales
Brescia, Italy.......... 7,700 Leased Distribution and sales
Vancouver, BC, Canada... 6,000 Leased Distribution and sales
Puebla, Mexico.......... 5,000 Leased Distribution and sales
Montreal, QB, Canada.... 3,600 Leased Distribution and sales
Paris, France........... 3,400 Leased Distribution and sales
Waardenburg, The Nether-
lands.................. 1,600 Leased Distribution and sales
Budapest, Hungary....... 600 Leased Distribution and sales
</TABLE>
ENVIRONMENTAL MATTERS
One of the Company's plants, located on North Milford Road in Highland,
Michigan, is the site of a groundwater contamination problem that became known
in the early 1980s. The contamination was caused by a chemical
(trichloroethylene) that was used for many years to degrease parts but which
has not been used by the Company since the early 1970s. A soil vapor extraction
system was used to clean up the soil contamination, and a pump and treat system
has been installed to purge the groundwater. The soil cleanup has been
completed, but completion of the groundwater remediation is expected to take
approximately another ten years. Based on past expenditures and its current
evaluation of site conditions, the Company expects to spend approximately
$70,000 annually to complete the groundwater remediation, although actual
expenditures will depend on actual site conditions and other factors and are
subject to change.
43
<PAGE>
In 1989, the Company became aware of a fluid spill site, containing PCBs, at
its East Highland Road site in Highland, Michigan. The source of the PCBs is
believed to be a transformer that was accidentally ruptured in 1973 while
sitting on the ground awaiting disposal. The area of the spill has been
disturbed by subsequent paving of a portion of the area and soil removal
following a non-PCB waste oil spill. The Company estimates that future soils
remedial work at this site will cost approximately $250,000 to $300,000.
In 1982, a spill of chromic acid and water occurred at the Company's Owosso,
Michigan site. Soils contaminated by this spill have been remediated, and
groundwater tested on a monthly basis. Test data shows no future remediation is
required. The Company has submitted a closure report to the Michigan Department
of Environmental Quality, and is awaiting agency approval of the report.
Except for the matters discussed above, compliance by the Company with
federal, state and local laws and regulations pertaining to the discharge of
material into the environment has not and is not anticipated to have any
material effect upon the Company in conducting its business. However, due to
the nature of its current and former operations, the Company does face some
risk of exposure to environmentally-related liabilities.
LEGAL PROCEEDINGS
Various legal matters arising during the normal course of business are
pending against the Company. Management does not expect that the ultimate
liability, if any, of these matters will have a material effect on future
consolidated financial statements.
44
<PAGE>
MANAGEMENT AND DIRECTORS
EXECUTIVE OFFICERS AND DIRECTORS
The table that follows sets forth the name, age at December 31, 1997,
position with the Company and years in the pneumatics industry of each person
who is an executive officer or director of the Company. Information concerning
the business experience for at least the past five years of each of the persons
named is provided after the table. All Company directors are elected for terms
of one year and until their successors are elected and qualified.
<TABLE>
<CAPTION>
YEARS IN
PNEUMATICS
NAME AGE POSITION INDUSTRY
---- --- -------- ----------
<S> <C> <C> <C>
John H. Welker............... 57 Chairman, President and Chief 34
Executive Officer
Robert P. Robeson............ 51 Vice President, Treasurer, 10
Secretary and Chief Financial
Officer
David K. Dodds............... 49 Vice President--Sales & Marketing 31
Henry Fleischer.............. 74 Vice President--Research & 30
Development
Donald E. McGeachy........... 62 Vice President--Engineering 40
David M. Tenniswood.......... 61 Vice President--European 6
Operations and Director
Albert A. Koch............... 55 Director
John P. Musat................ 52 Director
Tim R. Palmer................ 40 Director
</TABLE>
John H. Welker has been with the Company for 32 years and has been Chairman
of the Board and CEO since 1990. He has been President of the Company since
1983 and prior to then held a variety of management positions within the
Company.
Robert P. Robeson joined the Company as Chief Financial Officer in 1988. In
1990, he was also named Vice President, Treasurer and Secretary. Prior to
joining the Company, Mr. Robeson was CFO of Gelman Sciences, a publicly traded
company.
David K. Dodds has been Vice President-Sales & Marketing since 1994. Prior to
that, he was President of Numatics, Ltd., the Company's Canadian subsidiary, a
position he was appointed to in 1980.
Henry Fleischer has been Vice President-Research & Development since 1992. He
joined Numatics in 1968 as Chief Engineer and held a variety of positions from
then until his appointment to Vice President in 1992. He is the author of
Manual of Pneumatic Systems Optimization (McGraw-Hill 1995), the authoritative
treatise on that subject.
Donald E. McGeachy has been Vice President-Engineering since 1992. He has
been with the Company since 1964 and was its Chief Engineer from 1975 to 1992.
David M. Tenniswood has been Vice President-European Operations since 1996
and a Director of the Company since 1990. Prior to 1996, Mr. Tenniswood was
President of the Controls Group at MascoTech for ten years.
Albert A. Koch has been a Director of the Company since 1990. He has been a
Managing Principal of Jay Alix & Associates since 1995. Prior to joining Jay
Alix & Associates, he was a Managing Director of Equity Partners of America,
Ltd. (investment banking and financial consulting).
John P. Musat has been a Director of the Company since 1996. He is a Senior
Vice President at MascoTech Forming Technologies-Braun and has been with them
since 1982.
45
<PAGE>
Tim R. Palmer has been a Director of the Company since 1997. He is currently
a Managing Director of Harvard Private Capital Group, Inc., which manages the
private equity and real estate investment portfolios of the Harvard University
endowment fund. He has been with Harvard Private Capital Group, Inc. since 1990
and also serves on the boards of The WMF Group, Ltd. and several private
companies.
EXECUTIVE COMPENSATION
Summary Compensation Information.
The table that follows provides information, for the Company's last completed
fiscal year concerning the compensation of John H. Welker, the Company's CEO,
and the four other highest paid executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1)
--------------- ALL OTHER
SALARY BONUS COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
--------------------------- ---- ------- ------- ---------------
<S> <C> <C> <C> <C>
John H. Welker............................. 1997 251,020 160,500 5,000
Chairman, President and CEO
Robert P. Robeson.......................... 1997 134,600 62,008 5,000
Vice President, Treasurer and CFO
David M. Tenniswood........................ 1997 175,000 22,166 2,000
Vice President--European Operations
David K. Dodds............................. 1997 125,760 56,444 5,000
Vice President--Sales and Marketing
Donald E. McGeachy......................... 1997 107,800 48,430 5,000
Vice President--Engineering
</TABLE>
- --------
(1) Does not include prerequisites and other personal benefits provided to
named executives, the incremental cost of which to the Company in each case
was less than 10% of the executive's 1997 salary and bonus.
(2) Includes a $2,000 Company contribution for each executive to the Company's
deferred contribution and employee savings plan and, except for Mr.
Tenniswood, also includes a $3,000 Company matching contribution to that
plan.
Welker Employment Agreement. The Company has an agreement with Mr. Welker for
his employment as CEO through December 31, 2003, under which he is entitled to
salary at specified rates ($300,000 for 1998, increasing annually thereafter to
$440,000 for 2003), and to a cash performance bonus supplementing his salary
determined pursuant to a formula based on the Company's operating performance
relative to its operating budget. The agreement also contemplates that the
Company's Board annually will consider whether he should be paid a
discretionary bonus, whether or not a performance bonus also is payable.
During the term of the agreement, the Company is entitled to terminate Mr.
Welker's employment at any time for any reason, upon 60 days' prior notice to
him, and also is entitled to terminate him for "cause" or in certain cases of
"permanent disability" (as therein defined), upon less prior notice. If the
Company were to terminate him not for cause or permanent disability, or
terminated him for permanent disability without having maintained certain
disability insurance in effect for his benefit, he would be entitled to
continuation of his regular salary for a one-year period commencing on his
termination date. In addition, if Mr. Welker were to die while employed by the
Company, the equivalent of his regular salary for a 60-day period thereafter
would be payable to his estate.
The agreement imposes non-competition obligations upon Mr. Welker during his
employment and for one year thereafter and also imposes confidentiality
obligations upon him, which continue for five years after his employment
termination date.
46
<PAGE>
Tenniswood Employment Agreement. The Company has an agreement with Mr.
Tenniswood for his employment as Vice President--European Operations through
September 15, 1998, under which he is entitled to a $200,000 per year salary
and to discretionary bonuses at times and in amounts commensurate with such
discretionary bonus compensation as from time to time may be awarded to other
executive officers. The circumstances under which he can be terminated by the
Company and the compensation, if any, payable to him upon a termination of his
employment are comparable to those described above for Mr. Welker. Mr.
Tenniswood's agreement also imposes non-competition and confidentiality
obligations upon him comparable to those for Mr. Welker.
Deferred Compensation Plan. In connection with the 1990 Buyout, the Company
adopted a "top-hat" non-qualified deferred compensation plan, under which a
small group of management-level employees could become entitled to receive
future distributions of equity interests in the Company if certain conditions
thereafter were satisfied. In connection with the 1995 Recapitalization, the
plan was amended to change the type of distributions to be made under the plan
to cash, limit the employees eligible to participate in the plan to those then
participating, specify a fixed distribution amount for each participating
employee, and change the terms and conditions for payouts.
In general, under the plan as currently in effect, if a plan participant's
employment with the Company continues until his death, retirement at or after
age 65 or disability (determined as specified in the plan), or if a participant
remains in active Company service through the later of (a) November 29, 2002 or
(b) the twelfth anniversary of the commencement of his employment and his
employment thereafter terminates other than in an Involuntary Discharge for
Cause (as therein defined), which involuntary discharge would cause the
forfeiture of his right to any distribution, then the Company would become
obligated to pay his distribution, without interest, in regular installments
over a five-year period commencing within 60 days of his employment termination
date. Similar five-year installment payment obligations also would arise under
the plan with respect to all participants if the Company elected to terminate
the plan or if a Company Change in Control (as therein defined) should occur.
However, the current terms of the plan also provide for a pro rata reduction
in the amounts of annual installment payments to distributees and for
lengthening the installment payment period, if the Company becomes obligated to
make payments to more than one distributee at the same time, to the extent (if
any) necessary to prevent total annual payments to the distributees in excess
of 3.0% of the Company's prior year earnings before interest, taxes,
depreciation and amortization. In addition, the plan provides that no
distribution payments whatsoever may be made prior to January 31, 2004.
Eight of the Company's employees participate in this plan, including all of
the Company's current executive officers other than Mr. Tenniswood. The
distribution amounts for the executive officer participants named in the
Summary Compensation Table are as follows: Mr. Welker, $2,643,546; Mr. Robeson,
$105,398; Mr. Dodds, $151,757; Mr. McGeachy, $151,757.
DIRECTORS' COMPENSATION
The Company pays a meeting fee of $1,600 to each of its non-employee
directors for each meeting of the Board of Directors that he attends. Employee
directors are not paid any additional compensation for Board service. Mr.
Palmer's compensation is paid to Harvard Management Company pursuant to
Harvard's policies.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All decisions concerning the 1997 compensation of the Company's executive
officers were made by the Company's Board of Directors. The current directors,
Messrs. Welker, Tenniswood, Koch, Musat and Palmer, served on the Board
throughout 1997; no other person served as a director at any time during the
year. Except as described below, no current or former officer and no current
employee of the Company or of any of its subsidiaries participated in
deliberations of the Board concerning executive compensation during 1997.
47
<PAGE>
Mr. Welker is the controlling shareholder of the Company and the Company's
Chairman, CEO and President. Mr. Tenniswood also is an executive officer of
the Company. None of the other directors is or ever has been an officer or
employee of the Company or any of its subsidiaries.
Mr. Palmer is a Managing Director of an affiliate of the company that held
the Old Subordinated Notes, which were prepaid from the proceeds of the
Offering.
The Company advanced $185,000 to Mr. Welker during 1996 to purchase the
stock of a departing executive, all of which loan remains outstanding. In
February 1998, the Company advanced an additional $400,000 to Mr. Welker,
which also remains outstanding. These loans are unsecured, bear interest at
6.5% per annum and are payable on demand.
The Company, Mr. Welker, each other executive officer except Mr. Tenniswood
and all of the other current shareholders of the Company other than Harvard
(all of whom also are Company employees) are party to a shareholder agreement
that generally prohibits transfer of Company stock by any of the shareholder
parties. In general, the agreement requires the Company to purchase the shares
of any shareholder party, including Mr. Welker, if the shareholder ceases to
be a Company employee due to his death, his Total and Permanent Disability or
Involuntary Discharge Without Cause (each as therein defined), his retirement
at or after age 65 or his resignation (if after the later of (i) October 5,
2002 and (ii) the twelfth anniversary of his date of hire by the Company) for
a redemption price to be determined by a formula intended to approximate the
shares' fair market value at the time of employment termination.
For each shareholder party to the agreement other than Mr. Welker, the
Company is excused from this obligation to the extent redeeming shares would
be unlawful or would violate another agreement of the Company. For Mr. Welker,
while the Company is required to redeem all of his shares, the cash portion of
the redemption price is limited to the maximum amount which can be lawfully
paid without violating another agreement (including the Indenture), and the
balance is payable pursuant to a subordinated five-year installment note, with
interest at the applicable federal rate. Failure to pay principal of or
interest on such a promissory note would not be a default if making the
payment would be unlawful or would violate another agreement (including the
Indenture). This agreement covers 94.0% of the Company's shares, 74.12% of
which are held by Mr. Welker.
The management shareholders of certain subsidiaries of the Company
(Numation, Numatech, Micro- Filtration, Ultra Air and Microsmith) are required
to sell their shares to the Company upon such shareholder's (i) death, (ii)
permanent disability or (iii) termination of employment with the Company. The
price to be paid by the Company for such shares will be determined by a
formula based upon a multiple of earnings of the relevant subsidiary. The
obligations of the Company to purchase such shares are not subject to any
limitations. However, the payment of these amounts may be prohibited by the
terms of the Indenture. Currently, the amounts that would be payable under
these agreements are not material to the Company.
48
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
So far as is known to the Company, the only persons who are beneficial
owners (within the meaning of Commission Rule 13d-3) of over 5.0% of the
Company's common stock are: (a) John H. Welker, whose ownership information is
set forth below under "--Security Ownership of Management and Directors" and
who maintains an address at the Company's principal executive office; and (b)
Harvard Private Capital Holdings, Inc. (the address of which is c/o Harvard
Private Capital Group, Inc., 600 Atlantic Avenue, Boston, Massachusetts
02210), which holds 1,276.60 shares, which shares represent 6.0% of the
Company's outstanding stock.
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table sets forth the beneficial ownership (for purposes of
Rule 13d-3) of shares of the Company's common stock by each director of the
Company, each executive officer named in the Summary Compensation Table above,
and all directors and current executive officers as a group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF OWNERSHIP OF
NAME OF BENEFICIAL OWNER COMMON STOCK SHARES OF COMMON STOCK
------------------------ ------------ --------------------------
<S> <C> <C>
John H. Welker(1)..................... 20,000.00 94.00%
Robert P. Robeson..................... 627.13 2.95%
David K. Dodds........................ 903.05 4.24%
Donald E. McGeachy.................... 903.05 4.24%
David M. Tenniswood................... 0 --
Albert A. Koch........................ 0 --
John P. Musat......................... 0 --
Tim R. Palmer(2)...................... 0 --
All directors and executive officers
as a group (9 persons)(1)(2)......... 20,000.00 94.00%
</TABLE>
- --------
(1) Mr. Welker has sole voting and dispositive power over 15,769.57 (74.12%)
of the Company's outstanding shares, which are his own, and sole voting
power over all other outstanding shares, excluding those owned by Harvard,
pursuant to a voting agreement among the Company, Mr. Welker and all of
the Company's other shareholders other than Harvard.
(2) Excludes shares owned by Harvard. Mr. Palmer is a Managing Director of an
affiliate of Harvard. He disclaims beneficial ownership of these shares.
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DESCRIPTION OF OTHER INDEBTEDNESS
The following is a summary of certain of the Company's existing debt
agreements.
NEW CREDIT FACILITY
General. The Company and its subsidiaries, Numatics, Ltd. (the Company's
Canadian subsidiary) and Numatics GmbH (the Company's principal German
subsidiary), are borrowers under the New Credit Facility with NBD Bank as
agent for a group of lenders. The purposes of the loans under the New Credit
Facility are to refinance previously existing debt and for general corporate
purposes.
The New Credit Facility provides for (a) a term loan to the Company in the
amount of $16.0 million, a term loan to Numatics, Ltd. in the amount of $2.0
million, and a term loan to Numatics GmbH in the amount of $2.0 million
(collectively, "Term Loans A"), (b) a revolving credit facility for the
Company of $32.0 million, including letters of credit, and revolving credit
facility for Numatics GmbH of $3.0 million (each of the foregoing, a
"Revolving Credit Facility"), and (c) a term loan to the Company in the amount
of $13.0 million and a term loan to Numatics GmbH in the amount of $2.0
million (collectively, "Term Loans B"). The Revolving Credit Facilities permit
the Company to borrow up to the lesser of the total amount of its Revolving
Credit Facility or a borrowing base amount computed as a percentage of
inventory and accounts receivable (less outstanding letters of credit and
subject to certain limitations) and permit Numatics GmbH to borrow up to the
lesser of the total amount of its Revolving Credit Facility or a borrowing
base amount.
Guarantees and Security Interests. Each borrower under the New Credit
Facility has secured its obligations thereunder by substantially all of its
assets. The Company also pledged all the shares owned by it of its domestic
Subsidiaries and 66.0% of the shares of its foreign subsidiaries. The
borrowers' obligations under the New Credit Facility are guaranteed by the
Company's domestic subsidiaries, which guarantees are secured by substantially
all of their assets. The New Credit Facility also provides that, upon the
occurrence of an event of default, the lenders may require the Company to
cause all of its foreign subsidiaries to issue guarantees secured by
substantially all of their assets. In addition, the Company has guaranteed all
obligations of the other borrowers under the New Credit Facility, which
guaranty is secured by substantially all of the Company's assets.
Interest and Commitment Fees. Interest on the Revolving Credit Facilities
and Term Loans A accrues at an annual rate of interest equal to, at the
borrower's option, either (a) the higher of a federal funds rate plus 0.50%
and the prime rate of NBD Bank plus, in either case, an applicable margin
(which applicable margin will initially be 0.75% and thereafter may range from
0% to 0.75%), (the "floating rate") or (b) at a London Interbank Offered Rate
(adjusted) for a specified interest period ("LIBOR") plus an applicable margin
(which applicable margin will initially be 2.50% and thereafter may range from
1.25% to 2.50%).
Interest on Term Loans B accrues at an annual rate of interest equal to
LIBOR plus an applicable margin (which applicable margin will initially be
2.75% and thereafter may range from 2.50% to 2.75%).
Interest on all borrowings under the New Credit Facility bearing interest at
a floating is payable quarterly and interest on all borrowings under the New
Credit Facility bearing interest based on LIBOR is payable at the end of the
interest period pertaining thereto unless the interest period is six-months,
in which case it also is payable three-months after the interest period
commences.
The Company also pays an unused commitment fee on the Revolving Credit
Facilities which commitment fee initially is 0.50% of the unused amount of the
Revolving Credit Facilities and thereafter may range from 0.25% to 0.50%.
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The margins set forth above and the percentage used to determine the
commitment fees are determined based on the ratio of the Company's net total
debt to a trailing four-quarter adjusted EBITDA.
Maturities and Prepayments. All borrowings under each Revolving Credit
Facility mature six years after the Issue Date. Term Loans A have a final
maturity of six-years and Term Loans B have a final maturity of seven and one-
half years with aggregate quarterly principal payments on Term Loans A and Term
Loans B of $1.6 million in 1998, $2.5 million in 1999, $3.0 million in 2000,
$3.5 million in 2001, $4.0 million in 2002, $4.9 million in 2003, $8.4 million
in 2004 and $7.1 million in 2005.
All loans under the New Credit Facility are prepayable at the option of the
Company without premium or penalty, except that any prepayment of a loan
bearing interest based on LIBOR that is made before the end of the applicable
interest period will be subject to reimbursement of breakage costs.
The New Credit Facility requires prepayments of the term loans in amounts
equal to (a) 50.0% of "excess cash flow" for each fiscal year beginning with
1998, (b) 100.0% of net cash proceeds from sale of assets over a base amount
unless the proceeds are used to purchase specified other assets, (c) 75.0% of
the net cash proceeds from the issuance of subordinated debt (other than the
Notes and Exchange Notes) and (d) 50.0% of net cash proceeds from the issuance
of equity. The New Credit Facility also requires prepayments of revolving
credit loans (with an equal reduction in the commitment amount) in amounts
equal to 50.0% of the net cash proceeds from the issuance of equity once the
term loans are fully repaid.
Covenants. The New Credit Facility contains customary covenants, including:
reporting and other affirmative covenants; financial covenants, including
requirements that the Company maintain specified fixed charge coverage ratios,
specified interest coverage ratios, minimum shareholders' equity, and a ratio
of net total debt to adjusted EBITDA; and negative covenants, including
restrictions on incurring other indebtedness, payment of cash dividends and
other distributions, existence of liens, making investments, affiliate
transactions, issuing guarantees or making advances to others, modifications to
the terms of the Notes and Exchange Notes and related documents, sales of
assets not in the ordinary course of business, mergers and acquisitions, and
entering into agreements inconsistent with the New Credit Facility.
Events of Default. The New Credit Facility contains customary events of
default, including: non-payment of principal, interest or fees; violations of
covenants; inaccuracy of representations or warranties; judgments; ERISA
violations; cross-defaults to other indebtedness; change of control and
bankruptcy. It also is an event of default if Mr. Welker ceases to be the
President and Chief Executive Officer of the Company or ceases to have the
ability to elect a majority of its directors and if he is not replaced within
120 days by a person satisfactory to the New Credit Facility lenders.
INDUSTRIAL DEVELOPMENT REVENUE BONDS
The IRBs are limited obligation variable rate demand industrial development
revenue bonds issued in 1996 by the Industrial Development Board of Williamson
County, Tennessee (the "IDBW") for the benefit of the Company in the principal
amount of $2.5 million. The Company is obligated to pay to the IDBW all amounts
necessary to pay principal, interest, purchase price and premium, if any, on
the IRBs. The IRBs are due on December 1, 2011.
Letter of Credit. The Company has supplied a letter of credit issued by NBD
Bank on which the trustee for the holders of the IRBs can draw to pay principal
of the IRBs, principal and interest on IRBs tendered for purchase and an amount
equal to 110 days' interest. Under a reimbursement agreement with NBD Bank, the
Company has agreed to reimburse NBD Bank for all payments made by it under the
letter of credit and to indemnify NBD Bank from any and all losses, costs, and
damages which it may suffer in connection with the letter of credit. The
reimbursement agreement is part of the New Credit Facility.
Interest Rates. The interest rate on the IRBs is set weekly by a remarketing
agent at the rate it determines to be the lowest at which it can remarket the
IRBs at par, which in 1997 ranged from 3.4% to 4.1%.
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Purchase and Redemption. Each holder has the right to require his IRBs to be
purchased at par at any time. To the extent that purchased IRBs are not
remarketed, the purchase price is to be paid by drawing on the letter of credit
or otherwise by the Company. The IRBs are subject to mandatory purchase upon
the occurrence of certain events. The Company has agreed in the reimbursement
agreement that it will exercise its option to partially redeem IRBs in the
amount of (a) $200,000 on each December 1 from 2002 through 2006 and (b)
$300,000 on each December 1 from 2007 through 2010.
Events of Default. The IRB indenture and the loan agreement between the
Company and the IDBW contain various customary events of default. The
reimbursement agreement presently incorporates the events of default under the
Old Credit Facility and will incorporate the events of default under the New
Credit Facility.
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DESCRIPTION OF EXCHANGE NOTES
Set forth below is a summary of certain provisions of the Exchange Notes.
The Exchange Notes will be issued pursuant to the same Indenture (the
"Indenture") among the Company, the Guarantors and U.S. Bank Trust National
Association (formerly known as First Trust National Association), as trustee
(the "Trustee"), under which the Notes were issued. The terms of the Exchange
Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). The Exchange Notes are subject to all such terms, and Holders
of Exchange Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of the material provisions of
the Indenture and the Registration Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. Copies of the
Indenture and Registration Rights Agreement have been filed as Exhibits to the
Registration Statement. The definitions of certain terms used in the following
summary are set forth below under "--Certain Definitions." For purposes of
this summary, the term "Company" refers only to Numatics, Inc. and not to any
of its Subsidiaries.
GENERAL
The Exchange Notes will be general unsecured obligations of the Company,
will be subordinated in right of payment to all existing and future Senior
Indebtedness of the Company, including Senior Indebtedness under the New
Credit Facility, and will rank pari passu or senior in right of payment will
all existing and future subordinated indebtedness of the Company. The Exchange
Notes and the Notes will rank equally with one another. As of December 31,
1997, on a pro forma basis after giving effect to the Transaction (including
the Offering), the aggregate principal amount of Senior Indebtedness
(excluding trade payables and other accrued liabilities) of the Company would
have been approximately $43.0 million, approximately $38.7 million of which
would have been Indebtedness secured by substantially all of the assets of the
Company and its Subsidiaries pursuant to the New Credit Facility. Of such
amount, $7.3 million would have been Indebtedness of Restricted Subsidiaries
which was guaranteed by the Company. The terms of the Indenture limit the
ability of the Company and its Subsidiaries to incur additional Indebtedness.
The Exchange Notes will be guaranteed on a senior subordinated basis by each
domestic Restricted Subsidiary of the Company. See "Subsidiary Guarantees."
However, the Exchange Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables and lease
obligations) of the Company's foreign Subsidiaries. Any right to receive
assets of any of the Company's foreign Subsidiaries after the latter's
liquidation or reorganization will be effectively subordinated to the claims
of the Subsidiary's creditors. Each Guarantor's guarantee of the Exchange
Notes will rank equally with its guarantee of the Notes. As of December 31,
1997 the liabilities (including trade payables and lease obligations) of the
Company's foreign Subsidiaries was $12.7 million (including $7.3 million of
debt guaranteed by the Company).
All of the Company's Subsidiaries currently are Restricted Subsidiaries.
However, under certain circumstances, the Company will be able to designate
current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to many of the restrictive covenants set
forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will mature on April 1, 2008. The Indenture provides for
the issuance of up to $100.0 million aggregate principal amount of additional
notes having identical terms and conditions to the Notes and Exchange Notes
(the "Additional Notes"), subject to compliance with the covenants contained
in the Indenture. Any Additional Notes will be part of the same issue as the
Notes and Exchange Notes and will vote on all matters with the Notes and
Exchange Notes. For purposes of this "Description of Exchange Notes,"
references to the Notes and Exchange Notes do not include Additional Notes.
Interest on the Exchange Notes will accrue at the rate of 9 5/8% per annum and
will be payable semi-annually in arrears on April 1 and October 1, commencing
on October 1, 1998, to Holders of record on the immediately preceding March 15
and September 15. Interest on the Exchange Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
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Principal, premium, if any, and interest and Liquidated Damages on the
Exchange Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders of the Exchange Notes at their respective
addresses set forth in the register of Holders of Exchange Notes; provided
that all payments of principal, premium, interest and Liquidated Damages with
respect to Exchange Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
Until otherwise designated by the Company, the Company's office or agency in
New York will be the office of the Trustee maintained for such purpose. The
Exchange Notes will be issued in denominations of $1,000 and integral
multiples thereof.
SUBORDINATION
The payment of principal of, premium, if any, interest and Liquidated
Damages, if any, and all other Obligations on the Exchange Notes will be
subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full in cash or Cash Equivalents of all Senior Indebtedness,
whether outstanding on the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full in cash or Cash Equivalents of all Obligations due in
respect of such Senior Indebtedness (including, without limitation, interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Indebtedness) before the Holders of Exchange Notes will be
entitled to receive any payment with respect to the Exchange Notes, including,
without limitation, Obligations in respect thereof, and any redemption,
defeasance or other acquisition thereof, and until all Obligations with
respect to Senior Indebtedness are paid in full in cash or Cash Equivalents,
any distribution to which the Holders of Exchange Notes would be entitled
shall be made to the holders of Senior Indebtedness (except that Holders of
Exchange Notes may receive and retain Permitted Junior Securities and payments
made from the trust described under the caption "--Legal Defeasance and
Covenant Defeasance").
The Company also may not make any payment upon or in respect of the Exchange
Notes (except in Permitted Junior Securities or from the trust described under
the caption "--Legal Defeasance and Covenant Defeasance") if (i) a default in
the payment of the principal of, premium, if any (a "Payment Default"), or
interest on Designated Senior Indebtedness occurs and is continuing beyond any
applicable period of grace or (ii) any other default occurs and is continuing
with respect to Designated Senior Indebtedness that permits holders of the
Designated Senior Indebtedness as to which such default relates to accelerate
its maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior
Indebtedness. Payments on the Exchange Notes may and shall be resumed (a) in
the case of a payment default, upon the date on which such default is cured or
waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Indebtedness has been accelerated or a Payment
Default has occurred. No new period of payment blockage pursuant to a Payment
Blockage Notice may be commenced unless and until 360 days have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice. No
nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for
a subsequent Payment Blockage Notice unless such default shall have been cured
or waived for a period of not less than 90 days.
The Indenture further requires that the Company promptly notify holders of
Senior Indebtedness if payment of the Exchange Notes is accelerated because of
an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Exchange Notes may recover less
ratably than other creditors of the Company including holders of Senior
Indebtedness. On a pro forma basis, after giving effect to the Offering and
the application of the proceeds
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therefrom, the principal amount of Senior Indebtedness outstanding at December
31, 1997 would have been approximately $43.0 million. The Indenture limits,
subject to certain financial tests, the amount of additional Indebtedness,
including Senior Indebtedness, that the Company and its Subsidiaries can
incur. See "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock."
SUBSIDIARY GUARANTEES
General. The Company's payment obligations under the Exchange Notes will be
jointly and severally guaranteed on a senior subordinated basis (the
"Subsidiary Guarantees") by the Guarantors. The Subsidiary Guarantees will be
subordinated in right of payment to all existing and future Senior
Indebtedness of the Guarantors, including all obligations of the Guarantors
under the New Credit Facility, and will rank pari passu in right of payment
with all existing and future senior subordinated indebtedness of the
Guarantors. The obligation of each Guarantor under its Subsidiary Guarantee
will be limited with the intention that such Subsidiary Guarantee not
constitute a fraudulent conveyance or transfer or an improper distribution
under applicable law. The maximum liability of each Subsidiary Guarantor as a
result of the foregoing will vary depending upon the law and the legal
standards applied in any proceeding with respect to the Subsidiary Guarantee.
There can be no assurance as to what standard or law a court would apply in
making a determination as to what the maximum liability would be for each
Guarantor under its Subsidiary Guarantee.
Merger, Consolidation, etc. The Indenture provides that no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless (i) subject to the provisions of the
following paragraph, the Person formed by or surviving any such consolidation
or merger (if other than such Guarantor) assumes all the obligations of such
Guarantor pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Exchange Notes and the
Indenture and (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
Release. The Indenture provides that in the event of a sale or other
disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the
capital stock of any Guarantor, then such Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee.
OPTIONAL REDEMPTION
The Exchange Notes will not be redeemable at the Company's option prior to
April 1, 2003, except as provided in the following paragraph. Thereafter, the
Exchange Notes will be subject to redemption at any time at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such redemption date) accrued and unpaid interest and Liquidated
Damages thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.......................................................... 104.8125%
2004.......................................................... 103.2083%
2005.......................................................... 101.6042%
2006 and thereafter........................................... 100.00%
</TABLE>
Notwithstanding the foregoing, at any time on or before, April 1, 2001, the
Company may redeem up to $40,250,000 aggregate principal amount of Notes and
Exchange Notes at a redemption price of 109.625% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the
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redemption date, with the cash proceeds to the Company of one or more Public
Offerings; provided that at least $74,750,000 aggregate principal amount of
Notes and Exchange Notes remain outstanding immediately after the occurrence
of such redemption (excluding Notes and Exchange Notes held by the Company or
any of its Subsidiaries); and provided, further, that such redemption shall
occur within 45 days of the date of the closing of such Public Offering.
SELECTION AND NOTICE
If less than all of the Exchange Notes are to be redeemed at any time,
selection of Exchange Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which the Exchange Notes were listed, or, if the Exchange
Notes are not so listed, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided that no Exchange Notes of
$1,000 or less shall be redeemed in part. Notices of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each Holder of Exchange Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. If any
Exchange Note is to be redeemed in part only, the notice of redemption that
relates to such Exchange Note shall state the portion of the principal amount
thereof to be redeemed. A new Exchange Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Exchange Note. Exchange Notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Exchange Notes or portions of
them called for redemption unless the Company defaults in the payment thereof.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Exchange Notes.
CERTAIN COVENANTS
Repurchases of Exchange Notes at the Option of Holders upon a Change of
Control
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
will have the right to require the Company to purchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Exchange Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to
the date of purchase (the "Change of Control Payment"). Within ten days
following any Change of Control, the Company will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Exchange Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by the Indenture and described in such
notice. The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Exchange Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Exchange Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all
Exchange Notes or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the Exchange Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Exchange Notes
or portions thereof being purchased by the Company. The Paying Agent will
promptly mail to each holder of Exchange Notes so tendered the Change of
Control Payment for such Exchange Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each
Holder a new Exchange Note equal in principal amount to any unpurchased
portion of the Exchange Notes surrendered, if any; provided that each such new
Exchange Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Indenture will
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provide that, prior to complying with the provisions of this covenant, but in
any event within 90 days following a Change of Control, if agreements governing
Senior Indebtedness prohibit the purchase of the Exchange Notes, the Company
will either repay all outstanding Senior Indebtedness or obtain the requisite
consents, if any, under all agreements governing outstanding Senior
Indebtedness to permit the repurchase of Exchange Notes required by this
covenant if such agreements prohibit such purchase. However, there can be no
assurance that the Company will be able to either repay all such Senior
Indebtedness or obtain all required consents. The Company will publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change in Control, the Indenture does not
contain provisions that permit the Holders of the Exchange Notes to require
that the Company repurchase or redeem the Exchange Notes in the event of a
takeover, recapitalization or similar transaction.
The New Credit Facility provides that certain change of control events with
respect to the Company would constitute a default thereunder. The New Credit
Facility prohibits the Company from purchasing any Exchange Note prior to
maturity. Any future credit agreements or other agreements relating to the
Senior Indebtedness to which the Company becomes a party may contain similar
restrictions and provisions and the agreement of the Company thereto is not a
default under the Indenture. In the event a Change of Control occurs at a time
when the Company is prohibited from repurchasing Exchange Notes, the Company
could seek the consent of its lenders to the repurchase of Exchange Notes or
could attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from repurchasing Exchange Notes. There can be no
assurance that the Company will be able to obtain such consents or repay such
Indebtedness. In such case, the Company's failure to repurchase tendered
Exchange Notes would constitute an Event of Default under the Indenture which
would, in turn, constitute a default under the New Credit Facility. See
"Description of Other Indebtedness--New Credit Facility." In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to Holders of Exchange Notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Exchange Notes validly tendered and not withdrawn
under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Exchange Notes to require the
Company to repurchase such Exchange Notes as a result of a sale, lease,
transfer, conveyance or other disposition of less than all of the assets of the
Company and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
Restricted Payments
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the direct
or indirect holders of the Company's or any of its Restricted Subsidiaries'
Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or dividends or other distributions payable to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company or other Affiliate of
the Company (other than any such
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Equity Interests owned by the Company or any Wholly Owned Restricted Subsidiary
of the Company; (iii) make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is pari passu with or
subordinated to the Exchange Notes (other than Exchange Notes), except a
payment of interest or principal at Stated Maturity; (iv) make any Restricted
Investment; or (v) make any payment of principal, premium or interest on or in
respect of or otherwise purchase, redeem, defease or otherwise acquire or
retire for value any Management Notes (all such payments and other actions set
forth in clauses (i) through (v) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event or Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vii) and (viii) of the next
succeeding paragraph), is less than the sum, without duplication, of (i)
50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company since
the date of the Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company), plus
(iii) to the extent that any Restricted Investment that was made after the
date of the Indenture is sold for cash or otherwise liquidated or repaid
for cash (including through the redesignation of an Unrestricted Subsidiary
as a Restricted Subsidiary in accordance with the Indenture), the lesser of
(A) the cash return of capital with respect to such Restricted Investment
(less the cost of disposition, if any) and (B) the initial amount of such
Restricted Investment plus (iv) 50% of any cash dividends received by the
Company or an 80% Restricted Subsidiary that is a Guarantor after the date
of the Indenture from an Unrestricted Subsidiary of the Company, to the
extent that such dividends were not otherwise included in Consolidated Net
Income of the Company for such period, plus (v) to the extent that any
Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after
the date of the Indenture, the lesser of (A) the fair market value of the
Company's Investment in such Subsidiary as of the date of such
redesignation or (B) such fair market value as of the date on which such
Subsidiary was originally designated as an Unrestricted Subsidiary, plus
(vi) $2.5 million.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture: (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of pari passu
or subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
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acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any member of the Company's
(or any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement in effect as of the
date of the Indenture; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$5.0 million in the aggregate since the Issue Date; (vi) the repurchase of the
Harvard Warrant required pursuant to agreements in effect on the Issue Date
(as in effect on such date), provided that the consideration paid by the
Company shall consist solely of Harvard Notes; (vii) the purchase of common
stock held by management of the Company required pursuant to the Shareholders'
Agreement, provided that the consideration paid by the Company shall consist
solely of Management Notes; and (viii) the payment on or after the Issue Date
of dividends in respect of the Company's common stock in an aggregate amount
not exceeding $6.0 million. The Company paid a $6.0 million dividend on its
common stock on March 26, 1998.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments at
the time of such designation and will reduce the amount available for
Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation will only be permitted if such Restricted
Payment would be permitted at such time if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined
by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $1.0 million. Not later
than the date of making any Restricted Payment, the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and any Guarantor may
incur Indebtedness or issue preferred stock if the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock or
preferred stock is issued would have been at least 2.0 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or preferred stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The foregoing provisions will not apply to the incurrence of any of the
following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Restricted Subsidiaries of (A)
revolving credit Indebtedness and letters of credit pursuant to Credit
Facilities; provided that the aggregate principal amount of all revolving
credit Indebtedness (with letters of credit being deemed to have a
principal amount equal to the
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maximum potential liability of the Company and its Restricted Subsidiaries
thereunder) at any time outstanding under all Credit Facilities pursuant to
this clause (i) after giving effect to such incurrence does not exceed an
amount equal to the greater of (x) $35.0 million of such Indebtedness less
the aggregate amount of all Net Proceeds of Asset Sales applied to
permanently reduce commitments with respect to Credit Facilities pursuant
to the covenant described below under the caption "--Limitations on Asset
Sales" and (y) the amount of the Borrowing Base of the Company as of the
date of incurrence; and (B) term Indebtedness under Credit Facilities,
provided that the aggregate principal amount of all term Indebtedness
outstanding under all Credit Facilities after giving effect to such
incurrence does not exceed $35.0 million less the aggregate amount of all
Net Proceeds of Asset Sales that have been applied since the date of the
Indenture to repay term Indebtedness under a Credit Facility pursuant to
the covenant described below under the caption "--Limitations on Asset
Sales"; provided that the aggregate principal amount of all Indebtedness
incurred under all Credit Facilities (with letters of credit being deemed
to have a principal amount equal to the maximum potential liability of the
Company and its Restricted Subsidiaries thereunder) by any Restricted
Subsidiary that is not a Guarantor pursuant to this clause (i) after giving
effect to such incurrence does not exceed an amount equal to the greater of
(x) the amount of the Borrowing Base of such Restricted Subsidiary at the
time of such incurrence and (y) the amount which, when combined with all
outstanding Indebtedness incurred under Credit Facilities by Restricted
Subsidiaries that are not Guarantors at or prior to the time of such
incurrence does not exceed $35.0 million:
(ii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes (other than any Additional Notes) and the Exchange Notes (other than
any Additional Notes) and the incurrence by the Guarantors of Indebtedness
represented by the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal
amount not to exceed $5.0 million at any time outstanding;
(v) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that is either the Existing Indebtedness or was
permitted by the Indenture to be incurred under the first paragraph hereof
or clauses (iii), (iv), (v) or (vii) of this paragraph;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
80% Restricted Subsidiaries; provided, however, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes (it being understood that payments under intercompany
Indebtedness shall be permitted as long as no Default has occurred and is
continuing), and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or an 80% Restricted Subsidiary thereof and (B) any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or an 80% Restricted Subsidiary thereof shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vi);
(vii) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness in connection with the acquisition by the Company or a
Restricted Subsidiary of assets or a new Restricted Subsidiary; provided
that such Indebtedness was incurred by the prior owner of such assets or
such Restricted Subsidiary prior to such acquisition by the Company or a
Restricted Subsidiary and was not incurred in connection with, or in
contemplation of, such acquisition by the Company or a Restricted
Subsidiary; and provided further that the principal amount of such
Indebtedness does not exceed $5.0 million at any time outstanding.
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(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging (i) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding; (ii) the value of foreign currencies purchased or received by
the Issuer in the ordinary course of business, or (iii) commodities
purchased in the ordinary course of business for use in a Permitted
Business and not for speculation;
(ix) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $5.0
million;
(xi) the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, provided, however, that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi); and
(xii) the issuance of Harvard Notes and Management Notes required to be
issued in accordance with agreements as in effect on the Issue Date;
provided that such Harvard Notes and Management Notes are issued in
accordance with clauses (vi) and (vii), respectively, of the second
paragraph of the covenant described under "--Restricted Payments."
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
of Permitted Debt described in clauses (i) through (xii) above or is entitled
to be incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on Disqualified Stock in the form of additional
shares of the same class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock for purposes
of this covenant; provided, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued.
Liens
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien securing Indebtedness or trade payables on any assets now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens, unless
all payments due under the Indenture and the Notes and Exchange Notes are
secured on an equal and ratable basis with the Indebtedness so secured until
such time as such is no longer secured by a Lien; provided that if such
Indebtedness is by its terms expressly subordinated to the Notes and Exchange
Notes or any Subsidiary Guarantee, the Lien securing such Indebtedness shall
be subordinate and junior to the Lien securing the Notes and Exchange Notes
and the Subsidiary Guarantees with the same relative priority as such
subordinate or junior Indebtedness shall have with respect to the Notes and
Exchange Notes and the Subsidiary Guarantees.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (i)(a) pay
dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (b) pay
any indebtedness owed to the Company or any of its Restricted Subsidiaries,
(ii) make loans or advances to the Company or any of its Restricted
Subsidiaries or (iii)
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transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries. However, the foregoing restrictions will not apply to
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of the Indenture, (b) the Indenture and
the Notes and Exchange Notes, (c) applicable law, (d) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided
that, in the case of Indebtedness, such Indebtedness was permitted by the terms
of the Indenture to be incurred, (e) customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent with past
practices, (f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (g) any agreement for the sale of a
Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale, (h) Permitted Refinancing Indebtedness, provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being refinanced, (i)
Credit Facilities provided that the restrictions contained therein are no more
restrictive, taken as a whole, with respect to such dividends and other
payments than those contained in Credit Facilities as in effect on the date of
the Indenture, (j) agreements for the sale of assets that restrict the transfer
of such assets pending such sale (k) restrictions on cash or other deposits or
net worth imposed by customers under contracts entered into in the ordinary
course of business, (l) Liens securing Indebtedness otherwise permitted to be
incurred pursuant to the provisions of the covenant described above under the
caption "--Liens" that limits the right of the debtor to dispose of the assets
securing such Indebtedness, (m) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other
similar agreements entered into in the ordinary course of business and (n)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Registration Rights Agreement, the Notes
and Exchange Notes and the Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of
the Company, the Company or the entity or Person formed by or surviving any
such consolidation or merger (if other than the Company), or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charged Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock."
Limitations on Asset Sales
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company
(or the Restricted Subsidiary, as the case may be) receives
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consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided that the amount of (x) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet), of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to ordinary settlement periods)
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received), shall be deemed to be cash for purposes of this
provision.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the
Company may apply such Net Proceeds (or an amount of cash equal thereto), at
its option, (a) to permanently repay (and, if applied to revolving credit
loans, reduce the commitments under) Senior Indebtedness of the Company or a
Guarantor or (b) to the acquisition of a majority of the assets of, or a
majority of the Voting Stock of, another Permitted Business, the making of a
capital expenditure or the acquisition of other long-term assets that are used
or useful in a Permitted Business. Pending the final application of any such
Net Proceeds, the Company may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the first sentence of this paragraph will be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company will be required to make an offer to all
Holders of Notes and Exchange Notes and all holders of other Indebtedness
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes and Exchange
Notes and such other Indebtedness that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
the Indenture and such other Indebtedness. To the extent that any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indenture.
If the aggregate principal amount of Notes and such other Indebtedness tendered
into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and Exchange Notes and such
other Indebtedness to be purchased on a pro rata basis. Upon completion of such
offer to purchase, the amount of Excess Proceeds shall be reset at zero.
Transactions with Affiliates
The Indenture will provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (ii) the
Company delivers to the Trustee (a) with respect to any Affiliate Transaction
or series of related Affiliate Transactions involving aggregate consideration
in excess of $1.0 million, a resolution of the Board of Directors set forth in
an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above and that such Affiliate Transaction has been approved by
a majority of the disinterested members of the Board of Directors and (b) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment
banking firm of national standing. Notwithstanding the foregoing, the following
items shall not be deemed to be Affiliate Transactions: (i) any
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employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (ii) transactions
between or among the Company and/or its Restricted Subsidiaries, (iii) payment
of reasonable directors fees to Persons who are not otherwise Affiliates of the
Company, (iv) transactions pursuant to agreements in effect on the Issue Date
(as in effect on such date), and (v) Restricted Payments (other than Restricted
Investments) that are permitted by the provisions of the Indenture described
above under the caption "--Restricted Payments."
Limitation on Issuances and Sales of Equity Interests in Restricted
Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit any
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Equity Interests in any Restricted Subsidiary of the
Company to any Person (other than the Company or a Restricted Subsidiary of the
Company), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Equity Interests in such Restricted Subsidiary and
(b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above under
the caption "--Asset Sales," and (ii) will not permit any Restricted Subsidiary
of the Company to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares and
issuances of Preferred Stock in accordance with the covenant described above
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock") to any Person other than to the Company or a Restricted Subsidiary of
the Company.
Business Activities
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not be
material to the Company and its Subsidiaries taken as a whole.
No Senior Subordinated Debt
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness and senior
in any respect in right of payment to the Exchange Notes and (ii) no Guarantor
will incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness of such Guarantor that is subordinate or junior in right of
payment to any Indebtedness of such Guarantor and senior in any respect in
right of payment to the Subsidiary Guarantee of such Guarantor.
Payments for Consent
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Exchange
Notes for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of the Indenture or the Exchange Notes unless such
consideration is offered to be paid or is paid to all Holders of the Notes and
Exchange Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
Reports
The Indenture provides that, for periods ending after December 31, 1997,
whether or not required by the rules and regulations of the Securities and
Exchange Commission (the "Commission"), so long as any Notes or Exchange Notes
are outstanding, the Company will furnish to the Holders of Notes and Exchnage
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the
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Company and its Restricted Subsidiaries separate from the financial condition
and results of operation of the Unrestricted Subsidiaries of the Company) and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports, in each case within the time periods specified
in the Commission's rules and regulations. In addition, following the
consummation of the exchange offer contemplated by the Registration Rights
Agreement, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability within the time periods specified
in the Commission's rules and regulations (unless the Commission will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company and
the Guarantors have agreed that, for so long as any Notes remain outstanding,
they will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
Additional Subsidiary Guarantees
The Indenture provides that (i) the Company will not permit any of its
Subsidiaries that is not a Guarantor to incur, guarantee or secure through the
granting of Liens the payment of any Indebtedness of the Company or any
Guarantor and (ii) the Company will not, and will not permit any of its
Subsidiaries to, pledge any intercompany notes representing obligations of any
of its Subsidiaries, to secure the payment of any Indebtedness of the Company
or any Guarantor, in each case unless such Subsidiary, the Company and the
Trustee execute and deliver a supplemental indenture evidencing such
Subsidiary's Guarantee (providing for the unconditional guarantee by such
Subsidiary, on a senior subordinated basis, of the Exchange Notes).
EVENTS OF DEFAULT AND REMEDIES
The Indenture will provide that each of the following constitutes an Event
of Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes or Exchange Notes (whether or
not prohibited by the subordination provisions of the Indenture); (ii) default
in payment when due of the principal of or premium, if any, on the Notes or
Exchange Notes (whether or not prohibited by the subordination provisions of
the Indenture); (iii) failure by the Company or any of its Restricted
Subsidiaries to comply with the provisions described under the captions "--
Change of Control," "--Restricted Payments" or "--Incurrence of Indebtedness
and Issuance of Preferred Stock", (iv) failure by the Company or any of its
Restricted Subsidiaries for 60 days after notice to comply with any of its
other agreements in the Indenture or the Notes or Exchange Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted Subsidiaries) whether
such Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vi) failure
by the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) except as permitted by the
Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect
to the Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes and Exchange
Notes may declare all the Notes and Exchange Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any significant Restricted Subsidiary
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or any group of Restricted Subsidiaries that, taken together, would constitute
a Significant Restricted Subsidiary, all outstanding Notes and Exchange Notes
will become due and payable without further action or notice. Holders of the
Exchange Notes may not enforce the Indenture or the Exchange Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes and Exchange Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Exchange Notes notice of any continuing Default
or Event of Default (except a Default or Event of Default relating to the
payment of principal or interest) if it determines that withholding notice is
in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Exchange Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Exchange Notes. If an Event of
Default occurs prior to April 1, 2003 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Exchange Notes
prior to April 1, 2003 then the premium specified in the Indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the Exchange Notes.
The Holders of a majority in aggregate principal amount of the Notes and
Exchange Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes and Exchange Notes waive any existing Default or
Event of Default and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of interest on, or the principal
of, the Notes and Exchange Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Exchange Notes, the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Exchange Notes
by accepting an Exchange Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Exchange
Notes. Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Exchange Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Exchange
Notes to receive payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages on such Exchange Notes when such payments are
due from the trust referred to below, (ii) the Company's obligations with
respect to the Exchange Notes concerning issuing temporary Exchange Notes,
registration of Exchange Notes, mutilated, destroyed, lost or stolen Exchange
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and the Company's obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Exchange Notes. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Exchange Notes.
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In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes and Exchange Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Notes and Exchange Notes on the stated
maturity or on the applicable redemption date, as the case may be, and the
Company must specify whether the Notes and Exchange Notes are being defeased to
maturity or to a particular redemption date; (ii) in the case of Legal
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding Notes and Exchange Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the sale amounts, in
the same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes and Exchange Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant Defeasance
had not occurred; (iv) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit) or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes and Exchange Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (viii) the Company must
deliver to the Trustee an Officers' Certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Exchange Note selected for redemption. Also, the Company is not required to
transfer or exchange any Exchange Note for a period of 15 days before a
selection of Notes to be redeemed.
The registered Holder of an Exchange Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Exchange Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes and Exchange
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes and
Exchange Notes), and any existing default or compliance with any provision of
the Indenture or the Notes and Exchange Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes and
Exchange Notes (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes and Exchange
Notes).
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Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Exchange Notes held by a non-consenting Holder): (i)
reduce the principal amount of Notes and Exchange Notes whose Holders must
consent to an amendment, supplement or waiver, (ii) reduce the principal of or
change the fixed maturity of any Exchange Note or alter the provisions with
respect to the redemption of the Notes (other than provisions relating to the
covenants described above under the caption "--Repurchase at the Option of
Holders"), (iii) reduce the rate of or change the time for payment of interest
on any Exchange Note, (iv) waive a Default or Event of Default in the payment
of principal of or premium, if any, or interest on the Exchange Notes (except a
rescission of acceleration of the Notes and Exchange Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and Exchange Notes
and a waiver of the payment default that resulted from such acceleration), (v)
make any Exchange Note payable in money other than that stated in the Exchange
Notes, (vi) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of Holders of Exchange Notes to receive
payments of principal of or premium, if any, or interest on the Exchange Notes,
(vii) waive a redemption payment with respect to any Exchange Note (other than
a payment required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders"), (viii) release any Guarantor from any
of its obligations under its Subsidiary Guarantee or the Indenture, except in
accordance with the terms of the Indenture or (ix) make any change in the
foregoing amendment and waiver provisions. In addition, any amendment to the
provisions of Article 10 of the Indenture (which relate to subordination) will
require the consent of the Holders of at least 75% in aggregate principal
amount of the Notes and Exchange Notes then outstanding if such amendment would
adversely affect the rights of Holders of Notes and Exchange Notes.
Notwithstanding the foregoing, without the consent of any Holder of Notes and
Exchange Notes, the Company, the Guarantors and the Trustee may amend or
supplement the Indenture or the Exchange Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Exchange Notes in addition to or
in place of certificated Exchange Notes, to provide for the assumption of the
Company's or any Guarantor's obligations to Holders of Exchange Notes in the
case of a merger or consolidation or sale of all or substantially all of the
Company's assets, to provide for the issuance of Additional Notes in accordance
with the provisions set forth in the Indenture on the Issue Date, to make any
change that would provide any additional rights or benefits to the Holders of
Exchange Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue, or resign.
The Holders of a majority in principal amount of the then outstanding Notes
and Exchange Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required,
in the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Exchange Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i) Indebtedness
of any other Person existing at the time such other Person is merged with or
into or became a Subsidiary of such specified Person, including, without
limitation, Indebtedness incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming a Subsidiary of such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by the provisions of the Indenture described
above under the caption "--Certain Covenants--Repurchases of Notes at the
Option of Holders upon a Change of Control" and/or the provisions described
above under the caption "--Certain Covenants--Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue by any Restricted Subsidiaries of the Company of any Equity Interests of
such Restricted Subsidiary and the sale by the Company or any of its Restricted
Subsidiaries of Equity Interest of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $1.0
million or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing, the following items shall not be deemed to be Asset Sales: (i) a
transfer of assets by the Company to an 80% Restricted Subsidiary or by a
Restricted Subsidiary to the Company or to an 80% Restricted Subsidiary, (ii)
an issuance of Equity Interests by a Restricted Subsidiary to the Company or to
an 80% Restricted Subsidiary, and (iii) a Restricted Payment that is permitted
by the covenant described above under the caption "--Restricted Payments."
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Borrowing Base" means, as of any date, with respect to any Person, an amount
equal to the sum of 85% of accounts receivable of such Person and its
Restricted Subsidiaries as of such date that are not more than 120 days past
due, plus 65% of the book value of all inventory owned by such Person and its
Restricted Subsidiaries as of such date, in each case calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or inventory as of a
specific date, the Company may utilize the most recent available information
for purposes of calculating the Borrowing Base.
"Capital Lease Obligation" means, at the time any determination thereof is to
be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance
with GAAP.
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"Capital Stock" means (i) in the case of a corporation, corporate stock, (ii)
in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits 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 party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500 million and a Thompson Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition and (vi) money
market funds the assets of which constitute Cash Equivalents of the kinds
described in clauses (i)-(v) of this definition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any "person" (as defined above) other than a Permitted Transferee
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of more
than 50% of the Voting Stock of the Company (measured by voting power rather
than number of shares); (iv) the first day on which a majority of the members
of the Board of Directors of the Company are not Continuing Directors; or (v)
the Company consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Company, in any such
event pursuant to a transaction in which any of the outstanding Voting Stock of
the Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance).
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations
commissions, discounts and other fees and charges incurred in respect of letter
of credit of bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including
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amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (including unrealized foreign exchange losses recorded during such
period by such Person and its Restricted Subsidiaries provided, however, that
any such losses that are realized in a subsequent period shall be deducted from
Consolidated Cash Flow in the period when so realized and excluding any other
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income,
minus (v) non-cash items increasing such Consolidated Net Income for such
period, in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the amounts described in clause (ii) and
clause (iv) relating to any Restricted Subsidiary that is party to any
agreement that has not been legally waived that restricts the declaration or
payment of dividends or similar distributions shall be included in EBITDA only
to the extent (and in the same proportion) that the Net income of such
Restricted Subsidiary was included in calculating Consolidated Net Income
(without giving effect to clause (ii) of the definition thereof) for so long as
such Restricted Subsidiary is party to any agreement that has not been legally
waived that restricts the declaration or payment of dividends or similar
distributions.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a 80% Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iv) the cumulative effect of a
change in accounting principles shall be excluded and (v) the Net Income (but
not loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that
by its terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect of the year of
such declaration and payment, but only to the extent of any cash received by
such Person upon issuance of such preferred stock, less (x) all write-ups
(other than write-ups resulting from foreign currency translation and write-ups
of tangible assets of a going concern business made within 12 months after the
acquisition of such business) subsequent to the date of the Indenture in the
book value of any asset owned by such Person or a consolidated Subsidiary of
such Person, (y) all Investments as of such date in unconsolidated Subsidiaries
and in Persons that are not Subsidiaries (except, in each case, Permitted
Investments), and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time such nomination
or election.
"Credit Facilities" means, with respect to the Company or a Restricted
Subsidiary, one or more debt facilities (including, without limitation, the New
Credit Facility) or commercial paper facilities with banks or
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other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time. Indebtedness under Credit Facilities outstanding on the
date on which Notes were first issued and authenticated under the Indenture
shall be deemed to have been incurred on such date in reliance on the exception
provided by clause (i) of the definition of Permitted Debt.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Indebtedness" means (i) any Indebtedness outstanding under
the New Credit Facility and (ii) any other Senior Indebtedness permitted under
the Indenture that has been designated by the Company as "Designated Senior
Indebtedness" and which Indebtedness, at the time of such designation, was in
the aggregate principal amount of $25.0 million or more.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes and Exchange Notes mature, provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require the Company to repurchase such Capital Stock
upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to
such provisions unless such repurchase or redemption complies with the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"80% Restricted Subsidiary" means any Restricted Subsidiary of the Company at
least 80% of each outstanding class of Equity Interests of which shall at the
time be owned by the Company or one or more 80% Restricted Subsidiaries of the
Company.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest of such Person and its Restricted Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries and (iv) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of the Company (other than Disqualified
Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal statutory, effective state and local
statutory tax rates of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
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"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit or similar borrowings) or
issues or redeems preferred stock subsequent to the commencement of the period
for which the Fixed Charge Coverage Ratio is being calculated but prior to the
date on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
Guarantee or redemption of Indebtedness, or such issuance or redemption of
preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter reference period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii)
the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
be excluded, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Harvard Notes" means notes of the Company which (i) are pari passu in right
of payment with the Notes and Exchange Notes, (ii) mature one year following
the final maturity date of the Notes and Exchange Notes, (iii) are on terms,
including covenants, no more restrictive than those contained in the Notes and
Exchange Notes and (iv) bear non-default interest at a rate not in excess of
25% per annum in cash.
"Harvard Warrant" means the warrant to purchase up 6.0% of the common stock
of the Company that was held by Harvard Private Capital Holdings, Inc. on the
Issue Date, and the common stock of the Company subsequently issued upon
exercise thereof.
"Guarantors" means (i) each domestic Subsidiary of the Company on the Issue
Date and (ii) any other subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture, and their respective
successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money (whether or not
borrowed by such Person) or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the
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purchase price of any property or representing any Hedging Obligations,
excepting from the foregoing any such balance that constitutes an accrued
expense or trade payable, if and to the extent any of the foregoing (other than
letters of credit and Hedging Obligations) would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall
be (i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "--Certain Covenants--Restricted Payments."
"Issue Date" means the closing date for the sale and original issuance of the
Notes under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Management Notes" means subordinated promissory notes required to be issued
to members of management of the Company pursuant to the Shareholder's Agreement
which are subordinated to the Notes and Exchange Notes on the terms set forth
in the Indenture, contain no covenants or events of default (other than with
respect to payments thereon which do not violate the Indenture and certain
bankruptcy events) and bear interest at the rate specified in the Shareholder's
Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends, excluding, however, (i) any gain (but not loss),
together with any related provision for taxes on such gain (but not loss),
realized in connection with (a) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than debt under the New Credit Facility) secured by a Lien on
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the asset or assets that were the subject of such Asset Sale and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"New Credit Facility" means that certain Amended and Restated Loan Agreement
dated as of March 23, 1998 among the Company, the lenders and other parties
thereto from time to time and NBD Bank, as Agent, together with all related
documents executed or delivered pursuant thereto at any time (including,
without limitation, all mortgages, guarantees, security agreements and all
other collateral and security documents), in each case as such agreements may
be amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder provided that such
increase in borrowings is within the definition of Permitted Debt or is
otherwise permitted under the covenant described under "--Incurrence of
Indebtedness and Issuance of Preferred Stock") or adding Subsidiaries as
additional borrowers or guarantors thereunder in accordance with the terms of
the Indenture) all or any portion of the Indebtedness and other Obligations
under such agreement or agreements or any successor or replacement agreement or
agreements, and whether by the same or any other agent, lender or group of
lenders.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender, and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity, and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or assets
of the Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the business conducted by the Company and its
Restricted Subsidiaries on the Issue Date and businesses reasonably related
thereto.
"Permitted Investments" means (a) any Investment in the Company or in an 80%
Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any 80% Restricted Subsidiary of the
Company in a Person, if as a result of such investment (i) such Person becomes
an 80% Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or an 80% Restricted
Subsidiary of the Company; (d) any Investment made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Certain
Covenants--Limitations on Asset Sales"; (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; and (f) other Investments in any Person having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company or debt
securities that are subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the
same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness pursuant to the Indenture.
"Permitted Liens" means (i) Liens on assets of the Company or any of the
Guarantors securing Senior Indebtedness under the New Credit Facility which
Indebtedness was permitted by the terms of the Indenture to be incurred, and
Liens on assets of Restricted Subsidiaries that are not Guarantors securing
Indebtedness under
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the New Credit Facility which Indebtedness was permitted by the terms of the
Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing
at the time of acquisition thereof by the Company or any Subsidiary of the
Company, provided that such Liens were in existence prior to the contemplation
of such acquisition; (v) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business; (v) Liens to secure
Indebtedness (including Capital Lease Obligations) permitted by clause (iv) of
the second paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock" covering only the assets acquired with such
Indebtedness; (vi) Liens existing on the date of the Indenture; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (viii) Liens incurred in the ordinary course of
business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary course
of business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Subsidiary; (ix) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries; (x) Liens on assets of the Company securing Senior Indebtedness
of the Company that was permitted to be incurred by the terms of the Indenture
and Liens on assets of a Guarantor securing Senior Indebtedness of such
Guarantor which Indebtedness was permitted to be incurred by the terms of the
Indenture; and (xi) Liens on assets of Restricted Subsidiaries securing
Indebtedness which is not subordinated to any other Indebtedness of such
Restricted Subsidiary and which is permitted to be incurred under the
Indenture.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Permitted Transferees" means (i) the heirs, executors, administrators,
personal representative of the estate of, testamentary trustees, legatees or
beneficiaries of John H. Welker and (ii) a trust, the vested beneficiaries of
which, or a corporation or partnership, the stockholders or general or limited
partners of which, include only John H. Welker or his spouse or lineal
descendants.
"Public Offering" means an underwritten public offering of common stock
(other than Disqualified Stock) of the Company, pursuant to an effective
registration statement filed with the Commission in accordance with the
Securities Act.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Indebtedness" means (i) all Indebtedness of the Company or any
Subsidiary Guarantor outstanding under the New Credit Facility and all Hedging
Obligations with respect thereto, and in all cases whether now outstanding or
hereafter created, assumed or incurred and including, without limitation,
interest accruing subsequent to the filing of a petition in bankruptcy at the
rate provided in the relevant document, whether or not an allowed claim, (ii)
any other Indebtedness (other than Harvard Notes and Management Notes)
permitted to be incurred by the Company or any Subsidiary Guarantor under the
terms of the Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes or any Guarantor's Subsidiary Guarantee of the
Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Indebtedness will not include
(w) any liability for federal, state, local or other taxes owed or owing by the
Company or any of its Subsidiaries, (x) any Indebtedness of the Company or any
of its Subsidiaries to any Subsidiary or other Affiliate, (y) any trade
payables or (z) any Indebtedness that is incurred in violation of the
Indenture.
"Shareholders' Agreement" means the Amended and Restated Stock Transfer
Agreement dated December 28, 1995 among the Company, John H. Welker and the
other shareholders party thereto, as in effect on the Issue Date.
"Significant Restricted Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of the Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary; (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (x) to subscribe for additional Equity Interests or (y)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "Certain Covenants--Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such
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Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock," the Company
shall be in default of such covenant). The Board of Directors of the Company
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under the covenant described under the caption
"Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock," calculated on a pro forma basis as if such designation had occurred at
the beginning of the four-quarter reference period and (ii) no Default or
Event of Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
Book-Entry, Delivery and Form
The Exchange Notes initially will be represented by one or more Exchange
Notes in registered, global form without interest coupons (the "Global
Exchange Notes"). The Global Exchange Notes will be deposited upon issuance
with the Trustee as custodian for The Depository Trust Company ("DTC"), in New
York, New York, and registered in the name of DTC or its nominee, in each case
for credit to an account of a direct or indirect participant in DTC as
described below. Except as set forth below, the Global Exchange Notes may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Exchange
Notes may not be exchanged for Exchange Notes in certificated form except in
the limited circumstances described below. See "--Exchange of Book-Entry
Exchange Notes for Certificated Exchange Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Exchange Notes will not be entitled to receive physical delivery of
Certificated Exchange Notes (as defined below).
Transfers of beneficial interests in the Global Exchange Notes will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, those of the Euroclear System
("Euroclear") and Cedel Bank, societe anonyme ("Cedel")), which may change
from time to time.
Initially, the Trustee will act as Paying Agent and Registrar. The Exchange
Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
Depository Procedures
The following description of the operations and procedures of DTC, Euroclear
and Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them from time to time. The Company takes no
responsibility
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for these operations and procedures and urges investors to contact the system
or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic book-
entry changes in accounts of its Participants. The Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to DTC's system is also available to
other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly (collectively, the "Indirect Participants"). Persons
who are not Participants may beneficially own securities held by or on behalf
of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants
and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by
it, (i) upon deposit of the Global Exchange Notes, DTC will credit the
accounts of Participants designated by the Exchange Agent with portions of the
principal amount of the Global Exchange Notes and (ii) ownership of such
interests in the Global Exchange Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC
(with respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interest in the
Global Exchange Notes).
Investors in the Global Exchange Notes may hold their interests therein
directly through DTC, if they are Participants in such system, or indirectly
through organizations (including Euroclear and Cedel) which are Participants
in such system. Euroclear and Cedel will hold interests in the Global Exchange
Notes on behalf of their participants through customers' securities accounts
in their respective names on the books of their respective depositories, which
are Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear, and Citibank, N.A., as operator of Cedel. All interests in a Global
Exchange Note, including those held through Euroclear or Cedel, may be subject
to the procedures and requirements of DTC. Those interests held through
Euroclear or Cedel may also be subject to the procedures and requirements of
such systems. The laws of some states require that certain persons take
physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in a Global
Exchange Note to such persons will be limited to that extent. Because DTC can
act only on behalf of Participants, which in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having beneficial
interests in a Global Exchange Note to pledge such interests to persons or
entities that do not participate in the DTC system, or otherwise take actions
in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL EXCHANGE NOTES
WILL NOT HAVE EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE
PHYSICAL DELIVERY OF EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE
CONSIDERED THE REGISTERED OWNERS OR "HOLDERS" THEREOF UNDER THE INDENTURE FOR
ANY PURPOSE.
Payments in respect of the principal of, and premium, if any, Liquidated
Damages, if any, and interest on a Global Exchange Note registered in the name
of DTC or its nominee will be payable to DTC in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee will treat the persons in whose names the Exchange Notes,
including the Global Exchange Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company, the Trustee nor any agent of
the Company or the Trustee has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interest in the Global Exchange Notes,
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or for maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in the Global Exchange Notes or (ii) any other matter
relating to the actions and practices of DTC or any of its Participants or
Indirect Participants. DTC has advised the Company that its current practice,
upon receipt of any payment in respect of securities such as the Exchange
Notes (including principal and interest), is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in the principal amount of
beneficial interest in the relevant security as shown on the records of DTC
unless DTC has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Exchange Notes will be governed by standing instructions
and customary practices and will be the responsibility of the Participants or
the Indirect Participants and will not be the responsibility of DTC, the
Trustee or the Company. Neither the Company nor the Trustee will be liable for
any delay by DTC or any of its Participants in identifying the beneficial
owners of the Exchange Notes, and the Company and the Trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its
nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Exchange Notes are expected to be eligible to trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will, therefore, settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its Participants. See "--Same
Day Settlement and Payment."
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same day funds, and transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one hand, and
Euroclear or Cedel participants, on the other hand, will be effected through
DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the
case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or Cedel, as
the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Exchange Note in DTC,
and making or receiving payment in accordance with normal procedures for same-
day funds settlement applicable to DTC. Euroclear participants and Cedel
participants may not deliver instructions directly to the depositories for
Euroclear or Cedel.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Exchange Notes only at the direction of one or more
Participants to whose account DTC has credited the interests in the Global
Exchange Notes and only in respect of such portion of the aggregate principal
amount of the Exchange Notes as to which such Participant or Participants has
or have given such direction. However, if there is an Event of Default under
the Exchange Notes, DTC reserves the right to exchange the Global Exchange
Notes for Exchange Notes in certificated form, and to distribute such Exchange
Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the Global Exchange Notes among
Participants in DTC, Euroclear and Cedel, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee nor any of their
respective agents will have any responsibility for the performance by DTC,
Euroclear or Cedel or their respective participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes
A Global Exchange Note is exchangeable for definitive Exchange Notes in
registered certificated form ("Certificated Exchange Notes") if (i) DTC (x)
notifies the Company that it is unwilling or unable to continue as depositary
for the Global Exchange Notes and the Company thereupon fails to appoint a
successor depositary
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or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of the Certificated Exchange Notes or (iii) there
shall have occurred and be continuing a Default or Event of Default with
respect to the Exchange Notes. In addition, beneficial interests in a Global
Exchange Note may be exchanged for Certificated Exchange Notes upon request
but only upon prior written notice given to the Trustee by or on behalf of DTC
in accordance with the Indenture. In all cases, Certificated Exchange Notes
delivered in exchange for any Global Exchange Note or beneficial interests
therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures).
Exchange of Certificated Exchange Notes for Book-Entry Exchange Notes
Exchange Notes issued in certificated form may not be exchanged for
beneficial interests in any Global Exchange Note unless the transferor first
delivers to the Trustee a written certificate (in the form provided in the
Indenture) to the effect that such transfer will comply with the appropriate
transfer restrictions applicable to such Exchange Notes.
Same Day Settlement and Payment
The Indenture requires that payments in respect of the Exchange Notes
represented by the Global Exchange Notes (including principal, premium, if
any, interest and Liquidated Damages, if any) be made by wire transfer of
immediately available funds to the accounts specified by the Global Exchange
Note Holder. With respect to Exchange Notes in certificated form, the Company
will make all payments of principal, premium, if any, interest and Liquidated
Damages, if any, by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address. The Notes
represented by the Global Exchange Notes are expected to be eligible to trade
in the Depositary's Same-Day Funds Settlement System, and any secondary market
trading activity in such Exchange Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in any certificated Exchange Notes will also be settled
in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Exchange Note from a
Participant in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or Cedel participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Cedel) immediately following the settlement date of DTC. DTC has advised the
Company that cash received in Euroclear or Cedel as a result of sales of
interests in a Global Exchange Note by or through a Euroclear or Cedel
participant to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or
Cedel cash account only as of the business day for Euroclear or Cedel
following DTC's settlement date.
DESCRIPTION OF NOTES
The Notes evidence the same indebtedness as that which will be evidenced by
the Exchange Notes and are entitled to the benefits of the Indenture. The form
and terms of the Notes are the same as the form and terms of the Exchange
Notes except that none of the Notes was registered under the Securities Act.
Therefore, the Notes may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act. Accordingly, the Notes bear legends
restricting the transfer thereof. In addition, with certain exceptions, the
Notes may not be sold or transferred to, or acquired on behalf of, any pension
or welfare plan (as described in Section 3 of the Employee Retirement Income
Security Act of 1974). For a description of the terms of the Exchange Notes,
see "Description of Exchange Notes."
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REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement, pursuant to which they agreed to file with the
Commission the Registration Statement on the appropriate form under the
Securities Act with respect to the Exchange Notes. Upon the effectiveness of
the Registration Statement, the Company and the Guarantors will offer to the
Holders of Transfer Restricted Securities pursuant to the Exchange Offer who
are able to make certain representations the opportunity to exchange their
Transfer Restricted Securities for Exchange Notes. If (i) the Company and the
Guarantors are not permitted to consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable law or Commission policy or (ii)
any Holder of Transfer Restricted Securities notifies the Company prior to the
20th day following consummation of the Exchange Offer that (A) it is
prohibited by law or Commission policy from participating in the Exchange
Offer or (B) that it may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and this
Prospectus is not appropriate or available for such resales or (C) that it is
a broker-dealer and owns Notes acquired directly from the Company or an
affiliate of the Company, the Company and the Guarantors will file with the
Commission a Shelf Registration Statement to cover resales of the Notes by the
Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company
and the Guarantors will use their best efforts to cause the applicable
registration statement to be declared effective as promptly as possible by the
Commission. For purposes of the foregoing, "Transfer Restricted Securities"
means (i) Each Note and the related Subsidiary Guarantees, until the earliest
to occur of (a) the date on which such Note is exchanged in the Exchange Offer
for an Exchange Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Note has been disposed of in accordance
with a Shelf Registration Statement, or (c) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Act and (ii) each
Exchange Note acquired by a broker-dealer for its own account as a result of
market making activities or other trading activities until the date on which
such Exchange Note is disposed of by a broker-dealer pursuant to the "Plan of
Distribution" section of this Prospectus (including the delivery of this
Prospectus).
The Registration Rights Agreement provides that (i) the Company will file a
registration statement relating to the Exchange Offer with the Commission on
or prior to 45 days after the Issue Date (which requirement has been satisfied
by the filing of the Registration Statement), (ii) the Company and the
Guarantors will use their best efforts to have the Registration Statement
declared effective by the Commission on or prior to 135 days after the Issue
Date, (iii) unless the Exchange Offer would not be permitted by applicable law
or Commission policy, the Company and the Guarantors will commence the
Exchange Offer and use their best efforts to issue on or prior to 30 business
days after the date on which the Registration Statement was declared effective
by the Commission, Exchange Notes in exchange for all Notes tendered prior
thereto in the Exchange Offer and (iv) if obligated to file the Shelf
Registration Statement, the Company and the Guarantors will use their best
efforts to file the Shelf Registration Statement with the Commission on or
prior to 45 days after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the Commission on or prior to 135
days after such obligation arises. If (a) the Company fails to file any of the
registration statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such registration
statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), or (c) the
Company fails to consummate the Exchange Offer within 30 business days of the
Effectiveness Target Date with respect to the Registration Statement, or (d)
the Shelf Registration Statement or the Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each affected Holder of Transfer Restricted Securities,
with respect to the first 90-day period immediately following the occurrence
of the first Registration Default in an amount equal to $.05 per week per
$1,000 principal amount of Transfer Restricted Securities held by such Holder.
The amount of the Liquidated Damages will increase by an additional $.05 per
week per $1,000 principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been
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cured, up to a maximum amount of Liquidated Damages for all Registration
Defaults of $.50 per week per $1,000 principal amount of Transfer Restricted
Securities. All accrued Liquidated Damages will be paid by the Company on each
Damages Payment Date to the Global Note Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of certificated Notes
by wire transfer to the accounts specified by them or by mailing checks to
their registered addresses if no such accounts have been specified. Following
the cure of all Registration Defaults, the accrual of Liquidated Damages will
cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer, and Holders of Transfer Restricted
Securities will be required to deliver certain information to be used in
connection with the Shelf Registration Statement and to provide comments on
the Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Holders of Transfer
Restricted Securities included in the Shelf Registration Statement and benefit
from the provisions regarding Liquidated Damages set forth above.
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CERTAIN FEDERAL TAX CONSIDERATIONS FOR FOREIGN PERSONS
THIS SUMMARY IS OF A GENERAL NATURE AND IS INCLUDED HEREIN SOLELY FOR
INFORMATIONAL PURPOSES. IT IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED
AS BEING, LEGAL OR TAX ADVICE. NO REPRESENTATION WITH RESPECT TO THE
CONSEQUENCES TO ANY PARTICULAR PURCHASER OF THE EXCHANGE NOTES IS MADE.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THEIR PARTICULAR CIRCUMSTANCES.
The following discussion is a summary of certain United States federal
income and estate tax consequences of the ownership and disposition of the
Exchange Notes by a Foreign Person (as defined), based upon current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), judicial
decisions, and administrative interpretations, all of which are subject to
change at any time by legislative, judicial or administrative action. Any such
changes may be applied retroactively in a manner that could adversely affect a
holder of the Exchange Notes. There can be no assurance that the Internal
Revenue Service (the "IRS") will not challenge the conclusions stated below,
and no ruling from the IRS has been or will be sought on any of the matters
discussed below.
The following discussion does not purport to be a complete analysis of all
the potential federal income tax effects relating to the ownership and
disposition of the Exchange Notes by Foreign Persons or any other person, and,
without limiting the generality of the foregoing, this summary does not
address the effect of any special rules applicable to certain types of
purchasers (including dealers in securities, insurance companies, financial
institutions, tax-exempt entities, and persons who hold Exchange Notes as part
of a straddle, hedge, or conversion transaction). This discussion is limited
to Foreign Persons other than former United States citizens described in
Section 877(a) of the Code or former residents of the United States described
in Sections 877(e) or 7701(b)(10) of the Code and is limited to Foreign
Persons who hold the Exchange Notes as capital assets within the meaning of
Section 1221 of the Code. This discussion does not address the effect of any
state, local, or foreign tax laws. Holders of Exchange Notes who are Foreign
Persons are urged to consult their own tax advisors regarding the specific tax
consequences to them of owning and disposing of Exchange Notes.
CERTAIN U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO FOREIGN PERSONS
For purposes of this discussion, the term "U.S. Person" means (i) an
individual who is a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or any state thereof, (iii) an estate the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust.
The term "Foreign Person" means a person other than a U.S. Person.
Any interest or Liquidation Damages earned on an Exchange Note by a holder
who is a Foreign Person will be considered "portfolio interest" and will not
be subject to United States federal income tax, and will not be subject to
United States tax withholding (except for "backup withholding" in the
circumstances described below), if:
(1) such Foreign Person is neither (i) a "controlled foreign corporation"
that is related to the Issuer as described in Section 881(c)(3)(C) of the
Code, (ii) a bank that has purchased Exchange Notes pursuant to an
extension of credit made in the ordinary course of its trade or business,
nor (iii) a person who owns, directly or under the attribution rules of
Section 871(h)(3)(C) of the Code, 10% or more of the voting power in the
Company;
(2) the person who would otherwise be required to withhold tax from
payments of such interest (the "withholding agent") is furnished an IRS
Form W-8 (or equivalent), signed under penalties of perjury, identifying
the beneficial owner of the Exchange Note and stating that the beneficial
owner of the Exchange Note is a Foreign Person; and
(3) the interest is not effectively connected with the conduct of a trade
or business within the United States by the Foreign Person.
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Any interest or Liquidated Damages (other than "portfolio interest") earned
on an Exchange Note by a Foreign Person will be subject to United States
federal income tax and withholding at a rate of 30% (or at a lower rate under
an applicable tax treaty) if this interest or Liquidated Damages is not
effectively connected with the conduct of a trade or business within the
United States by this Foreign Person.
Any interest or Liquidated Damages earned on an Exchange Note, and any gain
realized on a sale or exchange (including a redemption) of an Exchange Note,
that is effectively connected with the conduct of a trade or business within
the United States by the Foreign Person will be subject to United States
federal income tax at regular graduated rates (and, if the Foreign Person is a
corporation, may also be subject to a United States branch profits tax). Such
income will not be subject to United States income tax withholding, however,
if the Foreign Person furnishes the proper certificate to the withholding
agent.
Any gain realized by a Foreign Person on a sale or exchange (including a
redemption) of an Exchange Note will not be subject to United States federal
income tax or withholding if (i) the gain is not effectively connected with
the conduct of a trade or business within the United States by the Foreign
Person, and (ii) in the case of a Foreign Person who is an individual, such
individual is not present in the United States for 183 days or more in the
taxable year of the sale or exchange, or the individual does not have a "tax
home" in the United States and the gain is not attributable to an office or
other fixed place of business maintained in the United States by the
individual.
For United States estate tax purposes, the gross estate of an individual who
is not a U.S. citizen or resident (as specially defined for United States
estate tax purposes) and who holds an Exchange Note at the time of his death
is not deemed to include such Exchange Note if the interest thereon
constitutes "portfolio interest" (without regard to whether the "portfolio
interest" certification requirements are satisfied).
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 and backup withholding will not apply
to payments made by the Issuer or any agent thereof to a holder of an Exchange
Note if the holder has furnished a certification under penalties of perjury
that it is a Foreign Person, or has otherwise demonstrated that it qualifies
for an applicable exemption, provided that neither the Issuer nor such agent
has actual knowledge to the contrary. The interest and any Liquidated Damages
earned by a Foreign Person will generally be reported, however, by the Issuer
on IRS Form 1042S.
If a Foreign Person sells an Exchange Note through a United States office of
a broker, the broker is required to file an information report and is required
to withhold 31% of the sale proceeds unless the Foreign Person certifies under
penalties of perjury its non-United States status (and the payor does not have
actual knowledge to the contrary) or otherwise establishes an exemption. If a
Foreign Person sells an Exchange Note through a foreign office of a broker,
backup withholding is not required; but information reporting is required if
the broker does not have documentary evidence that the holder is a Foreign
Person and if (i) the broker is a U.S. Person, (ii) the broker is a
"controlled foreign corporation" (as defined in Section 957 of the Code), or
(iii) the broker derives 50% or more of its gross income for a specified three
year period from the conduct of a trade or business in the United States.
Any amount withheld from payment to a holder under the backup withholding
rules will generally be allowed as a credit against such holder's United
States federal income tax liability, if any, and may entitle such holder to a
refund, provided that the required information is furnished to the IRS.
NEW FINAL REGULATIONS
Recently, the U.S. Treasury Department has promulgated final regulations
regarding the withholding and information reporting rules discussed above. In
general, the final regulations do not significantly alter the substantive
withholding and information reporting requirements but unify current
certification procedures and
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forms and clarify reliance standards. Special rules apply which permit the
shifting of primary responsibility for withholding to certain financial
intermediaries acting on behalf of beneficial owners. The final regulations
are generally effective for payments made after December 31, 1998, subject to
certain transition rules. Foreign Persons are urged to consult their own tax
advisors with respect to these final regulations.
PLAN OF DISTRIBUTION
Any broker or dealer registered under the Exchange Act (a "Broker-Dealer")
who holds Transfer Restricted Securities that were acquired for the account of
such Broker-Dealer as a result of market-making activities or other trading
activities (other than Notes acquired from the Issuer or any Affiliate of the
Company) may exchange such Transfer Restricted Securities pursuant to the
Exchange Offer. Each Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by any Broker-Dealer in connection
with resales of Exchange Notes received in exchange for Notes where such Notes
were acquired as a result of market-making activities or other trading
activities. The Issuer and Guarantors have agreed that, for a period of one
year after the Exchange Offer is consummated, they will make this Prospectus,
as amended or supplemented, available to any Broker-Dealer for use in
connection with any such resale. In addition, until , 1998 (90 days after
commencement of the Exchange Offer), all dealers effecting transactions in the
Exchange Notes may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Broker-Dealers. Exchange Notes received by Broker-Dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to the purchaser or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such
Exchange Notes. Any Broker-Dealer that resells the Exchange Notes that were
received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act,
and any profit on any such resale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that,
by acknowledging that it will deliver and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of one year after the date of consummation of the Exchange
Offer, the Issuer will promptly send additional copies of this Prospectus and
any amendment or supplement to this Prospectus to any Broker-Dealer that
requests such documents in the Letter of Transmittal. The Issuer has agreed to
pay certain expenses incident to the Exchange Offer, other than commission or
concessions of any brokers or dealers, and will indemnify the holders of the
Exchange Notes (including any Broker-Dealers) against certain liabilities,
including liabilities under the Securities Act.
By acceptance of the Exchange Offer, each Broker-Dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Issuer of the happening of any event which
makes any statement in this Prospectus untrue in any material respect or which
requires the making of any changes in this Prospectus in order to make the
statements therein not misleading (which notice the Issuer agrees to deliver
promptly to such Broker-Dealer), such Broker-Dealer will suspend use of the
Prospectus until the Issuer and Guarantors have amended or supplemented this
Prospectus to correct such misstatement or omission and have furnished copies
of the amended or supplemental Prospectus to such Broker-Dealer.
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LEGAL MATTERS
The validity of the Exchange Notes will be passed on for the Company by
Miller, Canfield, Paddock and Stone, P.L.C., Detroit, Michigan.
EXPERTS
The financial statements of the Company at December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997 that are included
in this Prospectus have been audited by Ernst & Young LLP, independent
accountants, as indicated in their reports appearing herein and elsewhere in
the Registration Statement. Such financial statements have been included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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NUMATICS, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................. F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets--December 31, 1997 and 1996.................. F-3
Consolidated Statements of Operations--For the Years Ended December 31,
1997, 1996 and 1995..................................................... F-4
Consolidated Statements of Stockholders' Equity (Deficiency)--For the
Years Ended December 31, 1997, 1996 and 1995............................ F-5
Consolidated Statements of Cash Flows--For the Years Ended December 31,
1997, 1996 and 1995..................................................... F-6
Notes to Consolidated Financial Statements............................... F-7
</TABLE>
F-1
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REPORT OF INDEPENDENT AUDITORS
Board of Directors
Numatics, Incorporated
We have audited the accompanying consolidated balance sheets of Numatics,
Incorporated and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity
(deficiency), and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Numatics,
Incorporated and subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
Ernst & Young llp
February 25, 1998
Detroit, Michigan
F-2
<PAGE>
NUMATICS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 701,072 $ 853,398
Trade receivables, less allowances of $61,000 in
1997 and $132,000 in 1996........................ 22,174,234 20,747,103
Inventories....................................... 27,953,158 25,444,983
Income taxes refundable........................... -- 1,062,010
Other current assets.............................. 2,220,852 1,478,146
------------ ------------
Total current assets............................ 53,049,316 49,585,640
Other assets:
Goodwill, net of accumulated amortization......... 6,839,952 8,967,270
Other intangible assets, net of accumulated
amortization..................................... 4,492,380 5,233,519
Deferred income taxes............................. 2,323,362 1,894,763
Investment in affiliate........................... 2,000,000 2,000,000
Other............................................. 390,895 639,025
------------ ------------
16,046,589 18,734,577
Properties:
Land.............................................. 1,631,658 1,647,523
Buildings and improvements........................ 12,072,592 10,238,576
Machinery and equipment........................... 39,799,217 34,949,645
------------ ------------
53,503,467 46,835,744
Less accumulated depreciation..................... (24,064,119) (21,168,527)
------------ ------------
29,439,348 25,667,217
------------ ------------
$ 98,535,253 $ 93,987,434
============ ============
LIABILITIES AND ACCUMULATED DEFICIENCY
Current liabilities:
Accounts payable trade............................ $ 9,641,314 $ 8,964,766
Accrued expenses.................................. 2,225,444 2,219,963
Compensation and employee benefits................ 4,574,794 4,248,573
Taxes, other than income and single business
tax.............................................. 427,349 350,115
Income and single business tax.................... 1,651,266 1,081,814
Current portion of long-term debt................. 7,060,060 4,531,798
------------ ------------
Total current liabilities....................... 25,580,227 21,397,029
Long-term liabilities:
Long-term debt, less current portion.............. 135,696,137 136,273,233
Deferred retirement benefits...................... 3,202,440 2,464,236
Deferred income taxes............................. 536,428 1,369,486
------------ ------------
139,435,005 140,106,955
Redeemable warrant................................. 3,102,138 3,102,138
Minority interest in subsidiaries.................. 348,445 245,227
Accumulated deficiency:
Common stock $.01 par value, 250,000 shares
authorized; 20,000 shares outstanding and
related additional paid in capital............... 1,500,000 1,500,000
Accumulated deficiency............................ (71,031,763) (72,295,586)
Equity adjustment from foreign currency
translation...................................... (398,799) (68,329)
------------ ------------
(69,930,562) (70,863,915)
------------ ------------
$ 98,535,253 $ 93,987,434
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
NUMATICS, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................... $147,097,265 $132,015,363 $125,807,708
Costs and expenses:
Cost of products sold................. 93,784,880 81,676,256 77,966,493
Marketing, engineering, general and
administrative....................... 31,830,324 28,253,122 29,567,306
Single business tax................... 945,450 885,150 871,600
------------ ------------ ------------
Operating income........................ 20,536,611 21,200,835 17,402,309
Other expenses:
Interest and other financing
expenses............................. 17,020,961 16,763,096 5,560,086
Other................................. 1,348,059 534,949 1,436,350
------------ ------------ ------------
Income before income taxes.............. 2,167,591 3,902,790 10,405,873
Income taxes............................ 903,768 1,895,006 4,837,000
------------ ------------ ------------
Net income.............................. $ 1,263,823 $ 2,007,784 $ 5,568,873
============ ============ ============
</TABLE>
See accompanying notes.
F-4
<PAGE>
NUMATICS, INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK
CLASS B CLASS C AND RELATED
8% SERIES A COMMON STOCK COMMON STOCK ADDITIONAL
PREFERRED STOCK AND RELATED AND RELATED PAID IN
$.01 PAR, ADDITIONAL ADDITIONAL CAPITAL $.01 PAR
50,000 SHARES PAID IN PAID IN 250,000 SHARES
AUTHORIZED CAPITAL $.01 PAR CAPITAL $.01 PAR AUTHORIZED RETAINED
-------------------------- ----------------------- -------------------- ----------------- EARNINGS
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT (DEFICIENCY)
------------ ------------ ---------- ----------- ---------- -------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January
1, 1995.......... 12,788.1246 $ 12,788,124 62,727.20 $ 1,481,277 17,272.80 $ 18,723 20,000 $1,500,000 $ 4,352,388
Net income for
1995............ 5,568,873
Equity
adjustment from
foreign currency
translation.....
Dividends paid.. (1,199,631)
Redemption of
stock........... (12,788.1246) (12,788,124) (62,727.20) (1,481,277) (17,272.80) (18,723) (83,025,000)
------------ ------------ ---------- ----------- ---------- -------- ------ ---------- ------------
Balance, December
31, 1995......... -- -- -- -- -- -- 20,000 1,500,000 (74,303,370)
Net income for
1996............ 2,007,784
Equity
adjustment from
foreign currency
translation.....
------------ ------------ ---------- ----------- ---------- -------- ------ ---------- ------------
Balance, December
31, 1996......... -- -- -- -- -- -- 20,000 1,500,000 (72,295,586)
Net income for
1997............ 1,263,823
Equity
adjustment from
foreign currency
translation.....
------------ ------------ ---------- ----------- ---------- -------- ------ ---------- ------------
Balance, December
31, 1997......... -- $ -- -- $ -- -- $ -- 20,000 $1,500,000 $(71,031,763)
============ ============ ========== =========== ========== ======== ====== ========== ============
<CAPTION>
CURRENCY TOTAL
TRANSLATION AMOUNT
----------- -------------
<S> <C> <C>
Balance, January
1, 1995.......... $(196,673) $ 19,943,839
Net income for
1995............ 5,568,873
Equity
adjustment from
foreign currency
translation..... 363,251 363,251
Dividends paid.. (1,199,631)
Redemption of
stock........... (97,313,124)
----------- -------------
Balance, December
31, 1995......... 166,578 (72,636,792)
Net income for
1996............ 2,007,784
Equity
adjustment from
foreign currency
translation..... (234,907) (234,907)
----------- -------------
Balance, December
31, 1996......... (68,329) (70,863,915)
Net income for
1997............ 1,263,823
Equity
adjustment from
foreign currency
translation..... (330,470) (330,470)
----------- -------------
Balance, December
31, 1997......... $(398,799) $(69,930,562)
=========== =============
</TABLE>
See accompanying notes.
F-5
<PAGE>
NUMATICS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................. $ 1,263,823 $ 2,007,784 $ 5,568,873
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation......................... 3,547,742 3,212,672 3,206,470
Amortization......................... 1,452,065 1,275,887 3,206,327
Deferred interest expense............ 7,313,204 6,154,299 --
Minority interest in earnings........ 103,218 93,104 38,533
Deferred taxes....................... (119,748) 499,723 (2,305,000)
Deferred retirement benefits......... 738,205 708,350 1,755,887
Unrealized foreign currency (gains)
losses.............................. 1,191,826 233,135 (125,026)
Changes in operating assets and
liabilities:
Trade receivables................... (2,200,958) (1,071,434) (1,292,348)
Inventories......................... (3,653,789) 1,733,855 (5,268,073)
Other current accounts.............. (833,655) (147,858) 304,305
Accounts payable and accrued
expenses........................... 1,006,333 (1,908,611) 2,854,251
Compensation and employee benefits.. 600,539 (156,175) 565,212
Taxes, other than income and single
business tax....................... (33,337) 19,361 (74,917)
Income and single business taxes.... 671,640 442,291 (2,292,552)
----------- ----------- -----------
Net cash provided by operating activi-
ties.................................. 11,047,108 13,096,383 6,141,942
INVESTING ACTIVITIES
Capital expenditures................... (7,880,756) (5,594,374) (3,743,664)
Other investments...................... 72,681 202,380 (3,006,378)
----------- ----------- -----------
Net cash used in investing activities.. (7,808,075) (5,391,994) (6,750,042)
FINANCING ACTIVITIES
Proceeds from long-term borrowing...... -- -- 142,300,000
Purchase of common and preferred
stock................................. -- -- (97,313,124)
Debt repayments........................ (4,915,021) (8,019,709) (38,924,416)
Debt issuance costs.................... -- (322,995) (4,481,703)
Dividends paid......................... -- -- (1,199,631)
Other.................................. 1,600,603 1,062,605 (94,053)
----------- ----------- -----------
Net cash provided by (used in) financ-
ing activities........................ (3,314,418) (7,280,099) 287,073
Effect of exchange rate changes on
cash.................................. (76,941) (149,005) (85,582)
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents...................... (152,326) 275,285 (406,609)
Cash and cash equivalents at beginning
of year............................... 853,398 578,113 984,722
----------- ----------- -----------
Cash and cash equivalents at end of
year.................................. $ 701,072 $ 853,398 $ 578,113
=========== =========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
NATURE OF THE BUSINESS
The Company develops and manufactures pneumatic components for automated
machinery used in various industries.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Numatics,
Incorporated, its wholly owned subsidiaries and its majority owned
subsidiaries (the "Company") after elimination of intercompany accounts,
transactions and profits.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
The Company sells its products principally to domestic and international
distributors. Management performs ongoing evaluations of its accounts
receivable, and credit losses have been minimal and within management's
expectations.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market, with cost determined
by use of the first-in, first-out method.
PROPERTIES AND DEPRECIATION
Properties are stated on the basis of cost. Properties are depreciated over
their estimated useful lives ranging from three to forty years, principally by
the straight-line method. Expenditures for repairs and maintenance which do
not extend the life of the asset are expensed as incurred.
INCOME TAXES
The Company utilizes the liability method of accounting for income taxes.
Deferred taxes are provided for the differences between financial statement
and income tax accounting.
ENVIRONMENTAL LIABILITIES
The Company recognizes estimated environmental liabilities when a loss is
probable. Such liabilities are generally not subject to insurance coverage.
The Company's environmental liabilities were not material as of December 31,
1997 and 1996.
F-7
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
REVENUE RECOGNITION
The Company recognizes revenue when goods are shipped to the customer.
FAIR VALUE OF FINANCIAL INSTRUMENTS
At December 31, 1997, the carrying amounts reported in the consolidated
balance sheets for cash and cash equivalents, accounts receivable, accounts
payable, debt, investments and swaps approximate fair value.
2. PURCHASE AND RETIREMENT OF CLASS B AND C COMMON STOCK AND PURCHASE OF
PREFERRED STOCK
In October 1995, the Company entered into an agreement with its Class B and
Class C common shareholders to acquire their respective shares of common and
preferred stock. The Company paid $84,525,000 for the common stock and
$12,788,124 for the preferred stock which was funded through the Company's
debt refinancing. The transaction was accounted for as a purchase and
retirement of treasury stock.
3. LONG-TERM DEBT
The Company's long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1997 1996
------------ ------------
<S> <C> <C>
Term loan payable in U.S. dollars in minimum
quarterly installments of $668,056 plus interest at
LIBOR plus 3.0% (8.96875% at December 31, 1997),
due in 2001........................................ $ 31,248,220 $ 34,944,444
Term loan payable in deutsche marks in minimum
quarterly installments of U.S. $76,507 plus
interest at LIBOR plus 2.15625% (8.125% at December
31, 1997), due in 2001............................. 3,165,473 4,001,927
Term loan payable in Canadian dollars in minimum
quarterly installments of U.S. $62,484 plus
interest at LIBOR plus 2.15625% (8.125% at December
31, 1997), due in 2001............................. 2,137,430 3,268,347
Term loan payable in U.S. dollars in minimum
quarterly installments of $125,000 plus interest at
LIBOR plus 3.5% (9.46875% at December 31, 1997),
due in 2003 ....................................... 42,898,000 44,750,000
Senior subordinated note due in 2004 bearing
interest at 18% (19% effective rate), face value
$30,000,000 less discount plus deferred interest... 40,365,366 33,052,163
Revolving notes payable to banks, due in 2002....... 16,650,000 15,300,000
Revolving loan payable to German bank, due in 2002.. 2,020,208 1,665,726
Williamston County Tennessee Industrial Revenue
Bond............................................... 2,500,000 456,295
Other............................................... 1,771,500 3,366,129
------------ ------------
142,756,197 140,805,031
Less current maturities............................. 7,060,060 4,531,798
------------ ------------
$135,696,137 $136,273,233
============ ============
</TABLE>
The Company entered into a credit agreement with a bank in 1995 that
included two term loans payable in U.S. dollars and a revolving note payable.
The credit agreement provides for the calculation of interest based on LIBOR
plus a variable rate. The variable rate is subject to change based on a
periodic recalculation of funded debt to earnings before interest, taxes,
depreciation and amortization. The revolving loan portion of the agreement
defines a formula for a borrowing base and establishes maximum borrowing
amounts ($27,000,000 in the U.S. and $3,000,000 in Germany). The credit
agreement contains various covenants including requirements
F-8
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
for minimum earning levels, leverage ratios and cash flow ratios, and certain
dividend restrictions. The Company was not in compliance with certain of these
debt covenants as of December 31, 1997, which have been waived by the bank as
of December 31, 1997. The Company has received amended covenants for the
quarters ended March 31, 1998 and June 30, 1998. The Company expects to be in
compliance with all debt covenants, including those that were amended during
1998.
The Company has pledged substantially all of its tangible and intangible
assets as collateral for the debt outstanding.
The Company has entered into interest rate swap agreements with a total
notional value of $70,000,000 all of which were effective as of December 31,
1997 in order to hedge against the risk of changes in interest rates. The
swaps result in the Company paying fixed rates of 5.055% to 5.74% and
receiving LIBOR. Payments received or made under the agreements are included
in interest expense. During 1997, $282,149 was received in connection with
these agreements. The Company does not hold or issue derivative financial
instruments for trading purposes.
The Company has an Industrial Development Revenue Bond with the County of
Williamson, Tennessee in the amount of $2,500,000. The Bond contains a
variable interest rate (4.15% at December 31, 1997) and payments are due
quarterly with scheduled principal payments commencing in 2002. The agreement
is secured by an irrevocable letter of credit.
Minimum contractual maturities of long-term liabilities for the years
following 1997 are as follows: 1998-$7,060,000; 1999-$9,421,000; 2000-
$11,744,000; 2001-$14,097,000 thereafter $100,434,000. In addition, the
Company is required to make a payment on the term loans in an amount equal to
50% of excess cash flow, as defined in the agreements.
Interest paid approximated $9,606,000 in 1997, $9,009,000 in 1996 and
$3,400,000 in 1995.
In connection with the issuance of the senior subordinated note, the Company
issued an excercisable warrant, redeemable at the option of the holder in
January, 2003 at a price computed at a multiple of earnings as defined in the
warrant agreement, with rights to purchase 1,276.60 shares of Class A common
stock for $.01 per share. The redemption amount approximates book value at
December 31, 1997. The difference between the warrant's exercise price and the
fair value of the Class A common stock at the time of issuance was recorded as
a discount on the related notes. The warrant expires on January 3, 2006.
4. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets at December 31 are comprised of the following:
<TABLE>
<CAPTION>
AMORTIZATION
PERIOD
1997 1996 (YEARS)
----------- ----------- ------------
<S> <C> <C> <C>
Product drawings........................ $ 1,090,000 $ 1,090,000 15
Numasize software....................... 1,021,000 1,021,000 10
Deferred cost, debt and equity.......... 5,282,255 5,229,712 5 to 10
Goodwill................................ 9,488,996 10,477,189 25
Other................................... -- 209,900 various
----------- -----------
16,882,251 18,027,801
Less accumulated amortization........... 5,549,919 3,827,012
----------- -----------
$11,332,332 $14,200,789
=========== ===========
</TABLE>
The Company periodically evaluates intangible assets for indicators of
impairment in value. If impairment is indicated, the Company evaluates its
related undiscounted cash flows and, if appropriate, revalues the asset based
on its fair values, accordingly.
F-9
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. INCOME TAXES
The components of income before income taxes consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Domestic................................... $1,747,000 $2,102,000 $ 9,020,000
International.............................. 421,000 1,801,000 1,386,000
---------- ---------- -----------
$2,168,000 $3,903,000 $10,406,000
========== ========== ===========
</TABLE>
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal................................. $1,091,000 $ 278,000 $3,991,000
Foreign................................. 888,000 976,000 1,251,000
---------- ---------- ----------
1,979,000 1,254,000 5,242,000
Deferred (credit):
Federal................................. (429,000) 620,000 (674,000)
Foreign................................. (646,000) 21,000 269,000
---------- ---------- ----------
(1,075,000) 641,000 (405,000)
---------- ---------- ----------
$ 904,000 $1,895,000 $4,837,000
========== ========== ==========
</TABLE>
The reconciliation of income taxes computed at the United States federal
statutory tax rate to income tax expense is:
<TABLE>
<CAPTION>
1997 1996 1995
--------- ----------- ----------
<S> <C> <C> <C>
Income taxes at U.S. statutory rate...... $ 736,981 $ 1,326,949 $3,537,997
International rate differences........... (295,455) 368,757 831,085
Other.................................... 462,474 199,284 467,918
--------- ----------- ----------
$ 904,000 $ 1,895,000 $4,837,000
========= =========== ==========
</TABLE>
No provision for U.S. federal income taxes has been made on the undistributed
earnings of the Canadian subsidiary for which earnings are considered
permanently invested ($3,884,000 at December 31, 1997, $2,772,000 at December
31, 1996 and $2,029,000 at December 31, 1995).
F-10
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the Company's deferred tax assets and liabilities
as of December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Deferred tax assets:
Intangible amortization............................. $ 2,150,000 $ 2,411,000
Deferred compensation............................... 1,595,000 992,000
Inventory........................................... 329,000 124,000
Other deferred assets............................... 354,000 283,000
Net operating loss carryforward..................... 2,146,000 1,678,000
----------- -----------
6,574,000 5,488,000
Valuation allowance................................... (1,066,000) (1,371,000)
----------- -----------
5,508,000 4,117,000
Deferred tax liabilities:
Depreciation........................................ 2,513,000 2,341,000
Other deferred liabilities.......................... 369,000 109,000
Foreign currency exchange gains..................... 839,000 1,141,000
----------- -----------
Total deferred tax liabilities........................ 3,721,000 3,591,000
----------- -----------
Net deferred tax assets............................... $ 1,787,000 $ 526,000
=========== ===========
</TABLE>
Income taxes paid approximated $315,000 in 1997, $1,800,000 in 1996 and
$8,400,000 in 1995.
The Company's net operating loss carryforwards primarily exist in its German
subsidiaries and expire in 2009.
6. EMPLOYEE BENEFIT PLANS
The Company has noncontributory defined benefit pension plans covering
substantially all United States hourly employees and employees of its Canadian
subsidiary. Benefits of the plans are based on years of service. The Company's
funding policy is consistent with the funding requirements of laws and
regulations. Plan assets consist primarily of equity securities and fixed
income investments.
The Company has a noncontributory defined contribution pension plan covering
all United States salaried employees. The Company also has a contributory
401(k) Plan, whereby the Company matches certain employee contributions.
Contributions to the defined contribution plan are based on compensation.
Net pension cost in 1997, 1996 and 1995 included the following components:
<TABLE>
<CAPTION>
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Defined benefit plans:
Service cost.............................. $ 209,785 $ 209,826 $ 174,379
Interest cost on projected benefit
obligation............................... 486,379 458,543 396,542
Actual return on plan assets.............. (1,048,702) (587,199) (844,144)
Amortization of prior service cost........ 589,802 215,647 577,853
----------- --------- ---------
Net pension cost of United States plans... 237,264 296,817 304,630
Canadian plan............................. 70,285 88,128 124,977
----------- --------- ---------
Total defined benefit cost.................. 307,549 384,945 429,607
Defined contribution plan................... 620,000 550,000 530,000
----------- --------- ---------
$ 927,549 $ 934,945 $ 959,607
=========== ========= =========
</TABLE>
F-11
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The assumptions used for the defined benefit plans included a discount rate
of 8.0% and an expected annual rate of return on plan assets of 9.0% for all
years presented.
The funded status of the United States defined benefit plans were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation......................... $6,195,581 $6,009,403
========== ==========
Accumulated benefit obligation.................... $6,492,321 $6,327,797
========== ==========
Projected benefit obligation...................... $6,492,321 $6,327,797
Plan assets at fair value........................... 6,676,144 5,830,177
---------- ----------
Funded status....................................... 183,823 (497,620)
Unrecognized gain................................... (925,817) (240,325)
Unrecognized prior service cost..................... 579,807 642,245
---------- ----------
Recorded pension liability.......................... $ (162,187) $ (95,700)
========== ==========
</TABLE>
The Company also provides post-retirement benefits for certain domestic
retirees covered under Company-sponsored benefit plans. Participants in these
plans may become eligible for these benefits if they reach normal retirement
age while working for the Company. The Company's policy is to fund benefit
costs as they are provided, with retirees paying a portion of the costs.
As of December 31, the accumulated post-retirement benefit obligation was as
follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Accumulated post-retirement benefit obligations:
Retirees....................................... $ 2,687,673 $ 2,692,548
Fully eligible employees....................... 499,521 273,690
Other active employees......................... 4,325,611 4,089,261
----------- -----------
7,512,805 7,055,499
Unrecognized net gain............................ (87,707) (56,815)
Unrecognized net transition obligation........... (4,518,419) (4,784,208)
Unrecognized prior service cost.................. (937,587) (1,010,043)
----------- -----------
Accrued post-retirement benefits liability....... $ 1,969,092 $ 1,204,433
=========== ===========
</TABLE>
Net benefit cost in 1997, 1996 and 1995 included the following components:
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------- --------
<S> <C> <C> <C>
Service cost................................... $ 185,468 $138,613 $128,345
Interest cost.................................. 561,871 454,509 427,055
Amortization of transition obligation.......... 338,245 265,789 265,789
---------- -------- --------
$1,085,584 $858,911 $821,189
========== ======== ========
</TABLE>
The discount rate used in determining the present value of the accumulated
postretirement benefit obligation was 8% in 1997 and 1996. The assumed health
care cost trend rate used in measuring the accumulated
F-12
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
postretirement benefit obligation was 9.12% declining by .45% per year to an
ultimate rate of 6% in 2004. If the assumed healthcare cost trend rate was
increased 1% in all future years, the accumulated postretirement benefit
obligation would increase by $569,471 and the related expense would increase
by $51,267.
7. FOREIGN OPERATIONS
The Company is a global developer and manufacturer of pneumatic components
for automated machinery used in various industries. The Company sells to
customers primarily in the United States, Canada and Europe. All of these
activities constitute a single business segment.
Financial information, summarized by geographic area, is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales:
United States and Canada........... $118,709,172 $106,217,448 $102,002,180
Europe............................. 28,388,093 25,797,915 23,805,528
------------ ------------ ------------
$147,097,265 $132,015,363 $125,807,708
============ ============ ============
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Operating income:
United States and Canada........... $ 20,318,252 $ 19,697,892 $ 15,801,609
Europe............................. 218,359 1,502,943 1,600,700
------------ ------------ ------------
$ 20,536,611 $ 21,200,835 $ 17,402,309
============ ============ ============
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Identifiable assets:
United States and Canada........... $ 74,567,027 $ 69,853,166 $ 70,431,901
Europe............................. 23,968,226 24,134,268 23,009,592
------------ ------------ ------------
$ 98,535,253 $ 93,987,434 $ 93,441,493
============ ============ ============
</TABLE>
The information presented above was prepared in accordance with Financial
Accounting Standards Board (FASB) Statement No. 14. In 1997, the FASB issued
Statement 131, Disclosures about Segments of an Enterprise and Related
Information. The Statement supersedes Statement 14 and establishes standards
for the way public business enterprises report selected information about
operating segments in annual reports and interim financial reports issued to
shareholders. Statement 131 is effective for fiscal years beginning after
December 15, 1997. For the year ended 1998, the Company will provide financial
and description information about its reportable operating segments to conform
with the requirements.
8. ACQUISITION AND INVESTMENT
In January 1995, the Company acquired an 80% interest in Ultra Air Products,
a Michigan Corporation, for approximately $2,858,000. Ultra Air Products is
the manufacturer of compressed air purification equipment. The excess of the
purchase price over the identifiable net assets acquired, $2,500,000, was
recorded as goodwill and is being amortized over 25 years.
In May 1995, the Company acquired an approximate 12% interest in Univer,
S.p.a., an Italian Corporation, for $2,000,000. The Company is accounting for
this investment using the cost method.
F-13
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES (UNAUDITED)
The Company issued $115 million of 9 5/8% Senior Subordinated Notes due 2008
subsequent to December 31, 1997. The Notes are guaranteed by the Company's
United States subsidiaries in which it owns 100% of the voting stock. Each of
the Guarantor Subsidiaries has fully and unconditionally guaranteed, on a
joint and several basis, the obligation to pay principal, premium, if any, and
interest on the Notes.
The following supplemental unaudited consolidating condensed financial
statements present:
1. Consolidating condensed balance sheets as of December 31, 1997 and
1996, consolidating condensed statements of operations for the years ended
December 31, 1997, 1996 and 1995 and consolidating condensed statements of
cash flows for the years ended December 31, 1997, 1996 and 1995.
2. Numatics, Incorporated (the Parent), combined Guarantor Subsidiaries
and combined Non-Guarantor Subsidiaries (consisting of the Company's
foreign subsidiaries).
3. Elimination entries necessary to consolidate the parent and all of its
subsidiaries.
Management does not believe that separate financial statements of the
Guarantor Subsidiaries of the proposed debt offering are material to
investors. Therefore, separate financial statements and other disclosures
concerning the Guarantor Subsidiaries are not presented.
F-14
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Trade receivables....... $ 11,078,207 $2,188,502 $ 8,907,525 $ 22,174,234
Inventories............. 15,366,392 2,607,696 10,890,070 $ (911,000) 27,953,158
Other................... 1,550,468 179,705 1,191,751 -- 2,921,924
------------ ---------- ----------- ------------ ------------
Total current assets.... 27,995,067 4,975,903 20,989,346 (911,000) 53,049,316
Goodwill, net of
accumulated
amortization........... 457,195 -- 3,704,800 2,677,957 6,839,952
Other................... 9,069,132 1,707 135,798 -- 9,206,637
Intercompany amounts.... 32,664,385 224,501 4,179,442 (37,068,328) --
Property, plant and
equipment, net of
accumulated
depreciation........... 24,183,658 670,466 4,585,224 -- 29,439,348
------------ ---------- ----------- ------------ ------------
$ 94,369,437 $5,872,577 $33,594,610 $(35,301,371) $ 98,535,253
============ ========== =========== ============ ============
Accounts payable and
accrued expenses....... $ 7,167,784 $1,356,896 $ 3,342,078 $ -- $ 11,866,758
Compensation and
employee benefits...... 3,533,317 164,571 876,906 -- 4,574,794
Current portion of long-
term debt.............. 6,172,595 -- 887,465 -- 7,060,060
Other................... 911,508 46,416 1,120,691 -- 2,078,615
------------ ---------- ----------- ------------ ------------
Total current
liabilities............ 17,785,204 1,567,883 6,227,140 25,580,227
Long-term debt less
current portion........ 129,260,490 -- 6,435,647 -- 135,696,137
Other................... 6,841,006 -- -- 348,445 7,189,451
Intercompany amounts.... 8,961,055 3,122,466 16,179,742 (28,263,263) --
Accumulated deficiency.. (68,359,966) 1,182,228 4,633,729 (7,386,553) (69,930,562)
------------ ---------- ----------- ------------ ------------
$ 94,487,789 $5,872,577 $33,476,258 $(35,301,371) $ 98,535,253
============ ========== =========== ============ ============
DECEMBER 31, 1996
<CAPTION>
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Trade receivables....... $ 11,016,971 $1,682,417 $ 8,047,715 $ -- $ 20,747,103
Inventories............. 13,261,077 1,653,392 11,497,514 (967,000) 25,444,983
Other................... 1,579,683 266,520 1,547,351 -- 3,393,554
------------ ---------- ----------- ------------ ------------
Trade current assets.... 25,857,731 3,602,329 21,092,580 (967,000) 49,585,640
Goodwill, net of
accumulated
amortization........... 1,700,038 -- 4,394,587 2,872,645 8,967,270
Other................... 9,391,957 1,707 373,643 -- 9,767,307
Intercompany amounts.... 28,954,731 114,399 3,672,527 (32,741,657) --
Property, plant and
equipment, net of
accumulated
depreciation........... 20,394,284 418,512 4,854,421 -- 25,667,217
------------ ---------- ----------- ------------ ------------
$ 86,298,741 $4,136,947 $34,387,758 $(30,836,012) $ 93,987,434
============ ========== =========== ============ ============
Accounts payable and
accrued expenses....... $ 6,912,457 $ 809,981 $ 3,462,291 $ -- $ 11,184,729
Compensation and
employee benefits...... 3,301,509 156,358 790,706 -- 4,248,573
Current portion of long-
term debt.............. 3,975,835 555,963 -- 4,531,798
Other................... 805,331 35,374 591,224 -- 1,431,929
------------ ---------- ----------- ------------ ------------
Total current
liabilities............ 14,995,132 1,001,713 5,400,184 21,397,029
Long-term debt less
current portion........ 127,893,196 -- 8,380,037 -- 136,273,233
Other................... 5,566,374 -- 1,369,486 245,227 7,181,087
Intercompany amounts.... 6,958,050 2,329,884 14,791,019 (24,078,953) --
Accumulated deficiency.. (69,114,011) 805,350 4,447,032 (7,002,286) (70,863,915)
------------ ---------- ----------- ------------ ------------
$ 86,298,741 $4,136,947 $34,387,758 $(30,836,012) $ 93,987,434
============ ========== =========== ============ ============
</TABLE>
F-15
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $104,177,704 $13,826,800 $52,979,761 $(23,887,000) $147,097,265
Costs and expenses...... 86,526,823 13,270,334 50,511,809 (23,748,312) 126,560,654
------------ ----------- ----------- ------------ ------------
Operating income........ 17,650,881 556,466 2,467,952 (138,688) 20,536,611
Interest and other...... 16,896,743 179,675 2,093,152 103,218 19,272,788
------------ ----------- ----------- ------------ ------------
Net income.............. $ 754,138 $ 376,791 $ 374,800 $ (241,906) $ 1,263,823
============ =========== =========== ============ ============
YEAR ENDED DECEMBER 31, 1996
<CAPTION>
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ 93,366,673 $10,391,257 $48,338,433 $(20,081,000) $132,015,363
Costs and expenses...... 76,233,562 9,741,393 44,856,573 (20,017,000) 110,814,528
------------ ----------- ----------- ------------ ------------
Operating income........ 17,133,111 649,864 3,481,860 (64,000) 21,200,835
Interest and other...... 16,347,186 231,710 2,480,683 133,472 19,193,051
------------ ----------- ----------- ------------ ------------
Net income.............. $ 785,925 $ 418,154 $ 1,001,177 $ (197,472) $ 2,007,784
============ =========== =========== ============ ============
YEAR ENDED DECEMBER 31, 1995
<CAPTION>
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ 91,822,084 $ 8,507,782 $45,913,842 $(20,436,000) $125,807,708
Costs and expenses...... 77,501,955 8,632,348 42,528,096 (20,257,000) 108,405,399
------------ ----------- ----------- ------------ ------------
Operating income........ 14,320,129 (124,566) 3,385,746 (179,000) 17,402,309
Interest and other
income................. 8,521,026 (28,175) 3,124,538 216,047 11,833,436
------------ ----------- ----------- ------------ ------------
Net income.............. $ 5,799,103 $ (96,391) $ 261,208 $ (395,047) $ 5,568,873
============ =========== =========== ============ ============
</TABLE>
F-16
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash from operations.... $ 11,270,566 $ (419,388) $ 195,930 $ -- $ 11,047,108
Capital expenditures.... (6,701,675) (320,413) (858,668) -- (7,880,756)
Other investments....... 72,681 (25,673) 25,673 -- 72,681
Debt repayments......... (4,198,225) -- (716,796) -- (4,915,021)
Other................... 1,600,603 -- (43,602) (33,339) 1,523,662
Intercompany accounts... (2,043,822) 679,595 1,330,888 33,339 --
------------ ----------- ----------- ----------- ------------
Net increase (decrease)
in cash................ $ 128 $ (85,879) $ (66,575) $ -- $ (152,326)
============ =========== =========== =========== ============
YEAR ENDED DECEMBER 31, 1996
<CAPTION>
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash from operations.... $ 11,780,002 $ (340,559) $ 1,656,940 $ -- $ 13,096,383
Capital expenditures.... (4,723,876) (101,938) (768,560) -- (5,594,374)
Other investments....... 123,464 2,168 76,748 -- 202,380
Debt repayments......... (7,805,556) -- 2,328,380 (2,542,533) (8,019,709)
Debt issuance costs..... (44,277) -- (278,718) -- (322,995)
Other................... 1,065,533 -- 13,694 (165,627) 913,600
Intercompany accounts... (278,216) 589,855 (3,019,799) 2,708,160 --
------------ ----------- ----------- ----------- ------------
Net increase (decrease)
in cash................ $ 117,074 $ 149,526 $ 8,685 $ -- $ 275,285
============ =========== =========== =========== ============
YEAR ENDED DECEMBER 31, 1995
<CAPTION>
GUARANTOR NON-GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash from operations.... $ 8,604,160 $(1,006,273) $(1,455,945) $ -- $ 6,141,942
Capital expenditures.... (2,962,478) (183,455) (597,731) -- (3,743,664)
Other investments....... (3,122,187) 8,730 107,079 -- (3,006,378)
Proceeds from
borrowing.............. 132,800,000 -- 9,500,000 -- 142,300,000
Purchase of common and
preferred stock........ (97,313,124) -- -- -- (97,313,124)
Debt repayments......... (31,056,333) -- (7,868,083) -- (38,924,416)
Debt issuance costs..... (4,503,886) -- 22,183 -- (4,481,703)
Other................... (1,236,017) -- (11,211) (132,038) (1,379,266)
Intercompany accounts... (1,568,875) 1,196,768 240,069 132,038 --
------------ ----------- ----------- ----------- ------------
Net increase (decrease)
in cash................ $ (358,740) $ 15,770 $ (63,639) $ -- $ (406,609)
============ =========== =========== =========== ============
</TABLE>
F-17
<PAGE>
NUMATICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. TOTAL
1997 ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales...... $36,065,270 $37,313,418 $37,190,414 $36,528,163 $147,097,265
Gross Profit... 13,144,710 14,146,551 13,625,724 12,395,400 53,312,385
Net Income... 85,647 983,651 308,005 (113,480) 1,263,823
<CAPTION>
1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. TOTAL
1996 ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales...... $31,643,102 $32,931,610 $33,565,920 $33,874,731 $132,015,363
Gross Profit... 12,129,273 12,806,455 12,953,697 12,449,682 50,339,107
Net Income... 546,051 696,707 566,749 198,277 2,007,784
</TABLE>
F-18
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE EX-
CHANGE NOTES BY ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING THE OF-
FER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information...................................................
Summary.................................................................. 1
Risk Factors............................................................. 10
The Exchange Offer.......................................................
Certain Federal Income Tax Consequences of the Exchange Offer............
Capitalization........................................................... 15
Selected Consolidated Financial Information.............................. 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 18
Business................................................................. 23
Management and Directors................................................. 33
Security Ownership of Certain Beneficial Owners and Management........... 37
Description of Other Indebtedness........................................ 38
Description of Exchange Notes............................................
Description of Notes..................................................... 41
Registration Rights; Liquidated Damages..................................
Certain Federal Tax Considerations for Foreign Persons................... 72
Plan of Distribution..................................................... 76
Legal Matters............................................................ 77
Experts.................................................................. 77
Index to Consolidated Financial Statements............................... F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LOGO
NUMATICS, INCORPORATED
OFFER TO EXCHANGE ALL OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES
DUE 2008
($115,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
($115,000,000 PRINCIPAL AMOUNT)
---------------
PROSPECTUS
---------------
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Michigan Business Corporation Act ("MBCA"), under which the Issuer is
organized, empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any action, suit or proceeding
(each a "proceeding"), other than a proceeding by or in the right of the
corporation, by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation or, at the corporation's
request, a director, officer, employee, or agent of another entity or
enterprise against expenses, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by the indemnitee in connection with the
proceeding, if the indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, without reasonable
cause to believe his or her conduct was unlawful. The MBCA further empowers a
corporation to indemnify any of the same types of indemnitees against expenses
actually and reasonably incurred by him or her in connection with the defense
or settlement of a proceeding by or in the right of the corporation if the
indemnitee met the same standards of conduct, except that indemnification with
respect to any claim, issue, or matter as to which the indemnitee has been
adjudged to be liable to the corporation may be made only if and to the extent
determined to be proper by a court. In addition, the MBCA requires such a
corporation to indemnify any such indemnitee who is successful on the merits
or otherwise in defense of any proceeding of the types described above, or in
defense of any claim, issue, or matter in any such proceeding, against his or
her actual and reasonable expenses incurred in connection with such defense,
and it permits advancement by the corporation of an indemnitee's expenses
under certain circumstances. In general, Article VI of the Issuer's bylaws
requires indemnification of and expense advancement to its officers and
directors to the fullest extent permitted by the MBCA.
All of the Guarantors other than Microsmith, Inc. are also organized under
the MBCA, and all of their bylaws (other than those of Ultra Air Products,
Inc.) contain provisions substantially identical to those contained in the
Issuer's bylaws described above.
Chapter 10 of the Arizona Revised Statutes, under which Microsmith, Inc. is
organized, empowers a corporation to provide indemnification and advancement
of expenses on substantially the same basis provided for in the MBCA.
Insurance is maintained on a regular basis (and not specifically in
connection with this offering or the offering of the Notes) against
liabilities arising on the part of directors and officers out of their
performance in such capacities or arising on the part of any of the
Registrants out of the above-described indemnification provisions of such
Registrant, subject to certain exclusions and to the policy limits.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1.1 Articles of Incorporation of the Issuer, as amended
3.1.2 Bylaws of the Issuer
3.2.1 Articles of Incorporation of Numation, Inc., as amended
3.2.2 Bylaws of Numation, Inc., as amended
3.3.1 Articles of Incorporation of Numatech, Inc., as amended
3.3.2 Bylaws of Numatech, Inc., as amended
3.4.1 Articles of Incorporation of Micro-Filtration, Inc., as amended
3.4.2 Bylaws of Micro-Filtration, Inc., as amended
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.5.1 Articles of Incorporation of Ultra Air Products, Inc., as amended
3.5.2 Bylaws of Ultra Air Products, Inc., as amended
3.6.1 Articles of Incorporation of Microsmith, Inc., as amended
3.6.2 Bylaws of Microsmith, Inc., as amended
3.7.1 Articles of Incorporation of I.A.E. Incorporated
3.7.2 Bylaws of I.A.E. Incorporated
4.1.1 Indenture, dated as of March 23, 1998, among the Issuer, the
Guarantors, and First Trust National Association, as trustee
(including forms of Notes and related Subsidiary Guarantees)
4.1.2 A/B Exchange Registration Rights Agreement, dated as of March 23,
1998, among the Issuer, the Guarantors, and the Initial
Purchasers
4.1.3 Form of Exchange Notes (including related Subsidiary Guarantees)
4.2.1 Amended and Restated Loan Agreement, dated March 23, 1998, among
the Issuer, Numatics GmbH, Numatics, Ltd., NBD Bank, as
Administrative Agent, BankBoston, N.A., as Documentation Agent,
and the Lenders party thereto
4.2.2 Amended and Restated Guaranty Agreement, dated as of March 23,
1998, by the Issuer and the Guarantors in favor of NBD Bank, as
Administrative Agent, and BankBoston, N.A., as Documentation
Agent
5.1 Opinion and consent of Miller, Canfield, Paddock and Stone, P.L.C.
10.1 Purchase Agreement dated March 18, 1998 among the Initial
Purchasers, the Issuer and the Guarantors
10.2.1 Securities Purchase Agreement, dated as of January 3, 1996,
between the Issuer and Harvard
10.2.2 Numatics, Incorporated Tag-Along and Drag-Along Agreement, dated
January 3, 1996, among the Issuer, Harvard and shareholders of
the Issuer
10.2.3 Registration Agreement, dated as of January 3, 1996, between the
Issuer and Harvard
10.2.4 Form of Guaranty Agreement between Harvard and I.A.E.
Incorporated, dated as of March 23, 1998 (Each of the other
Guarantors has executed an Amended and Restated Guaranty
Agreement in substantially the same form.)
10.2.5 Agreement, dated as of March 23, 1998, between the Issuer and
Harvard
10.3 Amended and Restated Stock Transfer Agreement, dated December 28,
1995, among the Issuer, 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
10.4 Voting Agreement, dated as of November 29, 1990, among the Issuer
(under its former name, Numatics Acquisition Corporation) and
certain shareholders of the Issuer
10.5 Employment Agreement, dated January 3, 1996, between the Issuer
and John H. Welker**
10.6 Employment Agreement, dated September 15, 1996, between the Issuer
and David M. Tenniswood**
10.7 Numatics, Incorporated Amended and Restated Deferred Compensation
Plan, adopted December 28, 1995, and related acknowledgements by
Eligible Employees (as therein defined)**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
12.1 Statement re computation of ratios
21.1 List of subsidiaries of the Issuer
23.1 Consent of Ernst & Young LLP
23.2 Consent of Miller, Canfield, Paddock and Stone, P.L.C. (contained
in Exhibit 5.1)
24.1 Powers of Attorney (contained in signature pages of this
Registration Statement)
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1
of First Trust National Association under the Trust Indenture Act
of 1939
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal with respect to the Exchange Offer
99.2 Form of Notice of Guaranteed Delivery with respect to the Exchange
Offer
*99.3 Form of Exchange Agent Agreement
</TABLE>
- --------
*To be filed by amendment
**Indicates contract or compensatory plan or arrangement with one or more
Company executive officers and/or directors of the Issuer
(b) FINANCIAL STATEMENT SCHEDULE & REPORT
II-3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Numatics, Incorporated
We have audited the consolidated financial statements of Numatics,
Incorporated as of December 31, 1997 and 1996, and for each of the three years
in the period ended December 31, 1997, and have issued our report thereon
dated February 25, 1998 (included elsewhere in this Registration Statement).
Our audits also included the financial statement schedule listed in Item 16(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Detroit, Michigan
February 25, 1998
II-4
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- ------------ ----------- ------------ ----------
ADDITIONS--
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND DEDUCTIONS-- END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE PERIOD
- ----------- ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1997:
Accounts receivable
allowance.................. $ 132 $ 102 $173(1) $ 61
Inventory reserve........... 1,047 509 639(2) 917
Deferred tax asset valuation
allowance.................. 1,371 -- 305(3) 1,066
Year ended December 31, 1996:
Accounts receivable
allowance.................. 222 76 166(1) 132
Inventory reserve........... 1,355 223 531(2) 1,047
Deferred tax asset valuation
allowance.................. 274 1,097 -- 1,371
Year ended December 31, 1995:
Accounts receivable
allowance.................. 230 165 173(1) 222
Inventory reserve........... 1,374 132 151(2) 1,355
Deferred tax asset valuation
allowance.................. -- 274 -- 274
</TABLE>
- --------
(1) Uncollectible accounts charged off net of recoveries.
(2) Reduction in inventory reserves for inventory disposed of during the year.
(3) Utilization of foreign net operating loss carryforwards.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of any
of the Registrants pursuant to the foregoing provisions, or otherwise, each
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a
Registrant of expenses incurred or paid by a director, officer or controlling
person of such Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Each undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the date of this Registration Statement (or most recent post-
effective amendment thereof) which, individual or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of the securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.
II-5
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of this Registration Statement through the date of
responding to the request.
(c) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in this Registration Statement
when it became effective.
II-6
<PAGE>
NUMATICS, INCORPORATED
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
Numatics, Incorporated
/s/ John H. Welker
By: _________________________________
John H. Welker
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY SEVERALLY CONSTITUTE AND APPOINT JOHN H. WELKER AND
ROBERT P. ROBESON, OR EITHER OF THEM, HIS TRUE AND LAWFUL ATTORNEYS AND
AGENTS, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR AND IN HIS
NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL
AMENDMENTS OR POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AND TO
FILE THE SAME, WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID
ATTORNEYS AND AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND
PERFORM EACH AND EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE, AS
FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY
RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS AND AGENTS, AND EACH OF THEM,
OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY
VIRTUE HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker President and Chief April 29, 1998
____________________________________ Executive Officer and
John H. Welker Director
/s/ Robert P. Robeson Vice President, Treasurer April 29, 1998
____________________________________ and Chief Financial Officer
Robert P. Robeson (also principal accounting
officer)
/s/ David M. Tenniswood Director April 27, 1998
____________________________________
David M. Tenniswood
/s/ A. A. Koch Director April 27, 1998
____________________________________
A. A. Koch
/s/ John P. Musat Director April 27, 1998
____________________________________
John P. Musat
/s/ Tim R. Palmer Director April 27, 1998
____________________________________
Tim R. Palmer
</TABLE>
S-1
<PAGE>
NUMATION, INC.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
Numation, Inc.
/s/ John H. Welker
By: _________________________________
John H. Welker
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY SEVERALLY CONSTITUTE AND APPOINT JOHN H. WELKER AND
ROBERT P. ROBESON, AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEYS AND AGENTS,
WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME,
PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS OR
POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION THEREWITH,
WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS
AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND
CONFIRMING ALL THAT SAID ATTORNEYS AND AGENTS, AND EACH OF THEM, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker Chairman of the Board April 29, 1998
____________________________________ (principal executive
John H. Welker officer) and Director
/s/ Robert P. Robeson Treasurer (principal April 29, 1998
____________________________________ financial officer and
Robert P. Robeson principal accounting
officer)
/s/ Jeffrey R. Schneid Director April 29, 1998
____________________________________
Jeffrey R. Schneid
/s/ Henry Fleischer Director April 29, 1998
____________________________________
Henry Fleischer
</TABLE>
S-2
<PAGE>
NUMATECH, INC.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
Numatech, Inc.
/s/ John H. Welker
By: _________________________________
John H. Welker
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY SEVERALLY CONSTITUTE AND APPOINT JOHN H. WELKER AND
ROBERT P. ROBESON, AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEYS AND AGENTS,
WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME,
PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS OR
POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION THEREWITH,
WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS
AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND
CONFIRMING ALL THAT SAID ATTORNEYS AND AGENTS, AND EACH OF THEM, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker Chairman of the Board April 29, 1998
____________________________________ (principal executive
John H. Welker officer) and Director
/s/ Robert P. Robeson Treasurer (principal April 29, 1998
____________________________________ financial officer and
Robert P. Robeson principal accounting
officer)
/s/ Richard L. Dalton, Jr. Director April 29, 1998
____________________________________
Richard L. Dalton, Jr.
/s/ Donald E. McGeachy Director April 29, 1998
____________________________________
Donald E. McGeachy
</TABLE>
S-3
<PAGE>
MICRO-FILTRATION, INC.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
Micro-Filtration, Inc.
/s/ John H. Welker
By: _________________________________
John H. Welker
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY SEVERALLY CONSTITUTE AND APPOINT JOHN H. WELKER AND
ROBERT P. ROBESON, AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEYS AND AGENTS,
WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME,
PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS OR
POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION THEREWITH,
WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS
AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND
CONFIRMING ALL THAT SAID ATTORNEYS AND AGENTS, AND EACH OF THEM, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker Chairman of the Board April 29, 1998
____________________________________ (principal executive
John H. Welker officer) and Director
/s/ Robert P. Robeson Treasurer (principal April 29, 1998
____________________________________ financial officer and
Robert P. Robeson principal accounting
officer)
/s/ Donald E. McGeachy Director April 29, 1998
____________________________________
Donald E. McGeachy
/s/ Robert D. Nuckles Director April 29, 1998
____________________________________
Robert D. Nuckles
</TABLE>
S-4
<PAGE>
ULTRA AIR PRODUCTS, INC.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
Ultra Air Products, Inc.
/s/ John H. Welker
By: _________________________________
John H. Welker
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY SEVERALLY CONSTITUTE AND APPOINT JOHN H. WELKER AND
ROBERT P. ROBESON, AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEYS AND AGENTS,
WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME,
PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS OR
POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION THEREWITH,
WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS
AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND
CONFIRMING ALL THAT SAID ATTORNEYS AND AGENTS, AND EACH OF THEM, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker Chairman of the Board April 29, 1998
____________________________________ (principal executive
John H. Welker officer) and Director
/s/ Robert P. Robeson Treasurer (principal April 29, 1998
____________________________________ financial officer and
Robert P. Robeson principal accounting
officer) and Director
/s/ Robert L. McKay Director April 29, 1998
____________________________________
.Robert L. McKay
</TABLE>
S-5
<PAGE>
MICROSMITH, INC.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
Microsmith, Inc.
/s/ John H. Welker
By: _________________________________
John H. Welker
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY SEVERALLY CONSTITUTE AND APPOINT JOHN H. WELKER AND
ROBERT P. ROBESON, AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEYS AND AGENTS,
WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME,
PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS OR
POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO AND ALL OTHER DOCUMENTS IN CONNECTION THEREWITH,
WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS AND
AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS
AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND
CONFIRMING ALL THAT SAID ATTORNEYS AND AGENTS, AND EACH OF THEM, OR HIS
SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker Chairman of the Board April 29, 1998
____________________________________ (principal executive
John H. Welker officer) and Director
/s/ Robert P. Robeson Treasurer (principal April 29, 1998
____________________________________ financial officer and
Robert P. Robeson principal accounting
officer)
/s/ Donald E. McGeachy Director April 29, 1998
____________________________________
Donald E. McGeachy
Director , 1998
____________________________________
William S. Smith
</TABLE>
S-6
<PAGE>
I.A.E. INCORPORATED
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
NAMED ABOVE HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HIGHLAND,
STATE OF MICHIGAN, ON APRIL 29, 1998.
I.A.E. Incorporated
/s/ John H. Welker
By: _________________________________
John H. Welker
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED. BY SIGNING BELOW, EACH OF THE
UNDERSIGNED DOES HEREBY CONSTITUTE THE OTHER OF THE UNDERSIGNED HIS TRUE AND
LAWFUL ATTORNEY AND AGENT, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION,
FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN
ANY AND ALL AMENDMENTS OR POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION
STATEMENT AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND ALL OTHER
DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, GRANTING UNTO SAID ATTORNEY AND AGENT FULL POWER AND AUTHORITY TO
DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE,
AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY
RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEY AND AGENT, OR HIS SUBSTITUTE
OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ John H. Welker Chairman of the Board April 29, 1998
____________________________________ (principal executive
John H. Welker officer) and Director
/s/ John H. Welker Treasurer (principal April 29, 1998
____________________________________ financial officer and
Robert P. Robeson principal accounting
officer)
</TABLE>
S-7
<PAGE>
EXHIBIT INDEX
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1.1 Articles of Incorporation of the Issuer, as amended
3.1.2 Bylaws of the Issuer
3.2.1 Articles of Incorporation of Numation, Inc., as amended
3.2.2 Bylaws of Numation, Inc., as amended
3.3.1 Articles of Incorporation of Numatech, Inc., as amended
3.3.2 Bylaws of Numatech, Inc., as amended
3.4.1 Articles of Incorporation of Micro-Filtration, Inc., as amended
3.4.2 Bylaws of Micro-Filtration, Inc., as amended
3.5.1 Articles of Incorporation of Ultra Air Products, Inc., as amended
3.5.2 Bylaws of Ultra Air Products, Inc., as amended
3.6.1 Articles of Incorporation of Microsmith, Inc., as amended
3.6.2 Bylaws of Microsmith, Inc., as amended
3.7.1 Articles of Incorporation of I.A.E. Incorporated
3.7.2 Bylaws of I.A.E. Incorporated
4.1.1 Indenture, dated as of March 23, 1998, among the Issuer, the
Guarantors, and First Trust National Association, as trustee
(including forms of Notes and related Subsidiary Guarantees)
4.1.2 A/B Exchange Registration Rights Agreement, dated as of March 23,
1998, among the Issuer, the Guarantors, and the Initial
Purchasers
4.1.3 Form of Exchange Notes (including related Subsidiary Guarantees)
4.2.1 Amended and Restated Loan Agreement, dated March 23, 1998, among
the Issuer, Numatics GmbH, Numatics, Ltd., NBD Bank, as
Administrative Agent, BankBoston, N.A., as Documentation Agent,
and the Lenders party thereto
4.2.2 Amended and Restated Guaranty Agreement, dated as of March 23,
1998, by the Issuer and the Guarantors in favor of NBD Bank, as
Administrative Agent, and BankBoston, N.A., as Documentation
Agent
5.1 Opinion and consent of Miller, Canfield, Paddock and Stone, P.L.C.
10.1 Purchase Agreement dated March 18, 1998 among the Initial
Purchasers, the Issuer and the Guarantors
10.2.1 Securities Purchase Agreement, dated as of January 3, 1996,
between the Issuer and Harvard
10.2.2 Numatics, Incorporated Tag-Along and Drag-Along Agreement, dated
January 3, 1996, among the Issuer, Harvard and shareholders of
the Issuer
10.2.3 Registration Agreement, dated as of January 3, 1996, between the
Issuer and Harvard
10.2.4 Form of Guaranty Agreement between Harvard and I.A.E.
Incorporated, dated as of March 23, 1998 (Each of the other
Guarantors has executed an Amended and Restated Guaranty
Agreement in substantially the same form.)
10.2.5 Agreement, dated as of March 23, 1998, between the Issuer and
Harvard
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.3 Amended and Restated Stock Transfer Agreement, dated December 28,
1995, among the Issuer, 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
10.4 Voting Agreement, dated as of November 29, 1990, among the Issuer
(under its former name, Numatics Acquisition Corporation) and
certain shareholders of the Issuer
10.5 Employment Agreement, dated January 3, 1996, between the Issuer
and John H. Welker**
10.6 Employment Agreement, dated September 15, 1996, between the Issuer
and David M. Tenniswood**
10.7 Numatics, Incorporated Amended and Restated Deferred Compensation
Plan, adopted December 28, 1995, and related acknowledgements by
Eligible Employees (as therein defined)**
12.1 Statement re computation of ratios
21.1 List of subsidiaries of the Issuer
23.1 Consent of Ernst & Young LLP
23.2 Consent of Miller, Canfield, Paddock and Stone, P.L.C. (contained
in Exhibit 5.1)
24.1 Powers of Attorney (contained in signature pages of this
Registration Statement)
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1
of First Trust National Association under the Trust Indenture Act
of 1939
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal with respect to the Exchange Offer
99.2 Form of Notice of Guaranteed Delivery with respect to the Exchange
Offer
*99.3 Form of Exchange Agent Agreement
</TABLE>
- --------
*To be filed by amendment
**Indicates contract or compensatory plan or arrangement with one or more
Company executive officers and/or directors of the Issuer
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
NUMATICS, INCORPORATED
Pursuant to the provisions of Act 284, Public Acts of 1972, as amended, the
undersigned corporation executes the following Articles:
1. The present name of this Corporation is Numatics, Incorporated.
2. This Corporation's identification number (CID) assigned by the Bureau is
536-171.
3. All former names of this Corporation are: Numatics Acquisition
Corporation.
4. The date of filing the original Articles of Incorporation of this
Corporation was October 15, 1990.
The following Restated Articles of Incorporation supersede the Articles of
Incorporation and shall be the Articles of Incorporation for this Corporation:
ARTICLE I
The name of this Corporation is Numatics, Incorporated.
ARTICLE II
The purpose or purposes for which this Corporation is formed is to engage
in any activity, within the purposes for which corporations may be formed under
the Michigan Business Corporation Act.
ARTICLE III
1. The address of the current registered office of this Corporation is 1450
North Milford Road, Highland, MI 48031.
2. The mailing address of the current registered office of this Corporation
is the same as above.
3. The name of the current registered agent of this Corporation is John H.
Welker.
<PAGE>
ARTICLE IV
Section 1. Authorized Shares.
-----------------
(a) Total Number. The total number of shares of all classes of capital
stock which this Corporation shall have authority to issue is 300,000,
consisting of the following:
(1) 50,000 shares of Preferred Stock ("Preferred Stock") of the par
value of $.01 per share; and
(2) 250,000 shares of Class A Common Stock ("Common Stock") of the par
value of $.01 per share.
Such shares of Preferred Stock and Common Stock are sometimes hereinafter
collectively referred to as the "capital stock". The designations and the
powers, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations and restrictions of each class of
capital stock shall be as follows:
PART II Preferred Stock
- ------- ---------------
(a) The Board of Directors of this Corporation is authorized to establish
from the shares of authorized Preferred Stock by resolutions adopted and filed
in the manner provided by law, one or more other classes or series of Preferred
Stock, to designate each such class or series of Preferred Stock and the number
of shares compromising such class or series, which number may, if permitted by
law, except where otherwise provided by the Board of Directors in creating such
class or series, be increased or decreased (but not below the number of shares
then outstanding) from time to time by resolutions of the Board of Directors
adopted and filed in the manner provided by law, and to fix the relative rights
and preferences of each such class or series of Preferred Stock, including the
following:
(1) the dividend rate or rates on the shares of such class or series
and the preference or relation which such dividends shall bear to the
dividends payable on any other class or series of capital stock of this
Corporation or on any other series of Preferred Stock, the terms and
conditions upon which and the periods in respect of which dividends shall
be payable, whether and upon what condition such dividends shall be
cumulative and, if cumulative, the date or dates from which dividends shall
accumulate;
(2) whether the shares of such class or series shall be redeemable, in
whole or in part, and if redeemable, whether redeemable for cash, bonds,
securities or other property, at the option of this Corporation or the
holder or upon the happening of a specified event, the limitations and
restrictions with respect to such redemption, and the time or times when,
or periods during which, the price or prices or
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rate or rates at which, the adjustments with which and the manner in which such
shares shall be redeemable, including the manner of selecting shares of such
class or series for redemption if less than all shares are to be redeemed;
(3) the rights to which the holders of shares of such class or series shall
be entitled, and the preferences if any, over any other class or series (or of
any other class or series over such class or series), upon the voluntary or
involuntary liquidation, dissolution, distribution, or winding up of this
Corporation, which rights may vary depending on whether such liquidation,
dissolution, distribution or winding up is voluntary or involuntary, and, if
voluntary, may vary at different dates;
(4) whether the shares of such class or series shall be subject to the
operation of a purchase, retirement or sinking fund, the extent to which and the
manner in which such fund shall be applied to the purchase or redemption of the
shares of such class or series for retirement or to other corporate purposes and
the terms and provisions relative to the operation thereof;
(5) whether the shares of such class or series shall be convertible into,
or exchangeable for at the option of this Corporation or the holder or upon the
happening of a specified event, shares of any other class or any series of any
class, or bonds, of this Corporation and, if so convertible or exchangeable, the
times, prices, rates, adjustments and other terms and conditions of such
conversion or exchange;
(6) the voting powers, full and/or limited, if any, of the shares of such
class or series, and whether and under what conditions the shares of such class
or series (alone or together with the shares of one or more other class or
series having similar provisions) shall be entitled to vote separately as a
single class, for the election of one or more directors, or additional
directors, of this Corporation in the case of dividend arrearage or other
specified events, or upon other matters;
(7) whether the issuance of any additional shares of such class or series,
or of any shares of any other class or series, shall be subject to restrictions
as to issuance or as to the powers, preferences or rights of any such other
class or series; and
(8) any other preferences, privileges and powers and relative,
participating, optional, or other special rights and qualifications,
limitations, restrictions of such class or series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of these
Restated Articles of Incorporation.
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(b) Unless and except to the extent otherwise required by law or provided
in the resolution or resolutions of the Board of Directors creating any series
of Preferred Stock pursuant to this Part I, the holders of the Preferred Stock
shall have no voting power with respect to any matter whatsoever.
(c) Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the Corporation, or which have been issued and
reacquired in any manner, may, upon compliance with any applicable provisions of
the Michigan Business Corporation Act, be given the status of authorized and
unissued shares of Preferred stock and may be reissued by the Board of Directors
as part of the series of which they were originally a part or may be
reclassified into and reissued as part of a new series or as a part of any other
series, all subject to the protective conditions or restrictions of any
outstanding series of Preferred Stock.
PART II: Common Stock
- -------- ------------
(a) Except as otherwise required by law or by any amendment to these
Restated Articles of Incorporation, each holder of Common Stock shall have one
vote for each share of stock held by such holder of record on the books of the
Corporation on all matters voted upon by the shareholders.
(b) Subject to the preferential dividend rights, if any, applicable to
shares of Preferred Stock and subject to applicable requirements, if any, with
respect to the setting aside of sums for purchase, retirement or sinking funds
for Preferred Stock, the holders of Common Stock shall be entitled to receive,
to the extent permitted by law, such dividends as may be declared from time to
time by the Board of Directors.
(c) In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of Preferred Stock, holders of Common Stock shall be entitled to receive
all of the remaining assets of the Corporation of whatever kind available for
distribution to shareholders ratably in proportion to the number of shares of
Common Stock held by them respectively. The Board of Directors may distribute in
kind to the holders of Common Stock such remaining assets of the Corporation or
may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other corporation, trust, individual or entity, or any combination
thereof, and may sell all or any part of the consideration so received and
distribute any balance thereof in kind to holders of Common Stock. The merger or
consolidation or the Corporation into or with any other corporation or other
entity, or the merger of any other corporation or other entity into it, or any
purchase or redemption of shares of stock of the Corporation of any class, shall
not be deemed to be a dissolution, liquidation of winding up of the Corporation
for the purposes of this paragraph.
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(d) Such numbers of shares of Common Stock as may from time to time be
required for such purpose shall be reserved for issuance (i) upon conversion of
any shares of Preferred stock or any obligation of the Corporation convertible
into shares of Common Stock which is at the time outstanding or issuable upon
exercise of any options, warrants or rights at the time outstanding and (ii)
upon exercise of any options, warrants or rights at the time outstanding to
purchase shares of Common Stock.
ARTICLE V
The duration of this Corporation is perpetual.
ARTICLE VI
Any action required or permitted by the Act, these Restated Articles of
Incorporation or the Bylaws of the Corporation to be taken at an annual or
special meeting of shareholders may be taken without a meeting, without prior
notice and without a vote, if consents in writing, setting forth the action so
taken, are signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take the action
at a meeting at which all shares entitled to vote on the action were present and
voted. The written consents shall bear the date of signature of each shareholder
who signs the consent. No written consents shall be effective to take the
corporate action referred to unless, within 60 days after the record date for
determining shareholders entitled to express consent to or to dissent from a
proposal without a meeting, written consents dated not more than 10 days before
the record date and signed by a sufficient number of shareholders to take the
action are delivered to the Corporation. Delivery shall be to the Corporation's
registered office, its principal place of business, or an officer or agent of
the corporation having custody of the minutes of the proceedings of its
shareholders. Delivery made to a Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to shareholders who would have been entitled to
notice of the shareholder meeting if the action had been taken at a meeting and
who have not consented in writing.
ARTICLE VII
A director of this Corporation shall not be personally liable to this
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. However, this provision does not eliminate or limit the
liability of a director for any of the following:
(a) any breach of the director's duty of loyalty to this Corporation or its
shareholders;
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(b) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
(c) a violation of Section 551(1) of the Michigan Business Corporation
Act; or
(d) a transaction from which the director derived an improper personal
benefit.
Any repeal, amendment or other modification of this Article VII shall not
increase the liability or alleged liability of any director of this Corporation
than existing with respect to any state of facts then theretofore existing or
any action, suit or proceeding theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts. If the Michigan Business
Corporation Act is subsequently amended to authorize corporate action further
eliminating or limiting personal liability of directors then the liability of
directors shall be eliminated or limited to the fullest extent permitted by the
Michigan Business Corporation Act as so amended.
ARTICLE VIII
The Corporation shall not issue or sell any of its Equity Securities (as
hereinafter defined), or enter into any Contractual Obligation (as hereinafter
defined) providing for the issuance (contingent or otherwise) of any of its
Equity Securities (each an "Issuance" of "Subject Securities"), except in
compliance with the following provisions of this Article VIII.
1. Right of Participation.
1.1 Not fewer than thirty days prior to the consummation of the
Issuance, a notice (the "Notice") shall be furnished by the Corporation to
each holder of Investor Securities. The Notice shall include:
(a) The principal terms of the proposed Issuance, including without
limitation the amount and kind of Subject Securities to be included in
the Issuance, the maximum and minimum (which shall be not less than
90% of such maximum) price per unit of the Subject Securities will be
Issued (collectively, the "Proposed Subscriber"); and
(b) An offer by the Corporation to issue, at the option of such holder of
Equity Securities constituting Investor Securities, up to such
holder's Applicable Percentage of the Subject Securities which would
be otherwise issued in the Issuance, on the same terms and conditions
as the Subject Securities are purchased by the Proposed Subscriber;
provided, however, that if the Proposed Subscriber is purchasing the
Subject Securities for noncash consideration, the holders of Equity
Securities
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constituting Investors Securities may pay in cash the fair market
value (as agreed to by the Corporation and such holder) of such
noncash consideration.
1.2. If a holder of Investor Securities desires to accept the offer
contained in the Notice, it shall send, within twenty days after the
effectiveness of the Notice, a written commitment to the Corporation
specifying the amount of Subject Securities (not in any event to exceed
such holder's Applicable Percentage of the Subject Securities to be
included in the Issuance) which such holder desires to be issued. If any
holder of Investor Securities has not so accepted such offer, such holder
shall be deemed to have waived (for itself and any transferee or assignee
of its Investor Securities) all of its rights with respect to this
Issuance, and the Corporation shall thereafter be free to issue the Subject
Securities to the Proposed Subscriber, at a price no less than 95% of the
minimum price set forth in the Notice and on otherwise no more favorable
terms in any material respect than as set forth in the Notice, without any
further obligation to such holder. If, prior to consummation, the terms of
such proposed Issuance shall change with the result that the price shall be
less than 95% of the minimum price set forth in the Notice, it shall be
necessary for a separate Notice to have been furnished, and the terms and
provisions of this Article VIII separately complied with, in order to
consummate such Issuance pursuant to this Article VIII.
The acceptance of such holder shall be irrevocable except as
hereinafter provided, and such holder shall be bound and obligated to
acquire in the Issuance on the same terms and conditions, with respect to
each unit of Subject Securities issues in the Issuance, such amount of
Subject Securities as such holder shall have specified in its written
commitment.
If at the end of the ninetieth (90th) day following the date of the
effectiveness of the Notice the Corporation has not completed the Issuance,
any holder of Investor Securities who has accepted the offer in a Notice
shall be released from its obligations under the written commitment, the
Notice shall be null and void, and it shall be necessary for a separate
Notice to have been furnished, in order to consummate such Issuance
pursuant to this Article VIII.
1.3. The Corporation may condition the participation of any holder of
Investor Securities in an Issuance upon the purchase by it of any
securities (including without limitation debt securities) other than
Subject Securities ("Other Securities") in the event that the participation
of the Proposed Subscriber in such Issuance is so conditioned. In such
case, each holder of Investor Securities shall acquire in the Issuance,
together with the Subject Securities to be acquired by it, Other Securities
in the same proportion to the Subject Securities to be acquired by it as
Other Securities
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are acquired by the Proposed Subscriber in proportion to the Subject
Securities acquired in the Issuance by the Proposed Subscriber, on the same
terms and conditions, as to each unit of Subject Securities and Other
Securities issued to the Proposed Subscriber, as the Proposed Subscriber
shall be issued units of Subject Securities and Other Securities.
1.4 Each holder of Investor Securities and its Affiliates shall take
or cause to be taken all such reasonable actions as may be necessary or
reasonably desirable in order expeditiously to consummate each Issuance
pursuant to this Article VIII and any related transactions, including,
without limitation, executing, acknowledging and delivering consents,
assignments, waivers and other documents or instruments with governmental
authorities; and otherwise cooperating with the Corporation; provided,
however, that no holder of Investor Securities or any Affiliate thereof
shall be required to agree to any amendment or modification of, or waiver
under, or other change to, this Agreement, the Investor Securities or any
other agreement relating thereto.
1.5 All costs and expenses incurred by any holder of Investor
Securities or the Corporation in connection with any proposed Issuance of
Subject Securities or the Corporation in connection with any proposed
Issuance of Subject Securities (whether or not consummated), including
without limitation all attorney's fees and charges, all accounting fees and
charges and all finders, brokerage or investment banking fees, charges or
commissions, shall be paid by the Corporation; provided however, that if a
holder of Investor Securities or any of its Affiliates retains separate
legal counsel or other advisors in connection with such proposed Issuance,
the fees and expenses of such separate attorneys or other advisors shall be
borne by such holder.
1.6 The closing of an Issuance pursuant to Article VIII shall take
place at such time and place as the Corporation shall specify by notice to
each participating holder of Investor Securities. At the closing of any
Issuance under this Article VIII, such holders of Investor Securities shall
be delivered the notes, certificates or other instruments evidencing the
Subject Securities (and, if applicable, Other Securities) to be issued to
it, registered in the name of such holder of its designated nominee, free
and clear of any Liens, with any transfer tax stamps affixed, against
delivery by such holders of the applicable consideration.
2 Excluded Transactions. Notwithstanding the preceding provisions of
this Article VIII, the preceding provisions of this Article VIII shall not
restrict:
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(a) Any Issuance of options to purchase not more than an aggregate of
2,000 shares of Common Stock (subject to appropriate adjustments
for stock splits) and any Issuance of shares of Common Stock in
connection therewith to employees of the Corporation and its
subsidiaries.
(b) Any Issuance of Common Stock upon the exercise or conversion of
any Investor Securities or any Equity Securities outstanding on
the date hereof or issued after the date hereof in compliance
with the provisions of this Article VIII; and
(c) Any Issuance of Common Stock pursuant to a public offering
registered under the Securities Act of 1933, as amended, other
than shares issued pursuant to an employee plan registered on
Form S-8 or any similar plan or form.
(d) Any Issuance of Common Stock pursuant to a stock split or pro
rata stock dividend.
3. Termination. The foregoing provisions of this Article VIII shall
terminate immediately following the closing of a public offering if, immediately
after giving effect thereto, there is outstanding Common Stock not held by
Affiliates of the Corporation which (x) is freely tradeable and the sale of
which is not in any way subject to Rule 144 (including without limitation Rule
144(k) under the Securities Act of 1933, as amended) and (y) has an aggregate
public market value of not less than $50 million.
4. For purposes of this Article VIII, the following terms shall have the
following meanings:
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the specified
Person and shall include (i) any Person who is an officer, director or
beneficial holder of at least 5% of the outstanding equity interest of the
specified Person and Members of the Immediate Family of any such officer,
director or holder, (ii) any Person of which the specified Person or an
Affiliate (as defined in clause (i) above) of the specified Person shall,
directly or indirectly), either beneficially own at least 5% of the outstanding
equity interest or constitute at least a 5% participant or shall be an officer
or director of such Person, and Members of the Immediate Family, if any, of
such holder, director or officer, and (iii) in the case of a specified Person
who is an individual, Members of the Immediate Family of such Person;
provided, however, that Harvard Private Capital Holdings, Inc shall not be an
Affiliate of the Corporation for purposes of this Article VIII.
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"Applicable Percentage" shall mean, with respect to any holder of
Investor Securities, the percentage of all outstanding shares of Common Stock
which would be held by such holder assuming that all outstanding Equity
Securities of the Corporation are converted into, or exchanged or exercised for,
shares of Common Stock in accordance with the terms thereof.
"Contractual Obligation" shall mean, with respect to the Corporation,
any contract, agreement, deed, mortgage, lease, license, indenture, commitment,
undertaking, arrangement or understanding, written or oral, or other document or
instrument, including, without limitation, any document or instrument evidencing
or otherwise relating to any indebtedness but excluding these Restated Articles
and the Bylaws of the Corporation, to which or by which the Corporation is a
party or otherwise subject or bound or to which or by which any property or
right of such Corporation is subject or bound.
"Equity Securities" shall mean all shares of capital stock or other
equity or beneficial interests issued by or created in or by the Corporation,
all stock appreciation or similar rights or grants of, or other Contractual
Obligation for, any right to share in equity, income, revenues or cash flow of
the Corporation, and all securities or other rights, warrants or other
Contractual Obligations to acquire any of the foregoing, whether by conversion,
exchange, exercise, preemptive right or otherwise.
"Members of the Immediate Family", as applied to any individual, shall
include each parent, spouse, child, brother, sister and the spouse of a child,
brother, or sister of the individual, and each trust created for the benefit of
one or more of such persons and each custodian of the property of one or more
such person.
"Person" shall mean an individual, partnership, limited liability
company, corporation, association, trust, joint venture or unincorporated
organization, and any government department or agency or political subdivision
thereof.
"Investor Securities" means the Warrants dated January 3, 1996 issued
by the Corporation to Harvard Private Capital Holdings, Inc., provided that any
such securities sold in a distribution pursuant to a registration statement
under the Securities Act or, if the securities sold are of a class which is
publicly traded or evidenced by listing with a national securities exchange, on
the NASDAQ National Market or otherwise, a sale to the public which is exempt
from the registration requirements of the Securities Act of 1933, as amended,
under Rule 144 thereunder or otherwise, shall cease to be Investor Securities
thereafter.
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5. COMPLETE SECTION (a) IF THE RESTATED ARTICLES WERE ADOPTED BY THE UNANIMOUS
CONSENT OF THE INCORPORATORS BEFORE THE FIRST MEETING OF THE BOARD OF
DIRECTORS; OTHERWISE, COMPLETE SECTION (b)
a. _____These Restated Articles of Incorporation were duly adopted on the
_____ day of ______, 1990, in accordance with the provisions of
Section 642 of the Act by the unanimous consent of the incorporators
before the first meeting of the Board of Directors.
Signed this _____ day of ___________, 199_.
___________________________________________
___________________________________________
(Signatures of all incorporation; type or print names under each signature)
b. __X__These Restated Articles of
Incorporation were duly adopted on
the 19th day of January, 1996, in
accordance with the provisions of
Section 642 of the Act and: (check
one of the following)
____ were duly adopted by the Board of Directors without a vote of the
shareholders. These Restate Articles of Incorporation only
restate and integrate and do not further amend the provisions of
the Articles of Incorporation as heretofore amended and there is
no material discrepancy between those provisions and the
provisions of these Restated Articles.
____ were duly adopted by the shareholders. The necessary number of
shares as required by statute were voted in favor of these
Restated Articles.
____ were duly adopted by the written consent of the shareholders
having not less than the minimum number of votes required by
statute in accordance with Section 407 (1) of the Act. Written
notice to shareholders who have not consented in writing has been
given. (Note: Written consent by less than all of the
shareholders is permitted only if such
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provision appears in the Articles of Incorporation.)
____ were duly adopted by the written consent of all the shareholders
entitled to vote in accordance with Section 407 (2) of the Act.
Signed this 19 day of January, 1996
John H. Welker
By ------------------------------------
(Signature)
John H. Welker, President
------------------------------------
(Type or Print Name)
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Exhibit 3.1.2
Adopted and Effective
January 19, 1996
AMENDED AND RESTATED BYLAWS
OF
NUMATICS, INCORPORATED
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be in the City of
Highland, County of Oakland, State of Michigan.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places both in and outside the State of Michigan as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders of the
corporation shall be held at the registered office or such other place, either
within or without the State of Michigan, as may be determined from time to time
by the board of directors.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of
shareholders for election of directors and for such other business as may
properly come before the meeting shall be held on such dates in May of each year
and at such time as shall be designated by the board of directors, unless such
action is taken by written consent as provided in Section 12 of this Article II.
SECTION 3. ORDER OF BUSINESS AT ANNUAL MEETING. The order of business at
the annual meeting of the shareholders shall be as follows:
(a) reading of notice and proof of mailing;
(b) reports of Officers;
(c) election of Directors;
(d) transaction of other business mentioned in the notice; and
<PAGE>
(e) adjournment;
provided that, in the absence of any objection, the presiding officer may vary
the order of business at his or her discretion.
SECTION 4. NOTICE OF MEETING OF SHAREHOLDERS. Except as otherwise provided
in the Michigan Business Corporation Act (herein called the "Act"), written
notice of the time, place and purposes of a meeting of shareholders shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting, either personally or by mail, to each shareholder of record
entitled to vote at the meeting. If a meeting is adjourned to another time or
place, it is not necessary to give notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken and at the adjourned meeting only business is
transacted as might have been transacted at the original meeting. If after the
adjournment the board of directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record on the new record date entitled to vote at the meeting, on such new
record date.
SECTION 5. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer or agent
having charge of the stock transfer books for shares of the corporation shall
make and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting or any adjournment thereof. The list shall:
(a) be arranged alphabetically within each class and series, with the
address of, and the number of shares held by, each shareholder;
(b) be produced at the time and place of the meeting;
(c) be subject to inspection by any shareholder during the whole time of
the meeting; and
(d) be prima facie evidence as to who are the shareholders entitled to
examine the list or to vote at the meeting.
SECTION 6. SPECIAL MEETING OF SHAREHOLDERS. A special meeting of
shareholders may be called at any time by the chief executive officer of the
corporation (see Article V, Section 4), by at least one (1) of the members of
the board of directors then in office, or by shareholders owning, in the
aggregate, not less than ten percent (10%) of any class or series of shares
entitled to vote at such special meeting. The method by which such meeting may
be called is as follows: Upon receipt of a specification in writing setting
forth the date and objects of such proposed special meeting, signed by the chief
executive officer, by at least one (1) of the members of the board of directors
then in office, or by shareholders as above provided, the secretary of the
corporation shall prepare, sign and mail the notices requisite to such meeting.
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SECTION 7. QUORUM OF SHAREHOLDERS. Unless a greater or lesser quorum is
provided in the Restated Articles of Incorporation, in a bylaw adopted by the
shareholders or incorporators, or in the Act, the holders of shares entitled to
cast a majority of the votes of each class or series of voting stock at a
meeting constitute a quorum at the meeting. The shareholders present in person
or by proxy at the meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. Whether or not a quorum is present, the meeting may be adjourned by a
vote of the shares present.
SECTION 8. VOTE OF SHAREHOLDERS. A vote may be cast either orally or in
writing. Each share shall have the voting power authorized in the Restated
Articles of Incorporation.
SECTION 9. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS. For the purpose
of determining shareholders entitled to notice of and to vote at a meeting of
shareholders or an adjournment of a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board of directors. The date shall not be more
than sixty (60) nor less than ten (10) days before the date of the meeting. If a
record date is not fixed, the record date for determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be the close
of business on the day next preceding the day on which notice is given, or if no
notice is given, the day next preceding the day on which the meeting is held.
When a determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders has been made as provided in this Section, the
determination applies to any adjournment of the meeting, unless the board of
directors fixes a new record date under this Section for the adjourned meeting.
For the purpose of determining shareholders entitled to express consent to or to
dissent from a proposal without a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board of directors and shall not be more than ten
(10) days after the board resolution. If a record date is not fixed and prior
action by the board of directors is required with respect to the corporate
action to be taken without a meeting, the record date shall be the close of
business on the day on which the resolution of the board of directors is
adopted. If a record date is not fixed and prior action by the board of
directors is not required, the record date shall be the first date on which a
signed written consent is delivered to the corporation as provided in Section 12
of this Article II. For the purpose of determining shareholders entitled to
receive payment of a share dividend or distribution, or allotment of a right, or
for the purpose of any other action, the board of directors may fix a record
date, which shall not precede the date on which the resolution fixing the record
date is adopted by the board. Subject to the provisions of the Restated Articles
of Incorporation, the date shall not be more than sixty (60) days before the
payment of the share dividend or distribution or
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allotment of a right or other action. If a record date is not fixed, the record
date shall be the close of business on the day on which the resolution of the
board of directors relating to the corporate action is adopted.
SECTION 10. PROXIES. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
one or more other persons to act for him or her by proxy. A proxy shall be
signed by the shareholder or his or her authorized agent or representative. A
proxy is not valid after the expiration of three (3) years from its date unless
otherwise provided in the proxy.
SECTION 11. INSPECTORS OF ELECTION. The board of directors, in advance of a
shareholders' meeting, may appoint one (1) or more inspectors of election to act
at the meeting or any adjournment thereof. If inspectors are not so appointed,
the person presiding at a shareholders' meeting may, and on request of a
shareholder entitled to vote thereat shall, appoint one (1) or more inspectors.
In case a person appointed fails to appear or act, the vacancy may be filled by
appointment made by the board of directors in advance of the meeting or at the
meeting by the person presiding thereat. The inspectors shall determine the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine
challenges and questions arising in connection with the right to vote, count and
tabulate votes, ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all shareholders. On
request of the person presiding at the meeting or a shareholder entitled to vote
thereat, the inspectors shall make and execute a written report to the person
presiding at the meeting of any of the facts found by them and matters
determined by them. The report is prima facie evidence of the facts stated and
of the vote as certified by the inspectors.
SECTION 12. ACTION BY WRITTEN CONSENT. The Restated Articles of
Incorporation may provide that any action required or permitted by the Act to be
taken at an annual or special meeting of shareholders may be taken without a
meeting, without prior notice and without a vote, if consents in writing,
setting forth the action so taken, are signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take the action at a meeting at which all shares entitled to
vote on the action were present and voted. The written consents shall bear the
date of signature of each shareholder who signs the consent. No written consents
shall be effective to take the corporate action referred to unless, within sixty
(60) days after the record date for determining shareholders entitled to express
consent to or to dissent from a proposal without a meeting, written consents
dated not more than ten (10) days before the record date and signed by a
sufficient number of shareholders to take the action are delivered to the
corporation. Delivery shall be to the corporation's registered office, its
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principal place of business, or an officer or agent of the corporation having
custody of the minutes of the proceedings of its shareholders. Delivery made to
a corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to shareholders who would have been entitled to notice of the shareholder
meeting if the action had been taken at a meeting and who have not consented in
writing. Any action required or permitted by the Act to be taken at an annual or
special meeting of shareholders may be taken without a meeting, without prior
notice and without a vote if, before or after the action, all the shareholders
entitled to vote consent in writing.
SECTION 13. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the Restated Articles of Incorporation, a shareholder may
participate in a meeting of shareholders by a conference telephone or by other
similar communications equipment through which all persons participating in the
meeting may communicate with the other participants. All participants shall be
advised of the communications equipment and the names of the participants in the
conference shall be divulged to all participants. Participation in a meeting
pursuant to this Section constitutes presence in person at the meeting.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of directors which
shall constitute the whole board shall be not less than one (1) nor more than
eleven (11) directors. The first board of directors after the adoption of these
Amended and Restated Bylaws consists of five (5) directors and thereafter, the
number of directors which shall constitute the board of directors for each
ensuing year shall be determined at the annual meeting by vote of the
shareholders prior to such election; provided, however, that if a motion is not
made and carried to increase or decrease the number of directors, the board
shall consist of the same number of directors as were elected for the preceding
year. The shareholders may also increase or decrease the number of directors at
any meeting of the shareholders or by a written consent in lieu thereof. Either
the shareholders or the board of directors may fill the vacancy caused by an
increase in the number of directors. The first board of directors shall hold
office until the first annual meeting of shareholders. At the first annual
meeting of shareholders and at each annual meeting thereafter, the shareholders
shall elect directors to hold office until the succeeding annual meeting, except
in the case of classification of directors as permitted by the Act. A director
shall hold office for the term for which he or she is elected and until his or
her successor is elected and qualified, or until his or her resignation
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or removal. Directors need not be shareholders and may serve continuous terms.
SECTION 2. VACANCIES. Unless otherwise limited by the Restated Articles of
Incorporation, if a vacancy, including a vacancy resulting from an increase in
the number of directors, occurs in the board of directors, the vacancy may be
filled as follows:
(a) The shareholders may fill the vacancy.
(b) The board may fill the vacancy.
(c) If the directors remaining in office constitute fewer than a quorum of
the board of directors, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
Unless otherwise provided in the Restated Articles of Incorporation, if the
holders of any class or classes of stock or series are entitled to elect one (1)
or more directors to the exclusion of other shareholders, vacancies of that
class or classes or series may be filled only by one (1) of the following:
(a) By a majority of the directors elected by the holders of that class or
classes or series then in office, whether or not those directors
constitute a quorum of the board of directors.
(b) By the holders of shares of that class or classes of shares, or
series.
Unless otherwise limited by the Restated Articles of Incorporation or these
bylaws, in the case of a corporation the board of directors of which are divided
into classes, any director chosen to fill a vacancy shall hold office until the
next election of the class for which the director shall have been chosen, and
until his or her successor is elected and qualified. If because of death,
resignation, or other cause, a corporation has no directors in office, an
officer, a shareholder, a personal representative, administrator, trustee, or
guardian of a shareholder, or other fiduciary entrusted with like responsibility
for the person or estate of a shareholder, may call a special meeting of
shareholders in accordance with the Restated Articles of Incorporation or these
bylaws. A vacancy that will occur at a specific date, by reason of a resignation
effective at a later date under Section 4 of this Article or otherwise, may be
filled before the vacancy occurs but the newly elected or appointed director may
not take office until the vacancy occurs.
SECTION 3. REMOVAL. The shareholders may remove one (1) or more directors
with or without cause unless the Restated Articles of Incorporation provide that
directors may be removed only for cause. The vote for removal shall be by a
majority of shares
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entitled to vote at an election of directors, unless the Restated Articles of
Incorporation require a higher vote for removal without cause.
SECTION 4. RESIGNATION. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a later time as set forth in the notice of resignation.
SECTION 5. POWERS. The business and affairs of the corporation shall be
managed by its board of directors except as otherwise provided in the Act or in
the Restated Articles of Incorporation.
SECTION 6. TIME AND LOCATION OF MEETINGS. Unless otherwise consented to by
all of the directors, regular or special meetings of the board of directors
shall be held during normal business hours at the principal executive office of
the corporation.
SECTION 7. ORGANIZATION MEETING OF BOARD. The first meeting of each newly
elected board of directors shall be held at the place of holding the annual
meeting of shareholders, and immediately following the same, for the purpose of
electing officers and transacting any other business properly brought before it,
provided that the organization meeting in any year may be held at a different
time and place than that herein provided by a consent of a majority of the
directors of such new board. No notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, unless said meeting is not held at the place of holding
and immediately following the annual meeting of shareholders.
SECTION 8. OTHER MEETINGS OF BOARD OF DIRECTORS. Any regular or special
meeting of the board of directors may be called by the chief executive officer,
or by one (1) or more of the persons then comprising the board of directors, at
any time by means of notice of the time and place thereof to each director,
given not less than five (5) business days before the time such regular or
special meeting is to be held.
SECTION 9. COMMITTEES OF DIRECTORS. The board of directors, by approval of
all of the directors then in office, may designate one (1) or more committees,
each committee to consist of one (1) or more of the directors of the
corporation. The board of directors may designate one (1) or more directors as
alternate members of any committee, who may replace an absent or disqualified
member at a meeting of the committee. In the absence or disqualification of a
member of a committee, the members thereof present at a meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors
creating such committee, may exercise all the powers and authority of the board
of directors
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in the management of the business and affairs of the corporation. A committee
does not have the power or authority to amend the Restated Articles of
Incorporation, adopt an agreement of merger or consolidation, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommend to the shareholders a dissolution
of the corporation or a revocation of a dissolution, amend these bylaws, fill
vacancies in the board of directors, or authorize dividends or the issuance of
stock. Any such committee, and each member thereof, shall serve at the pleasure
of the board of directors.
SECTION 10. QUORUM AND REQUIRED VOTE OF BOARD OF DIRECTORS AND COMMITTEES.
At all meetings of the board of directors, or of a committee thereof, a majority
of the members of the board then in office, or of the members of a committee of
the board of directors, constitutes a quorum for transaction of business, unless
the Restated Articles of Incorporation, these bylaws, or in the case of a
committee, the board resolution establishing the committee, provide for a larger
or smaller number. The vote of the majority of members present at a meeting at
which a quorum is present constitutes the action of the board of directors or of
the committee unless the vote of a larger number is required by the Act, the
Restated Articles of Incorporation, or these bylaws, or in the case of a
committee, the board resolution establishing the committee. Amendment of these
bylaws by the board of directors requires the vote of not less than a majority
of the members of the board of directors then in office. If a quorum shall not
be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 11. ACTION BY WRITTEN CONSENT. Action required or permitted to be
taken under authorization voted at a meeting of the board of directors or a
committee of the board of directors, may be taken without a meeting if, before
or after the action, all members of the board of directors then in office or of
the committee consent to the action in writing. The written consents shall be
filed with the minutes of the proceedings of the board of directors or
committee. The consent has the same effect as a vote of the board of directors
or committee for all purposes.
SECTION 12. COMPENSATION OF DIRECTORS. The board of directors, by
affirmative vote of a majority of directors in office and irrespective of any
personal interest of any of them, may establish reasonable compensation of
directors for services to the corporation as directors or officers, but approval
of the shareholders is required if the Restated Articles of Incorporation, these
bylaws or any provisions of the Act so provide.
SECTION 13. PARTICIPATION IN MEETING BY TELEPHONE. A member of the board of
directors or of a committee designated by the board of directors may participate
in a meeting by means of conference telephone or similar communications
equipment through which all
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persons participating in the meeting can communicate with the other
participants. Participation in a meeting pursuant to this Section constitutes
presence in person at the meeting.
ARTICLE IV
NOTICES
SECTION 1. NOTICE. Whenever any notice or communication is required to be
given by mail to any director or shareholder under any provision of the Act, the
Restated Articles of Incorporation or these bylaws, it shall be given in
writing, except as otherwise provided in the Act, to such director or
shareholder at the address designated by him or her for that purpose or, if none
is designated, at his or her last known address. The notice or communication is
deemed to have been given two (2) business days after it is deposited, with
postage thereon prepaid, in a post office or official depository under the
exclusive care and custody of the United States postal service. The mailing
shall be registered, certified or other first class mail except where otherwise
provided in the Act. Written notice may also be given in person or by telegram,
telecopy, telex, radiogram, cablegram, or mailgram, and such notice shall be
deemed to be given when the recipient receives the notice personally, or when
the notice, addressed as provided above, has been delivered to the corporation,
or to the equipment transmitting such notice. Neither the business to be
transacted at, nor the purpose of, a regular or special meeting of the board of
directors need be specified in the notice of the meeting.
SECTION 2. WAIVER OF NOTICE. When, under the Act or the Restated Articles
of Incorporation or these bylaws, or by the terms of an agreement or instrument,
the corporation or the board of directors or any committee thereof may take
action after notice to any person or after lapse of a prescribed period of time,
the action may be taken without notice and without lapse of the period of time,
if at any time before or after the action is completed the person entitled to
notice or to participate in the action to be taken or, in case of a shareholder,
by his or her attorney-in-fact, submits a signed waiver of such requirements.
Neither the business to be transacted at, nor the purpose of, a regular or
special meeting of the board of directors need be specified in the waiver of
notice of the meeting. Attendance of a person at a meeting of shareholders
constitutes a waiver of objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting and a waiver of
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented. A director's
attendance at or participation in a meeting waives any required notice to him or
her of the meeting unless he or she at the beginning of the meeting, or upon his
or
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her arrival, objects to the meeting or the transacting of business at the
meeting and does not thereafter vote for or assent to any action taken at the
meeting.
ARTICLE V
OFFICERS
SECTION 1. SELECTION. The board of directors, at its first meeting and at
its organization meeting following the annual meeting of shareholders, shall
elect or appoint a president, a secretary and a treasurer. The board of
directors may also elect or appoint a chairman of the board, one (1) or more
vice presidents and such other officers, employees and agents as it shall deem
necessary who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
board of directors. Two (2) or more offices may be held by the same person but
an officer shall not execute, acknowledge or verify an instrument in more than
one (1) capacity.
SECTION 2. COMPENSATION. The salaries of all officers, employees and agents
of the corporation shall be fixed by the board of directors; provided, however,
that the board may delegate to the officers the fixing of compensation of
assistant officers, employees and agents.
SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the corporation
shall hold office for the term for which he or she is elected or appointed and
until his or her successor is elected or appointed and qualified, or until his
or her resignation or removal. An officer elected or appointed by the board of
directors may be removed by the board of directors with or without cause at any
time. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation. Any vacancy occurring in any office
of the corporation shall be filled by the board of directors.
SECTION 4. CHIEF EXECUTIVE OFFICER. If the board of directors desires to
elect or appoint a chief executive officer, the board of directors shall
designate the chairman of the board or president as such officer at the first
meeting of each newly elected board of directors; provided, however, that if a
motion is not made and carried to change the designation, the designation shall
be the same as the designation for the preceding year; provided, further, that
the designation of the chief executive officer may be changed at any special
meeting of the board of directors. The president shall be the chief executive
officer whenever the office of chairman of the board is vacant. The chief
executive officer shall be responsible to the board of directors for the general
supervision and management of the business and affairs of the corporation and
shall see that all orders and
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resolutions of the board of directors are carried into effect. The chairman of
the board or president who is not the chief executive officer shall be subject
to the authority of the chief executive officer, but shall exercise all of the
powers and discharge all of the duties of the chief executive officer during the
absence or disability of the chief executive officer.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. If the board of directors
elects or appoints a chairman of the board, he or she shall be elected or
appointed by, and from among the membership of, the board of directors. He or
she shall preside at all meetings of the shareholders, of the board of directors
and of any executive committee. He or she shall perform such other duties and
functions as shall be assigned to him or her from time to time by the board of
directors. He or she shall be, ex officio, a member of all standing committees.
Except where by law the signature of the president of the corporation is
required, the chairman of the board of directors shall possess the same power
and authority to sign all certificates, contracts, instruments, papers and
documents of every conceivable kind and character whatsoever in the name of and
on behalf of the corporation which may be authorized by the board of directors.
During the absence or disability of the president, or while that office is
vacant, the chairman of the board of directors shall exercise all of the powers
and discharge all of the duties of the president.
SECTION 6. PRESIDENT. During the absence or disability of the chairman of
the board, or while that office is vacant, the president shall preside over all
meetings of the board of directors, of the shareholders and of any executive
committee, and shall perform all of the duties and functions, and when so acting
shall have all powers and authority, of the chairman of the board. He or she
shall be, ex officio, a member of all standing committees. The president shall,
in general, perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors.
SECTION 7. VICE PRESIDENTS. The board of directors may elect or appoint one
or more vice presidents. The board of directors may designate one or more vice
presidents as executive or senior vice presidents. Unless the board of directors
shall otherwise provide by resolution duly adopted by it, such of the vice
presidents as shall have been designated executive or senior vice presidents and
are members of the board of directors in the order specified by the board of
directors (or if no vice president who is a member of the board of directors
shall have been designated as executive or senior vice president, then such vice
presidents as are members of the board of directors in the order specified by
the board of directors) or if no order is specified by the board of directors,
in order of seniority as vice president, shall perform the duties and exercise
the powers of the president during the absence or disability of the president if
the office of the chairman of the board is vacant. The vice presidents shall
perform such other
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duties as may be delegated to them by the board of directors, any executive
committee, the chairman of the board or the president.
SECTION 8. SECRETARY. The secretary shall attend all meetings of the
shareholders, and of the board of directors and of any executive committee, and
shall preserve in the books of the corporation true minutes of the proceedings
of all such meetings. He or she shall safely keep in his or her custody the seal
of the corporation, if any, and shall have authority to affix the same to all
instruments where its use is required or permitted. He or she shall give all
notice required by the Act, these bylaws or resolution. He or she shall perform
such other duties as may be delegated to him or her by the board of directors,
any executive committee, the chairman of the board or the president.
SECTION 9. TREASURER. The treasurer shall have custody of all corporate
funds and securities and shall keep in books belonging to the corporation full
and accurate accounts of all receipts and disbursements; he or she shall deposit
all moneys, securities and other valuable effects in the name of the corporation
in such depositories as may be designated for that purpose by the board of
directors. He or she shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors
whenever requested an account of all his or her transactions as treasurer and of
the financial condition of the corporation. If required by the board of
directors, he or she shall keep in force a bond in form, amount and with a
surety or sureties satisfactory to the board of directors, conditioned for
faithful performance of the duties of his or her office, and for restoration to
the corporation in case of his or her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and property of whatever kind
in his or her possession or under his or her control belonging to the
corporation. He or she shall perform such other duties as may be delegated to
him or her by the board of directors, any executive committee, the chairman of
the board or the president.
SECTION 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretary or assistant secretaries, in the absence or disability of the
secretary, shall perform the duties and exercise the powers of the secretary.
The assistant treasurer or assistant treasurers, in the absence or disability of
the treasurer, shall perform the duties and exercise the powers of the
treasurer. Any assistant treasurer, if required by the board of directors, shall
keep in force a bond as provided in Section 9 of this Article V. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or by the treasurer, respectively, or
by the board of directors, any executive committee, the chairman of the board or
the president.
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SECTION 11. DELEGATION OF AUTHORITY AND DUTIES BY BOARD OF DIRECTORS. All
officers, employees and agents shall, in addition to the authority conferred, or
duties imposed, on them by these bylaws, have such authority and perform such
duties in the management of the corporation as may be determined by resolution
of the board of directors not inconsistent with these bylaws.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BY THIRD
PARTIES. The corporation shall, to the fullest extent authorized or permitted by
the Act or other applicable law, as the same presently exist or may hereafter be
amended, but, in the case of any such amendment, only to the extent such
amendment permits the corporation to provide broader indemnification rights than
before such amendment, indemnify a director or officer (an "Indemnitee") who was
or is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal, other than an action by or in
the right of the corporation, by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement actually and reasonably incurred by him or her in connection
with the action, suit, or proceeding, if the Indemnitee acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders, and with respect to a criminal
action or proceeding, if the Indemnitee had no reasonable cause to believe his
or her conduct was unlawful. The termination of an action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the Indemnitee
did not act in good faith and in a manner which he or she reasonably believed to
be in or not opposed to the best interests of the corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BROUGHT BY OR
IN THE RIGHT OF THE CORPORATION. The corporation shall, to the fullest extent
authorized or permitted by the Act or other applicable law, as the same
presently exist or may hereafter be amended, but, in the case of any such
amendment, only to the extent such amendment permits the corporation to provide
broader indemnification rights than before such amendment, indemnify an
Indemnitee who was or is a party or is threatened to be made a
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party to a threatened, pending, or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection with the action
or suit, if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders. Indemnification shall not be made under this
Section for a claim, issue, or matter in which the Indemnitee has been found
liable to the corporation except to the extent authorized in Section 6 of this
Article VI.
SECTION 3. ACTIONS BROUGHT BY THE INDEMNITEE. Notwithstanding the
provisions of Sections 1 and 2 of this Article VI, the corporation shall not be
required to indemnify an Indemnitee in connection with an action, suit,
proceeding or claim (or part thereof) brought or made by such Indemnitee except
as otherwise provided herein with respect to the enforcement of this Article VI,
unless such action, suit, proceeding or claim (or part thereof) was authorized
by the board of directors of the corporation.
SECTION 4. APPROVAL OF INDEMNIFICATION. An indemnification under Sections
1 or 2 of this Article VI, unless ordered by the court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper in the circumstances because such
Indemnitee has met the applicable standard of conduct set forth in Sections 1 or
2 of this Article VI, as the case may be, and upon an evaluation of the
reasonableness of expenses and amounts paid in settlement. This determination
and evaluation shall be made in any of the following ways:
(a) by a majority vote of a quorum of the board of directors consisting of
directors who are not parties or threatened to be made parties to the
action, suit, or proceeding;
(b) if a quorum cannot be obtained in subsection (a), by majority vote of
a committee duly designated by the board of directors and consisting
solely of two (2) or more directors not at the time parties or
threatened to be made parties to the action, suit or proceeding;
(c) by independent legal counsel in a written opinion, which counsel shall
be selected in one (1) of the following ways:
(i) by the board of directors or its committee in the manner
prescribed in subsection (a) or (b); or
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(ii) if a quorum of the board of directors cannot be obtained under
subsection (a) and a committee cannot be designated under
subsection (b), by the board of directors;
(d) by all independent directors (if any directors have been designated as
such by the board of directors or shareholders of the corporation) who
are not parties or threatened to be made parties to the action, suit,
or proceeding; or
(e) by the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties
to the action, suit, or proceeding may not be voted.
In the designation of a committee under subsection (b) or in the selection of
independent legal counsel under subsection (c)(ii), all directors may
participate.
SECTION 5. ADVANCEMENT OF EXPENSES. The corporation may pay or reimburse
the reasonable expenses incurred by an Indemnitee who is a party or threatened
to be made a party to an action, suit, or proceeding in advance of final
disposition of the proceeding if all of the following apply:
(a) the Indemnitee furnishes the corporation a written affirmation of his
or her good faith belief that he or she has met the applicable
standard of conduct set forth in Sections 1 and 2 of this Article VI;
(b) the Indemnitee furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the standard
of conduct; and
(c) a determination is made that the facts then known to those making the
determination would not preclude indemnification under the Act.
The undertaking required by subsection (b) must be an unlimited general
obligation of the Indemnitee but need not be secured. Determinations of payments
under this Section shall be made in the manner specified in Section 4 of this
Article VI.
SECTION 6. COURT APPROVAL. An Indemnitee who is a party or threatened to
be made a party to an action, suit, or proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any notice it
considers necessary may order indemnification if it determines that the
Indemnitee is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he or she met the applicable standard
of conduct set forth in Sections 1 and
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2 of this Article VI or was adjudged liable as described in Section 2 of this
Article VI, but if he or she was adjudged liable, his or her indemnification is
limited to reasonable expenses incurred.
SECTION 7. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled to
indemnification under Sections 1 or 2 of this Article VI for a portion of
expenses, including reasonable attorneys' fees, judgments, penalties, fines, and
amounts paid in settlement, but not for the total amount, the corporation shall
indemnify the Indemnitee for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the Indemnitee is entitled to be
indemnified.
SECTION 8. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Any person who is not
covered by the foregoing provisions of this Article VI and who is or was an
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, may be indemnified to the fullest
extent authorized or permitted by the Act or other applicable law, as the same
exists or may hereafter be amended, but, in the case of any such amendment, only
to the extent such amendment permits the corporation to provide broader
indemnification rights than before such amendment, but in any event only to the
extent authorized at any time or from time to time by the board of directors.
SECTION 9. OTHER RIGHTS OF INDEMNIFICATION. The indemnification or
advancement of expenses provided under Sections 1 through 8 of this Article VI
is not exclusive of other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the Restated Articles of
Incorporation, these bylaws, or a contractual agreement (approved by unanimous
consent of the directors). The total amount of expenses advanced or indemnified
from all sources combined shall not exceed the amount of actual expenses
incurred by the person seeking indemnification or advancement of expenses. The
indemnification provided for in Sections 1 through 8 of this Article VI
continues as to a person who ceases to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of the person.
SECTION 10. DEFINITIONS. "Other enterprises" shall include employee
benefit plans of the corporation, "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan of the
corporation, and "serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, the director, officer, employee or
agent with respect to an employee benefit plan, its participants or its
beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the
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<PAGE>
participants and beneficiaries of an employee benefit plan of the corporation
shall be considered to have acted in a manner "not opposed to the best interests
of the corporation or its shareholders" as referred to in Sections 1 and 2 of
this Article VI.
SECTION 11. LIABILITY INSURANCE. The corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as such,
whether or not the corporation would have power to indemnify him or her against
liability under the pertinent provisions of the Act.
SECTION 12. ENFORCEMENT. If a claim under this Article VI is not paid in
full by the corporation within thirty (30) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Act for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its board of directors, a committee
thereof, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because such claimant has met the
applicable standard of conduct set forth in the Act nor an actual determination
by the corporation (including its board of directors, a committee thereof,
independent legal counsel or its shareholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
SECTION 13. CONTRACT WITH THE CORPORATION. The right to indemnification
conferred in this Article VI shall be deemed to be a contract right between the
corporation and each director or officer who serves in any such capacity at any
time while this Article VI is in effect, and any repeal or modification of this
Article VI shall not affect any rights or obligations then existing with respect
to any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
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<PAGE>
SECTION 14. APPLICATION TO A RESULTING OR SURVIVING CORPORATION OR
CONSTITUENT CORPORATION. The definition for "corporation" found in Section 569
of the Act, as the same exists or may hereafter be amended is, and shall be,
specifically excluded from application to this Article VI. The indemnification
and other obligations set forth in this Article VI of the corporation shall be
binding upon any resulting or surviving corporation after any merger or
consolidation with the corporation. Notwithstanding anything to the contrary
contained herein or in Section 569 of the Act, no person shall be entitled to
the indemnification and other rights set forth in this Article VI for acting as
a director or officer of another corporation prior to such other corporation
entering into a merger or consolidation with the corporation.
SECTION 15. SEVERABILITY. Each and every paragraph, sentence, term and
provision of this Article VI shall be considered severable in that, in the event
a court finds any paragraph, sentence, term or provision to be invalid or
unenforceable, the validity and enforceability, operation, or effect of the
remaining paragraphs, sentences, terms, or provisions shall not be affected, and
this Article VI shall be construed in all respects as if the invalid or
unenforceable matter had been omitted.
ARTICLE VII
STOCK AND TRANSFERS
SECTION 1. SHARE CERTIFICATES: REQUIRED SIGNATURES. The shares of the
corporation shall be represented by certificates which shall be signed by the
chairman of the board of directors, vice chairman of the board of directors,
president or a vice president and which also may be signed by another officer of
the corporation. The certificate may be sealed with the seal of the corporation,
if any, or a facsimile of the seal. The signatures of the officers may be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. If an officer
who has signed or whose facsimile signature has been placed upon a certificate
ceases to be an officer before the certificate is issued, it may be issued by
the corporation with the same effect as if he or she were the officer at the
date of issue.
SECTION 2. SHARE CERTIFICATES: REQUIRED PROVISIONS. A certificate
representing shares of the corporation shall state upon its face all of the
following:
(a) that the corporation is formed under the laws of the State of
Michigan;
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<PAGE>
(b) the name of the person to whom issued; and
(c) the number and class of shares, and the designation of the series, if
any, which the certificate represents.
A certificate representing shares issued by the corporation shall set forth on
its face or back or state on its face or back that the corporation will furnish
to a shareholder upon request and without charge a full statement of the
designation, relative rights, preferences and limitations of the shares of each
class authorized to be issued, and the designation, relative rights, preferences
and limitations of each series so far as the same have been prescribed and the
authority of the board to designate and prescribe the relative rights,
preferences and limitations of other series.
SECTION 3. REPLACEMENT OF LOST OR DESTROYED SHARE CERTIFICATES. The
corporation may issue a new certificate for shares or fractional shares in place
of a certificate theretofore issued by it, alleged to have been lost or
destroyed, and the board of directors may require the owner of the lost or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged lost or destroyed certificate or the
issuance of such new certificate, provided, that in the case of institutional
investors, an indemnity agreement, in lieu of a bond, shall be sufficient.
SECTION 4. REGISTERED SHAREHOLDERS. The corporation shall have the right
to treat the registered holder of any share as the absolute owner thereof, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the corporation shall
have express or other notice thereof, save as may be otherwise provided by law.
SECTION 5. TRANSFER AGENT AND REGISTRAR. The board of directors may
appoint a transfer agent and a registrar in the registration of transfers of its
securities.
SECTION 6. REGULATIONS. The board of directors shall have power and
authority to make all such rules and regulations as the board of directors shall
deem expedient regulating the issue, transfer and registration of certificates
for shares in the corporation.
SECTION 7. UNCERTIFICATED SHARES. The board of directors may authorize
the issuance of some or all of the shares of any or all of the classes or series
of shares of the corporation without certificates. In such event, within a
reasonable time after the issuance or transfer of shares without certificates,
the corporation shall send the shareholder a written statement containing all of
the information required on certificates as set forth in Section 2 of this
Article VII, or the Act.
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<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS IN CASH OR PROPERTY. The board of directors may
authorize and the corporation may make distributions to its shareholders subject
to restriction by the Restated Articles of Incorporation, these bylaws or the
Act.
SECTION 2. RESERVES. The board of directors shall have power and
authority to set apart such reserve or reserves, for any proper purpose, as the
board of directors in its discretion shall approve, and the board of directors
shall have the power and authority to abolish any reserve created by the board
of directors.
SECTION 3. VOTING SECURITIES. Unless otherwise directed by the board of
directors, the chairman of the board or president, or in the case of their
absence or inability to act, the vice presidents, in order of their seniority,
shall have full power and authority on behalf of the corporation to attend and
to act and to vote, or to execute in the name or on behalf of the corporation a
consent in writing in lieu of a meeting of shareholders or a proxy authorizing
an agent or attorney-in-fact for the corporation to attend and vote at any
meetings of security holders of corporations in which the corporation may hold
securities, and at such meetings he or his duly authorized agent or attorney-in-
fact shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
corporation might have possessed and exercised if present. The board of
directors by resolution from time to time may confer like power upon any other
person or persons.
SECTION 4. CHECKS. All checks, drafts and orders for the payment of money
shall be signed in the name of the corporation in such manner and by such
officer or officers or such other person or persons as the board of directors
shall from time to time designate for that purpose.
SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of any
contract, conveyance or other instrument has been authorized without
specification of the executing officers, the chairman of the board, president or
any vice president may execute the same in the name and on behalf of the
corporation and may affix the corporate seal thereto, if any. The board of
directors shall have power to designate the officers and agents who shall have
authority to execute any instrument in behalf of the corporation.
SECTION 6. CORPORATE BOOKS AND RECORDS. The corporation shall keep books
and records of account and minutes of the proceedings of its shareholders, board
of directors and executive committees, if any. The books, records and minutes
may be kept outside the State of Michigan. The corporation shall keep at its
registered office, or at the office of its transfer agent in or outside the
State of Michigan, records containing the names and
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<PAGE>
addresses of all shareholders, the number, class and series of shares held by
each and the dates when they respectively became holders of record. Any of the
books, records or minutes may be in written form or in any other form capable of
being converted into written form within a reasonable time. The corporation
shall convert into written form without charge any record not in written form,
unless otherwise requested by a person entitled to inspect the records.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SECTION 8. SEAL. If the corporation has a corporate seal, it shall have
inscribed thereon the name of the corporation and the words "Corporate Seal" and
"Michigan." The seal may be used by causing it or a facsimile to be affixed,
impressed or reproduced in any other manner.
ARTICLE IX
AMENDMENTS
SECTION 1. The shareholders or the board of directors may amend or repeal
the bylaws or adopt new bylaws unless the Restated Articles of Incorporation
provide that the power to adopt new bylaws is reserved exclusively to the
shareholders or that these bylaws or any particular bylaw shall not be altered
or repealed by the board of directors. Such action may be taken by written
consent or at any meeting of shareholders or the board of directors; provided
that if notice of any such meeting is required by these bylaws, it shall contain
notice of the proposed amendment, repeal or new bylaws. Amendment of these
bylaws by the board of directors requires the vote of not less than a majority
of the members of the board then in office.
ARTICLE X
VOTING AGREEMENTS
SECTION 1. Shares of capital stock of the corporation are subject to
voting agreements included in a Voting Agreement between the corporation and
certain shareholders. These bylaws are subject to such agreement and do not
supersede such agreement in any respect.
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<PAGE>
Exhibit 3.2.1
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
Date Received
MAR 15 1994
FILED
MAR 15 1994
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
- --------------------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER: 092-712
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
OF
NUMATION, INC.
- --------------------------------------------------------------------------------
These Articles of Incorporation are signed by the incorporator for the
purpose of forming a profit corporation pursuant to the provisions of Act 284,
Public Acts of 1972, as amended, as follows:
ARTICLE I The name of the corporation is Numation, Inc.
ARTICLE II The purpose or purposes for which the corporation is formed is to
engage in any activity within the purposes for which corporations
may be formed under the Business Corporation Act of Michigan (the
"Act").
ARTICLE III The total authorized shares is 50,000 shares of common stock.
ARTICLE IV The corporation has only one class of stock.
ARTICLE V The address and mailing address of the registered office is:
1450 N. Milford Road
Highland, MI 48357-4560
The name of the resident agent at the registered office is John
H. Welker.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
ARTICLE VI The name and address of the incorporator are as follows:
Name Residence or Business Address
---- -----------------------------
Linda M. Foster 150 West Jefferson
Suite 2500
Detroit, Michigan 48226
ARTICLE VII The duration of the corporation is perpetual.
ARTICLE VIII A director of the corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director. However, this provision
does not eliminate or limit the liability of a director for any
of the following:
(a) any breach of the director's duty of loyalty to the
corporation or its shareholders;
(b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) a violation of Section 551(1) of the Act;
(d) a transaction from which the director derived an improper
personal benefit; or
(e) an act or omission occurring prior to the date when this
article becomes effective.
Any repeal, amendment or other modification of this Article shall
not increase the liability or alleged liability of any director
of the corporation then existing with respect to any state of
facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts. If the Act is
subsequently amended to authorize corporate action further
eliminating or limiting personal liability of directors, then the
liability of directors shall be eliminated or limited to the
fullest extent permitted by the Act as so amended.
ARTICLE IX Any action required or permitted by the Act, these Articles or
the Bylaws of the corporation to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without
prior notice and without a vote, if consents in writing, setting
forth the action so taken, are signed by the holders of
outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take the action at
a meeting at which all shares entitled to vote on the action were
present and voted. The written consents shall bear the date of
signature of each shareholder who signs the consent. No written
consents shall be effective to take the corporate
-2-
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
action referred to unless, within 60 days after the record date
for determining shareholders entitled to express consent to or to
dissent from a proposal without a meeting, written consents dated
not more than 10 days before the record date and signed by a
sufficient number of shareholders to take the action are
delivered to the corporation. Delivery shall be to the
corporation's registered office, its principal place of business,
or an officer or agent of the corporation having custody of the
minutes of the proceedings of its shareholders. Delivery made to
a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. Prompt
notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to
shareholders who would have been entitled to notice of the
shareholder meeting if the action had been taken at a meeting and
who have not consented in writing.
ARTICLE X When a compromise or arrangement or a plan of reorganization of
this corporation is proposed between this corporation and its
creditors or any class of them or between this corporation and
its shareholders or any class of them, a court of equity
jurisdiction within the state, on application of this corporation
or of a creditor or shareholder thereof, or on application of a
receiver appointed for the corporation, may order a meeting of
the creditors or class of creditors or of the shareholders or
class of shareholders to be affected by the proposed compromise
or arrangement or reorganization, to be summoned in such manner
as the court directs. If a majority in number representing 3/4 in
value of the creditors or class of creditors, or of the
shareholders or class of shareholders to be affected by the
proposed compromise or arrangement or a reorganization, agree to
a compromise or arrangement or a reorganization of this
corporation as a consequence of the compromise or arrangement,
the compromise or arrangement and the reorganization, if
sanctioned by the court to which the application has been made,
shall be binding on all the creditors or class of creditors, or
on all the shareholders or class of shareholders and also on this
corporation.
I, the sole incorporator, sign my name this 14th day of March, 1994.
/s/ Linda M. Foster
------------------------------------
Linda M. Foster
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SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
- --------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- -------------------------------------
- -------------------------------------
- --------------------------------------------------------
Name Sally A. Hamby
Miller, Canfield, Paddock and Stone, PLC
- --------------------------------------------------------
Address P.O. Box 2014
1400 North Woodward Ave., Suite 100
- --------------------------------------------------------
City State Zip Code EFFECTIVE
Bloomfield Hills Michigan 48303-2014 DATE:
- ------------------------------------------------------------------- ---------
.Document will be returned to the name and address you enter above.
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit and Nonprofit Corporations
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
- --------------------------------------------------------------------------------
1. The present name of the corporation is: NUMATION, INC.
2. The identification number assigned by the Bureau is: 092-712
3. The location of the registered office is:
1450 N. Milford Road Highland , Michigan 48357-4560
------------------------------------------------- ---------------
(Street Address) (City) (Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Article III of the Articles of Incorporation is hereby amended to read as
follows:
The total authorized shares is 50,000 shares of common stock, consisting of
35,000 voting common shares without par value to be designated as Class A and
15,000 nonvoting common shares without par value to be designated as Class B.
Article IV of the Articles of Incorporation is hereby amended to read as
follows:
The corporation has two classes of common stock. Each class of shares shall
be identical in all respects, except that the nonvoting shares, designated
as Class B, shall carry no right to vote for the election of directors of
the Corporation, and no right to vote on any matter presented to the
shareholders for their vote or approval except only as the laws of this
state require that voting rights be granted to such nonvoting shares.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
5. (For amendments adopted by unanimous consent of incorporators before the
first meeting of the board of directors or trustees.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____ day of _______________, 19__, in accordance with the provisions
of the Act by the unanimous consent of the incorporator(s) before the first
meeting of the Board of Directors or Trustees.
Signed this ____ day of _______________, 19__
------------------------------------ ------------------------------------
(Signature) (Signature)
------------------------------------ ------------------------------------
(Type or Print Name) (Type of Print Name)
------------------------------------ ------------------------------------
(Signature) (Signature)
------------------------------------ ------------------------------------
(Type or Print Name) (Type of Print Name)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. (For profit corporations, and for nonprofit corporations whose articles
state the corporation is organized on a stock or on a membership basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the 31st day of March, 1998 by the shareholders if a profit corporation,
or by the shareholders or members if a nonprofit corporation (check one of
the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of the shareholders or members having not less than
the minimum number of votes required by statute in accordance with
Section 407(1) and (2) of the Act if a nonprofit corporation, or
Section 407(1) of the Act if a profit corporation. Written notice to
shareholders or members who have not consented in writing has been
given. (Note: Written consent by less than all of the shareholders or
members is permitted only if such provision appears in the Articles of
Incorporation.)
[X] by written consent of all the shareholders or members entitled to vote
in accordance with section 407(3) of the Act if a nonprofit
corporation, or Section 407(2) of the Act if a profit corporation.
Signed this 31st day of March, 1998
By /s/ John H. Welker
--------------------------------------------------------------
(Signature of President, Vice-President,
Chairperson or Vice-Chairperson)
John H. Welker Chairperson
-----------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
7. (For a nonprofit corporation whose articles state the corporation is
organized on a directorship basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____ day of _______________, 19__, by the directors of a nonprofit
corporation whose articles of incorporation state it is organized on a
directorship basis (check one of the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of all directors pursuant to Section 525 of the
Act.
Signed this ____ day of _______________, 19__
By
--------------------------------------------------------------
(Signature of President, Vice-President,
Chairperson or Vice-Chairperson)
-----------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 3.2.2
BYLAWS
OF
NUMATION, INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The initial registered office shall be in
the City of Highland, County of Oakland, State of Michigan.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places both in and outside the State of Michigan as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders of the
corporation shall be held at the registered office or such other place, either
within or without the State of Michigan, as may be determined from time to time
by the board of directors.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of
shareholders for election of directors and for such other business as may
properly come before the meeting, commencing with the year 1995, shall be held
in May, at a date and time as shall be determined by the board of directors, or
at such other date and time as shall be determined from time to time by the
board of directors, unless such action is taken by written consent as provided
in Section 12 of this Article. If the annual meeting is not held on the date
designated therefor, the board shall cause the meeting to be held as soon
thereafter as convenient.
SECTION 3. ORDER OF BUSINESS AT ANNUAL MEETING. The order of business at
the annual meeting of the shareholders shall be as follows:
(a) Reading of notice and proof of mailing,
(b) Reports of Officers,
(c) Election of Directors,
-1-
<PAGE>
(d) Transaction of other business mentioned in the notice,
(e) Adjournment,
provided that the presiding officer may vary the order of business at his or her
discretion.
SECTION 4. NOTICE OF MEETING OF SHAREHOLDERS. Except as otherwise
provided in the Michigan Business Corporation Act (herein called the "Act"),
written notice of the time, place and purposes of a meeting of shareholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by mail, to each shareholder of record
entitled to vote at the meeting. If a meeting is adjourned to another time or
place, it is not necessary to give notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken and at the adjourned meeting only business is
transacted as might have been transacted at the original meeting. If after the
adjournment the board of directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record on the new record date entitled to vote at the meeting.
SECTION 5. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer or agent
having charge of the stock transfer books for shares of the corporation shall
make and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting or any adjournment thereof. The list shall:
(a) Be arranged alphabetically within each class and series, with the
address of, and the number of shares held by, each shareholder.
(b) Be produced at the time and place of the meeting.
(c) Be subject to inspection by any shareholder during the whole time of
the meeting.
(d) Be prima facie evidence as to who are the shareholders entitled to
examine the list or to vote at the meeting.
SECTION 6. SPECIAL MEETING OF SHAREHOLDERS. A special meeting of
shareholders may be called at any time by the chief executive officer of the
corporation (see Article V, Section 4) or by a majority of the members of the
board of directors then in office, or by shareholders owning, in the aggregate,
not less than ten percent (10%) of all the shares entitled to vote at such
special meeting. The method by which such meeting may be called is as follows:
Upon receipt of a specification in writing setting forth the date and objects of
such proposed special meeting, signed by the chief executive officer, or by a
majority of the members of the board of directors then in office, or by
shareholders as above provided, the secretary of the corporation shall prepare,
sign and mail the notices requisite to such meeting.
-2-
<PAGE>
SECTION 7. QUORUM OF SHAREHOLDERS. Unless a greater or lesser quorum is
provided in the articles of incorporation, in a bylaw adopted by the
shareholders or incorporators, or in the Act, shares entitled to cast a majority
of the votes at a meeting constitute a quorum at the meeting. The shareholders
present in person or by proxy at the meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum. Whether or not a quorum is present, the meeting may be adjourned
by a vote of the shares present.
SECTION 8. VOTE OF SHAREHOLDERS. Each outstanding share is entitled to
one (1) vote on each matter submitted to a vote, unless otherwise provided in
the articles of incorporation. A vote may be cast either orally or in writing.
If an action, other than the election of directors, is to be taken by vote of
the shareholders, it shall be authorized by a majority of the votes cast by the
holders of shares entitled to vote on the action, unless a greater vote is
required by the articles of incorporation or the Act. Except as otherwise
provided in the articles of incorporation, directors shall be elected by a
plurality of the votes cast at an election.
SECTION 9. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS. For the
purpose of determining shareholders entitled to notice of and to vote at a
meeting of shareholders or an adjournment of a meeting, the board of directors
may fix a record date, which shall not precede the date on which the resolution
fixing the record date is adopted by the board. The date shall not be more than
sixty (60) nor less than ten (10) days before the date of the meeting. If a
record date is not fixed, the record date for determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be the close
of business on the day next preceding the day on which notice is given, or if no
notice is given, the day next preceding the day on which the meeting is held.
When a determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders has been made as provided in this Section, the
determination applies to any adjournment of the meeting, unless the board of
directors fixes a new record date under this Section for the adjourned meeting.
For the purpose of determining shareholders entitled to express consent to or to
dissent from a proposal without a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board and shall not be more than ten (10) days
after the board resolution. If a record date is not fixed and prior action by
the board of directors is required with respect to the corporate action to be
taken without a meeting, the record date shall be the close of business on the
day on which the resolution of the board is adopted. If a record date is not
fixed and prior action by the board of directors is not required, the record
date shall be the first date on which a signed written consent is delivered to
the corporation as provided in Section 12 of this Article. For the purpose of
determining shareholders entitled to receive payment of a share dividend or
distribution, or allotment of a right, or for the purpose of any other action,
the board of directors may fix a record date, which shall not precede the date
on which the resolution fixing the record date is adopted by the board. The date
shall not be more than sixty (60) days before the payment of the share dividend
or distribution or allotment of a right or other action. If a record date is not
fixed, the
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record date shall be the close of business on the day on which the resolution of
the board of directors relating to the corporate action is adopted.
SECTION 10. PROXIES. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
one or more other persons to act for him or her by proxy. A proxy shall be
signed by the shareholder or his or her authorized agent or representative. A
proxy is not valid after the expiration of three (3) years from its date unless
otherwise provided in the proxy.
SECTION 11. INSPECTORS OF ELECTION. The board of directors, in advance of
a shareholders' meeting, may appoint one (1) or more inspectors of election to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a shareholders' meeting may, and on request
of a shareholder entitled to vote thereat shall, appoint one (1) or more
inspectors. In case a person appointed fails to appear or act, the vacancy may
be filled by appointment made by the board of directors in advance of the
meeting or at the meeting by the person presiding thereat. The inspectors shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine challenges and questions arising in connection with the right to vote,
count and tabulate votes, ballots or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting or a shareholder
entitled to vote thereat, the inspectors shall make and execute a written report
to the person presiding at the meeting of any of the facts found by them and
matters determined by them. The report is prima facie evidence of the facts
stated and of the vote as certified by the inspectors.
SECTION 12. ACTION BY WRITTEN CONSENT. The articles of incorporation may
provide that any action required or permitted by the Act to be taken at an
annual or special meeting of shareholders may be taken without a meeting,
without prior notice and without a vote, if consents in writing, setting forth
the action so taken, are signed by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to authorize or
take the action at a meeting at which all shares entitled to vote on the action
were present and voted. The written consents shall bear the date of signature of
each shareholder who signs the consent. No written consents shall be effective
to take the corporate action referred to unless, within sixty (60) days after
the record date for determining shareholders entitled to express consent to or
to dissent from a proposal without a meeting, written consents dated not more
than ten (10) days before the record date and signed by a sufficient number of
shareholders to take the action are delivered to the corporation. Delivery shall
be to the corporation's registered office, its principal place of business, or
an officer or agent of the corporation having custody of the minutes of the
proceedings of its shareholders. Delivery made to a corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to shareholders who would
have been entitled to notice of the shareholder meeting if the action had been
taken at a meeting and who have not consented in writing. Any action required or
permitted by the
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Act to be taken at an annual or special meeting of shareholders may be taken
without a meeting, without prior notice and without a vote if, before or after
the action, all the shareholders entitled to vote consent in writing.
SECTION 13. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the articles of incorporation, by oral or written permission of a
majority of the shareholders, a shareholder may participate in a meeting of
shareholders by a conference telephone or by other similar communications
equipment through which all persons participating in the meeting may communicate
with the other participants. All participants shall be advised of the
communications equipment and the names of the participants in the conference
shall be divulged to all participants. Participation in a meeting pursuant to
this Section constitutes presence in person at the meeting.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of directors which
shall constitute the whole board shall be three (3) directors. Thereafter, the
number of directors which shall constitute the board of directors for each
ensuing year shall be determined at the annual meeting by vote of the
shareholders prior to such election; provided, however, that if a motion is not
made and carried to increase or decrease the number of directors, the board
shall consist of the same number of directors as were elected for the preceding
year. The shareholders may also increase or decrease the number of directors at
any meeting of the shareholders or by a written consent in lieu thereof. Either
the shareholders or the board of directors may fill the vacancy caused by an
increase in the number of directors. The first board of directors shall hold
office until the first annual meeting of shareholders. At the first annual
meeting of shareholders and at each annual meeting thereafter, the shareholders
shall elect directors to hold office until the succeeding annual meeting, except
in the case of classification of directors as permitted by the Act. A director
shall hold office for the term for which he or she is elected and until his or
her successor is elected and qualified, or until his or her resignation or
removal. Directors need not be shareholders and may serve continuous terms.
SECTION 2. VACANCIES. Unless otherwise limited by the articles of
incorporation, if a vacancy, including a vacancy resulting from an increase in
the number of directors, occurs in the board of directors, the vacancy may be
filled as follows:
(a) The shareholders may fill the vacancy.
(b) The board may fill the vacancy.
(c) If the directors remaining in office constitute fewer than a quorum of
the board of directors, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
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Unless otherwise provided in the articles of incorporation, if the holders of
any class or classes of stock or series are entitled to elect one (1) or more
directors to the exclusion of other shareholders, vacancies of that class or
classes or series may be filled only by one (1) of the following:
(a) By a majority of the directors elected by the holders of that class or
classes or series then in office, whether or not those directors
constitute a quorum of the board of directors.
(b) By the holders of shares of that class or classes of shares, or
series.
Unless otherwise limited by the articles of incorporation or these bylaws, in
the case of a corporation the board of directors of which are divided into
classes, any director chosen to fill a vacancy shall hold office until the next
election of the class for which the director shall have been chosen, and until
his or her successor is elected and qualified. If because of death, resignation,
or other cause, a corporation has no directors in office, an officer, a
shareholder, a personal representative, administrator, trustee, or guardian of a
shareholder, or other fiduciary entrusted with like responsibility for the
person or estate of a shareholder, may call a special meeting of shareholders in
accordance with the articles of incorporation or these bylaws. A vacancy that
will occur at a specific date, by reason of a resignation effective at a later
date under Section 4 of this Article or otherwise, may be filled before the
vacancy occurs but the newly elected or appointed director may not take office
until the vacancy occurs.
SECTION 3. REMOVAL. The shareholders may remove one (1) or more directors
with or without cause unless the articles of incorporation provide that
directors may be removed only for cause. The vote for removal shall be by a
majority of shares entitled to vote at an election of directors, unless the
articles of incorporation require a higher vote for removal without cause.
SECTION 4. RESIGNATION. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a later time as set forth in the notice of resignation.
SECTION 5. POWERS. The business and affairs of the corporation shall be
managed by its board of directors except as otherwise provided in the Act or in
the articles of incorporation.
SECTION 6. LOCATION OF MEETINGS. Regular or special meetings of the board
of directors may be held either in or outside the State of Michigan.
SECTION 7. ORGANIZATION MEETING OF BOARD. The first meeting of each newly
elected board of directors shall be held at the place of holding the annual
meeting of shareholders, and immediately following the same, for the purpose of
electing officers and transacting any other business properly brought before it,
provided that the organization meeting in any year may be held at a different
time and place than that herein provided by a consent of a majority of the
directors of such new board. No notice
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of such meeting shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be present, unless
said meeting is not held at the place of holding and immediately following the
annual meeting of shareholders.
SECTION 8. REGULAR MEETING OF BOARD. Any regular meeting of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board.
SECTION 9. SPECIAL MEETING OF BOARD. Any special meeting of the board of
directors may be called by the chief executive officer, or by a majority of the
persons then comprising the board of directors, at any time by means of notice
of the time and place thereof to each director, given not less than twenty-four
(24) hours before the time such special meeting is to be held.
SECTION 10. COMMITTEES OF DIRECTORS. The board of directors may designate
one (1) or more committees, each committee to consist of one (1) or more of the
directors of the corporation. The board may designate one (1) or more directors
as alternate members of any committee, who may replace an absent or disqualified
member at a meeting of the committee. In the absence or disqualification of a
member of a committee, the members thereof present at a meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors
creating such committee, may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation. A
committee does not have the power or authority to amend the articles of
incorporation, adopt an agreement of merger or share exchange, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommend to the shareholders a dissolution
of the corporation or a revocation of a dissolution, amend the bylaws of the
corporation or fill vacancies in the board of directors; and, unless the
resolution of the board of directors creating such committee, the articles of
incorporation or bylaws expressly so provide, a committee does not have the
power or authority to declare a distribution, dividend or to authorize the
issuance of stock. Any such committee, and each member thereof, shall serve at
the pleasure of the board of directors.
SECTION 11. QUORUM AND REQUIRED VOTE OF BOARD AND COMMITTEES. At all
meetings of the board of directors, or of a committee thereof, a majority of the
members of the board then in office, or of the members of a committee of the
board of directors, constitutes a quorum for transaction of business, unless the
articles of incorporation, these bylaws, or in the case of a committee, the
board resolution establishing the committee, provide for a larger or smaller
number. The vote of the majority of members present at a meeting at which a
quorum is present constitutes the action of the board of directors or of the
committee unless the vote of a larger number is required by the Act, the
articles of incorporation, or these bylaws, or in the case of a committee, the
board resolution establishing the committee. Amendment of
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these bylaws by the board of directors requires the vote of not less than a
majority of the members of the board then in office. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 12. ACTION BY WRITTEN CONSENT. Action required or permitted to be
taken under authorization voted at a meeting of the board of directors or a
committee of the board of directors, may be taken without a meeting if, before
or after the action, all members of the board then in office or of the committee
consent to the action in writing. The written consents shall be filed with the
minutes of the proceedings of the board of directors or committee. The consent
has the same effect as a vote of the board of directors or committee for all
purposes.
SECTION 13. COMPENSATION OF DIRECTORS. The board of directors, by
affirmative vote of a majority of directors in office and irrespective of any
personal interest of any of them, may establish reasonable compensation of
directors for services to the corporation as directors or officers, but approval
of the shareholders is required if the articles of incorporation, these bylaws
or any provisions of the Act so provide.
SECTION 14. PARTICIPATION IN MEETING BY TELEPHONE. By oral or written
permission of a majority of the board of directors, a member of the board of
directors or of a committee designated by the board may participate in a meeting
by means of conference telephone or similar communications equipment through
which all persons participating in the meeting can communicate with the other
participants. Participation in a meeting pursuant to this Section constitutes
presence in person at the meeting.
ARTICLE IV
NOTICES
SECTION 1. NOTICE. Whenever any notice or communication is required to be
given by mail to any director or shareholder under any provision of the Act, or
of the articles of incorporation or of these bylaws, it shall be given in
writing, except as otherwise provided in the Act, to such director or
shareholder at the address designated by him or her for that purpose or, if none
is designated, at his or her last known address. The notice or communication is
given when deposited, with postage thereon prepaid, in a post office or official
depository under the exclusive care and custody of the United States postal
service. The mailing shall be registered, certified or other first class mail
except where otherwise provided in the Act. Written notice may also be given in
person or by telegram, telecopy, telex, radiogram, cablegram, or mailgram, and
such notice shall be deemed to be given when the recipient receives the notice
personally, or when the notice, addressed as provided above, has been delivered
to the corporation, or to the equipment transmitting such notice. Neither the
business to be transacted at, nor the
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purpose of, a regular or special meeting of the board of directors need be
specified in the notice of the meeting.
SECTION 2. WAIVER OF NOTICE. When, under the Act or the articles of
incorporation or these bylaws, or by the terms of an agreement or instrument, a
corporation or the board of directors or any committee thereof may take action
after notice to any person or after lapse of a prescribed period of time, the
action may be taken without notice and without lapse of the period of time, if
at any time before or after the action is completed the person entitled to
notice or to participate in the action to be taken or, in case of a shareholder,
by his or her attorney-in-fact, submits a signed waiver of such requirements.
Neither the business to be transacted at, nor the purpose of, a regular or
special meeting of the board of directors need be specified in the waiver of
notice of the meeting. Attendance of a person at a meeting of shareholders
constitutes a waiver of objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting and a waiver of
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented. A director's
attendance at or participation in a meeting waives any required notice to him or
her of the meeting unless he or she at the beginning of the meeting, or upon his
or her arrival, objects to the meeting or the transacting of business at the
meeting and does not thereafter vote for or assent to any action taken at the
meeting.
ARTICLE V
OFFICERS
SECTION 1. SELECTION. The board of directors, at its first meeting and at
its organization meeting following the annual meeting of shareholders, shall
elect or appoint a president, a secretary and a treasurer. The board of
directors may also elect or appoint a chairman of the board, one (1) or more
vice presidents and such other officers, employees and agents as it shall deem
necessary who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
board. Two (2) or more offices may be held by the same person but an officer
shall not execute, acknowledge or verify an instrument in more than one (1)
capacity.
SECTION 2. COMPENSATION. The salaries of all officers, employees and
agents of the corporation shall be fixed by the board of directors; provided,
however, that the board may delegate to the officers the fixing of compensation
of assistant officers, employees and agents.
SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the corporation
shall hold office for the term for which he or she is elected or appointed and
until his or her successor is elected or appointed and qualified, or until his
or her resignation or removal. An officer elected or appointed by the board of
directors may
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be removed by the board with or without cause at any time. An officer may resign
by written notice to the corporation. The resignation is effective upon its
receipt by the corporation or at a subsequent time specified in the notice of
resignation. Any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
SECTION 4. CHIEF EXECUTIVE OFFICER. If the board of directors desires to
elect or appoint a chief executive officer, the board shall designate the
chairman of the board or president as such officer at the first meeting of each
newly elected board of directors; provided, however, that if a motion is not
made and carried to change the designation, the designation shall be the same as
the designation for the preceding year; provided, further, that the designation
of the chief executive officer may be changed at any special meeting of the
board of directors. The president shall be the chief executive officer whenever
the office of chairman of the board is vacant. The chief executive officer shall
be responsible to the board of directors for the general supervision and
management of the business and affairs of the corporation and shall see that all
orders and resolutions of the board are carried into effect. The chairman of the
board or president who is not the chief executive officer shall be subject to
the authority of the chief executive officer, but shall exercise all of the
powers and discharge all of the duties of the chief executive officer during the
absence or disability of the chief executive officer.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. If the board of directors
elects or appoints a chairman of the board, he or she shall be elected or
appointed by, and from among the membership of, the board of directors. He or
she shall preside at all meetings of the shareholders, of the board of directors
and of any executive committee. He or she shall perform such other duties and
functions as shall be assigned to him or her from time to time by the board of
directors. He or she shall be, ex officio, a member of all standing committees.
Except where by law the signature of the president of the corporation is
required, the chairman of the board of directors shall possess the same power
and authority to sign all certificates, contracts, instruments, papers and
documents of every conceivable kind and character whatsoever in the name of and
on behalf of the corporation which may be authorized by the board of directors.
During the absence or disability of the president, or while that office is
vacant, the chairman of the board of directors shall exercise all of the powers
and discharge all of the duties of the president.
SECTION 6. PRESIDENT. During the absence or disability of the chairman of
the board, or while that office is vacant, the president shall preside over all
meetings of the board of directors, of the shareholders and of any executive
committee, and shall perform all of the duties and functions, and when so acting
shall have all powers and authority, of the chairman of the board. He or she
shall be, ex officio, a member of all standing committees. The president shall,
in general, perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors.
SECTION 7. VICE PRESIDENTS. The board of directors may elect or appoint
one or more vice presidents. The board of directors may designate one or more
vice presidents as executive or senior vice presidents. Unless the board of
directors shall
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otherwise provide by resolution duly adopted by it, such of the vice presidents
as shall have been designated executive or senior vice presidents and are
members of the board of directors in the order specified by the board of
directors (or if no vice president who is a member of the board of directors
shall have been designated as executive or senior vice president, then such vice
presidents as are members of the board of directors in the order specified by
the board of directors) shall perform the duties and exercise the powers of the
president during the absence or disability of the president if the office of the
chairman of the board is vacant. The vice presidents shall perform such other
duties as may be delegated to them by the board of directors, any executive
committee, the chairman of the board or the president.
SECTION 8. SECRETARY. The secretary shall attend all meetings of the
shareholders, and of the board of directors and of any executive committee, and
shall preserve in the books of the corporation true minutes of the proceedings
of all such meetings. He or she shall safely keep in his or her custody the seal
of the corporation, if any, and shall have authority to affix the same to all
instruments where its use is required or permitted. He or she shall give all
notice required by the Act, these bylaws or resolution. He or she shall perform
such other duties as may be delegated to him or her by the board of directors,
any executive committee, the chairman of the board or the president.
SECTION 9. TREASURER. The treasurer shall have custody of all corporate
funds and securities and shall keep in books belonging to the corporation full
and accurate accounts of all receipts and disbursements; he or she shall deposit
all moneys, securities and other valuable effects in the name of the corporation
in such depositories as may be designated for that purpose by the board of
directors. He or she shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors
whenever requested an account of all his or her transactions as treasurer and of
the financial condition of the corporation. If required by the board of
directors, he or she shall keep in force a bond in form, amount and with a
surety or sureties satisfactory to the board of directors, conditioned for
faithful performance of the duties of his or her office, and for restoration to
the corporation in case of his or her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and property of whatever kind
in his or her possession or under his or her control belonging to the
corporation. He or she shall perform such other duties as may be delegated to
him or her by the board of directors, any executive committee, the chairman of
the board or the president.
SECTION 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretary or assistant secretaries, in the absence or disability of the
secretary, shall perform the duties and exercise the powers of the secretary.
The assistant treasurer or assistant treasurers, in the absence or disability of
the treasurer, shall perform the duties and exercise the powers of the
treasurer. Any assistant treasurer, if required by the board of directors, shall
keep in force a bond as provided in Section 9 of this Article. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or by the
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treasurer, respectively, or by the board of directors, any executive committee,
the chairman of the board or the president.
SECTION 11. DELEGATION OF AUTHORITY AND DUTIES BY BOARD OF DIRECTORS. All
officers, employees and agents shall, in addition to the authority conferred, or
duties imposed, on them by these bylaws, have such authority and perform such
duties in the management of the corporation as may be determined by resolution
of the board of directors not inconsistent with these bylaws.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BY THIRD
PARTIES. The corporation shall, to the fullest extent authorized or permitted
by the Act or other applicable law, as the same presently exist or may hereafter
be amended, but, in the case of any such amendment, only to the extent such
amendment permits the corporation to provide broader indemnification rights than
before such amendment, indemnify a director or officer (an "Indemnitee") who was
or is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal, other than an action by or in
the right of the corporation, by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partner-ship,
joint venture, trust, or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement actually and reasonably incurred by him or her in connection
with the action, suit, or proceeding, if the Indemnitee acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its share-holders, and with respect to a
criminal action or proceeding, if the Indemnitee had no reasonable cause to
believe his or her conduct was unlawful. The termination of an action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
Indemnitee did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BROUGHT BY OR
IN THE RIGHT OF THE CORPORATION. The corporation shall, to the fullest extent
authorized or permitted by the Act or other applicable law, as the same
presently exist or may hereafter be amended, but, in the case of any such
amendment, only to the extent such amendment permits the corporation to provide
broader indemnification rights than before such amendment, indemnify an
Indemnitee who was or is a party or is threatened to be made a party to a
threatened,
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pending, or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, and amounts paid in settlement actually and
reasonably incurred by the Indemnitee in connection with the action or suit, if
the Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in or not opposed to the best interests of the corporation or its
shareholders. Indemnification shall not be made under this Section for a claim,
issue, or matter in which the Indemnitee has been found liable to the
corporation except to the extent authorized in Section 6 of this Article.
SECTION 3. ACTIONS BROUGHT BY THE INDEMNITEE. Notwithstanding the
provisions of Sections 1 and 2 of this Article, the corporation shall not be
required to indemnify an Indemnitee in connection with an action, suit,
proceeding or claim (or part thereof) brought or made by such Indemnitee except
as otherwise provided herein with respect to the enforcement of this Article,
unless such action, suit, proceeding or claim (or part thereof) was authorized
by the board of directors of the corporation.
SECTION 4. APPROVAL OF INDEMNIFICATION. An indemnification under Sections
1 or 2 of this Article, unless ordered by the court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper in the circumstances because such
Indemnitee has met the applicable standard of conduct set forth in Sections 1 or
2 of this Article, as the case may be, and upon an evaluation of the
reasonableness of expenses and amounts paid in settlement. This determination
and evaluation shall be made in any of the following ways:
(a) By a majority vote of a quorum of the board of directors consisting of
directors who are not parties or threatened to be made parties to the
action, suit, or proceeding.
(b) If a quorum cannot be obtained in subsection (a), by majority vote of
a committee duly designated by the board of directors and consisting
solely of two (2) or more directors not at the time parties or
threatened to be made parties to the action, suit or proceeding.
(c) By independent legal counsel in a written opinion, which counsel shall
be selected in one (1) of the following ways:
(i) By the board of directors or its committee in the manner
prescribed in subsection (a) or (b).
(ii) If a quorum of the board of directors cannot be obtained under
subsection (a) and a committee cannot be designated under
subsection (b), by the board of directors.
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(d) By all independent directors (if any directors have been designated as
such by the board of directors or shareholders of the corporation) who
are not parties or threatened to be made parties to the action, suit,
or proceeding.
(e) By the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties
to the action, suit, or proceeding may not be voted.
In the designation of a committee under subsection (b) or in the selection of
independent legal counsel under subsection (c)(ii), all directors may
participate.
SECTION 5. ADVANCEMENT OF EXPENSES. The corporation may pay or reimburse
the reasonable expenses incurred by an Indemnitee who is a party or threatened
to be made a party to an action, suit, or proceeding in advance of final
disposition of the proceeding if all of the following apply:
(a) The Indemnitee furnishes the corporation a written affirmation of his
or her good faith belief that he or she has met the applicable
standard of conduct set forth in Sections 1 and 2 of this Article.
(b) The Indemnitee furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the standard
of conduct.
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification under the Act.
The undertaking required by subsection (b) must be an unlimited general
obligation of the Indemnitee but need not be secured. Determinations and
evaluations of payments under this Section shall be made in the manner specified
in Section 4 of this Article.
SECTION 6. COURT APPROVAL. An Indemnitee who is a party or threatened to
be made a party to an action, suit, or proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any notice it
considers necessary may order indemnification if it determines that the
Indemnitee is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he or she met the applicable standard
of conduct set forth in Sections 1 and 2 of this Article or was adjudged liable
as described in Section 2 of this Article, but if he or she was adjudged liable,
his or her indemnification is limited to reasonable expenses incurred.
SECTION 7. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled to
indemnification under Sections 1 or 2 of this Article for a portion of expenses,
including reasonable attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement, but not for the total amount, the corporation shall
indemnify the Indemnitee for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the Indemnitee is entitled to be
indemnified.
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<PAGE>
SECTION 8. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Any person who is not
covered by the foregoing provisions of this Article and who is or was an
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, may be indemnified to the fullest
extent authorized or permitted by the Act or other applicable law, as the same
exists or may hereafter be amended, but, in the case of any such amendment, only
to the extent such amendment permits the corporation to provide broader
indemnification rights than before such amendment, but in any event only to the
extent authorized at any time or from time to time by the board of directors.
SECTION 9. OTHER RIGHTS OF INDEMNIFICATION. The indemnification or
advancement of expenses provided under Sections 1 through 8 of this Article is
not exclusive of other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the articles of incorporation,
bylaws, or a contractual agreement. The total amount of expenses advanced or
indemnified from all sources combined shall not exceed the amount of actual
expenses incurred by the person seeking indemnification or advancement of
expenses. The indemnification provided for in Sections 1 through 8 of this
Article continues as to a person who ceases to be a director, officer, employee,
or agent and shall inure to the benefit of the heirs, personal representatives,
and administrators of the person.
SECTION 10. DEFINITIONS. "Other enterprises" shall include employee
benefit plans; "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and "serving at the request of the
corporation" shall include any service as a director, officer, employee, or
agent of the corporation which imposes duties on, or involves services by, the
director, officer, employee or agent with respect to an employee benefit plan,
its participants or its beneficiaries; and a person who acted in good faith and
in a manner he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be considered
to have acted in a manner "not opposed to the best interests of the corporation
or its shareholders" as referred to in Sections 1 and 2 of this Article.
SECTION 11. LIABILITY INSURANCE. The corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as such,
whether or not the corporation would have power to indemnify him or her against
liability under the pertinent provisions of the Act.
SECTION 12. ENFORCEMENT. If a claim under this Article is not paid in full
by the corporation within thirty (30) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall
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<PAGE>
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Act for the corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the corporation. Neither the failure of the corporation (including
its board of directors, a committee thereof, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because such claimant has met the applicable standard of conduct set forth in
the Act nor an actual determination by the corporation (including its board of
directors, a committee thereof, independent legal counsel or its shareholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
SECTION 13. CONTRACT WITH THE CORPORATION. The right to indemnification
conferred in this Article shall be deemed to be a contract right between the
corporation and each director or officer who serves in any such capacity at any
time while this Article is in effect, and any repeal or modification of this
Article shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
SECTION 14. APPLICATION TO A RESULTING OR SURVIVING CORPORATION OR
CONSTITUENT CORPORATION. The definition for "corporation" found in Section 569
of the Act, as the same exists or may hereafter be amended is, and shall be,
specifically excluded from application to this Article. The indemnification and
other obligations set forth in this Article of the corporation shall be binding
upon any resulting or surviving corporation after any merger or consolidation
with the corporation. Notwithstanding anything to the contrary contained herein
or in Section 569 of the Act, no person shall be entitled to the indemnification
and other rights set forth in this Article for acting as a director or officer
of another corporation prior to such other corporation entering into a merger or
consolidation with the corporation.
SECTION 15. SEVERABILITY. Each and every paragraph, sentence, term and
provision of this Article shall be considered severable in that, in the event a
court finds any paragraph, sentence, term or provision to be invalid or
unenforceable, the validity and enforceability, operation, or effect of the
remaining paragraphs, sentences, terms, or provisions shall not be affected, and
this Article shall be construed in all respects as if the invalid or
unenforceable matter had been omitted.
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<PAGE>
ARTICLE VII
STOCK AND TRANSFERS
SECTION 1. SHARE CERTIFICATES: REQUIRED SIGNATURES. The shares of the
corporation shall be represented by certificates which shall be signed by the
chairman of the board of directors, vice chairman of the board of directors,
president or a vice president and which also may be signed by another officer of
the corporation. The certificate may be sealed with the seal of the corporation
or a facsimile of the seal. The signatures of the officers may be facsimiles if
the certificate is countersigned by a transfer agent or registered by a
registrar other than the corporation itself or its employee. If an officer who
has signed or whose facsimile signature has been placed upon a certificate
ceases to be an officer before the certificate is issued, it may be issued by
the corporation with the same effect as if he or she were the officer at the
date of issue.
SECTION 2. SHARE CERTIFICATES: REQUIRED PROVISIONS. A certificate
representing shares of the corporation shall state upon its face all of the
following:
(a) That the corporation is formed under the laws of this state.
(b) The name of the person to whom issued.
(c) The number and class of shares, and the designation of the series, if
any, which the certificate represents.
A certificate representing shares issued by a corporation which is authorized to
issue shares of more than one (1) class shall set forth on its face or back or
state on its face or back that the corporation will furnish to a shareholder
upon request and without charge a full statement of the designation, relative
rights, preferences and limitations of the shares of each class authorized to be
issued, and if the corporation is authorized to issue any class of shares in
series, the designation, relative rights, preferences and limitations of each
series so far as the same have been prescribed and the authority of the board to
designate and prescribe the relative rights, preferences and limitations of
other series.
SECTION 3. REPLACEMENT OF LOST OR DESTROYED SHARE CERTIFICATES. The
corporation may issue a new certificate for shares or fractional shares in place
of a certificate theretofore issued by it, alleged to have been lost or
destroyed, and the board of directors may require the owner of the lost or
destroyed certificate, or his or her legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged lost or destroyed
certificate or the issuance of such new certificate.
SECTION 4. REGISTERED SHAREHOLDERS. The corporation shall have the right
to treat the registered holder of any share as the absolute owner thereof, and
shall
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<PAGE>
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not the corporation shall have
express or other notice thereof, save as may be otherwise provided by the
statutes of Michigan.
SECTION 5. TRANSFER AGENT AND REGISTRAR. The board of directors may
appoint a transfer agent and a registrar in the registration of transfers of its
securities.
SECTION 6. REGULATIONS. The board of directors shall have power and
authority to make all such rules and regulations as the board shall deem
expedient regulating the issue, transfer and registration of certificates for
shares in this corporation.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS IN CASH OR PROPERTY. The board of directors may
authorize and the corporation may make distributions to its shareholders subject
to restriction by the articles of incorporation and/or unless otherwise limited
by the articles of incorporation, these bylaws or the Act.
SECTION 2. RESERVES. The board of directors shall have power and authority
to set apart such reserve or reserves, for any proper purpose, as the board in
its discretion shall approve, and the board shall have the power and authority
to abolish any reserve created by the board.
SECTION 3. VOTING SECURITIES. Unless otherwise directed by the board of
directors, the chairman of the board or president, or in the case of their
absence or inability to act, the vice presidents, in order of their seniority,
shall have full power and authority on behalf of the corporation to attend and
to act and to vote, or to execute in the name or on behalf of the corporation a
consent in writing in lieu of a meeting of shareholders or a proxy authorizing
an agent or attorney-in-fact for the corporation to attend and vote at any
meetings of security holders of corporations in which the corporation may hold
securities, and at such meetings he or she or his or her duly authorized agent
or attorney-in-fact shall possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as the owner thereof,
the corporation might have possessed and exercised if present. The board of
directors by resolution from time to time may confer like power upon any other
person or persons.
SECTION 4. CHECKS. All checks, drafts and orders for the payment of money
shall be signed in the name of the corporation in such manner and by such
officer or officers or such other person or persons as the board of directors
shall from time to time designate for that purpose.
SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of any
contract, conveyance or other instrument has been authorized without
specification
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<PAGE>
of the executing officers, the chairman of the board, president or any vice
president, and the secretary or assistant secretary, may execute the same in the
name and on behalf of this corporation and may affix the corporate seal thereto.
The board of directors shall have power to designate the officers and agents who
shall have authority to execute any instrument on behalf of this corporation.
SECTION 6. CORPORATE BOOKS AND RECORDS. The corporation shall keep books
and records of account and minutes of the proceedings of its shareholders, board
of directors and executive committees, if any. The books, records and minutes
may be kept outside this state. The corporation shall keep at its registered
office, or at the office of its transfer agent in or outside the State of
Michigan, records containing the names and addresses of all shareholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record. Any of the books, records or minutes may
be in written form or in any other form capable of being converted into written
form within a reasonable time. The corporation shall convert into written form
without charge any record not in written form, unless otherwise requested by a
person entitled to inspect the records.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SECTION 8. SEAL. If the corporation has a corporate seal, it shall have
inscribed thereon the name of the corporation and the words "Corporate Seal" and
"Michigan." The seal may be used by causing it or a facsimile to be affixed,
impressed or reproduced in any other manner.
ARTICLE IX
AMENDMENTS
SECTION 1. The shareholders or the board of directors may amend or repeal
the bylaws or adopt new bylaws unless the articles of incorporation provide that
the power to adopt new bylaws is reserved exclusively to the shareholders or
that these bylaws or any particular bylaw shall not be altered or repealed by
the board of directors. Such action may be taken by written consent or at any
meeting of shareholders or the board of directors; provided that if notice of
any such meeting is required by these bylaws, it shall contain notice of the
proposed amendment, repeal or new bylaws. Amendment of these bylaws by the board
of directors requires the vote of not less than a majority of the members of the
board then in office.
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<PAGE>
NUMATION
AMENDMENT TO THE BYLAWS OF THE CORPORATION
ADOPTED BY THE BOARD OF DIRECTORS ON
March 31, 1998
SECTION 4. CHIEF EXECUTIVE OFFICER. Unless otherwise designated by the
board of directors, the chairman of the board shall be the chief executive
officer of the Corporation. The designation of the chief executive officer may
be changed at any special meeting of the board of directors. The president shall
be the chief executive officer whenever the office of chairman of the board is
vacant. The chief executive officer shall be responsible to the board of
directors for the general supervision and management of the business and affairs
of the corporation and shall see that all orders and resolutions of the board
are carried into effect.
<PAGE>
Exhibit 3.3.1
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
Date Received
MAR 15 1994
FILED
MAR 15 1994
Administrator
MICHIGAN DEPARTMENT OF COMMERCE
Corporation & Securities Bureau
- --------------------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER: 092-717
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
OF
NUMATECH, INC.
- --------------------------------------------------------------------------------
These Articles of Incorporation are signed by the incorporator for the
purpose of forming a profit corporation pursuant to the provisions of Act 284,
Public Acts of 1972, as amended, as follows:
ARTICLE I The name of the corporation is Numatech, Inc.
ARTICLE II The purpose or purposes for which the corporation is formed is to
engage in any activity within the purposes for which corporations
may be formed under the Business Corporation Act of Michigan (the
"Act").
ARTICLE III The total authorized shares is 50,000 shares of common stock.
ARTICLE IV The corporation has only one class of stock.
ARTICLE V The address and mailing address of the registered office is:
1450 N. Milford Road
Highland, MI 48357-4560
The name of the resident agent at the registered office is John
H. Welker.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
ARTICLE VI The name and address of the incorporator are as follows:
Name Residence or Business Address
---- -----------------------------
Linda M. Foster 150 West Jefferson
Suite 2500
Detroit, Michigan 48226
ARTICLE VII The duration of the corporation is perpetual.
ARTICLE VIII A director of the corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director. However, this provision
does not eliminate or limit the liability of a director for any
of the following:
(a) any breach of the director's duty of loyalty to the
corporation or its shareholders;
(b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) a violation of Section 551(1) of the Act;
(d) a transaction from which the director derived an improper
personal benefit; or
(e) an act or omission occurring prior to the date when this
article becomes effective.
Any repeal, amendment or other modification of this Article shall
not increase the liability or alleged liability of any director
of the corporation then existing with respect to any state of
facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts. If the Act is
subsequently amended to authorize corporate action further
eliminating or limiting personal liability of directors, then the
liability of directors shall be eliminated or limited to the
fullest extent permitted by the Act as so amended.
ARTICLE IX Any action required or permitted by the Act, these Articles or
the Bylaws of the corporation to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without
prior notice and without a vote, if consents in writing, setting
forth the action so taken, are signed by the holders of
outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take the action at
a meeting at which all shares entitled to vote on the action were
present and voted. The written consents shall bear the date of
signature of each shareholder who signs the consent. No written
consents shall be effective to take the corporate
-2-
SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
action referred to unless, within 60 days after the record date
for determining shareholders entitled to express consent to or to
dissent from a proposal without a meeting, written consents dated
not more than 10 days before the record date and signed by a
sufficient number of shareholders to take the action are
delivered to the corporation. Delivery shall be to the
corporation's registered office, its principal place of business,
or an officer or agent of the corporation having custody of the
minutes of the proceedings of its shareholders. Delivery made to
a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. Prompt
notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to
shareholders who would have been entitled to notice of the
shareholder meeting if the action had been taken at a meeting and
who have not consented in writing.
ARTICLE X When a compromise or arrangement or a plan of reorganization of
this corporation is proposed between this corporation and its
creditors or any class of them or between this corporation and
its shareholders or any class of them, a court of equity
jurisdiction within the state, on application of this corporation
or of a creditor or shareholder thereof, or on application of a
receiver appointed for the corporation, may order a meeting of
the creditors or class of creditors or of the shareholders or
class of shareholders to be affected by the proposed compromise
or arrangement or reorganization, to be summoned in such manner
as the court directs. If a majority in number representing 3/4 in
value of the creditors or class of creditors, or of the
shareholders or class of shareholders to be affected by the
proposed compromise or arrangement or a reorganization, agree to
a compromise or arrangement or a reorganization of this
corporation as a consequence of the compromise or arrangement,
the compromise or arrangement and the reorganization, if
sanctioned by the court to which the application has been made,
shall be binding on all the creditors or class of creditors, or
on all the shareholders or class of shareholders and also on this
corporation.
I, the sole incorporator, sign my name this 14th day of March, 1994.
/s/ Linda M. Foster
------------------------------------
Linda M. Foster
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SEAL APPEARS ONLY ON ORIGINAL
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
- --------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- -------------------------------------
- -------------------------------------
- --------------------------------------------------------
Name Sally A. Hamby
Miller, Canfield, Paddock and Stone, PLC
- --------------------------------------------------------
Address P.O. Box 2014
1400 North Woodward Ave., Suite 100
- --------------------------------------------------------
City State Zip Code EFFECTIVE
Bloomfield Hills Michigan 48303-2014 DATE:
- ----------------------------------------------------------------- ------------
Document will be returned to the name and address you enter above
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit and Nonprofit Corporations
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
- --------------------------------------------------------------------------------
1. The present name of the corporation is: NUMATECH, INC.
2. The identification number assigned by the Bureau is: 092-717
3. The location of the registered office is:
1450 N. Milford Road Highland , Michigan 48357-4560
------------------------------------------------- ---------------
(Street Address) (City) (Zip Code)
- --------------------------------------------------------------------------------
4. Article III of the Articles of Incorporation is hereby amended to read as
follows:
The total authorized shares is 50,000 shares of common stock, consisting of
35,000 voting common shares without par value to be designated as Class A and
15,000 nonvoting common shares without par value to be designated as Class B.
Article IV of the Articles of Incorporation is hereby amended to read as
follows:
The corporation has two classes of common stock. Each class of shares shall
be identical in all respects, except that the nonvoting shares, designated
as Class B, shall carry no right to vote for the election of directors of
the Corporation, and no right to vote on any matter presented to the
shareholders for their vote or approval except only as the laws of this
state require that voting rights be granted to such nonvoting shares.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
5. (For amendments adopted by unanimous consent of incorporators before the
first meeting of the board of directors or trustees.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____________ day of _______________, 19_____, in accordance with the
provisions of the Act by the unanimous consent of the incorporator(s) before
the first meeting of the Board of Directors or Trustees.
Signed this __________ day of _______________, 19_____
____________________________________ ____________________________________
(Signature) (Signature)
____________________________________ ____________________________________
(Type or Print Name) (Type or Print Name)
____________________________________ ____________________________________
(Signature) (Signature)
____________________________________ ____________________________________
(Type or Print Name) (Type or Print Name)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. (For profit corporations, and for nonprofit corporations whose articles state
the corporation is organized on a stock or on a membership basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted on
the 31st day of March , 1998 by the shareholders in a
------------ ------------ ----
profit corporation, or by the shareholders or members if a nonprofit
corporation (check one of the following)
[ ] at a meeting. The necessary votes were cast in favor of the amendment.
[ ] by written consent of the shareholders or members having not less than
the minimum number of votes required by statute in accordance with
Section 407(1) and (2) of the Act if a nonprofit corporation, or Section
407(1) of the Act if a profit corporation. Written notice to shareholders
or members who have not consented in writing has been given. (Note:
Written consent by less than all of the shareholders or members is
permitted only if such provision appears in the Articles of
Incorporation.)
[X] by written consent of all the shareholders or members entitled to vote
in accordance with section 407(3) of the Act if a nonprofit corporation,
or Section 407(2) of the Act if a profit corporation.
Signed this 31st day of March , 1998
----------------- ---------------- ----
By /s/ John H. Welker
__________________________________________________________
(Signature of President, Vice-President,
Chairperson or Vice-Chairperson)
John H. Welker Chairperson
_____________________________________________________________
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
7. (For a nonprofit corporation whose articles state the corporation is
organized on a directorship basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____ day of _______________, 19__, by the directors of a nonprofit
corporation whose articles of incorporation state it is organized on a
directorship basis (check one of the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of all directors pursuant to Section 525 of the
Act.
Signed this ____ day of _______________, 19__
By
--------------------------------------------------------------
(Signature of President, Vice-President,
Chairperson or Vice-Chairperson)
-----------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 3.3.2
BYLAWS
OF
NUMATECH, INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The initial registered office shall be in
the City of Highland, County of Oakland, State of Michigan.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places both in and outside the State of Michigan as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders of the
corporation shall be held at the registered office or such other place, either
within or without the State of Michigan, as may be determined from time to time
by the board of directors.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of
shareholders for election of directors and for such other business as may
properly come before the meeting, commencing with the year 1995, shall be held
in May, at a date and time as shall be determined by the board of directors, or
at such other date and time as shall be determined from time to time by the
board of directors, unless such action is taken by written consent as provided
in Section 12 of this Article. If the annual meeting is not held on the date
designated therefor, the board shall cause the meeting to be held as soon
thereafter as convenient.
SECTION 3. ORDER OF BUSINESS AT ANNUAL MEETING. The order of business at
the annual meeting of the shareholders shall be as follows:
(a) Reading of notice and proof of mailing,
(b) Reports of Officers,
(c) Election of Directors,
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<PAGE>
(d) Transaction of other business mentioned in the notice,
(e) Adjournment,
provided that the presiding officer may vary the order of business at his or her
discretion.
SECTION 4. NOTICE OF MEETING OF SHAREHOLDERS. Except as otherwise provided
in the Michigan Business Corporation Act (herein called the "Act"), written
notice of the time, place and purposes of a meeting of shareholders shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting, either personally or by mail, to each shareholder of record
entitled to vote at the meeting. If a meeting is adjourned to another time or
place, it is not necessary to give notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken and at the adjourned meeting only business is
transacted as might have been transacted at the original meeting. If after the
adjournment the board of directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record on the new record date entitled to vote at the meeting.
SECTION 5. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer or agent
having charge of the stock transfer books for shares of the corporation shall
make and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting or any adjournment thereof. The list shall:
(a) Be arranged alphabetically within each class and series, with the
address of, and the number of shares held by, each shareholder.
(b) Be produced at the time and place of the meeting.
(c) Be subject to inspection by any shareholder during the whole time of
the meeting.
(d) Be prima facie evidence as to who are the shareholders entitled to
examine the list or to vote at the meeting.
SECTION 6. SPECIAL MEETING OF SHAREHOLDERS. A special meeting of
shareholders may be called at any time by the chief executive officer of the
corporation (see Article V, Section 4) or by a majority of the members of the
board of directors then in office, or by shareholders owning, in the aggregate,
not less than ten percent (10%) of all the shares entitled to vote at such
special meeting. The method by which such meeting may be called is as follows:
Upon receipt of a specification in writing setting forth the date and objects of
such proposed special meeting, signed by the chief executive officer, or by a
majority of the members of the board of directors then in office, or by
shareholders as above provided, the secretary of the corporation shall prepare,
sign and mail the notices requisite to such meeting.
-2-
<PAGE>
SECTION 7. QUORUM OF SHAREHOLDERS. Unless a greater or lesser quorum is
provided in the articles of incorporation, in a bylaw adopted by the
shareholders or incorporators, or in the Act, shares entitled to cast a majority
of the votes at a meeting constitute a quorum at the meeting. The shareholders
present in person or by proxy at the meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum. Whether or not a quorum is present, the meeting may be adjourned
by a vote of the shares present.
SECTION 8. VOTE OF SHAREHOLDERS. Each outstanding share is entitled to one
(1) vote on each matter submitted to a vote, unless otherwise provided in the
articles of incorporation. A vote may be cast either orally or in writing. If an
action, other than the election of directors, is to be taken by vote of the
shareholders, it shall be authorized by a majority of the votes cast by the
holders of shares entitled to vote on the action, unless a greater vote is
required by the articles of incorporation or the Act. Except as otherwise
provided in the articles of incorporation, directors shall be elected by a
plurality of the votes cast at an election.
SECTION 9. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS. For the purpose
of determining shareholders entitled to notice of and to vote at a meeting of
shareholders or an adjournment of a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board. The date shall not be more than sixty (60)
nor less than ten (10) days before the date of the meeting. If a record date is
not fixed, the record date for determination of shareholders entitled to notice
of or to vote at a meeting of shareholders shall be the close of business on the
day next preceding the day on which notice is given, or if no notice is given,
the day next preceding the day on which the meeting is held. When a
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders has been made as provided in this Section, the
determination applies to any adjournment of the meeting, unless the board of
directors fixes a new record date under this Section for the adjourned meeting.
For the purpose of determining shareholders entitled to express consent to or to
dissent from a proposal without a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board and shall not be more than ten (10) days
after the board resolution. If a record date is not fixed and prior action by
the board of directors is required with respect to the corporate action to be
taken without a meeting, the record date shall be the close of business on the
day on which the resolution of the board is adopted. If a record date is not
fixed and prior action by the board of directors is not required, the record
date shall be the first date on which a signed written consent is delivered to
the corporation as provided in Section 12 of this Article. For the purpose of
determining shareholders entitled to receive payment of a share dividend or
distribution, or allotment of a right, or for the purpose of any other action,
the board of directors may fix a record date, which shall not precede the date
on which the resolution fixing the record date is adopted by the board. The date
shall not be more than sixty (60) days before the payment of the share dividend
or distribution or allotment of a right or other action. If a record date is not
fixed, the
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record date shall be the close of business on the day on which the resolution of
the board of directors relating to the corporate action is adopted.
SECTION 10. PROXIES. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
one or more other persons to act for him or her by proxy. A proxy shall be
signed by the shareholder or his or her authorized agent or representative. A
proxy is not valid after the expiration of three (3) years from its date unless
otherwise provided in the proxy.
SECTION 11. INSPECTORS OF ELECTION. The board of directors, in advance of
a shareholders' meeting, may appoint one (1) or more inspectors of election to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a shareholders' meeting may, and on request
of a shareholder entitled to vote thereat shall, appoint one (1) or more
inspectors. In case a person appointed fails to appear or act, the vacancy may
be filled by appointment made by the board of directors in advance of the
meeting or at the meeting by the person presiding thereat. The inspectors shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine challenges and questions arising in connection with the right to vote,
count and tabulate votes, ballots or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting or a shareholder
entitled to vote thereat, the inspectors shall make and execute a written report
to the person presiding at the meeting of any of the facts found by them and
matters determined by them. The report is prima facie evidence of the facts
stated and of the vote as certified by the inspectors.
SECTION 12. ACTION BY WRITTEN CONSENT. The articles of incorporation may
provide that any action required or permitted by the Act to be taken at an
annual or special meeting of shareholders may be taken without a meeting,
without prior notice and without a vote, if consents in writing, setting forth
the action so taken, are signed by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to authorize or
take the action at a meeting at which all shares entitled to vote on the action
were present and voted. The written consents shall bear the date of signature of
each shareholder who signs the consent. No written consents shall be effective
to take the corporate action referred to unless, within sixty (60) days after
the record date for determining shareholders entitled to express consent to or
to dissent from a proposal without a meeting, written consents dated not more
than ten (10) days before the record date and signed by a sufficient number of
shareholders to take the action are delivered to the corporation. Delivery shall
be to the corporation's registered office, its principal place of business, or
an officer or agent of the corporation having custody of the minutes of the
proceedings of its shareholders. Delivery made to a corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to shareholders who would
have been entitled to notice of the shareholder meeting if the action had been
taken at a meeting and who have not consented in writing. Any action required or
permitted by the
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Act to be taken at an annual or special meeting of shareholders may be taken
without a meeting, without prior notice and without a vote if, before or after
the action, all the shareholders entitled to vote consent in writing.
SECTION 13. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the articles of incorporation, by oral or written permission of a
majority of the shareholders, a shareholder may participate in a meeting of
shareholders by a conference telephone or by other similar communications
equipment through which all persons participating in the meeting may communicate
with the other participants. All participants shall be advised of the
communications equipment and the names of the participants in the conference
shall be divulged to all participants. Participation in a meeting pursuant to
this Section constitutes presence in person at the meeting.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of directors which
shall constitute the whole board shall be three (3) directors. Thereafter, the
number of directors which shall constitute the board of directors for each
ensuing year shall be determined at the annual meeting by vote of the
shareholders prior to such election; provided, however, that if a motion is not
made and carried to increase or decrease the number of directors, the board
shall consist of the same number of directors as were elected for the preceding
year. The shareholders may also increase or decrease the number of directors at
any meeting of the shareholders or by a written consent in lieu thereof. Either
the shareholders or the board of directors may fill the vacancy caused by an
increase in the number of directors. The first board of directors shall hold
office until the first annual meeting of shareholders. At the first annual
meeting of shareholders and at each annual meeting thereafter, the shareholders
shall elect directors to hold office until the succeeding annual meeting, except
in the case of classification of directors as permitted by the Act. A director
shall hold office for the term for which he or she is elected and until his or
her successor is elected and qualified, or until his or her resignation or
removal. Directors need not be shareholders and may serve continuous terms.
SECTION 2. VACANCIES. Unless otherwise limited by the articles of
incorporation, if a vacancy, including a vacancy resulting from an increase in
the number of directors, occurs in the board of directors, the vacancy may be
filled as follows:
(a) The shareholders may fill the vacancy.
(b) The board may fill the vacancy.
(c) If the directors remaining in office constitute fewer than a quorum of
the board of directors, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
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Unless otherwise provided in the articles of incorporation, if the holders of
any class or classes of stock or series are entitled to elect one (1) or more
directors to the exclusion of other shareholders, vacancies of that class or
classes or series may be filled only by one (1) of the following:
(a) By a majority of the directors elected by the holders of that class or
classes or series then in office, whether or not those directors
constitute a quorum of the board of directors.
(b) By the holders of shares of that class or classes of shares, or
series.
Unless otherwise limited by the articles of incorporation or these bylaws, in
the case of a corporation the board of directors of which are divided into
classes, any director chosen to fill a vacancy shall hold office until the next
election of the class for which the director shall have been chosen, and until
his or her successor is elected and qualified. If because of death, resignation,
or other cause, a corporation has no directors in office, an officer, a
shareholder, a personal representative, administrator, trustee, or guardian of a
shareholder, or other fiduciary entrusted with like responsibility for the
person or estate of a shareholder, may call a special meeting of shareholders in
accordance with the articles of incorporation or these bylaws. A vacancy that
will occur at a specific date, by reason of a resignation effective at a later
date under Section 4 of this Article or otherwise, may be filled before the
vacancy occurs but the newly elected or appointed director may not take office
until the vacancy occurs.
SECTION 3. REMOVAL. The shareholders may remove one (1) or more directors
with or without cause unless the articles of incorporation provide that
directors may be removed only for cause. The vote for removal shall be by a
majority of shares entitled to vote at an election of directors, unless the
articles of incorporation require a higher vote for removal without cause.
SECTION 4. RESIGNATION. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a later time as set forth in the notice of resignation.
SECTION 5. POWERS. The business and affairs of the corporation shall be
managed by its board of directors except as otherwise provided in the Act or in
the articles of incorporation.
SECTION 6. LOCATION OF MEETINGS. Regular or special meetings of the board
of directors may be held either in or outside the State of Michigan.
SECTION 7. ORGANIZATION MEETING OF BOARD. The first meeting of each newly
elected board of directors shall be held at the place of holding the annual
meeting of shareholders, and immediately following the same, for the purpose of
electing officers and transacting any other business properly brought before it,
provided that the organization meeting in any year may be held at a different
time and place than that herein provided by a consent of a majority of the
directors of such new board. No notice
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of such meeting shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be present, unless
said meeting is not held at the place of holding and immediately following the
annual meeting of shareholders.
SECTION 8. REGULAR MEETING OF BOARD. Any regular meeting of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board.
SECTION 9. SPECIAL MEETING OF BOARD. Any special meeting of the board of
directors may be called by the chief executive officer, or by a majority of the
persons then comprising the board of directors, at any time by means of notice
of the time and place thereof to each director, given not less than twenty-four
(24) hours before the time such special meeting is to be held.
SECTION 10. COMMITTEES OF DIRECTORS. The board of directors may designate
one (1) or more committees, each committee to consist of one (1) or more of the
directors of the corporation. The board may designate one (1) or more directors
as alternate members of any committee, who may replace an absent or disqualified
member at a meeting of the committee. In the absence or disqualification of a
member of a committee, the members thereof present at a meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors
creating such committee, may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation. A
committee does not have the power or authority to amend the articles of
incorporation, adopt an agreement of merger or share exchange, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommend to the shareholders a dissolution
of the corporation or a revocation of a dissolution, amend the bylaws of the
corporation or fill vacancies in the board of directors; and, unless the
resolution of the board of directors creating such committee, the articles of
incorporation or bylaws expressly so provide, a committee does not have the
power or authority to declare a distribution, dividend or to authorize the
issuance of stock. Any such committee, and each member thereof, shall serve at
the pleasure of the board of directors.
SECTION 11. QUORUM AND REQUIRED VOTE OF BOARD AND COMMITTEES. At all
meetings of the board of directors, or of a committee thereof, a majority of the
members of the board then in office, or of the members of a committee of the
board of directors, constitutes a quorum for transaction of business, unless the
articles of incorporation, these bylaws, or in the case of a committee, the
board resolution establishing the committee, provide for a larger or smaller
number. The vote of the majority of members present at a meeting at which a
quorum is present constitutes the action of the board of directors or of the
committee unless the vote of a larger number is required by the Act, the
articles of incorporation, or these bylaws, or in the
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case of a committee, the board resolution establishing the committee. Amendment
of these bylaws by the board of directors requires the vote of not less than a
majority of the members of the board then in office. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 12. ACTION BY WRITTEN CONSENT. Action required or permitted to be
taken under authorization voted at a meeting of the board of directors or a
committee of the board of directors, may be taken without a meeting if, before
or after the action, all members of the board then in office or of the committee
consent to the action in writing. The written consents shall be filed with the
minutes of the proceedings of the board of directors or committee. The consent
has the same effect as a vote of the board of directors or committee for all
purposes.
SECTION 13. COMPENSATION OF DIRECTORS. The board of directors, by
affirmative vote of a majority of directors in office and irrespective of any
personal interest of any of them, may establish reasonable compensation of
directors for services to the corporation as directors or officers, but approval
of the shareholders is required if the articles of incorporation, these bylaws
or any provisions of the Act so provide.
SECTION 14. PARTICIPATION IN MEETING BY TELEPHONE. By oral or written
permission of a majority of the board of directors, a member of the board of
directors or of a committee designated by the board may participate in a meeting
by means of conference telephone or similar communications equipment through
which all persons participating in the meeting can communicate with the other
participants. Participation in a meeting pursuant to this Section constitutes
presence in person at the meeting.
ARTICLE IV
NOTICES
SECTION 1. NOTICE. Whenever any notice or communication is required to be
given by mail to any director or shareholder under any provision of the Act, or
of the articles of incorporation or of these bylaws, it shall be given in
writing, except as otherwise provided in the Act, to such director or
shareholder at the address designated by him or her for that purpose or, if none
is designated, at his or her last known address. The notice or communication is
given when deposited, with postage thereon prepaid, in a post office or official
depository under the exclusive care and custody of the United States postal
service. The mailing shall be registered, certified or other first class mail
except where otherwise provided in the Act. Written notice may also be given in
person or by telegram, telecopy, telex, radiogram, cablegram, or mailgram, and
such notice shall be deemed to be given when the recipient receives the notice
personally, or when the notice, addressed as provided above, has been delivered
to the corporation, or to the equipment transmitting such notice. Neither the
business to be transacted at, nor the
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purpose of, a regular or special meeting of the board of directors need be
specified in the notice of the meeting.
SECTION 2. WAIVER OF NOTICE. When, under the Act or the articles of
incorporation or these bylaws, or by the terms of an agreement or instrument, a
corporation or the board of directors or any committee thereof may take action
after notice to any person or after lapse of a prescribed period of time, the
action may be taken without notice and without lapse of the period of time, if
at any time before or after the action is completed the person entitled to
notice or to participate in the action to be taken or, in case of a shareholder,
by his or her attorney-in-fact, submits a signed waiver of such requirements.
Neither the business to be transacted at, nor the purpose of, a regular or
special meeting of the board of directors need be specified in the waiver of
notice of the meeting. Attendance of a person at a meeting of shareholders
constitutes a waiver of objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting and a waiver of
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented. A director's
attendance at or participation in a meeting waives any required notice to him or
her of the meeting unless he or she at the beginning of the meeting, or upon his
or her arrival, objects to the meeting or the transacting of business at the
meeting and does not thereafter vote for or assent to any action taken at the
meeting.
ARTICLE V
OFFICERS
SECTION 1. SELECTION. The board of directors, at its first meeting and at
its organization meeting following the annual meeting of shareholders, shall
elect or appoint a president, a secretary and a treasurer. The board of
directors may also elect or appoint a chairman of the board, one (1) or more
vice presidents and such other officers, employees and agents as it shall deem
necessary who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
board. Two (2) or more offices may be held by the same person but an officer
shall not execute, acknowledge or verify an instrument in more than one (1)
capacity.
SECTION 2. COMPENSATION. The salaries of all officers, employees and
agents of the corporation shall be fixed by the board of directors; provided,
however, that the board may delegate to the officers the fixing of compensation
of assistant officers, employees and agents.
SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the corporation
shall hold office for the term for which he or she is elected or appointed and
until his or her successor is elected or appointed and qualified, or until his
or her
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resignation or removal. An officer elected or appointed by the board of
directors may be removed by the board with or without cause at any time. An
officer may resign by written notice to the corporation. The resignation is
effective upon its receipt by the corporation or at a subsequent time specified
in the notice of resignation. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
SECTION 4. CHIEF EXECUTIVE OFFICER. If the board of directors desires to
elect or appoint a chief executive officer, the board shall designate the
chairman of the board or president as such officer at the first meeting of each
newly elected board of directors; provided, however, that if a motion is not
made and carried to change the designation, the designation shall be the same as
the designation for the preceding year; provided, further, that the designation
of the chief executive officer may be changed at any special meeting of the
board of directors. The president shall be the chief executive officer whenever
the office of chairman of the board is vacant. The chief executive officer shall
be responsible to the board of directors for the general supervision and
management of the business and affairs of the corporation and shall see that all
orders and resolutions of the board are carried into effect. The chairman of the
board or president who is not the chief executive officer shall be subject to
the authority of the chief executive officer, but shall exercise all of the
powers and discharge all of the duties of the chief executive officer during the
absence or disability of the chief executive officer.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. If the board of directors
elects or appoints a chairman of the board, he or she shall be elected or
appointed by, and from among the membership of, the board of directors. He or
she shall preside at all meetings of the shareholders, of the board of directors
and of any executive committee. He or she shall perform such other duties and
functions as shall be assigned to him or her from time to time by the board of
directors. He or she shall be, ex officio, a member of all standing committees.
Except where by law the signature of the president of the corporation is
required, the chairman of the board of directors shall possess the same power
and authority to sign all certificates, contracts, instruments, papers and
documents of every conceivable kind and character whatsoever in the name of and
on behalf of the corporation which may be authorized by the board of directors.
During the absence or disability of the president, or while that office is
vacant, the chairman of the board of directors shall exercise all of the powers
and discharge all of the duties of the president.
SECTION 6. PRESIDENT. During the absence or disability of the chairman of
the board, or while that office is vacant, the president shall preside over all
meetings of the board of directors, of the shareholders and of any executive
committee, and shall perform all of the duties and functions, and when so acting
shall have all powers and authority, of the chairman of the board. He or she
shall be, ex officio, a member of all standing committees. The president shall,
in general, perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors.
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SECTION 7. VICE PRESIDENTS. The board of directors may elect or appoint
one or more vice presidents. The board of directors may designate one or more
vice presidents as executive or senior vice presidents. Unless the board of
directors shall otherwise provide by resolution duly adopted by it, such of the
vice presidents as shall have been designated executive or senior vice
presidents and are members of the board of directors in the order specified by
the board of directors (or if no vice president who is a member of the board of
directors shall have been designated as executive or senior vice president, then
such vice presidents as are members of the board of directors in the order
specified by the board of directors) shall perform the duties and exercise the
powers of the president during the absence or disability of the president if the
office of the chairman of the board is vacant. The vice presidents shall perform
such other duties as may be delegated to them by the board of directors, any
executive committee, the chairman of the board or the president.
SECTION 8. SECRETARY. The secretary shall attend all meetings of the
shareholders, and of the board of directors and of any executive committee, and
shall preserve in the books of the corporation true minutes of the proceedings
of all such meetings. He or she shall safely keep in his or her custody the seal
of the corporation, if any, and shall have authority to affix the same to all
instruments where its use is required or permitted. He or she shall give all
notice required by the Act, these bylaws or resolution. He or she shall perform
such other duties as may be delegated to him or her by the board of directors,
any executive committee, the chairman of the board or the president.
SECTION 9. TREASURER. The treasurer shall have custody of all corporate
funds and securities and shall keep in books belonging to the corporation full
and accurate accounts of all receipts and disbursements; he or she shall deposit
all moneys, securities and other valuable effects in the name of the corporation
in such depositories as may be designated for that purpose by the board of
directors. He or she shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors
whenever requested an account of all his or her transactions as treasurer and of
the financial condition of the corporation. If required by the board of
directors, he or she shall keep in force a bond in form, amount and with a
surety or sureties satisfactory to the board of directors, conditioned for
faithful performance of the duties of his or her office, and for restoration to
the corporation in case of his or her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and property of whatever kind
in his or her possession or under his or her control belonging to the
corporation. He or she shall perform such other duties as may be delegated to
him or her by the board of directors, any executive committee, the chairman of
the board or the president.
SECTION 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretary or assistant secretaries, in the absence or disability of the
secretary, shall perform the duties and exercise the powers of the secretary.
The assistant treasurer or assistant treasurers, in the absence or disability of
the treasurer, shall perform the duties and exercise the powers of the
treasurer. Any assistant
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treasurer, if required by the board of directors, shall keep in force a bond as
provided in Section 9 of this Article. The assistant secretaries and assistant
treasurers, in general, shall perform such duties as shall be assigned to them
by the secretary or by the treasurer, respectively, or by the board of
directors, any executive committee, the chairman of the board or the president.
SECTION 11. DELEGATION OF AUTHORITY AND DUTIES BY BOARD OF DIRECTORS. All
officers, employees and agents shall, in addition to the authority conferred, or
duties imposed, on them by these bylaws, have such authority and perform such
duties in the management of the corporation as may be determined by resolution
of the board of directors not inconsistent with these bylaws.
ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BY THIRD
PARTIES. The corporation shall, to the fullest extent authorized or permitted by
the Act or other applicable law, as the same presently exist or may hereafter be
amended, but, in the case of any such amendment, only to the extent such
amendment permits the corporation to provide broader indemnification rights than
before such amendment, indemnify a director or officer (an "Indemnitee") who was
or is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal, other than an action by or in
the right of the corporation, by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partner-ship,
joint venture, trust, or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement actually and reasonably incurred by him or her in connection
with the action, suit, or proceeding, if the Indemnitee acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its share-holders, and with respect to a
criminal action or proceeding, if the Indemnitee had no reasonable cause to
believe his or her conduct was unlawful. The termination of an action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
Indemnitee did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BROUGHT BY
OR IN THE RIGHT OF THE CORPORATION. The corporation shall, to the fullest extent
authorized or permitted by the Act or other applicable law, as the same
presently exist or may hereafter be amended, but, in the case
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of any such amendment, only to the extent such amendment permits the corporation
to provide broader indemnification rights than before such amendment, indemnify
an Indemnitee who was or is a party or is threatened to be made a party to a
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection with the action
or suit, if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders. Indemnification shall not be made under this
Section for a claim, issue, or matter in which the Indemnitee has been found
liable to the corporation except to the extent authorized in Section 6 of this
Article.
SECTION 3. ACTIONS BROUGHT BY THE INDEMNITEE. Notwithstanding the
provisions of Sections 1 and 2 of this Article, the corporation shall not be
required to indemnify an Indemnitee in connection with an action, suit,
proceeding or claim (or part thereof) brought or made by such Indemnitee except
as otherwise provided herein with respect to the enforcement of this Article,
unless such action, suit, proceeding or claim (or part thereof) was authorized
by the board of directors of the corporation.
SECTION 4. APPROVAL OF INDEMNIFICATION. An indemnification under Sections
1 or 2 of this Article, unless ordered by the court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper in the circumstances because such
Indemnitee has met the applicable standard of conduct set forth in Sections 1 or
2 of this Article, as the case may be, and upon an evaluation of the
reasonableness of expenses and amounts paid in settlement. This determination
and evaluation shall be made in any of the following ways:
(a) By a majority vote of a quorum of the board of directors consisting of
directors who are not parties or threatened to be made parties to the
action, suit, or proceeding.
(b) If a quorum cannot be obtained in subsection (a), by majority vote of
a committee duly designated by the board of directors and consisting
solely of two (2) or more directors not at the time parties or
threatened to be made parties to the action, suit or proceeding.
(c) By independent legal counsel in a written opinion, which counsel shall
be selected in one (1) of the following ways:
(i) By the board of directors or its committee in the manner
prescribed in subsection (a) or (b).
-13-
<PAGE>
(ii) If a quorum of the board of directors cannot be obtained under
subsection (a) and a committee cannot be designated under
subsection (b), by the board of directors.
(d) By all independent directors (if any directors have been designated as
such by the board of directors or shareholders of the corporation) who
are not parties or threatened to be made parties to the action, suit,
or proceeding.
(e) By the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties
to the action, suit, or proceeding may not be voted.
In the designation of a committee under subsection (b) or in the selection of
independent legal counsel under subsection (c)(ii), all directors may
participate.
SECTION 5. ADVANCEMENT OF EXPENSES. The corporation may pay or reimburse
the reasonable expenses incurred by an Indemnitee who is a party or threatened
to be made a party to an action, suit, or proceeding in advance of final
disposition of the proceeding if all of the following apply:
(a) The Indemnitee furnishes the corporation a written affirmation of his
or her good faith belief that he or she has met the applicable
standard of conduct set forth in Sections 1 and 2 of this Article.
(b) The Indemnitee furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the standard
of conduct.
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification under the Act.
The undertaking required by subsection (b) must be an unlimited general
obligation of the Indemnitee but need not be secured. Determinations and
evaluations of payments under this Section shall be made in the manner specified
in Section 4 of this Article.
SECTION 6. COURT APPROVAL. An Indemnitee who is a party or threatened to
be made a party to an action, suit, or proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any notice it
considers necessary may order indemnification if it determines that the
Indemnitee is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he or she met the applicable standard
of conduct set forth in Sections 1 and 2 of this Article or was adjudged liable
as described in Section 2 of this Article, but if he or she was adjudged liable,
his or her indemnification is limited to reasonable expenses incurred.
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<PAGE>
SECTION 7. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled to
indemnification under Sections 1 or 2 of this Article for a portion of expenses,
including reasonable attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement, but not for the total amount, the corporation shall
indemnify the Indemnitee for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the Indemnitee is entitled to be
indemnified.
SECTION 8. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Any person who is not
covered by the foregoing provisions of this Article and who is or was an
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, may be indemnified to the fullest
extent authorized or permitted by the Act or other applicable law, as the same
exists or may hereafter be amended, but, in the case of any such amendment, only
to the extent such amendment permits the corporation to provide broader
indemnification rights than before such amendment, but in any event only to the
extent authorized at any time or from time to time by the board of directors.
SECTION 9. OTHER RIGHTS OF INDEMNIFICATION. The indemnification or
advancement of expenses provided under Sections 1 through 8 of this Article is
not exclusive of other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the articles of incorporation,
bylaws, or a contractual agreement. The total amount of expenses advanced or
indemnified from all sources combined shall not exceed the amount of actual
expenses incurred by the person seeking indemnification or advancement of
expenses. The indemnification provided for in Sections 1 through 8 of this
Article continues as to a person who ceases to be a director, officer, employee,
or agent and shall inure to the benefit of the heirs, personal representatives,
and administrators of the person.
SECTION 10. DEFINITIONS. "Other enterprises" shall include employee
benefit plans; "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and "serving at the request of the
corporation" shall include any service as a director, officer, employee, or
agent of the corporation which imposes duties on, or involves services by, the
director, officer, employee or agent with respect to an employee benefit plan,
its participants or its beneficiaries; and a person who acted in good faith and
in a manner he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be considered
to have acted in a manner "not opposed to the best interests of the corporation
or its shareholders" as referred to in Sections 1 and 2 of this Article.
SECTION 11. LIABILITY INSURANCE. The corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising
-15-
<PAGE>
out of his or her status as such, whether or not the corporation would have
power to indemnify him or her against liability under the pertinent provisions
of the Act.
SECTION 12. ENFORCEMENT. If a claim under this Article is not paid in
full by the corporation within thirty (30) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Act for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its board of directors, a committee
thereof, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because such claimant has met the
applicable standard of conduct set forth in the Act nor an actual determination
by the corporation (including its board of directors, a committee thereof,
independent legal counsel or its shareholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
SECTION 13. CONTRACT WITH THE CORPORATION. The right to indemnification
conferred in this Article shall be deemed to be a contract right between the
corporation and each director or officer who serves in any such capacity at any
time while this Article is in effect, and any repeal or modification of this
Article shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
SECTION 14. APPLICATION TO A RESULTING OR SURVIVING CORPORATION OR
CONSTITUENT CORPORATION. The definition for "corporation" found in Section 569
of the Act, as the same exists or may hereafter be amended is, and shall be,
specifically excluded from application to this Article. The indemnification and
other obligations set forth in this Article of the corporation shall be binding
upon any resulting or surviving corporation after any merger or consolidation
with the corporation. Notwithstanding anything to the contrary contained herein
or in Section 569 of the Act, no person shall be entitled to the indemnification
and other rights set forth in this Article for acting as a director or officer
of another corporation prior to such other corporation entering into a merger or
consolidation with the corporation.
SECTION 15. SEVERABILITY. Each and every paragraph, sentence, term and
provision of this Article shall be considered severable in that, in the event a
court finds any paragraph, sentence, term or provision to be invalid or
unenforceable, the validity and enforceability, operation, or effect of the
remaining paragraphs, sentences, terms,
-16-
<PAGE>
or provisions shall not be affected, and this Article shall be construed in all
respects as if the invalid or unenforceable matter had been omitted.
ARTICLE VII
STOCK AND TRANSFERS
SECTION 1. SHARE CERTIFICATES: REQUIRED SIGNATURES. The shares of the
corporation shall be represented by certificates which shall be signed by the
chairman of the board of directors, vice chairman of the board of directors,
president or a vice president and which also may be signed by another officer of
the corporation. The certificate may be sealed with the seal of the corporation
or a facsimile of the seal. The signatures of the officers may be facsimiles if
the certificate is countersigned by a transfer agent or registered by a
registrar other than the corporation itself or its employee. If an officer who
has signed or whose facsimile signature has been placed upon a certificate
ceases to be an officer before the certificate is issued, it may be issued by
the corporation with the same effect as if he or she were the officer at the
date of issue.
SECTION 2. SHARE CERTIFICATES: REQUIRED PROVISIONS. A certificate
representing shares of the corporation shall state upon its face all of the
following:
(a) That the corporation is formed under the laws of this state.
(b) The name of the person to whom issued.
(c) The number and class of shares, and the designation of the series, if
any, which the certificate represents.
A certificate representing shares issued by a corporation which is authorized to
issue shares of more than one (1) class shall set forth on its face or back or
state on its face or back that the corporation will furnish to a shareholder
upon request and without charge a full statement of the designation, relative
rights, preferences and limitations of the shares of each class authorized to be
issued, and if the corporation is authorized to issue any class of shares in
series, the designation, relative rights, preferences and limitations of each
series so far as the same have been prescribed and the authority of the board to
designate and prescribe the relative rights, preferences and limitations of
other series.
SECTION 3. REPLACEMENT OF LOST OR DESTROYED SHARE CERTIFICATES. The
corporation may issue a new certificate for shares or fractional shares in place
of a certificate theretofore issued by it, alleged to have been lost or
destroyed, and the board of directors may require the owner of the lost or
destroyed certificate, or his or her legal representative, to give the
corporation a bond sufficient to
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<PAGE>
indemnify the corporation against any claim that may be made against it on
account of the alleged lost or destroyed certificate or the issuance of such new
certificate.
SECTION 4. REGISTERED SHAREHOLDERS. The corporation shall have the right
to treat the registered holder of any share as the absolute owner thereof, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the corporation shall
have express or other notice thereof, save as may be otherwise provided by the
statutes of Michigan.
SECTION 5. TRANSFER AGENT AND REGISTRAR. The board of directors may
appoint a transfer agent and a registrar in the registration of transfers of its
securities.
SECTION 6. REGULATIONS. The board of directors shall have power and
authority to make all such rules and regulations as the board shall deem
expedient regulating the issue, transfer and registration of certificates for
shares in this corporation.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS IN CASH OR PROPERTY. The board of directors may
authorize and the corporation may make distributions to its shareholders subject
to restriction by the articles of incorporation and/or unless otherwise limited
by the articles of incorporation, these bylaws or the Act.
SECTION 2. RESERVES. The board of directors shall have power and
authority to set apart such reserve or reserves, for any proper purpose, as the
board in its discretion shall approve, and the board shall have the power and
authority to abolish any reserve created by the board.
SECTION 3. VOTING SECURITIES. Unless otherwise directed by the board of
directors, the chairman of the board or president, or in the case of their
absence or inability to act, the vice presidents, in order of their seniority,
shall have full power and authority on behalf of the corporation to attend and
to act and to vote, or to execute in the name or on behalf of the corporation a
consent in writing in lieu of a meeting of shareholders or a proxy authorizing
an agent or attorney-in-fact for the corporation to attend and vote at any
meetings of security holders of corporations in which the corporation may hold
securities, and at such meetings he or she or his or her duly authorized agent
or attorney-in-fact shall possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as the owner thereof,
the corporation might have possessed and exercised if present. The board of
directors by resolution from time to time may confer like power upon any other
person or persons.
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<PAGE>
SECTION 4. CHECKS. All checks, drafts and orders for the payment of money
shall be signed in the name of the corporation in such manner and by such
officer or officers or such other person or persons as the board of directors
shall from time to time designate for that purpose.
SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of any
contract, conveyance or other instrument has been authorized without
specification of the executing officers, the chairman of the board, president or
any vice president, and the secretary or assistant secretary, may execute the
same in the name and on behalf of this corporation and may affix the corporate
seal thereto. The board of directors shall have power to designate the officers
and agents who shall have authority to execute any instrument on behalf of this
corporation.
SECTION 6. CORPORATE BOOKS AND RECORDS. The corporation shall keep books
and records of account and minutes of the proceedings of its shareholders, board
of directors and executive committees, if any. The books, records and minutes
may be kept outside this state. The corporation shall keep at its registered
office, or at the office of its transfer agent in or outside the State of
Michigan, records containing the names and addresses of all shareholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record. Any of the books, records or minutes may
be in written form or in any other form capable of being converted into written
form within a reasonable time. The corporation shall convert into written form
without charge any record not in written form, unless otherwise requested by a
person entitled to inspect the records.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SECTION 8. SEAL. If the corporation has a corporate seal, it shall have
inscribed thereon the name of the corporation and the words "Corporate Seal" and
"Michigan." The seal may be used by causing it or a facsimile to be affixed,
impressed or reproduced in any other manner.
ARTICLE IX
AMENDMENTS
SECTION 1. The shareholders or the board of directors may amend or repeal
the bylaws or adopt new bylaws unless the articles of incorporation provide that
the power to adopt new bylaws is reserved exclusively to the shareholders or
that these bylaws or any particular bylaw shall not be altered or repealed by
the board of directors. Such action may be taken by written consent or at any
meeting of shareholders or the board of directors; provided that if notice of
any such meeting is required by these bylaws, it shall contain notice of the
proposed amendment, repeal or new bylaws. Amendment of these bylaws by the board
of directors requires the vote of not less than a majority of the members of the
board then in office.
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<PAGE>
DEFS2\297031.1\065647-00001
-20-
<PAGE>
NUMATECH
AMENDMENT TO THE BYLAWS OF THE CORPORATION
ADOPTED BY THE BOARD OF DIRECTORS ON
March 31, 1998
SECTION 4. CHIEF EXECUTIVE OFFICER. Unless otherwise designated by the
board of directors, the chairman of the board shall be the chief executive
officer of the Corporation. The designation of the chief executive officer may
be changed at any special meeting of the board of directors. The president shall
be the chief executive officer whenever the office of chairman of the board is
vacant. The chief executive officer shall be responsible to the board of
directors for the general supervision and management of the business and affairs
of the corporation and shall see that all orders and resolutions of the board
are carried into effect.
<PAGE>
Exhibit 3.4.1
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(FOR BUREAU USE ONLY) FILED DATE RECEIVED
-------------------------
MAR 17 1988
MAR 21 1988
ADMINISTRATOR -------------------------
MICHIGAN DEPT. OF COMMERCE
CORPORATION & SECURITIES BUREAU
EFFECTIVE DATE:
- -----------------------------------------------------------------------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER 158-025
- -----------------------------------------------------------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(PLEASE READ INSTRUCTIONS AND PAPERWORK REDUCTION ACT NOTICE ON LAST PAGE)
Pursuant to the provisions of Act 284, Public Acts of 1972, as amended, the undersigned corporation executes the following
Articles:
ARTICLE I
- -----------------------------------------------------------------------------------------------------------------------------------
The name of the corporation is:
MICRO-FILTRATION, INC.
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ARTICLE II
- -----------------------------------------------------------------------------------------------------------------------------------
The purpose or purposes for which the corporation is organized is to engage in any activity within the purposes for which
corporations may be organized under the Business Corporation Act of Michigan.
- -----------------------------------------------------------------------------------------------------------------------------------
ARTICLE III
- -----------------------------------------------------------------------------------------------------------------------------------
The total authorized capital stock is :
1. Common Shares 50,000 Par Value Per Share $ 1.00
-------------------------------------------------------------- -------------------------
Preferred Shares none Par Value Per Share $
-------------------------------------------------------------- -------------------------
and/or shares without par value as follows:
2. Common Shares none Stated Value Per Share $
----------------------------------------------------------- -------------------------
Preferred Shares none Stated Value Per Share $
----------------------------------------------------------- -------------------------
3. A statement of all or any of the relative rights, preferences and limitations of the shares of each class is as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ARTICLE IV
- -------------------------------------------------------------------------------
1. The address of the registered office is:
4011 Phillips Road, Metemora, Michigan 48455
- -----------------------------------------------------
(street address) (City)
2. The mailing address of the registered office if different than above:
- --------------------------------, Michigan ----------
(P.O. Box (City)
3. The name of the resident agent at the registered office is: Robert D. Nuckles
- --------------------------------------------------------------------------------
ARTICLE V
- --------------------------------------------------------------------------------
The name(s) and address(es) of the Incorporator(s) is (are) as follows:
Name Residence or Business Address
Robert D. Nuckles 4011 Phillips Road, Metamora, Michigan 48455
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE VI (OPTIONAL. DELETE IF NOT APPLICABLE)
- --------------------------------------------------------------------------------
When a compromise or arrangement or a plan of reorganization of this corporation
is proposed between this corporation and its creditors or any class of them or
between this corporation and its shareholders or any class of them, a court of
equity jurisdiction within the state, on application of this corporation or of a
creditor or shareholder thereof, or on application of a receiver appointed for
the corporation, may order a meeting of the creditors or class of creditors or
of the shareholders or class of shareholders to be affected by the proposed
compromise or arrangement or reorganization, to be summoned in such manner as
the court directs. If a majority in number representing 3/4 in value of the
creditors or class of creditors, or of the shareholders or class of shareholders
to be affected by the proposed compromise or arrangement or a reorganization,
agree to a compromise or arrangement or a reorganization of this corporation as
a consequence of the compromise or arrangement, the compromise or arrangement
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or on
all the shareholders or class of shareholders and also on this corporation.
- --------------------------------------------------------------------------------
ARTICLE VII (OPTIONAL. DELETE IF NOT APPLICABLE)
- --------------------------------------------------------------------------------
Any action required or permitted by the Act to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken, is
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to shareholders who have not
consented in writing.
- --------------------------------------------------------------------------------
<PAGE>
USE SPACE BELOW FOR ADDITIONAL ARTICLES OR FOR CONTINUATION OF PREVIOUS
ARTICLES. PLEASE IDENTIFY ANY ARTICLE BEING CONTINUED OR ADDED. ATTACH
ADDITIONAL PAGES IF NEEDED.
I (WE), THE INCORPORATOR(S) SIGN MY (OUR) NAME(S) THIS 15TH DAY OF MARCH 1988.
/s/ Robert D. Nuckles
- --------------------------------------- ------------------------------------
Robert D. Nuckles
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
- --------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- -------------------------------------
- -------------------------------------
- --------------------------------------------------------
Name Sally A. Hamby
Miller, Canfield, Paddock and Stone, PLC
- --------------------------------------------------------
Address P.O. Box 2014
1400 North Woodward Ave., Suite 100
- --------------------------------------------------------
City State Zip Code EFFECTIVE
Bloomfield Hills Michigan 48303-2014 DATE:
- ----------------------------------------------------------------- ------------
Document will be returned to the name and address you enter above
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit and Nonprofit Corporations
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
- --------------------------------------------------------------------------------
1. The present name of the corporation is: MICRO-FILTRATION, INC.
2. The identification number assigned by the Bureau is: 158-025
3. The location of the registered office is:
401 McCormick Dr. Lapeer , Michigan 48446
------------------------------------------------- ---------------
(Street Address) (City) (Zip Code)
- --------------------------------------------------------------------------------
4. Article III of the Articles of Incorporation is hereby amended to read as
follows:
The total authorized shares is 50,000 shares of common stock, consisting of
35,000 voting common shares $1.00 par value to be designated as Class A and
15,000 nonvoting common shares $1.00 par value to be designated as Class B.
The corporation has two classes of common stock. Each class of shares shall be
identical in all respects, except that the nonvoting shares, designated as
Class B, shall carry no right to vote for the election of directors of the
Corporation, and no right to vote on any matter presented to the shareholders
for their vote or approval except only as the laws of this state require that
voting rights be granted to such nonvoting shares.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
5. (For amendments adopted by unanimous consent of incorporators before the
first meeting of the board of directors or trustees.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the _________day of __________ 19_____, in accordance with the
provisions of the Act by the unanimous consent of the incorporator(s)
before the first meeting of the Board on Directors or Trustees.
Signed this ______day of _____________, 19___
--------------------------------- ----------------------------------
(Signature) (Signature)
--------------------------------- ----------------------------------
(Type or Print Name) (Type or Print Name)
--------------------------------- ----------------------------------
(Signature) (Signature)
--------------------------------- ----------------------------------
(Type or Print Name) (Type or Print Name)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. (For profit corporations, and for nonprofit corporations whose articles
state the corporation is organized on a stock or on a membership basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the 31st day of March, 1998 by the shareholders if a profit corporation,
or by the shareholders or members if a nonprofit corporation (check one of
the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of the shareholders or members having not less than the
minimum number of votes required by statute in accordance with Section
407(1) and (2) of the Act if a nonprofit corporation, or Section 407(1) of
the Act if a profit corporation. Written notice to shareholders or members
who have not consented in writing has been given. (Note: Written consent by
less than all of the shareholders or members is permitted only if such
provision appears in the Articles of Incorporation.)
[X] by written consent of all the shareholders or members entitled to vote in
accordance with section 407(3) of the Act if a nonprofit corporation, or
Section 407(2) of the Act if a profit corporation.
Signed this 31st day of March , 1998
--------- ----------------- ----
By /s/ Robert D. Nuckles
-----------------------------------------------------------------------
(Signature of President, Vice-President, Chairperson or Vice-Chairperson)
Robert D. Nuckles President
------------------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
7. (For a nonprofit corporation whose articles state the corporation is
organized on a directorship basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____ day of ______, 19_____ by the directors of a nonprofit
corporation whose articles of incorporation state it is organized on a
directorship basis (check one of the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of all directors pursuant to Section 525 of the Act.
Signed this day of , 19
-------------- ----------------- -------------
By
------------------------------------------------------------------------
(Signature of President, Vice-President, Chairperson or Vice-Chairperson)
------------------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 3.4.2
INDEX
TO
BY-LAWS
OF MICRO-FILTRATION, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I - MEETING OF SHAREHOLDERS
Section 1.01. Place of Meetings...................................... 4
Section 1.02. Annual Meeting......................................... 4
Section 1.03. Special Meetings....................................... 4
Section 1.04. Notice of Meetings..................................... 4
Section 1.05. Waiver of Notice....................................... 5
Section 1.06. Quorum and Adjournment................................. 6
Section 1.07. Vote of Shareholders................................... 6
Section 1.08. Proxies................................................ 7
Section 1.09. Consents............................................... 7
Section 1.10. Organization of Shareholders'
Meetings............................................... 7
Section 1.11. New Shareholders....................................... 7
Article II - DETERMINATION OF VOTING, DIVIDEND
AND OTHER RIGHTS............................................... 8
Article III - DIRECTORS
Section 3.01. General Powers......................................... 9
Section 3.02. Number, Qualifications and
Term of Office......................................... 10
Section 3.03. Election............................................... 10
Section 3.04. Place of Meetings...................................... 10
Section 3.05. Organization Meeting................................... 11
Section 3.06. Annual Meeting......................................... 11
Section 3.07. Special Meetings....................................... 11
</TABLE>
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<PAGE>
Section 3.08. Regular Meetings....................................... 12
Section 3.09. Action Without a Meeting............................... 12
Section 3.10. Quorum and Manner of Action............................ 12
Section 3.11. Compensation........................................... 13
Section 3.12. Removal of Directors................................... 13
Section 3.13. Resignations........................................... 13
Section 3.14. Vacancies.............................................. 14
Section 3.15. Organization of Board Meeting.......................... 14
Article IV - EXECUTIVE COMMITTEE
Section 4.01. Constitution and Powers................................ 14
Section 4.02. Regular Meetings....................................... 15
Section 4.03. Special Meetings....................................... 15
Section 4.04. Quorum and Manner of Action............................ 16
Section 4.05. Records................................................ 16
Article V - OFFICERS
Section 5.01. Officers............................................... 17
Section 5.02. Term of Office and Resignation......................... 17
Section 5.03. Removal of Elected Officers............................ 18
Section 5.04. Vacancies.............................................. 18
Section 5.05. Compensation........................................... 18
Section 5.06. The President.......................................... 18
Section 5.07. The President (con't).................................. 18
Section 5.08. The Vice President..................................... 19
Section 5.09. The Secretary.......................................... 20
Section 5.10. The Treasurer.......................................... 20
Section 5.11. Reimbursement to Corporation........................... 21
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<PAGE>
Article VI - INDEMNIFICATION
Section 6.01. Indemnification: Third Party
Actions................................................ 21
Section 6.02. Indemnification: Actions in the
Right of the Corporation............................... 22
Section 6.03. Indemnification: Mandatory and
Permissive Payments.................................... 23
Section 6.04. Indemnification: Expense
Advances............................................... 24
Section 6.05. Indemnification: Insurance............................. 24
Article VII - SHARE CERTIFICATES
Section 7.01. Form: Signature........................................ 25
Section 7.02. Transfer Agents and Registrars......................... 25
Section 7.03. Transfer of Shares..................................... 26
Section 7.04. Registered Shareholders................................ 26
Section 7.05. Lost Certificates...................................... 26
Article VIII - MISCELLANEOUS
Section 8.01. Fiscal Year............................................ 27
Section 8.02. Signatures on Negotiable
Instruments............................................ 27
Section 8.03. Dividends.............................................. 27
Section 8.04. Reserves............................................... 27
Section 8.05. Seal................................................... 28
Section 8.06. Corporate Offices...................................... 28
Article IX - AMENDMENTS
Section 9.01. Power to Amend......................................... 28
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BY-LAWS
Article I
MEETINGS OF SHAREHOLDERS
-------- -- ------------
Section 1.01. PLACE OF MEETING. Annual and special meetings of the shareholders
----- -- -------
shall be held at such place within or without the State of Michigan as may be
fixed from time to time by the Board of Directors and stated in the notice of
meeting or in a duly executed waiver of notice thereof.
Section 1.02. ANNUAL MEETING. The annual meeting of the shareholders for the
------ -------
election of directors and for the transaction of such other business as may
properly come before the meeting shall be set by the Board of Directors and
shall be held within six (6) months after the close of the fiscal year for each
such year, unless such action is taken by written consent as provided in Section
1.09 hereof. If the annual meeting is not held on the date designated therefor,
the Board of Directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 1.03. SPECIAL MEETINGS. A special meeting of the shareholders may be
------- --------
called at any time for any purpose or purposes by the President, Secretary or
the Board of Directors or by a shareholder or shareholders holding of record at
least forty percent (40%) of all the shares entitled to vote at such meeting.
Section 1.04. NOTICE OF MEETINGS. (1) Except as otherwise provided herein,
------ -- --------
written notice of the time, place and purposes of a meeting of shareholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting,
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either personally or by mail, to each shareholder of record entitled to vote at
the meeting. (2) When a meeting is adjourned to another time or place, it is not
necessary to give notice of the adjourned meeting if the time and place to which
the meeting is adjourned are announced at the meeting at which the adjournment
is taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting. However, if after the adjournment
the Board of Directors fixes a new record date for the adjourned meeting, a
notice of the adjourned meeting shall be given to each shareholder of record on
the new record date entitled to notice under Sub-section (1). (3) Attendance of
a person at a meeting of shareholders, in person or by proxy, constitutes a
waiver of notice of the meeting, except when the shareholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. (4) Any notice required by statute or by these By-Laws to be given to
the shareholders, or to directors, or to any officer of the Company, shall be
deemed to be sufficiently given by depositing the same in a post office box, in
a sealed, post-paid wrapper, addressed to such shareholder, director, or officer
at his last known address, and such notice shall be deemed to have been given at
the time of such mailing.
Section 1.05. WAIVER OF NOTICE. Any action required or permitted by the laws of
----------------
the State of Michigan by these By-Laws to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice and
without a vote, if a
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consent in writing, setting forth the actions so taken, is signed by the holders
of outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to shareholders who have not consented in writing.
Section 1.06. QUORUM AND ADJOURNMENT. At all meetings of shareholders, except as
------ --- -----------
otherwise expressly provided by statute or the Articles of Incorporation, shares
entitled to cast a majority of the votes at a meeting constitute a quorum at the
meeting. The shareholders present, in person or by proxy, at such meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less that a quorum. Whether or not a quorum is
present, the meeting may be adjourned by a majority of the shares present.
Section 1.07. VOTE OF SHAREHOLDERS. Each outstanding share having the right to
---- -- ------------
vote is entitled at every meeting of shareholders to one (1) vote on each matter
submitted to a vote. A vote may be cast either orally or in writing. Whenever
any other corporate action is to be taken by vote at a meeting of the
shareholders, it shall, except as otherwise required by statute or by the
Articles of Incorporation, be authorized by a majority of the votes cast by such
holders present in person or by proxy and entitled to vote.
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Section 1.08. PROXIES. Every shareholder entitled to vote at a meeting of
-------
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy. Every proxy must be in
writing and signed by the shareholder or his authorized agent or representative.
No proxy shall be valid after the expiration of three (3) years from the date
thereof unless otherwise provided in the proxy.
Section 1.09. CONSENTS. Whenever, by any statute or the Articles of
--------
Incorporation, shareholders are required or permitted to take any action by
vote, such action may be taken without a meeting upon written consent setting
forth the action so taken, signed in person by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take the action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to shareholders who have not consented in writing.
Section 1.10. ORGANIZATION OF SHAREHOLDERS' MEETINGS. At every meeting of the
------------ -- ------------- --------
shareholders, the President, or in his absence, a Vice-President, or in his
absence, the Secretary, or Chairman chosen by a majority in interest of the
shareholders of the Corporation present in person or by proxy and entitled to
vote, shall act as Secretary.
Section 1.11. NEW SHAREHOLDERS. Every person becoming a shareholder in this
--- ------------
Company shall be deemed to assent to these By-Laws, and shall designate to the
Secretary the address to which he
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desires that the notice herein required to be given may be sent, and all notices
mailed to such addresses, with postage prepaid, shall be considered as duly
given at the date of mailing, and any person failing to so designate his address
shall be deemed to have waived notice of such meeting.
Article II
DETERMINATION OF VOTING,
------------- -- -------
DIVIDEND AND OTHER RIGHTS
-------- --- ----- ------
For the purpose of determining shareholders entitled to notice of and to vote at
a meeting of shareholders or an adjournment thereof, or to express consent to or
dissent from any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of a dividend or allotment of a right,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or for the purpose of any other action, the Board of Directors may
fix, in advance, date as the record date for any such determination of
shareholders. Such date shall not be more than sixty (60) days nor less than
(10) days before the date of any such meeting, nor more than sixty (60) days
prior to any other action. If a record date is so fixed, such shareholders and
only such shareholders as shall be shareholders of record on that date so fixed
shall be entitled to notice of, and to vote at, such meeting and any adjournment
thereof, or to express such consent or dissent, or to receive payment of such
dividend or such allotment of rights, or otherwise to be recognized as
shareholders for the purpose of any other action, notwithstanding any transfer
of any
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shares on the books of the Corporation after any such record date so fixed. If a
record date is not fixed; (a) the record date for determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be the close
of business on the day on which the resolution of the Board relating thereto is
adopted.
Whenever any shareholder present at a meeting of shareholders shall request the
appointment of inspectors, a majority of the shareholders present at such
meeting and entitled to vote thereat, shall appoint inspectors who need not be
shareholders. If the right of any person to vote at such meeting shall be
challenged, the inspectors of election shall determine such right. The
inspectors shall receive and count the votes either upon an election or for the
decision of any question and shall determine the result. Their certificate of
any vote shall be prima facie evidence thereof. When a determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders has been made as provided in this section, the determination
applies to any adjournment of the meeting, unless the board fixes a new record
date under this section for the adjourned meeting.
Article III
DIRECTORS
---------
Section 3.01. GENERAL POWERS. The business and property of the Corporation,
------- ------
except as expanded and/or limited by the Articles of
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Incorporation, these By-Laws or by statute, shall be managed by the Board of
Directors.
Section 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The number of directors
------ -------------- --- ---- -- ------
shall be as specified in the Articles of Incorporation, or, if not so specified,
no greater than 7 and no less that 1. In either event, such numbers may be
increased by amendment of the appropriate instruments. The directors need be
shareholders only if so specified in the Articles of Incorporation. Except as
otherwise provided by statute, the Articles of Incorporation or these By-Laws,
the directors shall be elected at the annual meeting of shareholders and shall
hold office for the term for which he is elected and qualified, or until his
death, resignation or removal.
Section 3.03. ELECTION. At each meeting of the shareholders for the election of
--------
directors, at which a quorum is present, each shareholder entitled to vote shall
have the right to vote, in person or by proxy, the number of shares of stock
having voting power owned by him for or against each director to be elected.
Except as otherwise provided by the Articles of Incorporation, there shall be no
right to cumulate votes. Each person standing for election as a director shall
be elected upon his receipt of a plurality of the votes cast for his election. A
person not receiving a plurality of the votes cast shall not be elected.
Section 3.04. PLACE OF MEETINGS. Meetings of the Board of Directors, annual,
----- -- --------
regular or special, shall be held at any place within or without the State of
Michigan as may from time to time be determined by the Board of Directors.
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Section 3.05. ORGANIZATION MEETING. Without notice of such meeting, a newly
------------ -------
elected Board of Directors may meet and organize as soon as practicable after
and at the place where the annual meeting is held, or the Board of Directors may
meet at such place and time as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as shall
be specified in a duly executed waiver of notice.
Section 3.06. ANNUAL MEETING. The Board of Directors shall meet as soon as
------ -------
practicable after each annual election of directors for the purpose of
organization, election of officers and the transaction of other business on the
same day and at the same place at which the shareholders' meeting is held.
Notice of such meeting need not be given. Such meeting may be held at such other
time and place as shall be specified in a notice to be given as hereinafter
provided for special meetings of the Board of Directors, or according to consent
and waiver of notice thereof signed by all of the directors.
Section 3.07. SPECIAL MEETING. Special meetings of the Board of Directors shall
------- -------
be held whenever called by any director. Notice of any special meeting, and any
adjournment thereof, stating the place, date and hour of the meeting, shall be
mailed to each director, addressed to him at his residence or usual place of
business, or shall be sent to him at such place by telegraph, cable, or radio,
or be delivered personally, or by telephone at least three (3) calendar days
before the day on which the meeting is to be held. Notice of any meeting of the
Board of Directors need not be given to any director who submits a signed waiver
of
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notice before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to him.
Unless limited by statute, the Articles of Incorporation, these By-Laws, or the
terms of notice thereof, any and all business may be transacted at any special
meeting.
Section 3.08. REGULAR MEETINGS. Regular meetings of the Board of Directors shall
------- --------
be held on a regular basis. The frequency and number of such regular meetings
shall be set by the Board of Directors as from time to time in their discretion
they deem necessary. Notice of such regular meetings, and any adjournment
thereof, shall be as set forth in Section 3.07 of this Article III.
Section 3.09. ACTION WITHOUT A MEETING. Unless otherwise provided in the
------ ------- - -------
Articles of Incorporation, action required or permitted to be taken pursuant to
authorization voted as a meeting of the Board of Directors may be taken without
a meeting if, before or after the action, the number of directors specified in
the Articles of Incorporation then in office, or if no number is so specified, a
majority of the members of the Board of Directors then in office, consent
thereto in writing. The written consents shall be filed with the minutes of the
proceedings of the Board of Directors. The consent has the same effect as a vote
of the Board of Directors for all purposes.
Section 3.10. QUORUM AND MANNER OF ACTION. A majority of the members of the
------ --- ------ -- ------
Board of Directors then in office constitute a quorum for the transaction of
business unless the Articles of Incorporation provide otherwise. The votes of a
majority of the
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directors present at a meeting at which a quorum is present constitutes the
action of the Board of Directors, except as otherwise required by statute or the
Articles of Incorporation. A majority of the directors present, whether or not a
quorum is present, may be resolution adjourn any meeting, to another place and
time, from time to time for a period not exceeding fourteen (14) days in any one
case.
Section 3.11. COMPENSATION. Each director of the Corporation shall serve without
------------
fee, but by resolution of the Board of Directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each annual, special, or
regular meeting of the Board of Directors; provided, however, that nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 3.12. REMOVAL OF DIRECTORS. A director, directors, or the entire Board
------- -- ---------
of Directors may be removed, with or without cause, by vote of the holders of a
majority of the shares entitled to vote at an election of directors, except as
otherwise provided by statute or the Articles of Incorporation. The holders of
such shares shall not have the right to vote cumulatively on such removal,
except as otherwise provided in the Articles of Incorporation.
Section 3.13. RESIGNATIONS. Any director may resign at any time by giving
------------
written notice to the Board of Directors, the Chairman, the President or the
Secretary of the Corporation. Such resignation shall take effect upon its
receipt by addressee named
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above or a subsequent time as set forth in the notice of resignation.
Section 3.14. VACANCIES. Any newly created directorships and vacancies occurring
---------
on the Board of Directors by reason of death, resignation, retirement,
disqualification or removal may be filled by the affirmative vote of a majority
of the remaining directors then in office, although less than a quorum. Unless a
successor director is elected by a vote of the shareholders, any director
elected by the Board of Directors because of an increase in the number of
directors or to fill a vacancy, shall hold office for the unexpired portion of
the term of his predecessor or until the next election of directors by the
shareholders, whichever shall first occur.
Section 3.15. ORGANIZATION OF BOARD MEETING. At each meeting of the Board of
------------ -- ----- -------
Directors, the President, or a Vice-President, or the Secretary, or a director
chosen by a majority of the directors present, shall act as Chairman of the
meeting. The Secretary, or in his absence, any person appointed by the Chairman,
shall act as Secretary of the meeting.
Article IV
EXECUTIVE COMMITTEE
--------- ---------
Section 4.01. CONSTITUTION AND POWERS. Unless the unanimous vote of the Board of
------------ --- ------
Directors is required by the Articles of Incorporation to transact business, the
Board of Directors, by resolution adopted by a majority of the entire Board of
Directors then in office, may designate from among its members an Executive
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Committee and a Chairman and officers thereof, consisting of one (1) or more
directors which, to the extent provided in such resolution, may exercise all
power and authority of the Board of Directors in management of the business
affairs of the Corporation. However, the Executive Committee does not have the
power or authority to:
(a) Amend the Articles of Incorporation.
(b) Adopt an agreement of merger or consolidation.
(c) Recommend to shareholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets.
(d) Recommend to shareholders a dissolution of the Corporation or a
revocation of a dissolution.
(e) Amend the By-Laws of the Corporation.
(f) Fill vacancies on the Board of Directors.
(g) Fix compensation of the directors for serving on the Board or on a
committee.
Section 4.02. REGULAR MEETINGS. Regular meetings of the Executive Committee
------- --------
shall be held without notice at such time and at such place as shall from time
to time be determined by resolution of the Executive Committee. In case the day
so determined shall be a legal holiday, such meeting shall be held on the next
succeeding day, not a legal holiday, at the same hour.
Section 4.03. SPECIAL MEETINGS. Special meetings of the Executive Committee
------- --------
shall be held whenever called by the Chairman of the Executive Committee. Notice
of any special meeting and any adjournment thereof, shall be mailed to each
member, addressed to him at his residence or usual place of business, or be sent
to him at such place by telegraph, or be delivered personally, or by
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telephone not more than the five days before the day on which the meeting is to
be held. Notice of any meeting of the Executive Committee need not be given to
any member who submits a signed waiver of notice before or after the meeting, or
who attends the meeting without protesting prior thereto or at its commencement,
the place of notice to him. Unless limited by statute, the Articles of
Incorporation, the By-Laws, or the terms of the notice thereof, any and all
business may be transacted at any special meeting of the Executive Committee.
Section 4.04. QUORUM AND MANNER OF ACTION. A majority of the members of the
------ --- ------ -- ------
Executive Committee in office at the time of any regular or special meeting of
the Executive Committee shall be present in person to constitute a quorum for
the transaction of business. The vote of a majority of the members present at
the time of such vote, if a quorum is present at such time, shall be the act of
the Executive Committee. A majority of the members present, whether or not a
quorum is present, may adjourn any meeting and no notice of an adjourned meeting
need be given.
Section 4.05. RECORD. The Executive Committee may in their discretion or at the
------
discretion of the Board of Directors keep minutes of its proceedings and submit
the same, if any, from time to time to the Board of Directors. The Secretary of
the Corporation, or in his absence an Assistant Secretary, shall act as
secretary to the Executive Committee; or the Executive Committee may in its
discretion appoint its own secretary.
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Article V
OFFICERS
--------
Section 5.01. OFFICERS. The elected officers of the Corporation shall be a
--------
President, one or more Vice-Presidents, a Secretary, and a Treasurer. The Board
of Directors or the Executive Committee may also appoint one or more Assistant
Treasurers, and such other officers and agents as may from time to time appear
to be necessary or advisable in the conduct of the affairs of the Corporation.
Any two or more offices, whether elective or appointive, may be held by the same
person, except that no one person may hold the offices of both President and
Vice-President. No one of said officers except the President need be a director,
but a Vice-President who is not a director cannot succeed to or fill the office
of President. The Board of Directors may secure the fidelity of any or all of
such officers by bond or otherwise.
Section 5.02. TERM OF OFFICE AND RESIGNATION. So far as practicable, all elected
---- -- ------ --- -----------
officers shall be elected at the first meeting of the Board of Directors
following the annual meeting of shareholders in each year and, except as
otherwise hereinafter provided, shall hold office until the next first meeting
of the Board of Directors. Any elected or appointed officer may resign, at any
time, by giving written notice to the Board of Directors, the Chairman, the
President or the Secretary of the Corporation. Such resignation shall take
effect upon its receipt by any one of the above or at a subsequent time
specified therein, and unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
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Section 5.03. REMOVAL OF ELECTED OFFICERS. Any officer may be removed at any
------- -- ------- --------
time, with or without cause, by vote of a majority of the Board of Directors
present at any meeting at which a quorum is present, except as otherwise
required by statute or the Article of Incorporation.
Section 5.04. VACANCIES. If any vacancy shall occur in any office for any
---------
reason, the Board of Directors or, in the case of an appointive office, the
Executive Committee, may elect or appoint a successor to fill such vacancy for
the remainder of the term.
Section 5.05. COMPENSATION. The compensation, if any, of all elected officers of
------------
the Corporation shall be fixed by the Board of Directors. The compensation, if
any, of officers and agents of the Corporation appointed by the Board of
Directors, the Executive Committee or the President shall be fixed by the body
or person appointing such officers and agents.
Section 5.06. THE PRESIDENT. The President shall preside, when present, at all
--- ---------
meeting of the Board of Directors. He shall have such further powers and duties
as may be conferred upon him by these By-Laws, the Board of Directors or the
Executive Committee.
Section 5.07. THE PRESIDENT (CONT'D). The President shall also be the chief
--- --------- --------
executive officer of the Corporation, and, subject to the control of the Board
of Directors, shall have general and active charge, control and supervision of
all its business and affairs and shall see that all orders and resolutions of
the Board of Directors are carried into effect. He may act as chairman at all
meetings of the shareholders. The President shall have
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general authority to execute contracts in the ordinary course of business in the
name and on behalf of the Corporation; to sign stock certificates; to cause the
employment or appointment of such employees and agents of the Corporation (other
than officers or agents elected or appointed by the Board of Directors or the
Executive Committee) as the conduct of the business of the Corporation may
require, and to fix their compensation; to remove or suspend any employee or
agent who shall not have been appointed by the Board of Directors or the
Executive Committee; to suspend for cause, pending final action by the authority
which shall have elected or appointed him, any officer or agent who shall have
been elected or appointed either by the Board of Directors or Executive
Committee; and, in general, to exercise all the powers generally appertaining to
the office of president of a corporation.
Section 5.08. THE VICE-PRESIDENT. During the absence or disability of the
--- --------------
President, in the order designated by the Board of Directors, shall exercise the
functions of the President. The Vice-President or if there is more than one
Vice-President, each Vice-President, shall have such powers and discharge such
duties as may be assigned to him from time to time by the Board of Directors.
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Section 5.09. THE SECRETARY. The Secretary shall attend all meetings of the
--- ---------
Board of Directors and the shareholders and shall record all votes and the
minutes of all proceedings in a book to be kept for that purpose and shall, when
requested, perform like duties for all committees of the Board of Directors. He
shall attend to the giving of notice of all meetings of the shareholders, and
special meetings of the Board of Directors and committees thereof; he shall have
custody of the corporate seal, if any, and, when authorized by the Board of
Directors, shall have authority to affix the same to any instrument and, when so
affixed, it shall be attested by his signature or by the signature of the
Treasurer or an Assistant Secretary or an Assistant Treasurer. He shall keep and
account for all books, documents, papers and records of the Corporation, and
shall generally perform all the duties appertaining to the office of secretary
of a corporation. In the absence of the Secretary, such person as shall be
designated by the President shall perform his duties.
Section 5.10. THE TREASURER. The Treasurer shall have the care and custody of
--- ---------
all the funds of the Corporation and shall deposit the same in such banks or
other depositories as the Board of Directors, or any officer or officers, or any
officer and agent jointly, duly authorized by the Board of Directors, shall,
from time, to time, direct or approve. He shall keep a full and accurate account
of all monies received and paid on account of the Corporation, and shall tender
a statement of his accounts whenever the Board of Directors shall require. He
shall perform all other necessary acts and duties in connection with the
administration of
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the financial affairs of the Corporation, and shall generally perform all the
duties usually appertaining to the office of treasurer of a corporation. When
required by the Board of Directors, he shall give bonds for the faithful
discharge of his duties in such sums and with such sureties as the Board of
Directors shall approve. In the absence of the Treasurer, such person as shall
be designated by the President shall perform his duties.
Section 5.11. REIMBURSEMENT TO CORPORATION. Any payment made to an officer of
------------ -- -----------
the Corporation such as a salary, commission, bonus, interest, or rent, or
entertainment expense incurred by him, which shall be disallowed in whole or in
part as a deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer to the Corporation to the full extent of such
disallowance. It shall be the duty of the Directors, as a board, to enforce
payment of each such amount disallowed. In lieu of payment by the officer,
subject to the determination of the Directors, proportionate amounts may be
withheld from his future compensation payments until the amount owed to the
Corporation has been recovered.
Article VI
INDEMNIFICATION
---------------
Section 6.01. INDEMNIFICATION: THIRD PARTY ACTIONS. The Corporation shall
--------------- ----- ----- -------
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the
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right of the Corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation or its Shareholders, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceedings by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation or its Shareholders, and, with respect to any
criminal action or proceedings, had reasonable cause to believe that his conduct
was unlawful.
Section 6.02. INDEMNIFICATION: ACTIONS IN THE RIGHT OF THE CORPORATION. The
--------------- ------- -- --- ----- -- --- -----------
Corporation shall indemnify any person who was or is a party to or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by reasons of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of
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the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation or its Shareholders and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 6.03. INDEMNIFICATION: MANDATORY AND PERMISSIVE PAYMENTS. (1) To the
--------------- --------- --- ---------- --------
extent that a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 6.01 or 6.02, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(2) Any indemnification under Sections 6.01 or 6.02 (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that
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indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 6.01 and 6.02. Such determination shall be made in either of the
following ways:
(a) By the Board by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, except as a greater vote is
required by the Articles of Incorporation.
(b) If such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion.
(c) By the Shareholders.
Section 6.04. INDEMNIFICATION: EXPENSE ADVANCES. Expenses incurred in defending
--------------- ------- --------
a civil or criminal action, suit or proceeding described in Sections 6.01 or
6.02 may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized in the manner provided in Subsection
(2) of Section 6.03 upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation.
Section 6.05. INDEMNIFICATION: INSURANCE. The Corporation shall have the power
--------------- ---------
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another
-24-
<PAGE>
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Corporation would have
power to indemnify him against such liability under Sections 6.01 to 6.04.
Article VII
SHARE CERTIFICATES
----- ------------
Section 7.01. FORM: SIGNATURE. The shares of the Corporation shall be
---- ---------
represented by certificates signed by the President, Treasurer, Assistant
Treasurer, Secretary or Assistant Secretary of the Corporation, and may be
sealed with the seal of the Corporation or a facsimile thereof. The signatures
of the officers may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the Corporation itself or
its employee. In case an officer who has signed or whose facsimile signature has
been placed upon a certificate, ceases to be such officer before the certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer at the date of issue.
Section 7.02. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may, in its
-------- ------ --- ----------
discretion, appoint one or more banks or trust companies in the State of
Michigan and in such other state or states as the Board of Directors may deem
advisable, from time to time, to act as Transfer Agents and Registrars of the
shares of the Corporation; and upon such appointments being made, no certificate
representing shares shall be valid until countersigned
-25-
<PAGE>
by one of such Transfer Agents and registered by one of such Registrars.
Section 7.03. TRANSFER OF SHARES. Transfer of shares shall be made on the books
-------- -- ------
of the Corporation only upon written request by the person named in the
certificate, or by his attorney lawfully constituted in writing, and upon
surrender and cancellation of a certificate or certificates for a like number of
shares of the same class, with duly executed assignment and power of transfer
endorsed thereon or attached thereto, and with such proof of the authenticity of
the signatures as the Corporation or its agents may reasonably require.
Section 7.04. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
---------- ------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and other distributions, and to vote as such
owner, and to hold liable for calls and assessments the person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
Section 7.05. LOST CERTIFICATES. In case any certificate representing shares
---- ------------
shall be lost, stolen or destroyed, the Board of Directors, or any officer or
officers duly authorized by the Board of Directors, may authorize the insurance
of a substitute certificate in place of the certificate so lost, stolen, or
destroyed, and may cause or authorize such substitute certificate to be
countersigned by the appropriate Transfer Agent and
-26-
<PAGE>
registered by the appropriate Registrar. In each such case the applicant for a
substitute certificate shall furnish to the Corporation and to such of its
Transfer Agents and Registrars as may require to same, evidence to their
satisfaction, in their discretion, of the loss, theft or destruction of such
certificate and of the ownership thereof, and also such security or indemnity as
may by them be required.
Article VIII
MISCELLANEOUS
-------------
Section 8.01. FISCAL YEAR. The Board of Directors from time to time shall
------ ----
determine the fiscal year (or calendar year) of the Corporation.
Section 8.02. SIGNATURES ON NEGOTIABLE INSTRUMENTS. All bills, notes, checks or
---------- -- ---------- -----------
other instruments for the payment of money shall be signed or countersigned by
such officers or agents and in such manner as from time to time may be
prescribed by resolution of the Board of Directors, or may be prescribed by any
officer or officers, or any officer and agent jointly, duly authorized by the
Board of Directors.
Section 8.03. DIVIDENDS. Except as otherwise provided in the Article of
---------
Incorporation, dividends upon the shares of the Corporation may be declared and
paid as permitted by law in such amounts as the Board of Directors may determine
at any annual or special meeting.
Section 8.04. RESERVES. Before payment of any dividend, there may be set aside
--------
out of any funds of the Corporation available for
-27-
<PAGE>
dividends such sum or sums as the Board of Directors from time to time, in its
absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation or for such other purpose as the Board of Directors
deems conducive to the interest of the Corporation; and in its discretion the
Board of Directors may decrease or abolish any such reserve.
Section 8.05. SEAL. The corporate seal, if any, shall consist of two concentric
----
circles between which is the name of the Corporation and in the center of which
shall be inscribed "SEAL" and such seal as is impressed on the margin hereof is
hereby adopted as the corporate seal being manually impressed thereon; or a
facsimile thereof may be used in lieu of such manual impression, and when so
used shall be deemed to be the corporate seal if otherwise properly authorized.
Section 8.06. CORPORATE OFFICES. The registered office of the Corporation shall
--------- -------
be as provided in the Articles of Incorporation. The Corporation may also have
offices in such other places as the Board of Directors may from time to time
appoint, or the business of the Corporation requires. Such offices may be
outside of the State of Michigan.
Article IX
AMENDMENTS
----------
Section 9.01. POWER TO AMEND. These By-Laws may be amended, repealed or adopted
----- -- -----
by the holders of a majority of the shares entitled to vote in the election of
any directors or by a majority
-28-
<PAGE>
of the Board of Directors, then in office, except as a greater or lesser number
of shares or directors is required in the Articles of Incorporation for
shareholder action or action of the Board of Directors. Any By-Law adopted by
the Board of Directors may be amended or repealed by shareholders entitled to
vote thereon as herein provided; and any By-Law adopted by the shareholders may
be amended or repealed by the Board of Directors, except as limited by statute
and except when the shareholders have expressly provided otherwise with respect
to any particular By-Law or By-Laws. The notice of any special meeting of the
Board of Directors or the shareholders, as the case may be, at which action to
amend, repeal or adopt any By-Law or By-Laws is proposed to be taken, shall
include the text or a summary of each By-Law proposed to be repealed or adopted
or as it is proposed to be amended.
-29-
<PAGE>
MICROFILTRATION
AMENDMENTS TO THE BY-LAWS OF THE CORPORATION
ADOPTED BY THE BOARD OF DIRECTORS ON
March 31, 1998
1. First sentence of Article V, Section 5.01 of the By-laws is amended in its
entirety to read as follows:
Section 5.01. OFFICERS. The elected officers of the Corporation shall be a
Chairman and Chief Executive Officer, President, one or more Vice-
Presidents, a Secretary and a Treasurer.
2. Section 5.06 of the By-laws is amended in its entirety to read as follows:
Section 5.06. THE PRESIDENT. During the absence or disability of the
chairman of the board, or while that office is vacant, the president shall
preside over all meetings of the board of directors, of the shareholders
and of any executive committee, and shall perform all of the duties and
functions, and when so acting shall have all powers and authority, of the
chairman of the board. He or she shall be, ex officio, a member of all
standing committees. The president shall, in general, perform all duties
incident to the office of president and such other duties as may be
prescribed by the board of directors.
3. Section 5.07 of the By-laws is amended in its entirety to read as follows:
Section 5.07. CHAIRMAN OF THE BOARD OF DIRECTORS. If the board of directors
elects or appoints a chairman of the board, he or she shall be elected or
appointed by, and from among the membership of, the board of directors. He
or she shall preside at all meetings of the shareholders, of the board of
directors and of any executive committee. He or she shall perform such
other duties and functions as shall be assigned to him or her from time to
time by the board of directors. He or she shall be, ex officio, a member of
all standing committees. Except where by law the signature of the president
of the corporation is required, the chairman of the board of directors
shall possess the same power and authority to sign all certificates,
contracts, instruments, papers and documents of every conceivable kind and
character whatsoever in the name of and on behalf of the corporation which
may be authorized by the board of directors. During the absence or
disability of the president, or while that office is vacant, the chairman
of the board of directors shall exercise all of
<PAGE>
the powers and discharge all of the duties of the president.
4. Article V of the By-laws is amended to add a new section 5.12 as follows:
Section 5.12. CHIEF EXECUTIVE OFFICER. Unless otherwise designated by the
board of directors, the chairman of the board shall be the chief executive
officer of the Corporation. The designation of the chief executive officer
may be changed at any special meeting of the board of directors. The
president shall be the chief executive officer whenever the office of
chairman of the board is vacant. The chief executive officer shall be
responsible to the board of directors for the general supervision and
management of the business and affairs of the corporation and shall see
that all orders and resolutions of the board are carried into effect.
<PAGE>
Exhibit 3.5.1
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------
(FOR BUREAU USE ONLY) FILED DATE RESERVED
DEC 7 1984
DEC 7 1984 --------------------
ADMINISTRATION --------------------
MICHIGAN DEPARTMENT OF COMMERCE
CORPORATION & SECURITIES BUREAU
EFFECTIVE DATE:
- --------------------------------------------------------------------------------
CORPORATION IDENTIFICATION NUMBER 346-257
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(Please read instructions on last page before completing form)
Pursuant to the provisions of Act 284, Public Acts of 1972, as amended, the
undersigned corporation executes the following Articles:
ARTICLE 1
- --------------------------------------------------------------------------------
The name of the corporation is:
ULTRA AIR PRODUCTS, INC.
- --------------------------------------------------------------------------------
ARTICLE II
- --------------------------------------------------------------------------------
The purpose or purposes for which the corporation is organized is to engage in
any activity within the purposes for which corporations may be organized under
the Business Corporation Act of Michigan.
- --------------------------------------------------------------------------------
ARTICLE III
- --------------------------------------------------------------------------------
The total authorized capital stock is:
Common Shares 50,000 Par Value Per Share $ 1.00
---------------------------- ----------
1.
Preferred Shares ____________________________ Par Value Per Share $ ________
and/or shares without par value as follows:
Common Shares ____________________________ Stated Value Per Share $ _____
2.
Preferred Shares ____________________________ Stated Value Per Share $ _____
3. A statement of all or any of the relative rights, preferences and limitations
of the shares of each class is as follows:
All stock to be issued under Section 1244 of the Internal Revenues Codes
of 1954 as amended.
- --------------------------------------------------------------------------------
<PAGE>
ARTICLE IV
- --------------------------------------------------------------------------------
1. The address of the registered office is:
16191 Groesbeck Highway Roseville Michigan 48066
- ------------------------------------------------ ----------------
(Street Address) (City) (Zip Code)
2. The mailing address of the registered office if different than above:
________________________________________________ Michigan _______________
(P.O. Box) (City) (Zip Code)
3. The name of the resident agent at the registered office is: Maroy A. Melin
- --------------------------------------------------------------------------------
ARTICLE V
- --------------------------------------------------------------------------------
The name(s) and address(es) of the incorporator(s) is (are) as follows:
NAME RESIDENCE OR BUSINESS ADDRESS
Robert L. McKay 16191 Groesbeck Highway, Roseville, Mi. 48066
- --------------------------------------------------------------------------------
James Muller 16191 Groesbeck Highway, Roseville, Mi. 48066
- --------------------------------------------------------------------------------
Larry C. Curtis 16191 Groesbeck Highway, Roseville, Mi. 48066
- --------------------------------------------------------------------------------
Maroy A. Melin 16191 Groesbeck Highway, Roseville, Mi. 48066
- --------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
ARTICLE VI (OPTIONAL DELETE IF NOT APPLICABLE)
- --------------------------------------------------------------------------------
When a compromise or arrangement or a plan of reorganization of this corporation
is proposed between this corporation and its creditors or any class of them or
between this corporation and its shareholders or any class of them, a court of
equity jurisdiction within the state, on application of this corporation or of a
creditor or shareholder thereof, or on application of a receiver appointed for
the corporation, may order a meeting of the creditors or class of creditors or
of the shareholders or class of shareholders to be affected by the proposed
compromise or arrangement or reorganization, to be summoned in such manner as
the court directs. If a majority in number representing 3/4 in value of the
creditors or class of creditors or of the shareholders or class of shareholders
to be affected by the proposed compromise or arrangement or a reorganization,
agree to a compromise or arrangement or a reorganization of this corporation as
a consequence of the compromise or arrangement, the compromise or arrangement,
and the reorganization, if sanctioned by the court to which the application has
been made, shall be binding on all the creditors or class of creditors, or on
all the shareholders or class of shareholders and also on this corporation.
- --------------------------------------------------------------------------------
ARTICLE VII (OPTIONAL DELETE IF NOT APPLICABLE)
- --------------------------------------------------------------------------------
Any action required or permitted by the Act to be taken at an annual or special
meeting of shareholders may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken, is
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to shareholders who have not
consented in writing.
- --------------------------------------------------------------------------------
<PAGE>
Use space below for additional Articles or for continuation of previous
Articles. Please identify any Article being continued or added. Attach
additional pages if needed.
I (We), the incorporator(s) sign my (our) name(s) this 6th day of December 1984.
/s/ Robert L. McKay
- --------------------------------------- ___________________________________
Robert L. McKay
/s/ James Muller
- --------------------------------------- ___________________________________
James Muller
/s/ Larry C. Curtis
- --------------------------------------- ___________________________________
Larry C. Curtis
/s/ Maroy A. Melin
- --------------------------------------- ___________________________________
Maroy A. Melin
- --------------------------------------- ___________________________________
<PAGE>
- --------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES
CORPORATION, SECURITIES AND LAND DEVELOPMENT BUREAU
- --------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- -------------------------------------
- -------------------------------------
- --------------------------------------------------------
Name Sally A. Hamby
Miller, Canfield, Paddock and Stone, PLC
- --------------------------------------------------------
Address P.O. Box 2014
1400 North Woodward Ave., Suite 100
- --------------------------------------------------------
City State Zip Code EFFECTIVE
Bloomfield Hills Michigan 48303-2014 DATE:
- ----------------------------------------------------------------- ------------
Document will be returned to the name and address you enter above
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For use by Domestic Profit and Nonprofit Corporations
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
- --------------------------------------------------------------------------------
1. The present name of the corporation is: ULTRA AIR PRODUCTS, INC.
2. The identification number assigned by the Bureau is: 346-257
3. The location of the registered office is:
3080 E. Outer Drive, Suite 10, Detroit , Michigan 48234
------------------------------------------------- ---------------
(Street Address) (City) (Zip Code)
- --------------------------------------------------------------------------------
4. Article III of the Articles of Incorporation is hereby amended to read as
follows:
The total authorized shares is 50,000 shares of common stock, consisting of
35,000 voting common shares $1.00 par value to be designated as Class A and
15,000 nonvoting common shares $1.00 par value to be designated as Class B.
The corporation has two classes of common stock. Each class of shares shall be
identical in all respects, except that the nonvoting shares, designated as
Class B, shall carry no right to vote for the election of directors of the
Corporation, and no right to vote on any matter presented to the shareholders
for their vote or approval except only as the laws of this state require that
voting rights be granted to such nonvoting shares.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
5. (For amendments adopted by unanimous consent of incorporators before the
first meeting of the board of directors or trustees.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____ day of _______________, 19__, in accordance with the provisions
of the Act by the unanimous consent of the incorporator(s) before the first
meeting of the Board of Directors or Trustees.
Signed this ____ day of _______________, 19__
------------------------------------ ------------------------------------
(Signature) (Signature)
------------------------------------ ------------------------------------
(Type or Print Name) (Type of Print Name)
------------------------------------ ------------------------------------
(Signature) (Signature)
------------------------------------ ------------------------------------
(Type or Print Name) (Type of Print Name)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. (For profit corporations, and for nonprofit corporations whose articles
state the corporation is organized on a stock or on a membership basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the 30th day of March, 1998 by the shareholders if a profit corporation,
or by the shareholders or members if a nonprofit corporation (check one of
the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of the shareholders or members having not less than
the minimum number of votes required by statute in accordance with
Section 407(1) and (2) of the Act if a nonprofit corporation, or
Section 407(1) of the Act if a profit corporation. Written notice to
shareholders or members who have not consented in writing has been
given. (Note: Written consent by less than all of the shareholders or
members is permitted only if such provision appears in the Articles of
Incorporation.)
[X] by written consent of all the shareholders or members entitled to vote
in accordance with Section 407(3) of the Act if a nonprofit
corporation, or Section 407(2) of the Act if a profit corporation.
Signed this 30th day of March, 1998
By /s/ Robert McKay
--------------------------------------------------------------
(Signature of President, Vice-President,
Chairperson or Vice-Chairperson)
Robert McKay President
-----------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
7. (For a nonprofit corporation whose articles state the corporation is
organized on a directorship basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted
on the ____ day of _______________, 19__, by the directors of a nonprofit
corporation whose articles of incorporation state it is organized on a
directorship basis (check one of the following)
[_] at a meeting. The necessary votes were cast in favor of the amendment.
[_] by written consent of all directors pursuant to Section 525 of the
Act.
Signed this ____ day of _______________, 19__
By
--------------------------------------------------------------
(Signature of President, Vice-President,
Chairperson or Vice-Chairperson)
-----------------------------------------------------------------
(Type or Print Name) (Type or Print Title)
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 3.5.2
BY-LAWS
OF
ULTRA AIR PRODUCTS, INC.
ARTICLE I. OFFICES
The principal office of the corporation in the State of Michigan shall be
located in the City of Roseville, County of Macomb. The corporation may have
such other offices, either within or without the State of Michigan, as the Board
of Directors may designate or as the business of the corporation may require
from time to time.
ARTICLE II. SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall be
held on the 21st in the month of December in each year, beginning with the year
1985, at the hour of 9:00 o'clock A.M., or at such other time on such other day
within such month as shall be fixed by the Board of Directors, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Michigan, such meeting shall be held on the next
succeeding business day.
If the annual meeting is not held on the date designated therefor, the
board shall cause the meeting to be held as soon thereafter as convenient. If
the annual meeting is not held for 90 days after the date designated therefor,
or if no date has been designated for 15 months after organization of the
corporation or after its last annual meeting, the circuit court for the county
in which the registered office of the corporation is located, upon application
of a shareholder, may summarily order the meeting or the election, or both, to
be held at such time and place, upon such notice and for the transaction of such
business as may be designated in the order.
SECTION 2. Special Meetings. Special meetings of the shareholders, for any
purpose or purposes may be called by the President or by the Board of
Directors, and shall be called by the President at the request of the holders of
not less than ten percent (10%) of all the outstanding shares of the corporation
entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Michigan, as the place of meeting
for annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Michigan, as the
place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the corporation in the State of Michigan.
SECTION 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting shall be delivered not less than ten (10) nor more than
sixty (60) days before the date of meeting, either personally or by mail, by or
at the direction of the President, or the Secretary, or the officer or persons
calling the meeting, to each shareholder or record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid.
SECTION 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
an adjournment thereof, or shareholders entitled to receive payment of any
dividend, or entitled to receive the allotment of rights or for the purpose of
any other action, the Board of Directors may fix a date as the record date for
such determination of shareholders, such date to be not less than ten (10) days
nor more than sixty (60) days before the date of the meeting or any other action
to be taken.
If a record date is not fixed (a) the record date for determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be the close of business on the day on which notice is given, or, if no notice
is given, the day next preceding the day on which the meeting is held, and (b)
the record date for determining shareholders for any purpose other than that
specified in subdivision (a) shall be the close of business on the day on which
the resolution of the board relating thereto is adopted. When a determination of
shareholders entitled to notice of or to vote at any meeting of shareholders has
been made as provided in this section, such determination shall apply to any
adjournment thereof, unless the board fixes a new record date under this section
for the adjourned meeting. Nothing in this section shall affect the right of a
shareholder and his transferee or transferor as between themselves.
SECTION 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make and certify a complete
list of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which list, shall be produced at the time and place of the
meeting and shall be subject to inspection by any shareholder entitled to vote
at such
<PAGE>
meeting during the whole time of the meeting. The list shall be prima facie
evidence as to whom are shareholders entitled to examine such list or to vote at
the meeting.
SECTION 7. Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his authorized agent or
representative. Such proxy shall be filed with the Secretary of the corporation
before or at the time of the meeting. No proxy shall be valid after 3 years from
its date unless otherwise provided in the proxy.
SECTION 9. Voting of Shares. Each outstanding share of capital stock of the
corporation shall be entitled to one vote upon each matter submitted to a vote
at a meeting of shareholders except as the Articles of Incorporation otherwise
provide.
SECTION 10. Voting of Shares by Certain Holders
(a) Corporations
Shares standing in the name of another corporation may be voted by an
officer or agent, or by proxy appointed by an officer or agent or by some other
person who by resolution of the Board of Directors of such corporation or by its
By-Laws shall be appointed to vote such shares.
(b) Representative or Fiduciary Capacity
Shares held by a person in a representative or fiduciary capacity may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name.
(c) Pledged Stock
A shareholder whose shares are pledged shall be entitled to vote such
shares unless in the transfer by the pledgor on the books of the corporation he
shall have expressly empowered the pledgee to vote thereon, in which case only
the pledgee or his proxy may represent said shares and vote thereon.
(d) Treasury Shares
Neither treasury shares of its own stock held by the corporation, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
(e) Jointly Held Shares
Shares held by two or more persons as joint tenants or as tenants in common
may be voted at a meeting of shareholders by any of such persons, unless another
joint tenant or tenant in common seeks to vote any of such shares in person or
by proxy. In the latter event, the written agreement, if any, which governs the
manner in which the shares shall be voted, controls if presented at the meeting.
If no such agreement is presented at the meeting, the majority in interest of
the joint tenants or tenants in common present shall control the manner of
voting. If there is no such majority, the shares, for the purpose of voting,
shall be divided among such joint tenants or tenants in common in accordance
with their interest in the shares.
SECTION 11. Informal Action by Shareholders. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of directors of
the corporation shall be FIVE. No director need be a shareholder. Each director
shall hold office for the term for which he is elected and until his successor
shall have been elected and qualified or until his resignation or removal.
SECTION 3. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this By-Law immediately after, and at
the same place as the annual meeting. The Board of Directors may provide, by
<PAGE>
resolution, the time and place, within or without the State of Michigan, for the
holding of additional regular meetings without other notice than such
resolution.
SECTION 4. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the President or any two Directors. The person
or persons authorized to call special meetings of the Board of Directors may fix
the place within or without the State of Michigan for holding any special
meeting of the Board of Directors called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at least
three days previously thereto by written notice, stating the time and place of
the meeting, delivered personally or mailed to each director at his business
address. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. Any
director may waive notice of any meeting by written statement signed before or
after the holder of the meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 6. Quorum. A majority of the number of the directors then in office
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice. A member of the board may participate in a meeting by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this subsection constitutes presence in
person at the meeting.
SECTION 7. Manner of Acting. Except as provided in Article XI hereby, the
act of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
SECTION 8. Action Without a Meeting. Any action which may be taken at a
meeting of the Board of Directors may be taken without a meeting if, before or
after the action, a consent in writing, setting forth the action so taken, shall
be signed severally or collectively by all of the directors entitled to vote
with respect to the subject matter thereof.
SECTION 9. Vacancies. Any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be a director only until the next election of directors by the
shareholders or by reason of an increase in the number of directors.
SECTION 10. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken is presumed to have concurred in that action unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to the action with the person acting as the secretary of the
meeting before or promptly after the adjournment thereof. Such right to dissent
shall not apply to a Director who voted in favor of such action. A director who
is absent from a meeting of the board at which any such action is taken is
presumed to have concurred in the action unless he files his dissent with the
secretary of the corporation within a reasonable time after he had knowledge of
the action.
SECTION 12. Delegation of Powers to Executive Committee. The Board of
Directors may, by resolution passed by a majority of the whole Board, designate
one or more of their number to constitute an executive committee who, to the
extent provided in such resolution shall have and exercise the authority of the
Board of Directors in the management of the business of the corporation between
the meetings of the Board except as may be prohibited by statute.
ARTICLE IV. OFFICERS
SECTION 1. Number. The officers of the corporation shall be a President, a
Secretary and a Treasurer, each of whom shall be selected by the Board of
Directors. The Board of Directors may select a Chairman of the Board, one or
more Vice Presidents, Assistant Secretaries, and Assistant Treasurers, and may
also appoint such other officers and agents as they may deem necessary for the
transaction of the business of the corporation.
SECTION 2. Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the regular meeting of the Board of Directors held immediately
following each annual meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
<PAGE>
SECTION 3. Removal or Resignation. Any officer or agent may be removed by
the Board of Directors with or without cause, but such removal shall be without
limitation on the right, if any, of the person so removed to recover damages
for breach of contract. Election or appointment of an officer or agent shall not
of itself create contract rights. An officer may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
at a subsequent time specified in the notice of resignation.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. Vice President. In the absence of the President or in the event
of his death, inability or refusal to act, the Vice President shall perform the
duties of the President, and when so acting, shall have all of and subject to
all the restrictions upon the President. The Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the corporation,
and shall perform such other duties as from time to time may be assigned to him
by the President or by the Board of Directors.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders' and of the Board of Directors' meetings in one
or more books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these By-Laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder, which shall be
furnished to the Secretary by such shareholder; (e) sign with the President, or
a Vice President, certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the corporation; and (g) in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with the provision of Article V of these By-Laws; and (c) in general perform all
of the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the Board of Directors shall determine.
SECTION 9. Assistant Secretaries and Assistant Treasurers. The assistant
secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice President certificates for shares of the corporation, the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
SECTION 10. Salaries. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
corporation.
SECTION 11. Filling More Than One Office. Any two offices of the
corporation may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if the instrument
is required by law or the Articles or By-Laws to be executed, acknowledged or
verified by two or more officers.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract, or execute and deliver
any instrument in the name of and on behalf of the corporation and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall
<PAGE>
be issued in its name unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific instances.
SECTION 3. Checks, drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trusts, companies or other depositaries as the Board of Directors may
select.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. The signature of such officers upon a
certificate may be facsimiles if the certificate is manually signed on behalf of
a transfer agent or a registrar, other than the corporation itself or one of its
employees. Each certificate for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a new number
of shares shall have been surrendered and cancelled, except that in case of a
lost, destroyed or mutilated certificate a new one may be issued therefor upon
such terms and indemnity to the corporation as the Board of Directors may
prescribe.
SECTION 2. Shares Certificates; Required Provisions. A certificate
representing shares shall set forth on its face or back or state that the
corporation will furnish to a shareholder upon request and without charge a full
statement of the designation, relative rights, preferences and limitations of
the shares of each class authorized to be issued, and if the corporation is
authorized to issue any class of shares in series, the designation, relative
rights, preferences and limitations of each series so far as the same have been
prescribed and the authority of the Board to designate and prescribe the
relative rights, preferences and limitations of other series.
SECTION 3. Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to the the owner thereof for all purposes.
ARTICLE VII. FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January
and end on the 31st day of December in each year.
ARTICLE VIII. DIVIDENDS
SECTION 1. Declaration of Dividends. The Board of Directors may, from time
to time, declare and the corporation may pay dividends on its outstanding shares
in the manner and upon the terms and conditions provided by law and its Articles
of Incorporation.
ARTICLE IX. SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation,
its designation as a Michigan corporation, and the words, "Corporate Seal."
ARTICLE X. WAIVER OF NOTICE
Whenever any notice is required to be given to any incorporator,
shareholder or Director of the corporation under the provisions of these By-Laws
or under the provisions of the Articles of Incorporation, or under the provision
of the Michigan Business Corporation Act, a waiver thereof in writing signed by
the person or persons entitled to such notice whether before or after the
holding of the meeting shall be deemed equivalent to the giving of such notice.
ARTICLE XI. AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may be
adopted by the Board of Directors or by the shareholders at any annual or
special meeting. Amendment of the By-Laws by the Board of Directors requires the
vote of not less than a majority of the members of the Board then in office.
/s/ Robert L. McKay
--------------------------------
Robert L. McKay
Secretary
<PAGE>
AMENDMENT NO. 2 TO
BY-LAWS OF
ULTRA AIR PRODUCTS, INC.
-------------------------
Pursuant to the Special Meeting of Stockholders conducted on September 30,
1988, the following Amendment No. 2 to the By-laws of the Corporation was duly
adopted by the shareholders of the Corporation:
"RESOLVED FURTHER, that, pursuant to Article XI of the Company's
By-Laws, the first sentence of Section 2, Article III shall be
amended, effective October 1, 1988, to read as follows:
The number of directors of the corporation shall be two(2)."
<PAGE>
AMENDMENT NO. 3 TO
BY-LAWS OF
ULTRA AIR PRODUCTS, INC.
-------------------------
Pursuant to the Consent Resolutions of the Sole Shareholder adopted on
April 28, 1990, the following Amendment No. 3 to the By-laws of the Corporation
was duly adopted by the sole shareholder of the Corporation:
"RESOLVED, that, pursuant to Article XI of the Company's By-Laws,
the first sentence of Section 2, Article III shall be amended,
effective as of April 28, 1990, to read as follows:
The number of directors of the corporation shall be one (1)."
<PAGE>
AMENDMENT NO. 4 TO
BY-LAWS OF
ULTRA AIR PRODUCTS, INC.
-------------------------
Pursuant to the Resolutions of the Shareholders adopted on February 13,
1995, the following amendments to the By-laws of the Corporation were duly
adopted by the shareholders of the Corporation:
"FURTHER RESOLVED, that Article III, Section 2 of the Bylaws of the
Corporation shall be amended to increase the number of directors from one
to three. Upon this Amendment, Section 2 shall be replaced and read in its
entirety:
SECTION 2. Number, Tenure, and Qualifications. The number of
directors of the Corporation shall be three. No director need be a
shareholder. Each director shall hold office for the term for which he
is elected and until his successor shall have been elected and
qualified or until his resignation or removal.
FURTHER RESOLVED, that Article IV, Section 1 of the Bylaws shall be amended
to require that the officers of the Corporation be elected by the
shareholders of the Corporation and which shall include a chairman of the
Board. Upon this Amendment, Article IV Section 1 shall be replaced and read
in its entirety:
Section 1. Number. The officers of the corporation shall be a
Chairman of the Board, a President, a Secretary and a Treasurer, each
of whom shall be elected by the Shareholders. The Shareholders may
elect one or more Vice Presidents, Assistant Secretaries, and
Assistant Treasurers, and may elect such other officers and agents as
they may deem necessary for the transaction of the business of the
corporation.
FURTHER RESOLVED, the Article IV shall include in its provisions, as
Section 5, the duties and responsibilities of the Chairman of the Board. A
new Section 5 shall be added, which shall read:
Section 5. Chairman of the Board of Directors. The Chairman of
the Board of Directors shall preside at all meetings of the
Shareholders, of the Board of Directors and of any executive
committee. He or she shall perform such other duties and functions as
shall be assigned to him or her from time to time by the Board of
Directors. He or she shall be, ex officio, a member of all standing
committees. Except whereby law the signature of the President of the
Corporation is required, the Chairman of the Board of Directors shall
possess the same power and authority to sign all certificates,
contracts, instruments, papers and documents of every conceivable kind
and character whatsoever in the name of and on behalf
<PAGE>
of the Corporation which may be authorized by the Board of Directors.
During the absence of disability of the President, or while that
office is vacant, the Chairman of the Board of Directors shall
exercise all of the powers and discharge all of the duties of the
President.
FURTHER RESOLVED, that the responsibilities and duties of the President
shall be enumerated in a new Section 6 which shall replace the duties
existing in Section 5 of the Bylaws, and which shall provide as follows:
Section 6. President. During the absence of disability of the
Chairman of the Board, or while that office is vacant, the President
shall preside over all meetings of the Board of Directors, of the
Shareholders and of any executive committee, and shall perform all of
the duties and functions, and when so active shall have all the powers
and authority, of the Chairman of the Board. He of she shall be, ex
officio, a member of the standing committees. The President shall, in
general, perform all the duties incident to the office of the
President and such of the duties as may be prescribed by the Board of
Directors.
The remaining Sections of Article IV shall be renumbered to
accommodate, and be consistent with, these Amendments."
-2-
<PAGE>
ULTRA AIR PRODUCTS
AMENDMENTS TO THE BY-LAWS OF THE CORPORATION
ADOPTED BY THE BOARD OF DIRECTORS ON
March 31, 1998
1. The first sentence of Article IV, Section 6 of the By-laws is amended
in its entirely to read as follows:
Section 6. President. The President shall be subject to the control of the
Board of Directors, shall in general supervise and control all of the business
and affairs of the corporation.
2. Article IV of the By-laws is amended to add a new section 13 as
follows:
Section 13. Chief Executive Officer. Unless otherwise designated by the
Board of Directors, the Chairman of the Board shall be the Chief Executive
Officer of the Corporation. The designation of the Chief Executive Officer
may be changed at any special meeting of the Board of Directors. The
President shall be the Chief Executive Officer whenever the office of
Chairman of the Board is vacant. The Chief Executive Officer shall be
responsible to the Board of Directors for the general supervision and
management of the business and affairs of the corporation and shall see
that all orders and resolutions of the board are carried into effect.
<PAGE>
EXHIBIT 3.6.1
216745-9
ARTICLES OF INCORPORATION
OF
SOFTROL INCORPORATED
The undersigned, acting as incorporators of a corporation under Chapter
1 of Title 10, Arizona Revised Statutes, adopt the following Articles of
Incorporation for such corporation:
ARTICLE I
The names, addresses and post office addresses of the incorporators
are:
Willy Smith
1201 North 54th Avenue, Ste. 113
Phoenix, Arizona 85043
Dawn Smith
1201 North 54th Avenue, Ste. 113
Phoenix, Arizona 85043
ARTICLE II
The name of the corporation shall be Softrol Incorporated.
ARTICLE III
The general nature of the business proposed to be transacted by the
corporation is any legal business a corporation may engage in in the State of
Arizona.
ARTICLE IV
Walter Gilmore Shaw is hereby appointed an statutory agent for Softrol
Incorporated. His address is 2700 North Central Avenue, Suite 800, Phoenix,
Arizona 45004.
<PAGE>
ARTICLE V
The capital stock shall be One Million Dollars ($1,000,000.00) divided
into one million shares with the par value of One Dollar ($1.00) each. All of
the stock shall be one class. The capital stock shall be issued and paid for as
directed by the Board of Directors.
ARTICLE VI
The Board of Directors shall consist of not less than two (2) Directors,
nor more than five (5), as may be called for in the By-Laws. Such Board shall be
elected at the annual meeting of the stockholders. Until the first meeting of
the stockholders and until their successors have been elected and qualified, the
following named persons shall be Directors:
Willy Smith
1201 North 54th Avenue, Ste. 113
Phoenix, Arizona 85043
Dawn Smith
1201 North 54th Avenue, Ste. 113
Phoenix, Arizona 85043
ARTICLE VII
To the fullest extent permitted by Title 10, Chapter 1 of the Arizona
Revised Statutes, as the case exists or may heretofore after be amended, no
Director shall be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director.
No repeal or modification of the foregoing paragraph by the stockholders
of the corporation shall adversely affect any right or protection of a Director
existing at the time of such repeal or modification.
<PAGE>
IN WITNESS WHEREOF, we, the undersigned, have hereunto set our hands
this 30th day of July, 1989.
/s/ Willy Smith
---------------------------------
Willy Smith -- Incorporator
/s/ Dawn Smith
---------------------------------
Dawn Smith -- Incorporator
[Softrol.ART.csk]
<PAGE>
Articles of Amendment
to the
Articles of the Incorporation
of Softrol Incorporated
Pursuant to the provisions of A.R.S. & 10-061, Softrol and Arizona corporation,
hereby adopts the following Articles of Amendment and certifies as follows:
First: The name of the corporation is Softrol Incorporated
Second: Article One of the Articles of Incorporation is amended to read as
follows:
The name of the corporation shall be:
Microsmith, Inc.
Third: The Amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation on August 2, 1993, in the manner prescribed by
the Arizona General Corporation Law.
Fourth: 670 shares were outstanding at the time of the Amendment and the
number of shares entitled to vote thereon was 670.
Fifth: All of the outstanding 670 shares of common stock, par value $1.00
per share, voted for the Amendment.
Sixth: The Amendment does not provide for an exchange, reclassification or
cancellation of issued shares.
Seventh: The Amendment will not effect a change in the amount of the
corporation's stated capital.
DATED: August 2, 1993
By: /s/ William S. Smith
--------------------------------
William S. Smith, President
By: /s/ Dawn C. Smith
--------------------------------
Dawn C. Smith, Secretary
<PAGE>
Joint Action of Shareholders
and Board of Directors
In Lieu of Meeting
Pursuant to ARS & 10-044 and 10-145, the undersigned being all of the
shareholders and directors of Softrol, Inc., and Arizona corporation (the
"Corporation"), do hereby authorize, approve and unanimously consent to the
adoption of the following resolutions without a meeting:
RESOLVED, that article 1, of the Corporation's Articles of Incorporation be
and it is hereby amended to change the Corporation's name and to read as
follows:
"The name of the corporation shall be:
Microsmith, Inc.; and
FURTHER RESOLVED, that the President or Vice President and Secretary of the
Corporation be, and they hereby are, authorized and directed to execute, file
with the Arizona Corporation Commission and publish Articles of Amendment to
evidence the foregoing amendment.
Dated: August 1, 1993
Shareholders:
/s/ William S. Smith
-------------------------------------
/s/ Dawn C. Smith
-------------------------------------
Directors:
/s/ William S. Smith
-------------------------------------
/s/ Dawn C. Smith
-------------------------------------
<PAGE>
ARTICLES OF AMENDMENT
OF
MICROSMITH, INC.
1. The name of the corporation is MICROSMITH, INC.
2. Attached hereto as Exhibit A is the text of each amendment adopted.
3. [_] The amendment does not provide for an exchange, reclassification or
cancellation of _________ issued shares.
[_] Exhibit A contains provisions for implementing the exchange,
reclassification or cancellation of issued shares provided for therein.
[X] The amendment provides for exchange, reclassification or cancellation
of issued shares. Such actions will be implemented as follows:
Shareholders will surrender existing common stock certificates and such
certificates will be exchanged for Class B Shares of Common Stock or a
combination of Class A Shares of Common Stock and Class B Shares of Common
Stock.
4. The amendment was adopted the 31st day of March, 1998.
5. [_] The amendment was adopted by the [_] incorporators [_] board of
directors without shareholder action and shareholder action was not
required.
[X] The amendment was approved by all of the shareholders. There is one (1)
voting group eligible to vote on the amendment. The voting group
entitled to vote on the amendment, the number of votes, the number of
votes represented pursuant to the consent in lieu of a special
Shareholder's meeting (the "Consent") by which the amendment was adopted
and the number of votes represented by the Shareholders who executed the
Consent for the amendment were as follows:
The voting group consisting of 670 outstanding shares of common stock is
entitled to 670 votes. There were 670 votes represented pursuant to the Consent.
The voting group cast 670 votes for and -0- votes against approval of the
amendment. The number of votes cast for approval of the amendment was sufficient
for approval by the voting group.
Dated as of the 31st day of March, 1998.
MICROSMITH, INC.
By: /s/ William S. Smith
---------------------------
William S. Smith, President
---------------------------
[name] [title]
<PAGE>
EXHIBIT A
---------
Article V
The total authorized shares is 1,000,000 shares of common stock, consisting of
900,000 voting common shares $1.00 par value to be designed as Class A and
100,000 nonvoting common shares $1.00 par value to be designated as Class B.
The corporation has two classes of common stock. Each class of shares shall be
identical in all respects, except that the nonvoting shares, designated as Class
B, shall carry no right to vote for the election of directors of the
Corporation, and no right to vote on any matter presented to the shareholders
for their vote or approval except only as the laws of this state require that
voting rights be granted to such nonvoting shares.
<PAGE>
EXHIBIT 3.6.2
BY-LAWS
OF
SOFTROL INCORPORATED
AN ARIZONA CORPORATION
ARTICLE I - OFFICES
The principal office for the transaction of the business of the Corporation
in the state of Arizona shall be located in the City of Phoenix, County of
Maricopa. The Board of Directors of the Corporation is granted full power and
authority to change such principle office or it may have such other offices,
either within or without the County or State of Incorporation as the business of
the Corporation may from time to time require.
ARTICLE II - STATUTES AND ARTICLES
1. REFERENCES TO ARTICLES
Any reference herein made to the Corporation's Articles will be
deemed to refer to its Articles of Incorporation and all amendments thereto as
at any given time on file with the office of the Arizona Corporation Commission,
together with any and all certificates or amendments thereto filed by the
Corporation with that office.
2. SENIORITY THEREOF
The Statutes of the State of Arizona will in all respects be
considered superior to the Articles of Incorporation with any inconsistency
resolved in the favor of said Statutes. The Statutes and Articles will in all
respects be considered senior and superior to these Bylaws, with any
inconsistency to be resolved in favor of the Statutes and Articles, and with
these Bylaws to be deemed automatically amended from time to time to eliminate
any such inconsistency which may then exist.
ARTICLE III - STOCKHOLDERS MEETINGS
1. ANNUAL MEETING
The annual meeting of the Stockholders shall be held on the first
Monday of December, each year at the hour of 6 o'clock P.M., for the purpose of
electing Directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday such meeting shall be held on the next succeeding business day. If any
such annual meeting is for any reason not
<PAGE>
held, a special meeting may thereafter be called and held in lieu thereof, and
the same proceedings (including the election of directors) may be conducted
thereat as at an annual meeting. Any director elected at any annual meeting
will continue in office until the next annual meeting or special meeting held in
lieu of an annual meeting, subject to his/her earlier resignation pursuant to
Article IV Section 10 below.
2. SPECIAL MEETINGS.
Special meetings of the Stockholders, unless otherwise prescribed by
statute, may be held whenever and wherever called for by the Board of Directors
or by the written demand of the holders of ten percent (10%) of all issued and
outstanding shares of stock, regardless of class. The business which may be
conducted at any such special meeting will be confined to the purposes stated in
the notice thereof, and to such additional matters as the Chairman of such
meeting may rule to be germane to such purpose.
3. PLACE OF MEETING.
The Directors may designate any place, either within or without the
State unless otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the Directors. A waiver of
notice signed by all Stockholders entitled to vote at a meeting may designate
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation.
4. NOTICE OF MEETING.
Written or printed notice starting the place, day, and hour of the
meeting of Stockholders and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than seven
(7) nor more than fourteen (14) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling meeting, to each Stockholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
Stockholder at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid. Whenever any notice is required to be
given to any stockholder, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Any such waiver shall
be filed with the corporate records or made a part of the minutes of the
meeting. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining Stockholders entitled to notice of or
to vote at any meeting of Stockholders or any adjournment thereof, or
Stockholders entitled
<PAGE>
to receive payment of any dividend, or in order to make a determination of
Stockholders for any other proper purpose, the Directors of the Corporation may
provide that the stock transfer books shall be closed for a stated period but
not to exceed, in any case, fourteen (14) days. If the stock transfer books
shall be closed for the purpose of determining Stockholders entitled to notice
of or to vote at a meeting of Stockholders, such books shall be closed for at
least two (2) days immediately preceding such meeting. In lieu of closing, the
stock transfer books, the Directors may fix in advance a date as the record date
for any such determination of Stockholders, such date in any case to be not more
than thirty (30) days and, in case of a meeting of Stockholders, not less than
thirty (30) days prior to the date on which the particular action requiring such
determination of Stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of Stockholders
entitled to notice of or to vote at a meeting of Microsmith, Inc. Stockholders,
or Stockholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of Stockholders. When a determination of Stockholders
entitled to vote at any meeting of Stockholders has been made as provided in
this section, such determination shall apply to any adjustment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the Corporation shall make, at least seven (7) days before each
meeting of Stockholders, a complete list of the Stockholders entitled to vote at
such meeting, or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each, which list for a period of
seven (7) days prior to such meeting, shall be kept on file at the principal
office of the Corporation and shall be subject to inspection by any Stockholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any Stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
Stockholders entitled to examine such list or transfer books or to vote at the
meeting of Stockholders.
7. QUORUM.
At any meeting of Stockholders a majority of the outstanding shares
of the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Stockholders. All shares represented and
entitled to vote on any single subject matter which may be brought before the
meeting shall be counted for the purpose of a quorum. Only those shares
entitled to vote on a particular subject matter shall be counted for the
purposes of voting on that subject matter. If less than said number of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The Stockholders present at a duly organized meeting may
continue to transact business until
<PAGE>
adjournment, notwithstanding the withdrawal of enough Stockholders to leave less
than a quorum.
8. ORGANIZATION AND CONDUCT OF MEETINGS
Each stockholders meeting will be called to order and thereafter
chaired by the Chairman of the Board if there is one, or, if not, then by the
President; or if both the Chairman of the Board and the President are
unavailable, then by such other officer of the Corporation or such stockholder
as may be appointed by the Board of Directors. The Corporation's Secretary will
act as Secretary of each stockholders meeting; in his/her absence the Chairman
of the meeting may appoint any person (whether a stockholder or not) to act as
Secretary thereat. After calling a meeting to order, the Chairman may require
the registration of all stockholders intending to vote in person, and the filing
of all proxies with the Secretary of the meeting. After the announced time of
filing of proxies has ended, no further proxies or changes thereto will be
accepted. Absent a showing of bad faith on his part, the Chairman of the
meeting will, among other things, have absolute authority to fix the period of
time allowed for registration of stockholders and the filing of proxies, to
determine the order of business to be conducted at such meeting and to establish
reasonable rules for expediting the business of the meeting (including any
informal, or question and answer portions thereof.)
9. VOTING
Except as otherwise may be required by the Corporation's Articles of
Incorporation or by Statute, each share of stock represented at any meeting of
the stockholders shall be entitled to one vote. Except as otherwise herein
provided, the record holder of each share of stock, as determined by the name
appearing on the Corporation's books, shall be the person empowered to cast the
vote to which such share shall be entitled. The affirmative vote of the
majority of the shares then represented at any meeting of stockholders and
entitled to vote on the subject matter shall be the act of the stockholders.
The voting will be by ballot on any question as to which a ballot vote is
demanded, prior to the time the voting begins, by any person entitled to vote on
such question; otherwise a voice vote will suffice. No ballot or change of vote
will be accepted after the polls have been declared closed following the ending
of the announced time for voting.
The following additional provisions shall apply to the voting of shares:
(a) Treasury Stock - Shares of its own stock belonging to the
Corporation shall neither be entitled to vote nor counted for
quorum purposes. Nothing in this subparagraph shall be
construed as limiting the right of this Corporation to vote its
own stock held by it in a fiduciary capacity.
(b) Proxies - At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder or by his
duly authorized attorney in fact. Such proxy shall be filed
with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid
<PAGE>
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
(c) Corporate Stockholders - Shares outstanding in the name of another
corporation, domestic or foreign, may be voted by such officer, agent or proxy
as the bylaws of such other corporation may prescribe, or, in the absence of
such provision, as the Board of Directors of such other corporation may
determine. The Secretary of the Corporation shall have the authority to require
that such documents be filed with the Secretary as they shall reasonably require
in order to verify the authority and power of any such officer, agent or proxy
to vote the shares of the Corporation held by any such other corporation.
(d) Shares Held by Fiduciary - Shares held by an administrator, executor,
guardian, conservator or personal representative may be voted by him/her, either
in person or by proxy, without a transfer of such shares into his/her name.
Shares standing in the name of a trustee, other than a trustee in bankruptcy,
may be voted by him/her either in person or by proxy, but no such trustee shall
be entitled to vote shares held by him/her without a transfer of such shares
into his/her name. Shares held by or under the control of such trustee may be
voted by such trustee without the transfer thereof into his/her name if
authority to do so is contained in an appropriate order of the court by which
such trustee was appointed.
(e) Joint Owners - If the shares stand in the names or two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or tenants by community property or otherwise, or if two
or more persons have the same fiduciary relationship respecting the same shares,
unless the Corporation is given written notice to the contrary and is furnished
with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall
have the following effect:
(1) If only one votes, his/her act binds.
(2) If more than one votes, the act of the majority so voting binds all.
(3) If more than one votes, but the vote is evenly split on any
particular matter, each faction may vote the shares in question
proportionally.
<PAGE>
10. NOMINATIONS OF DIRECTORS
Nominations for election to the Board of Directors of the Corporation
at a meeting of stockholders may be made by the Board of Directors or on behalf
of the Board by a nominating committee appointed by the Board, or by any
stockholder of the Corporation entitled to vote for the election of Directors at
such meeting. Such nominations, other than those made by or on behalf of the
Board, shall be made by notice in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Corporation, and
received by him/her not less than thirty (30) days nor more than sixty (60) days
prior to any meeting of stockholders called for election of Directors. Such
notice shall set forth as to each proposed nominee who is not an incumbent
Director (i) the name, age, business address and telephone number and, if known,
residence address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares of
stock of the Corporation which are beneficially owned by each such nominee and
the nominating stockholder, and (iv) any other information about the nominee
that must be disclosed with respect to nominees in proxy solicitations pursuant
to the rules, regulations and forms promulgated under Section 14(a) of the
Securities Exchange Act of 1934, if applicable.
The Chairman of the meeting may, if the facts warrant, determine that a
nomination was not made in accordance with the forgoing procedure, and if he/she
should so determine, he/she shall so declare to the meeting and the defective
nomination shall be disregarded.
11. ELECTION OF DIRECTORS
At each election for directors, every stockholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him/her for as many persons as there are directors to be elected
and for whose election he/she has a right to vote, or to cumulate his/her votes
by giving one candidate as many votes as the number of shares owned, multiplied
by the number of directors to be elected and for whose election he/she has a
right to vote, shall equal, or by distribution such votes on the same principle
among any number of such candidates.
12. STOCKHOLDER APPROVAL OR RATIFICATION
The Board of Directors may submit any contract or act for approval or
ratification at any duly constituted meeting of the stockholders, the notice of
which either includes mention of the proposed submittal or is waived as provided
in Section 4 above. If any contract or act so submitted is approved or ratified
by a majority of the votes cast thereon at such meeting, the same will be valid
and as binding upon the Corporation and all of its stockholders as if would be
if approved and ratified by each and every stockholder of the Corporation.
13. INFORMALITIES AND IRREGULARITIES
All informalities or irregularities in any call or notice of a
meeting, or in the areas of credentials, proxies, quorums, voting and similar
matters, will be deemed waived if no objection is made at the meeting.
<PAGE>
ARTICLE IV - BOARD OF DIRECTORS
1. GENERAL POWERS.
Subject to the limitations of the Articles of Incorporation, the
Bylaws, the Arizona General Corporation Law as to actions to be authorized or
approved by the stockholders, and subject to the duties of Directors as
prescribed by the Bylaws, all corporation powers shall be exercised by or under
the authority of, and the business and affairs of the Corporation shall be
controlled by, the Board of Directors. In addition to any other powers granted
by the Arizona General Corporation Law, the Articles of Incorporation and the
Bylaws, it is hereby expressly declared that the Directors shall have the
following powers:
(a) To select and remove all of the officers, agents, and employees
of the Corporation, prescribe such powers and duties for them as may
not be inconsistent with law, with the Articles of Incorporation, or
the Bylaws and fix their compensation.
(b) To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, or with the Articles of Incorporation or the
Bylaws, as they may deem best.
(c) To designate any place within or without the State of Arizona for
the holding of any stockholders meeting or meetings; and to adopt,
make and use a corporate seal, and to prescribe the forms of
certificate of stock, and to alter the form of such seal and such
certificates so that the same shall at all times comply with the
applicable law.
(d) To authorize the issuance of shares of stock of the Corporation
from time to time, upon such terms as may be lawful, in consideration
of money paid, labor done or services actually rendered, debts or
securities canceled, or tangible or intangible property actually
received, or in case of shares issued as a dividend against amounts
transferred from surplus to stated capital.
(e) To borrow money and incur indebtedness for the purpose of the
Corporation, and to cause to be executed and delivered therefore, in
the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecations and other evidence of debt
and securities therefor.
(f) To authorize a person or persons to sign and endorse all
checks, drafts or other forms for payments of money, notes, or other
evidences of indebtedness, issued in the name of or payable to the
Corporation.
<PAGE>
2. NUMBER, TENURE, AND QUALIFICATIONS.
The number of Directors of the Corporation shall be not less than one
(1) nor more than nine (9). Each Director shall hold office until the next
annual meeting of Stockholders and until his successor shall have been elected
and qualified, or until his/her earlier resignation or removal. The Directors
need not be stockholders or residents of the state of incorporation.
3. REGULAR MEETING.
A regular meeting of the Directors, shall be held without other
notice than this Bylaw immediately after, and at the same place as, the annual
meeting of Stockholders. The Directors may provide, by resolution, the time and
place for the holding of additional regular meetings without other notice than
such resolution.
4. SPECIAL MEETING.
Special meeting of the Directors may be called by or at the request
of the President or any two Directors. The person or persons authorized to call
special meeting of the Directors may fix the place for holding any special
meeting of the Directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least seven days
previously thereto by written notice delivered personally, or by telegram or
mailed to each Director at his business address. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice is given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company. The attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
6. QUORUM.
At any meeting of the Directors a majority shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created Directorships resulting from an increase in the number
of Directors and vacancies occurring in the board for any reason except the
removal of Directors without cause may be filled by a vote of majority of the
Directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of Directors without cause shall be filled by
vote of the Stockholders. A Director elected
<PAGE>
to fill a vacancy caused by resignation, death or removal shall be elected to
hold office for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the Directors may be removed for cause by vote of the
Stockholders or by action of the Board. Directors may be removed without cause
only by vote of the Stockholders.
10. RESIGNATION.
A Director may resign at any time by giving written notice to the
Board, the President or the Secretary of the Corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the Board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
Compensation may be paid to Directors for their services by
resolution of the Board. A fixed sum and expenses for actual attendance at
each regular or special meeting of the Board may be authorized. Nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A Director of the Corporation who is present at a meeting of the
Directors at which action on any Corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The Board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of two or more
Directors. Each such committee shall serve at the pleasure of the Board.
ARTICLES V - OFFICERS
1. NUMBER.
The Officers of the Corporation shall be a President, a
Vice-President, a Secretary, and a Treasurer, each of whom shall be elected by
the Directors. Any number of offices may be held by the same person, except
that the office of President and Secretary shall not be held by the same person.
Such other Officers and Assistant Officers as may be deemed necessary may be
elected or appointed by the Directors.
<PAGE>
2. ELECTION AND TERM OF OFFICE.
The Officers of the Corporation to be elected by the Directors shall
be elected annually at the first meeting of the Directors held after each annual
meeting of the Stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any Officer or agent elected or appointed by the Directors may be
removed by the Directors whenever in their judgment the best interests of the
Corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Directors for the unexpired
portion of the term.
5. PRESIDENT.
The President shall be the principal executive officer of the
Corporation and, subject to the control of the Directors,shall in general
supervise and control all of the business and affairs of the Corporation. He
shall, when present, preside at all meetings of the Stockholders and of the
Directors. He may sign, with the Secretary or any other proper officer of the
Corporation thereunto authorized by the Directors, certificates for shares of
the Corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the Directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Directors or
by these by-laws to some other Officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Directors from time to time.
6. SECRETARY.
The Secretary shall keep the minutes of the Stockholders' and of the
Directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the Corporate records and of the Seal of the
Corporation and keep a register of the post office address of each Stockholder
which shall be furnished to the Secretary by such Stockholder, have general
charge of the stock transfer books of the Corporation and in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to her by the President or by the Directors.
<PAGE>
7. TREASURER.
If required by the Directors, the Treasurer shall give a bond for the
faithful discharge of her duties in such sum and with such surety or sureties as
the Directors shall determine. She shall have charge and custody of and be
responsible for all funds and securities of the Corporation; receive and give
receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
Office of Treasurer and such other duties as from time to time may be assigned
to her by the President or by the Directors.
8. SALARIES.
The salaries of the Officers shall be fixed from time to time by the
Board of Directors. No Officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation.
ARTICLE VI - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The Directors may authorize any Officer or Officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the Corporation, and such authority may be general or confined
to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation, shall be
signed be such Officer or Officers, agent or agents of the Corporation and in
such manner as shall from time to time be determined by resolution of the
Directors.
4. DEPOSITS.
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Directors may select.
<PAGE>
ARTICLES VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the Corporation shall be in such
form as shall be determined by the Directors. Such certificates shall be signed
by the President and by the Secretary or by such other Officers authorized by
law and by the Directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the Stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the Corporation. All certificates surrendered to the Corporation for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed, or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Directors may prescribe.
2. TRANSFERS OF SHARES.
(A) Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the Corporation which shall be kept at its principal
office.
(B) The Corporation shall be entitled to treat the holder of record
of any share as the holder in fact thereof, and accordingly, shall not be bound
to recognize any equitable or other claim or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
October in each year.
ARTICLE VIII - DIVIDENDS
The Directors may from time to time declare, and the Corporation may
pay, dividends on its outstanding shares in the manner and upon the term and
conditions provided by law.
ARTICLE IX - SEAL
The Directors shall provide a Corporate Seal which shall be circular
in form and shall have inscribed thereon the name of the Corporation, the State
of the Incorporation, year of Incorporation and the words, "CORPORATE SEAL".
<PAGE>
ARTICLE X - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the Stockholders representing a majority of all the shares
issued and outstanding, at any Annual Stockholders' meeting or at any special
Stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
AUTHENTICATED DATED: July 30, 1989
/s/ William S. Smith
_________________________________
William S. Smith - President
_________________________________
James H. Eakes - Vice-President/Treasurer
/s/ Dawn C. Smith
_________________________________
Dawn C. Smith - Secretary
<PAGE>
MICROSMITH
AMENDMENTS TO THE BY-LAWS OF THE CORPORATION
ADOPTED BY THE SHAREHOLDERS ON
March 31, 1998
1. The first sentence of Article V, Section 1 of the By-laws is amended in its
entirety to read as follows:
Section 1. OFFICERS.
The Officers of the Corporation shall be a Chairman and Chief Executive
Officer, President, a Vice-President, a Secretary and a Treasurer.
2. Article V, Section 5 of the By-laws is amended in its entirety to read as
follows:
Section 5. THE PRESIDENT.
During the absence or disability of the Chairman of the Board, or while
that office is vacant, the President shall preside over all meetings of
the Board of Directors, of the Shareholders and of any executive
committee, and shall perform all of the duties and functions, and when so
acting shall have all powers and authority, of the Chairman of the Board.
He or she shall be, ex officio, a member of all standing committees. The
President shall, in general, perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of
Directors.
3. Article V of the By-laws is amended to add a new section 9 to read as
follows:
Section 9. CHAIRMAN OF THE BOARD OF DIRECTORS.
If the Board of Directors elects or appoints a Chairman of the Board, he
or she shall be elected or appointed by, and from among the membership
of, the Board of Directors. He or she shall preside at all meetings of
the Shareholders of the Board of Directors and of any executive
committee. He or she shall perform such other duties and functions as
shall be assigned to him or her from time to time by the Board of
Directors. He or she shall be, ex officio, a member of all standing
committees. Except where by law the signature of the president of the
corporation is required, the chairman of the Board of Directors shall
possess the same power and authority to sign all certificates, contracts,
instruments, papers and documents of every conceivable kind and character
whatsoever in the name of and on behalf of the corporation which may be
authorized by the Board of Directors. During the absence or disability of
<PAGE>
the President, or while that office is vacant, the Chairman of the Board of
Directors shall exercise all of the powers and discharge all of the duties
of the President.
4. Article V of the By-laws is amended to add a new section 10 as follows:
Section 10. CHIEF EXECUTIVE OFFICER.
Unless otherwise designated by the Board of Directors, the Chairman of the
Board shall be the Chief Executive Officer of the Corporation. The
designation of the Chief Executive Officer may be changed at any special
meeting of the Board of Directors. The President shall be the Chief
Executive Officer whenever the office of Chairman of the Board is vacant.
The Chief Executive Officer shall be responsible to the Board of Directors
for the general supervision and management of the business and affairs of
the corporation and shall see that all orders and resolutions of the Board
are carried into effect.
<PAGE>
EXHIBIT 3.7.1
ARTICLES OF INCORPORATION
OF
I. A. E. Incorporated
These Articles of Incorporation are signed by the incorporator for the
purpose of forming a profit corporation pursuant to the provisions of Act 284,
Public Acts of 1972, as amended, as follows:
ARTICLE I
The name of the corporation is I. A. E. Incorporated.
ARTICLE II
The purpose or purposes for which the corporation is formed is to engage in
any activity within the purposes for which corporations may be formed under the
Business Corporation Act of Michigan (the "Act").
ARTICLE III
The total number of authorized shares is fifty thousand (50,000) shares of
Common Stock.
ARTICLE IV
The corporation has only one class of stock.
ARTICLE V
The address and mailing address of the registered office is:
1400 N. Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48304
The name of the resident agent at the registered office is Jay L.
Kreindler.
<PAGE>
ARTICLE VI
The name and address of the incorporator is as follows:
Name Residence or Business Address
Jay L. Kreindler 1400 N. Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48304
ARTICLE VII
The duration of the corporation is perpetual.
ARTICLE VIII
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. However, this provision does not eliminate or limit the
liability of a director for any of the following:
(a) any breach of the director's duty of loyalty to the
corporation or its shareholders;
(b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) a violation of Section 551(1) of the Act;
(d) a transaction from which the director derived an improper
personal benefit; or
(e) an act or omission occurring prior to the date this
Article becomes effective.
Any repeal, amendment or other modification of this Article shall not
increase the liability or alleged liability of any director of the corporation
then existing with respect to any state of facts then or theretofore existing or
any action, suit or proceeding theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts. If the Act is
subsequently amended to authorize corporate action further eliminating or
limiting personal liability of directors, then the liability of directors shall
be eliminated or limited to the fullest extent permitted by the Act as so
amended.
-2-
<PAGE>
ARTICLE IX
Any action required or permitted by the Act, these Articles or the Bylaws
of the corporation to be taken at an annual or special meeting of shareholders
may be taken without a meeting, without prior notice and without a vote, if
consents in writing, setting forth the action so taken, are signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take the action at a meeting at which
all shares entitled to vote on the action were present and voted. The written
consents shall bear the date of signature of each shareholder who signs the
consent. No written consents shall be effective to take the corporate action
referred to unless, within 60 days after the record date for determining
shareholders entitled to express consent to or to dissent from a proposal
without a meeting, written consents dated not more than 10 days before the
record date and signed by a sufficient number of shareholders to take the action
are delivered to the corporation. Delivery shall be to the corporation's
registered office, its principal place of business, or an officer or agent of
the corporation having custody of the minutes of the proceedings of its
shareholders. Delivery made to a corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to shareholders who would have been entitled to
notice of the shareholder meeting if the action had been taken at a meeting and
who have not consented in writing.
ARTICLE X
When a compromise or arrangement or a plan of reorganization of this
corporation is proposed between this corporation and its creditors or any class
of them or between this corporation and its shareholders or any class of them, a
court of equity jurisdiction within the state, on application of this
corporation or of a creditor or shareholder thereof, or on application of a
receiver appointed for the corporation, may order a meeting of the creditors or
class of creditors or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or reorganization, to be
summoned in such manner as the court directs. If a majority in number
representing 3/4 in value of the creditors or class of creditors, or of the
shareholders or class of shareholders to be affected by the proposed compromise
or arrangement or a reorganization, agree to a compromise or arrangement or a
reorganization of this corporation as a consequence of the compromise or
arrangement, the compromise or arrangement and the reorganization, if sanctioned
by the court to which the application has been made, shall be binding on all the
creditors or class of creditors, or on all the shareholders or class of
shareholders and also on this corporation.
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I, the sole incorporator, sign my name this 13th day of March, 1997.
/s/ Jay L. Kreindler
-------------------------------
Jay L. Kreindler
Prepared by, and after filing return to:
Jay L. Kreindler
Miller, Canfield, Paddock and Stone, P.L.C.
Post Office Box 2014
Bloomfield Hills, Michigan 48303-2014
(810) 645-5000
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EXHIBIT 3.7.2
BYLAWS
OF
I. A. E. INCORPORATED
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The initial registered office shall be in the
City of Bloomfield Hills, County of Oakland, State of Michigan.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places both in and outside the State of Michigan as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders of the
corporation shall be held at the registered office or such other place, either
within or without the State of Michigan, as may be determined from time to time
by the board of directors.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of
shareholders for election of directors and for such other business as may
properly come before the meeting, commencing with the year 1997, shall be held
at such date and time as shall be determined from time to time by the board of
directors, unless such action is taken by written consent as provided in Section
12 of this Article. If the annual meeting is not held on the date designated
therefor, the board shall cause the meeting to be held as soon thereafter as
convenient.
SECTION 3. ORDER OF BUSINESS AT ANNUAL MEETING. The order of business at
the annual meeting of the shareholders shall be as follows:
(a) Reading of notice and proof of mailing,
(b) Reports of Officers,
(c) Election of Directors,
(d) Transaction of other business mentioned in the notice,
(e) Adjournment,
provided that the presiding officer may vary the order of business at his or her
discretion.
<PAGE>
SECTION 4. NOTICE OF MEETING OF SHAREHOLDERS. Except as otherwise provided
in the Michigan Business Corporation Act (herein called the "Act"), written
notice of the time, place and purposes of a meeting of shareholders shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting, either personally or by mail, to each shareholder of record
entitled to vote at the meeting. If a meeting is adjourned to another time or
place, it is not necessary to give notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken and at the adjourned meeting only business is
transacted as might have been transacted at the original meeting. If after the
adjournment the board of directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record on the new record date entitled to vote at the meeting.
SECTION 5. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer or agent
having charge of the stock transfer books for shares of the corporation shall
make and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting or any adjournment thereof. The list shall:
(a) Be arranged alphabetically within each class and series, with the
address of, and the number of shares held by, each shareholder.
(b) Be produced at the time and place of the meeting.
(c) Be subject to inspection by any shareholder during the whole time of
the meeting.
(d) Be prima facie evidence as to who are the shareholders entitled to
examine the list or to vote at the meeting.
SECTION 6. SPECIAL MEETING OF SHAREHOLDERS. A special meeting of
shareholders may be called at any time by the chief executive officer of the
corporation (see Article V, Section (4) or by a majority of the members of the
board of directors then in office, or by shareholders owning, in the aggregate,
not less than ten percent (10%) of all the shares entitled to vote at such
special meeting. The method by which such meeting may be called is as follows:
Upon receipt of a specification in writing setting forth the date and objects of
such proposed special meeting, signed by the chief executive officer, or by a
majority of the members of the board of directors then in office, or by
shareholders as above provided, the secretary of the corporation shall prepare,
sign and mail the notices requisite to such meeting.
SECTION 7. QUORUM OF SHAREHOLDERS. Unless a greater or lesser quorum is
provided in the articles of incorporation, in a bylaw adopted by the
shareholders or incorporators, or in the Act, shares entitled to cast a majority
of the votes at a meeting constitute a quorum at the meeting. The shareholders
present in person or by proxy at the meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough share-holders to leave
less than a quorum. Whether or not a quorum is present, the meeting may be
adjourned by a vote of the shares present.
SECTION 8. VOTE OF SHAREHOLDERS. Each outstanding share is entitled to one
(1) vote on each matter submitted to a vote, unless otherwise provided in the
articles of
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incorporation. A vote may be cast either orally or in writing. If an action,
other than the election of directors, is to be taken by vote of the
shareholders, it shall be authorized by a majority of the votes cast by the
holders of shares entitled to vote on the action, unless a greater vote is
required by the articles of incorporation or the Act. Except as otherwise
provided in the articles of incorporation, directors shall be elected by a
plurality of the votes cast at an election.
SECTION 9. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS. For the purpose
of determining shareholders entitled to notice of and to vote at a meeting of
shareholders or an adjournment of a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board. The date shall not be more than sixty (60)
nor less than ten (10) days before the date of the meeting. If a record date is
not fixed, the record date for determination of shareholders entitled to notice
of or to vote at a meeting of shareholders shall be the close of business on the
day next preceding the day on which notice is given, or if no notice is given,
the day next preceding the day on which the meeting is held. When a
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders has been made as provided in this Section, the
determination applies to any adjournment of the meeting, unless the board of
directors fixes a new record date under this Section for the adjourned meeting.
For the purpose of determining shareholders entitled to express consent to or to
dissent from a proposal without a meeting, the board of directors may fix a
record date, which shall not precede the date on which the resolution fixing the
record date is adopted by the board and shall not be more than ten (10) days
after the board resolution. If a record date is not fixed and prior action by
the board of directors is required with respect to the corporate action to be
taken without a meeting, the record date shall be the close of business on the
day on which the resolution of the board is adopted. If a record date is not
fixed and prior action by the board of directors is not required, the record
date shall be the first date on which a signed written consent is delivered to
the corporation as provided in Section 12 of this Article. For the purpose of
determining shareholders entitled to receive payment of a share dividend or
distribution, or allotment of a right, or for the purpose of any other action,
the board of directors may fix a record date, which shall not precede the date
on which the resolution fixing the record date is adopted by the board. The date
shall not be more than sixty (60) days before the payment of the share dividend
or distribution or allotment of a right or other action. If a record date is not
fixed, the record date shall be the close of business on the day on which the
resolution of the board of directors relating to the corporate action is
adopted.
SECTION 10. PROXIES. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
one or more other persons to act for him or her by proxy. A proxy shall be
signed by the shareholder or his or her authorized agent or representative. A
proxy is not valid after the expiration of three (3) years from its date unless
otherwise provided in the proxy.
SECTION 11. INSPECTORS OF ELECTION. The board of directors, in advance of a
shareholders' meeting, may appoint one (1) or more inspectors of election to act
at the meeting or any adjournment thereof. If inspectors are not so appointed,
the person presiding at a
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shareholders' meeting may, and on request of a shareholder entitled to vote
thereat shall, appoint one (1) or more inspectors. In case a person appointed
fails to appear or act, the vacancy may be filled by appointment made by the
board of directors in advance of the meeting or at the meeting by the person
presiding thereat. The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine challenges and questions arising
in connection with the right to vote, count and tabulate votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting or a shareholder entitled to vote thereat, the
inspectors shall make and execute a written report to the person presiding at
the meeting of any of the facts found by them and matters determined by them.
The report is prima facie evidence of the facts stated and of the vote as
certified by the inspectors.
SECTION 12. ACTION BY WRITTEN CONSENT. The articles of incorporation may
provide that any action required or permitted by the Act to be taken at an
annual or special meeting of shareholders may be taken without a meeting,
without prior notice and without a vote, if consents in writing, setting forth
the action so taken, are signed by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to authorize or
take the action at a meeting at which all shares entitled to vote on the action
were present and voted. The written consents shall bear the date of signature of
each shareholder who signs the consent. No written consents shall be effective
to take the corporate action referred to unless, within sixty (60) days after
the record date for determining shareholders entitled to express consent to or
to dissent from a proposal without a meeting, written consents dated not more
than ten (10) days before the record date and signed by a sufficient number of
shareholders to take the action are delivered to the corporation. Delivery shall
be to the corporation's registered office, its principal place of business, or
an officer or agent of the corporation having custody of the minutes of the
proceedings of its shareholders. Delivery made to a corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to shareholders who would
have been entitled to notice of the shareholder meeting if the action had been
taken at a meeting and who have not consented in writing. Any action required or
permitted by the Act to be taken at an annual or special meeting of shareholders
may be taken without a meeting, without prior notice and without a vote if,
before or after the action, all the shareholders entitled to vote consent in
writing.
SECTION 13. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the articles of incorporation, by oral or written permission of a
majority of the shareholders, a shareholder may participate in a meeting of
shareholders by a conference telephone or by other similar communications
equipment through which all persons participating in the meeting may communicate
with the other participants. All participants shall be advised of the
communications equipment and the names of the participants in the conference
shall be divulged to all participants. Participation in a meeting pursuant to
this Section constitutes presence in person at the meeting.
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ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF DIRECTORS. The number of directors which
shall constitute the whole board shall be not less than one (1) nor more than
ten (10). The first board shall consist of one (1) director. Thereafter, the
number of directors which shall constitute the board of directors for each
ensuing year shall be determined at the annual meeting by vote of the
shareholders prior to such election; provided, however, that if a motion is not
made and carried to increase or decrease the number of directors, the board
shall consist of the same number of directors as were elected for the preceding
year. The shareholders may also increase or decrease the number of directors at
any meeting of the shareholders or by a written consent in lieu thereof. Either
the shareholders or the board of directors may fill the vacancy caused by an
increase in the number of directors. The first board of directors shall hold
office until the first annual meeting of shareholders. At the first annual
meeting of shareholders and at each annual meeting thereafter, the shareholders
shall elect directors to hold office until the succeeding annual meeting, except
in the case of classification of directors as permitted by the Act. A director
shall hold office for the term for which he or she is elected and until his or
her successor is elected and qualified, or until his or her resignation or
removal. Directors need not be shareholders and may serve continuous terms.
SECTION 2. VACANCIES. Unless otherwise limited by the articles of
incorporation, if a vacancy, including a vacancy resulting from an increase in
the number of directors, occurs in the board of directors, the vacancy may be
filled as follows:
(a) The shareholders may fill the vacancy.
(b) The board may fill the vacancy.
(c) If the directors remaining in office constitute fewer than a quorum of
the board of directors, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
Unless otherwise provided in the articles of incorporation, if the holders of
any class or classes of stock or series are entitled to elect one (1) or more
directors to the exclusion of other shareholders, vacancies of that class or
classes or series may be filled only by one (1) of the following:
(a) By a majority of the directors elected by the holders of that class or
classes or series then in office, whether or not those directors
constitute a quorum of the board of directors.
(b) By the holders of shares of that class or classes of shares, or
series.
Unless otherwise limited by the articles of incorporation or these bylaws, in
the case of a corporation the board of directors of which are divided into
classes, any director chosen to fill a vacancy shall hold office until the next
election of the class for which the director shall have
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been chosen, and until his or her successor is elected and qualified. If because
of death, resignation, or other cause, a corporation has no directors in office,
an officer, a shareholder, a personal representative, administrator, trustee, or
guardian of a shareholder, or other fiduciary entrusted with like responsibility
for the person or estate of a shareholder, may call a special meeting of
shareholders in accordance with the articles of incorporation or these bylaws. A
vacancy that will occur at a specific date, by reason of a resignation effective
at a later date under Section 4 of this Article or otherwise, may be filled
before the vacancy occurs but the newly elected or appointed director may not
take office until the vacancy occurs.
SECTION 3. REMOVAL. The shareholders may remove one (1) or more directors
with or without cause unless the articles of incorporation provide that
directors may be removed only for cause. The vote for removal shall be by a
majority of shares entitled to vote at an election of directors, unless the
articles of incorporation require a higher vote for removal without cause.
SECTION 4. RESIGNATION. A director may resign by written notice to the
corporation. The resignation is effective upon its receipt by the corporation or
a later time as set forth in the notice of resignation.
SECTION 5. POWERS. The business and affairs of the corporation shall be
managed by its board of directors except as otherwise provided in the Act or in
the articles of incorporation.
SECTION 6. LOCATION OF MEETINGS. Regular or special meetings of the board
of directors may be held either in or outside the State of Michigan.
SECTION 7. ORGANIZATION MEETING OF BOARD. The first meeting of each newly
elected board of directors shall be held at the place of holding the annual
meeting of shareholders, and immediately following the same, for the purpose of
electing officers and transacting any other business properly brought before it,
provided that the organization meeting in any year may be held at a different
time and place than that herein provided by a consent of a majority of the
directors of such new board. No notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present, unless said meeting is not held at the place of holding
and immediately following the annual meeting of shareholders.
SECTION 8. REGULAR MEETING OF BOARD. Any regular meeting of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board.
SECTION 9. SPECIAL MEETING OF BOARD. Any special meeting of the board of
directors may be called by the chief executive officer, or by a majority of the
persons then comprising the board of directors, at any time by means of notice
of the time and place thereof
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to each director, given not less than twenty-four (24) hours before the time
such special meeting is to be held.
SECTION 10. COMMITTEES OF DIRECTORS. The board of directors may designate
one (1) or more committees, each committee to consist of one (1) or more of the
directors of the corporation. The board may designate one (1) or more directors
as alternate members of any committee, who may replace an absent or disqualified
member at a meeting of the committee. In the absence or disqualification of a
member of a committee, the members thereof present at a meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors
creating such committee, may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation. A
committee does not have the power or authority to amend the articles of
incorporation, adopt an agreement of merger or share exchange, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommend to the shareholders a dissolution
of the corporation or a revocation of a dissolution, amend the bylaws of the
corporation or fill vacancies in the board of directors; and, unless the
resolution of the board of directors creating such committee, the articles of
incorporation or bylaws expressly so provide, a committee does not have the
power or authority to declare a distribution, dividend or to authorize the
issuance of stock. Any such committee, and each member thereof, shall serve at
the pleasure of the board of directors.
SECTION 11. QUORUM AND REQUIRED VOTE OF BOARD AND COMMITTEES. At all
meetings of the board of directors, or of a committee thereof, a majority of the
members of the board then in office, or of the members of a committee of the
board of directors, constitutes a quorum for transaction of business, unless the
articles of incorporation, these bylaws, or in the case of a committee, the
board resolution establishing the committee, provide for a larger or smaller
number. The vote of the majority of members present at a meeting at which a
quorum is present constitutes the action of the board of directors or of the
committee unless the vote of a larger number is required by the Act, the
articles of incorporation, or these bylaws, or in the case of a committee, the
board resolution establishing the committee. Amendment of these bylaws by the
board of directors requires the vote of not less than a majority of the members
of the board then in office. If a quorum shall not be present at any meeting of
the board of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
SECTION 12. ACTION BY WRITTEN CONSENT. Action required or permitted to be
taken under authorization voted at a meeting of the board of directors or a
committee of the board of directors, may be taken without a meeting if, before
or after the action, all members of the board then in office or of the committee
consent to the action in writing. The written consents shall be filed with the
minutes of the proceedings of the board of directors or
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committee. The consent has the same effect as a vote of the board of directors
or committee for all purposes.
SECTION 13. COMPENSATION OF DIRECTORS. The board of directors, by
affirmative vote of a majority of directors in office and irrespective of any
personal interest of any of them, may establish reasonable compensation of
directors for services to the corporation as directors or officers, but approval
of the shareholders is required if the articles of incorporation, these bylaws
or any provisions of the Act so provide.
SECTION 14. PARTICIPATION IN MEETING BY TELEPHONE. By oral or written
permission of a majority of the board of directors, a member of the board of
directors or of a committee designated by the board may participate in a meeting
by means of conference telephone or similar communications equipment through
which all persons participating in the meeting can communicate with the other
participants. Participation in a meeting pursuant to this Section constitutes
presence in person at the meeting.
ARTICLE IV
NOTICES
SECTION 1. NOTICE. Whenever any notice or communication is required to be
given by mail to any director or shareholder under any provision of the Act, or
of the articles of incorporation or of these bylaws, it shall be given in
writing, except as otherwise provided in the Act, to such director or
shareholder at the address designated by him or her for that purpose or, if none
is designated, at his or her last known address. The notice or communication is
given when deposited, with postage thereon prepaid, in a post office or official
depository under the exclusive care and custody of the United States postal
service. The mailing shall be registered, certified or other first class mail
except where otherwise provided in the Act. Written notice may also be given in
person or by telegram, telecopy, telex, radiogram, cablegram, or mailgram, and
such notice shall be deemed to be given when the recipient receives the notice
personally, or when the notice, addressed as provided above, has been delivered
to the corporation, or to the equipment transmitting such notice. Neither the
business to be transacted at, nor the purpose of, a regular or special meeting
of the board of directors need be specified in the notice of the meeting.
SECTION 2. WAIVER OF NOTICE. When, under the Act or the articles of
incorporation or these bylaws, or by the terms of an agreement or instrument, a
corporation or the board of directors or any committee thereof may take action
after notice to any person or after lapse of a prescribed period of time, the
action may be taken without notice and without lapse of the period of time, if
at any time before or after the action is completed the person entitled to
notice or to participate in the action to be taken or, in case of a shareholder,
by his or her attorney-in-fact, submits a signed waiver of such requirements.
Neither the business to be transacted at, nor the purpose of, a regular or
special meeting of the board of directors need be specified in the waiver of
notice of the meeting. Attendance of a person at a meeting of
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shareholders constitutes a waiver of objection to lack of notice or defective
notice of the meeting, unless the shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting and a
waiver of objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice, unless
the shareholder objects to considering the matter when it is presented. A
director's attendance at or participation in a meeting waives any required
notice to him or her of the meeting unless he or she at the beginning of the
meeting, or upon his or her arrival, objects to the meeting or the transacting
of business at the meeting and does not thereafter vote for or assent to any
action taken at the meeting.
ARTICLE V
OFFICERS
SECTION 1. SELECTION. The board of directors, at its first meeting and at
its organization meeting following the annual meeting of shareholders, shall
elect or appoint a president, a secretary and a treasurer. The board of
directors may also elect or appoint a chairman of the board, one (1) or more
vice presidents and such other officers, employees and agents as it shall deem
necessary who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
board. Two (2) or more offices may be held by the same person but an officer
shall not execute, acknowledge or verify an instrument in more than one (1)
capacity if the instrument is required by law or the articles or bylaws to be
executed, acknowledged or verified by two (2) or more officers.
SECTION 2. COMPENSATION. The salaries of all officers, employees and agents
of the corporation shall be fixed by the board of directors; provided, however,
that the board may delegate to the officers the fixing of compensation of
assistant officers, employees and agents.
SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the corporation
shall hold office for the term for which he or she is elected or appointed and
until his or her successor is elected or appointed and qualified, or until his
or her resignation or removal. An officer elected or appointed by the board of
directors may be removed by the board with or without cause at any time. An
officer may resign by written notice to the corporation. The resignation is
effective upon its receipt by the corporation or at a subsequent time specified
in the notice of resignation. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
SECTION 4. CHIEF EXECUTIVE OFFICER. If the board of directors desires to
elect or appoint a chief executive officer, the board shall designate the
chairman of the board or president as such officer at the first meeting of each
newly elected board of directors; provided, however, that if a motion is not
made and carried to change the designation, the designation shall be the same as
the designation for the preceding year; provided, further, that the designation
of the chief executive officer may be changed at any special meeting of the
board
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of directors. The president shall be the chief executive officer whenever the
office of chairman of the board is vacant. The chief executive officer shall be
responsible to the board of directors for the general supervision and management
of the business and affairs of the corporation and shall see that all orders and
resolutions of the board are carried into effect. The chairman of the board or
president who is not the chief executive officer shall be subject to the
authority of the chief executive officer, but shall exercise all of the powers
and discharge all of the duties of the chief executive officer during the
absence or disability of the chief executive officer.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. If the board of directors
elects or appoints a chairman of the board, he or she shall be elected or
appointed by, and from among the membership of, the board of directors. He or
she shall preside at all meetings of the shareholders, of the board of directors
and of any executive committee. He or she shall perform such other duties and
functions as shall be assigned to him or her from time to time by the board of
directors. He or she shall be, ex officio, a member of all standing committees.
Except where by law the signature of the president of the corporation is
required, the chairman of the board of directors shall possess the same power
and authority to sign all certificates, contracts, instruments, papers and
documents of every conceivable kind and character whatsoever in the name of and
on behalf of the corporation which may be authorized by the board of directors.
During the absence or disability of the president, or while that office is
vacant, the chairman of the board of directors shall exercise all of the powers
and discharge all of the duties of the president.
SECTION 6. PRESIDENT. During the absence or disability of the chairman of
the board, or while that office is vacant, the president shall preside over all
meetings of the board of directors, of the shareholders and of any executive
committee, and shall perform all of the duties and functions, and when so acting
shall have all powers and authority, of the chairman of the board. He or she
shall be, ex officio, a member of all standing committees. The president shall,
in general, perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors.
SECTION 7. VICE PRESIDENTS. The board of directors may elect or appoint one
or more vice presidents. The board of directors may designate one or more vice
presidents as executive or senior vice presidents. Unless the board of directors
shall otherwise provide by resolution duly adopted by it, such of the vice
presidents as shall have been designated executive or senior vice presidents and
are members of the board of directors in the order specified by the board of
directors (or if no vice president who is a member of the board of directors
shall have been designated as executive or senior vice president, then such vice
presidents as are members of the board of directors in the order specified by
the board of directors) shall perform the duties and exercise the powers of the
president during the absence or disability of the president if the office of the
chairman of the board is vacant. The vice presidents shall perform such other
duties as may be delegated to them by the board of directors, any executive
committee, the chairman of the board or the president.
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SECTION 8. SECRETARY. The secretary shall attend all meetings of the
shareholders, and of the board of directors and of any executive committee, and
shall preserve in the books of the corporation true minutes of the proceedings
of all such meetings. He or she shall safely keep in his or her custody the seal
of the corporation, if any, and shall have authority to affix the same to all
instruments where its use is required or permitted. He or she shall give all
notice required by the Act, these bylaws or resolution. He or she shall perform
such other duties as may be delegated to him or her by the board of directors,
any executive committee, the chairman of the board or the president.
SECTION 9. TREASURER. The treasurer shall have custody of all corporate
funds and securities and shall keep in books belonging to the corporation full
and accurate accounts of all receipts and disbursements; he or she shall deposit
all moneys, securities and other valuable effects in the name of the corporation
in such depositories as may be designated for that purpose by the board of
directors. He or she shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors
whenever requested an account of all his or her transactions as treasurer and of
the financial condition of the corporation. If required by the board of
directors, he or she shall keep in force a bond in form, amount and with a
surety or sureties satisfactory to the board of directors, conditioned for
faithful performance of the duties of his or her office, and for restoration to
the corporation in case of his or her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and property of whatever kind
in his or her possession or under his or her control belonging to the
corporation. He or she shall perform such other duties as may be delegated to
him or her by the board of directors, any executive committee, the chairman of
the board or the president.
SECTION 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretary or assistant secretaries, in the absence or disability of the
secretary, shall perform the duties and exercise the powers of the secretary.
The assistant treasurer or assistant treasurers, in the absence or disability of
the treasurer, shall perform the duties and exercise the powers of the
treasurer. Any assistant treasurer, if required by the board of directors, shall
keep in force a bond as provided in Section 9 of this Article. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or by the treasurer, respectively, or
by the board of directors, any executive committee, the chairman of the board or
the president.
SECTION 11. DELEGATION OF AUTHORITY AND DUTIES BY BOARD OF DIRECTORS. All
officers, employees and agents shall, in addition to the authority conferred, or
duties imposed, on them by these bylaws, have such authority and perform such
duties in the management of the corporation as may be determined by resolution
of the board of directors not inconsistent with these bylaws.
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ARTICLE VI
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BY THIRD
PARTIES. The corporation shall, to the fullest extent authorized or permitted by
the Act or other applicable law, as the same presently exist or may hereafter be
amended, but, in the case of any such amendment, only to the extent such
amendment permits the corporation to provide broader indemnification rights than
before such amendment, indemnify a director or officer (an "Indemnitee") who was
or is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal, other than an action by or in
the right of the corporation, by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise, whether for profit or not, against
expenses, including attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement actually and reasonably incurred by him or her in connection
with the action, suit, or proceeding, if the Indemnitee acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders, and with respect to a criminal
action or proceeding, if the Indemnitee had no reasonable cause to believe his
or her conduct was unlawful. The termination of an action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the Indemnitee
did not act in good faith and in a manner which he or she reasonably believed to
be in or not opposed to the best interests of the corporation or its
shareholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
SECTION 2. INDEMNIFICATION OF DIRECTORS AND OFFICERS: CLAIMS BROUGHT BY OR
IN THE RIGHT OF THE CORPORATION. The corporation shall, to the fullest extent
authorized or permitted by the Act or other applicable law, as the same
presently exist or may hereafter be amended, but, in the case of any such
amendment, only to the extent such amendment permits the corporation to provide
broader indemnification rights than before such amendment, indemnify an
Indemnitee who was or is a party or is threatened to be made a party to a
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against expenses, including attorneys' fees, and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection with the action
or suit, if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders. Indemnification shall not be made under this
Section for a claim, issue, or matter in which the Indemnitee has been found
liable to the corporation except to the extent authorized in Section 6 of this
Article.
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SECTION 3. ACTIONS BROUGHT BY THE INDEMNITEE. Notwithstanding the
provisions of Sections 1 and 2 of this Article, the corporation shall not be
required to indemnify an Indemnitee in connection with an action, suit,
proceeding or claim (or part thereof) brought or made by such Indemnitee except
as otherwise provided herein with respect to the enforcement of this Article,
unless such action, suit, proceeding or claim (or part thereof) was authorized
by the board of directors of the corporation.
SECTION 4. APPROVAL OF INDEMNIFICATION. An indemnification under Sections 1
or 2 of this Article, unless ordered by the court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper in the circumstances because such
Indemnitee has met the applicable standard of conduct set forth in Sections 1 or
2 of this Article, as the case may be, and upon an evaluation of the
reasonableness of expenses and amounts paid in settlement. This determination
and evaluation shall be made in any of the following ways:
(a) By a majority vote of a quorum of the board of directors consisting of
directors who are not parties or threatened to be made parties to the
action, suit, or proceeding.
(b) If a quorum cannot be obtained in subsection (a), by majority vote of
a committee duly designated by the board of directors and consisting
solely of two (2) or more directors not at the time parties or
threatened to be made parties to the action, suit or proceeding.
(c) By independent legal counsel in a written opinion, which counsel shall
be selected in one (1) of the following ways:
(i) By the board of directors or its committee in the manner
prescribed in subsection (a) or (b).
(ii) If a quorum of the board of directors cannot be obtained under
subsection (a) and a committee cannot be designated under
subsection (b), by the board of directors.
(d) By all independent directors (if any directors have been designated as
such by the board of directors or shareholders of the corporation) who
are not parties or threatened to be made parties to the action, suit,
or proceeding.
(e) By the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties
to the action, suit, or proceeding may not be voted.
In the designation of a committee under subsection (b) or in the selection of
independent legal counsel under subsection (c)(ii), all directors may
participate.
SECTION 5. ADVANCEMENT OF EXPENSES. The corporation may pay or reimburse
the reasonable expenses incurred by an Indemnitee who is a party or threatened
to be made a party to an action, suit, or proceeding in advance of final
disposition of the proceeding if all of the following apply:
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(a) The Indemnitee furnishes the corporation a written affirmation of his
or her good faith belief that he or she has met the applicable
standard of conduct set forth in Sections 1 and 2 of this Article.
(b) The Indemnitee furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the standard
of conduct.
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification under the Act.
The undertaking required by subsection (b) must be an unlimited general
obligation of the Indemnitee but need not be secured. Determinations and
evaluations of payments under this Section shall be made in the manner specified
in Section 4 of this Article.
SECTION 6. COURT APPROVAL. An Indemnitee who is a party or threatened to be
made a party to an action, suit, or proceeding may apply for indemnification to
the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any notice it
considers necessary may order indemnification if it determines that the
Indemnitee is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he or she met the applicable standard
of conduct set forth in Sections 1 and 2 of this Article or was adjudged liable
as described in Section 2 of this Article, but if he or she was adjudged liable,
his or her indemnification is limited to reasonable expenses incurred.
SECTION 7. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled to
indemnification under Sections 1 or 2 of this Article for a portion of expenses,
including reasonable attorneys' fees, judgments, penalties, fines, and amounts
paid in settlement, but not for the total amount, the corporation shall
indemnify the Indemnitee for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the Indemnitee is entitled to be
indemnified.
SECTION 8. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Any person who is not
covered by the foregoing provisions of this Article and who is or was an
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, whether for profit or not, may be indemnified to the fullest
extent authorized or permitted by the Act or other applicable law, as the same
exists or may hereafter be amended, but, in the case of any such amendment, only
to the extent such amendment permits the corporation to provide broader
indemnification rights than before such amendment, but in any event only to the
extent authorized at any time or from time to time by the board of directors.
SECTION 9. OTHER RIGHTS OF INDEMNIFICATION. The indemnification or
advancement of expenses provided under Sections 1 through 8 of this Article is
not exclusive of other rights to which a person seeking indemnification or
advancement of expenses may be
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entitled under the articles of incorporation, bylaws, or a contractual
agreement. The total amount of expenses advanced or indemnified from all sources
combined shall not exceed the amount of actual expenses incurred by the person
seeking indemnification or advancement of expenses. The indemnification provided
for in Sections 1 through 8 of this Article continues as to a person who ceases
to be a director, officer, employee, or agent and shall inure to the benefit of
the heirs, personal representatives, and administrators of the person.
SECTION 10. DEFINITIONS. "Other enterprises" shall include employee benefit
plans; "fines" shall include any excise taxes assessed on a person with respect
to an employee benefit plan; and "serving at the request of the corporation"
shall include any service as a director, officer, employee, or agent of the
corporation which imposes duties on, or involves services by, the director,
officer, employee or agent with respect to an employee benefit plan, its
participants or its beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be considered to have acted
in a manner "not opposed to the best interests of the corporation or its
shareholders" as referred to in Sections 1 and 2 of this Article.
SECTION 11. LIABILITY INSURANCE. The corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as such,
whether or not the corporation would have power to indemnify him or her against
liability under the pertinent provisions of the Act.
SECTION 12. ENFORCEMENT. If a claim under this Article is not paid in full
by the corporation within thirty (30) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim, and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Act for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its board of directors, a committee
thereof, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because such claimant has met the
applicable standard of conduct set forth in the Act nor an actual determination
by the corporation (including its board of directors, a committee thereof,
independent legal counsel or its shareholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
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SECTION 13. CONTRACT WITH THE CORPORATION. The right to indemnification
conferred in this Article shall be deemed to be a contract right between the
corporation and each director or officer who serves in any such capacity at any
time while this Article is in effect, and any repeal or modification of this
Article shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
SECTION 14. APPLICATION TO A RESULTING OR SURVIVING CORPORATION OR
CONSTITUENT CORPORATION. The definition for "corporation" found in Section 569
of the Act, as the same exists or may hereafter be amended is, and shall be,
specifically excluded from application to this Article. The indemnification and
other obligations set forth in this Article of the corporation shall be binding
upon any resulting or surviving corporation after any merger or consolidation
with the corporation. Notwithstanding anything to the contrary contained herein
or in Section 569 of the Act, no person shall be entitled to the indemnification
and other rights set forth in this Article for acting as a director or officer
of another corporation prior to such other corporation entering into a merger or
consolidation with the corporation.
SECTION 15. SEVERABILITY. Each and every paragraph, sentence, term and
provision of this Article shall be considered severable in that, in the event a
court finds any paragraph, sentence, term or provision to be invalid or
unenforceable, the validity and enforceability, operation, or effect of the
remaining paragraphs, sentences, terms, or provisions shall not be affected, and
this Article shall be construed in all respects as if the invalid or
unenforceable matter had been omitted.
ARTICLE VII
STOCK AND TRANSFERS
SECTION 1. SHARE CERTIFICATES: REQUIRED SIGNATURES. The shares of the
corporation shall be represented by certificates which shall be signed by the
chairman of the board of directors, vice chairman of the board of directors,
president or a vice president and which also may be signed by another officer of
the corporation. The certificate may be sealed with the seal of the corporation
or a facsimile of the seal. The signatures of the officers may be facsimiles if
the certificate is countersigned by a transfer agent or registered by a
registrar other than the corporation itself or its employee. If an officer who
has signed or whose facsimile signature has been placed upon a certificate
ceases to be an officer before the certificate is issued, it may be issued by
the corporation with the same effect as if he or she were the officer at the
date of issue.
SECTION 2. SHARE CERTIFICATES: REQUIRED PROVISIONS. A certificate
representing shares of the corporation shall state upon its face all of the
following:
(a) That the corporation is formed under the laws of this state.
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(b) The name of the person to whom issued.
(c) The number and class of shares, and the designation of the series, if
any, which the certificate represents.
A certificate representing shares issued by a corporation which is authorized to
issue shares of more than one (1) class shall set forth on its face or back or
state on its face or back that the corporation will furnish to a shareholder
upon request and without charge a full statement of the designation, relative
rights, preferences and limitations of the shares of each class authorized to be
issued, and if the corporation is authorized to issue any class of shares in
series, the designation, relative rights, preferences and limitations of each
series so far as the same have been prescribed and the authority of the board to
designate and prescribe the relative rights, preferences and limitations of
other series.
SECTION 3. REPLACEMENT OF LOST OR DESTROYED SHARE CERTIFICATES. The
corporation may issue a new certificate for shares or fractional shares in place
of a certificate theretofore issued by it, alleged to have been lost or
destroyed, and the board of directors may require the owner of the lost or
destroyed certificate, or his or her legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged lost or destroyed
certificate or the issuance of such new certificate.
SECTION 4. REGISTERED SHAREHOLDERS. The corporation shall have the right to
treat the registered holder of any share as the absolute owner thereof, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the corporation shall
have express or other notice thereof, save as may be otherwise provided by the
statutes of Michigan.
SECTION 5. TRANSFER AGENT AND REGISTRAR. The board of directors may appoint
a transfer agent and a registrar in the registration of transfers of its
securities.
SECTION 6. REGULATIONS. The board of directors shall have power and
authority to make all such rules and regulations as the board shall deem
expedient regulating the issue, transfer and registration of certificates for
shares in this corporation.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS IN CASH OR PROPERTY. The board of directors may
authorize and the corporation may make distributions to its shareholders subject
to restriction by the articles of incorporation and/or unless otherwise limited
by the articles of incorporation, these bylaws or the Act.
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SECTION 2. RESERVES. The board of directors shall have power and authority
to set apart such reserve or reserves, for any proper purpose, as the board in
its discretion shall approve, and the board shall have the power and authority
to abolish any reserve created by the board.
SECTION 3. VOTING SECURITIES. Unless otherwise directed by the board of
directors, the chairman of the board or president, or in the case of their
absence or inability to act, the vice presidents, in order of their seniority,
shall have full power and authority on behalf of the corporation to attend and
to act and to vote, or to execute in the name or on behalf of the corporation a
consent in writing in lieu of a meeting of shareholders or a proxy authorizing
an agent or attorney-in-fact for the corporation to attend and vote at any
meetings of security holders of corporations in which the corporation may hold
securities, and at such meetings he or she or his or her duly authorized agent
or attorney-in-fact shall possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as the owner thereof,
the corporation might have possessed and exercised if present. The board of
directors by resolution from time to time may confer like power upon any other
person or persons.
SECTION 4. CHECKS. All checks, drafts and orders for the payment of money
shall be signed in the name of the corporation in such manner and by such
officer or officers or such other person or persons as the board of directors
shall from time to time designate for that purpose.
SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of any contract,
conveyance or other instrument has been authorized without specification of the
executing officers, the chairman of the board, president or any vice president,
and the secretary or assistant secretary, may execute the same in the name and
on behalf of this corporation and may affix the corporate seal thereto. The
board of directors shall have power to designate the officers and agents who
shall have authority to execute any instrument on behalf of this corporation.
SECTION 6. CORPORATE BOOKS AND RECORDS. The corporation shall keep books
and records of account and minutes of the proceedings of its shareholders, board
of directors and executive committees, if any. The books, records and minutes
may be kept outside this state. The corporation shall keep at its registered
office, or at the office of its transfer agent in or outside the State of
Michigan, records containing the names and addresses of all shareholders, the
number, class and series of shares held by each and the dates when they
respectively became holders of record. Any of the books, records or minutes may
be in written form or in any other form capable of being converted into written
form within a reasonable time. The corporation shall convert into written form
without charge any record not in written form, unless otherwise requested by a
person entitled to inspect the records.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
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SECTION 8. SEAL. If the corporation has a corporate seal, it shall have
inscribed thereon the name of the corporation and the words "Corporate Seal" and
"Michigan." The seal may be used by causing it or a facsimile to be affixed,
impressed or reproduced in any other manner.
ARTICLE IX
AMENDMENTS
SECTION 1. The shareholders or the board of directors may amend or repeal
the bylaws or adopt new bylaws unless the articles of incorporation provide that
the power to adopt new bylaws is reserved exclusively to the shareholders or
that these bylaws or any particular bylaw shall not be altered or repealed by
the board of directors. Such action may be taken by written consent or at any
meeting of shareholders or the board of directors; provided that if notice of
any such meeting is required by these bylaws, it shall contain notice of the
proposed amendment, repeal or new bylaws. Amendment of these bylaws by the board
of directors requires the vote of not less than a majority of the members of the
board then in office.
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EXHIBIT 4.1.1
---------------------------------
NUMATICS, INCORPORATED, as Issuer
and
THE GUARANTORS
(defined herein)
9-5/8% SENIOR SUBORDINATED NOTES DUE 2008
INDENTURE
---------
Dated as of March 23, 1998
---------
First Trust National Association
Trustee
---------------------------------
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE..........................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................18
Section 1.03. Trust Indenture Act Definitions............................18
Section 1.04. Rules of Construction......................................19
ARTICLE II. THE NOTES.........................................................19
Section 2.01. Form and Dating............................................19
Section 2.02. Execution and Authentication...............................21
Section 2.03. Registrar and Paying Agent.................................21
Section 2.04. Paying Agent to Hold Money in Trust........................22
Section 2.05. Holder Lists...............................................22
Section 2.06. Transfer and Exchange......................................22
Section 2.07. Replacement Notes..........................................35
Section 2.08. Outstanding Notes..........................................36
Section 2.09. Treasury Notes.............................................36
Section 2.10. Temporary Notes............................................36
Section 2.11. Cancellation...............................................37
Section 2.12. Defaulted Interest.........................................37
ARTICLE III. REDEMPTION AND PREPAYMENT........................................37
Section 3.01. Notices to Trustee.........................................37
Section 3.02. Selection of Notes to Be Redeemed..........................37
Section 3.03. Notice of Redemption.......................................38
Section 3.04. Effect of Notice of Redemption.............................39
Section 3.05. Deposit of Redemption Price................................39
Section 3.06. Notes Redeemed in Part.....................................39
Section 3.07. Optional Redemption........................................39
Section 3.08. Mandatory Redemption.......................................40
Section 3.09. Offer to Purchase by Application of Excess Proceeds........40
ARTICLE IV. COVENANTS.........................................................42
Section 4.01. Payment of Notes...........................................42
Section 4.02. Maintenance of Office or Agency............................42
Section 4.03. Reports....................................................43
Section 4.04. Compliance Certificate.....................................43
Section 4.05. Taxes......................................................44
Section 4.06. Stay, Extension and Usury Laws.............................44
Section 4.07. Restricted Payments........................................45
<PAGE>
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries........................................................47
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.48
Section 4.10. Asset Sales................................................51
Section 4.11. Transactions with Affiliates...............................52
Section 4.12. Liens......................................................52
Section 4.13. Line of Business...........................................52
Section 4.14. Corporate Existence........................................53
Section 4.15. Offer to Repurchase Upon Change of Control.................53
Section 4.16. No Senior Subordinated Debt................................54
Section 4.17. Limitation on Issuances and Sales of Equity Interests in
Restricted Subsidiaries.............................................54
Section 4.18. Payments for Consent.......................................54
Section 4.19. Additional Subsidiary Guarantees...........................55
ARTICLE V. SUCCESSORS.........................................................55
Section 5.01. Merger, Consolidation, or Sale of Assets...................55
Section 5.02. Successor Corporation Substituted..........................56
ARTICLE VI. DEFAULTS AND REMEDIES.............................................56
Section 6.01. Events of Default..........................................56
Section 6.02. Acceleration...............................................58
Section 6.03. Other Remedies.............................................59
Section 6.04. Waiver of Past Defaults....................................59
Section 6.05. Control by Majority........................................59
Section 6.06. Limitation on Suits........................................59
Section 6.07. Rights of Holders of Notes to Receive Payment..............60
Section 6.08. Collection Suit by Trustee.................................60
Section 6.09. Trustee May File Proofs of Claim...........................60
Section 6.10. Priorities.................................................61
Section 6.11. Undertaking for Costs......................................61
ARTICLE VII. TRUSTEE..........................................................61
Section 7.01. Duties of Trustee..........................................61
Section 7.02. Rights of Trustee..........................................62
Section 7.03. Individual Rights of Trustee...............................63
Section 7.04. Trustee's Disclaimer.......................................63
Section 7.05. Notice of Defaults.........................................63
Section 7.06. Reports by Trustee to Holders of the Notes.................64
Section 7.07. Compensation and Indemnity.................................64
Section 7.08. Replacement of Trustee.....................................65
Section 7.09. Successor Trustee by Merger, etc...........................66
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Section 7.10. Eligibility; Disqualification..............................66
Section 7.11. Preferential Collection of Claims Against Company..........66
ARTICLE VIII. LEGAL DEFEASANCE AND COVENANT DEFEASANCE........................66
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...66
Section 8.02. Legal Defeasance and Discharge.............................66
Section 8.03. Covenant Defeasance........................................67
Section 8.04. Conditions to Legal or Covenant Defeasance.................67
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions...............................69
Section 8.06. Repayment to Company.......................................69
Section 8.07. Reinstatement..............................................70
ARTICLE IX. AMENDMENT, SUPPLEMENT AND WAIVER..................................70
Section 9.01. Without Consent of Holders of Notes........................70
Section 9.02. With Consent of Holders of Notes...........................71
Section 9.03. Compliance with Trust Indenture Act........................72
Section 9.04. Revocation and Effect of Consents..........................72
Section 9.05. Notation on or Exchange of Notes...........................73
Section 9.06. Trustee to Sign Amendments, etc............................73
ARTICLE X. SUBORDINATION......................................................73
Section 10.01. Agreement to Subordinate..................................73
Section 10.02. Liquidation; Dissolution; Bankruptcy......................73
Section 10.03. Default on Designated Senior Indebtedness.................74
Section 10.04. Acceleration of Notes.....................................75
Section 10.05. When Distribution Must Be Paid Over.......................75
Section 10.06. Notice by Company.........................................75
Section 10.07. Subrogation...............................................75
Section 10.08. Relative Rights...........................................76
Section 10.09. Subordination May Not Be Impaired by Company..............76
Section 10.10. Distribution or Notice to Representative..................76
Section 10.11. Rights of Trustee and Paying Agent........................77
Section 10.12. Authorization to Effect Subordination.....................77
Section 10.13. Amendments................................................77
ARTICLE XI. SUBSIDIARY GUARANTEES.............................................77
Section 11.01. Subsidiary Guarantees.....................................77
Section 11.02. Subordination of Subsidiary Guarantees....................78
Section 11.03. Limitation on Guarantor Liability.........................79
iii
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Section 11.04. Execution and Delivery of Subsidiary Guarantees...........79
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms........80
Section 11.06. Releases Following Sale of Assets.........................80
ARTICLE XII. MISCELLANEOUS....................................................81
Section 12.01. Trust Indenture Act Controls..............................81
Section 12.02. Notices...................................................81
Section 12.03. Communication by Holders of Notes with Other Holders of
Notes...............................................................82
Section 12.04. Certificate and Opinion as to Conditions Precedent........82
Section 12.05. Statements Required in Certificate or Opinion.............83
Section 12.06. Rules by Trustee and Agents...............................83
Section 12.07. No Personal Liability of Directors, Officers, Employees
and Stockholders....................................................83
Section 12.08. Governing Law.............................................83
Section 12.09. No Adverse Interpretation of Other Agreements.............84
Section 12.10. Successors................................................84
Section 12.11. Severability..............................................84
Section 12.12. Counterpart Originals.....................................84
Section 12.13. Table of Contents, Headings, etc..........................84
EXHIBITS
Exhibit A1 FORM OF 144A/INSTITUTIONAL ACCREDITED INVESTOR RESTRICTED
GLOBAL NOTE
Exhibit A2 FORM OF REGULATION S [TEMPORARY] [PERMANENT] GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
Exhibit G SUBORDINATION PROVISIONS FOR MANAGEMENT NOTES
iv
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1).........................................................7.10
(a)(2).............................................................7.10
(a)(3).............................................................N.A.
(a)(4).............................................................N.A.
(a)(5).............................................................7.10
(i)(b).............................................................7.10
(ii)(c)............................................................N.A.
311(a).............................................................7.11
(b)................................................................7.11
(iii)(c)...........................................................N.A.
312 (a)............................................................2.05
(b)................................................................12.03
(iv)(c)............................................................12.03
313(a).............................................................7.06
(b)(2).............................................................7.07
(v)(c).............................................................7.06;
12.02
(vi)(d)............................................................7.06
314(a).............................................................4.03;
12.02
(c)(1).............................................................12.04
(c)(2).............................................................12.04
(c)(3).............................................................N.A.
(vii)(e)...........................................................12.05
(f)................................................................NA
315 (a)............................................................7.01
(b)................................................................7.05,
12.02
(A)(c).............................................................7.01
(d)................................................................7.01
(e)................................................................6.11
316 (a)(last sentence).............................................2.09
(a)(1)(A)..........................................................6.05
(a)(1)(B)..........................................................6.04
(a)(2).............................................................N.A.
(b)................................................................6.07
(B)(c).............................................................2.12
317 (a)(1).........................................................6.08
(a)(2).............................................................6.09
(b)................................................................2.04
318 (a)............................................................12.01
(b)................................................................N.A.
(c)................................................................12.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
INDENTURE dated as of March 23, 1998 between Numatics, Incorporated, a
Michigan corporation (the "Company"), the Guarantors (as defined herein) and
First Trust National Association, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9-5/8% Senior Subordinated Notes due 2008 (the "Series A Notes") and the
9-5/8% Series B Senior Subordinated Notes due 2008 (the "Exchange Notes" and,
together with the Series A Notes and any other notes permitted to be issued
hereunder, the "Notes"):
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions
"80% Restricted Subsidiary" means any Restricted Subsidiary of the
Company at least 80% of each outstanding class of Equity Interests of which
shall at the time be owned by the Company or one or more 80% Restricted
Subsidiaries of the Company.
"144A Global Note" means a global note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
<PAGE>
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole shall be governed by the provisions of Section
4.15 hereof and/or the provisions of Section 5.01 hereof and not by the
provisions of Section 4.10 hereof), and (ii) the issue by any Restricted
Subsidiaries of the Company of any Equity Interests of such Restricted
Subsidiary and the sale by the Company or any of its Restricted Subsidiaries of
Equity Interest of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) a transfer of assets
by the Company to an 80% Restricted Subsidiary or by a Restricted Subsidiary to
the Company or to an 80% Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Restricted Subsidiary to the Company or to an 80% Restricted
Subsidiary, and (iii) a Restricted Payment that is permitted by Section 4.07
hereof.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Borrowing Base" means, as of any date, with respect to any Person,
an amount equal to the sum of 85% of accounts receivable of such Person and its
Restricted Subsidiaries as of such date that are not more than 120 days past
due, plus 65% of the book value of all inventory owned by such Person and its
Restricted Subsidiaries as of such date, in each case calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or inventory as of a
specific date, the Company may utilize the most recent available information for
purposes of calculating the Borrowing Base.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or
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<PAGE>
limited liability company, partnership or membership interests (whether general
or limited) and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits 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 party to the New Credit Facility or with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition and (vi) money market funds the assets of which constitute Cash
Equivalents of the kinds described in clauses (i)-(v) of this definition and
(vii) with respect to Investments by any foreign Subsidiary, the local currency
of such foreign Subsidiary.
"Cedel" means Cedel Bank, S.A.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act); (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company; (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) other than a Permitted
Transferee becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 50% of the Voting Stock of the Company (measured by
voting power rather than number of shares); (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors or; (v) the Company consolidates with, or merges with or
into, any Person, or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where the Voting
Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance).
3
<PAGE>
"Company" means Numatics, Incorporated, and any and all successors
thereto.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations commissions, discounts and
other fees and charges incurred in respect of letter of credit of bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (including unrealized foreign exchange losses recorded during such
period by such Person and its Restricted Subsidiaries provided, however, that
any such losses that are realized in a subsequent period shall be deducted from
Consolidated Cash Flow in the period when so realized and excluding any other
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income, minus
(v) non-cash items increasing such Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the amounts described in clause (ii) and clause
(iv) relating to any Restricted Subsidiary that is party to any agreement that
has not been legally waived that restricts the declaration or payment of
dividends or similar distributions shall be included in Consolidated Cash Flow
only to the extent (and in the same proportion) that the Net Income of such
Restricted Subsidiary was included in calculating Consolidated Net Income
(without giving effect to clause (ii) of the definition thereof) for so long as
such Restricted Subsidiary is party to any agreement that has not been legally
waived that restricts the declaration or payment of dividends or similar
distributions.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or an 80% Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental
4
<PAGE>
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translation and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all Investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means, with respect to the Company or a
Restricted Subsidiary, one or more debt facilities (including, without
limitation, the New Credit Facility) or commercial paper facilities with banks
or other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
Indebtedness under Credit Facilities outstanding on the date on which Notes are
first issued and authenticated under this Indenture shall be deemed to have been
incurred on such date in reliance on the exception provided by clause (i) of the
definition of Permitted Debt.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
5
<PAGE>
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A1 or A2 hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Indebtedness" means (i) any Indebtedness
outstanding under the New Credit Facility and (ii) any other Senior Indebtedness
permitted under this Indenture that has been designated by the Company as
"Designated Senior Indebtedness" and which Indebtedness, at the time of such
designation, was in the aggregate principal amount of $25.0 million or more.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature, provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
6
<PAGE>
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations) and (ii) the consolidated interest of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries and (iv) the
product of (a) all dividend payments, whether or not in cash, on any series of
preferred stock of such Person or any of its Restricted Subsidiaries, other than
dividend payments on Equity Interests payable solely in Equity Interests of the
Company (other than Disqualified Stock) or to the Company or a Restricted
Subsidiary of the Company, times (b) a fraction, the numerator of which is one
and the denominator of which is one minus the then current combined federal
statutory, effective state and local statutory tax rates of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit or similar borrowings) or
issues or redeems preferred stock subsequent to the commencement of the period
for which the Fixed Charge Coverage Ratio is being calculated but prior to the
date on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
Guarantee or redemption of Indebtedness, or such issuance or redemption of
preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter reference period. In addition, for purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date,
7
<PAGE>
shall be excluded, but only to the extent that the obligations giving rise to
such Fixed Charges will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A1 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guarantors" means (i) each domestic Subsidiary of the Company on
the Issue Date and (ii) any other subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"Harvard Notes" means notes of the Company which (i) are pari passu
in right of payment with the Notes, (ii) mature one year following the final
maturity date of the Notes, (iii) are on terms, including covenants, no more
restrictive than those contained in the Notes and (iv) bear non-default interest
at a rate not in excess of 25% per annum in cash.
"Harvard Warrant" means the warrant to purchase up to 6.0% of the
common stock of the Company held by Harvard Private Capital Holdings, Inc. on
the Issue Date, (and including common stock of the Company issuable upon
exercise thereof pursuant to the terms of such warrant as in effect on the Issue
Date).
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
8
<PAGE>
"IAI Global Note" means the global note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depository or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money (whether
or not borrowed by such Person) or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, excepting from the foregoing any such
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07 hereof.
"Issue Date" means the closing date for the sale and original
issuance of the Notes under this Indenture.
9
<PAGE>
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Notes" means subordinated promissory notes required to
be issued to members of management of the Company pursuant to the Shareholder's
Agreement which are subordinated to the Notes on the terms set forth in Exhibit
G hereto, contain no covenants or events of default (other than with respect to
payments thereon which do not violate this Indenture and certain bankruptcy
events), and bear interest at the rate specified in the Shareholder's Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than debt under the New Credit Facility)
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for
10
<PAGE>
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"New Credit Facility" means that certain Amended and Restated Loan
Agreement dated as of March 23, 1998 among the Company, certain foreign
subsidiaries of the Company, the lenders and other parties thereto from time to
time and NBD Bank, as Agent, together with all related documents executed or
delivered pursuant thereto at any time (including, without limitation, all
mortgages, guarantees, security agreements and all other collateral and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder provided that such increase in borrowings is
within the definition of Permitted Debt or is otherwise permitted under Section
4.07 hereof) or adding Subsidiaries as additional borrowers or guarantors
thereunder in accordance with the terms of this Indenture) all or any portion of
the Indebtedness and other Obligations under such agreement or agreements or any
successor or replacement agreement or agreements, and whether by the same or any
other agent, lender or group of lenders.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender, (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity, and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, premium, if any, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
11
<PAGE>
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" means any Broker-Dealer registered under
the Exchange Act that exchanges Series A Notes for Exchange Notes pursuant to
the Exchange Offer and is required to deliver a prospectus in connection with a
resale of such Exchange Notes, as contemplated by the Registration Rights
Agreement.
"Permitted Business" means the business conducted by the Company and
its Restricted Subsidiaries on the Issue Date and businesses reasonably related
thereto.
"Permitted Investments" means (a) any Investment in the Company or
in an 80% Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any 80% Restricted Subsidiary
of the Company in a Person, if as a result of such investment (i) such Person
becomes an 80% Restricted Subsidiary of the Company or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or an 80%
Restricted Subsidiary of the Company; (d) any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof; (e) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; and (f) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company
or debt securities that are subordinated to all Senior Indebtedness (and any
debt securities issued in exchange for Senior Indebtedness) to substantially the
same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness pursuant to this Indenture.
"Permitted Liens" means (i) Liens on assets of the Company or any of
the Guarantors securing Senior Indebtedness under the New Credit Facility which
Indebtedness was permitted by the terms of this Indenture to be incurred, and
Liens on assets of Restricted Subsidiaries that are not Guarantors securing
Indebtedness under the New Credit Facility which Indebtedness was permitted by
the terms of this Indenture to be incurred; (ii) Liens in favor of the Company;
(iii) Liens on property of a Person existing at the time such Person is merged
into or
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<PAGE>
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (v) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of the second
paragraph of Section 4.09 hereof covering only the assets acquired with such
Indebtedness; (vi) Liens existing on the date of this Indenture; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (viii) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations that do
not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Subsidiary; (ix) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens on assets of the
Company securing Senior Indebtedness of the Company that was permitted to be
incurred by the terms of this Indenture and Liens on assets of a Guarantor
securing Senior Indebtedness of such Guarantor which Indebtedness was permitted
to be incurred by the terms of this Indenture; and (xi) Liens on assets of
Restricted Subsidiaries securing Indebtedness which is not subordinated to any
other Indebtedness of such Restricted Subsidiary and which is permitted to be
incurred under this Indenture.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who
13
<PAGE>
is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Permitted Transferees" means (i) the heirs, executors,
administrators, personal representative of the estate of, testamentary trustees,
legatees or beneficiaries of John H. Welker and (ii) a trust, the vested
beneficiaries of which, or a corporation or partnership, the stockholders or
general or limited partners of which, include only John H. Welker or his spouse
or lineal descendants.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Public Offering" means an underwritten public offering of common
stock (other than Disqualified Stock) of the Company, pursuant to an effective
registration statement filed with the Commission in accordance with the
Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 23, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or a Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent Global Note in
the form of Exhibit A2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note (less the
principal amount transferred out of the Regulation S Temporary Global Note by
beneficial owners who acquired an interest therein during the Restricted Period
pursuant to another exemption from registration under the Securities Act and who
will take delivery of a beneficial ownership interest in a 144A Global Note or
an IAI Global Note bearing a Private Placement Legend, all as contemplated by
Section 2.06(b)(ii) hereof) upon expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary Global Note in
the form of Exhibit A2 hereto bearing the Global Note Legend, the Private
Placement Legend and the Regulation S Temporary Global Note Legend and deposited
with or on behalf of and registered in
14
<PAGE>
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.
"Regulation S Temporary Global Note Legend" means the legend set forth
in Section 2.06(g)(iii) to be placed on all Regulation S Temporary Global Notes
issued under this Indenture.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S, which shall be terminated for purposes of this Indenture pursuant
to the procedures described in Section 2.01 hereof.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means (i) all Indebtedness of the Company or
any Guarantor outstanding under the New Credit Facility and all Hedging
Obligations with respect thereto, and in all cases whether now outstanding or
hereafter created, assumed or incurred and including, without limitation,
interest accruing subsequent to the filing of a petition in bankruptcy
15
<PAGE>
at the rate provided in the relevant document, whether or not an allowed claim,
(ii) any other Indebtedness (other than Harvard Notes and Management Notes)
permitted to be incurred by the Company or any Guarantor under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or any Guarantor's Subsidiary Guarantee of the Notes and
(iii) all Obligations with respect to the foregoing. Notwithstanding anything to
the contrary in the foregoing, Senior Indebtedness shall not include (w) any
liability for federal, state, local or other taxes owed or owing by the Company
or any of its Subsidiaries, (x) any Indebtedness of the Company or any of its
Subsidiaries to any Subsidiary or other Affiliate, (y) any trade payables or (z)
any Indebtedness that is incurred in violation of this Indenture.
"Shareholders' Agreement" means the Amended and Restated Stock
Transfer Agreement dated December 28, 1995 among the Company, John H. Welker and
the other shareholders party thereto, as in effect on the Issue Date.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Restricted Subsidiary" means any Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
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"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under Section 4.09 hereof,
the Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under Section 4.09 hereof, calculated
on a pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period and (ii) no Default or Event of Default would be
in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
Section 1.02. Other Definitions
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction".....................4.11
"Asset Sale Offer"..........................3.09
"Authentication Order"......................2.02
"Change of Control Offer"...................4.15
"Change of Control Payment".................4.15
"Change of Control Payment Date"............4.15
"Covenant Defeasance".......................8.03
"DTC".......................................2.03
"Event of Default"..........................6.01
"Excess Proceeds"...........................4.10
"incur".....................................4.09
"Legal Defeasance"..........................8.02
"Offer Amount"..............................3.09
"Offer Period"..............................3.09
"Paying Agent"..............................2.03
"Payment Default"...........................6.01
"Permitted Debt"............................4.09
"Purchase Date".............................3.09
"Registrar".................................2.03
"Restricted Payments".......................4.07
</TABLE>
Section 1.03. Trust Indenture Act Definitions. Whenever this Indenture refers
to a provision of the TIA, the provision is incorporated by reference in and
made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
18
<PAGE>
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the Company
and the Guarantors, respectively, and any successor obligor upon the Notes and
the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction
Unless the context otherwise requires:
(1) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(2) words in the singular include the plural, and in the
plural include the singular;
(3) provisions apply to successive events and transactions;
and
(4) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement
of successor sections or rules adopted by the SEC from
time to time.
ARTICLE II.
THE NOTES
Section 2.01. Form and Dating
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
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(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A1 or A2 attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the Depositary or the nominee of
the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Cedel Bank, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall be terminated upon
the receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note or an IAI Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in Regulation S Temporary Global Note
shall be exchanged for beneficial interests in Regulation S Permanent Global
Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in Regulation S Temporary Global Notes and Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel
Bank.
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Section 2.02. Execution and Authentication
Two duly authorized Officers shall sign the Notes for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue on
the Issue Date up to $115,000,000 aggregate principal amount of Notes.
Additional amounts may be issued under this Indenture after the Issue Date in
one or more series from time to time, subject to the limitations set forth under
Section 4.09 hereof, but the aggregate principal amount of Notes outstanding at
any time may not exceed $215,000,000 except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
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Section 2.04. Paying Agent to Hold Money in Trust
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Notes be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global
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Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Regulation S Temporary Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. Except as
may be required in connection with the IAI Global Note, no written orders
or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Notes prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal
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delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act,
the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Permanent Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal or otherwise that it
is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration
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Rights Agreement; or
(D) the Registrar and Trustee receive the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar
and Trustee to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the
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certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in and Opinion of Counsel required by, item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest
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in the Regulation S Temporary Global Note may not be exchanged for a
Definitive Note or transferred to a Person who takes delivery thereof in
the form of a Definitive Note prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the
case of a transfer pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. Notwithstanding 2.06(c)(i) hereof, a holder of a
beneficial interest in a Restricted Global Note may exchange such
beneficial interest for an Unrestricted Definitive Note or may transfer
such beneficial interest to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal or otherwise that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar and Trustee receive the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not
bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), an Opinion of
Counsel in form reasonably acceptable to the Registrar and Trustee to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer
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contained herein and in the Private Placement Legend are no longer required
in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iv) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the Persons
in whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iv)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set
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forth in Exhibit B hereto, including the certifications in and Opinion
of Counsel required by, item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, and in the case of
clause (B) above, the 144A Global Note, in the case of clause (C) above,
the Regulation S Global Note, and in all of the cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
or otherwise that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar and Trustee receive the following:
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(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such
Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), an Opinion of
Counsel in form reasonably acceptable to the Registrar and Trustee to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
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(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
or otherwise that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar and Trustee receive the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications
in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted
Definitive Note, a
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certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), an Opinion of
Counsel in form reasonably acceptable to the Registrar and Trustee to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Registrar
shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance
with the Registration Rights Agreement, the Company shall issue and, upon
receipt of an Authentication Order in accordance with Section 2.02, the Trustee
shall authenticate (i) one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that certify in
the applicable Letters of Transmittal that (x) they are not broker-dealers, (y)
they are not participating in a distribution of the Exchange Notes and (z) they
are not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER: REPRESENTS THAT (1) IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER"
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(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) NOT A U.S.
PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
NOTE EVIDENCED HEREBY EXCEPT TO (A) THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO FIRST TRUST NATIONAL ASSOCIATION, AS TRUSTEE
(OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST TRUST NATIONAL ASSOCIATION,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
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"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF NUMATICS, INCORPORATED."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer
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<PAGE>
tax or similar governmental charge payable in connection therewith (other
than any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and
9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
interest payment date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
(ix) After the Exchange Offer, if there is any subsequent exchange
permitted by this Indenture of a beneficial interest in a Restricted Global
Note or of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, or transfer to a Person taking a beneficial
interest in an Unrestricted Global Note in accordance with this Indenture,
then such beneficial interest may in each case be represented by a
beneficial interest in any Unrestricted Global Note representing the
Exchange Notes.
Section 2.07. Replacement Notes
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a
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replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably
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acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE III.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata
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basis, by lot or in accordance with any other method the Trustee considers fair
and appropriate. In the event of partial redemption by lot, the particular Notes
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to
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the Trustee, at least 45 days prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption shall become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to April 1, 2003. Thereafter, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below (subject to the right of
Holders of record on a record date to receive interest due on an interest
payment date that is on or prior to such redemption date) plus accrued and
unpaid interest and Liquidated Damages thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on April 1 of
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the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003......................................... 104.8125%
2004......................................... 103.2083%
2005......................................... 101.6042%
2006 and thereafter.......................... 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to April 1, 2001, the
Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes originally issued under this Indenture at a redemption
price of 109.625% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption date, with
the net cash proceeds of one or more public offerings of common stock of the
Company; provided that at least 65% of the aggregate principal amount of Notes
remain outstanding immediately after the occurrence of such redemption
(excluding the Notes held by the Company and its Subsidiaries); and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such Public Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all
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instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall
state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case
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may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE IV.
COVENANTS
Section 4.01. Payment of Notes
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.02. Maintenance of Office or Agency
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may
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from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports
(a) For periods ending after December 31, 1997, whether or not required by
the rules and regulations of the SEC, so long as any Notes are outstanding, the
Company shall furnish to the Holders of Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the SEC on Forms 10-Q and 10-K if the Company were required to file such forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports, in each case, within the time
periods specified in the SEC's rules and regulations. In addition, following
consummation of the Exchange Offer, whether or not required by the rules and
regulations of the SEC, the Company shall file a copy of all such information
and reports with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. The Company shall at all times comply with
TIA (S) 314(a).
(b) For so long as any Notes remain outstanding, the Company and the
Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate
(a) The Company and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed,
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performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article IV or Article V hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
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Section 4.07. Restricted Payments
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or other
distributions payable to the Company or a Restricted Subsidiary of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Restricted Subsidiary of the
Company); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is pari
passu with or subordinated to the Notes (other than Notes), except a payment of
interest or principal at Stated Maturity; (iv) make any Restricted Investment;
or (v) make any payment of principal, premium or interest on or in respect of or
otherwise purchase, redeem, defease or otherwise acquire or retire for value any
Management Notes (all such payments and other actions set forth in clauses (i)
through (v) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event or Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii), (iv), (vii) and (viii) of the next succeeding paragraph),
is less than the sum, without duplication, of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the date of this
Indenture to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds
received by the Company since the date of this Indenture as a contribution to
its common equity capital or from the issue or sale of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or sale of
Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company), plus (iii)
to the extent that any
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Restricted Investment that was made after the date of this Indenture is sold for
cash or otherwise liquidated or repaid for cash (including through the
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary in
accordance with this Indenture), the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment plus (iv) 50% of
any cash dividends received by the Company or an 80% Restricted Subsidiary that
is a Guarantor after the date of this Indenture from an Unrestricted Subsidiary
of the Company, to the extent that such dividends were not otherwise included in
Consolidated Net Income of the Company for such period, plus (v) to the extent
that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary
after the date of this Indenture, the lesser of (A) the fair market value of the
Company's Investment in such Subsidiary as of the date of such redesignation or
(B) such fair market value as of the date on which such Subsidiary was
originally designated as an Unrestricted Subsidiary, plus (vi) $2.5 million.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture: (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any member of the Company's (or
any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement in effect as of the date
of this Indenture; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$5.0 million in the aggregate since the Issue Date; (vi) the repurchase of the
Harvard Warrant required pursuant to agreements in effect on the Issue Date (as
in effect on such date), provided that the consideration paid by the Company
shall consist solely of Harvard Notes; (vii) the purchase of common stock held
by management of the Company required pursuant to the Shareholders' Agreement,
provided that the consideration paid by the Company shall consist solely of
Management Notes; and (viii) the payment on or after the Issue Date of dividends
in respect of the Company's common stock in an aggregate amount not exceeding
$6.0 million.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments
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shall be deemed to constitute Investments in an amount equal to the fair market
value of such Investments at the time of such designation. Such designation
shall only be permitted if such Restricted Payment would be permitted at such
time if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors whose resolution with respect thereto shall be delivered
to the Trustee, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such fair market value exceeds $1.0 million. Not later than the date
of making any Restricted Payment (except with respect to a payment on a
Management Note, for which 15 days notice shall be required), the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this Section 4.07 were computed, together with a copy of any
fairness opinion or appraisal required by this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions shall not apply to encumbrances or restrictions existing under or
by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) this Indenture and the Notes, (c) applicable law, (d) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of this Indenture to be incurred, (e) customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (f) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (g) any
agreement for the sale of a Restricted Subsidiary that restricts distributions
by that Restricted Subsidiary pending its sale, (h) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive, taken
as a whole, than those contained in the agreements governing the Indebtedness
being refinanced, (i) Credit Facilities provided that the restrictions contained
therein are no more restrictive, taken as a whole, with respect to such
dividends and other payments than those
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contained in Credit Facilities as in effect on the date of this Indenture, (j)
agreements for the sale of assets that restrict the transfer of such assets
pending such sale (k) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business, (l) Liens securing Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described in Section 4.12 hereof that
limits the right of the debtor to dispose of the assets securing such
Indebtedness, (m) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business and (n) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that
the Company shall not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to issue any shares of preferred stock; provided, however, that
the Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and any Guarantor may incur Indebtedness or issue preferred
stock if the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock or preferred stock is issued would have been at least
2.0 to 1, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock or preferred stock had been issued, as the
case may be, at the beginning of such four-quarter period.
The foregoing provisions shall not apply to the incurrence of any of
the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company and its Restricted Subsidiaries of
(A) revolving credit Indebtedness and letters of credit pursuant to Credit
Facilities; provided that the aggregate principal amount of all revolving
credit Indebtedness (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder) at any time outstanding under
all Credit Facilities pursuant to this clause (i) after giving effect to
such incurrence does not exceed an amount equal to the greater of (x) $35.0
million of such Indebtedness less the aggregate amount of all Net Proceeds
of Asset Sales applied to permanently reduce commitments with respect to
Credit Facilities pursuant to Section 4.10 hereof and (y) the amount of the
Borrowing Base of the Company as of the date of incurrence; and (B) term
Indebtedness under Credit Facilities, provided that the aggregate principal
amount of all term Indebtedness outstanding under all Credit Facilities
after giving effect to such incurrence does not exceed $35.0 million less
the aggregate amount of all Net Proceeds of Asset Sales that have been
applied since the date of this Indenture to repay term Indebtedness under a
Credit Facility pursuant to Section 4.10 hereof; provided that the
aggregate principal amount of all Indebtedness incurred under all Credit
Facilities (with letters of credit being deemed to have a principal amount
equal to the maximum potential
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liability of the Company and its Restricted Subsidiaries thereunder) by any
Restricted Subsidiary that is not a Guarantor pursuant to this clause (i)
after giving effect to such incurrence does not exceed an amount equal to
the greater of (x) the amount of the Borrowing Base of such Restricted
Subsidiary at the time of such incurrence and (y) the amount which, when
combined with all outstanding Indebtedness incurred under Credit Facilities
by Restricted Subsidiaries that are not Guarantors at or prior to the time
of such incurrence does not exceed $35.0 million:
(ii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by
the Notes (other than any Additional Notes) and the Exchange Notes (other
than any Additional Notes) and the incurrence by the Guarantors of
Indebtedness represented by the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal
amount not to exceed $5.0 million at any time outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that is either the Existing
Indebtedness or was permitted by this Indenture to be incurred under the
first paragraph hereof or clauses (iii), (iv), (v) or (vii) of this
paragraph;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its 80% Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes (it being understood that payments under intercompany
Indebtedness shall be permitted as long as no Default has occurred and is
continuing), and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or an 80% Restricted Subsidiary thereof and (B) any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or an 80% Restricted Subsidiary thereof shall be deemed,
in each case, to constitute an incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (vi);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition by the
Company or a Restricted Subsidiary of assets or a new Restricted
Subsidiary; provided that such Indebtedness was
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incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or a Restricted Subsidiary and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or a Restricted Subsidiary; and provided further that the
principal amount of such Indebtedness does not exceed $5.0 million at any
time outstanding.
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging (i) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding; (ii) the value of foreign currencies purchased or received by
the Company in the ordinary course of business, or (iii) commodities
purchased in the ordinary course of business for use in a Permitted
Business and not for speculation;
(ix) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Section 4.09;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (x), not to exceed $5.0
million;
(xi) the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, provided, however, that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi); and
(xii) the issuance of Harvard Notes and Management Notes required to
be issued in accordance with agreements as in effect on the Issue Date;
provided that such Harvard Notes and Management Notes are issued in
accordance with clauses (vi) and (vii), respectively, of the second
paragraph of Section 4.07 hereof.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09. Accrual of interest, accretion
or amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock shall not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this Section
4.09; provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
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Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Restricted Subsidiary from further
liability and (y) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds (or an amount of cash equal
thereto), at its option, (a) to permanently repay (and, if applied to revolving
credit loans, reduce the commitments under) Senior Indebtedness of the Company
or a Guarantor or (b) to the acquisition of a majority of the assets of, or a
majority of the Voting Stock of, another Permitted Business, the making of a
capital expenditure or the acquisition of other long-term assets that are used
or useful in a Permitted Business. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first sentence of this paragraph shall be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall be required to make an offer to all Holders of Notes
and all holders of other Indebtedness containing provisions similar to those set
forth in this Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other Indebtedness that may be purchased out
of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in this Indenture and such other Indebtedness. To the
extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
such other Indebtedness tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
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Section 4.11. Transactions with Affiliates
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such Restricted
Subsidiary, (ii) transactions between or among the Company and/or its Restricted
Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company, (iv) transactions pursuant to agreements in
effect on the Issue Date (as in effect on such date), and (v) Restricted
Payments (other than Restricted Investments) that are permitted by Section 4.07
hereof.
Section 4.12. Liens
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness or trade payables on any assets now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens, unless all payments due under
this Indenture and the Notes are secured on an equal and ratable basis with the
Indebtedness so secured until such time as such is no longer secured by a Lien;
provided that if such Indebtedness is by its terms expressly subordinated to the
Notes or any Subsidiary Guarantee, the Lien securing such Indebtedness shall be
subordinate and junior to the Lien securing the Notes and the Subsidiary
Guarantees with the same relative priority as such subordinate or junior
Indebtedness shall have with respect to the Notes and the Subsidiary Guarantees.
Section 4.13. Line of Business
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Subsidiaries taken as a
whole.
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Section 4.14. Corporate Existence
Subject to Article V hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to purchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within ten days following any Change of
Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by this
Indenture and described in such notice. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof.
(c) Prior to complying with the provisions of this covenant, but in any
event within 90 days following a Change of Control, if agreements governing
Senior Indebtedness prohibit the purchase of the Notes, the Company shall either
repay all outstanding Senior Indebtedness or obtain the requisite consents, if
any, under all agreements governing outstanding Senior
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Indebtedness to permit the repurchase of Notes required by this Section 4.15 if
such agreements prohibit such purchase. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change in Control Payment Date. After the Change in Control Payment Date, the
Change of Control provisions described in this Section 4.15 shall be applicable
whether or not any other provisions of this Indenture are applicable.
(d) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.16. No Senior Subordinated Debt
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Indebtedness and senior in any respect in right of payment to the Notes and (ii)
no Guarantor shall incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness of such Guarantor that is subordinate or junior in
right of payment to any Indebtedness of such Guarantor and senior in any respect
in right of payment to the Subsidiary Guarantee of such Guarantor.
Section 4.17. Limitation on Issuances and Sales of Equity Interests in
Restricted Subsidiaries
The Company (i) shall not, and shall not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Restricted Subsidiary of the Company to any
Person (other than the Company or a Restricted Subsidiary of the Company),
unless (a) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Restricted Subsidiary and (b) the cash Net Proceeds
from such transfer, conveyance, sale, lease or other disposition are applied in
accordance with Section 4.10 hereof, and (ii) shall not permit any Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying shares
and issuances of preferred stock in accordance with Section 4.09 hereof) to any
Person other than to the Company or a Restricted Subsidiary of the Company.
Section 4.18. Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
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Section 4.19. Additional Subsidiary Guarantees
(a) The Company shall cause each of its existing and future domestic
Restricted Subsidiaries and each other Restricted Subsidiary of the Company that
guarantees debt of the Company or other domestic Restricted Subsidiary of the
Company to guarantee the Notes in accordance with the terms of this Indenture
and shall not permit any of its Subsidiaries that is not a Guarantor to incur,
guarantee or secure through the granting of Liens the payment of any
Indebtedness of the Company or any Guarantor, and
(b) The Company shall not, and shall not permit any of its Subsidiaries to,
pledge any intercompany notes representing obligations of any of its
Subsidiaries, to secure the payment of any Indebtedness of the Company or any
Guarantor, in each case unless such Subsidiary, the Company and the Trustee
execute and deliver a supplemental indenture evidencing such Subsidiary's
Guarantee (providing for the unconditional guarantee by such Subsidiary, on a
senior subordinated basis, of the Notes).
ARTICLE V.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the
Registration Rights Agreement, the Notes and this Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company, the Company or the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) shall have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charged
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof.
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Section 5.02. Successor Corporation Substituted
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default
Each of the following constitutes an "Event of Default":
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by
Article X hereof);
(b) default in payment when due of the principal of or premium, if any, on
the Notes (whether or not prohibited by Article X hereof);
(c) failure by the Company or any of its Restricted Subsidiaries to comply
with the provisions described under Sections 4.07, 4.09, or 4.15;
(d) failure by the Company or any of its Restricted Subsidiaries for 60
days after notice to comply with any of its other agreements in this Indenture
or the Notes;
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date hereof, which default (a) is caused by a failure to pay principal
of or premium, if any, or interest on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its stated maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(f) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments
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aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days;
(g) except as permitted herein, any Subsidiary Guarantee shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee;
(h) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole would constitute a Significant Subsidiary,
pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or
(iii) orders the liquidation of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" for the foregoing purposes means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
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Section 6.02. Acceleration
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01
hereof occurs with respect to the Company, any of its Significant Restricted
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Restricted Subsidiary, all outstanding Notes
shall be due and payable immediately without further action or notice. The
Holders of the Notes may not enforce this Indenture or the Notes except as
provided herein. Except as otherwise provided in this Indenture, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
If an Event of Default occurs on or after April 1, 2003 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to April 1, 2003
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on April 1 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount to the date of payment that would otherwise be due but for the provisions
of this sentence):
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998...............................................109.625%
1999...............................................108.663%
2000...............................................107.700%
2001...............................................106.738%
2002...............................................105.775%
</TABLE>
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
The Company shall deliver to the Trustee annually a statement
regarding compliance with the terms hereof, and the Company shall upon becoming
aware of any Default of Event of Default, deliver to the Trustee a statement
specifying such Default or Event of Default.
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Section 6.03. Other Remedies
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority
Subject to Article VII hereof, Holders of a majority in principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.
Section 6.06. Limitation on Suits
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the
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Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled
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to receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE VII.
TRUSTEE
Section 7.01. Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
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(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it
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takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes; it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture; it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee; and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
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Section 7.06. Reports by Trustee to Holders of the Notes
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
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When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and
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duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Holders of the Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
provided all sums owing to the Trustee hereunder have been paid and subject to
the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article VIII.
Section 8.02. Legal Defeasance and Discharge
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to
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have paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages, if any,
on such Notes when such payments are due, (b) the Company's obligations with
respect to such Notes under Article II and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article VIII. Subject to
compliance with this Article VIII, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19, and 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of
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the Holders, cash in United States dollars, non-callable Government Securities,
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on the
outstanding Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied against such deposit) or insofar as
Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an opinion of counsel
to the effect that, assuming no intervening bankruptcy of the Company between
the date of deposit and the 91st day following the deposit and assuming no
Holder of Notes is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;
(g) the Company shall have delivered to the Trustee an officers'
certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an
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Opinion of Counsel, each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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Section 8.07. Reinstatement
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantees or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article II hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company or a
Guarantor pursuant to Article V or Article X hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
(f) to allow any Guarantor to execute a supplemental indenture and/or a
Subsidiary Guarantee with respect to the Notes; or
(g) to provide for the issuance of Additional Notes in accordance with the
provisions of this Indenture on the Issue Date.
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Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof), the Subsidiary Guarantees and the Notes with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes). Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or
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the Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes, except as
provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note except as provided
above with respect to Section 3.09, 4.10 and 4.15 hereof;
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(i) release any Guarantor from any of its obligations under its Subsidiary
Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
Notwithstanding anything to the contrary contained herein, any
amendment to the provisions of Article X of this Indenture shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
the Holders of Notes.
Section 9.03. Compliance with Trust Indenture Act
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if
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notation of the consent is not made on any Note. However, any such Holder of a
Note or subsequent Holder of a Note may revoke the consent as to its Note if the
Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
Section 9.05. Notation on or Exchange of Notes
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article IX if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE X.
SUBORDINATION
Section 10.01. Agreement to Subordinate
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article X, to the prior payment in
full of all Senior Indebtedness (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Indebtedness.
Section 10.02. Liquidation; Dissolution; Bankruptcy
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all Obligations due in respect of
such Senior Indebtedness (including
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interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Indebtedness) before Holders of the Notes shall be
entitled to receive any payment with respect to the Notes (except that Holders
may receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof); and
(2) until all Obligations with respect to Senior Indebtedness (as
provided in subsection (1) above) are paid in full in cash or Cash Equivalents,
any distribution to which Holders would be entitled but for this Article X shall
be made to holders of Senior Indebtedness (except that Holders of Notes may
receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof), as their interests may appear.
Section 10.03. Default on Designated Senior Indebtedness
The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (i) Permitted Junior Securities and (ii) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Designated Senior
Indebtedness have been paid in full if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Indebtedness occurs and is continuing
beyond any applicable grace period in the agreement, indenture or other
document governing such Designated Senior Indebtedness; or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of the
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Person who may give it pursuant to Section 10.11 hereof. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section unless and until at
least 360 days shall have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default shall have been waived for a
period of not less than 90 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
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(2) in the case of a default referred to in Section 10.03(ii) hereof,
179 days pass after notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated or a Payment Default has not occurred,
if this Article X otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.04. Acceleration of Notes
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
Section 10.05. When Distribution Must Be Paid Over
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.03 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Indebtedness as their interests
may appear or their Representative under the indenture or other agreement (if
any) pursuant to which Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article X, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
X, except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
Section 10.06. Notice by Company
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article X, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article X.
Section 10.07. Subrogation
After all Senior Indebtedness is paid in full and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu
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with the Notes) to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holders of Notes have been applied to the payment of
Senior Indebtedness. A distribution made under this Article X to holders of
Senior Indebtedness that otherwise would have been made to Holders of Notes is
not, as between the Company and Holders, a payment by the Company on the Notes.
Section 10.08. Relative Rights
This Article X defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article X to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.09. Subordination May Not Be Impaired by Company
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article X, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article X.
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Section 10.11. Rights of Trustee and Paying Agent
Notwithstanding the provisions of this Article X or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article X. Only the Company or a
Representative may give the notice. Nothing in this Article X shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 10.12. Authorization to Effect Subordination
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article X, and appoints the Trustee to act as such Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the representatives of the Designated Senior Indebtedness are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
Section 10.13. Amendments
The provisions of this Article X shall not be amended or modified
without the written consent of the holders of all Senior Indebtedness.
ARTICLE XI.
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees
Subject to this Article XI, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or
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performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article VI
hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article VI hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Subsidiary Guarantee.
Section 11.02. Subordination of Subsidiary Guarantees
The Obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Article XI shall be junior and subordinated to the Senior
Indebtedness of such Guarantor on the same basis as the Notes are junior and
subordinated to Senior Indebtedness of the Company. For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments by any of the Guarantors only at such times as they may
receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article X hereof.
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Section 11.03. Limitation on Guarantor Liability
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee and not constitute any improper
distribution under, or be otherwise prohibited by, applicable state law. To
effectuate the foregoing intention, the Trustee, the Holders and the Guarantors
hereby irrevocably agree that the obligations of any such Guarantor under its
Subsidiary Guarantee and this Article XI shall be limited to the maximum amount
as will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Guarantor and all other matters that are relevant
under such laws, and, to the extent relevant, after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article XI, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance or being improper or prohibited under applicable state law.
Section 11.04. Execution and Delivery of Subsidiary Guarantees
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President, one of its Vice Presidents or Treasurer or Chief Financial Officer.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.19 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Subsidiary Guarantees in accordance with Section 4.19 hereof
and this Article XI, to the extent applicable.
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Section 11.05. Guarantors May Consolidate, etc., on Certain Terms
Subject to Section 11.06 hereof, no Guarantor may consolidate with or
merge with or into (whether or not such Guarantor is the surviving Person)
another Corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(a) subject to this Section 11.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes, this
Indenture, the Registration Rights Agreement and the Subsidiary Guarantees;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted, by virtue of the Company's pro forma
Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
Section 11.06. Releases Following Sale of Assets
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and relieved
of any obligations under its Subsidiary Guarantee. The obligation to apply the
Net Proceeds of such sale or other disposition in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof,
shall continue and be enforceable. Upon delivery by the Company to the Trustee
of an Officers' Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance with the
applicable provisions of this
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Indenture, including without limitation Section 4.10 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article XI.
ARTICLE XII.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
Section 12.02. Notices
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address
If to the Company and/or any Guarantor:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
Telecopier No.: (248) 887-2142
Attention: President
With a copy to:
Miller, Canfield, Paddock and Stone, P.L. C.
150 West Jefferson, Suite 2500
Detroit, Michigan 48226
Telecopier No. (313) 496-8451
Attention: Kent E. Shafer
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If to the Trustee:
First Trust National Association
Buhl Building, Suite 740
535 Griswold Street
Detroit, MI 48226
Telecopier No.: (313) 963-9428
Attention: James D. Khami
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
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(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 12.05. Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 12.06. Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or such Guarantor under the Notes,
the Subsidiary Guarantees or this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
Section 12.08. Governing Law
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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Section 12.09. No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10. Successors
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 12.11. Severability
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Counterpart Originals
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 12.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of March 23, 1998
NUMATICS, INCORPORATED
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: President
NUMATION, INC.
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: Chairman
NUMATECH, INC.
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: Chairman
MICRO-FILTRATION, INC.
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: Chairman
ULTRA AIR PRODUCTS, INC.
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: Chairman
MICROSMITH, INC.
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: Chairman
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I.A.E. INCORPORATED
By: /s/ John H. Welker
------------------------------------
Name: John H. Welker
Title: President
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<PAGE>
FIRST TRUST NATIONAL ASSOCIATION, as
Trustee
By: /s/ James D. Khami
------------------------------------
Name: James D. Khami
Title: Vice President
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EXHIBIT A1
(Face of 144A/IAI Global Notes)
===============================================================================
CUSIP __________
9-5/8% Senior Subordinated Notes due 2008
No. $
NUMATICS, INCORPORATED
promises to pay to ____________________
or registered assigns,
the principal sum of $
on April 1, 2008.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated: March ___, 1998
NUMATICS, INCORPORATED
By: ______________________________
Name:
Title:
NUMATICS, INCORPORATED
By: ______________________________
Name:
Title:
This is one of the 9-5/8% Senior
Subordinated Notes due 2008 referred to
in the within-mentioned Indenture:
A1-1
<PAGE>
First Trust National Association,
as Trustee
By: ________________________________
===============================================================================
A1-2
<PAGE>
(Back of 144A/IAI Global Note)
9-5/8% Senior Subordinated Notes due 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF NUMATICS, INCORPORATED/1/
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN./2/
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER:
REPRESENTS THAT (1) IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS
- -----------------------
/1/ This paragraph should be included only if the Note is issued in global
form.
/2/ This paragraph should be included only if the Note is issued in global
form and The Depository Trust Company is acting as the Depositary under
the Indenture.
A1-3
<PAGE>
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT
IT WILL NOT RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY EXCEPT TO (A)
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO FIRST TRUST
NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER IS PURSUANT
TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO FIRST TRUST NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT./3/
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Numatics, Incorporated, a Michigan corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-5/8% per annum from March 23, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest
- -----------------------
/3/ This legend should be removed upon the exchange of Notes for Exchange
Notes in the Exchange Offer or upon the registration of the Notes
pursuant to the terms of the Registration Rights Agreement.
A1-4
<PAGE>
and Liquidated Damages semi-annually on April 1 and October 1 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be October 1, 1998. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. PAYING AGENT AND REGISTRAR. Initially, First Trust National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 23, 1998 ("Indenture") between the Company, the Guarantors (as
defined therein) and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are obligations of the
Company limited to $215,000,000 million in aggregate principal amount.
A1-5
<PAGE>
5. OPTIONAL REDEMPTION
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to April 1, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus (subject to the right of Holders of record on a record date
to receive interest due on an Interest Payment Date that is on or prior to such
redemption date) accrued and unpaid interest and Liquidated Damages thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003............................................ 104.8125%
2004............................................ 103.2083%
2005............................................ 101.6042%
2006 and thereafter............................. 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to April 1, 2001,
the Company may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes originally issued under the Indenture at a redemption
price of 109.625% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption date, with
the net cash proceeds of one or more public offerings of common stock of the
Company; provided that at least 65% of the aggregate principal amount of Notes
remain outstanding immediately after the occurrence of such redemption
(excluding the Notes held by the Company and its Subsidiaries); and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such public offering.
6. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the
Company shall commence an offer to all Holders of Notes (an "Asset Sale Offer")
pursuant to Section 3.09 of
A1-6
<PAGE>
the Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency
for general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. SUBORDINATION. The Notes are subordinated in right of payment, to
the extent and in the manner provided in Article X of the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Indebtedness. To
the extent provided in the Indenture, Senior Indebtedness must be paid before
the Notes may be paid. The Company agrees and each Holder of Notes by accepting
a Note consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give its consent.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Subsidiary Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes voting as a single class, and any existing
default or compliance with any provision of the
A1-7
<PAGE>
Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
voting as a single class. Without the consent of any Holder of a Note, the
Indenture, the Subsidiary Guarantees or the Notes may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's or Guarantor's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act, or to allow
any Guarantor to execute a supplemental indenture to the Indenture and/or a
Subsidiary Guarantee with respect to the Notes.
13. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any of its Restricted Subsidiaries to comply with Section
4.07, 4.09 or 4.15 of the Indenture; (iv) failure by the Company or any of its
Restricted Subsidiaries for 60 days after notice to comply with certain other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company or any of its Restricted
Subsidiaries which default results in the acceleration of such Indebtedness
prior to its express maturity; (vi) certain final judgments for the payment of
money that remain undischarged for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor or any Person acting on its behalf shall deny or disaffirm its
obligations under such Guarantor's Subsidiary Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Except as otherwise provided in the Indenture, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
A1-8
<PAGE>
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of March 23, 1998, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
Attention: President
A1-9
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date: _______________
Your Signature: __________________________
(Sign exactly as your name appears on the
face of this Note)
Medallion Signature Guarantee.
A1-10
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: Your Signature:__________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No:___________________________
Medallion Signature Guarantee.
A1-11
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of Signature of
decrease in increase in this Global Note authorized
Principal Amount Principal Amount following such officer of
Date of of of decrease (or Trustee or
Exchange this Global Note this Global Note increase) Custodian
- -------- ---------------- ---------------- ------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
A1-12
<PAGE>
EXHIBIT A2
(Face of Regulation S [Temporary] [Permanent] Global Note)
===============================================================================
CINS_____
9-5/8% Senior Subordinated Notes due 2008
No.__ $
NUMATICS, INCORPORATED
promises to pay to __________________________________________
or registered assigns,
the principal sum of $
on April 1, 2008.
Interest Payment Dates: April 1, and October 1
Record Dates: March 15, and September 15
Dated: March ___, 1998
NUMATICS, INCORPORATED
By:
---------------------------
Name:
Title:
NUMATICS, INCORPORATED
By:
---------------------------
Name:
Title:
This is one of the 9-5/8% Senior Subordinated
Notes due 2008 referred to in the
within-mentioned Indenture:
First Trust National Association,
as Trustee
A2-1
<PAGE>
By:
----------------------
===============================================================================
A2-2
<PAGE>
(Back of Regulation S [Temporary] [Permanent] Global Note)
9-5/8% Senior Subordinated Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON./1/
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF NUMATICS, INCORPORATED./2/
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
- -----------------------
/1/ This paragraph should be included only if the Note is a Regulation S
Temporary Global Note.
/2/ This paragraph should be included only if the Note is issued in global
form.
A2-3
<PAGE>
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN./3/
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER:
REPRESENTS THAT (1) IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT
IT WILL NOT RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY EXCEPT TO (A)
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO FIRST TRUST
NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFER IS PURSUANT
TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO FIRST TRUST NATIONAL ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
- -----------------------
/3/ This paragraph should be included only if the Note is issued in global
form and the Depository Trust Company is acting as the Depository under
the Indenture.
A2-4
<PAGE>
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT./4/
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Numatics, Incorporated, a Michigan corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-5/8% per annum from March 23, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages semi-
annually on April 1 and October 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
[Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.]/5/
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
- ------------------------
/4/ This legend should be removed upon the exchange of Notes for Exchange Notes
in the Exchange Offer or upon the registration of the Notes pursuant to the
terms of the Registration Rights Agreement.
/5/ This paragraph should be included only if the Note is a Regulation S
Temporary Global Note.
A2-5
<PAGE>
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. Paying Agent and Registrar. Initially, First Trust National
Association, the Trustee under the Indenture, will act as Paying
Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of March 23, 1998 ("Indenture") between the Company, the
Guarantors (as defined therein) and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939,
as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are
subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are obligations of the
Company limited to $215,000,000 million in aggregate principal
amount.
5. Optional Redemption
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to April 1, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus (subject to the right of Holders of record on a record date
to receive interest due on an Interest Payment Date that is on or prior to such
redemption date) accrued and unpaid interest and Liquidated Damages thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003............................................ 104.8125%
2004............................................ 103.2083%
2005............................................ 101.6024%
2006 and thereafter............................. 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to April 1,
2001, the Company may on any one or more occasions redeem up to 35% of the
aggregate principal amount of Notes originally issued under the Indenture at a
redemption price of 109.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more public offerings of common stock of
the Company; provided that at least 65% of the aggregate principal amount of
Notes remain outstanding immediately after the occurrence of such redemption
(excluding the
A2-6
<PAGE>
Notes held by the Company and its Subsidiaries); and provided, further, that
such redemption shall occur within 45 days of the date of the closing of such
public offering.
6. Mandatory Redemption
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. Repurchase at Option of Holder
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the
Company shall commence an offer to all Holders of Notes (an "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Restricted
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes
A2-7
<PAGE>
and fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
[This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article II of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.]/6/
10. Subordination. The Notes are subordinated in right of payment,
to the extent and in the manner provided in Article X of the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Indebtedness. To
the extent provided in the Indenture, Senior Indebtedness must be paid before
the Notes may be paid. The Company agrees and each Holder of Notes by accepting
a Note consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give its consent.
11. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
13. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any of its Restricted Subsidiaries to comply with Section
4.07, 4.09 or 4.15 of the Indenture; (iv) failure by the Company or any of its
Restricted
- ----------------
/6/This paragraph should be included only if this Note is a Regulation S
Temporary Global Note.
A2-8
<PAGE>
Subsidiaries for 60 days after notice to comply with certain other agreements in
the Indenture or the Notes; (v) default under certain other agreements relating
to Indebtedness of the Company or any of its Restricted Subsidiaries which
default results in the acceleration of such Indebtedness prior to its express
maturity; (vi) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries;
and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor or any Person
acting on its behalf shall deny or disaffirm its obligations under such
Guarantor's Subsidiary Guarantee. If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Except as otherwise
provided in the Indenture, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
A2-9
<PAGE>
18. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of March 23, 1998, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
Attention: President
A2-10
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
--------------------- Your Signature:
----------------------
(Sign exactly as your name appears on the face of this Note)
Medallion Signature Guarantee.
A2-11
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
- --------------------------------------------------------------------------------
Date: Your Signature:
--------------- ---------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
---------------------
Medallion Signature Guarantee.
A2-12
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of of this
decrease in Amount of increase Global Note Signature of
Principal Amount in Principal Amount following such authorized officer
of of decrease (or of Trustee or
Date of Exchange this Global Note this Global Note increase) Custodian
---------------- ---------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-13
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
First Trust National Association
Buhl Building, Suite 740
535 Giswold Street
Detroit, Michigan 48226
Re: 9-5/8% Senior Subordinated Notes due 2008
-----------------------------------------
Reference is hereby made to the Indenture, dated as of March 23, 1998
(the "Indenture"), between Numatics, Incorporated, as issuer (the "Company"),
the Guarantors (as defined therein) and First Trust National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [] Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
B-1
<PAGE>
2. [] Check if Transferee will take delivery of a beneficial interest in a
Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture and
the Securities Act.
3. [] Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Definitive Note pursuant to any provision
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act which certification is supported by an
Opinion of Counsel provided by the Transferor or Transferee (a copy of which the
Transferor has attached to this certification);
or
(b) [] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than
B-2
<PAGE>
Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies
that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted Global
Note or Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such Transfer
is in compliance with the Securities Act. Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.
4. [] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [] Check if Transfer is pursuant to Rule 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [] Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
B-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
Dated:_____, ___
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [] a beneficial interest in the:
(i) [] 144A Global Note (CUSIP _________), or
(ii) [] Regulation S Global Note (CINS _________), or
(iii) [] IAI Global Note (CUSIP ________); or
(b) [] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [] a beneficial interest in the:
(i) [] 144A Global Note (CUSIP ________), or
(ii) [] Regulation S Global Note (CINS ________), or
(iii) [] IAI Global Note (CUSIP ________); or
(iv) [] Unrestricted Global Note (CUSIP ________); or
(b) [] a Restricted Definitive Note; or
(c) [] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
First Trust National Association
Buhl Building, Suite 740
535 Giswold Street
Detroit, Michigan 48226
Re: 9-5/8% Senior Subordinated Notes due 2008
-----------------------------------------
(CUSIP/CINS______________)
Reference is hereby made to the Indenture, dated as of March 23, 1998
(the "Indenture"), between Numatics, Incorporated, as issuer (the "Company"),
the Guarantors (as defined therein) and First Trust National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [] Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities
C-1
<PAGE>
Act and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b) [_] Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [_] Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes
(a) [_] Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
C-2
<PAGE>
be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Definitive Note and in the Indenture and the
Securities Act.
(b) [_] Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] "144A Global Note," "Regulation S Global Note," IAI Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
--------------------------
[Insert Name of Owner]
By:
------------------------
Name:
Title:
Dated: ________________, ____
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
First Trust National Association
Buhl Building, Suite 740
535 Giswold Street
Detroit, Michigan 48226
Re: 9-5/8% Senior Subordinated Notes due 2008
-----------------------------------------
Reference is hereby made to the Indenture, dated as of March 23, 1998
(the "Indenture"), between Numatics, Incorporated, as issuer (the "Company"),
the Guarantors (as defined therein) and First Trust National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note, we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in
D-1
<PAGE>
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter) (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant
to the exemption from registration provided by Rule 144 under the Securities Act
(if applicable) or in accordance with another exemption from the registration
requirements of the Securities Act, or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed transfer of the Notes or
beneficial interest therein pursuant to clause (c), (d) or (e) of the
immediately preceding paragraph,, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
-----------------------------------------
[Insert Name of Accredited Investor]
By:
-------------------------------
Name:
Title:
Dated: ,
------------------ ----
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 23, 1998 (the "Indenture") among
Numatics, Incorporated, the Guarantors listed on Schedule I thereto and First
Trust National Association, as trustee (the "Trustee"), (a) the due and punctual
payment of the principal of, premium, if any, and interest on the Notes (as
defined in the Indenture), whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and
the Indenture are expressly set forth in Article XI of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Note in accordance with the provisions of the Indenture.
NUMATION, INC.
By:
-----------------------------
Name:
Title:
NUMATECH, INC.
By:
-----------------------------
Name:
Title:
E-1
<PAGE>
MICRO-FILTRATION, INC.
By:
---------------------------------
Name:
Title:
ULTRA AIR PRODUCTS, INC.
By:
---------------------------------
Name:
Title:
MICROSMITH, INC.
By:
---------------------------------
Name:
Title:
I.A.E. INCORPORATED
By:
---------------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Numatics, Incorporated (or its permitted successor), a Delaware
corporation (the "Company"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and First Trust National Association, as
trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 23, 1998 providing for
the issuance of an aggregate principal amount of up to $215,000,000 of 9-5/8%
Senior Subordinated Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or
F-1
<PAGE>
otherwise, and interest on the overdue principal of and
interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay
the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any
provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency
or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands
whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes
and the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed
F-2
<PAGE>
hereby may be accelerated as provided in Article VI of the
Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article VI of the
Indenture, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Guarantors for the
purpose of this Subsidiary Guarantee.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Subsidiary
Guarantee.
(i) Pursuant to Section 11.03 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and, to the extent relevant, after
giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor
under Article XI of the Indenture, the Subsidiary Guarantee shall
not result in the obligations of such Guarantor under its
Subsidiary Guarantee constituting a fraudulent transfer or
conveyance or being improper or prohibited under applicable state
law.
3 Execution and Delivery. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms
(a) The Guaranteeing Subsidiary may not consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person formed by
or surviving any such consolidation or merger (if other than a
Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Subsidiary
Guarantee on the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in
form to the Trustee, of the Subsidiary
F-3
<PAGE>
Guarantee endorsed upon the Notes and the due and punctual performance
of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall succeed
to and be substituted for the Guarantor with the same effect as if it
had been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under the
Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of the Indenture as though all of
such Subsidiary Guarantees had been issued at the date of the
execution hereof.
(c) Except as set forth in Articles IV and V of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or
in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
5. Releases
(a) In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all to the capital stock of any Guarantor,
then such Guarantor (in the event of a sale or other disposition, by
way of merger, consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all of
the assets of such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee. The obligation to apply
the Net Proceeds of such sale or other disposition in accordance with
the applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture, shall continue to be
enforceable. Upon delivery by the Company to the Trustee of an
Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance
with the provisions of the Indenture, including without limitation
Section 4.10 of the Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor
from its obligations under its Subsidiary Guarantee.
(b) Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor
under the Indenture as provided in Article X of the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the
Indenture or this Supplemental Indenture or for any claim based
F-4
<PAGE>
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10 The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated:
-----------------------------------
By: -----------------------------------
Name:
Title:
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: -----------------------------------
Name:
Title:
F-6
<PAGE>
EXHIBIT G
SUBORDINATION PROVISIONS FOR MANAGEMENT NOTES
The indebtedness represented by the Management Note to which this
Exhibit applies (the "Note") shall contain the following subordination
provisions:
1. Definitions. For the purposes hereof,
1.1 "Company" means Numatics, Incorporated, a Michigan corporation;
1.2 "Guarantors" means Numatech, Inc., Numation, Inc., Micro-
Filtration, Inc., Ultra Air Products, Inc., I.A.E. Incorporated, each a Michigan
corporation and Microsmith, Inc., an Arizona corporation;
1.3 "Indenture" means the Indenture dated March 23, 1998, between the
Company, the Guarantors and the Trustee;
1.4 "Obligors" means the Company and each of the Guarantors;
1.5 "Senior Indebtedness" means, at any time, all indebtedness under
the Indenture, the Notes (as defined in the Indenture) and the Guarantees
(including, without limitation, principal, interest, premium, fees, Liquidated
Damages, indemnities and "post-petition interest" in bankruptcy);
1.6 "Trustee" means First Trust National Association, as trustee under
the Indenture; and
1.7 All other capitalized terms used herein without definition shall
have the respective meanings assigned thereto in the Indenture.
2. Subordination.
2.1 Agreement to Subordinate. The Obligors, for themselves and their
successors and assigns, and the holder of this Note (the "Holder") agree, that
the indebtedness evidenced by this Note (including, without limitation,
principal, interest, premium, fees, penalties, indemnities and "post-petition
interest" in bankruptcy) is subordinate and junior in right of payment, to the
extent and in the manner provided in this Section 2, to the prior payment in
full of Senior Indebtedness. The provisions of this Section 2 are for the
benefit of the holders from time to time of Senior Indebtedness, and the Trustee
for the benefit of such holders is hereby made an obligee hereunder to the same
extent as if its name were written herein as such, and the Trustee may proceed
to enforce such provisions.
2.2 Liquidation; Dissolution; Bankruptcy. (a) Upon any assignment for
the benefit of creditors or upon a liquidation or dissolution or winding-up of
any Obligor or in a bankruptcy, arrangement, liquidation, reorganization,
insolvency, receivership or similar case or proceeding relating to the any
Obligor or its property or other marshalling of assets of such Obligor (a
"Liquidation"):
G-1
<PAGE>
(i) the holders of Senior Indebtedness shall be entitled to receive
payment in full of all Senior Indebtedness before the Holder shall be
entitled to receive any payment of principal of or interest on, or any
other amount owing in respect of, this Note;
(ii) until payment in full (as defined below) of all Senior
Indebtedness, any distribution or assets of any kind or character to which
the Holder would be entitled but for this Section 2 shall be paid by the
Obligors or by any receiver, trustee in bankruptcy, liquidating trustee,
agents or other Persons making such payment or distribution to, or if
received by the Holder shall be held for the benefit of and shall be
forthwith paid or delivered to, the holders of Senior Indebtedness, as
their interests may appear, and
(iii) if, notwithstanding the foregoing, any payment or distribution
of assets of any Obligor of any kind or character, whether in cash,
property or securities as a result of a Liquidation, shall be received by
the Holder before all Senior Indebtedness is paid in full, such payment or
distribution shall be held in trust for the benefit of and shall be paid
over to the holders of Senior Indebtedness, as their interests may appear,
for application to the payment of all Senior Indebtedness until all Senior
Indebtedness shall have been paid in full after giving effect to any
concurrent payment or distribution to the holders of Senior Indebtedness in
respect of such Senior Indebtedness.
For purposes of this Section 2, "payment in full," with respect to
Senior Indebtedness, means the receipt on an irrevocable basis of United
States Dollars in an amount equal to the unpaid principal amount of the
Senior Indebtedness and Liquidated Damages, if any, premium, if any, and
interest thereon to the date of such payment together with all other
amounts owing with respect to such Senior Indebtedness.
(b) If the Holder does not file proper claims or proofs of claim in
the form required in bankruptcy, reorganization, insolvency, receivership
or similar proceeding relating to the Company or its property prior to 45
days before the expiration of the time to file such claims then (i) upon
the request of the Trustee, the Holder shall file such claims and proofs of
claim in respect of this Note and execute and deliver such powers of
attorney, assignments and proofs of claim as may be directed by the Trustee
to enable it to enforce any and all claims upon or in respect of this Note
and to collect and receive any and all payments or distributions that may
be payable or deliverable at any time upon or in respect of this Note, and
(ii) whether or not the Trustee shall take action described in clause (i)
above, the Trustee shall nevertheless be deemed to have such powers of
attorney as may be necessary to file appropriate claims and proofs of claim
and otherwise exercise the powers described above.
2.3 Senior Indebtedness. The Obligors shall not pay any principal,
interest or premium on this Note, acquire this Note for cash or property
other than capital stock of the Company, or make any loans, advances or
extensions of credit to the Holder with respect to this Note, or pay or
acquire any obligation or liability upon which a Holder is the obligor if
any such payment would not be permitted by the covenants contained in the
Senior Indebtedness. Notwithstanding anything contained herein to the
contrary, the Holder of this Note may accept and retain payments of
principal and interest (including
G-2
<PAGE>
therein regularly scheduled payments as well as prepayments) (each, a
"Permitted Payment") under this Note, unless: (i) such payment would not be
permitted by the covenants contained in the Senior Indebtedness and (ii) at
or prior to the time such payment is received by any Holder, the Trustee
shall have given such Holder a written notice ( a "Payment Blockage
Notice"), which Payment Blockage Notice must specify the nature of the
covenant(s) of the Senior Indebtedness that would be violated by such
payment. If at any time after the Holders receive a Payment Blockage
Notice, the covenants contained in the Senior Indebtedness would permit
payments on the Notes, the Holders may accept and retain such payments
unless the Holders receive a subsequent Payment Blockage Notice.
2.4 Subordination May Not Be Impaired. (a) No right of the Trustee on
behalf of any holder of Senior Indebtedness to enforce the subordination of
indebtedness evidenced by this Note shall in any way be prejudiced or
impaired by any act or failure to act by the Obligors or by any act or
failure to act in good faith, by any such holder or the Trustee, or by any
non-compliance by the Obligors with the terms, provisions or covenants
herein, regardless of any knowledge thereof that any such holder or the
Trustee may have or be otherwise charged with. Neither the subordination of
this Note as herein provided nor the rights of the holders of Senior
Indebtedness with respect hereto shall be affected by any extension,
renewal or modification of the terms, or the granting of any security in
respect of, any Senior Indebtedness or any exercise or non-exercise of any
right, power or remedy with respect thereto.
(b) The Holder agrees that all indebtedness evidenced by this Note
will be unsecured by any Lien upon or with respect to any property of the
Obligors, and that the Holder will not permit or allow to exist any Liens
which secure this Note.
(c) The Holder agrees not to exercise any offset or counterclaim or
similar right in respect of the indebtedness evidenced by this Note except
to the extent payment of such indebtedness is permitted and will not
assign, pledge, grant a security interest in or otherwise transfer this
Note or the indebtedness that it evidences unless the transferee agrees to
be bound by the terms of this Section 2.
3. Miscellaneous. These subordination provisions may not be amended
or modified in any respect, nor may any of the terms or provisions hereof be
waived, except by an instrument signed by the Obligors, the Holder and the
Trustee. These subordination provisions shall be binding upon each of the
parties hereto and their respective successors and assigns and shall insure to
the benefit of the Trustee and each and every holder of Senior Indebtedness and
their respective successors and assigns. These subordination provisions shall be
governed by and construed in accordance with the laws of the State of New York.
G-3
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Schedule I
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Guarantor under the Indenture as of the Issue
Date:
Numation, Inc.
Numatech, Inc.
Micro-Filtration, Inc.
Ultra Air Products, Inc.
Microsmith, Inc.
I.A.E. Incorporated
<PAGE>
EXHIBIT 4.1.2
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of March 23, 1998
by and among
Numatics, Incorporated
and
the Guarantors (as defined)
and
First Chicago Capital Markets, Inc.
BancBoston Securities, Inc.
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 23, 1998, by and among Numatics, Incorporated, a Michigan
corporation (the "Company"), Numation, Inc., Numatech, Inc., Micro-Filtration,
Inc., Ultra Air Products, Inc., Microsmith, Inc. and I.A.E. Incorporated (the
"Guarantors"), and First Chicago Capital Markets, Inc. and BancBoston Securities
Inc., (each an "Initial Purchaser" and, collectively, the "Initial Purchasers"),
each of whom has agreed to purchase the Company's 9-5/8% Senior Subordinated
Notes due 2008 (the "Series A Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 18,
1998, (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Series A Notes, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 9 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them the Indenture, dated the date hereof
among the Company, the Guarantors and First Trust National Association, as
Trustee, relating to the Series A Notes and the Series B Notes (the
"Indenture").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Consummation Deadline: As defined in Section 3(b) hereof.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
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Exchange Offer: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose to
sell the Series A Notes to certain "qualified institutional Buyers," as such
term is defined in Rule 144A under the Act, and pursuant to Regulation S under
the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B Notes and related Subsidiary
Guarantees pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
each case, (i) that is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 9-5/8% Series B Senior Subordinated Notes due
2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii)
as contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
Transfer Restricted Securities: (i) Each Series A Note and the related
Subsidiary Guarantees, until the earliest to occur of (a) the date on which such
Series A Note is exchanged in the Exchange Offer for a Series B Note which is
entitled to be resold to the public by the Holder thereof without complying with
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the prospectus delivery requirements of the Act, (b) the date on which such
Series A Note has been disposed of in accordance with a Shelf Registration
Statement, or (c) the date on which such Series A Note is distributed to the
public pursuant to Rule 144 under the Act (ii) each Series B Note acquired by a
Broker-Dealer for its own account as a result of market making activities or
other trading activities until the date on which such Series B Note is disposed
of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 45 days after the Closing
Date (such 45th day being the "Filing Deadline"), (ii) use its best efforts to
cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 135 days after the Closing
Date (such 135th day being the "Effectiveness Deadline"), (iii) in connection
with the foregoing, (A) file all preeffective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause it to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer, provided, however, that in no event shall such period be
less than 20 business days. The Company and the Guarantors shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Series B Notes shall be included in the Exchange
Offer Registration Statement. The Company and the Guarantors shall use their
respective best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 business days thereafter (such
30th day being the "Consummation Deadline").
(c) The Company shall include a "Plan of distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market making
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<PAGE>
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement.
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Section 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the date on which the Exchange Offer is Consummated or such
shorter period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold pursuant thereto. The Company and
the Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than one day after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 business days following
the Consummation of the Exchange Offer that (A) such Holder was prohibited by
law or Commission policy from participating in the Exchange Offer or (B) such
Holder may not resell the Series B Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A
Notes acquired directly from the Company or any of its Affiliates, then the
Company and the Guarantors shall:
(x) cause to be filed, on or prior to 45 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "Filing Deadline"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "Shelf Registration Statement")), relating to
all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 135 days after the
Filing Deadline for the Shelf Registration Statement (such 135th day the
"Effectiveness Deadline").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration.
4
<PAGE>
Statement solely because the Exchange Offer is not permitted under applicable
federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause (x)
above; provided that, in such event, the Company shall remain obligated to meet
the Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period
as will terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has
not been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within 2 business days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within 5 business days of filing such
post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) in the case
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<PAGE>
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
liquidated damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay liquidated damages with respect to securities
shall survive until such time as such obligations with respect to such
securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby agree
to pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company and the Guarantors hereby agree
to take all such other actions as may be requested by the Commission or
otherwise required in connection with the issuance for such decision,
including without limitation (A) participating in telephonic conferences
with the Commission staff, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases,
if any, upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a resolution (which need
not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
Each Holder using the Exchange Offer to participate in a distribution of
the Series B Notes will be required
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to acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such as secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantors' information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with Shelf Registration
Statement, the Company and the Guarantors shall
(i) comply with all the provisions of Section 6(c) below and use
their respective best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto
the Company and the Guarantors will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods
of distribution thereof within the time periods and otherwise in accordance with
the provisions hereof; and
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
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Agreement, as applicable. Upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain an untrue statement of material fact or omit to state any material
fact necessary to make the statements therein not misleading or (B) not to
be effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors shall
file promptly an appropriate amendment to such Registration Statement
curing such defect, and, if Commission review is required, use their
respective best efforts to cause such amendment to be declared effective as
soon as practicable; if at any time the Commission shall issue any stop
order suspending the effectiveness of any Registration Statement, or any
state securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company and the Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with rules 424, 430A and 462, as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two business days prior to such sale
of Transfer Restricted Securities;
(iv) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities;
provided, however, that neither the Company nor any Guarantor shall be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(v) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with certificates for the Transfer Restricted Securities which are in a
form eligible for deposit with the Depository Trust Company;
(vi) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act); and
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(vii) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner.
(d) Additional provisions applicable to Shelf Registration Statements and
Certain Exchange Offer Prospectuses. In connection with each Shelf Registration
Statement, and each Exchange Offer Registration Statement if and to the extent
that an Initial Purchaser has notified the Company that it is a holder of Series
B Notes that are Transfer Restricted Securities (for so long as such Series B
Notes are Transfer Restricted Securities or for the period provided in Section
3, whichever is shorter), the Company and the Guarantors shall:
(i) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) if any fact or event contemplated by Section 6(d)(i)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(iii) furnish to each Holder in connection with such exchange or sale,
if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five business days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holders shall reasonably object
within five business days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or
9
<PAGE>
omits to state any material fact necessary to make the statements therein
not misleading or fails to comply with the applicable requirements of the
Act;
(iv) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder in connection with such
exchange or sale, if any, make the Company's and the Guarantors'
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably
request;
(v) make available, at reasonable times, for inspection by each Holder
and any attorney or accountant retained by such Holders, all financial and
other records, pertinent corporate documents of the Company and the
Guarantors and cause the Company's and the Guarantors' officers, directors
and employees to supply all information reasonably requested by any such
Holder, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(vi) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(vii) furnish to each Holder in connection with such exchange or sale
without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(viii) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder
in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(ix) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by any Holder in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of paragraphs
(2) and (3), use its best efforts to cause to be furnished) to each
Holder, upon Consummation of the Exchange Offer or upon the effectiveness
of the Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company
and such Guarantor, confirming, as of the date thereof, the matters
set forth
10
<PAGE>
in Sections 6(y), 9(a) and 9(b) of the Purchase Agreement and such
other similar matters as such Holders may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company and the
Guarantors covering matters similar to those set forth in paragraph
(e) of Section 9 of the Purchase Agreement and such other matters as
such Holder may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company and
the Guarantors, representatives of the independent public accountants
for the Company and the Guarantors and has considered the matters
required to be stated therein and the statements contained therein,
although such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing, no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective
and, in the case of the Exchange Offer Registration Statement, as of
the date of Consummation of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the opinion
dated the date of Consummation of the Exchange Offer, as of the date
of Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility
for, and has not independently verified, the accuracy, completeness or
fairness of the financial statements, notes and schedules and other
financial data included in any Registration Statement contemplated by
this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of Consummation of
the Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 9(g) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be reasonably
requested by the selling Holders to evidence compliance with the matters
covered in clause (A) above and with any customary conditions contained in
any agreement entered into by the Company and the Guarantors pursuant to
this clause (ix);
(x) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling Holders may
request and do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however, that
neither the Company nor any Guarantor shall be required to register or qualify
as a foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration Statement, in
any jurisdiction where it is not now so subject; and
11
<PAGE>
(xi) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(e) Restrictions on Holders. Each Holder's acquisition of a Transfer
Restricted Security constitutes such Holder's agreement that, upon receipt of
the notice referred to in Section 6(d)(i)(C) or any notice from the Company of
the existence of any fact of the kind described in Section 6(d)(i)(D) hereof (in
each case, a "Suspension Notice"), such Holder will forthwith discontinue
disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until (i) such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section 6(d)(ii) hereof, or
(ii) such Holder is advised in writing by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice
shall be required to either (i) destroy an Prospectuses, other than permanent
file copies, then in such Holder's possession which have been replaced by the
Company with more recently dated Prospectuses or (ii) deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including certificates for the Series B
Notes to be issued in the Exchange Offer and printing of Prospectuses, messenger
and delivery services and telephone; (iv) all fees and disbursements of counsel
for the Company, the Guarantors and one counsel of the Holders of Transfer
Restricted Securities which shall be Latham & Watkins or such other counsel as
may be selected by a majority of such Holders; (v) all application and filing
fees in connection with listing the Series B Notes on a national securities
exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of
the Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes into in the Exchange Offer and/or
selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the
12
<PAGE>
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holders (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigation or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any Holder or any prospective purchaser of
Series B Notes or registered Series A Notes, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Company
by any of the Holders.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Company and the Guarantors, and their
respective directors and officers, and each person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Company, or the Guarantors to the same extent as the foregoing indemnity from
the Company and the Guarantors set forth in section (a) above, but only with
reference to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its directors, officers or any Person who controls such
Holder be liable or responsible for any amount in excess of the amount by which
the total amount received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages that such Holder, its directors, officers or any Person
who controls such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Securities 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which
13
<PAGE>
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of the indemnified party). In any such case, the
indemnifying party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by a
majority of the Holders, in the case of the parties indemnified pursuant to
Section 8(a), and by the Company and Guarantors, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
parties, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by cause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors, on the one hand, and of the Holder, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact related to information supplied by the
Company or such Guarantor, on the one hand, or by the Holder, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
judgments referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 8(a), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company, the Guarantors and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
14
<PAGE>
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(d) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each Holder hereunder and not joint.
SECTION 9. RULE 144A and RULE 144
The Company and each Guarantor agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that any
failure by the Company and/or the Guarantors to comply with their obligations
under Sections 3 and 4 hereof may result in material irreparable injury to the
Initial Purchasers or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's and
the Guarantor's obligations under Sections 3 and 4 hereof. The Company and the
Guarantors further agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor will,
on or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Neither the
Company nor any Guarantor has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's and the
Guarantors' securities under any agreement in effect on the date hereof.
(c) Amendment and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
15
<PAGE>
Company or its Affiliates). Notwithstanding the foregoing, a waier or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose Transfer Restricted Securities are being tendered pursuant to the
Exchange Offer, and that does not affect directly or indirectly the rights of
other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
Telecopier No.: (248) 887-2142
Attention: President
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, when receipt acknowledged, if telecopied;
and on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the 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.
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<PAGE>
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NUMATICS, INCORPORATED
By: /s/ John H. Welker
------------------------------
Name: John H. Welker
Title: President
NUMATION, INC.
By: /s/ John H. Welker
-------------------------------
Name: John H. Welker
Title: Chairman
NUMATECH, INC.
By: /s/ John H. Welker
-------------------------------
Name: John H. Welker
Title: Chairman
ULTRA AIR PRODUCTS, INC.
By: /s/ John H. Welker
-------------------------------
Name: John H. Welker
Title: Chairman
MICROSMITH, INC.
By: /s/ John H. Welker
-------------------------------
Name: John H. Welker
Title: Chairman
I.A.E. INCORPORATED
By: /s/ John H. Welker
-------------------------------
Name: John H. Welker
Title: President
18
<PAGE>
FIRST CHICAGO CAPITAL MARKETS, INC.
BANCBOSTON SECURITIES INC.
By: FIRST CHICAGO CAPITAL MARKETS, INC.
By: /s/
---------------------------------
Name:
Title: Managing Director
19
<PAGE>
Exhibit 4.1.3
(Face of Global Exchange Note)
================================================================================
CUSIP 67052YAC5
9-5/8% Series B Senior Subordinated Notes due 2008
No. B-001 $________________
NUMATICS, INCORPORATED
promises to pay to Cede & Co. or registered assigns, the principal sum of
$__________________ on April 1, 2008.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated: ______________, 1998
NUMATICS, INCORPORATED
By: _________________________________
Name: John H. Welker
Title: President
NUMATICS, INCORPORATED
By: _________________________________
Name: Robert P. Robeson
Title: Treasurer
This is one of the 9-5/8% Series B Senior
Subordinated Notes due 2008 referred to
in the within-mentioned Indenture:
U.S. Bank Trust National Association,
as Trustee
By: _________________________________
================================================================================
<PAGE>
(Back of Global Exchange Note)
9-5/8% Series B Senior Subordinated Notes due 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF NUMATICS, INCORPORATED.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Numatics, Incorporated, a Michigan corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-5/8% per annum from March 23, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages semi-
annually on April 1 and October 1 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to
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<PAGE>
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. Paying Agent and Registrar. Initially, U.S. Bank Trust National
Association (formerly known as First Trust National Association), the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of March 23, 1998 ("Indenture") between the Company, the Guarantors (as
defined therein) and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are obligations of the
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<PAGE>
Company limited to $215,000,000 million in aggregate principal amount.
5. Optional Redemption
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to April 1, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus (subject to the right of Holders of record on a record date
to receive interest due on an Interest Payment Date that is on or prior to such
redemption date) accrued and unpaid interest and Liquidated Damages thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on April 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003 ........................... 104.8125%
2004 ........................... 103.2083%
2005 ........................... 101.6042%
2006 and thereafter ............ 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to April 1,
2001, the Company may on any one or more occasions redeem up to 35% of the
aggregate principal amount of Notes originally issued under the Indenture at a
redemption price of 109.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more public offerings of common stock of
the Company; provided that at least 65% of the aggregate principal amount of
Notes remain outstanding immediately after the occurrence of such redemption
(excluding the Notes held by the Company and its Subsidiaries); and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such public offering.
6. Mandatory Redemption
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. Repurchase at Option of Holder
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 10 days
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<PAGE>
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the
Company shall commence an offer to all Holders of Notes (an "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Restricted
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Subordination. The Notes are subordinated in right of payment,
to the extent and in the manner provided in Article X of the Indenture, to the
prior payment in full in cash or Cash Equivalents of all Senior Indebtedness. To
the extent provided in the Indenture, Senior Indebtedness must be paid before
the Notes may be paid. The Company agrees and each Holder of Notes by accepting
a Note consents and agrees to the
-5-
<PAGE>
subordination provided in the Indenture and authorizes the Trustee to give its
consent.
11. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Subsidiary Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Notes voting as a single class, and any existing
default or compliance with any provision of the Indenture, the Subsidiary
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class. Without the consent of any Holder of a Note, the Indenture, the
Subsidiary Guarantees or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's or Guarantor's obligations to Holders of the Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Subsidiary Guarantee
with respect to the Notes.
13. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any of its Restricted Subsidiaries to comply with Section
4.07, 4.09 or 4.15 of the Indenture; (iv) failure by the Company or any of its
Restricted Subsidiaries for 60 days after notice to comply with certain other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company or any of its Restricted
Subsidiaries which default results in the acceleration of such Indebtedness
prior to its express maturity; (vi) certain final judgments for the payment of
money that remain undischarged for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor or any Person acting on its behalf shall deny or disaffirm its
obligations under such Guarantor's Subsidiary Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as
-6-
<PAGE>
provided in the Indenture. Except as otherwise provided in the Indenture,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Subsidiary Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of March 23, 1998, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
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<PAGE>
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
Attention: President
-8-
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:________________________
Your Signature:_____________________________
(Sign exactly as your name appears on the
face of this Note)
Medallion Signature Guarantee.
-9-
<PAGE>
SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 23, 1998 (the "Indenture") among
Numatics, Incorporated, the Guarantors listed on Schedule I thereto and U.S.
Bank Trust National Association (formerly known as First Trust National
Association), as trustee (the "Trustee"), (a) the due and punctual payment of
the principal of, premium, if any, and interest on the Notes (as defined in the
Indenture), whether at maturity, by acceleration, redemption or otherwise, the
due and punctual payment of interest on overdue principal and premium, and, to
the extent permitted by law, interest, and the due and punctual performance of
all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The obligations of the Guarantors to the Holders of
Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture
are expressly set forth in Article XI of the Indenture and reference is hereby
made to the Indenture for the precise terms of the Subsidiary Guarantee. Each
Holder of a Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Subsidiary Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.
NUMATION, INC.
By:_____________________
Name: John H. Welker
Title: Chairman
NUMATECH, INC.
By:_____________________
Name: John H. Welker
Title: Chairman
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<PAGE>
MICRO-FILTRATION, INC.
By:__________________________
Name: John H. Welker
Title: Chairman
ULTRA AIR PRODUCTS, INC.
By:__________________________
Name: John H. Welker
Title: Chairman
MICROSMITH, INC.
By:__________________________
Name: John H. Welker
Title: Chairman
I.A.E. INCORPORATED
By:__________________________
Name: John H. Welker
Title: President
-11-
<PAGE>
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.
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
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
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
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
</TABLE>
LOAN AGREEMENT Page ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
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
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
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
</TABLE>
LOAN AGREEMENT Page iii
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
- ---------
<S> <C>
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
</TABLE>
LOAN AGREEMENT Page iv
<PAGE>
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
<PAGE>
"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
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than 2.5:1.0 0.00% 1.25% 2.50% 1.25% 0.25%
- ----------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------
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
======================================================================================================================
</TABLE>
"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 $6,000,000.
"Borrowing Base Certificate" for any date shall mean an appropriately
completed report as of such date and substantially in the form of Exhibit A
hereto, certified as true and correct as of such date by a duly authorized
officer of the Company.
LOAN AGREEMENT Page 3
<PAGE>
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which (a) banks in Boston, Chicago or Detroit are not open to the public for
carrying on substantially all of their banking functions, or (b) if such
reference relates to the date for payment or purchase of any amount denominated
in any currency other than Dollars, banks are not generally open to the public
for carrying on substantially all of their banking functions in the principal
financial center of the country issuing such currency.
"Canadian Dollars" or "CDN$" 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
<PAGE>
"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
<PAGE>
"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
<PAGE>
"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
<PAGE>
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
<PAGE>
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
<PAGE>
"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
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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
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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
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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.
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"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
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"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.
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"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
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"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
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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".
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"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"
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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
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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.
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(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
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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
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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
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(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
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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
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
============================================================================================
Borrower
- --------------------------------------------------------------------------------------------
Company Numatics Ltd. Numatics GmbH
---------- ------------- -------------
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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]
============================================================================================
</TABLE>
(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
<PAGE>
<TABLE>
<CAPTION>
==================================================================================
Borrower
- ----------------------------------------------------------------------------------
Company Numatics GmbH
---------- -------------
- ----------------------------------------------------------------------------------
<S> <C> <C>
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]
==================================================================================
</TABLE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
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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
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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
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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
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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
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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
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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
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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
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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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
=======================================================================================
Fixed Charge Coverage Ratio
---------------------------
- ---------------------------------------------------------------------------------------
<S> <C>
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
=======================================================================================
</TABLE>
(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:
<TABLE>
<CAPTION>
=======================================================================================
Net Funded Debt to EBITDA
-------------------------
- ---------------------------------------------------------------------------------------
<S> <C>
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
=======================================================================================
</TABLE>
(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
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================
Interest Coverage Ratio
-----------------------
- ---------------------------------------------------------------------------------------
<S> <C>
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
=======================================================================================
</TABLE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C>
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
</TABLE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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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
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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
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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.
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(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
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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
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(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.
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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
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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.
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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
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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)
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
NUMATION, INC.
By:__________________________
Its:______________________
ENVIRONMENTAL CERTIFICATE
-------------------------
-6-
<PAGE>
ULTRA AIR PRODUCTS, INC.
By:__________________________
Its:______________________
MICROSMITH, INC.
By:__________________________
Its:______________________
I.A.E. INCORPORATED
By:__________________________
Its:______________________
ENVIRONMENTAL CERTIFICATE
-------------------------
-7-
<PAGE>
EXHIBIT C
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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
<PAGE>
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
---------------------------------------
-2-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
---------------------------------------
-10-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
Schedule to Revolving Credit Note, dated
March __, 1998, made by Numatics, Incorporated
in favor of __________________________.
<TABLE>
<CAPTION>
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
- ---- ---- ----- ---- ----------- --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------
* L - Libor Rate
F - Adjusted Floating Rate
REVOLVING CREDIT NOTE
---------------------
-3-
<PAGE>
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.
<PAGE>
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-
<PAGE>
Schedule to Revolving Credit Note, dated
March 23, 1998, made by Numatics GmbH
in favor of The First National Bank of Chicago
<TABLE>
<CAPTION>
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
- ---- ---- ----- ---- ----------- --------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
- ----------
* L - Libor Rate
REVOLVING CREDIT NOTE
---------------------
-3-
<PAGE>
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.
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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,
<PAGE>
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-
<PAGE>
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-
<PAGE>
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,
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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");
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
----------------------------------
<PAGE>
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
<PAGE>
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
-------------------------
-2-
<PAGE>
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:
--------------------------------------
ITS:
----------------------------------
[ASSIGNEE]
BY:
--------------------------------------
ITS:
----------------------------------
ASSIGNMENT AND ACCEPTANCE
-------------------------
-3-
<PAGE>
Exhibit 4.2.2
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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
<PAGE>
documents, agreements, instruments and certificates evidencing or otherwise
pertaining thereto and to any other indebtedness, obligations and liabilities of
the 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, 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
AMENDED AND RESTATED GUARANTY AGREEMENT
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<PAGE>
(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.
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)
AMENDED AND RESTATED GUARANTY AGREEMENT
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<PAGE>
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 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
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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<PAGE>
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. Judgments. 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
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,
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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<PAGE>
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.
(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
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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<PAGE>
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 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
AMENDED AND RESTATED GUARANTY AGREEMENT
---------------------------------------
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<PAGE>
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 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
AMENDED AND RESTATED GUARANTY AGREEMENT
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<PAGE>
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. Integration 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 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
AMENDED AND RESTATED GUARANTY AGREEMENT
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<PAGE>
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: /s/ John H. Welker
Highland, Michigan 48357 ------------------
Attention: Chief Financial Officer Its: President
Facsimile No: (810) 887-2142 ------------
Address for Notice: NUMATION, INC.
c/o Numatics Incorporated By: /s/ John H. Welker
1450 Milford Road ------------------
Highland, Michigan 48357 Its: Chairman
Attention: Chief Financial Officer -----------------
Facsimile No: (810) 887-2142
Address for Notice: NUMATECH, INC.
1450 Milford Road By: /s/ John H. Welker
Highland, Michigan 48357 ------------------
Attention: Chief Financial Officer Its: Chairman
Facsimile No: (810) 887-2142 -----------
Address for Notice: MICRO-FILTRATION, INC.
1450 Milford Road By: /s/ John H. Welker
Highland, Michigan 48357 ------------------
Attention: Chief Financial Officer Its: Chairman
Facsimile No: (810) 887-2142 -----------
AMENDED AND RESTATED GUARANTY AGREEMENT
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<PAGE>
Address for Notice: ULTRA AIR PRODUCTS, INC.
c/o Numatics Incorporated By: /s/ John H. Welker
1450 Milford Road ------------------
Highland, Michigan 48357 Its: Chairman
Attention: Chief Financial Officer -----------------
Facsimile No: (810) 887-2142
Address for Notice: MICROSMITH, INC.
c/o Numatics Incorporated By: /s/ John H. Welker
1450 Milford Road ------------------
Highland, Michigan 48357 Its: Chairman
Attention: Chief Financial Officer -------------
Facsimile No: (810) 887-2142
I.A.E. INCORPORATED
c/o Numatics Incorporated By: /s/ John H. Welker
1450 Milford Road ------------------
Highland, Michigan 48357 Its: President
Attention: Chief Financial Officer -------------
Facsimile No: (810) 887-2142
AMENDED AND RESTATED GUARANTY AGREEMENT
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EXHIBIT 5.1
[LETTERHEAD OF MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.]
April 29, 1998
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48357
Gentlemen:
This opinion relates to the registration statement on Form S-4 (the
"Registration Statement") being filed today by Numatics, Incorporated, a
Michigan corporation (the "Issuer"), and certain of its subsidiaries which are
"Guarantors" (as defined in the Registration Statement) with the Securities and
Exchange Commission (the "Commission") for the purpose of registering under the
Securities Act of 1933, as amended (the "Act"): (a) $115,000,000 principal
amount of the Issuer's 9 5/8% Series B Senior Subordinated Notes due 2008 (the
"Exchange Notes"); and (b) the Guarantors' guarantees of the Exchange Notes (the
"Subsidiary Guarantees"). The Exchange Notes are to be issued in exchange for
the Issuer's outstanding 9 5/8% Senior Subordinated Notes due 2008 (the "Notes")
pursuant to the Exchange Offer described in the Registration Statement. As your
counsel, we have examined such certificates, instruments, and documents and
reviewed such questions of law as we have considered necessary or appropriate
for the purposes of this opinion, and, on the basis of such examination and
review, we advise you that, in our opinion:
1. The Exchange Notes have been duly authorized by all necessary corporate
action on the part of the Issuer, and the Subsidiary Guarantees have been
duly authorized by all necessary corporate action on the part of the
Guarantors.
2. When the Registration Statement has become effective and the Exchange
Notes have been issued in exchange for the Notes pursuant to the Exchange
Offer, the Exchange Notes will be legally issued and will be binding
obligations of the Issuer, and the Subsidiary Guarantees will be legally
issued and will be binding obligations of the Guarantors.
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MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
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We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the prospectus forming a part of the Registration Statement. In
giving this consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
Very truly yours,
Miller, Canfield, Paddock and Stone, P.L.C.
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EXHIBIT 10.1
NUMATICS, INCORPORATED
$115,000,000
9-5/8% Senior Subordinated Notes due 2008
Purchase Agreement
March 18, 1998
FIRST CHICAGO CAPITAL MARKETS, INC.
BANCBOSTON SECURITIES INC.
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$115,000,000
9-5/8% Senior Subordinated Notes due 2008
of
NUMATICS, INCORPORATED
PURCHASE AGREEMENT
March 18, 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
Dear Sirs:
Numatics, Incorporated, a Michigan corporation (the "Company"),
proposes to issue and sell to First Chicago Capital Markets, Inc. ("First
Chicago") and BancBoston Securities Inc. (each, an "Initial Purchaser" and,
collectively, the "Initial Purchasers") an aggregate of $115,000,000 in
principal amount of its 9-5/8 % Senior Subordinated Notes due 2008 (the "Series
A Notes"), subject to the terms and conditions set forth herein. The Series A
Notes are to be issued pursuant to the provisions of an indenture (the
"Indenture"), to be dated as of the Closing Date (as defined below), among the
Company, the Guarantors (as defined below) and First Trust National Association,
as trustee (the "Trustee"). The Series A Notes and the Series B Notes (as
defined below) issuable in exchange therefor are collectively referred to herein
as the "Notes." The Notes will be guaranteed (the "Subsidiary Guarantees") by
each of the entities listed on Schedule A, hereto (each, a "Guarantor" and
collectively the "Guarantors"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Offering Memorandum (as
defined below).
1. OFFERING MEMORANDUM. The Series A Notes will be offered and sold
to the Initial Purchaser pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company and the Guarantors have prepared a preliminary offering
memorandum, dated March 5, 1998 (the "Preliminary Offering Memorandum") and a
final offering memorandum, dated March 18, 1998 (the "Offering Memorandum"),
relating to the Series A Notes and the Subsidiary Guarantees.
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Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER: REPRESENTS THAT (1) IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) NOT A U.S.
PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
NOTE EVIDENCED HEREBY EXCEPT TO (A) THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO FIRST TRUST NATIONAL ASSOCIATION, AS TRUSTEE
(OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFER IS PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO FIRST TRUST NATIONAL ASSOCIATION,
AS TRUSTEE (OR AS SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE
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PURSUANT TO AN EXEMPTION FORM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, the Company agrees to issue and sell to the
Initial Purchasers, and the Initial Purchasers agree, severally and not jointly,
to purchase from the Company, an aggregate principal amount of $115,000,000 of
Series A Notes as set forth in Schedule C hereto at a purchase price equal to
97.25% of the principal amount thereof (the "Purchase Price").
3. TERMS OF OFFERING. The Initial Purchasers have advised the Company that
the Initial Purchasers will make offers (the "Exempt Resales") of the Series A
Notes purchased hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to (i) persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBs"), (ii) a limited number of institutional "accredited
investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the Act that
make certain representations and agreements to the Company and the Initial
Purchasers (each, an "Accredited Institution") and (iii) to persons permitted to
purchase the Series A Notes in offshore transactions in reliance upon Regulation
S under the Act (each, a "Regulation S Purchaser") (such persons specified in
clauses (i), (ii) and (iii) being referred to herein as the "Eligible
Purchasers"). The Initial Purchasers will offer the Series A Notes to Eligible
Purchasers initially at a price equal to 100% of the principal amount thereof.
Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Series A Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantors will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's 9-5/8% Series B Senior Subordinated Notes due 2008 (the "Series
B Notes"), to be offered in exchange for the Series A Notes (such offer to
exchange being referred to as the "Exchange Offer") and the Subsidiary
Guarantees thereof and (ii) a shelf registration statement pursuant to Rule 415
under the Act (the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, the "Registration Statements") relating
to the resale by certain holders of the Series A Senior Notes and to use its
best efforts to cause such Registration Statements to be declared and remain
effective and usable for the periods specified in the Registration Rights
Agreement and to consummate the Exchange Offer. This Agreement, the Indenture,
the Notes, the Subsidiary
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Guarantees and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "Operative Documents."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the offices of Miller, Canfield, Paddock and Stone,
P.L.C. ("Miller, Canfield") or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m., local time,
on March 23, 1998 or at such other time as shall be agreed upon by the Initial
Purchasers and the Company in writing. The time and date of such delivery and
the payment for the Series A Notes are herein called the "Closing Date."
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"), having a aggregate principal amount corresponding to the aggregate
principal amount of the Series A Notes (collectively, the "Global Note"), shall
be delivered by the Company to the Initial Purchasers (or as the Initial
Purchasers direct) in each case with any transfer taxes thereon duly paid by the
Company against payment by the Initial Purchasers of the Purchase Price thereof
by wire transfer in same day funds to the order of the Company. The Global Note
shall be made available to the Initial Purchasers for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the Company and
the Guarantors hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Series A Notes for offering or sale in
any jurisdiction designated by the Initial Purchasers pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company and the
Guarantors shall use their best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption of any Series A Notes
under any state securities or Blue Sky laws and, if at any time any state
securities commission or other federal or state regulatory authority shall issue
an order suspending the qualification or exemption of any Series A Notes under
any state securities or Blue Sky laws, the Company and the Guarantors shall use
their best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments or supplements
thereto, as the Initial
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Purchasers may reasonably request for the time period specified in Section
5(c). Subject to the Initial Purchasers' compliance with their representations
and warranties and agreements set forth in Section 7 hereof, the Company
consents to the use of the Preliminary Offering Memorandum and the Offering
Memorandum, and any amendments and supplements thereto required pursuant hereto,
by the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers or during the 360 days
following the Closing Date, whichever is shorter, (i) not to make any amendment
or supplement to the Offering Memorandum of which the Initial Purchasers shall
not previously have been advised or to which the Initial Purchasers shall
reasonably object after being so advised and (ii) to prepare promptly upon the
Initial Purchasers' reasonable request, any amendment or supplement to the
Offering Memorandum which may be necessary or advisable in connection with such
Exempt Resales.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) During the period specified in Section 5(c) hereof, to cooperate
with the Initial Purchasers and counsel to the Initial Purchasers in connection
with the registration or qualification of the Series A Notes for offer and sale
to the Initial Purchasers and pursuant to Exempt Resales under the securities or
Blue Sky laws of such jurisdictions as the Initial Purchasers may request and to
continue such registration or qualification in effect throughout such period and
to file such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification; provided,
however, that neither the Company nor any Guarantor shall be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum, or Exempt Resales, in any jurisdiction in which it is not now so
subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to
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include a consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(g) So long as the Notes are outstanding, to furnish to the Initial
Purchasers as soon as available copies of all reports or other communications
furnished by the Company or any of the Guarantors to its security holders or
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company or any of the Guarantors is listed
and such other publicly available information concerning the Company and/or its
subsidiaries as the Initial Purchasers may reasonably request.
(h) So long as any of the Series A Notes remain outstanding and during
any period in which the Company and the Guarantors are not subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to make available to any holder of Series A Notes in connection with any
sale thereof and any prospective purchaser of such Series A Notes from such
holder, the information ("Rule 144A Information") required by Rule 144A(d)(4)
under the Act.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and the
Guarantors under this Agreement, including: (i) the fees, disbursements and
expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales, and all
other fees and expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum and
all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes and the Subsidiary
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates
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representing the Series A Notes and the Subsidiary Guarantees, (vi) all expenses
and listing fees in connection with the application for quotation of the Series
A Notes in the National Association of Securities Dealers, Inc. ("NASD")
Automated Quotations System--Portal ("PORTAL") market, (vii) the fees and
expenses of the Trustee and the Trustee's counsel in connection with the
Indenture, the Notes and the Subsidiary Guarantees, (viii) the costs and charges
of any transfer agent, registrar and/or depositary (including DTC), (ix) any
fees charged by rating agencies for the rating of the Notes, (x) all costs and
expenses of the Exchange Offer and any Registration Statement, as set forth in
or contemplated by the Registration Rights Agreement, and (xi) and all other
costs and expenses incident to the performance of the obligations of the Company
and the Guarantors hereunder for which provision is not otherwise made in this
Section.
(j) To use its best efforts to effect the inclusion of the Series A
Notes in PORTAL and to maintain the listing of the Series A Notes on PORTAL for
so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company and the Guarantors to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and continuing to and
including the date that is 180 days after the Closing Date, not to offer, sell,
contract to sell or otherwise transfer or dispose of any debt securities of the
Company or any Guarantor or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Company or any Guarantor substantially
similar to the Notes and the Subsidiary Guarantees (other than (i) the Notes and
the Subsidiary Guarantees and (ii) commercial paper issued in the ordinary
course of business), without the prior written consent of First Chicago.
(m) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes and the
related Subsidiary Guarantees.
(o) To cause the Exchange Offer to be made in the appropriate form to
permit Series B Notes and guarantees thereof by the Guarantors registered
pursuant to the Act to be offered in exchange for the Series A Notes and the
Subsidiary Guarantees and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the Registration
Rights Agreement.
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(q) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the Subsidiary Guarantees.
6. Representations, Warranties and Agreements of the Company and the
Guarantors. As of the date hereof, each of the Company and the Guarantors,
jointly and severally, represents and warrants to, and agrees with, the Initial
Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering Memorandum do
not, and any supplement or amendment to them will not, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company and its subsidiaries, 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 as described in the Preliminary Offering
Memorandum and the Offering Memorandum and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries taken as a whole, or
draw into question the validity of this Agreement or the other Operative
Documents (a "Material Adverse Effect").
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) The entities listed on Schedule B hereto are the only subsidiaries,
direct or indirect, of the Company. All of the outstanding shares of capital
stock of each of the Company's subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable, and are owned by the
Company in the percentage set forth on Schedule B directly or indirectly through
one or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "Lien"), except as
described in the Offering Memorandum.
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(e) This Agreement has been duly authorized, executed and delivered by
the Company and each of the Guarantors.
(f) The Indenture has been duly authorized by the Company and each of
the Guarantors and, on the Closing Date, will have been validly executed and
delivered by the Company and each of the Guarantors. When the Indenture has been
duly executed and delivered by the Company and each of the Guarantors, the
Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "TIA" or "Trust Indenture Act"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.
(g) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When the
Series A Notes have been issued, 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 this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Series A
Notes will conform as to legal matters to the description thereof contained in
the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applications.
(i) The Subsidiary Guarantee to be endorsed on the Series A Notes by
each Guarantor has been duly authorized by each such Guarantor and, on the
Closing Date, will have been duly executed and delivered by each such Guarantor.
When the Series A Notes have been issued, executed and authenticated in
accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Subsidiary
Guarantee of each Guarantor endorsed thereon will be entitled to the benefits of
the Indenture and will be the valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as (i)
the enforceability thereof may be limited by
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bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Subsidiary Guarantees to be endorsed on the Series A Notes will conform as
to legal matters to the description thereof contained in the Offering
Memorandum.
(j) The Subsidiary Guarantee to be endorsed on the Series B Notes by
each Guarantor has been duly authorized by each such Guarantor and, when issued,
the Series B Notes will have been duly executed and delivered by each such
Guarantor. When the Series B Notes have been issued, executed and authenticated
in accordance with the terms of the Exchange Offer and the Indenture, the
Subsidiary Guarantee of each Guarantor endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. When the Series B Notes are
issued, authenticated and delivered, the Subsidiary Guarantees to be endorsed on
the Series B Notes will conform as to legal matters to the description thereof
in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized by the
Company and each of the Guarantors, and, on the Closing Date, will have been
duly executed and delivered by the Company and each of the Guarantors. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and each of the Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability, (iii)
rights to indemnity and contribution thereunder may be limited by federal or
state securities laws or principles of public policy. On the Closing Date, the
Registration Rights Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(l) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(m) The execution, delivery and performance of this Agreement and the
other Operative Documents by the Company and each of the Guarantors, compliance
by the Company and each of the Guarantors with all provisions hereof and
thereof and the consummation of the transactions contemplated hereby and thereby
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
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laws of the various states), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or by-laws of the
Company, any of its subsidiaries, or (except as described in the Offering
Memorandum) any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries taken as a
whole, to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or their respective property is bound,
(iii) violate or conflict with any applicable law or any rule, regulation,
judgment, order or decree 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 the obligation to
create or impose) a Lien under, any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, or (v) result in the
termination, suspension or revocation of any Authorization (as defined below) of
the Company or any of its subsidiaries or result in any other impairment of the
rights of the holder of any such Authorization.
(n) Except as may be described in the Offering Memorandum, there are no
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, which might result, singly or in the
aggregate, in a Material Adverse Effect.
(o) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Authorization, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(q) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company and
its subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including, without
limitation, the
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receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not,
singly or in the aggregate, have a Material Adverse Effect.
(r) The accountants, Ernst & Young LLP, that have certified the
financial statements and supporting schedules included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Company and the Guarantors, as required by the
Act and the Exchange Act. The historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Memorandum
and the Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(s) The historical financial statements, together with related schedules
and notes forming part of the Offering Memorandum (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of the Company and its
subsidiaries on the basis stated in the Offering Memorandum at the respective
dates or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data set forth in the Offering Memorandum (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company and its subsidiaries.
(t) The pro forma financial information included in the Preliminary
Offering Memorandum and the Offering Memorandum have been prepared on a basis
consistent with the historical financial statements of the Company and its
subsidiaries and give effect to assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Preliminary Offering Memorandum and
the Offering Memorandum.
(u) Neither the Company nor any of its subsidiaries is, nor after giving
effect to the offering and sale of the Series A Notes and the application of the
net proceeds thereof as described in the Offering Memorandum, will be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended.
(v) 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
Act with respect to any securities of the Company or such Guarantor or to
require the Company or such Guarantor to
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include such securities with the Notes and Subsidiary Guarantees registered
pursuant to any Registration Statement.
(w) Neither the Company nor any of its subsidiaries, nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Series A
Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System.
(x) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed (or
has informed the Company or any Guarantor that it is considering imposing) any
condition (financial or otherwise) on the Company's or any Guarantor's retaining
any rating assigned to the Company or any Guarantor, any securities of the
Company or any Guarantor or (ii) has indicated to the Company or any Guarantor
that it is considering (a) the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (b) any change in the outlook for
any rating of the Company, any Guarantor or any securities of the Company or any
Guarantor.
(y) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in Offering Memorandum (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any material adverse change or any development
involving a prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Company or any of
its subsidiaries and (iii) neither the Company nor its subsidiaries have
incurred any material liability or obligation, direct or contingent.
(z) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
(aa) When the Series A Notes and the Subsidiary Guarantees are issued
and delivered pursuant to this Agreement, neither the Series A Notes nor the
Subsidiary Guarantees will be of the same class (within the meaning of Rule 144A
under the Act) as any security of the Company or the Guarantors that is listed
on a national securities exchange registered under Section 6 of the Exchange Act
or that is quoted in a United States automated inter-dealer quotation system.
(bb) No form of general solicitation or general advertising (as defined
in Regulation D under the Act) was used by the Company, the Guarantors or any of
their respective representatives (other than the Initial Purchasers, as to whom
the Company and the Guarantors make no representation) in connection with the
offer and sale of the Series A Notes contemplated hereby, including, but not
limited to, articles, notices or other communications published in any
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newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as the
Series A Notes have been issued and sold by the Company within the six-month
period immediately prior to the date hereof.
(cc) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(dd) None of the Company, the Guarantors nor any of their respective
affiliates or any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company and the Guarantors make no representation)
has engaged or will engage in any directed selling efforts within the meaning of
Regulation S under the Act ("Regulation S") with respect to the Series A Notes
or the Subsidiary Guarantees.
(ee) Except for offers and sales you may make on behalf of the Company
as contemplated by this Agreement, none of the Company, the Guarantors nor any
of their respective affiliates or any person acting on its or their behalf has
taken or will take any action with respect to any offer or sale of the Notes to
any non-U.S. Person (as defined in Regulation S).
(ff) The sale of the Series A Notes by the Initial Purchasers pursuant
to Regulation S is not a part of a plan or scheme on the part of the Company or
any of its Subsidiaries to evade the registration provisions of the Act.
(gg) The Company, the Guarantors and their respective affiliates and
all persons acting on their behalf (other than the Initial Purchasers, as to
whom the Company and the Guarantors make no representation) have complied with
and will comply with the offering restrictions requirements of Regulation S in
connection with the Offering of the Series A Notes outside the United States
and, in connection therewith, the Offering Memorandum will contain the
disclosure required by Rule 902(h).
(hh) The Series A Notes sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule 903(c)(3) of the Act and only upon
certification of beneficial ownership of such Series A Notes by non-U.S. persons
or U.S. persons who purchased such Series A Notes in transactions that were
exempt from the regulation requirements of the Act.
(ii) No registration under the Act of the Series A Notes or the
Subsidiary Guarantees is required for the sale of the Series A Notes and the
Subsidiary Guarantees to the Initial Purchasers as contemplated or for the
Exempt Resales assuming the accuracy of the Initial Purchasers' representations
and warranties and agreements set forth in Section 7 hereof.
(jj) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how
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(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names ("intellectual property") currently employed by them in connection
with the business now operated by them except where the failure to own or
possess or otherwise be able to acquire such intellectual property would not,
singly or in the aggregate, have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of infringement of
or conflict with asserted rights of others with respect to any of such
intellectual property which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
(kk) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of its subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers at a cost that would not
have a Material Adverse Effect.
(ll) Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between or among the Company or any of its
subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the other
hand, which would be required by the Act to be described in the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 filed with the Commission.
(mm) There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or threatened against the Company or
any of its subsidiaries before the National Labor Relations Board or any state
or local labor relations board, (ii) strike, labor dispute, slowdown or stoppage
pending or threatened against the Company or any of its subsidiaries or (iii)
union representation question existing with respect to the employees of the
Company or any of its subsidiaries, except in the case of clauses (i), (ii) and
(iii) for such actions which, singly or in the aggregate, would not have a
Material Adverse Effect. To the best knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to the Company
or any of its subsidiaries for any employees not currently covered by a
collective bargaining agreement.
(nn) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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(oo) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(pp) All indebtedness of the Company and the Guarantors that will be
repaid with the proceeds of the issuance and sale of the Series A Notes was
incurred, and the indebtedness represented by the Series A Notes is being
incurred, for proper purposes and in good faith and each of the Company and the
Guarantors was, at the time of the incurrence of such indebtedness that will be
repaid with the proceeds of the issuance and sale of the Series A Notes, and
will be on the Closing Date (after giving effect to the application of the
proceeds from the issuance of the Series A Notes) solvent, and had at the time
of the incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Series A Notes and will have on the Closing Date
(after giving effect to the application of the proceeds from the issuance of the
Series A Notes) sufficient capital for carrying on their respective business and
were, at the time of the incurrence of such indebtedness that will be repaid
with the proceeds of the issuance and sale of the Series A Notes, and will be on
the Closing Date (after giving effect to the application of the proceeds from
the issuance of the Series A Notes) able to pay their respective debts as they
mature.
(qq) No action has been taken and no law, statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the execution, delivery and performance of any of the Operative
Documents, the issuance of the Series A Notes or the Subsidiary Guarantees, or
suspends the sale of the Series A Notes or the Subsidiary Guarantees in any
jurisdiction referred to in Section 5(e); and no injunction, restraining order
or other order or relief of any nature by a federal or state court or other
tribunal of competent jurisdiction has been issued with respect to the Company
or any of its subsidiaries which would prevent or suspend the issuance or sale
of the Series A Notes or the Subsidiary Guarantees in any jurisdiction referred
to in Section 5(e).
(rr) Each certificate signed by an officer of the Company or any
Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the Company or
such Guarantor to the Initial Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each Initial
Purchaser, severally and not jointly, represents and warrants to the Company and
the Guarantors, and agrees that:
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(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A
Notes with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A, (y) a limited number
of Accredited Institutions and (z) in offshore transactions in reliance upon
Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Series A
Notes only from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Each of the Initial Purchasers further agrees that it will offer to
sell the Series A Notes only to, and will solicit offers to buy the Series A
Notes only from (A) Eligible Purchasers that the Initial Purchasers reasonably
believe are QIBs (B) a limited number of Accredited Institutions, (C) Regulation
S Purchasers, in each case, that agree that (x) the Series A Notes purchased by
them may be resold, pledged or otherwise transferred within the time period
referred to under Rule 144(k) (taking into account the provisions of Rule 144(d)
under the Act, if applicable) under the Act, as in effect on the date of the
transfer of such Series A Notes, only (i) to the Company or any of its
subsidiaries, (ii) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Act, (iii) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the requirements of
Rule 904 of the Act, (iv) in a transaction meeting the requirements of Rule 144
under the Act, (v) to an Accredited Institution that, prior to such transfer,
furnishes the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Series A Note (the
form of which is attached to the Indenture) and an opinion of counsel
acceptable to the Company that such transfer is in compliance with the Act, (vi)
in accordance with another exemption from the registration requirements of the
Act (and based upon an opinion of counsel acceptable to the Company) or (vii)
pursuant to an effective registration statement and, in each case, in accordance
with the applicable securities laws of any state of the United States or any
other applicable jurisdiction and (y) they will deliver to each person to whom
such Series A Notes or an interest therein is transferred a notice substantially
to the effect of the foregoing.
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<PAGE>
(e) None of such Initial Purchasers nor any of their affiliates
or any person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Series A Notes or the Subsidiary Guarantees.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act. All offers and
sales of the Series A Notes by such Initial Purchaser prior to the expiration of
the restricted period specified in Rule 903(c)(2) of Regulation S will be made
only: (i) in accordance with the provisions of Rule 903 or 904, (ii) pursuant to
registration of the Series A Notes under the Act or (iii) pursuant to an
available exemption from the registration requirements of the Act.
(h) Such Initial Purchaser further represents and agrees that
(i) it has not offered or sold and will not offer or sell any Series A Notes to
persons in the United Kingdom prior to the expiration of the period of six
months from the issue date of the Series A Notes, except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Series A Notes in, from or otherwise
involving the United Kingdom and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Series A Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
(i) Such Initial Purchaser agrees that it will not offer, sell
or deliver any of the Series A Notes in any jurisdiction outside the United
States except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Series A Notes in
such jurisdictions. Such Initial Purchaser understands that no action has been
taken to permit a public offering in any jurisdiction outside the United States
where action would be required for such purpose.
(j) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Series A Notes in the United States or to,
or for the benefit or account of, a U.S. Person (other than a distributor), in
each case, as defined in Rule 902 under the Act (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the commencement
of the offering of the Series A Notes pursuant hereto and the Closing Date,
other
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than in accordance with Regulation S of the Act or another exemption from the
registration requirements of the Act. Such Initial Purchaser agrees that, during
such 40-day restricted period, it will not cause any advertisement with respect
to the Series A Notes (including any "tombstone" advertisement) to be published
in any newspaper or periodical or posted in any public place and will not issue
any circular relating to the Series A Notes, except such advertisements as
permitted by and include the statements required by Regulation S.
(k) Such Initial Purchaser agrees that, at or prior to confirmation of a
sale of Series A Notes by it to any distributor, dealer or person receiving a
selling concession, fee or other remuneration during the 40-day restricted
period referred to in Rule 903(c)(3) under the Act, it will send to such
distributor, dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following effect:
"The Series A Notes covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of your distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities
Act), and in connection with any subsequent sale by you of the
Series A Notes covered hereby in reliance on Regulation S during
the period referred to above to any distributor, dealer or
person receiving a selling concession, fee or other
remuneration, you must deliver a notice to substantially the
foregoing effect. Terms used above have the meanings assigned to
them in Regulation S."
(l) Such Initial Purchaser agrees that the Series A Notes offered and
sold in reliance on Regulation S will be represented upon issuance by a global
security that may not be exchanged for definitive securities until the
expiration of the 40-day restricted period referred to in Rule 903(c)(3) of the
Act and only upon certification of beneficial ownership of such Series A Notes
by non-U.S. persons or U.S. persons who purchased such Series A notes in
transactions that were exempt from the registration requirements of the Act.
The Initial Purchasers acknowledge that the Company and the Guarantors and,
for purposes of the opinions to be delivered to each Initial Purchaser pursuant
to Section 9 hereof, counsel to the Company and the Guarantors and count to the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and the Initial Purchasers hereby consent to such reliance.
8. Indemnification.
(a) The Company and each Guarantor agree, jointly and severally, to
indemnify and hold harmless the Initial Purchasers, their directors, their
officers and each person,
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if any, who controls such Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgements (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering Memorandum
(or any amendment or supplement thereto), the Preliminary Offering Memorandum or
any Rule 144A Information provided by the Company or any Guarantor to any holder
or prospective purchaser of Series A Notes pursuant to Section 5(h) or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to an Initial Purchaser furnished in
writing to the Company by such Initial Purchaser; provided, however, that the
foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial Purchaser who failed to
deliver an Offering Memorandum (as then amended or supplemented, provided by the
Company to the several Initial Purchasers in the requisite quantity and on a
timely basis to permit proper delivery on or prior to the Closing Date) to the
person asserting any losses, claims, damages and liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Offering Memorandum.
(b) The Initial Purchasers agree to indemnify and hold harmless the
Company and the Guarantors, and their respective directors and officers and each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Company or the Guarantors, to the same
extent as the foregoing indemnity from the Company and the Guarantors to the
Initial Purchasers but only with reference to information relating to the
Initial Purchasers furnished in writing to the Company by the Initial Purchasers
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchasers). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the
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employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory to
the indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by First Chicago, in
the case of the parties indemnified pursuant to Section 8(a), and by the
Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchasers on the
other hand from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand and the Initial Purchasers, on the other hand, shall
be deemed to be in the same
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proportion as the total net proceeds from the offering of the Series A Notes
(after underwriting discounts and commissions, but before deducting expenses)
received by the Company, and the total discounts and commissions received by the
Initial Purchasers bear to the total price to investors of the Series A Notes,
in each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or any Guarantor, on the one
hand, or the Initial Purchasers, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Guarantors and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation even if the Initial Purchasers were
treated as one entity for such purpose, or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Series A Notes purchased by each of the Initial Purchasers
hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of the
Initial Purchasers to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
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(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or any Guarantor or any securities of the Company or any Guarantor (including,
without limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there
shall not have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the Company or
any Guarantor or any securities of the Company or any Guarantor by any such
rating organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considered assigning) a lower rating to the
Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change or any
development involving a prospective change in the capital stock or in the
long-term debt of the Company or any of its subsidiaries and (iii) neither the
Company nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in the judgment of First
Chicago, is material and adverse and, in the judgment of First Chicago, makes it
impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date certificates dated the
Closing Date, signed by the President or Chairman and Treasurer or Chief
Financial Officer of the Company and each of the Guarantors, confirming the
matters set forth in Sections 6(y), 9(a) and 9(b) and stating that each of the
Company and the Guarantors has complied with all the agreements and satisfied
all of the conditions herein contained and required to be complied with or
satisfied on or prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for the Initial Purchasers), dated the Closing Date, of Miller
Canfield, counsel for the Company and the Guarantors, to the effect that:
(i) 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 Offering Memorandum.
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<PAGE>
(ii) Based solely on certificates of public officials, each of the
Company and the Guarantors is duly qualified and is in good standing as a
foreign corporation authorized to do business in the states set forth in
such opinion or an exhibit thereto.
(iii) All of the outstanding shares of capital stock of each of the
Guarantors has been duly authorized and validly issued and are fully paid
and non-assessable, and each Guarantor's stock records, stock certificates
and minute books indicate that such Guarantor is owned by the Company in
the percentage set forth on Schedule A, and to such counsel's knowledge are
free and clear of any Lien, except as described in the Offering Memorandum.
(iv) The Series A Notes have been duly authorized and, when 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 this Agreement, will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company, enforceable in
accordance with their terms except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (y) equitable principles of general applicability
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
(v) The Subsidiary Guarantees have been duly authorized by each
Guarantor and will be duly authorized with the Series A 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 this Agreement, the Subsidiary Guarantees endorsed thereon will be
entitled to the benefits of the Indenture and will be valid and binding
obligations of the Guarantors, enforceable in accordance with their terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (y)
equitable principles of general applicability (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(vi) The Indenture has been duly authorized, executed and delivered by
the Company and each Guarantor and is a valid and binding agreement of the
Company and each Guarantor, enforceable against the Company and each
Guarantor in accordance with its terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors rights generally and (y) equitable principles of general
applicability regardless of whether enforceability is considered in a
proceeding at law or in equity).
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<PAGE>
(vii) This Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors.
(viii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and each of
the Guarantors and is a valid and binding agreement of the
Company and each Guarantor, enforceable against the Company and
each Guarantor in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (y)
equitable principles of general applicability (regardless of
whether enforceability is considered in a proceeding at law or
in equity).
(ix) The Series B Notes have been duly authorized.
(x) 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 Notes," "Description of Other
Indebtedness" and "Plan of Distribution" in the Offering
Memorandum, insofar as such statements constitute a summary of
the legal matters of documents referred to therein, fairly
present in all material respects such legal matters or
documents.
(xi) Such counsel believes the summary contained in the
Offering Memorandum under the caption "Certain Federal Tax
Considerations for Foreign Persons" is an accurate summary of
the issues described therein in all material respects.
(xii) The execution, delivery and performance of this
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 hereof and thereof and the
consummation of the transactions described herein and 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
provisions of, or a default under the charter or by-laws of the
Company or any of the Guarantors or (except as described in the
Offering Memorandum) any indenture, loan agreement, mortgage,
lease or other agreement or instrument, identified to such
counsel as material, to which the Company or any of the
Guarantors is a party or by which the Company or any of the
Guarantors or their respective property is bound (any of the
foregoing, an "Other Contract", (iii) violate or conflict with
any applicable law, rule, or regulation, or any judgment, order
or decree known to such counsel of any court or any
25
<PAGE>
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 the obligation to
create or impose) a Lien under any Other Contract.
(xiii) Such counsel does 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 Offering Memorandum (it being
understood that such counsel has not conducted any search of any
court docket or other governmental records in connection
therewith).
(xiv) Neither the Company nor any of its subsidiaries is
nor, after giving effect to the offering and sale of the Series
A Notes and the application of the net proceeds thereof as
described in the Offering Memorandum, will be, an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
(xv) To the best of such counsel's 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 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.
(xvi) 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 Series A Notes to the
Initial Purchasers in the manner contemplated by this Agreement
or in connection with the Exempt Resales to qualify the
Indenture under the TIA.
(xvii) No registration under the Act of the Series A
Notes is required for the sale of the Series A Notes to the
Initial Purchasers as contemplated by this Agreement or for the
Exempt Resales assuming that (i) 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 this Agreement, and (iii)
the accuracy of the representations of the Company and the
Guarantors set
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<PAGE>
forth in Sections 5(h) and 6(bb), (dd) (ee), (gg) and (hh) of
this Agreement.
(xviii) Such counsel has no reason to believe that, as
of the date of the Offering Memorandum or as of the Closing
Date, the Offering Memorandum, as amended or supplemented, if
applicable (except for the financial statements and other
financial data included therein, as to which such counsel need
not express any belief) contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The opinion of Miller Canfield described in Section 9(e) above shall be
rendered to you at the request of the Company and the Guarantors and shall so
state therein. Such opinion may be limited to the laws of the State of Michigan
and United States federal law, for purposes of the enforceability opinion, may
assume that New York law is identical to Michigan law and may assume that the
Arizona business corporation law is identical to the Michigan Business
Corporation Act. In giving such opinion with respect to the matters covered by
Section 9(e)(xviii), Miller Canfield may state that their opinion and belief are
based upon their participation in the preparation of the Offering Memorandum and
any amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(g) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from Ernst & Young LLP, independent
public accountants, containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to the Initial Purchasers
with respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(h) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(i) The initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company, the Guarantors and the Trustee.
(j) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company and the Guarantors.
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<PAGE>
(k) Neither the Company nor the Guarantors shall have failed at or prior
to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or the
Guarantors, as the case may be, at or prior to the Closing Date.
(l) The Company and the Guarantors shall have executed this Agreement
and the Initial Purchasers shall have received an original copy thereof, duly
executed by the Company and the Guarantors.
(m) On or prior to the Closing Date, the Company, and the Company's
subsidiaries that are party thereto, shall have executed and delivered the New
Credit Facility (as defined in the Offering Memorandum), and the New Credit
Facility shall be in full force and effect on terms substantially as described
in the Offering Memorandum and no default or event of default shall have
occurred thereunder.
(n) On or prior to the Closing Date, the Company and Harvard Private
Capital Holdings, Inc. shall have executed and delivered an amendment to that
certain Securities Purchase Agreement dated as of January 3, 1996 and certain
agreements contemplated in the exhibits thereto (including without limitation
the agreement contemplated by Exhibit 7 thereto), each in form and substance
reasonably satisfactory to the Initial Purchasers.
(o) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Initial Purchasers), dated the Closing Date, of
Canadian counsel for the Company and Numatics, Ltd., to the effect that:
(i) Numatics, Ltd. has been duly incorporated, is validly existing
as a corporation in good standing under the laws of Canada and has the
corporate power and authority to carry on its business and to own, lease
and operate its properties as described in the Offering Memorandum.
(ii) All of the outstanding shares of capital stock of Numatics,
Ltd. have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company in the percentage set forth
on Schedule B. To such counsel's knowledge, all shares owned by the
Company are owned free and clear of any Lien, except as described in the
Offering Memorandum.
10. Effectiveness of Agreement and Termination. This Agreement shall become
effective upon the execution and delivery of this Agreement by the parties
hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchasers by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchasers' judgment, is material and adverse and, in the Initial Purchasers'
judgment, makes it impracticable to market the Series A Notes on the terms and
in the manner
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contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the NASDAQ
National Market or limitation on prices for securities or other instruments on
any such exchange or the NASDAQ National Market, (iii) the suspension of trading
of any securities of the Company or any Guarantor on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchasers or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchasers shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule B bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Series A Notes which such
defaulting Initial Purchasers or Initial Purchasers, as the case may be, agreed
but failed or refused to purchase on such date; provided that in no event shall
the aggregate principal amount of the Series A Notes which any Initial
Purchasers has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of the Series A Notes without the written consent of such
Initial Purchasers. If on the Closing Date any Initial Purchasers or Initial
Purchasers shall fail or refuse to purchase the Series A Notes and the aggregate
principal amount of the Series A Notes with respect to which such default occurs
is more than one-tenth of the aggregate principal amount of the Series A Notes
to be purchased by all Initial Purchasers and arrangements satisfactory to the
Initial Purchasers and the Company for purchase of such the Series A Notes are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Initial Purchasers and the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchasers from liability in respect of any
default of any such Initial Purchasers under this Agreement.
11. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company or any Guarantor,
to Numatics,
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Incorporated, 1450 North Milford Road, Highland, Michigan 48357, (248) 887-4111,
Attention: President, and (ii) if to the Initial Purchasers, c/o First Chicago
Capital Markets, Inc., One First National Plaza, Suite 0701, 8th Floor, Chicago,
Illinois 60670, (312) 732-5600, Attention: High Yield Capital Markets, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantors and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchasers, the
officers or directors of the Initial Purchasers, any person controlling the
Initial Purchasers, the Company, any Guarantor, the officers or directors of the
Company or any Guarantor, or any person controlling the Company or any
Guarantor, (ii) acceptance of the Series A Notes and payment for them hereunder
and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company and each Guarantor, jointly
and severally, agree to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof. The
Company and each Guarantor also agree, jointly and severally, to reimburse the
Initial Purchasers and its officers, directors and each person, if any, who
controls such Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation its rights under this Section 8).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Guarantors, the
Initial Purchasers, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantors and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Series A Notes from the Initial Purchasers
merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
NUMATICS, INCORPORATED
By: /s/ John H. Welker
------------------------------
Name: John H. Welker
Title: President
NUMATION, INC. NUMATECH, INC.
By: /s/ John H. Welker By: /s/ John H. Welker
------------------------------ --------------------------------
Name: John H. Welker Name: John H. Welker
Title: Chairman Title: Chairman
MICRO-FILTRATION, INC. ULTRA AIR PRODUCTS, INC.
By: /s/ John H. Welker By: /s/ John H. Welker
------------------------------ --------------------------------
Name: John H. Welker Name: John H. Welker
Title: Chairman Title: Chairman
MICROSMITH, INC. I.A.E. INCORPORATED
By: /s/ John H. Welker By: /s/ John H. Welker
------------------------------ --------------------------------
Name: John H. Welker Name: John H. Welker
Title: Chairman Title: President
S-1
<PAGE>
Acknowledged and Agreed:
FIRST CHICAGO CAPITAL MARKETS, INC.
BANCBOSTON SECURITIES INC.
By: FIRST CHICAGO CAPITAL MARKETS, INC.
By: /s/ Brad Bernstein
---------------------------
Name: Brad Bernstein
Title: Managing Director
S-2
<PAGE>
SCHEDULE A
GUARANTORS
NUMATION, INC., a Michigan corporation (90% owned by the Company)
NUMATECH, INC., a Michigan corporation (88% owned by the Company)
MICRO-FILTRATION, INC., a Michigan corporation (80% owned by the Company)
ULTRA AIR PRODUCTS, INC., a Michigan corporation (80% owned by the Company)
MICROSMITH, INC., an Arizona corporation (80% owned by the Company)
I.A.E. INCORPORATED, a Michigan corporation (100% owned by the Company)
<PAGE>
SCHEDULE B
SUBSIDIARIES
NUMATION, INC., a Michigan corporation (90% owned by the Company)
NUMATECH, INC., a Michigan corporation (88% owned by the Company)
MICRO-FILTRATION, INC., a Michigan corporation (80% owned by the Company)
ULTRA AIR PRODUCTS, INC., a Michigan corporation (80% owned by the Company)
MICROSMITH, INC., an Arizona corporation (80% owned by the Company)
I.A.E. INCORPORATED, a Michigan corporation (100% owned by the Company)
NUMATICS B.V., organized in the Netherlands (100% owned by the Company)
NUMATICS S.A. DE C.V., organized in Mexico (100% owned by the Company)
NUMATICS S.A.R.L., organized in France (100% owned by the Company)
NUMATICS LTD., organized in the United Kingdom (100% owned by the Company)
NUMATICS, LTD., organized in Canada (100% owned by the Company)
NAC BETEILINGUNGE GMBH, organized in Germany (100% owned by the Company)
NUMATICS, GMBH, organized in Germany (100% owned by the Company)
NUMATICS, K.F.T., organized in Hungary (100% owned by the Company)
NUMATICS LTD, organized in Taiwan (95% owned by the Company)
NUMATICS S.R.L., organized in Italy (100% owned by the Company)
UNIVER GMBH, organized in Germany (100% owned by the Company)
<PAGE>
SCHEDULE C
Principal Amount
Initial Purchaser of Notes
----------------- -----------------
First Chicago Capital Markets, Inc.................... $ 80,500,000
BancBoston Securities Inc............................. $ 34,500,000
Total......................................... $115,000,000
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
Exhibit 10.2.1
================================================================================
_________________
SECURITIES PURCHASE AGREEMENT
_________________
between
NUMATICS, INCORPORATED
and
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
Dated
As of January 3, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. Transactions and Definitions........................................... 1
2. The Securities......................................................... 1
2.1. Notes............................................................ 1
2.2. Warrants......................................................... 2
2.3. Investor Securities Defined...................................... 2
3. Sale and Purchase of Securities........................................ 2
3.1. Agreement to Sell and Purchase................................... 2
3.2. Closing.......................................................... 2
3.3. Use of Proceeds.................................................. 3
3.4. Specifically Prohibited Applications of Proceeds................. 3
4. Representations and Warranties......................................... 3
4.1. Organization, Standing, Subsidiaries, etc........................ 3
4.2. Capitalization................................................... 4
4.3. Reports, Financial Statements and Other Documents................ 5
4.4. Changes in Condition............................................. 9
4.5. Incorporation by Reference....................................... 9
4.6. No Legal Obstacle to Agreement................................... 9
4.7. Foreign Trade Regulations; Government Regulations; Margin Stock.. 10
4.8. Litigation....................................................... 10
4.9. Solvency......................................................... 11
4.10. Disclosure....................................................... 11
5. Investment Representations............................................. 11
5.1. Accredited Investor.............................................. 11
5.2. Experience....................................................... 11
5.3. Investment....................................................... 11
6. Conditions to Purchase................................................. 12
6.1. Related Agreements............................................... 12
6.2. Legal Opinions................................................... 12
6.3. Representations and Warranties; Officers' Certificate............ 12
6.4. Subsidiary Guarantee Agreements.................................. 12
6.5. Security Agreements.............................................. 12
6.6. Employment and Noncompetition Agreements......................... 12
6.7. Tag-Along and Drag-Along Agreement............................... 13
<PAGE>
6.8. Registration Agreement........................................... 13
6.9. Solvency Opinion................................................. 13
6.10. Key Man Insurance................................................ 13
6.11. Proper Proceedings............................................... 13
6.12. Legality; Governmental Authorization............................. 13
6.13. Payment of Transaction Costs..................................... 13
6.14. General.......................................................... 13
7. Repurchase of Warrants and Common Stock................................ 14
8. Covenants Applicable While Any Investor Securities Are Outstanding..... 14
8.1. Charter Amendments............................................... 14
8.2. Right to Attend Board Meetings................................... 14
8.3. Financial Statements............................................. 15
8.4. Conduct of Business.............................................. 17
8.5. Transactions with Affiliates..................................... 17
8.6. Limitations on Issuance of Equity Securities..................... 18
8.7. Equity Participation Rights...................................... 18
8.8. Registration Statements.......................................... 21
8.9. Repurchase....................................................... 22
8.10. Certain Tax and other Valuation Matters.......................... 22
9. Covenants Applicable While Any Notes Are Outstanding................... 22
9.1. Incorporation of Certain Covenants............................... 22
9.2. Amendments to Certain Agreements................................. 23
9.3. Fiscal Year...................................................... 24
9.4. Restrictions on Indebtedness..................................... 24
9.5. Restrictions on Guarantees....................................... 25
9.6. Restrictions on Liens............................................ 25
9.7. Restrictions on Distributions.................................... 27
9.8. Debt Incurrence Test............................................. 27
9.9. Execution of Guarantee Agreements and Security Agreements
by Guarantee Subsidiaries........................................ 28
9.10. Key Man Insurance................................................ 28
10. Defaults............................................................... 28
10.1. Events of Default; Remedies...................................... 28
10.2. Annulment of Defaults............................................ 32
10.3. Waivers.......................................................... 32
10.4. Course of Dealing................................................ 32
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11. Payment on Investor Securities; Transfer; Replacement.................. 32
11.1. Home Office Payment............................................. 32
11.2. Registration, Transfer and Exchange of Notes.................... 32
11.3. Transfer, Exchange, Exercise and Conversion of Warrants......... 33
11.4. Transfer and Exchange of the Capital Stock...................... 33
11.5. Replacement of Lost Securities.................................. 34
12. Restrictions on Transfer............................................... 34
12.1. Restrictive Legend.............................................. 34
12.2. Notice of Proposed Transfer; Opinions of Counsel................ 35
12.3. Termination of Restrictions..................................... 35
12.4. Special Restriction............................................. 35
13. Definitions............................................................ 36
13.1. Terms Defined Elsewhere......................................... 36
13.2. Action.......................................................... 37
13.3. Adjusted Net Operating Income................................... 37
13.4. Affiliate....................................................... 37
13.5. Applicable Percentage........................................... 37
13.6. Business Day.................................................... 37
13.7. By-laws......................................................... 38
13.8. Capitalized Lease............................................... 38
13.9. Charter......................................................... 38
13.10. Code............................................................ 38
13.11. Commission...................................................... 38
13.12. Consolidated.................................................... 38
13.13. Contractual Obligation.......................................... 38
13.14. Default......................................................... 38
13.15. Distribution.................................................... 38
13.16. Exchange Act.................................................... 39
13.17. Equity Securities............................................... 39
13.18. Foreign Trade Regulations....................................... 39
13.19. Generally Accepted Accounting Principles........................ 39
13.20. Governmental Authority.......................................... 39
13.21. Guarantee....................................................... 39
13.22. Guarantee Subsidiary............................................ 40
13.23. Indebtedness.................................................... 40
13.24. Initial Yield to Maturity....................................... 40
13.25. Investment...................................................... 40
13.26. Legal Requirement............................................... 41
13.27. Lien............................................................ 41
13.28. Material Adverse Change; Material Adverse Effect............... . 41
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13.29. Members of the Immediate Family................................ 41
13.30. Net Operating Income........................................... 41
13.31. Person......................................................... 42
13.32. Pro Forma Net Operating Income................................. 42
13.33. Public Sale.................................................... 42
13.34. Required Holders............................................... 42
13.35. Securities Act................................................. 42
13.36. Senior Indebtedness............................................ 42
13.37. Significant Subsidiary......................................... 42
13.38. Stockholder.................................................... 42
13.39. Subject Entity................................................. 43
13.40. Subordinated Indebtedness...................................... 43
13.41. Subsidiary..................................................... 43
13.42. Wholly Owned Subsidiary........................................ 43
13.43. Yield to Maturity.............................................. 43
14. Expenses, Etc.......................................................... 43
15. Notices................................................................ 44
16. Survival of Covenants.................................................. 45
17. Amendments and Waivers................................................. 45
18. Waiver of Jury Trial................................................... 45
19. Service of Process..................................................... 45
20. Miscellaneous.......................................................... 46
-iv-
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I Home Office Payments
Exhibit 2.1 Form Of Senior Subordinated Note
Exhibit A to Exhibit 2.1 Form of PIK Note
Exhibit 2.2 Form of Warrant
Exhibit 4.1.2 Charter of the Company
Exhibit 4.1.3A Stockholders as of Date of Agreement
Exhibit 4.1.3B Stockholders Immediately After Closing
Exhibit 4.1.4A Subsidiaries
Exhibit 4.1.4B Other Investments
Exhibit 4.2.1A Other Agreements Related to Equity Securities as
of Date of Agreement
Exhibit 4.2.1B Other Agreements Related to Equity Securities
Immediately After Closing
Exhibit 4.2.2 Ownership of Subsidiaries
Exhibit 4.3.1 Exceptions to Financial Information
Exhibit 4.4 Transactions Outside of Ordinary Course
Exhibit 6.4 Form of Guarantee Agreement
Exhibit 6.5 Form of Intercreditor Agreement
Exhibit 6.7 Form of Tag-Along and Drag-Along Agreement
Exhibit 6.8 Form of Registration Agreement
Exhibit 7 Put/Call Rights
Exhibit 8.5.1 Transactions Not at Arm's Length
Exhibit 8.5.3 Compensation of Employee Stockholders
Exhibit 9.4.1 Existing Indebtedness
Exhibit 9.6.2 Existing Liens
Exhibit 12.4 Competitors
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<PAGE>
NUMATICS, INCORPORATED
1450 North Milford Road
Highland, Michigan 48357
Telecopier Number: (810) 887-2142
As of January 3, 1996
Harvard Private Capital Holdings, Inc.
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Michael R. Eisenson
Telecopier Number: (617) 523-1063
Ladies and Gentlemen:
In connection with the purchase and sale of securities provided for herein,
the undersigned Numatics, Incorporated, a corporation duly organized and validly
existing under the laws of the State of Michigan (the "Company"), hereby agrees
with you as follows:
1. Transactions and Definitions. Subject to all of the terms and conditions
of this Agreement and in reliance on the representations and warranties set
forth or incorporated by reference herein, the Company proposes to issue and
sell to you the Investor Securities described herein, and to apply the proceeds
therefrom solely as specified in Section 3.3 hereof. Certain terms are used in
this Agreement as specifically defined herein. These definitions are set forth
or referred to in Section 13 hereof.
2. The Securities.
2.1. Notes.
2.1.1. Senior Subordinated Notes. The Company has authorized the
issuance and sale to you of its senior subordinated notes, each in
substantially the form of Exhibit 2.1 hereto (each such note, together with
any note or notes issued in exchange therefor, being referred to herein
individually as a "Senior Subordinated Note" and collectively as the
"Senior Subordinated Notes"), in the aggregate stated principal amount of
$30,000,000 for an aggregate purchase price equal to $26,597,862.
2.1.2. PIK Notes. The Company has authorized the issuance and sale
to the holders from time to time of the Notes of payment-in-kind notes,
each in substantially the
<PAGE>
form of Exhibit A to Exhibit 2.1 hereto (each such note, together with any
note or notes issued in exchange therefor, being referred to herein
individually as a "PIK Note" and collectively as the "PIK Notes"), on the
terms and conditions stated in the Notes.
2.1.3. Notes. Each of the Senior Subordinated Notes and the PIK
Notes, together with each of any Put Notes issued pursuant to Section 7.2
of Exhibit 7 hereto, are referred to herein individually as a "Note" and
collectively as the "Notes".
2.2. Warrants. The Company has authorized the issuance and sale to you
of warrants, each in substantially the form of Exhibit 2.2 hereto, for the
purchase of an aggregate of 1,276.60 shares of the Company's Class A Common
Stock, par value $0.01 per share ("Class A Common Stock"), at a per share
exercise price of $0.01 (each such warrant, together with any warrant or
warrants issued in exchange therefor, being referred to herein as a "Warrant"
and collectively as the "Warrants") for an aggregate purchase price of
$3,102,138.
2.3. Investor Securities Defined. The Senior Subordinated Notes and the
Warrants being issued to you hereunder, together with (i) any securities issued
with respect thereto, upon exercise, conversion or transfer thereof or in
exchange therefor, including without limitation the PIK Notes, the Put Notes and
the shares of Class A Common Stock issued or issuable upon exercise or
conversion of the Warrants, and (ii) any securities issued with respect to, upon
exercise, conversion or transfer of or in exchange for the securities described
in the immediately preceding clause (i) or this clause (ii), are collectively
referred to herein as "Investor Securities"; provided, however, that any such
securities sold in a Public Sale shall cease to be Investor Securities for all
purposes hereof.
3. Sale and Purchase of Securities.
3.1. Agreement to Sell and Purchase. Based on your representations and
warranties contained in Section 5 hereof, the Company hereby agrees to issue and
sell to you, and, subject to all of the terms and conditions hereof and in
reliance on the representations and warranties of the Company set forth or
incorporated by reference or otherwise referred to herein, you hereby agree to
purchase from the Company, at the Closing, the Senior Subordinated Notes and the
Warrants, at the respective purchase prices specified in Sections 2.1.1 and 2.2
hereof.
3.2. Closing. The closing of the purchase and sale of the Senior
Subordinated Notes and the Warrants (the "Closing") shall take place at 11:00
a.m., Boston, Massachusetts time, at the offices of Ropes & Gray, One
International Place, Boston, Massachusetts on January 3, 1996 or at such other
time and place as the Company and you may agree upon (the date on which the
Closing occurs being herein referred to as the "Closing Date"). At the Closing,
the Company will, unless otherwise requested, deliver to you a single note
evidencing the aggregate principal amount of Senior Subordinated Notes to be
issued to you by the Company hereunder and a single warrant evidencing the
aggregate number of warrants to be issued to you by the Company hereunder, each
registered in your name, against payment of the purchase price therefor by wire
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<PAGE>
transfer of immediately available funds to a single account of the Company
specified by notice from the Company to you not less than three Business Days
prior to the Closing Date.
3.3. Use of Proceeds. The Company covenants that it will apply the
proceeds of the Investor Securities to be issued and sold by it to you at the
Closing for the repurchase of its capital stock pursuant to the Related
Agreements referred to in Section 4.3.2.2 hereof, to refinance certain
indebtedness, to satisfy its working capital needs and those of its
Subsidiaries, and for general corporate purposes.
3.4. Specifically Prohibited Applications of Proceeds. In no event shall
the Company, directly or indirectly, apply any part of the proceeds from the
issuance and sale hereunder of the Investor Securities (i) to any transaction
prohibited by the Foreign Trade Regulations, or (ii) for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of any regulation, interpretation or ruling of the Board of
Governors of the Federal Reserve System, all as from time to time in effect
("Margin Stock"), or refunding any Indebtedness incurred for such purpose.
4. Representations and Warranties. In order to induce you to enter into this
Agreement and to purchase the Investor Securities to be purchased by you
hereunder, the Company hereby represents and warrants that:
4.1. Organization, Standing, Subsidiaries, etc.
4.1.1. The Company. The Company is a duly organized and validly
existing corporation in good standing under the laws of the State of
Michigan, with all necessary corporate power and authority to execute,
deliver and perform this Agreement and each other Related Agreement to
which it is or will be a party, to issue, sell and perform the Investor
Securities, and to carry on the business now conducted or currently
proposed to be conducted by it. The Company has taken all corporate action
necessary to authorize this Agreement, the other Related Agreements to
which it is or will be a party and the issuance of the Investor Securities
and to make each such document the legal, valid, binding and enforceable
obligation it purports to be. This Agreement, each other Related Agreement
to which the Company is or will be a party and the Investor Securities have
been (or, as applicable, will have been at or prior to the Closing, or, in
the case of the PIK Notes, will be at or prior to the time they are
received in payment of interest on the Senior Subordinated Notes) duly
executed and delivered by the Company.
4.1.2. Charter. Attached hereto as Exhibit 4.1.2 is a correct and
complete copy of the Charter of the Company as in effect at the execution
hereof and as it will be in effect at the Closing.
4.1.3. Stockholders. As of the date of this Agreement, the only
Stockholders are those listed on Exhibit 4.1.3A hereto. Immediately after
the Closing and giving effect
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<PAGE>
to the application of the proceeds of the sale of the Investor Securities
to be sold to you at the Closing, the only Stockholders will be those
listed on Exhibit 4.1.3B hereto.
4.1.4. Subsidiaries; Investments. The Company has no Subsidiaries
other than those listed on Exhibit 4.1.4A hereto. Each Subsidiary is a duly
organized and validly existing corporation in good standing under the laws
of its state of incorporation, with all necessary corporate power and
authority to execute, deliver and perform each Related Agreement to which
it is or will be a party and to carry on the business now conducted or
currently proposed to be conducted by it. Each Subsidiary has taken all
corporate action necessary to authorize each Related Agreement, if any, to
which it is or will be a party, and to make each such document the legal,
valid, binding and enforceable obligation it purports to be. Each Related
Agreement, if any, to which any Subsidiary is or will be a party has been
(or, as applicable, will have been at or prior to the Closing) duly
executed and delivered by such Subsidiary. No Subject Entity has any
Investment in any Person other than a Subsidiary, other than those
described on Exhibit 4.1.4B hereto.
4.1.5. Qualification. Each Subject Entity is duly qualified to do
business as a foreign corporation and is in good standing as such in each
jurisdiction in which it is required to be so qualified and is duly
authorized, qualified and licensed under all laws, regulations, ordinances
or orders of public authorities, or otherwise, to carry on its business in
the places and in the manner presently conducted and proposed to be
conducted, except for such failures to be so qualified or authorized,
qualified and licensed that have not had and will not have a Material
Adverse Effect.
4.2. Capitalization.
4.2.1. Capital Stock of the Company; Options, Etc. The authorized
capital stock of the Company consists and will consist as at the Closing
solely of 50,000 shares of Class A Common Stock, 150,000 shares of Class B
Common Stock, par value $0.01 per share ("Class B Common Stock"), 50,000
shares of Class C Common Stock, par value $0.01 per share ("Class C Common
Stock"; the Class A Common Stock, Class B Common Stock and Class C Common
Stock being referred to collectively herein as "Common Stock"), and 50,000
shares of Preferred Stock, par value $0.01 per share ("Preferred Stock"),
of which 35,000 shares have been designated Series A Preferred Stock
("Series A Preferred Stock") and 10,000 shares have been designated Series
B Preferred Stock ("Series B Preferred Stock"). As of the date of this
Agreement, the Company has outstanding 20,000 shares of Class A Common
Stock, 62,727.28 shares of Class B Common Stock, 17,272.72 shares of Class
C Common Stock and 12,788.12393 shares of Class A Preferred Stock, owned of
record as set forth in Exhibit 4.1.3A hereto, all of which have been
validly issued and are fully paid and nonassessable. After giving effect to
the consummation of the Closing, the Company will have no outstanding
capital stock except for 20,000 shares of Class A Common Stock, which shall
be owned of record as set forth in Exhibit 4.1.3B hereto, all of which will
be validly issued, fully paid and
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<PAGE>
nonassessable. When issued and paid for as provided for in this Agreement,
the Investor Securities will be subject to no Lien except restrictions on
transfer imposed by this Agreement, the other Related Agreements and
applicable securities laws and Liens, if any, created by you. Except as
described in Exhibits 4.2.1A and 4.2.2 hereto, no Subject Entity has
outstanding, and except as described in Exhibits 4.2.1B and 4.2.2 hereto,
immediately after giving effect to the Closing no Subject Entity will have
outstanding, in each case other than as created by or pursuant to this
Agreement, (a) any Equity Securities, or (b) any Contractual Obligation to
repurchase or otherwise acquire or retire any of its Equity Securities.
4.2.2. Subsidiaries. All of the outstanding shares of capital stock
of each Subsidiary have been duly and validly authorized and issued, and
are fully paid, nonassessable and owned, beneficially and of record, as set
forth in Exhibit 4.2.2 hereto, subject to no Lien or restriction except
Liens securing the Senior Indebtedness, Liens securing the Notes and
restrictions on transfer imposed by this Agreement and the other Related
Agreements and applicable securities laws, and except as described in
Exhibit 4.2.2.
4.2.3. Reservation of Class A Common Stock. The shares of Class A
Common Stock issuable upon exercise or conversion of the Warrants have been
duly authorized and reserved for issuance by all necessary corporate action
on the part of the Company, and such shares, when issued upon such exercise
or conversion (as applicable), will be duly and validly issued, fully paid
and nonassessable.
4.2.4. Issuance of Securities. All outstanding securities of each
Subject Entity have been, and all securities of each Subject Entity
outstanding on the Closing Date will have been, issued in accordance with
all applicable Legal Requirements, including without limitation the
Securities Act and state "blue sky" laws.
4.3. Reports, Financial Statements and Other Documents.
4.3.1. Financial Information. You have been furnished with true,
complete and correct copies of each of the following:
(a) The consolidated and consolidating balance sheets of the Subject
Entities as of December 31, 1994 and the related consolidated and
consolidating statements of earnings and shareholders equity and
cash flows for the fiscal year then ended, accompanied by the
notes thereto and (with respect to such consolidated statements)
the report thereon of Ernst & Young, LLP, and similar financial
statements as at the end of and for the preceding fiscal year
accompanied by the notes thereto and auditors' report thereon.
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<PAGE>
(b) The unaudited consolidated and consolidating balance sheets of
the Subject Entities as of September 30, 1995 and the related
unaudited consolidated and consolidating statements of earnings
and stockholders equity and cash flows for the fiscal quarter and
portion of the fiscal year then ended.
(c) Monthly unaudited consolidated and consolidating financial
statements of the Subject Entities for internal use for the
months of October and November, 1995.
(d) The budgeted consolidated and consolidating financial statements
of the Subject Entities for the periods ended December 31 of each
of 1995 and 1996.
(e) Pro forma projections of consolidated financial results of the
Subject Entities for each of the fiscal years ended December 31,
1997 through 2000.
(f) The pro forma consolidated capitalization of the Subject
Entities, as of the Closing Date, as if the Closing Date occurred
on December 31, 1995.
The financial statements (including the notes thereto, if any)
referred to in clauses (a) and (b) above were properly prepared in
accordance with generally accepted accounting principles consistently
applied (except as to changes described therein and except, in the case of
the financial statements described in clause (b) above, for the absence of
footnotes), and such financial statements and the financial statements
referred to in clause (c) above present fairly the financial condition of
the Persons covered thereby at the respective dates thereof and the results
of their operations for the periods covered thereby subject, in the case of
interim financial statements, to normal year-end adjustments and the
absence of footnotes.
Except as described in Exhibit 4.3.1, the budgeted, projected and pro
forma information referred to in clauses (d), (e) and (f) above was
prepared in good faith, was reasonable to the Company when prepared and
continues to be reasonable as of the Closing Date, based upon the
assumptions stated therein, it being understood that the Company is not
warranting the actual results of operations of the Subject Entities, which
will depend in part upon the occurrence of the assumptions stated therein,
general economic conditions and the normal and ordinary competitive and
operating risks associated with the business of the Subject Entities, which
are not within the control of the Subject Entities.
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<PAGE>
The Company is not aware of any fact which casts doubt on the validity
in any material respect of the pro forma capitalization referred to in
clause (f) above. After giving effect to the transactions contemplated
hereby, the Company does not and will not have any material contingent
liabilities which are not referred to in said pro forma capitalization or
on the financial statements referred to above or the notes thereto.
4.3.2. Other Agreements. The Company has furnished or caused to be
furnished to you (i) true, correct and complete executed or conformed
copies of the documents listed in Sections 4.3.2.1 through 4.3.2.3 hereof,
inclusive, which have been executed on or prior to the date hereof and of
any amendments thereto, modifications thereof or waivers granted
thereunder, and (ii) true, correct and complete copies of the documents
listed in Sections 4.3.2.1 through 4.3.2.3 hereof, inclusive, which have
not yet been executed, in the exact form in which they will be executed on
or prior to, and will be in effect on, the Closing Date. This Agreement,
the Investor Securities, each Guarantee Agreement, each Employment
Agreement, the Tag-Along Agreement, the Intercreditor Agreement and the
Registration Agreement are referred to collectively herein as the
"Specified Related Agreements," and the Specified Related Agreements
together with the documents listed in Sections 4.3.2.1 through 4.3.2.3
hereof, inclusive, are referred to collectively herein as the "Related
Agreements". References to any one of the Related Agreements shall mean
such Related Agreement in the form so furnished to you, without regard to
any amendment, modification, waiver, change, limitation or termination of
such document which is made or otherwise becomes effective after the date
hereof and prior to the payment in full of all obligations in respect of
Notes, unless such amendment, modification, waiver, change, limitation or
termination has been made in compliance with Section 9.2 hereof, and shall
include other documents, exhibits and schedules which are attached thereto
or incorporated therein by reference.
4.3.2.1. Bank Credit Agreement Documents.
(a) Loan Agreement dated as of January 3, 1996 between
Numatics, Incorporated and certain of its Subsidiaries party thereto
from time to time, the lenders party thereto from time to time, and
The First National Bank of Boston, as Managing Agent, and NBD Bank, as
Administrative Agent
(b) Promissory Notes executed by the Company and each of the
Subsidiaries referred to in (a) above.
(c) Security Agreements and Mortgages executed by the
Company and its Subsidiaries
(d) Guarantee Agreement executed by Numatech, Inc.
(e) Guarantee Agreement executed by Numation, Inc.
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(f) Guarantee Agreement executed by Micro-Filtration, Inc.
(g) Guarantee Agreement executed by MicroSmith, Inc.
(h) Guarantee Agreement executed by Ultra Air
Products, Inc.
(i) Pledge Agreement
(j) Guarantee Agreement of the Company
(k) any other present or future guarantee agreements or
documents granting a security interest or lien executed by the Company
or any of its Subsidiaries
The "Bank Credit Agreement" means the documents listed in this Section
4.3.2.1, (together with any accompanying security documents), as any
of the foregoing may be amended, restated, renewed, extended,
restructured, supplemented, or otherwise modified from time to time in
accordance with Section 9.2.2 hereof.
4.3.2.2. Repurchase Agreements.
(a) Agreement dated October 10, 1995 between Norwest Equity
Partners IV, Greylock Investments Limited Partnership, Greylock
Limited Partnership, Heller Financial, Inc. and Numatics, Incorporated
(b) Agreement dated October 31, 1995 between State Treasurer of
the State of Michigan et al. and Numatics, Incorporated
(c) Exercise of Option
(d) Mutual Termination Agreement
(e) Promissory Note issued by Numatics, Incorporated to Norwest
Equity Partners IV
(f) Collateral Pledge Agreement
4.3.2.3. Other Agreements.
(a) Employment Agreement with John H. Welker
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(b) Noncompetition Agreements with John E. Acuff; David K. Dodds;
Henry Fleischer; Bruce W. Hoppe; David King; Donald E. McGeachy;
Robert P. Robeson; and Philip Robinson
(c) Amended Stock Transfer Agreement dated January 3, 1996
(d) Amended and Restated Deferred Compensation Plan dated
December 28, 1995
(e) Termination of Trust
(f) Stock Purchase and Transfer Restriction Agreement by and
among Robert L. McKay and Numatics, Incorporated, dated January 24,
1995, as amended by the First Amendment dated January 24, 1995.
(g) Stock Purchase and Transfer Restriction Agreement among
Robert B. and Pamela S. Nuckles and Numatics, Incorporated, dated as
of July 31, 1992.
(h) Stock Purchase and Transfer Restriction Agreement among
William S. and Dawn C. Smith and Numatics, Incorporated, dated
September 25, 1995.
(i) Stock Transfer Agreement among Jeffrey R. Schneid, Numatics,
Incorporated and Numation, Inc. dated September 1, 1994.
(j) Stock Transfer Agreement among Richard L. Dalton, Jr.,
Numatics, Incorporated and Numatech, Inc.
(k) Numatics, Incorporated Voting Agreement
No Subject Entity is a party to or bound by any Contractual Obligation (i)
relating to Indebtedness, or (ii) affecting the Equity Securities of any Subject
Entity or the voting thereof, which, in either case, is not a Related Agreement
or referred to in one or more of the Related Agreements.
4.4. Changes in Condition. Since December 31, 1994, there has been no
Material Adverse Change, and since December 31, 1994, no Subject Entity has
entered into any material transaction outside of the ordinary course of business
except as described on Exhibit 4.4 hereto or as disclosed elsewhere herein.
4.5. Incorporation by Reference. Each of the representations and
warranties made by any Subject Entity in any of the agreements listed in Section
4.3.2.1 to which such Subject Entity is a party or in any document delivered
pursuant thereto at the Closing or otherwise is
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incorporated herein by reference with the same force and effect as if fully set
forth herein together with the definitions of the defined terms used therein,
mutatis mutandis, so that references to the recipient of any such
representations and warranties shall be deemed to be references to you. Each
such representation and warranty so incorporated herein by reference is true and
correct on the date hereof as if made on and as of the date hereof and is hereby
confirmed directly by the Company to you (without regard to any limitation on
the survival of representations and warranties). The Company has no reason to
believe and does not believe that any of the representations and warranties made
by any Person (other than the Subject Entities) in any of the other Related
Agreements or in any document delivered pursuant thereto at the Closing or
otherwise is not true and correct in all material respects.
4.6. No Legal Obstacle to Agreement. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to herein or therein or contemplated hereby or thereby, nor
the fulfillment of the terms hereof or thereof or of any agreement or instrument
referred to in this Agreement or any other Related Agreement, has constituted or
resulted in or will constitute or result in (i) a breach of the provisions of
any Contractual Obligation to which any Subject Entity is party or by which it
is bound or of its Charter or By-laws, or (ii) assuming the accuracy of your
representation, and warranties in Section 5 hereof, a violation of any Legal
Requirement applicable to any Subject Entity, or (iii) the creation under any
Contractual Obligation of any Lien upon any of the assets of any Subject Entity.
No approval, authorization or other action by any Governmental Authority or any
other Person is required to be obtained by any Subject Entity in connection with
the execution, delivery and performance of this Agreement or any other Related
Agreement or the Investor Securities or the transactions contemplated hereby or
thereby, except for such approvals as will have been obtained and shall be in
full force and effect as of the Closing Date, and copies of which shall have
been furnished to you at or prior to the Closing.
4.7. Foreign Trade Regulations; Government Regulations; Margin Stock.
4.7.1. Foreign Trade Regulations. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the issuance and sale
of the Investor Securities by the Company hereunder and the application of
the proceeds thereof, has constituted or resulted in or will constitute or
result in the violation of any Foreign Trade Regulation.
4.7.2. Governmental Regulation. Neither the Company nor any
corporation controlling the Company or under common control with the
Company is subject to regulation under the Public Utility Holding Company
Act of 1935, the Investment Company Act of 1940, the Interstate Commerce
Act or the Federal Power Act, or is subject to any Legal Requirement (other
than Legal Requirements applicable to borrowers or issuers of securities
generally) which regulates the incurring of Indebtedness by the Company, or
any of its Affiliates, for money borrowed or the issuing by any of them of
any equity security. No approval or authorization of any governmental
authority
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is required to permit the execution, delivery or performance by the Company
of this Agreement or the consummation of any of the transactions
contemplated hereby.
4.7.3. Margin Stock. The Company does not own any Margin Stock.
4.8. Litigation. There is no Action against any Subject Entity, pending
(or, to the knowledge of the Company, threatened), except for such of the
foregoing as will not, individually or in the aggregate, result in any material
liability or expense or otherwise result in any Material Adverse Effect. There
is no Action, pending (or, to the knowledge of the Company, threatened), which
seeks rescission of, seeks to enjoin the consummation of, or questions the
validity of, this Agreement or any other Related Agreement or any of the
transactions contemplated hereby or thereby. No judgment, decree or order of
any Governmental Authority has been issued against any Subject Entity which will
have any Material Adverse Effect.
4.9. Solvency. The Company, both before and after giving effect to this
Agreement and the transactions contemplated hereby, is and will be solvent
(within the meaning contemplated by Section 548 of Title 11 of the United States
Code and any similar state statute which may be applicable), has and will have
assets having a fair value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured, and has
and will have access to adequate capital for the conduct of its business and the
ability to pay its debts from time to time incurred in connection therewith as
such debts mature.
4.10. Disclosure. Except as otherwise updated or disclosed to you in
writing, neither this Agreement nor any agreement, certificate, statement or
document furnished by or on behalf of the Company in connection herewith,
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein, in light of the
circumstances in which they were made, not misleading. There is no fact known
to the Company which currently has, or in the future is reasonably likely to
have (so far as the Company can now foresee), a Material Adverse Effect.
5. Investment Representations. You hereby represent and warrant to the
Company with respect to the purchase by you of the Investor Securities as
follows; provided, however, that nothing contained in this Section 5 shall
prevent you from transferring such Investor Securities in compliance with the
provisions of Section 12 hereof; and provided, further, that the disposition of
your property shall at all times be and remain in your control.
5.1. Accredited Investor. You are an "accredited investor" as such term
is defined in Rule 501(a) of Regulation D of the Securities Act. You have a net
worth in excess of $1,000,000 and after the purchase of the Notes and Warrants
contemplated herein, you will have less than 10% of your assets invested in
securities of the Company. You are an institutional buyer for purposes of the
Massachusetts Uniform Securities Act. You have not and are not obligated to pay
any commission to any person in connection with the purchase of the Notes or the
Warrants.
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5.2. Experience. You have substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so you are capable of evaluating the merits and risks of your
investment in the Company and have the capacity to protect your own interests in
making your investment in the Company.
5.3. Investment. You are acquiring the Investor Securities for
investment for your own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof. You
understand that the Investor Securities to be purchased have not been, and will
not be registered under the Securities Act by reason of a specific exemption
from the registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of your investment
intent and the accuracy of your representations as expressed herein.
6. Conditions to Purchase. Your obligation to purchase any of the Investor
Securities pursuant to this Agreement is subject to compliance by the Company
with its agreements herein contained, and to the satisfaction, simultaneously
with or prior to the Closing, of the following conditions, which may be waived
by you in the exercise of your sole discretion:
6.1. Related Agreements. The Related Agreements shall have been duly
authorized, executed and delivered and shall be in full force and effect in the
respective forms referred to in Section 4.3.2 hereof with no term or condition
thereof having been amended, modified or waived without your prior written
consent, and the financing contemplated by the Bank Credit Agreement shall have
been effected or shall be effected simultaneously with the Closing hereunder
substantially in accordance with the terms thereof. All material covenants and
conditions contained in the Related Agreements which are to be performed or
complied with at or prior to closing under the Related Agreements shall have
been performed, complied with or (subject to the provisions of the immediately
preceding sentence) waived prior thereto.
6.2. Legal Opinions. You shall have received from Miller, Canfield,
Paddock and Stone, P.L.C., counsel to the Company, its opinion in form and
substance reasonably satisfactory to you.
6.3. Representations and Warranties; Officers' Certificate. The
representations and warranties contained in Section 4 hereof shall be true and
correct on and as of the Closing with the same force and effect as though made
on and as of the Closing; no Default shall have occurred on or prior to the
Closing (other than a Default which you shall have waived in writing or shall
have stated in writing to have been cured to your reasonable satisfaction); and
you shall have received on the Closing Date a certificate to these effects
signed by the President and the Chief Financial Officer of the Company.
6.4. Subsidiary Guarantee Agreements. Each Guarantee Subsidiary of the
Company shall have duly authorized, executed and delivered to you a Guarantee
Agreement in substantially
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the form of Exhibit 6.4 hereto (each, together with each Guarantee Agreement
executed and delivered pursuant to Section 9.9 hereof, a "Guarantee Agreement").
6.5. Security Agreements. The Company and each Guarantee Subsidiary of
the Company shall have satisfied the condition described in Section 2.5(c) of
the Bank Credit Agreement, and NBD Bank, as Collateral Agent, the holders of the
Senior Indebtedness, and you shall have entered into an intercreditor agreement
(the "Intercreditor Agreement") in substantially the form of Exhibit 6.5.
6.6. Employment and Noncompetition Agreements. The Company and John H.
Welker shall have duly executed and delivered to each other an Employment and
Noncompetition Agreement in form and substance reasonably satisfactory to you
(the "Employment Agreement"). The Company and each of John E. Acuff, David K.
Dodds, Donald E. McGeachy, Robert P. Robeson, Henry Fleischer, Bruce W. Hoppe,
David King, and Philip Robinson, shall have duly executed and delivered to each
other Noncompetition Agreements in form and substance reasonably satisfactory to
you (each the "Noncompetition Agreement").
6.7. Tag-Along and Drag-Along Agreement. The Company and its stockholders
shall have duly executed and delivered to you a Tag-Along and Drag-Along
Agreement in substantially the form of Exhibit 6.7 hereto (the "Tag-Along
Agreement").
6.8. Registration Agreement. The Company and each other party thereto
shall have duly executed and delivered to you a Registration Agreement in
substantially the form of Exhibit 6.8 hereto (the "Registration Agreement").
6.9. Solvency Opinion. You shall have received an opinion, in form and
substance, and from an investment banking firm, reasonably satisfactory to you,
as to the solvency of the Company and of the Subject Entities immediately after
the consummation of the transactions contemplated hereby and by the other
Related Agreements.
6.10. Key Man Insurance. The Company will have in full force and effect
at the Closing Date the insurance policy described in Section 9.10 hereof.
6.11. Proper Proceedings. All proper corporate proceedings shall have
been taken by each Subject Entity to authorize this Agreement and the
transactions contemplated hereby.
6.12. Legality; Governmental Authorization. Neither the purchase of the
Investor Securities nor the consummation of any of the transactions contemplated
hereunder shall be prohibited by any Legal Requirement, or shall subject you to
any penalty, special tax, or other onerous condition. All necessary consents,
approvals, licenses, permits, orders and authorizations of, and registrations,
declarations and filings with, any governmental or administrative agency or any
other Person with respect to any of the transactions contemplated by this
Agreement or the
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other Related Agreements shall have been duly obtained or made and shall be in
full force and effect.
6.13. Payment of Transaction Costs. At the time of the Closing, the
Company shall have paid all fees, expenses, and disbursements incurred by you at
or prior to the time of the Closing in connection with the transactions
contemplated by this Agreement and the Related Agreements (not to exceed
$150,000), including, without limitation, the reasonable fees, expenses, and
disbursements of your counsel.
6.14. General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to you, and you shall have
received copies of all documents, including without limitation records of
corporate proceedings and opinions of counsel, which you may have reasonably
requested in connection therewith, such documents where appropriate to be
certified by proper corporate or governmental authorities.
7. Repurchase of Warrants and Common Stock. The Company and you shall have
the rights and obligations set forth in Exhibit 7 hereto to purchase and sell
and to redeem and have redeemed the Warrants and the Class A Common Stock
constituting Investor Securities.
8. Covenants Applicable While Any Investor Securities Are Outstanding. The
Company covenants that so long as any of the Investor Securities remains
outstanding it will comply with the following provisions; provided, however,
that as long as any Investor Securities remain outstanding, the covenants
contained in Sections 8.3.3 and 8.3.4, clauses (i), (iii) and (iv) of Section
8.3.5 and Sections 8.4, 8.5.3 and 8.9 hereof shall expire and shall be of no
further force of effect after the later of (x) January 31, 2004 or (y) the
payment in full in cash of all obligations under or in respect of the Notes such
that no Notes remain outstanding:
8.1. Charter Amendments. The Charter and By-laws of the Company shall
not be amended, modified or supplemented in a manner that poses a material risk
of having, directly or indirectly, any Material Adverse Effect or any material
adverse effect on any then outstanding Investor Securities or on the rights,
remedies or interests of any holder thereof under this Agreement or any of the
other Related Agreements.
8.2. Right to Attend Board Meetings. The Company will give to (i) you (so
long as you hold any Investor Securities), and (ii) any holder of 25% or more of
either (x) the aggregate principal amount of the Notes then outstanding, or (y)
Investor Securities representing (either directly or indirectly, through
exercise, conversion or otherwise) 25% or more of the shares of Common Stock
representing Investor Securities then outstanding (or obtainable upon exercise
or conversion of other Investor Securities) (each Person referred to in clause
(i) or (ii) being referred to herein as a "Major Holder"): (a) the same notice
of the time, place and subject matter of any proposed meeting of its board of
directors or any committee thereof or of any Significant Subsidiary's board of
directors or any committee thereof as is given to the directors attending such
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meeting, and (b) the same notice of the date and subject matter of any proposed
action by written consent of its board of directors or any committee thereof or
of any Significant Subsidiary's board of directors or any committee thereof as
is given to the directors who are being asked to execute such consent. Each
such notice shall include true and complete copies of all documents furnished to
any director in connection with such meeting or consent. The Major Holders as a
group will be entitled to send two Persons (designated by the Required Holders)
to attend any such meeting, or if a meeting is held by telephone conference to
have two Persons (designated by the Required Holders) participate therein, but
the foregoing right of attendance or participation shall not in and of itself
include the right to vote on matters presented to the board of directors. The
board of directors may exclude such Persons from the portion of any meeting
during which the Investors or Investor Securities are to be discussed. The
Company will call and hold a meeting of the board of directors of the Company at
least once each fiscal quarter. At least one such meeting each fiscal year
shall include a discussion of financial results, and at least one such meeting
each fiscal year shall include a discussion of annual financial results and
presentation and approval of an annual budget for the following fiscal year.
8.3. Financial Statements. Each Subject Entity will maintain a system of
accounting in which full, true and correct entries will be made of all dealings
and transactions in relation to its business and affairs in accordance with
generally accepted accounting principles.
8.3.1. Annual Statements. The Company will furnish to each holder of
Investor Securities as soon as available, and in any event within 120 days
after the end of each fiscal year of the Company, (i) the consolidated and
consolidating balance sheet of the Subject Entities as at the end of such
fiscal year and the consolidated and consolidating statements of income,
stockholders' equity and cash flows for such year of the Subject Entities,
together with comparative figures for the immediately preceding fiscal
year, accompanied by the reports or certificates of independent certified
public accountants of recognized standing, to the effect that such
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior years (except as to changes described therein with which such
accountants concur) and fairly present the financial condition of the
Subject Entities at the dates thereof and the results of their operations
for the periods covered thereby, (ii) the statement of such accountants
that they have caused the provisions of this Agreement to be reviewed and
that in the course of their audit of the Company nothing has come to their
attention to lead them to believe that any Default hereunder exists, or, if
such is not the case, specifying such Default or possible Default and the
nature thereof, it being understood that the examination of such
accountants cannot be relied upon to give them knowledge of any such
Default except as it relates to accounting or auditing matters, (iii) so
long as any Note remains outstanding, computations by the Company
demonstrating, as of the close of such fiscal year, compliance with
Sections 9.4 through 9.8 hereof, inclusive, and (iv) the certificate of the
President or the Chief Financial Officer of the Company that such officers
have caused the provisions of this Agreement to be reviewed and have no
knowledge of any Default, or if any such officer has such
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knowledge, specifying such Default, and the nature thereof, and what action
the Company has taken, is taking or proposes to take with respect thereto.
8.3.2. Quarterly Reports. The Company will furnish to each holder of
Investor Securities as soon as available and, in any event, within 45 days
after the end of each of the first three fiscal quarters of each fiscal
year of the Company, (i) the consolidated and consolidating balance sheet
of the Subject Entities as at the end of such quarter and the consolidated
and consolidating statements of income, stockholders' equity and cash flows
for the fiscal quarter and portion of the fiscal year then ending of the
Subject Entities (all in reasonable detail), accompanied by the
corresponding figures for the corresponding portions of the previous fiscal
year, (ii) a certificate of the President or the Chief Financial Officer of
the Company that such statements have been properly prepared in accordance
with generally accepted accounting principles consistently applied (except
as to changes described therein and except for the absence of footnotes
thereto) and fairly present the financial position of the Subject Entities
at the dates thereof and the results of their operations for the periods
covered thereby, subject only to normal year-end audit adjustments, (iii)
so long as any Note remains outstanding, computations by the Company
demonstrating, as of the close of such fiscal quarter, compliance with
Sections 9.4 through 9.8 hereof, inclusive, and (iv) the certificate of the
President or the Chief Financial Officer of the Company that such officers
have caused the provisions of this Agreement to be reviewed and have no
knowledge of any Default, or if such officer has such knowledge, specifying
such Default and the nature thereof and what action the Company has taken,
is taking or proposes to take with respect thereto.
8.3.3. Monthly Reports. As soon as practicable, and in any event
within 30 days after the end of each calendar month of each fiscal year
(other than the last month of each fiscal quarter of the Company), the
Company will furnish to each Major Holder the operating reports of the
Subject Entities as of the end of such month in the form customarily
prepared by management for internal use.
8.3.4. Annual Budgets. Not later than 30 days prior to the end of
each fiscal year of the Company, the Company will furnish to each Major
Holder a proposed month by month operating and capital budget for the
following fiscal year of the Subject Entities, including projected cash
flows. Together with each report furnished pursuant to Section 8.3.1, 8.3.2
or 8.3.3 hereof, the Company shall furnish to each Major Holder a budgetary
analysis demonstrating the status of compliance by the Subject Entities for
such month with the operating and capital budget for that year previously
furnished to such Major Holder.
8.3.5. Other Reports. The Company will furnish to each Major Holder
(i) all management letters furnished to the Company by its auditors, (ii)
promptly after the sending or making available for filing of the same,
copies of all reports and financial statements which the Company shall send
or make available to the holders of its securities,
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and all registration statements, proxy statements and all reports, if any,
which the Company shall file with the Securities and Exchange Commission,
(iii) all material reports, certificates and other written information
provided to any lender by any Subject Entity, including without limitation
all such information furnished to holders of Senior Indebtedness; and (iv)
a description of all transactions between the Subject Entities and any
holder of the Equity Securities of the Company, other than those disclosed
in Exhibit 8.5.
8.3.6. Notice of Litigation, Defaults, etc. The Company will promptly
give each Major Holder written notice of any Action to which any Subject
Entity may hereafter become a party which after giving effect to applicable
insurance may result in any Material Adverse Change. Promptly upon any
officer of the Company obtaining knowledge of any Default or of any default
or event of default under any agreement relating to Indebtedness, the
acquisition or disposition by the Company of a significant amount of assets
other than in the ordinary course of business; resignations of any of the
Company's directors, and changes in the Company's fisal year, the Company
will furnish to each Major Holder a notice specifying the nature and period
of existence thereof and in the case of a default or event of default what
action the Company has taken, is taking or proposes to take with respect
thereto. Promptly after the receipt thereof, the Company will provide to
each Major Holder copies of any reports submitted by independent
accountants as to adequacies in accounting controls. The Company will give
each Major Holder prior written notice of any proposed change in its
independent certified public accountants.
8.3.7. Other Information. From time to time upon request of any Major
Holder, the Company will furnish to such Major Holder such other
information regarding the business, affairs, operations, prospects, and
condition, financial or otherwise, as such Major Holder may reasonably
request. One representative designated by the Required Holders shall have
the right during normal business hours and upon reasonable notice to
examine the books and records of the Subject Entities, to make copies,
notes and abstracts therefrom, and to make an independent examination of
such books and records, for the purpose of verifying the accuracy of the
reports delivered by any of them pursuant to this Section 8.3, and of
ascertaining compliance with this Agreement.
Each holder of Investor Securities understands that some of the information
furnished to it pursuant to this Section 8.3 may be received by it prior to the
time such information shall have been made public, acknowledges the limitations
placed on the uses of such information by federal securities laws, and agrees
that it will make all reasonable efforts to keep all information so furnished to
it pursuant to this Section 8.3 confidential and will make no use or disclosure
to other Persons of such information until such information shall have become
public; provided, however, that it shall not be precluded from making disclosure
regarding such information (i) to counsel, accountants or other professional
advisors, (ii) to any lender to the Company, (iii) in connection with the
enforcement of any rights hereunder, (iv) as required by law or applicable
regulation (provided that such holder will try to give advance notice of such
disclosure to the Company to the extent practical or legally permissible under
the circumstances) or (v) to any parents or
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corporate affiliates or to any prospective purchaser of Investor Securities (so
long as such Person agrees to keep such information confidential in accordance
with this Section 8.3).
8.4. Conduct of Business. Each Subject Entity will engage only in the
business conducted by it on the date hereof or in businesses that are logical
extensions of or ancillary to the fluid power business.
8.5. Transactions with Affiliates; Certain Compensation Payments.
8.5.1. Transactions Not at Arm's Length. Except as contemplated in
Exhibit 8.5.1, no Subject Entity shall effect any transaction with any
Affiliate on a basis less favorable to such Subject Entity than would be
the case if such transaction had been effected with a Person which was not
an Affiliate; provided, however, that the foregoing shall not apply to
transactions among the Company and its Wholly Owned Subsidiaries.
8.5.2. Compensation of John H. Welker. No Subject Entity shall pay
any salary, bonus or other compensation to John H. Welker except in
accordance with the provisions of the Employment Agreement.
8.5.3. Compensation of Employee Stockholders. 1Exhibit 8.5.3 lists
the salary, bonus, and other compensation currently paid in 1995 by the
Subject Entities to employees who are also holders of the Equity Securities
of the Company. No Subject Entity shall increase the salary, bonus, and
other compensation paid to any such person except for reasonable increases
(i) in the ordinary course of business, (ii) which reflect a change in such
person's position or status with the Subject Entities or (iii) which, in
the good faith judgment of the board of directors of the Company, reflect
such person's special contributions to the business of the Subject
Entities.
8.6. Limitations on Issuance of Equity Securities. The Company will not
issue any of its Equity Securities to any Person; provided, however, that the
Company may (i) issue the Investor Securities, (ii) grant options to purchase
not more than an aggregate of 2,000 shares of Class A Common Stock (subject to
appropriate adjustments for stock splits) and issue shares of Class A Common
Stock in connection therewith to employees of the Subject Entities, and (iii)
subject to compliance with the provisions of Section 8.7 hereof (if applicable),
issue shares of Class A Common Stock to persons not Affiliates of the Company
for consideration not less than fair market value of such shares. Except as
disclosed in Exhibit 4.2.2, all of the outstanding Equity Securities of each
Subsidiary of the Company shall at all times be owned, beneficially and of
record and free and clear of all Liens, by the Company, except for Liens
permitted hereunder.
8.7. Equity Participation Rights. The Company shall not issue or sell any
of its Equity Securities, or enter into any Contractual Obligation providing for
the issuance (contingent or otherwise) of, any of its Equity Securities (each an
"Issuance" of "Subject Securities"), except in compliance with the following
provisions of this Section 8.7.
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8.7.1. Right of Participation.
8.7.1.1. Not fewer than thirty days prior to the consummation of
the Issuance, a notice (the "Participation Notice") shall be furnished
by the Company to each holder of Equity Securities constituting
Investor Securities. The Participation Notice shall include:
(a) The principal terms of the proposed Issuance, including without
limitation the amount and kind of Subject Securities to be
included in the Issuance, the maximum and minimum (which shall be
not less than 90% of such maximum) price per unit of the Subject
Securities and the name and address of the Persons to whom the
Subject Securities will be Issued (collectively, the "Proposed
Subscriber"); and
(b) An offer by the Company to issue, at the option of such holder of
Equity Securities constituting Investor Securities, to such
holder of Equity Securities constituting Investor Securities, up
to such holder's Applicable Percentage of the Subject Securities
which would be otherwise issued in the Issuance, on the same
terms and conditions as the Subject Securities are purchased by
the Proposed Subscriber; provided, however, that if the Proposed
Subscriber is purchasing the Subject Securities for noncash
consideration, the holders of Equity Securities constituting
Investor Securities may pay in cash the fair market value (as
agreed to by the Company and such holder) of such noncash
consideration.
8.7.1.2. If a holder of Investor Securities desires to accept
the offer contained in the Participation Notice, it shall send, within
twenty days after the effectiveness of the Participation Notice, a
written commitment to the Company specifying the amount of Subject
Securities (not in any event to exceed such holder's Applicable
Percentage of the Subject Securities to be included in the Issuance)
which such holder desires to be issued. If any holder of Investor
Securities has not so accepted such offer, such holder shall be deemed
to have waived (for itself and any transferee or assignee of its
Investor Securities) all of its rights with respect to this Issuance,
and the Company shall thereafter be free to issue the Subject
Securities to the Proposed Subscriber, at a price no less than 95% of
the minimum price set forth in the Participation Notice and on
otherwise no more favorable terms in any material respect than as set
forth in the Participation Notice, without any further obligation to
such holder. If, prior to consummation, the terms of such proposed
Issuance shall change with the result that the price shall be less
than 95% of the minimum price set forth in the Participation Notice,
it shall be necessary for a separate Participation Notice to have been
furnished, and the terms and provisions of this Section 8.7 separately
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<PAGE>
complied with, in order to consummate such Issuance pursuant to this
Section 8.7.
The acceptance of such holder shall be irrevocable except as
hereinafter provided, and such holder shall be bound and obligated to
acquire in the Issuance on the same terms and conditions, with respect
to each unit of Subject Securities issues in the Issuance, such amount
of Subject Securities as such holder shall have specified in its
written commitment.
If at the end of the ninetieth (90th) day following the date of
the effectiveness of the Participation Notice the Company has not
completed the Issuance, any holder of Investor Securities who has
accepted the offer in a Participation Notice shall be released from
its obligations under the written commitment, the Participation Notice
shall be null and void, and it shall be necessary for a separate
Participation Notice to have been furnished, and the terms and
provisions of this Section 8.7 separately complied with, in order to
consummate such Issuance pursuant to this Section 8.7.
8.7.1.3. The Company may condition the participation of any
holder of Investor Securities in an Issuance upon the purchase by it
of any securities (including without limitation debt securities) other
than Subject Securities ("Other Securities") in the event that the
participation of the Proposed Subscriber in such Issuance is so
conditioned. In such case, each holder of Investor Securities shall
acquire in the Issuance, together with the Subject Securities to be
acquired by it, Other Securities in the same proportion to the Subject
Securities to be acquired by it as Other Securities are acquired by
the Proposed Subscriber in proportion to the Subject Securities
acquired in the Issuance by the Proposed Subscriber, on the same terms
and conditions, as to each unit of Subject Securities and Other
Securities issued to the Proposed Subscriber, as the Proposed
Subscriber shall be issued units of Subject Securities and Other
Securities.
8.7.1.4. Each holder of Investor Securities and its Affiliates
shall take or cause to be taken all such reasonable actions as may be
necessary or reasonably desirable in order expeditiously to consummate
each Issuance pursuant to this Section 8.7 and any related
transactions, including, without limitation, executing, acknowledging
and delivering consents, assignments, waivers and other documents or
instruments with governmental authorities; and otherwise cooperating
with the Company; provided, however, that no holder of Investor
Securities or any Affiliate thereof shall be required to agree to any
amendment or modification of, or waiver under, or other change to,
this Agreement, the Investor Securities or any other Related
Agreement.
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<PAGE>
8.7.1.5. All costs and expenses incurred by any holder of
Investor Securities or the Company in connection with any proposed
Issuance of Subject Securities (whether or nor consummated), including
without limitation all attorney's fees and charges, all accounting
fees and charges and all finders, brokerage or investment banking
fees, charges or commissions, shall be paid by the Company; provided,
however, that if a holder of Investor Securities or any of its
Affiliates retains separate legal counsel or other advisors in
connection with such proposed Issuance, the fees and expenses of such
separate attorneys or other advisors shall be borne by such holder.
8.7.1.6. The closing of an Issuance pursuant to Section 8.7
shall take place at such time and place as the Company shall specify
by notice to each participating holder of Investor Securities. At the
closing of any Issuance under this Section 8.7, such holders of
Investor Securities shall be delivered the notes, certificates or
other instruments evidencing the Subject Securities (and, if
applicable, Other Securities) to be issued to it, registered in the
name of such holder of its designated nominee, free and clear of any
Liens, with any transfer tax stamps affixed, against delivery by such
holders of the applicable consideration.
8.7.2. Excluded Transactions. Notwithstanding the preceding
provisions of this Section 8.7, the preceding provisions of this Section
8.7 shall not restrict:
(a) Any Issuance of Equity Securities pursuant to clause (ii) of the
proviso to Section 8.6 hereto;
(b) Any Issuance of Common Stock upon the exercise or conversion of
any Investor Securities or any Equity Securities outstanding on
the date hereof or issued after the date hereof in compliance
with the provisions of this Section 8.7; and
(c) Any Issuance of Common Stock pursuant to a public offering
registered under the Securities Act, other than shares issued
pursuant to an employee plan registered on Form S-8 or any
similar plan or form.
(d) Any Issuance of Common Stock pursuant to a stock split or pro
rata stock dividend of the type described in Section 2.2.2 of the
Warrants.
8.7.3. Termination. The foregoing provisions of this Section 8 shall
terminate immediately following the closing of a public offering if,
immediately after giving effect thereto, there is outstanding Common Stock
not held by Affiliates of the Company which (x) is freely tradeable and the
sale of which is not in any way subject to Rule 144 (including without
limitation Rule 144(k) under the Securities Act) and (y) has an
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aggregate public market value of not less than $50 million, (a "Qualifying
Public Offering").
8.8. Registration Statements. No Subject Entity will file any
registration statement under the Securities Act covering any offering of debt or
equity securities unless it shall first have given each holder of Investor
Securities 60 days advance written notice thereof. Each holder of Investor
Securities shall have the right, at any time when in its sole and exclusive
judgment it is or might be deemed to be a controlling person of any Subject
Entity for purposes of the Securities Act, (i) to participate in the preparation
of such registration statement and to require the inclusion therein or deletion
therefrom of material which in its judgment should be included or deleted, as
the case may be, (ii) to retain counsel and independent public accountants to
assist it in such participation, and (iii) to obtain an opinion from the
Company's counsel and a "cold-comfort" letter from the Company's auditors, each
in customary form, each addressed to it and covering such matters as it may
reasonably specify in connection with such registration statement. Unless a
reference to a holder of Investor Securities by name is required by any
provision of the Securities Act or the rules and regulations promulgated
thereunder, no such registration statement or other document shall refer to such
holder by name without the prior written consent of such holder. The indemnity
and contribution provisions set forth in Section 8 of the Registration Agreement
shall apply mutatis mutandis to any registration statement or other document
referred to in this Section 8.8, except that references therein to the Selling
Holders shall be deemed to be references to each holder of Investor Securities.
8.9. Repurchase. The Company shall not, nor shall it subject itself to
any obligation to, repurchase or otherwise acquire or retire any of its Equity
Securities except as contemplated by Exhibit 7 hereto and by the Stock Transfer
Agreement; provided, however, that the aggregate amount of all payments made in
respect of acquisitions under the Stock Transfer Agreement plus the aggregate
amount of all payments made in respect of Indebtedness incurred in connection
with repurchases of Equity Securities under the Stock Transfer Agreement shall
not exceed $500,000 during any fiscal year of the Company plus during the fiscal
year ending December 31, 1997, an additional $500,000 if Adjusted Net Operating
Income for the fiscal year ending December 31, 1996 was not less than the amount
specified with respect to such fiscal year in the table below and plus during
the fiscal years ending December 31, 1998 and thereafter, an additional $500,000
if both (x) aggregate Adjusted Net Operating Income for the two complete fiscal
years of the Company most recently ended was not less than the sum of the
amounts specified with respect to such fiscal years in the table below and (y)
aggregate Adjusted Net Operating Income for the fiscal years of the Company
beginning with the fiscal year ending December 31, 1996 and ending with the
complete fiscal year of the Company most recently ended was not less than the
sum of the amounts specified with respect to such fiscal years in the table
below:
<TABLE>
<CAPTION>
Fiscal Year Ending December 31, Amount
------------------------------- ------
<S> <C>
1996 $28,136,000
1997 $30,787,000
1998 $35,693,000
</TABLE>
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<PAGE>
1999 $41,418,000
2000 $48,044,000
2001 $53,364,000
2002 $59,821,000
8.10. Certain Tax and other Valuation Matters. The Company hereby agrees
with you that (i) for the purposes of Sections 1271 through 1275 of the Code,
the price at which each of the Senior Subordinated Notes and the Warrants would
have been issued had they been issued apart from the investment unit consisting
of Investor Securities is equal to the allocated cost thereof set forth in
Section 2.1.1 and 2.2 hereof, (ii) for such purposes, the price at which each
PIK Note is issued is the stated principal amount thereof, and (iii) each such
price will be appropriately used by the Company for income tax purposes.
8.11. Lawsuits only in Massachusetts. The Company (and its successors
and assigns) shall not commence any proceeding arising out of or based upon any
Specified Related Agreement in any court other than the state courts of the
Commonwealth of Massachusetts or federal courts located in the Commonwealth of
Massachusetts.
9. Covenants Applicable While Any Notes Are Outstanding.
9.1. Incorporation of Certain Covenants. The Company will comply, and
will cause the Subject Entities to comply, with all of the covenants and
provisions set forth in Sections 5.1(a), 5.1(b), 5.1(c), 5.1(f), 5.1(g), 5.2(g),
5.2(h) (provided that sales of assets the net proceeds of which are actually
applied to permanently pay down the Senior Indebtedness shall be permitted
without limit), 5.2(n), 5.2(o), 5.2(p), 5.2(r) (excluding the Bank Credit
Agreement), and 5.2(s) of the Bank Credit Agreement as in effect at the Closing,
all of which covenants and provisions, together with the definitions of the
defined terms used therein, are hereby incorporated herein by reference as fully
as if set forth herein in their entirety, mutatis mutandis, so that references
therein to "you" shall be deemed to be references to the Required Holders;
provided, however, that, notwithstanding the precatory language set forth in the
preamble to Sections 5.1 and 5.2 of the Bank Credit Agreement, for the purposes
hereof, all of such covenants and provisions shall be in full force and effect
for so long as any of the Notes shall be outstanding. Each such covenant
incorporated herein by reference (together with each related definition) shall
remain unmodified notwithstanding any modification or termination of such
covenant (or such definition); provided, however, that if the lenders party
thereto and the Company agree to amend any such Section of the Bank Credit
Agreement and if the Required Holders consent to such amendment in writing,
references in this Section 9.1 shall be deemed to be references to such Sections
of the Bank Credit Agreement as and to the extent amended with the consent of
the Required Holders.
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9.2 Amendments to Certain Agreements.
9.2.1. Other Than Senior Indebtedness. The Subject Entities will not
at any time consent to any amendment or modification or assignment of, or
grant any waiver of or fail to enforce any of its rights pursuant to, any
of the Related Agreements listed in Sections 4.3.2.2 and 4.3.2.3 if such
amendment, modification, waiver or failure has or poses a material risk of
having, directly or indirectly, any Material Adverse Effect or any material
adverse effect on any then outstanding Investor Securities or on the
rights, remedies or interest of any such holder hereunder or any of the
other Related Agreements other than the Bank Credit Agreement.
9.2.2. Senior Indebtedness. The Company shall not enter into, or
agree to any renewal, extension, refinancing, refunding, amendment or
modification of any of its rights pursuant to, the Bank Credit Agreement or
any other Contractual Obligation relating to Senior Indebtedness (including
without limitation swaps and other interest rate protection arrangements)
if any such renewal, extension, refinancing, refunding, amendment or
modification or any agreement or instrument creating or evidencing such
renewal, extension, refinancing, refunding, amendment or modification (a)
permits the aggregate principal amount of all Senior Indebtedness of the
Company outstanding at any time to exceed $125,000,000, (b) permits the
aggregate principal amount of all Senior Indebtedness of the Company
outstanding at any time which may be borrowed, repaid and reborrowed prior
to the stated maturity thereof ("Revolving Credit Debt") to exceed
$50,000,000, (c) increases the rate of interest or default interest on, or
fees or other amounts payable in respect of, any such Senior Indebtedness
such that the Yield to Maturity on all Senior Indebtedness calculated
immediately after giving effect to such increase (but including any fees
payable in connection therewith) exceeds by more than 1.00% (one hundred
basis points) the Initial Yield to Maturity on Senior Indebtedness
calculated immediately prior to giving effect to such increase, (provided,
that no change in the method of calculating any default rate of interest
shall be made so as to increase the excess of such rate over the rate which
would otherwise be in effect), (d) could alter the maturity of any such
Senior Indebtedness to a time earlier than that specified in the Bank
Credit Agreement or (e) could, in conjunction with all previous such
renewals, extensions, refinancings, refundings, amendments or
modifications, result in altering the dates that payment is due of more
than six payments due under such Senior Indebtedness (other than Revolving
Credit Debt) such that the date that any such payment is due is altered to
a date later than one year from the date originally specified with respect
to such payment in the Bank Credit Agreement as in effect on the date of
this Agreement. For purposes of this Section 9.2.2(e), multiple payments
due on the same date under more than one term loan shall be considered one
payment.
9.3 Fiscal Year. The fiscal year of the Company, which ends on the last
day of December of each year, will not be changed without the prior written
consent of the Required Holders, which consent shall not be unreasonably
withheld.
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9.4 Restrictions on Indebtedness. No Subject Entity will create, incur
or otherwise become or remain liable with respect to any Indebtedness except the
following, so long as, in each such case, such Indebtedness is incurred in
compliance with Section 9.8 hereof:
9.4.1. Indebtedness specified on Exhibit 9.4.1 hereto; provided,
however, that no amendment to the terms of such Indebtedness, and no
optional prepayment of such Indebtedness shall be made without the prior
written consent of the Required Holders.
9.4.2. Senior Indebtedness; provided, however, that (i) the aggregate
principal amount of all Senior Indebtedness at any one time outstanding
shall not exceed $125,000,000 and (ii) the aggregate principal amount of
all Revolving Credit Debt at any one time outstanding shall not exceed
$50,000,000.
9.4.3. Indebtedness in respect of the Notes.
9.4.4. Indebtedness of the Subject Entities (x) in respect of
Capitalized Lease Obligations and (y) secured by purchase money Liens
permitted by Section 9.6.3 hereof; provided, however, that the aggregate
principal amount of all Indebtedness permitted by this Section 9.4.4 shall
not exceed $6 million at any one time outstanding.
9.4.5. Indebtedness in respect of Guarantees permitted by Section 9.5
hereof.
9.4.6. Indebtedness incurred in connection with the repurchase
pursuant to the Stock Transfer Agreement of Equity Securities issued by the
Company; provided, however, that (i) all such Indebtedness shall be
subordinated to the prior payment in full of the Notes on terms no less
favorable to the holders of the Notes as are enjoyed by the holders of
Senior Indebtedness with respect to the Notes, (ii) no principal of, or
interest on, such Indebtedness shall be due and payable until the latest of
five years from the date of issuance, January 31, 2004 or one year after
the payment in full in cash of all obligations in respect of the Notes
(provided, that voluntary payments of interest on and principal of such
Indebtedness shall be permitted subject to the limitations contained in
Section 8.9 hereof), (iii) the interest rate on such Indebtedness shall not
exceed the lowest such rate which avoids the imputation of interest under
the Code and (iv) no such Indebtedness shall be issued unless, immediately
after giving effect thereto, there shall exist no Default and the
incurrence of such Indebtedness shall have been permitted under Section 9.8
hereof (if applicable).
9.4.7. Indebtedness of any Subsidiary of the Company to the Company.
9.4.8. Additional Indebtedness of the Subject Entities not otherwise
permitted by this Section 9.4; provided, however, that, both immediately
prior to and immediately after giving effect to the incurrence thereof, no
Default shall exist; and provided, further,
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that the aggregate principal amount of all Indebtedness permitted by this
Section 9.4.8 shall not exceed $500,000 at any one time outstanding.
9.4.9. Additional Indebtedness of the Company; provided, however,
that, both immediately prior to and after giving effect to the incurrence
thereof, no Default shall exist; and provided, further, that (i) all such
Indebtedness (including without limitation the Company's obligations under
its Amended and Restated Deferred Compensation Plan) shall be subordinated
to the prior payment in full of the Notes on terms no less favorable to the
holders of the Notes as are enjoyed by the holders of Senior Indebtedness
with respect to the Notes, (ii) no principal of such Indebtedness shall be
due and payable until the later of five years from the date of issuance or
one year after the payment in full in cash of all Notes.
9.5 Restrictions on Guarantees. The Subject Entities will not become or
remain liable with respect to any Guarantee of any obligation of any other
Person except the following:
9.5.1. Guarantees by Subsidiaries of the Company of the Notes.
9.5.2. Guarantees by Subsidiaries of the Company of Senior
Indebtedness.
9.5.3. Endorsements for collection or deposit in the ordinary course
of business.
9.5.4. Guarantees of amounts payable under indemnity, performance or
similar bonds in the ordinary course of business.
9.5.5. Guarantees by the Company of the obligations of Subsidiaries
of the Company.
9.6 Restrictions on Liens. The Subject Entities will not create or
incur or suffer to be created or incurred or to exist any Lien of any kind upon
any of its property or assets of any character, whether now owned or hereafter
acquired, or upon the income or profits therefrom; provided, however, that the
Subject Entities may create or incur or suffer to be created or incurred or to
exist:
9.6.1. Liens securing the Indebtedness permitted by Sections 9.4.1,
9.4.2 and 9.4.3 hereof.
9.6.2. Liens on the assets of the Subject Entities existing on the
Closing Date and listed in Exhibit 9.6.2 hereto.
9.6.3. Purchase money Liens (including mortgages, conditional sales,
Capitalized Leases and any other title retention or deferred purchase
devices) on property
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of the Company existing or created at the time of acquisition thereof, and
the renewal, extension and refunding of any such Lien in an amount not
exceeding the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding; provided, however, that the aggregate
principal amount of Indebtedness (including Indebtedness in respect of
Capitalized Lease Obligations) secured by each such Lien in each item of
property shall not exceed the cost (including all such Indebtedness secured
thereby, whether or not assumed) of the item subject thereto; and provided,
further, that the aggregate principal amount of all such Indebtedness shall
not exceed the amount specified in Section 9.4.4 hereof.
9.6.4. Liens to secure taxes, assessments and other governmental
charges or claims for labor, material or supplies to the extent that
payment thereof shall not be in arrears or shall be contested in good faith
by appropriate proceedings.
9.6.5. Deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pensions
or other social security or in connection with contests, bids, governmental
contracts, performance bonds and similar obligations to the extent that
payment thereof shall not be in arrears or shall be contested in good faith
by appropriate proceedings.
9.6.6. Liens in respect of judgments or awards to the extent that
such judgments or awards are being appealed in good faith by the Company or
which have been in force for less than the applicable appeal period.
9.6.7. Liens of carriers, warehousemen, mechanics and materialmen,
and other Liens arising by operation of law in the ordinary course of
business, to the extent that payment of the obligation secured thereby
shall not be in arrears or shall be contested in good faith by appropriate
proceedings.
9.6.8. Encumbrances in the nature of zoning restrictions, easements,
rights or restrictions of record on the use of real property and landlord's
and lessor's liens under leases on the premises rented, which do not
materially detract from the value of such property or impair the use
thereof in the business of the Subject Entities.
9.6.9. Deposits or pledges made in connection with, or to secure
payment of, indemnity, performance or other similar bonds incurred in the
ordinary course of business.
9.7. Restrictions on Distributions. No Subject Entity shall make, pay or
declare any Distribution; provided, however, that so long as immediately prior
to and after giving effect thereto there shall be no Default, the Subject
Entities shall be permitted to make, pay and declare the following
Distributions:
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9.7.1. Distributions permitted or required by Section 10 hereof or
Exhibit 7 hereto.
9.7.2. Distributions consisting of the acquisition by the Company and
its Wholly Owned Subsidiaries, in accordance with the provisions of the
Related Agreements, of Equity Securities of Subsidiaries of the Company
held by Persons other than the Company and its Wholly Owned Subsidiaries.
9.7.3. Distributions consisting of the regular and periodic payment
of interest on Indebtedness permitted by Section 9.4.9, provided that cash
payments of interest on such Indebtedness shall not exceed a per annum rate
of 10%.
9.7.4. Distributions consisting of payments permitted by Section 8.9
hereof.
9.8. Debt Incurrence Test. At no time during any period specified in the
table below shall any Subject Entity incur any Indebtedness if, immediately
after giving effect to such incurrence and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Indebtedness of the
Subject Entities would exceed an amount equal to (i) Net Operating Income for
the four consecutive fiscal quarters most recently ended with respect to which
the Company has furnished the financial statements required by Sections 8.3.1
and 8.3.2 hereof multiplied by (ii) the multiple set beside such period in such
table; provided, however, that the limitation contained in this Section 9.8
shall not apply to the incurrence by the Company of Indebtedness permitted by
Section 9.4.6 hereof if such Indebtedness is being incurred in connection with
the death, total and permanent disability, or retirement upon reaching the age
of 65 of the person from whom (or from whose estate) the applicable Equity
Securities are being purchased:
<TABLE>
<CAPTION>
Period Multiple
<S> <C>
Fiscal year ended March 31, 1996 5.50
Fiscal year ended June 30, 1996 5.50
Fiscal year ended September 30, 1996 5.40
Period beginning October 1, 1996 and ending December 30, 1997 5.00
Period beginning December 31, 1997 and ending December 30, 1998 4.75
Period beginning December 31, 1998 and ending December 30, 1999 4.30
Period beginning December 31, 1999 and ending December 30, 2000 3.60
Period beginning December 31, 2000 and ending December 30, 2001 3.00
Periods beginning on December 31, 2001 and thereafter 2.50
</TABLE>
9.9. Execution of Guarantee Agreements and Security Agreements by
Guarantee Subsidiaries. No Subject Entity shall hold any Equity Security in any
Person which is a Guarantee Subsidiary of the Company unless such Person shall
have, prior to or concurrently with such Person becoming a Subsidiary, duly
authorized, executed and delivered to the holders of
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Notes each of a Guarantee Agreement and a Security Agreement, together with such
other agreements, certificates and other documents, including without limitation
financing statements, mortgages, deeds of trust and opinions of counsel, as the
Required Holders of Notes shall have reasonably requested in connection
therewith.
9.10. Key Man Insurance. The Company will have in full force and effect
as the owner thereof at all times from and after the Closing Date key man life
insurance policies with insurers reasonably satisfactory to you covering the
life of John H. Welker in the aggregate amount of $7,500,000 prior to June 30,
1996 and will use its best eforts to increase the amount of such coverage to
$15,000,000 on and after June 30, 1996.
10. Defaults.
10.1. Events of Default; Remedies. If any of the following events
(each such event herein termed an "Event of Default") shall happen, that is
to say:
10.1.1. The Company shall fail to make any payment in respect of
principal of or interest or premium on any of the Notes as the same shall
become due whether at maturity or by acceleration or otherwise and such
failure shall continue for a period of five Business Days; or
10.1.2. Any Subject Entity shall fail to perform or observe any of
the covenants, agreements or provisions set forth or incorporated by
reference in Section 8.1, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.11 or 9
(exclusive of 9.10) hereof, and, in the case of covenants, agreements or
provisions incorporated by reference in Section 9.1 hereof, such failure
shall continue beyond the period of grace, if any, specified in the Bank
Credit Agreement (provided, however, that no such period shall exceed
thirty days after such failure unless the Required Holders of the Notes in
their sole discretion shall specifically agree in writing); or
10.1.3. Any Subject Entity shall fail to perform or observe any
other covenant, agreement or provision to be performed or observed by it
under this Agreement or any other Related Agreement not listed in Section
4.3.2.1, and in each such case such failure shall not be rectified or cured
to the reasonable satisfaction of the Required Holders within thirty days
after the occurrence of such failure; or
10.1.4. Any representation or warranty of or with respect to any
Subject Entity contained in or made in connection with this Agreement or
any other Related Agreement not described in Sections 4.3.2.2 or 4.3.2.3,
including without limitation any representation or warranty incorporated by
reference into such agreements, shall prove to have been materially false
on the Closing Date or, if earlier, the date as of which it was made; or
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<PAGE>
10.1.5. Any Subject Entity shall fail to make any required payment on
or in respect of any Senior Indebtedness or on or in respect of any other
Indebtedness of any Subject Entity, whether because funds are not legally
available therefor or otherwise, or any Subject Entity shall fail to
perform or observe any of the covenants or provisions required to be
performed or observed by it pursuant to any agreement relating to Senior
Indebtedness or any other such Indebtedness, and, in the case of Senior
Indebtedness, (a) any security interest in or other Lien on any property
securing any such Senior Indebtedness shall be enforced, or (b) any such
Senior Indebtedness shall have become due or payable prior to its stated
maturity for any reason whatsoever, and, in the case of any other such
Indebtedness, the aggregate principal amount thereof shall exceed $500,000;
or
10.1.6. A final judgment which, in the aggregate with other
outstanding final judgments against the Subject Entity, exceeds $1,000,000
after giving effect to any applicable insurance, shall be rendered against
any Subject Entity if (i) within 30 days after entry thereof, such judgment
shall not have been discharged or stayed pending appeal, or (ii) within 30
days after expiration of any such stay, such judgment shall not have been
discharged; or
10.1.7. (a) John H. Welker shall cease for any reason whatsoever,
other than his death or disability, to be and continuously to perform the
duties of chief executive officer of the Company and to devote
substantially all of his professional time and efforts to the operations of
the Subject Entities; or (b) John H. Welker shall cease, by virtue of his
death or disability, to be and continuously to perform the duties of chief
executive officer of the Company and to devote substantially all of his
professional time and efforts to the operations of the Subject Entities and
no successor shall have been approved in writing by the Required Holders in
their sole discretion, and shall have commenced to perform the duties of
chief executive officer of the Company, within one year after such
cessation, provided that if any satisfactory successor shall have been so
approved and shall have commenced performance of such duties within such
period, the name of such successor or successors shall be deemed to have
been inserted in place of John H. Welker in this Section 10.1.7.
10.1.8. John H. Welker and Members of the Immediate Family of John
H. Welker shall at any time own collectively less than 51% of the then
outstanding capital stock of the Company; provided, that this Section
10.1.8 shall not apply from and after (i) the closing of any Qualifying
Public Offering, or (ii) the date that John H. Welker shall cease to be the
chief executive officer of the Company.
10.1.9. Any Subject Entity shall:
(a) commence a voluntary case under Title 11 of the United
States Code as from time to time in effect, or authorize, by
appropriate proceedings
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of its board of directors or other governing body, the commencement of
such a voluntary case;
(b) have filed against it a petition under said Title 11 which
shall not have been dismissed within 30 days after the date on which
said petition is filed, or file an answer or other pleading within
said 30-day period admitting or failing to deny the material
allegations of such a petition, or seeking, consenting to or
acquiescing in the relief therein sought, or fail to controvert timely
the material allegations of any such petition;
(c) have entered against it an order for relief in any
involuntary case commenced under said Title 11;
(d) seek relief as a debtor under any applicable law, other than
said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(e) have entered against it any order by a court of competent
jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering
or approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors, or (iii) assuming custody
of, or appointing a receiver or other custodian for, all or a
substantial part of its property; or
(f) make an assignment for the benefit of, or enter into a
composition with, its creditors or appoint or consent to the
appointment of a receiver or other custodian for all or a substantial
part of its property;
then and in each and every such case,
(1) if such Event of Default shall not be based solely upon a
failure to observe a covenant with respect only to Warrants or Common
Stock constituting Investor Securities, any holder or holders of more
than 50% of the outstanding principal amount of the Notes may proceed
to protect and enforce its or their rights by suit in equity, action
at law and/or other appropriate proceeding either for specific
performance of any covenant, provision or condition contained or
incorporated by reference in this Agreement or in any other Specified
Related Agreement or in the Notes, or in aid of the exercise of any
power granted in this Agreement or in the Notes, and (unless there
shall have occurred an Event of Default under Section 10.1.9 hereof,
in which case the unpaid balance of the Notes shall automatically
become due and payable) may by notice to the Company declare all or
any part of the unpaid principal amount of the Notes then outstanding
to be forthwith due and payable, and
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thereupon such unpaid principal amount or part thereof, together with
interest accrued thereon and all other sums, if any, payable under
this Agreement or the notes, shall become so due and payable without
presentation, presentment, protest or further demand or notice of any
kind, all of which are hereby expressly waived to the extent not
prohibited by applicable law that cannot be waived, and such holder or
holders may proceed to enforce payment of such amount or part thereof
in such manner as it or they may elect; and
(2) if such Event of Default shall be based upon a failure to
observe a covenant with respect to Warrants or Common Stock
constituting Investor Securities, any holder or holders of more than
50% of the outstanding Warrants and shares of Common Stock which
constitute Investor Securities (calculated on the assumption that all
Warrants have been exercised) may proceed to protect and enforce its
or their rights by suit in equity (including without limitation a suit
for rescission), action at law and/or other appropriate proceeding
either for specific performance of any covenant, provision or
condition contained or incorporated by reference in this Agreement or
in any other Specified Related Agreement or any term of the Charter of
the Company, or in aid of the exercise of any power granted in this
Agreement or in the Charter of the Company; and
(3) if such Event of Default is described in Section 10.1.7, the
holders of Warrants and Common Stock constituting Investor Securities
may exercise their "put" rights in accordance with the provisions of
Exhibit 7 hereto.
The Company hereby agrees that the holders of the Warrants and shares of Common
Stock constituting Investor Securities have no adequate remedy at law, for
monetary compensation or otherwise, for the damages that would be suffered if
the Company were to fail to comply with its obligations hereunder and under the
other Specified Related Agreements, and that the Company therefore agrees that
the holders of the Warrants and of shares of Common Stock constituting Investor
Securities shall be entitled to obtain specific performance of the obligations
of the Company herein and therein contained.
10.2. Annulment of Defaults. An Event of Default shall not be deemed to
be in existence for any purpose of this Agreement if the Required Holders shall
have waived such event in writing or stated in writing that the same has been
cured to their reasonable satisfaction. No waiver or statement of satisfactory
cure pursuant to this Section 10.2 shall extend to or affect any subsequent or
other Event of Default not specifically identified in such waiver or statement
of satisfactory cure or impair any of the rights of any of you or the rights of
any holder of Investor Securities upon the occurrence thereof.
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10.3. Waivers. The Company hereby waives to the extent not prohibited by
provisions of applicable law which cannot be waived (a) all presentments,
demands for performance and notices of nonperformance (except to the extent
specifically required by the provisions hereof), (b) any requirement of
diligence or promptness on the part of any holder of Investor Securities in the
enforcement of its rights under the provisions of this Agreement or any other
Related Agreement, (c) any and all notices of every kind and description which
may be required to be given by any statute or rule of law, and (d) any defense
of any kind (other than payment) which it may now or hereafter have with respect
to its obligations and liability under this Agreement or any other Related
Agreement.
10.4. Course of Dealing. No course of dealing between the Company on the
one hand, and you or any holder of the Investor Securities on the other hand,
shall operate as a waiver of any of your or its rights under this Agreement or
any other Related Agreement or the Charter of the Company. No delay or omission
in exercising any right under this Agreement or the Charter of the Company shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a waiver of or bar to any right or remedy on
any other occasion. No waiver or statement of satisfactory cure or consent
shall be binding upon you or any holder of any Investor Securities unless it is
in writing and signed by one or more of you or of the holders of the Investor
Securities as may be required by the provisions of this Agreement.
11. Payment on Investor Securities; Transfer; Replacement.
11.1. Home Office Payment. All payments made in respect of the Investor
Securities held by you shall be made in federal or other immediately available
funds in lawful money of the United States for credit, not later than 12:00
noon, Boston time, to you at your account set forth on Schedule I hereto
accompanied by sufficient information to identify the source and application
thereof or by such other method or at such other address as a holder of Notes
shall have from time to time given timely notice of to the Company.
11.2. Registration, Transfer and Exchange of Notes. The Company shall
keep at its principal office a register in which shall be entered the names and
addresses of the registered holders of Notes issued by it and particulars of the
respective Notes held by them and of all transfers of such Notes. References to
the "holder", "Holder" or "holder of record" of any Note shall mean the payee
thereof unless the payee shall have presented such Note to the issuer thereof
for transfer in compliance with the applicable provisions of Section 12 hereof
and the transferee shall have been entered in said register as a subsequent
holder, in which case such terms shall mean such subsequent holder. The
ownership of the Notes shall be proven by such register.
The holder of any of the Notes may at any time and from time to time prior
to maturity or redemption thereof surrender any Note held by it for exchange or
(subject to compliance with the applicable provisions of Section 12 hereof)
transfer at said office of the issuer thereof. Within a reasonable time
thereafter and without expense (other than transfer taxes, if any) to such
holder, such issuer shall issue, at its expense, in exchange therefor another
Note or Notes, dated the date
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to which interest has been paid on the surrendered Note, for the same aggregate
principal amount as the unpaid principal amount of the Note so surrendered,
having the same maturity and rate of interest, containing the same provisions
and subject to the same terms and conditions as the Note so surrendered. Each
such new Note shall be in the denominations and registered in the name of such
Person or Persons as the holder of such surrendered Note may designate in
writing, and such exchange shall be made in a manner such that no additional or
lesser amount of principal or interest shall result. The issuer will pay
shipping and insurance charges, from and to each holder's principal office,
involved in the exchange or transfer of any Note.
Each Note issued hereunder, whether originally or in substitution for or
upon transfer or exchange of any Note, shall be registered on the date of
execution thereof by the issuer. The registered holder of record shall be deemed
to be the owner of the Note for all purposes of this Agreement and, subject to
the provisions hereof, shall be entitled to the principal, premium, if any, and
interest evidenced by or payable on such Note free from all equities or rights
of set-off or counterclaim between the issuer and the transferor of such holder
of record or any previous holder of record thereof, and shall execute an
agreement agreeing to be bound as a party to the Intercreditor Agreement. All
notices given hereunder to the holder of record shall be deemed validly given if
given in the manner specified in Section 15 hereof.
11.3. Transfer, Exchange, Exercise and Conversion of Warrants. The Company
shall keep at its principal office a register in which shall be entered the
names and addresses of the holders of the Warrants and particulars of the
Warrants held by them and of all transfers, exchanges, conversions and
redemptions of Warrants. Upon surrender at such office or such other place as
shall be duly specified by the company of any Warrant for redemption,
conversion, exercise, exchange or (subject to compliance with the applicable
provisions of this Agreement, including without limitation the conditions set
forth in Section 12 hereof) transfer, the Company shall issue at its expense one
or more new Warrants in such denomination or denominations as may be requested,
and registered as such holder may request. Any Warrant surrendered for
registration of transfer shall be duly endorsed, or accompanied by a written
instrument of transfer duly executed by the holder of such certificate or his
attorney duly authorized in writing. The Company will pay shipping and insurance
charges, from and to each holder's principal office, upon any transfer,
exchange, conversion or redemption provided for in this Section 11.3.
11.4. Transfer and Exchange of the Capital Stock. The Company shall keep
at its principal office a register in which shall be entered the names and
addresses of the holders of the capital stock of the Company and particulars of
the respective shares of capital stock held by them and of all transfers,
exchanges, conversions and redemptions of such capital stock. Upon surrender at
such office or such other place as shall be duly specified by the Company of any
certificate representing shares of capital stock, for conversion, exchange or
(subject to compliance with the applicable provisions of this Agreement,
including without limitation the conditions set forth in Sections 12 hereof)
transfer, the Company shall issue, at its expense, one or more new certificates
in such denomination or denominations as may be requested, and registered as
such holder may request. Any certificate representing shares of capital stock
surrendered for
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registration of transfer shall be duly endorsed, or accompanied by a written
instrument of transfer duly executed by the holder of such certificate or his
attorney duly authorized in writing. The Company will pay shipping and insurance
charges, to each holder's principal office, upon any transfer, exchange or
conversion provided for in this Section 11.4.
11.5. Replacement of Lost Securities. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of a
security and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity bond in such reasonable amount as the Company may determine (or,
in the case of a security held by you or another institutional holder or by the
nominee of you or such other institutional holder, of an unsecured indemnity
agreement from you or such other holder reasonably satisfactory to the Company)
or, in the case of any such mutilation, upon the surrender of the security for
cancellation to the Company at its principal office, the Company at its expense
will execute and deliver or will cause to be executed and delivered in lieu
thereof a new security of like tenor. Any security in lieu of which any such new
security has been so executed and delivered or caused to be executed and
delivered by the Company shall not be deemed to be an outstanding security for
any purpose.
12. Restrictions on Transfer. Investor Securities shall be transferable only
upon satisfaction of the applicable conditions specified in this Section 12.
12.1. Restrictive Legend. Except as otherwise permitted by Section 12.3
hereof, each Senior Subordinated Note shall bear a legend in substantially the
form of the legend set forth at the beginning of Exhibit 2.1 hereto, each PIK
Notes shall bear a legend in substantially the form of the legend set forth at
the beginning of Exhibit A to Exhibit 2.1 hereto, each Warrant shall bear a
legend in substantially the form of the legend set forth at the beginning of
Exhibit 2.2 hereto, and each certificate representing shares of capital stock
constituting Investor Securities shall bear a legend in substantially the
following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under the securities laws of any
state, and may not be sold, or otherwise transferred, in the absence of
such registration or an exemption therefrom under such Act and under any
such applicable state laws. Furthermore, such shares may be sold or
otherwise transferred only in compliance with the conditions specified in
the Securities Purchase Agreement dated as of January 3, 1996 among the
issuer hereof and the other parties thereto, and are subject to certain
call and sell-back provisions set forth in such Agreement (including the
Exhibits thereto). Such shares may be sold or otherwise transferred only in
compliance with, and are subject to the "Drag-Along" provisions of, the
Tag-Along and Drag-Along Agreement dated as of January 3, 1996 among the
Issuer hereof and the other parties thereto. Complete and correct copies of
such Agreements (including the Exhibits thereto) are available for
inspection at the principal office of the issuer hereof and will be
furnished without charge to the holder of such shares upon written
request."
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12.2. Notice of Proposed Transfer; Opinions of Counsel. Prior to any
transfer of any Investor Securities other than pursuant to an effective
registration statement under the Securities Act, the holder thereof will give
not less than three Business Days' prior written notice to the Company of such
holder's intention to effect such transfer, describing in reasonable detail the
manner of the proposed transfer. No holder of Investor Securities shall transfer
any Investor Securities other than pursuant to an effective registration
statement under the Securities Act until (i) such holder delivers to the Company
an opinion, in form and substance reasonably acceptable to the Company, of Ropes
& Gray or other counsel reasonably acceptable to the Company addressed to the
Company to the effect that the proposed transfer may be effected without
registration of such Investor Securities under the Securities Act or applicable
state securities laws, and (ii) the transferee agrees in writing to be bound by
all of the terms of this Agreement and the Investor Securities to be
transferred, and thereupon such holder shall be entitled, within 30 days
thereafter, to transfer such Investor Securities in accordance with the terms of
this Agreement and the notice delivered by such holder to the Company. Each
Note, each Warrant and each certificate representing shares of capital stock
issued upon or in connection with any such transfer shall bear the restrictive
legend referred to in Section 12.1 hereof, in each case unless the restrictions
on transfer provided for in this Section 12 shall have ceased and terminated as
to such Investor Securities pursuant to Section 12.3 hereof.
12.3. Termination of Restrictions. The restrictions imposed by this
Section 12 upon the transferability of Investor Securities shall cease and
terminate as to any particular Investor Securities and any securities issued in
exchange therefor or upon transfer thereof when such Investor Securities are
being or have been sold pursuant to a Public Sale. Whenever any of such
restrictions shall cease and terminate as to any Investor Securities, the holder
thereof shall be entitled to receive, without expense, from the Company, new
certificates not bearing that part of the legend specified in Section 12.1
hereof that is no longer applicable.
12.4. Special Restriction. No Investor Security shall be transferred
(other than in a Public Sale) to any Person unless, concurrently with such
transfer, such Person certifies to the Company that such Person is not a
Competitor or a Customer. The term "Competitor" shall mean a Person which is
listed on Exhibit 12.4 hereto or which, collectively in the most recent two
complete fiscal years of such Person, derived at least 5% of its gross revenues
during such years from products which were directly competitive with products of
the Subject Entities. The term "Customer" shall mean a Person to which the
Company made sales in its two most recent fiscal years representing more than 1%
of the Company's gross revenues in each such year.
13. Definitions. For purposes of this Agreement:
13.1. Terms Defined Elsewhere. The following terms defined elsewhere in
this Agreement in the Sections set forth below shall have the respective
meanings therein defined:
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<TABLE>
<CAPTION>
Term Definition
<S> <C>
"Bank Credit Agreement" Section 4.3.2.1
"Class A Common Stock" Section 2.2
"Class A Preferred Stock" Section 4.2.1
"Class B Common Stock" Section 4.2.1
"Class B Preferred Stock" Section 4.2.1
"Class C Common Stock" Section 4.2.1
"Closing" Section 3.2
"Closing Date" Section 3.2
"Common Stock" Section 4.2.1
"Company" Preamble
"Competitor" Section 12.4
"Customer" Section 12.4
"Employment Agreement" Section 6.6
"Event of Default" Section 10.1
"Guarantee Agreement" Section 6.4
"Intercreditor Agreement" Section 6.5
"Investor Securities" Section 2.3
"Issuance" Section 8.7
"Major Holder" Section 8.2
"Margin Stock" Section 3.4
"Noncompetition Agreement" Section 6.6
"Notes" Section 2.1.3
"Other Securities" Section 8.7.1.3
"PIK Notes" Section 2.1.2
"Participation Notice" Section 8.7.1.1
"Preferred Stock" Section 4.2.1
"Proposed Subscriber" Section 8.7.1.1
"Put Notes" Section 7.2.1 of Exhibit 7
"Qualifying Public Offering" Section 8.7.3
"Related Agreements" Section 4.3.2
"Registration Agreement" Section 6.8
"Revolving Credit Debt" Section 9.2.2
"Security Agreement" Section 6.5
"Senior Subordinated Notes" Section 2.1.1
"Specified Related Agreements" Section 4.3.2
"Subject Securities" Section 8.7
"Tag-Along Agreement" Section 6.7
"Warrants" Section 2.2
</TABLE>
Certain other terms are defined in the Exhibits hereto and are used therein with
the meanings so defined.
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13.2. Action. The term "Action" shall mean any claim, action, cause of
action or suit (in contract or tort or otherwise), arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
13.3. Adjusted Net Operating Income. The term "Adjusted Net Operating
Income" shall mean, for any period, Net Operating Income for such period after
excluding therefrom all amounts included therein as a result of the business or
operations of each acquisition of assets, a Person or a business (if any) made
after the date of this Agreement the purchase of which was funded, in whole or
in part, directly or indirectly, with proceeds of Equity Securities issued or
Indebtedness incurred in connection with, in anticipation of or as a result of
(including without limitation by the Person acquired), such acquisition, all of
the foregoing calculated on a pro forma basis and in conformity with generally
accepted accounting principles on a basis consistent with the financial
statements referred to in clause (a) of Section 4.3.1 hereof.
13.4. Affiliate. The term "Affiliate" (which shall be deemed to refer to
the Company unless another Person is specified) shall mean any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with the Company (or such other specified Person) and shall include (i)
any Person who is an officer, director or beneficial holder of at least 5% of
the outstanding equity interest of the Company (or such other specified Person)
and Members of the Immediate Family of any such officer, director or holder,
(ii) any Person of which the Company (or such other specified Person) or an
Affiliate (as defined in clause (i) above) of the Company (or such other
specified Person) shall, directly or indirectly, either beneficially own at
least 5% of the outstanding equity interest or constitute at least a 5%
participant or shall be an officer or director of such Person, and Members of
the Immediate Family, if any, of such holder, director or officer, and (iii) in
the case of a specified Person who is an individual, Members of the Immediate
Family of such Person; provided, however, that you shall not be an Affiliate of
the Company for purposes of this Agreement.
13.5. Applicable Percentage. The term "Applicable Percentage" shall
mean, with respect to any holder of Investor Securities, the percentage of all
outstanding shares of Common Stock which would be held by such holder assuming
that all outstanding Equity Securities of the Company are converted into, or
exchanged or exercised for, shares of Common Stock in accordance with the terms
thereof.
13.6. Business Day. The term "Business Day" shall mean any day on which
banking institutions in Boston, Massachusetts and Detroit, Michigan are
customarily open for the purpose of transacting business.
13.7. By-laws. The term "By-laws" shall include all written rules,
regulations, procedures and by-laws and all other documents relating to the
management, governance or internal regulation of a Person other than an
individual, or interpretive of the Charter of such Person, each as from time to
time amended or modified.
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13.8. Capitalized Lease. The term "Capitalized Lease" shall mean any
lease which is or should be capitalized on the balance sheet of the lessee in
accordance with generally accepted accounting principles.
13.9. Charter. The term "Charter" shall include the articles or
certificate of incorporation, statute, constitution, joint venture or
partnership agreement or articles or other charter of any Person other than an
individual, each as from time to time amended or modified.
13.10. Code. The term "Code" shall mean the federal Internal Revenue
Code of 1986 or any successor statute, and the rules and regulations thereunder,
and in the case of any referenced section of any such statute, rule or
regulation, any successor thereof, collectively and from time to time amended
and in effect.
13.11. Commission. The term "Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act, the Exchange Act or both.
13.12. Consolidated. The term "consolidated" shall mean, when used with
reference to any term, that term as applied to the accounts of the Company (or
other indicated Person) and each of its Subsidiaries, consolidated in accordance
with generally accepted accounting principles after eliminating all inter-
company items and with appropriate deductions for minority interests in
Subsidiaries.
13.13. Contractual Obligation. The term "Contractual Obligation" shall
mean, with respect to any Person, any contract, agreement, deed, mortgage,
lease, license, indenture, commitment, undertaking, arrangement or
understanding, written or oral, or other document or instrument, including,
without limitation, any document or instrument evidencing or otherwise relating
to any indebtedness but excluding the Charter and By-laws of such Person, to
which or by which such Person is a party or otherwise subject or bound or to
which or by which any property or right of such Person is subject or bound.
13.14. Default. The term "Default" shall mean an Event of Default as
defined in Section 10 or an event or condition with which the passage of time or
the giving of notice or both would become such an Event of Default.
13.15. Distribution. The term "Distribution" shall mean (i) the
declaration or payment of any dividend or other distribution on or in respect of
any Equity Security of any Subject Entity, other than dividends payable on
Common Stock solely in shares of Common Stock, (ii) the purchase, redemption or
other retirement of any Equity Security of any Subject Entity, whether directly
or indirectly through a Subsidiary or otherwise, and (iii) any payment of the
principal of, premium (if any) or interest on, or any other payment in respect
of, any Indebtedness permitted by Sections 9.4.6 and 9.4.9 hereof and any other
Indebtedness which is subordinated in any way to the Notes.
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13.16. Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
13.17. Equity Securities. The term "Equity Securities" shall mean, with
respect to any Person which is not a natural person, all shares of capital stock
or other equity or beneficial interests issued by or created in or by such
Person, all stock appreciation or similar rights or grants of, or other
Contractual Obligation for, any right to share in the equity, income, revenues
or cash flow of such Person, and all securities or other rights, warrants or
other Contractual Obligations to acquire any of the foregoing, whether by
conversion, exchange, exercise, preemptive right or otherwise.
13.18. Foreign Trade Regulations. The term "Foreign Trade Regulations"
means (a) any act that prohibits or restricts, or empowers the President or any
executive agency of the United States of America to prohibit or restrict,
exports to or financial transactions with any foreign country or foreign
national, (b) the regulations with respect to certain prohibited foreign trade
transactions set forth at 15 C.F.R. Parts 730 et seq., 22 C.F.R. Parts 120-130
and 31 C.F.R. Parts 500 et seq. and (c) any order, regulation, ruling,
interpretation, direction, instruction or notice relating to any of the
foregoing, all as from time to time in effect.
13.19. Generally Accepted Accounting Principles. The term "generally
accepted accounting principles" shall mean generally accepted accounting
principles as defined by the Financial Accounting Standards Board, as in effect
on December 31, 1994 and as applied by the Subject Entities in their
consolidated financial statements dated December 31, 1994 referred to in clause
(a) of Section 4.3.1 hereof and consistently followed thereafter without giving
effect to any subsequent changes in such accounting principles; provided,
however, that for purposes of the financial statements to be delivered pursuant
to Section 8.3 hereof, "generally accepted accounting principles" shall mean
such principles as recognized by the Financial Accounting Standards Board, as
from time to time in effect.
13.20. Governmental Authority. The term "Governmental Authority" shall
mean any U.S. federal, state or local or any foreign government, governmental
authority, regulatory or administrative agency, governmental commission, court
or tribunal (or any department, bureau or division thereof) or any arbitral
body.
13.21. Guarantee. The term "Guarantee" shall mean (i) any guarantee of
the payment or performance of, or any contingent obligation in respect of, any
Indebtedness or other obligation of any other Person, (ii) any other arrangement
whereby credit is extended to one obligor on the basis of any promise or
undertaking of another Person (A) to pay the Indebtedness of such obligor, (B)
to purchase any obligation owed by such obligor, (C) to purchase or lease assets
(other than inventory in the ordinary course of business) under circumstances
that would enable such obligor to discharge one or more of its obligations, or
(D) to maintain the capital, working capital, solvency or general financial
condition of such obligor, and (iii) any liability as a general
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partner of a partnership or as a venturer in a joint venture in respect of
Indebtedness or other obligations of such partnership or venture.
13.22. Guarantee Subsidiary. Each Subsidiary of the Company that (i) is
incorporated in one of the states of the United States of America, or (ii) has
guaranteed any portion or all of the Senior Indebtedness.
13.23. Indebtedness. The term "Indebtedness" shall mean: (i) all debt for
borrowed money and similar monetary obligations evidenced by bonds, notes,
debentures, Capitalized 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 in Schedule 9.4 to the extent such
Indebtedness does not exceed $2.5 million; (ii) all liabilities secured by any
Lien existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; and (iii) all reimbursement
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.
13.24. Initial Yield to Maturity. The term "Initial Yield to Maturity"
shall mean the Yield to Maturity on all Senior Indebtedness then outstanding
calculated on the basis of the Bank Credit Agreement as in effect on the date of
this Agreement but assuming that any Revolving Credit Debt has a maturity 5
years from the date of computation.
13.25. Investment. The term "Investment" shall mean (i) any share of
capital stock, evidence of Indebtedness or other security issued by any other
Person, (ii) any loan, advance, or extension of credit to, or contribution to
the capital of, any other Person, (iii) any purchase of the securities or
business or integral part of the business of any other Person, or commitment or
option to make such purchase if, in the case of an option, the consideration
therefor exceeds $1,000, including without limitation the entering into of local
marketing agreements and similar agreements, and (iv) any other investment;
provided, however, that the term "Investment" shall not include (a) current
trade and customer accounts receivable arising in the ordinary course of
business and payable in accordance with customary trade terms or prepaid assets
arising in the ordinary course of business, (b) advances to employees for travel
and relocation expenses, drawing accounts and similar expenditures, or (c)
demand deposits in banks or trust companies the entire principal amount of which
is subject to deposit insurance provided by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance Corporation.
13.26. Legal Requirement. The term "Legal Requirement" shall mean any
federal, state, local or foreign law, statute, standard, ordinance, code, order,
rule, regulation, resolution, promulgation, or any order, judgment or decree of
any court, arbitrator, tribunal or governmental authority, or any license,
franchise, permit or similar right granted under any of the foregoing, or any
similar provision having the force and effect of law.
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13.27. Lien. The term "Lien" shall mean (a) any mortgage, pledge, lien,
charge, security interest or other similar encumbrance or restriction of any
kind upon any property or assets of any character, or upon the income or profits
therefrom or upon the transfer thereof; (b) any acquisition of or agreement to
have an option to acquire any property or assets upon conditional sale or other
title retention agreement, device or arrangement (including a capitalized
lease); or (c) any sale, assignment, pledge or other transfer for security of
any accounts, general intangibles or chattel paper, with or without recourse.
13.28. Material Adverse Change; Material Adverse Effect. The terms
"Material Adverse Change" and "Material Adverse Effect" shall mean,
respectively, any adverse change in or effect on the business, operations,
assets, prospects or condition, financial or otherwise, of any Subject Entity
which, when considered either singly or together with all other adverse changes
and effects with respect to which either such phrase is used in this Agreement,
is material to the Subject Entities considered as one enterprise.
13.29. Members of the Immediate Family. The term "Members of the Immediate
Family", as applied to any individual, shall include each parent, spouse, child,
brother, sister and the spouse of a child, brother, or sister of the individual,
and each trust created for the benefit of one or more of such persons and each
custodian of the property of one or more such persons.
13.30. Net Operating Income. The term "Net Operating Income" shall mean,
with respect to any period, (i) the net income of the Subject Entities for such
period, plus (ii) to the extent deducted in computing such net income, (a) all
charges and expenses in the nature of interest (including without limitation
charges in the nature of interest on Capitalized Leases), (b) provisions for
income taxes (including the State of Michigan single business tax), depreciation
and amortization, (c) accretion of the liability accrued as of December 31, 1995
pursuant to Statement of Financial Accounting Standards No. 106 issued by the
Financial Accounting Standard Board, (d) accretion of the liability accrued as
of December 31, 1995 in connection with deferred compensation payable by virtue
of the amendment of the Company's deferred compensation plan entered into on
November 29, 1990, and (e) unrealized foreign currency gains and losses, all of
the foregoing calculated in conformity with generally accepted accounting
principles on a basis consistent with the financial statements referred to in
clause (a) of Section 4.3.1 hereof, and with appropriate deductions from each
such item for minority interests in subsidiaries.
13.31. Person. The term "Person" shall mean an individual, partnership,
limited liability company, corporation, association, trust, joint venture or
unincorporated organization, and any government, governmental department or
agency or political subdivision thereof.
13.32. Pro Forma Net Operating Income. The term "Pro Forma Net Operating
Income" shall mean, with respect to any period, Net Operating Income for such
period; provided, however, that if an acquisition or disposition of assets,
another Person or a business occurred during the period for which Pro Forma Net
Operating Income is to be determined, such
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determination shall be made on a pro forma basis, on the assumption that such
acquisition or disposition occurred on the day immediately preceding the first
day of such period.
13.33. Public Sale. The term "Public Sale" shall mean a distribution
pursuant to a registration statement under the Securities Act or, if the
securities sold are of a class which is publicly traded as evidenced by listing
with a national securities exchange, on the NASDAQ National Market or otherwise,
a sale to the public which is exempt from the registration requirements of the
Securities Act under Rule 144 thereunder or otherwise.
13.34. Required Holders. The term "Required Holders" shall mean, with
respect to any class or type of Investor Securities, the holder or holders at
the relevant time (excluding the Subject Entities) of more than 50% of the
outstanding principal amount or number of outstanding shares, as the case may
be, of the specified class or type of Investor Securities, or if no class or
type is specified, the holder or holders at the relevant time (excluding the
Subject Entities) of each of (i) more than 50% in outstanding principal amount
of the Notes, (ii) more than 50% of the outstanding shares of Common Stock which
constitute Investor Securities, and (iii) more than 50% of the outstanding
Warrants which constitute Investor Securities.
13.35. Securities Act. The term "Securities Act" shall mean the Securities
Act of 1933, as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
13.36. Senior Indebtedness. The term "Senior Indebtedness" shall have the
meaning assigned to such term in the Notes.
13.37. Significant Subsidiary. The term "Significant Subsidiary" shall
mean each Subsidiary of the Company which is (or would be on a pro forma basis)
a "significant subsidiary" of the Company, as such term is used in Regulation S-
X promulgated by the Commission.
13.38. Stockholder. The term "Stockholder" shall mean each Person who
holds any Equity Security of the Company.
13.39. Subject Entity. The term "Subject Entity" shall mean each of the
Company and each of its Subsidiaries.
13.40. Subordinated Indebtedness. The term "Subordinated Indebtedness"
shall have the meaning assigned to such term in the Notes.
13.41. Subsidiary. The term "Subsidiary" shall mean any Person of which
the Company or any other specified Person now or hereafter shall at the time own
directly or indirectly through a Subsidiary at least a majority of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally.
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13.42. Wholly Owned Subsidiary. The term "Wholly Owned Subsidiary" shall
mean any Subsidiary all of whose outstanding Equity Securities are owned by the
Company (or any other specified Person), directly or indirectly through a Wholly
Owned Subsidiary.
13.43. Yield to Maturity. The term "Yield to Maturity" shall mean, at any
time, the yield to maturity (calculated in accordance with generally accepted
financial practices) on all Senior Indebtedness at such time, including all
interest, fees and other amounts payable with respect thereto, calculated on the
following assumptions: (i) the only payment or prepayments of outstanding Senior
Indebtedness which will be made are those specified to be made on a fixed date;
(ii) where Revolving Credit Debt is available, the maximum principal amount
permitted to be outstanding at any time will be outstanding; (iii) where an
interest rate varies based upon a floating rate of interest, the rate of
interest in effect on the date of computation will remain constant; (iv) where
an interest rate varies on the basis of other events or conditions (including
without limitation the financial performance of the borrower), an equal
principal amount of Senior Indebtedness subject thereto will be subject to each
possible rate of interest; (v) the maturity of all Revolving Credit Debt is five
years from the date of computation; and (vi) all fees and other amounts paid
prior to the date of computation in lump sums rather than periodically over the
remaining life of the applicable Indebtedness were, in fact, made payable
ratably over such remaining life at the time of their original payment.
14. Expenses, Etc. Whether or not the transactions contemplated by this
Agreement shall be consummated, the Company hereby agrees to pay on demand all
reasonable out-of-pocket expenses incurred by you in connection with such
transactions and operations hereunder (other than expenses incurred in the
normal course of investment monitoring) and in connection with any amendments or
waivers (whether or not the same become effective) hereof and of the other
Related Agreements and all expenses incurred by any of you or any holder of any
Investor Securities issued hereunder in connection with the enforcement in good
faith of any rights hereunder, under any other Related Agreement or under the
Charter of the Company, including without limitation: (a) the cost and expenses
of preparing and duplicating this Agreement; (b) the cost of delivering to your
principal office, insured to your reasonable satisfaction, the Investor
Securities sold to you hereunder and any Investor Securities delivered to you in
exchange therefor or upon any conversion or substitution thereof, in any such
case insured to your satisfaction; (c) the reasonable fees, expenses and
disbursements of Ropes & Gray in connection with the transactions contemplated
by this Agreement; and (d) all taxes (other than taxes determined with respect
to income and transfer taxes that may be payable upon a transfer), including any
recording fees and filing fees and documentary stamp and similar taxes at any
time payable in respect of this Agreement, any other Related Agreement, or the
issuance of any of the Investor Securities; provided, however, that you and each
holder of Investor Securities shall bear the fees and disbursements of counsel
for such of you or such holder in connection with all opinions rendered by such
counsel pursuant to Section 12 hereof.
The Company hereby further agrees to indemnify, exonerate and hold you and
each of your stockholders, officers, directors, employees and agents free and
harmless from and against
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<PAGE>
any and all Actions, losses, liabilities and damages, and any investigation or
proceeding instituted by any Governmental Authority or any other Person, and
expenses in connection therewith, including without limitation reasonable
attorneys' fees and disbursements, incurred in any capacity by the indemnitee or
any of them as a result of, or arising out of, or relating to any transaction
financed or to be financed in whole or in part directly or indirectly with
proceeds from the sale by the Company of any of the Investor Securities, except
for any of such indemnified liabilities arising on account of any indemnitee's
gross negligence, willful misconduct or bad faith.
Each of the Company and you hereby agree to indemnify each other against
and hold each other harmless from any claim, demand or liability for any
broker's, finder's or placement fees or lender's incentive fees alleged to have
been incurred by the Company or you, as the case may be, in connection with the
transactions contemplated by this Agreement, including without limitation
reasonable legal fees arising in connection with any such claim, demand or
liability; provided, however, that the Company shall bear the fees and expenses
referred to in the first paragraph of this Section 14.
The obligations of the Company to you under this Section 14 shall survive
the redemption, repurchase or transfer of any or all of the Investor Securities.
15. Notices. Any notice or other communication in connection with this
Agreement or the Investor Securities shall be deemed to be delivered if in
writing (or in the form of a telex or telecopy to be given only during the
recipient's normal business hours unless arrangements have otherwise been made
to receive such notice by telex or telecopy outside of normal business hours)
addressed as provided below and if either (a) actually delivered at said address
or (b) in the case of a letter, seven business days shall have elapsed after the
same shall have been deposited in the United States mails, postage prepaid and
registered or certified:
If to the Company, to it at the address set forth on page 1, with a
courtesy copy (not necessary to constitute notice hereunder) to John J. Collins,
Jr., Miller, Canfield, Paddock and Stone, Suite 100, 1400 North Woodward ,
Bloomfield Hills, Michigan 48303-2014, or at such other address as such Person
shall have specified by notice actually received by you.
If to you, to your address set forth on page 1 hereof, or at such other
address as you shall have specified by notice actually received by the Company.
If to any other holder of record of any Investor Security, to it at its
address set forth in the relevant registers of the Company.
16. Survival of Covenants. All covenants, agreements, representations and
warranties made herein or in any other document referred to herein or delivered
to you pursuant hereto or in connection herewith shall be deemed to have been
material and relied on by you, notwithstanding any investigation made by you or
on your behalf, and shall survive the execution and delivery to you of this
Agreement and of the Investor Securities.
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17. Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and Required Holders. Any amendment or waiver
effected in accordance with this Section 17 shall be binding upon each holder of
any Investor Securities and the Company.
18. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, THE COMPANY AND YOU HEREBY WAIVE, AND COVENANT THAT IT AND YOU
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY OTHER RELATED
AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR
THEREUNDER OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE HOLDERS OF INVESTOR SECURITIES OR THE COMPANY OR ANY OF THEM IN
CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE COMPANY AND
YOU ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION 18 CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH THE COMPANY AND YOU HAVE RELIED, ARE RELYING AND WILL RELY
IN ENTERING INTO THIS AGREEMENT, AND SUCH OF THE RELATED AGREEMENTS TO WHICH THE
COMPANY AND YOU ARE A PARTY. You or the Company may file an original counterpart
or a copy of this Section 18 with any court as written evidence of the consent
of the Company and you to the waiver of its or your right to trial by jury,
respectively.
19. Service of Process. The Company and you, by execution hereof, (a) agree
that any legal proceeding arising out of or based upon this Agreement or any
Specified Related Agreement relating to the subject matter hereof or thereof
shall be brought in the state courts of The Commonwealth of Massachusetts or the
United States District Court located in the Commonwealth of Massachusetts, and
in no other court or jurisdiction, (b) hereby irrevocably submit to the
exclusive jurisdiction of the state courts of The Commonwealth of Massachusetts
and the United States District Court located in the Commonwealth of
Massachusetts for the purpose of any suit, action or other proceeding arising
out of or based upon this Agreement or any other Specified Related Agreement or
the subject matter hereof or thereof brought by the Company or you or any of the
Company's or your respective successors or assigns, and (c) hereby waive to the
extent not prohibited by law, and agree not to assert, by way of motion, as a
defense or otherwise, in any such proceeding, any claim that it or you is not
subject personally to the jurisdiction of the above-named courts, that its or
your property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper or that this
Agreement or the subject matter hereof or thereof, may not be enforced in or by
such court. The Company and you hereby consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth
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of Massachusetts or the rules and regulations promulgated thereunder and agree
that service of process by registered or certified mail, return receipt
requested, at its or your address, as applicable, referred to in or specified
pursuant to Section 15 hereof, is reasonably calculated to give actual notice.
20. Miscellaneous. This Agreement, the other Related Agreements, and the
Charter of the Company set forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby and supersede any prior
written or oral understandings with respect thereto. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not alter or otherwise
affect the meaning hereof. This Agreement is intended to take effect as a sealed
instrument and may be executed in any number of counterparts which together
shall constitute one instrument and shall be governed by and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws of any
other jurisdiction. This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
Whether or not any express assignment has been made in this Agreement,
provisions of this Agreement that are for your benefit as the holder of any
Investor Securities are also for the benefit of, and enforceable by, all
subsequent holders of Investor Securities, except as otherwise expressly
provided herein.
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If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return one counterpart of the same to the Company whereupon this
letter shall become and be a binding agreement between you and the Company.
Very truly yours,
SEAL Numatics, Incorporated
Attest: By: /s/ Robert P. Robeson
Title: ---------------------------
Title:
Accepted and Agreed to:
Harvard Private Capital
Holdings, Inc.
By:
---------------------------
Title:
By:
---------------------------
Title:
<PAGE>
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return one counterpart of the same to the Company whereupon this
letter shall become and be a binding agreement between you and the Company.
Very truly yours,
SEAL Numatics, Incorporated
Attest: By:
Title: ---------------------------
Title:
Accepted and Agreed to:
Harvard Private Capital
Holdings, Inc.
By: /s/
---------------------------
Title: Authorized Signatory
By: /s/
---------------------------
Title: Authorized Signatory
<PAGE>
Exhibit 10.2.2
Tag-Along and Drag-Along Agreement
This Tag-Along Agreement (the "Agreement") is made as of January 3, 1996
among (i) Numatics, Incorporated, a Michigan corporation (the "Company"), (ii)
Harvard Private Capital Holdings, Inc., a Massachusetts corporation (the
"Investor"), and (iii) each of the Stockholders listed on Exhibit A hereto (each
a "Principal Stockholder and, collectively, the "Principal Stockholders").
Witnesseth:
Whereas, the Principal Stockholders and Investor now own or will own
outstanding shares of the capital stock of the Company or warrants to acquire
such capital stock;
Whereas, the parties hereto believe that it is in the best interests of
the Company and the Principal Stockholders to induce Investor to enter into the
Securities Purchase Agreement (as defined below) and purchase the Investor
Securities (as defined in said Securities Purchase Agreement) to be purchased by
it pursuant to said Securities Purchase Agreement by granting to Investor the
rights specified in this Agreement with respect to sales of equity securities of
the Company; and
Whereas, Investor would be not willing to enter into said Securities
Purchase Agreement or to purchase said Investor Securities to be purchased by it
pursuant to said Securities Purchase Agreement unless the Company and the
Principal Stockholders enter into this Agreement, and each of the Company and
each Principal Stockholder hereby acknowledges that its entering into this
Agreement is a material inducement to Investor's entering into said Securities
Purchase Agreement and its purchase of said Investor Securities;
Now, therefore, in consideration of the premises and the mutual covenants
herein contained the parties hereto hereby agree as follows:
1. Definitions. Reference is made to the Securities Purchase Agreement dated
as of January 3, 1996 (the "Securities Purchase Agreement") between the Company
and Investor. Each Principal Stockholder hereby acknowledges receipt of a
correct and complete copy of the Securities Purchase Agreement from the Company.
Terms defined in the Securities Purchase Agreement and not otherwise defined
herein are used herein as so defined. For purposes of this Agreement, Equity
Securities which are not Common Stock shall be treated on a Common Stock
equivalent basis, taking into appropriate consideration conversion, exercise and
exchange provisions. In addition, the following terms shall have the following
respective meanings:
<PAGE>
1.1 "Investor Shares" shall mean all shares of any class of capital
stock of the Company held by Investor, all other Equity Securities held by
Investor and all shares of capital stock issuable with respect to, in exchange
for or upon exercise or conversion of any such shares or other Equity
Securities; provided, however, that once any such shares shall have been sold in
a Public Sale or in a Transfer which is subject to Section 3 or 4 hereof, they
shall cease to be Investor Shares. For purposes of calculating numbers of
Investor Shares, Warrants shall be deemed to have been exercised and the holders
of Warrants shall be deemed to hold the number of shares of Common Stock
obtainable upon such exercise.
1.2 "Covered Shares" shall mean all shares of any class of capital
stock of the Company originally issued to any Stockholder, and all shares of
capital stock issued with respect to, in exchange for or upon conversion of any
such shares; provided, however, that once any such shares shall have been sold
in a Public Sale or in a Transfer subject to Section 3 hereof to a Person other
than a Stockholder, they shall cease to be Covered Shares.
1.3 "Stockholders" shall mean the Principal Stockholders and all
Persons who are required by the terms of this Agreement to become bound hereby
and party hereto as Stockholders upon a Transfer to them of Covered Shares. The
term "Stockholders" shall not include the Investor.
1.4 "Transfer" shall mean, when used as a verb, sell, assign,
encumber, pledge, hypothecate, give away or in any other manner dispose of or
transfer, whether voluntarily, involuntarily, by operation of law, pursuant to
judicial process or otherwise, but shall not include redemptions permitted by
Section 8.9 of the Securities Purchase Agreement, and shall have a correlative
meaning when used as a noun.
1.5 "Majority Stockholders" shall mean Principal Stockholders who own
more than 50% of the Common Stock then issued and outstanding held by all
Stockholders.
1.6 "Acquisition" shall mean a Transfer of any shares of Common Stock
to any Intended Buyer, which when aggregated with all shares of Common Stock
proposed to be transferred to such Intended Buyer would equal 100% of all
outstanding shares of Common Stock (assuming all options and convertible
securities are exercised or converted).
2. Restrictions on Transfer. No Stockholder shall Transfer any Covered Shares
to any other Person until the proposed transferee has delivered to Investor a
written acknowledgment and agreement in form and substance reasonably
satisfactory to Investor that the Covered Shares to be received by such
transferee are subject to all of the applicable provisions of this Agreement and
that such transferee is bound hereby and party hereto as a Stockholder;
provided, however, that the provisions of this Section 2 shall not apply to any
Public Sale of Covered Shares or to any Transfer of Covered Shares which is
subject to Section 3 or 4 hereof unless such Transfer is to another Stockholder.
Notwithstanding the foregoing, upon the death
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of any individual holder of Covered Shares (held either directly or through a
grantor trust for such individual's benefit), the Covered Shares held directly
or through a grantor trust by such holder may be distributed by will or other
instrument taking effect at death or by the laws of descent and distribution to
such holder's estate, executors, administrators and personal representatives,
and then to such holder's heirs, legatees or distributees; provided, however,
that the Company shall not give effect to any such Transfer until the recipient
of such Covered Shares has delivered to Investor a written acknowledgment and
agreement in form and substance reasonably satisfactory to Investor that the
Covered Shares to be received by such recipient are subject to all the
provisions of this Agreement and that such recipient is bound hereby and party
hereto as a Stockholder. Any attempted Transfer of Covered Shares not permitted
by this Agreement shall be null and void, and, to the extent permitted by law,
the Company shall not in any way give effect to any such Transfer.
3. Tag-Along Rights. No Stockholder or Stockholders (individually or
collectively, as the case may be, the "Proposed Seller") shall Transfer for
value ("Sell") any Covered Shares to any other Person (the "Proposed Buyer")
unless Investor is offered the opportunity to participate in such sale in the
manner and on the terms set forth in this Section 3; provided, however, that the
provisions of this Section 3 shall not apply to a Public Sale effected under
Rule 144, to Transfers between Stockholders, or to Transfers between an
individual Stockholder and a Member of the Immediate Family of such Stockholder.
3.1 Offer. A notice (the "Tag-Along Notice") shall be delivered by
the Proposed Seller to Investor. The Tag-Along Notice shall include:
(a) A true copy of a bona fide offer from the Proposed Buyer, which
shall set forth the complete terms of the proposed sale, including the
number of shares proposed to be purchased, the purchase price, the name and
address of the Proposed Buyer and the other principal terms of the proposed
transaction (the "Proposed Sale");
(b) An offer by the Proposed Seller to include in the Proposed Sale to
the Proposed Buyer, at the option of Investor, that number of Investor
Shares as is specified in accordance with Section 3.2 hereof, on the same
terms and conditions as the Proposed Seller shall sell his, her or its
Covered Shares;
(c) An acknowledgment from the Proposed Buyer of his, her or its
willingness to purchase such number of Investor Shares as shall be
includable in such Proposed Sale pursuant to Section 3.2 hereof.
3.2 Time and Manner of Exercise by Investor; Closing. If Investor
desires to accept the offer contained in the Tag-Along Notice, it shall notify
the Proposed Seller in writing within 30 days after its receipt of such Tag-
Along Notice, which notification shall specify the number of Investor Shares
which Investor desires to include in the Proposed Sale. If Investor has not so
accepted such offer in writing within such 30-day period it shall be
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deemed to have waived all of its rights with respect to the Proposed Sale, and
the Proposed Seller shall thereafter be free to Sell an amount of its Covered
Shares not exceeding the total number of shares specified in the Tag-Along
Notice, at a price no greater than the price set forth in the Tag-Along Notice
and on otherwise substantially no more favorable terms than as set forth in the
Tag-Along Notice, without any further obligation to Investor. Investor shall be
entitled to Sell in the Proposed Sale, on the same terms and conditions as the
Proposed Seller, up to that number of Investor Shares (the "Maximum Tag-Along
Number") such that such Maximum Tag-Along Number is equal, as nearly as may be,
to (i) the total number of shares proposed to be purchased in such Proposed
Sale, multiplied by (ii) a fraction, the numerator of which shall be the total
number of Investor Shares immediately before the Proposed Sale and the
denominator of which shall be the sum of (a) the total number of Investor Shares
immediately before the Proposed Sale, plus (b) the total number of Covered
Shares outstanding immediately before the Proposed Sale (assuming, for this
purpose, that all securities exercisable for or convertible into capital stock
of the Company are exercised or converted).
Investor shall take such actions and execute such documents and
instruments as shall be reasonably necessary or desirable in order to consummate
the Proposed Sale expeditiously and on the same terms as the Proposed Seller,
except that Investor shall not be required to make any representations or
warranties or give any indemnities other than (a) that it is duly empowered and
authorized to carry out the proposed transaction, (b) that it has valid
marketable title to the Equity Securities proposed to be sold and (c) that there
exist no laws, litigation or agreements that would impair the transfer of the
Equity Securities. If at the end of 180 days following the date on which the
Tag-Along Notice was given the Proposed Seller has not completed the Proposed
Sale in accordance with the terms hereof, Investor shall be released from its
obligations hereunder and all restrictions on the Proposed Seller contained in
this Section 3 shall again be in effect, including without limitation with
respect to such Proposed Sale. All costs and expenses incurred by the Proposed
Seller in connection with any sale which is actually consummated, including
without limitation all attorneys' fees and disbursements and any finders' or
brokerage fees or commissions, shall be allocated pro rata between the Proposed
Seller and Investor according to the number of shares sold by each. The portion
of such costs and expenses allocable to Investor shall be remitted to or as
directed by the Proposed Seller promptly after notice thereof is delivered
together with reasonable supporting calculations.
At the closing of any sale under this Section 3, Investor shall deliver
certificates representing the Investor Shares to be sold by it, duly endorsed
for transfer with signature guaranteed and with any stock transfer tax stamps
affixed, against delivery of the applicable purchase price. Any shares sold to
the Proposed Buyer in compliance with this Section 3 shall no longer be subject
to the provisions of this Agreement.
4. Drag-Along Obligations. In the event that the Majority Stockholders shall
vote in favor of, or otherwise propose to enter into, an Acquisition, then, upon
the request of the Majority Stockholders as evidenced by delivery of a Drag-
Along Notice as required by Section 4.1, the
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Investor shall Transfer all of its Investor Shares to the intended buyer (the
"Intended Buyer") in the manner and on the terms set forth in this Section 4;
provided, however, that the provisions of this Section 4 shall not apply (a)
unless the Investor shall be entitled to Transfer Investor Shares in the
Acquisition on the same terms and conditions as the Majority Stockholders shall
transfer their stock, (b) if one or more of the transactions constituting the
Acquisition shall be a Qualifying Public Offering, or (c) if the Intended Buyer
shall be an Affiliate (as defined in Rule 405 under the Securities Act of 1933,
as amended) of the Majority Stockholders.
4.1 Drag-Along Notice. A Drag-Along Notice shall be delivered by the
Majority Stockholders to the Investor. The Drag-Along Notice shall include:
(a) a copy of a bona fide offer from the Intended Buyer, which shall set forth
the principal terms of the Acquisition, including the number of shares of Common
Stock proposed to be acquired, the purchase price or merger consideration, and
the name and address of the Intended Buyer; (b) a demand by the Majority
Stockholders that all (but not less than all) of the Investor Shares of the
Investor be Transferred in the Acquisition on the same terms and conditions as
the Majority Stockholders shall transfer their Common Stock; and (c) an
acknowledgment from the Intended Buyer of his, her, its or their willingness to
acquire all of the Investor Shares of the Investor on the same terms and
conditions as the Majority Stockholders shall transfer their Common Stock in the
acquisition.
4.2 Consummation of Sale. The Investor shall take such actions and
execute such documents and instruments as shall be reasonably necessary or
desirable in order to consummate the acquisition expeditiously and on the same
terms as the Majority Stockholders, except that Investor shall not be required
to make any representations or warranties or give any indemnities other than (a)
that it is duly empowered and authorized to carry out the proposed transaction,
(b) that it has valid marketable title to the Equity Securities proposed to be
sold and (c) that there exist no laws, litigation or agreements that would
impair the transfer of their common stock. If, at the end of the 180-day period
following the date on which the Drag-Along Notice was delivered, the Majority
Stockholders have not completed the Acquisition, the Investor shall be released
from its obligations hereunder with respect to such Acquisition. At the closing
of any Acquisition under this Section 4, the Investor shall deliver certificates
representing the Investor Shares to be transferred by it, duly endorsed for
transfer with signature guaranteed and with any stock transfer tax stamps
affixed, against delivery of the applicable purchase price or merger
consideration. All cost and expenses incurred by the Majority Stockholders in
connection with such Acquisition shall be borne by the Majority Stockholders.
5. Additional Security. No Stockholder will grant a security interest in his
Equity Securities of the Company without giving a prior security interest to the
Investor; provided, however, that if the security interest is granted to holders
of Senior Indebtedness, the Investor shall receive a second security interest in
such Equity Securities.
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<PAGE>
6. Service of Process. By execution hereof, the Investor and each Stockholder
(a) agree that any legal proceeding arising out of or based upon this Agreement
or any Specified Related Agreement relating to the subject matter hereof or
thereof shall be brought in the state courts of the Commonwealth of
Massachusetts or the United States District Court located in the Commonwealth of
Massachusetts, and in no other court or jurisdiction, (b) hereby irrevocably
submit to the exclusive jurisdiction of the state courts of The Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding arising
out of or based upon this Agreement or the subject matter hereof brought by
Investor or any Stockholder or any of their respective successors or assigns and
(c) hereby waive to the extent not prohibited by law, and agree not to assert,
by way of motion, as a defense or otherwise, in any such proceeding, any claim
that such Investor or Stockholder is not subject personally to the jurisdiction
of the above-named courts, that such Investor or Stockholder's property is
exempt or immune from attachment or execution, that any such proceeding brought
in one of the above-named courts is improper or that this Agreement or the
subject matter hereof may not be enforced in or by such court. To the extent
not prohibited by law, Investor and each Stockholder hereby consent to service
of process in any such proceeding in any manner permitted by Chapter 223A or any
other provision of the General Laws of The Commonwealth of Massachusetts or the
rules and regulations promulgated thereunder and agree that service of process
by registered or certified mail, return receipt requested, at such Investor's or
Stockholder's address referred to in or specified pursuant to Section 8.1
hereof, is reasonably calculated to give actual notice.
7. Waiver of Jury Trial. To the extent not prohibited by applicable law which
cannot be waived, Investor and each Stockholder hereby waive, and covenant that
they will not assert (whether as plaintiff, defendant or otherwise), any right
to trial by jury in any forum in respect of any issue, claim, demand, action, or
cause of action arising out of or based upon this Agreement or the Securities
Purchase Agreement or the subject matter hereof or thereof or any Investor
Security or in any way connected with or related or incidental to the dealings
of Investor or any Stockholder or any of them in connection with any of the
above, in each case whether now existing or hereafter arising and whether
sounding in contract or tort or otherwise. Investor and each Stockholder
acknowledge that each has been informed by the other that the provisions of this
Section 7 constitute a material inducement upon which the other has relied, is
relying and will rely in entering into this Agreement and the Securities
Purchase Agreement. Investor or any Stockholder may file an original
counterpart or a copy of this Section with any court as written evidence of the
consent of Investor or each Stockholder to the waiver of its right to trial by
jury.
6
<PAGE>
8. Miscellaneous.
8.1 Notices. Notices and other communications provided for in or
otherwise in connection with this Agreement shall be in writing and shall be
sent by certified mail, return receipt requested, addressed to the party or
parties sought to be charged with notice of the same at the respective addresses
specified pursuant to Section 15 of the Securities Purchase Agreement.
8.2 Changes and Modifications; Termination; Actions under this
Agreement. This Agreement may not be orally changed, modified, extended or
terminated, nor shall any oral waiver of any of its terms be effective. This
Agreement may be terminated, changed, modified or extended, and waivers and
consents hereunder may be granted, only by an agreement in writing signed by the
Required Holders, the Company and the Majority Stockholders.
8.3 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
8.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.
8.5 Severability. If in any judicial proceedings a court shall
refuse to enforce any provision of this Agreement, then such unenforceable
provision shall be deemed eliminated from this Agreement for purposes of such
proceedings to the extent necessary to permit the remaining provisions to be
enforced.
8.6 Governing Law. This Agreement shall be construed under and
governed by the domestic substantive laws of The Commonwealth of Massachusetts
without giving effect to any choice or conflict of laws provision or rule that
would cause the application of the domestic substantive laws of any other
jurisdiction.
8.7 Remedies. The parties hereto shall have all remedies for breach
of this Agreement available to them provided by law or equity. Without limiting
the generality of the foregoing, the parties agree that in addition to all other
rights and remedies available at law or in equity, the parties shall be entitled
to obtain specific performance of the obligations of each party to this
Agreement and immediate injunctive relief against any proposed, threatened or
actual breach thereof, and that in the event any action or proceeding is brought
in equity to enforce the same, neither the Company nor Investor nor any
Stockholder will proffer, as a defense, that there is an adequate remedy at law.
7
<PAGE>
8.8 Legends. Each certificate representing Investor Shares or
Covered Shares shall bear a legend in substantially the following form:
"The shares represented by this certificate may be sold or otherwise
transferred only in compliance with, and are subject to the "drag-along"
provisions of, the Tag-Along and Drag-Along Agreement dated as of January
3, 1996 among the issuer hereof and the other parties thereto. Complete
and correct copies of the Tag-Along and Drag-Along Agreement are available
for inspection at the principal office of the issuer hereof and will be
furnished without charge to the holder of such shares upon written
request."
Whenever any Covered Shares shall cease to be Covered Shares or Investor Shares
shall cease to be Investor Shares, the holder thereof shall be entitled to
receive from the issuer thereof without expense a new certificate or
certificates for such shares not bearing the legend set forth above.
8.9 Other Transfer Restrictions. Nothing herein shall be deemed to
permit Investor or any Stockholder to Transfer Equity Securities in the Company
if such Transfer is prohibited by any other Agreement to which Investor or any
Stockholder is a party.
8
<PAGE>
Exhibit A
PRINCIPAL STOCKHOLDERS
----------------------
John H. Welker
David K. Dodds
Donald E. McGeachy
Henry Fleischer, Trustee
Robert P. Robeson
John E. Acuff
Bruce W. Hoppe
David King
Philip Robinson
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seal as of the date first above written.
NUMATICS, INCORPORATED
SEAL
By: /s/ Robert P. Robeson
----------------------------------
Title:
Attest:__________________
Secretary
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By:
----------------------------------
Title:
By:
----------------------------------
Title
PRINCIPAL STOCKHOLDERS:
/s/ John H. Welker
----------------------------------
John H. Welker
/s/ David K. Dodds
----------------------------------
David K. Dodds
----------------------------------
Donald E. McGeachy
----------------------------------
Henry Fleischer, Trustee
----------------------------------
Robert P. Robeson
----------------------------------
John E. Acuff
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seal as of the date first above written.
NUMATICS, INCORPORATED
SEAL
By:
----------------------------------
Title:
Attest:__________________
Secretary
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By: ???????
----------------------------------
Title:
By: ???????
----------------------------------
Title
PRINCIPAL STOCKHOLDERS:
----------------------------------
John H. Welker
----------------------------------
David K. Dodds
----------------------------------
Donald E. McGeachy
----------------------------------
Henry Fleischer, Trustee
----------------------------------
Robert P. Robeson
----------------------------------
John E. Acuff
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seal as of the date first above written.
NUMATICS, INCORPORATED
SEAL
By:
----------------------------------
Title:
Attest:__________________
Secretary
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By:
----------------------------------
Title:
By:
----------------------------------
Title
PRINCIPAL STOCKHOLDERS:
----------------------------------
John H. Welker
/s/ David K. Dodds
----------------------------------
David K. Dodds
/s/ Donald E. McGeachy
----------------------------------
Donald E. McGeachy
/s/ Henry Fleischer
----------------------------------
Henry Fleischer, Trustee
----------------------------------
Robert P. Robeson
/s/ John E. Acuff
----------------------------------
John E. Acuff
<PAGE>
/s/ Bruce W. Hoppe
-----------------------------
Bruce W. Hoppe
-----------------------------
David King
/s/ Philip Robinson
-----------------------------
Philip Robinson
<PAGE>
-----------------------------
Bruce W. Hoppe
/s/ David King
-----------------------------
David King
-----------------------------
Philip Robinson
<PAGE>
Exhibit 10.2.3
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT is made as of January 3, 1996 by and between
Numatics, Incorporated, a Michigan corporation (the "Company"), and Harvard
Private Capital Holdings, Inc., or registered assigns (collectively, the
"Purchaser").
RECITALS
A. The Company and the Purchaser have entered into the Securities
Purchase Agreement of even date herewith (as from time to time in effect, the
"Securities Purchase Agreement") for sale by the Company and purchase by the
Purchaser of certain of the Company's securities.
B. In connection with the purchase and sale of the Company's securities,
the Company and the Purchaser desire to provide for the registration of the
Common Stock to be issued upon exercise or conversion of the Warrants according
to the terms of this Agreement.
NOW THEREFORE, the parties agree as follows:
1. Certain Definitions. Terms defined in the Securities Purchase
Agreement and not otherwise defined herein are used herein with the meaning so
defined. In addition to terms otherwise defined herein, as used in this
Agreement, the following terms shall have the following respective meanings:
"Holder" shall mean the Purchaser (and its transferees as permitted by
Section 11) holding Registrable Securities or securities convertible into, or
exercisable or exchangeable for, Registrable Securities.
"Initiating Holders" shall mean Holders who in the aggregate hold greater
than fifty percent (50%) of the Registrable Securities.
"Initial Public Offering" shall mean a distribution of shares of Common
Stock pursuant to an effective registration statement filed pursuant to the
Securities Act or the effectiveness of a registration statement with respect to
Common Stock under Section 12 of the Exchange Act.
"NASD" shall mean The National Association of Securities Dealers, Inc.
<PAGE>
"Other Holders" shall mean holders of Company securities, other than the
Holders, proposing to distribute their securities pursuant to a registration
under this Agreement.
"Public Offering" shall mean a public offering of Common Stock pursuant to
an effective registration statement on Form S-1, S-2 or S-3 (or any successor
form or other form which would permit the public sale of Registrable Securities
pursuant thereto).
"Registrable Securities" shall mean Common Stock issued or issuable on
exercise or conversion of the Warrants and any shares of Common Stock issued or
issuable in respect of such Common Stock upon any stock split, stock dividend,
recapitalization, or similar event. Shares of Common Stock shall only be
treated as Registrable Securities if they have not been sold in a Public Sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with Section 2, 3 and 4 hereof, including without
limitation all registration, filing and NASD fees, all fees and expenses of
complying with securities or blue sky laws, all printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance, the fees and disbursements of a single counsel retained by the
holders of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and transfer
taxes, if any, provided that, in any case where Registration Expenses are not to
be borne by the Company, such expenses shall not include salaries of Company
personnel or general overhead expenses of the Company, and shall not include
auditing fees (except solely to the extent that such fees would not have been
incurred but for the filing of the applicable registration statement), premiums
or other expenses relating to liability insurance for the Company and its
officers and directors required by underwriters or the Company, or other
expenses for the preparation of financial statements or other data normally
prepared by the Company in the ordinary course of its business or which the
Company would have incurred in any event.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
2. Requested Registrations.
(a) Request for Registration. If an Initial Public Offering has occurred
and if the Company shall receive from Initiating Holders a written request that
the Company effect any registration, qualification or compliance with respect to
not less than twenty percent (20%) of the
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<PAGE>
Registrable Securities, and specifying the intended method of disposition
thereof, the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other Legal Requirements) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in such request, together with all
or such portion of the Registrable Securities of any Holder or Holders joining
in such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 2:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction, provided that the Company shall execute any
such general consent which is required under the Securities Act;
(B) If, within ten (10) days of the Company's receipt of a request
for registration pursuant to this Section 2, the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that the
Board of Directors has authorized the Company to file a registration statement
pertaining to securities of the Company sold by the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee plan), then during the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of (which shall be not more than
ninety (90) days after the Company's receipt of such request from the Initiating
Holders), and ending on the date six (6) months immediately following the
effective date of, such registration statement, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(C) If, within ten (10) days of the Company's receipt of a request
for registration pursuant to this Section 2, the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be materially detrimental
to the Company or its shareholders for a registration statement to be filed in
the near future, then the Company's obligation to use its best efforts to
register, qualify or comply under this Section 2 shall be deferred for a period
not to exceed ninety (90) days from the date of receipt of written request from
the Initiating Holders, provided that the Company shall not utilize this right
more than once in any twelve (12) month period.
-3-
<PAGE>
Subject to the foregoing clauses (A) through (C), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as reasonably practicable, after receipt of the request
or requests of the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to Section 2
is for a Public Offering involving an underwriting, the Company shall so advise
the Holders as part of the notice given pursuant to Section 2(a)(i). In such
event, the right of any Holder to registration pursuant to Section 2 shall be
conditioned upon such Holder's participation in the underwriting arrangements
required by this Section 2, and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent requested shall be limited to the
extent provided herein.
If requested registration pursuant to Section 2 involves an
underwritten offering, the underwriter or underwriters thereof shall be selected
by the holders of more than 50% of the Registrable Securities as to which
registration has been requested and shall be acceptable to the Company, which
shall not unreasonably withhold its acceptance of such underwriters.
If requested by the underwriters for any underwritten offering by
holders of Registrable Securities pursuant to a registration requested under
Section 2 hereof, the Company will enter into an underwriting agreement with
such underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in agreements of that type, including
without limitation indemnities to the effect and to the extent provided in
Section 8 hereof. The holders of Registrable Securities which are to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Such holders of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holders and such holders' intended methods of distribution.
Registrations under Section 2 shall be on such appropriate
registration form of the Commission as shall be selected by the holders of more
than 50% of the Registrable Securities so to be disposed of, and as shall permit
the disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in their request for such
registration. The Company agrees to include in any such registration statement
all information which holders of Registrable Securities being registered shall
reasonably request.
The Company shall not be required to effect more than one registration
pursuant to this Section 2. A registration requested pursuant to this Section 2
will not be deemed to have been effected: (i) unless it has become effective,
provided that a registration which does not
-4-
<PAGE>
become effective after the Company has filed a registration statement with
respect thereto solely by reason of the refusal to proceed of the holders of
Registrable Securities who initially requested registration of Registrable
Securities shall be deemed to have been effected by the Company at the request
of such holders, unless such holders shall have elected to pay all Registration
Expenses in connection with such registration; or (ii) if, after it has become
effective and prior to the completed distribution of all Registrable Securities
registered thereby, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or of any court which is not subsequently lifted so as to permit the
distribution of Registrable Securities to continue under such registration in a
manner that is not materially adverse to the sellers of Registrable Securities
in such distribution compared to what would have prevailed had such interference
not occurred.
If a requested registration pursuant to Section 2 involves an
underwritten offering, and the managing underwriter shall advise the Company in
writing (with a copy to each Holder of Registrable Securities requesting
registration) that, in its opinion, the number of securities requested to be
included in such registration (including securities of the Company which are not
Registrable Securities) exceeds the number which can be sold in such offering,
the Company will include in such registration to the extent of the number which
the Company is so advised can be sold in such offering: (i) first, all
Registrable Securities requested to be included in such registration by the
Holder or Holders of Registrable Securities (or if the number of Registrable
Securities required to be so included exceeds the number of specified by such
managing underwriter as being able to be sold in such offering, then pro rata
among such holders on the basis of the number of Registrable Securities
requested to be included by such holders), and (ii) second, to the extent of any
remaining excess, securities the Company proposes to sell and other securities
of the Company included in such registration by the holders thereof.
If any Holder of Registrable Securities or Other Holder disapproves of
the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration.
3. Company Registration.
(a) Notice of Registration. If at any time or from time to time the
Company shall determine to effect a Public Offering, either for its own account
or the account of a security holder or holders, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within twenty (20) days after receipt of such written notice from the Company,
by any Holder.
-5-
<PAGE>
(b) Underwriting. If the Public Offering of which the Company gives
notice involves an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 3(a)(i). In such event the
right of any Holder to registration pursuant to Section 3 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall, together with the Company and the Other Holders, enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company and may, at their option, require that any
or all of the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such Holders and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holders. Holders shall not be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holders and such
Holders' intended methods of distribution. Notwithstanding any other provision
of this Section 3, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the Registrable Securities and other securities to be
included in such registration. The Company shall so advise all Holders and Other
Holders and the number of shares that may be included in the registration and
underwriting by all Holders and Other Holders shall be allocated among them, as
nearly as practicable, first, to the Company, and, second, among the Holders of
Registrable Securities and the Other Holders in proportion to the number of
shares of Common Stock proposed to be included in such registration by such
Holders and Other Holders. If any Holder or Other Holder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 3
prior to the effectiveness of such registration whether or not any Holder has
elected to include Registrable Securities in such registration, without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to request that such registration be effected as a
registration under Section 2.
(d) No registration effected pursuant to a request or requests referred to
in Section 3 shall be deemed to have been effected pursuant to Section 2.
4. Registration on Form S-3.
(a) Request for Registration. If any Holder or Holders request that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3) for a Public Offering of Registrable Securities the reasonably anticipated
aggregate price to the public of which would
-6-
<PAGE>
exceed $1,500,000, and the Company is a registrant entitled to use Form S-3 to
register the Registrable Securities for such an offering, the Company shall use
its best efforts to cause such Registrable Securities to be registered for the
offering on such form and to cause such Registrable Securities to be qualified
in such jurisdictions as the Holder or Holders may reasonably request. The
substantive provisions of Section 2(b) hereof shall be applicable to each
registration initiated under this Section 4.
(b) Limitations. Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 4: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such
jurisdiction, provided that the Company shall execute any such general consent
which is required under the Securities Act; (ii) if, within ten (10) days of the
Company's receipt of a request for registration pursuant to this Section 4, the
Company shall furnish to such Holders a certificate signed by the President of
the Company stating that the Board of Directors has authorized the Company to
file a registration statement pertaining to securities of the Company sold by
the Company (other than a registration of securities in a Rule 145 transaction
or with respect to an employee plan), then during the period starting with the
date sixty (60) days prior to the Company's estimated date of filing of (which
shall be not more than ninety (90) days after the Company's receipt of such
request from the Initiating Holders), and ending on the date six (6) months
immediately following the effective date of, such registration statement,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective; or (iii) if,
within ten (10) days of the Company's receipt of a request for registration
pursuant to this Section 4, the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be materially detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 4 shall be deferred for a period not to
exceed ninety (90) days from the date of receipt of written request from the
Initiating Holders, provided that the Company shall not utilize this right more
than once in any twelve (12) month period.
5. Limitations on Subsequent Registration Rights. From and after the date
hereof, the Company will not, without the prior written consent of holders of a
majority of the aggregate voting power of the then outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which allows such holder or prospective holder of
any securities of the Company to include such securities in any registration
filed under Sections 2, 3 or 4 hereof, unless, under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of his securities will
not diminish the amount of Registrable Securities which are included to less
than the pro rata amount specified in Section 3(b) hereof. However, the Company
may by agreement grant such holder or prospective holder a registration right
analogous to that set forth in Section 2 provided that the Registrable
Securities may be included in any such
-7-
<PAGE>
registration demanded by such holders to the extent such inclusion will not
diminish the amount of securities of such holders which are included.
6. Expenses of Registration.
(a) Registration Expenses. The Company shall bear all Registration
Expenses incurred in connection with all registrations pursuant to Section 3
hereof. The Company shall bear 50% of the Registration Expenses relating to the
registration effected pursuant to Sections 2 or 4 hereof. The Holders shall bear
all Registration Expenses relating to registrations pursuant to Section 2 and 4
hereof of securities registered on behalf of the Holders which are not so borne
by the Company pro rata on the basis of the number of shares so registered.
(b) Selling Expenses. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders pursuant to this
Agreement shall be borne the Holders pro rata on the basis of the number of
shares so registered.
7. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will:
(a) prepare and file with the Commission (in the case of a registration
pursuant to Section 2, such filing to be made within ninety (90) days after the
initial request of Holders or in any event as soon thereafter as reasonably
practicable) the requisite registration statement with respect to such
Registrable Securities (including such audited financial statements as may be
required by the Securities Act or the rules and regulations promulgated
thereunder) and use its best efforts to cause such registration statement to
become and remain effective, provided that at least 5 days before filing such
registration statement or any amendments thereto, the Company will furnish to
the counsel selected by the Holders of Registrable Securities which are to be
included in such registration copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to maintain the effectiveness of such registration statement
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or (i) in the case of a
registration pursuant to Section 2 or 4 hereof the expiration of 120 days after
such registration statement becomes effective (unless such registration is
pursuant to Section 4 hereof and is a continuous offering described in Rule 415
under the Securities Act, in which event such period shall be two (2) years
after such effectiveness), or (ii) in the case of a registration pursuant to
Section 3 hereof , the expiration of 90 days after such registration statement
becomes effective, provided that if less than all the Registrable Securities are
withdrawn from registration after the expiration of the relevant period, the
shares to be so
-8-
<PAGE>
withdrawn shall be allocated pro rata among the holders thereof on the basis of
the respective numbers of Registrable Securities held by them included in such
registration;
(c) furnish to each seller of Registrable Securities covered by such
registration statement and each underwriter, if any, of the securities being
sold by such seller such number of copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus and supplements thereto
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as such seller or underwriter, if any,
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify all Registrable Securities
covered by such registration statement under such other securities laws or blue
sky laws of such jurisdictions as any seller or any underwriter, if any, of the
securities being sold by such seller shall reasonably request, to keep such
registrations or qualifications in effect for so long as the registration
statement remains in effect and do any and all other acts and things which may
be necessary or advisable to enable such seller and underwriter, if any, to
consummate the disposition in such jurisdictions of such Registrable Securities
owned by such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this clause (d) be
obligated to be qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause all Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Registrable Securities,
except that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this clause (e) be obligated to be
qualified, to subject itself to taxation in any such jurisdiction or to consent
to general service of process in any such jurisdiction;
(f) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the Company's becoming
aware that the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and
promptly prepare and furnish to each seller and each underwriter, if any, a
reasonable number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
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(g) advise each seller of Registrable Securities covered by such
registration statement, promptly after it receives notice thereof, of the time
when such registration statement, or any amendment thereto, or any amendment to
such registration statement have become effective or any related prospectus or
any supplement to such prospectus or any amendment to such prospectus has been
filed, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any related preliminary prospectus or
prospectus, of the suspension of the qualification of such Registrable
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of such registration statement or
prospectus or for additional information; and in the event of the issuance of
any stop order or of any order preventing or suspending the use of any such
preliminary prospectus or prospectus or suspending any such qualification, to
use promptly its best efforts to obtain withdrawal of such order;
(h) file promptly all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act subsequent to the time
such registration statement becomes effective and during any period when any
related prospectus is required to be delivered;
(i) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
day of the Company's first calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(j) provide a transfer agent and registrar for all such Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;
(k) enter into such agreements, including without limitation underwriting
agreements, and take such other actions as sellers holding more than 50% of the
Registrable Securities so to be sold shall reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;
(l) use its best efforts to furnish to each seller of Registrable
Securities a signed counterpart, addressed to such seller (and the underwriters,
if any), of
(i) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten Public Offering, an opinion dated the date of each closing
under the underwriting agreement); and
(ii) to the extent available under the rules relating to such
accountants, a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
Public Offering, a letter dated the date of each closing under the
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underwriting agreement), signed by the independent public accountants who
have certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten Public
Offerings of securities and, in the case of the accountants' letter, such other
financial matters, as such seller (or the underwriters, if any) may reasonably
request;
(m) give a single representative of the holders of Registrable Securities
whose Registrable Securities are registered under such registration statement
and their underwriters, if any, and their respective counsel and accountants,
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and give each of them such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the respective counsel of such holders and
such underwriters, to conduct a reasonable investigation within the meaning of
the Securities Act, and such other access and information as may be reasonably
requested; and
(n) use its best efforts to list all Registrable Securities covered by such
registration statement on each securities exchange on which any of the
securities of the same class as the Registrable Securities are then listed.
Each holder of Registrable Securities shall be deemed to have agreed by
acquisition of such Registrable Securities that upon receipt of any notice from
the Company of the occurrence of any event of the kind described in clause (f)
of this Section 7, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (f) of this
Section 7 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in clause (b) of this Section 7 shall
be extended by the length of the period from and including the date when the
Company shall have given such notice to and including the date when each seller
of any Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
clause (f) of this Section 7.
If any such registration or comparable statement refers to any holder by
name or otherwise as the holder of any securities of the Company then such
holder shall have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such holder, to the effect that the holding
by such holder of such securities is not to be construed as a recommendation by
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such holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the deletion of the
reference to such holder. The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish the Company
such information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing.
8. Indemnification.
(a) By Company. The Company will indemnify each Holder, each of its
officers, directors, shareholders, agents and partners, and each Person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
Person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers, directors, shareholders, agents and partners, and each
Person controlling such Holder, each such underwriter and each Person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling Person or underwriter and stated to be
specifically for use therein, and provided, further, that the Company shall not
be liable in any such case to any Person to the extent that any such claim,
loss, damage, liability or expense arises out of or is based upon such Person's
failure to fulfill an legal obligation to deliver a supplemented or amended
prospectus provided by the Company to such Person pursuant to Section 7(f)
hereof. If the Holders are represented by counsel other than counsel for the
Company, the Company will not be obligated under this Section 8(a) to reimburse
legal fees and expenses of more than one separate counsel for Holders. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Holder or any such director, officer,
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<PAGE>
shareholder, agent, partner, underwriter or controlling Person and shall survive
the transfer of such securities by such holder.
(b) By Holders. Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers, shareholders and agents, each underwriter, if any, of
the Company's securities covered by such a registration statement, each Person
who controls the Company or such underwriter within the meaning of Section 15 of
the Securities Act, and each other such Holder, each of its officers, directors,
shareholders, agents and partners and each Person controlling such Holder within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlements of any litigation, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other
document, or any 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 Company, such Holders, such directors,
officers, persons, underwriters or control Persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the proceeds received by
such Holder for the shares sold by such Holder, unless such liability arises out
of or is based on willful conduct by such Holder or Founder. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Holder or any such director, officer, shareholder, agent,
partner, underwriter or controlling Person and shall survive the transfer of
such securities by such holder.
(c) Procedures. Each party entitled to indemnification under this Section
8 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided, further, that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Agreement unless the failure to give such notice
is materially prejudicial to an Indemnifying Party's ability to defend such
action and provided, further, that the Indemnifying Party shall not assume the
defense for matters as to which there is a conflict of interest or separate and
different defenses. If the Indemnifying Party has assumed the
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defense of such claim or litigation in accordance with the terms hereof, or if
the Indemnifying Party cannot assume such defense because of a conflict of
interest or separate and different defenses, no Indemnified Party shall, except
with the consent of the Indemnifying Party (which shall not be unreasonably
withheld or delayed), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnifying Party of a release from all
liability in respect to such claim or litigation. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in Section 8(a) or
8(b) is unavailable to a party that would have been an indemnified party under
such Section in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each party that would have
been an indemnifying party thereunder shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as if appropriate to reflect the relative
fault of the indemnifying party on the one hand and such indemnified party on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof). The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party or such indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 8(d) shall include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim (which shall be limited as provided in Section 8(d)
hereof if the indemnifying party has assumed the defense of any such action in
accordance with the provisions thereof). No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Other Indemnification and Contribution. Indemnification and
contribution similar to that specified in Sections 8(a), 8(b), 8(c) and 8(d)
(with appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of such Registrable Securities under any Legal Requirement, other
than the Securities Act.
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<PAGE>
(f) Payments. The indemnification and contribution required by this Section
8 shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
9. Information by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders, the Registrable Securities held by them and
the distribution proposed by them as the Company may request in writing and only
as shall be necessary to enable the Company to comply with the provisions hereof
in connection with any registration, qualification or compliance referred to in
this Agreement.
10. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after and
during such time as the Company shall be subject to the reporting requirements
of Sections 13 or 15(d) of the Exchange Act, the Company agrees to use its best
efforts to make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, and to furnish to
any Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144.
11. Transfer of Registration Rights. The rights to cause the Company to
register securities granted Holders under Sections 2, 3 and 4 may be assigned in
connection with any transfer or assignment by a Holder of Registrable Securities
provided that: (i) such transfer may otherwise be effected in accordance with
applicable securities laws, and (ii) such transfer is effected in compliance
with the restrictions on transfer contained in this Agreement and in any other
agreement between the Company and the Holder. No transfer or assignment will
divest Holder or any subsequent owner of such rights and powers unless all
Registrable Shares are transferred or assigned.
12. Standoff Agreement. (a) Each Holder agrees that, if, in connection with
any Public Offering, the Company or the underwriters managing the offering so
request, the Holders shall not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days) from the effective date of
such registration as may be requested by the Company or the underwriters;
provided that each officer and director of the Company who owns stock of the
Company and each Holder of one percent (1%) or more of the Company's capital
stock also agrees to such restrictions.
(b) Each Holder shall be deemed to have agreed by acquisition of such
Registrable Securities, if so required by the managing underwriter, not to
effect any public sale or distribution of such securities during the seven days
prior to and the 180 days after any underwritten
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<PAGE>
registration pursuant to Section 2 or 3 has become effective, except as part of
such underwritten registration, whether or not such holder participates in such
registration.
(c) The Company agrees (i) if so required by the managing underwriter, not
to effect any public sale or distribution of its equity securities or securities
convertible into or exchangeable or exercisable for any of such securities
during the seven days prior to and the 180 days after any underwritten
registration pursuant to Section 2 has become effective, except as part of such
underwritten registration and except in connection with a stock option plan,
stock purchase plan, managing directors' plan, savings or similar plan, or an
acquisition of a business, merger or exchange of stock for stock, and (ii) to
cause each holder of its equity securities or of any securities convertible into
or exchangeable or exercisable for any of such securities, in each case
purchased directly from the Company at any time after the date of this Agreement
(other than in a public offering), to agree not to effect any such public sale
or distribution of such securities during such period, except as part of such
underwritten registration.
(d) This Section 12 shall be binding on all transferees or assignees of
Registrable Securities, whether or not such persons are entitled to registration
rights pursuant to Section 11.
13. Miscellaneous.
(a) Nominees for Beneficial Owners. In the event that Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its option, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement (or any
determination of any number or percentage of shares constituting Registrable
Securities held by any holder or holders of Registrable Securities contemplated
by this Agreement).
(b) Governing Law. This Agreement will be governed by and construed under
the laws of Massachusetts as applied to agreements among Massachusetts residents
entered into and to be performed entirely within Massachusetts.
(c) Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Holders of a majority of the
Registrable securities, voting as a class. Any amendment or waiver effected in
accordance with this paragraph will be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities and the Company.
(d) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
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<PAGE>
(e) Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telex or telecopy) addressed as hereinafter provided and if either (x) actually
delivered at said address (evidenced in the case of a telex by receipt of the
correct answerback) or (y) in the case of a letter, three business days shall
have elapsed after the same shall have been deposited in the United States
mails, postage prepaid and registered or certified: (a) if to any Holder, to the
registered address of such Holder as set forth in the Company's transfer
records; and (b) if to the Company, to the attention of its President at its
address specified in or pursuant to Section 15 of the Securities Purchase
Agreement.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(g) Titles, Subtitles and Table of Contents. The titles, subtitles and
table of contents used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement.
(h) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto and supersedes all
prior agreements and understandings relating to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
NUMATICS, INCORPORATED
By: /s/ Robert P. Robeson
------------------------------------------
Title
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By:
------------------------------------------
Title:
By
------------------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
NUMATICS, INCORPORATED
By:
------------------------------------------
Title:
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By: /s/ Michael R. Eisenson
------------------------------------------
Authorized Signatory
By: /s/ Mark A. Rosen
------------------------------------------
Authorized Signatory
<PAGE>
Exhibit 10.2.4
GUARANTEE
This Guarantee ("Agreement"), dated as of March 23, 1998, is between I.A.E.
Incorporated, a Michigan corporation (together with its successors and assigns,
the "Guarantor"), and Harvard Private Capital Holdings, Inc. (together with its
successors and assigns, the "Noteholder"). The parties agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other of the Related Agreements
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
<PAGE>
2.2. Continuing Obligation. The Guarantor acknowledges that the
Noteholder has entered into the Securities Purchase Agreement and the other
Related Agreements (and, to the extent that the Noteholder may enter into any
future Related Agreement, will have entered into such agreement) in reliance on
this Section 2 being a continuing irrevocable agreement, and the Guarantor
agrees that its guarantee may not be revoked in whole or in part. The
obligations of the Guarantor hereunder shall terminate when all of the
Guaranteed Obligations has been indefeasibly paid in full in cash and
discharged; provided, however, that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
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<PAGE>
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may impair
or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any Lien
under any Security Agreement or any other action which harms or impairs the
value of, or any failure to preserve or protect the value of, any right,
title and interest in and to the items and types of present and future
property on which a Lien is created as set forth in any Security Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would otherwise
prevent the Noteholder from bringing any action, including any claim for a
deficiency, against the Guarantor before or after the Noteholder's
commencement or completion of any foreclosure action, whether judicially,
by exercise of power of sale or otherwise, or any other law which would
otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed Obligations, together with all suretyship
defenses, which could otherwise be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be
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<PAGE>
available to it with respect to its obligations hereunder in the absence of the
waivers contained in this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent to
any amendment to or modification or termination of any terms or provisions
of, or to give any waiver in respect of, the Securities Purchase Agreement,
any other Related Agreement, the Guaranteed Obligations or any Guarantee
thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of such power shall be
of a character or value the same as or different from the character or
value of any property disposed of, and to obtain, modify or release any
present or future Guarantees of the Guaranteed Obligations and to proceed
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<PAGE>
against any property on which a Lien is created under any Security
Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
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<PAGE>
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to
extend credit under the Securities Purchase Agreement, the Guarantor represents
and warrants that:
3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under
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<PAGE>
the laws of Michigan, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Related
Agreement to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Guarantor have been previously delivered to the
Noteholder and are correct and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery of
this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Related Agreement. No judgment, decree or order of any Governmental Authority
has been issued against or
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<PAGE>
binds the Guarantor which has resulted, or creates a material risk of resulting,
in any material adverse change in the Guarantor's business. assets, financial
condition, income or prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of the Noteholder and its successors and assigns and shall be
binding upon the Guarantor and its respective successors and assigns. The
Guarantor may not assign its rights or obligations under this Agreement without
the written consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such proceeding brought in any of the above-named courts,
any claim that they are not subject personally to the jurisdiction of such
court,
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<PAGE>
that their property is exempt or immune from attachment or execution, that
such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Related
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND
COVENANT THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE),
ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
9. General. All covenants, agreements, representations and warranties made
in this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be
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<PAGE>
deemed to have been relied on by The Noteholder, notwithstanding any
investigation made by the Noteholder or its counsel, and shall survive the
execution and delivery to The Noteholder hereof and thereof. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit, alter or
otherwise affect the meaning hereof. This Agreement and the other Related
Agreements constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is
intended to take effect as a sealed document and may be executed in any number
of counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the domestic substantive
laws of The Commonwealth of Massachusetts without regard to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
I.A.E. INCORPORATED
By /s/ Robert P. Robeson
--------------------------------
Title: Secretary
-----------------------
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By /s/ Timothy R. Palmer
--------------------------------
Title: Managing Director
-----------------------
By /s/ Michael R. Eisenson
--------------------------------
Title: President and CEO
-----------------------
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<PAGE>
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Micro-Filtration, Inc., a Michigan corporation (together with
its successors and assigns, the "Guarantor"), and Harvard Private Capital
Holdings, Inc. (together with its successors and assigns, the "Noteholder"). The
parties agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other of the Related Agreements
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
<PAGE>
2.2. Continuing Obligation. The Guarantor acknowledges that the
Noteholder has entered into the Securities Purchase Agreement and the other
Related Agreements (and, to the extent that the Noteholder may enter into any
future Related Agreement, will have entered into such agreement) in reliance on
this Section 2 being a continuing irrevocable agreement, and the Guarantor
agrees that its guarantee may not be revoked in whole or in part. The
obligations of the Guarantor hereunder shall terminate when all of the
Guaranteed Obligations has been indefeasibly paid in full in cash and
discharged; provided, however, that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
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<PAGE>
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed Obligations, together with all suretyship
defenses, which could otherwise be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be
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available to it with respect to its obligations hereunder in the absence of the
waivers contained in this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of such power shall be
of a character or value the same as or different from the character or
value of any property disposed of, and to obtain, modify or release any
present or future Guarantees of the Guaranteed Obligations and to proceed
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<PAGE>
against any property on which a Lien is created under any Security
Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
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(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to
extend credit under the Securities Purchase Agreement, the Guarantor represents
and warrants that:
3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under
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<PAGE>
the laws of Michigan, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Related
Agreement to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Guarantor have been previously delivered to the
Noteholder and are correct and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Related Agreement. No judgment, decree or order of any Governmental Authority
has been issued against or
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binds the Guarantor which has resulted, or creates a material risk of resulting,
in any material adverse change in the Guarantor's business, assets, financial
condition, income or prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of the Noteholder and its successors and assigns and shall be
binding upon the Guarantor and its respective successors and assigns. The
Guarantor may not assign its rights or obligations under this Agreement without
the written consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that they are not subject personally to the jurisdiction
of such court,
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that their property is exempt or immune from attachment or execution, that
such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Related
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be
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<PAGE>
deemed to have been relied on by The Noteholder, notwithstanding any
investigation made by the Noteholder or its counsel, and shall survive the
execution and delivery to The Noteholder hereof and thereof. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit, alter or
otherwise affect the meaning hereof. This Agreement and the other Related
Agreements constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is
intended to take effect as a sealed document and may be executed in any number
of counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the domestic substantive
laws of The Commonwealth of Massachusetts without regard to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
MICRO-FILTRATION, INC.
By /s/ Robert P. Robeson
------------------------------------
Title: Secretary
---------------------------
HARVARD PRIVATE CAPITAL HOLDINGS. INC.
By /s/ Timothy R. Palmer
------------------------------------
Title: Managing Director
--------------------------
By /s/ Michard R. Eisenson
------------------------------------
Title: President and CEO
---------------------------
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<PAGE>
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Numation, Inc., a Michigan corporation (together with its
successors and assigns, the "Guarantor"), and Harvard Private Capital Holdings,
Inc. (together with its successors and assigns, the "Noteholder"). The parties
agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other of the Rela ted Agreements
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
<PAGE>
2.2. Continuing Obligation. The Guarantor acknowledges that the Noteholder
has entered into the Securities Purchase Agreement and the other Related
Agreements (and, to the extent that the Noteholder may enter into any future
Related Agreement, will have entered into such agreement) in reliance on this
Section 2 being a continuing irrevocable agreement, and the Guarantor agrees
that its guarantee may not be revoked in whole or in part. The obligations of
the Guarantor hereunder shall terminate when all of the Guaranteed Obligations
has been indefeasibly paid in full in cash and discharged; provided, however,
that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
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<PAGE>
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed Obligations, together with all suretyship
defenses, which could otherwise be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be
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<PAGE>
available to it with respect to its obligations hereunder in the absence of the
waivers contained in this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of such power shall be
of a character or value the same as or different from the character or
value of any property disposed of, and to obtain, modify or release any
present or future Guarantees of the Guaranteed Obligations and to proceed
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<PAGE>
against any property on which a Lien is created under any Security
Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
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<PAGE>
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to extend
credit under the Securities Purchase Agreement, the Guarantor represents and
warrants that:
3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under
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the laws of Michigan, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Related
Agreement to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Guarantor have been previously delivered to the
Noteholder and are correct and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Related Agreement. No judgment, decree or order of any Governmental Authority
has been issued against or
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<PAGE>
binds the Guarantor which has resulted, or creates a material risk of resulting,
in any material adverse change in the Guarantor's business. assets, financial
condition, income or prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Noteholder and its successors and assigns and shall be binding
upon the Guarantor and its respective successors and assigns. The Guarantor may
not assign its rights or obligations under this Agreement without the written
consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that they are not subject personally to the jurisdiction
of such court,
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<PAGE>
that their property is exempt or immune from attachment or execution, that
such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Related
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be
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<PAGE>
deemed to have been relied on by The Noteholder, notwithstanding any
investigation made by the Noteholder or its counsel, and shall survive the
execution and delivery to The Noteholder hereof and thereof. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit, alter or
otherwise affect the meaning hereof. This Agreement and the other Related
Agreements constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is
intended to take effect as a sealed document and may be executed in any number
of counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the domestic substantive
laws of The Commonwealth of Massachusetts without regard to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
NUMATION, INC.
By /s/ Robert P. Robeson
----------------------------------
Title: Secretary
-------------------------
HARVARD PRIVATE CAPITAL HOLDINGS. INC.
By /s/ Timothy R. Palmer
----------------------------------
Title: Managing Director
-------------------------
By /s/ Michael R. Eisenson
----------------------------------
Title: President and CEO
-------------------------
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<PAGE>
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Numatech, Inc., a Michigan corporation (together with its
successors and assigns, the "Guarantor"), and Harvard Private Capital Holdings,
Inc. (together with its successors and assigns, the "Noteholder"). The parties
agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other of the Related Agreements
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
<PAGE>
2.2. Continuing Obligation. The Guarantor acknowledges that the Noteholder
has entered into the Securities Purchase Agreement and the other Related
Agreements (and, to the extent that the Noteholder may enter into any future
Related Agreement, will have entered into such agreement) in reliance on this
Section 2 being a continuing irrevocable agreement, and the Guarantor agrees
that its guarantee may not be revoked in whole or in part. The obligations of
the Guarantor hereunder shall terminate when all of the Guaranteed Obligations
has been indefeasibly paid in full in cash and discharged; provided, however,
that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
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<PAGE>
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed Obligations, together with all suretyship
defenses, which could otherwise be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be
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<PAGE>
available to it with respect to its obligations hereunder in the absence of the
waivers contained in this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of such power shall be
of a character or value the same as or different from the character or
value of any property disposed of, and to obtain, modify or release any
present or future Guarantees of the Guaranteed Obligations and to proceed
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<PAGE>
against any property on which a Lien is created under any Security
Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
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<PAGE>
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to extend
credit under the Securities Purchase Agreement, the Guarantor represents and
warrants that:
3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under
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<PAGE>
the laws of Michigan, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Related
Agreement to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Guarantor have been previously delivered to the
Noteholder and are correct and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Related Agreement. No judgment, decree or order of any Governmental Authority
has been issued against or
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<PAGE>
binds the Guarantor which has resulted, or creates a material risk of resulting,
in any material adverse change in the Guarantor's business, assets, financial
condition, income or prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Noteholder and its successors and assigns and shall be binding
upon the Guarantor and its respective successors and assigns. The Guarantor may
not assign its rights or obligations under this Agreement without the written
consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that they are not subject personally to the jurisdiction
of such court,
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<PAGE>
that their property is exempt or immune from attachment or execution, that
such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Related
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be
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<PAGE>
deemed to have been relied on by The Noteholder, notwithstanding any
investigation made by the Noteholder or its counsel, and shall survive the
execution and delivery to The Noteholder hereof and thereof. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit, alter or
otherwise affect the meaning hereof. This Agreement and the other Related
Agreements constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is
intended to take effect as a sealed document and may be executed in any number
of counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the domestic substantive
laws of The Commonwealth of Massachusetts without regard to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
NUMATECH, INC.
By /s/ Robert P. Robeson
--------------------------------------
Title: Secretary
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By /s/ Timothy R. Palmer
--------------------------------------
Title: Managing Director
By /s/ Michael R. Eisenson
--------------------------------------
Title: President and CEO
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<PAGE>
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Ultra Air Products, Inc., a Michigan corporation (together with
its successors and assigns, the "Guarantor"), and Harvard Private Capital
Holdings, Inc. (together with its successors and assigns, the "Noteholder"). The
parties agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other of the Related Agreements
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
<PAGE>
2.2. Continuing Obligation. The Guarantor acknowledges that the Noteholder
has entered into the Securities Purchase Agreement and the other Related
Agreements (and, to the extent that the Noteholder may enter into any future
Related Agreement, will have entered into such agreement) in reliance on this
Section 2 being a continuing irrevocable agreement, and the Guarantor agrees
that its guarantee may not be revoked in whole or in part. The obligations of
the Guarantor hereunder shall terminate when all of the Guaranteed Obligations
has been indefeasibly paid in full in cash and discharged; provided, however,
that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
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<PAGE>
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed Obligations, together with all suretyship
defenses, which could otherwise be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be
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<PAGE>
available to it with respect to its obligations hereunder in the absence of the
waivers contained in this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of such power shall be
of a character or value the same as or different from the character or
value of any property disposed of, and to obtain, modify or release any
present or future Guarantees of the Guaranteed Obligations and to proceed
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<PAGE>
against any property on which a Lien is created under any Security
Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
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<PAGE>
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to extend
credit under the Securities Purchase Agreement, the Guarantor represents and
warrants that:
3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under
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<PAGE>
the laws of Michigan, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Related
Agreement to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Guarantor have been previously delivered to the
Noteholder and are correct and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Related Agreement. No judgment, decree or order of any Governmental Authority
has been issued against or
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<PAGE>
binds the Guarantor which has resulted, or creates a material risk of resulting,
in any material adverse change in the Guarantor's business, assets, financial
condition, income or prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Noteholder and its successors and assigns and shall be binding
upon the Guarantor and its respective successors and assigns. The Guarantor may
not assign its rights or obligations under this Agreement without the written
consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that they are not subject personally to the jurisdiction
of such court,
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<PAGE>
that their property is exempt or immune from attachment or execution, that
such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Related
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be
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<PAGE>
deemed to have been relied on by The Noteholder, notwithstanding any
investigation made by the Noteholder or its counsel, and shall survive the
execution and delivery to The Noteholder hereof and thereof. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit, alter or
otherwise affect the meaning hereof. This Agreement and the other Related
Agreements constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is
intended to take effect as a sealed document and may be executed in any number
of counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the domestic substantive
laws of The Commonwealth of Massachusetts without regard to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
ULTRA AIR PRODUCTS, INC.
By /s/ Robert P. Robeson
-----------------------------------
Title: Secretary
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By /s/ Timothy R. Palmer
-----------------------------------
Title: Managing Director
By /s/ Michael R. Eisenson
-----------------------------------
Title: President and CEO
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<PAGE>
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Microsmith, Inc., an Arizona corporation (together with its
successors and assigns, the "Guarantor"), and Harvard Private Capital Holdings,
Inc. (together with its successors and assigns, the "Noteholder"). The parties
agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other of the Related Agreements
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under the Bankruptcy Code or other applicable law.
<PAGE>
2.2. Continuing Obligation. The Guarantor acknowledges that the Noteholder
has entered into the Securities Purchase Agreement and the other Related
Agreements (and, to the extent that the Noteholder may enter into any future
Related Agreement, will have entered into such agreement) in reliance on this
Section 2 being a continuing irrevocable agreement, and the Guarantor agrees
that its guarantee may not be revoked in whole or in part. The obligations of
the Guarantor hereunder shall terminate when all of the Guaranteed Obligations
has been indefeasibly paid in full in cash and discharged; provided, however,
that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
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<PAGE>
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed Obligations, together with all suretyship
defenses, which could otherwise be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be
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available to it with respect to its obligations hereunder in the absence of the
waivers contained in this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of such power shall be
of a character or value the same as or different from the character or
value of any property disposed of, and to obtain, modify or release any
present or future Guarantees of the Guaranteed Obligations and to proceed
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against any property on which a Lien is created under any Security
Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
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(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to extend
credit under the Securities Purchase Agreement, the Guarantor represents and
warrants that:
3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under
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the laws of Arizona, with all power and authority, corporate or otherwise,
necessary (a) to enter into and perform this Agreement and each other Related
Agreement to which it is a party and (b) to own its properties and carry on the
business now conducted or proposed to be conducted by it. Certified copies of
the Charter and By-laws of the Guarantor have been previously delivered to the
Noteholder and are correct and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by this Agreement or any other
Related Agreement. No judgment, decree or order of any Governmental Authority
has been issued against or
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binds the Guarantor which has resulted, or creates a material risk of resulting,
in any material adverse change in the Guarantor's business. assets, financial
condition, income or prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Noteholder and its successors and assigns and shall be binding
upon the Guarantor and its respective successors and assigns. The Guarantor may
not assign its rights or obligations under this Agreement without the written
consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding brought in any of the above-named
courts, any claim that they are not subject personally to the jurisdiction
of such court,
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that their property is exempt or immune from attachment or execution, that
such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Related
Agreement, or the subject matter hereof or thereof, may not be enforced in
or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be
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deemed to have been relied on by The Noteholder, notwithstanding any
investigation made by the Noteholder or its counsel, and shall survive the
execution and delivery to The Noteholder hereof and thereof. The invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of any other term or provision hereof. The headings in this
Agreement are for convenience of reference only and shall not limit, alter or
otherwise affect the meaning hereof. This Agreement and the other Related
Agreements constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is
intended to take effect as a sealed document and may be executed in any number
of counterparts, which together shall constitute one instrument. This Agreement
shall be governed by and construed in accordance with the domestic substantive
laws of The Commonwealth of Massachusetts without regard to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
MICROSMITH, INC.
By /s/ Robert P. Robeson
-----------------------------------
Title: Secretary
---------------------------
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By /s/ Timothy R. Palmer
-----------------------------------
Title: Managing Director
---------------------------
By /s/ Michael R. Eisenson
-----------------------------------
Title: President and CEO
---------------------------
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Exhibit 10.2.5
AGREEMENT
This Agreement ("Agreement") is entered into as of the 23rd day of March,
1998 by and between Numatics, Incorporated (the "Company") and Harvard Private
Capital Holdings, Inc. ("Harvard");
WITNESSETH:
WHEREAS, Harvard and the Company did enter into a certain Securities
Purchase Agreement ("Purchase Agreement") dated as of January 3, 1996 pursuant
to which the Company did execute and deliver to Harvard a Senior Subordinated
Note (as defined in the Purchase Agreement) in the face amount of
$30,000,000.00; and
WHEREAS, the Company has also executed and delivered the PIK Notes (as
defined in the Purchase Agreement) (the PIK Notes and the Senior Subordinated
Note, collectively, the "Harvard Notes"); and
WHEREAS, the Company, in accordance with the Purchase Agreement, has
executed and delivered to Harvard the Warrants (as defined in the Purchase
Agreement); and
WHEREAS, the Company has agreed pursuant to the Purchase Agreement and,
specifically, as set forth in Exhibit 7 ("Exhibit 7") to the Purchase Agreement
to purchase upon notice to the Company at the Put Purchase Price (as defined in
the Purchase Agreement) the Warrants or shares of Common Stock (as defined in
the Purchase Agreement") which constitute Investor Securities (as defined in the
Purchase Agreement) if certain conditions described in Exhibit 7 occur on the
terms and conditions set forth in the Purchase Agreement; and
WHEREAS, the Company, together with certain of its subsidiaries, intends to
enter into an Indenture ("Indenture") with First Trust National Association
(together with any successors, the "Trustee") pursuant to which Indenture it
will issue certain subordinated notes ("Subordinated Notes") in the aggregate
amount of $110,000,000; and
WHEREAS, the Company intends to use $46,365,636.47 of the proceeds of the
Subordinated Notes to pay in full the Harvard Notes; and
WHEREAS, the Company (together with certain subsidiaries of the Company)
either simultaneously with or before issuing the Subordinated Notes intends to
enter into an Amended and Restated Loan Agreement ("Loan Agreement") (the Loan
Agreement and documents related thereto, the "Loan Documents") with NBD Bank, as
Administrative Agent and a lender thereunder, BancBoston as Documentation Agent
and a lender thereunder, and certain other lenders to be a signatory thereto;
and
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WHEREAS, the Company and Harvard have agreed to the amendments and other
matters set forth herein;
NOW, THEREFOR, for good and valuable consideration and in consideration of
the covenants set forth herein, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms as used herein are set forth in
Section 11 hereof. In addition, capitalized terms used herein which are not
defined herein, unless the context clearly requires otherwise, are used as
defined in the Purchase Agreement.
2. Representations and Warranties in Regard to the Harvard Notes. Harvard
hereby represents and warrants, as of the date hereof and as of the
Effectiveness Date, as follows:
(a) that it is the owner and holder of, and has in its possession, the
Harvard Notes and the Warrant, and that no other Person has any interest
(including without limitation any beneficial or legal interest arising by way of
sale, conveyance, pledge, security interest, hypothecation, mortgage, or other
type of lien or encumbrance) in the Harvard Notes or the Warrant.
(b) that on the Harvard Notes, March 23, 1998, the aggregate of principal,
interest, and prepayment premium will be $46,365,637.47 and on March 24, 1998,
absent previous payment, the aggregate of principal, interest, and prepayment
premium will be $46,387,916.93.
3. Payment of the Harvard Notes and Amended Guarantees. Upon a payment to
Harvard by the Company of $46,365,637.47 if made on March 23, 1998 or of
$46,387,916.93 if made on March 24, 1998, (the payment of which shall be made in
accordance with Exhibit A hereto) the Harvard Notes will be paid in full. Upon
receipt of either of the foregoing payments on the date set forth above
applicable thereto, Harvard agrees that it shall immediately mark the Harvard
Notes "Paid In Full" and return said Harvard Notes to the Company at its address
set forth under its signature line hereto by recognized overnight courier
service.
In addition, each Guarantee Subsidiary (as defined in the Purchase
Agreement) (which Guarantee Subsidiaries are Microsmith, Inc., Ultra Air
Products, Inc., Numatech, Inc., Numation, Inc., and Micro-Filtration, Inc.) have
previously executed and delivered to Harvard certain guarantees (the "Subsidiary
Guarantees"). Simultaneously with the execution and delivery hereof, each
Guarantee Subsidiary is executing and delivering to Harvard an Amended and
Restated Guarantee ("Amended Guarantee") substantially in the form of Exhibit B
hereto. Harvard agrees that, upon the payment set forth in the immediately
preceding paragraph from the Company on the applicable date, the Amended and
Restated Guarantees shall be effective, without the necessity of any further
action, Harvard will mark each of the existing Subsidiary Guarantees as "Amended
and Restated", and the Subsidiary Guarantees will be
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amended and restated thereby. Furthermore, I.A.E. Incorporated will issue and
deliver to Harvard its guarantee substantially in the form and substance of the
Amended Guarantees.
4. Consent and Default. Harvard hereby consents to the execution and
delivery of the Loan Documents, the Indenture, the Subordinated Notes, and all
other documents related to or contemplated by the Indenture and the Subordinated
Notes, and hereby waives any default or event of default which may be caused by
the execution and delivery thereof. It shall constitute an Event of Default (as
defined in the Purchase Agreement) under Section 10.1.3 thereof if the Company
fails to perform or observe any covenant, agreement or provision to be performed
or observed by it hereunder and, in the case of such failure (other than a
failure to perform its obligations under Section 5 hereof), such failure shall
not be rectified or cured to the reasonable satisfaction of the Required Holders
within thirty days after the occurrence of such failure.
5. Payment. The Company hereby agrees that it shall immediately upon
receipt of the proceeds of the Subordinated Notes prepay the principal of the
Harvard Notes and all accrued and unpaid interest thereon in the amount of
$46,365,637.47 if such payment is made on March 23, 1998 or in the amount of
$46,387,916.93 if such payment is made on March 24, 1998.
6. Amendments to Purchase Agreement. Effective immediately upon the
payment of the amounts set forth in Section 5 hereof, the Purchase Agreement,
without the necessity of any further action, shall be amended as follows:
(A) Article 9 (encaptioned "Covenants Applicable While Any Notes Are
Outstanding" and consisting of Sections 9.1 through 9.10, inclusive) shall
be deleted in their entirety and shall be replaced with the following:
"9. Certain Covenants Contained in the Indenture and Amendments to
Certain Other Agreements.
During such time as the Put Notes are outstanding, the Company
covenants that it will comply, and will cause its Subsidiaries (as defined
in the Indenture) to comply, with all of the covenants and provisions set
forth in Sections 4.07, 4.08, 4.09, 4.10, 4.12, 4.16 (except for purposes
of this Agreement only, the word "Note" set forth in Sections 4.16 and 4.12
of the Indenture shall be deemed to be replaced with the words "Put Note"
and the words "Subsidiary Guarantees" in Section 4.16 of the Indenture
shall be deemed replaced with the words "Amended Guarantees"), 4.17, and
4.19 as in effect upon initial execution and delivery thereof, all of which
covenants and provisions, together with the definitions of the defined
terms used therein, are hereby incorporated herein by reference as fully as
if set forth herein in their entirety. Each such covenant incorporated
herein by reference (together
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with each related definition) shall remain unmodified, notwithstanding any
modification or termination of such covenant (or such definition) or the
termination of the Indenture; provided, however, that if the Trustee under
the Indenture and the Company agree to amend any such section or definition
and the Required Holders consent to such amendment in writing, references
in this section shall be deemed to be references to such sections of the
Indenture as and to the extent amended with the consent of the Required
Holders.
In the event that the Company supplies the Trustee with a guarantee
pursuant to Section 4.19, it shall simultaneously therewith supply the Holders
of the Put Note(s) (if and at such time a Put Note is outstanding), with a
guarantee similar in form and substance to the Amended Guarantee.
In addition, the Subject Entities will not at any time consent to any
amendment or modification or assignment of, or grant any waiver of or fail to
enforce any of its rights pursuant to, any of the Related Agreements listed in
Sections 4.3.2.2 and 4.3.2.3 if such amendment, modification, waiver or failure
has or poses a material risk of having, directly or indirectly, any Material
Adverse Effect or any material adverse effect on any then outstanding Investor
Securities or on the rights, remedies or interest of any such holder hereunder
or any of the other Related Agreements other than the Bank Credit Agreement. For
purposes of this paragraph, the Indenture and the Subordinated Notes shall be
considered to be Related Agreements as if they were listed in Section 4.3.2.3
hereof.
(B) Section 7.2 contained in Exhibit 7 is hereby amended as follows:
The sentences contained in Section 7.2 which read as follows:
"The Put Purchase Price shall be paid in cash. However, if Senior
Indebtedness remains outstanding on the Put/Call Closing Date, to the
extent that the terms of both such Senior Indebtedness and the terms
of the Original Senior Indebtedness prohibit such payment in cash, the
Company may pay the Purchase Price by issuing to you, or such other
holder of Warrants or shares of Common Stock as shall have exercised
its rights under this Section 7.2, a promissory note (each a "Put
Note") in the original principal amount equal to the entire amount due
on such Put/Call Closing Date. The Put Note shall have the same terms
as the Senior Subordinated Notes except that all interest due on such
Put Note must be paid currently in cash."
are hereby deleted and are hereby replaced by the following:
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"The Put Purchase Price shall be paid in cash. However,
notwithstanding the foregoing, if (a) any Senior Indebtedness remains
outstanding on the Put/Call Closing Date, and if the terms of both
such Senior Indebtedness and the terms of the Original Senior
Indebtedness prohibit such payment in cash or (b) if the Indenture
prohibits such payment in cash, the Company shall pay the amount (if
any) of the Put Purchase Price to the extent that it is not prohibited
by the foregoing in cash and pay the amount of the Put Purchase Price
which it is so prohibited from paying in cash (such amount of the Put
Purchase Price which the Company is prohibited in paying in cash, the
"Deferred Put Purchase Price") by issuing to you, or such other holder
of Warrants or shares of Common Stock as shall have exercised its
rights under this Section 7.2, a promissory note (each a "Put Note")
in the amount of the Deferred Put Purchase Price. The Put Note shall
be substantially in the form of Exhibit 7.2A hereto with the blanks
suitably filled in and the Deferred Put Purchase Price, and the terms
and conditions thereof, including the subordination thereof, shall be
as set forth in said Exhibit 7.2A.
(C) Exhibit 7.2A hereto is hereby attached to the Purchase Agreement
as Exhibit 7.2A thereto.
(D) Section 10.1.2 shall be deleted and replaced with the following:
"10.1.2 Any Subject Entity shall fail to perform or observe any
of the covenants, agreements or provisions set forth or incorporated
by reference in Section 8.1, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.11 or
Section 9 hereof and, in the case of covenants, agreements or
provisions incorporated by reference in Section 9 hereof, such failure
shall continue beyond the period of grace, if any, specified in the
Indenture (provided, however, that no such period shall exceed thirty
days after such failure unless the Required Holders of the Notes in
their sole discretion shall specifically agree in writing); or"
(E) The following amendments shall be effective on the first day
("First Day") that (a) one or more Put Notes are outstanding and (b)
no Holder of any Put Note is also the Holder of any Investor
Securities other than a Put Note.
(i) On the First Day, Section 8.4 shall be deleted and
replaced with the following:
"8.4 Conduct of Business. So long as the Subordinated Notes
are outstanding, each Subject Entity will not engage in any
business other than Permitted Business (as defined in
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the Indenture), except to such extent as would not be
material to the Company and its Subsidiaries (as defined in
the Indenture) taken as a whole, and, during such time as
the Subordinated Notes are not outstanding, each Subject
Entity will engage only in the business conducted by it on
January 3, 1996 or in businesses that are logical extensions
of or ancillary to the fluid power business.
(ii) On the First Day, the period at the end of Section
8.5.2 shall be deleted and shall be replaced with the following:
"except that during such times as the Subordinated Notes are
outstanding, any Subject Entity shall be able to pay any salary,
bonus or other compensation to John H. Welker which it is
permitted to pay pursuant to the Indenture."
(iii) On the First Day, the period at the end of Section
8.5.3 shall be deleted and shall be replaced with the following:
"except that during such times as the Subordinated Notes are
outstanding, any Subject Entity shall be permitted to do any or
all of the foregoing to the extent that doing so does not violate
a term or condition of the Indenture.
(iv) On the First Day, Section 8.6 shall be amended to add,
between the phrase "Equity Securities to any Person;" and the
phrase "provided, however, that the Company", the following
phrase: "provided, however, that during such times as the
Subordinated Notes are outstanding, the Company may issue any of
its Equity Securities to any Person if it is permitted to do so
pursuant to the Indenture, and further".
(v) On the First Day, Section 8.9 shall be amended to add,
between the phrase "by the Stock Transfer Agreement;" and the
phrase "provided, however, that the aggregate amount of all
payments", the following phrase: "provided, however, that during
such times as the Subordinated Notes are outstanding, the Company
may do any or all of the foregoing if, and to the extent,
permitted by the Indenture, and further".
(F) Section 4.3.2.1 (a) and 4.3.2.1 (b) are hereby deleted in their
entirety and replaced, respectively, with the following:
"(a) loan Agreement dated as of January 3, 1996 between Numatics,
Incorporated and certain of its
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Subsidiaries party thereto from time to time, the lenders party
thereto from time to time, and the First National Bank of Boston as
Managing Agent and NBD Bank, as Administrative Agent, as amended by
four amendments, prior to the amendment and restatement thereof, and
the Amended and Restated Loan Agreement dated as of March 23, 1998,
the Lenders a party thereto, and NBD Bank, as Administrative Agent,
and BancBoston, N.A., as Documentation Agent, as amended, restated, or
otherwise modified from time to time, including without limitation any
increases in the amount thereof and including all agreements,
documents, and instruments executed in connection therewith at any
time ("Amended and Restated Credit Agreement").
(b) all Promissory Notes executed by the Company or any of the
Subsidiaries referred to in (a) above, plus all documents referenced
in the Amended and Restated Credit Agreement which were or are to be
executed by Numatics, Incorporated or a subsidiary thereof."
(G) The following phrase contained at the end of Section 4.3.2.1 "in
accordance with Section 9.2.2 hereof." is hereby deleted and replaced
with a period.
(H) Section 7.5.4 contained in Exhibit 7 to the Purchase Agreement is
hereby deleted and is replaced in its entirety with the following:
"7.5.4 Original Senior Indebtedness. The term "Original Senior
Indebtedness" shall mean the Indebtedness of the Company outstanding
under the Amended and Restated Credit Agreement as in effect on March
23, 1998."
(I) The following defined term shall be added to the Purchase
Agreement as Section 13.23A immediately after Section 13.23 thereof:
"13.23A. Indenture. The term "Indenture" shall mean that certain
Indenture by and among the Company, certain subsidiaries of the
Company, and First Trust National Association dated March 23, 1998."
(J) The following defined term shall be added to the Purchase
Agreement as Section 13.40A immediately after Section 13.40 thereof:
"Subordinated Notes" shall mean those certain notes issued by the
Company in accordance with the Indenture in the original
aggregate principal amount of $110,000,000.
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(K) A new Section 8.12 shall be, and hereby is, added to the Purchase
Agreement, which section will be placed immediately after Section 8.11
thereof:
"8.12 Prepayment. In the event that the Company prepays the
Subordinated Notes in whole or in part (whether such prepayment
is voluntary or required under the terms of the Indenture), the
Company agrees that simultaneously with any such prepayment it
will prepay principal of the Put Notes then outstanding in an
aggregate amount outstanding equal to the Prorata Amount. The
"Prorata Amount" shall mean the amount derived by multiplying the
principal amount of the Put Notes outstanding immediately prior
to the prepayment required under this section by the Percentage.
The "Percentage" shall mean the percentage that the amount so
prepaid on the Subordinated Notes is of the entire principal
amount of the Subordinated Notes outstanding immediately prior to
the relevant prepayment of principal thereof."
7. Harvard hereby relinquishes and terminates any and all, and terminates
any right which it may presently have to obtain in the future any, security
interests, pledges, mortgages, collateral assignments, liens and other
encumbrances which it has (and all of the foregoing which it would have in the
future based on instruments, agreements, mortgages or other documents in
existence on the date hereof) in the assets or other property, whether real,
personal, or mixed, tangible or intangible, of any and all conceivable types and
kinds, of the Company or of any subsidiary of the Company (including without
limitation, each Guarantee Subsidiary) and furthermore releases NBD Bank as
collateral agent for Harvard from any and all obligations which it may owe
Harvard in its capacity as such collateral agent. In furtherance of the
foregoing, Harvard relinquishes and discharges its rights under the agreements
and other documents listed on Exhibit C hereto, and terminates that certain
Intercreditor Agreement dated January 3, 1996 by and between Harvard, NBD Bank,
as collateral agent for the Subordinated Lenders, The First National Bank of
Boston, NBD Bank, Canada, and Massachusetts Mutual Life Insurance Company,
provided, however, the foregoing termination of the Intercreditor Agreement
shall be effective only upon receipt by Harvard of a termination thereof
executed by the other parties thereto. Harvard agrees to execute such further
documents, including discharges or amendments of mortgages, security agreements,
and financing statements, as the Company shall reasonably request.
8. The Company hereby represents and warrants to Harvard as follows:
(a) Neither the execution and delivery of this Agreement or of any
document contemplated hereby, nor the performance in accordance herewith,
constitutes or will constitute or result in a
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breach of the provisions of any Contractual Obligation to which it is a party or
by which it is bound or of its Charter or By-laws, (b) no approval,
authorization, or other action by any Governmental Authority or any other Person
is required to be obtained by it in connection with the execution, delivery, and
performance of this Agreement or any document contemplated hereby or the
transactions contemplated hereby, except for such approvals as will have been
obtained and which are in full force and effect, (c) this Agreement, upon
execution and delivery hereof by both of the parties hereto, will be valid,
binding, and enforceable obligations of the Company, and (d) the copies of the
Indenture and the Amended and Restated Credit Agreement which the Company has or
is simultaneously herewith providing to Harvard are full, complete, and accurate
copies thereof as executed or as they will be executed (except that if there are
subsequent changes thereto prior to execution, the Company shall immediately
supply to Harvard full, complete, and accurate copies of such changes).
9. Harvard hereby represents and warrants to the Company as follows:
(a) Neither the execution and delivery of this Agreement or of any
document contemplated hereby, nor the performance in accordance herewith,
constitutes or will constitute or result in a breach of the provisions of any
Contractual Obligation to which it is a party or by which it bound or of its
Charter or By-laws, (b) no approval, authorization, or other action by any
Governmental Authority or any other Person is required to be obtained by it in
connection with the execution, delivery, and performance of this Agreement or
any document contemplated hereby or the transactions contemplated hereby, except
for such approvals as have been obtained and which are in full force and effect,
and (c) this Agreement, upon execution and delivery hereof by both of the
parties hereto, will be valid, binding, and enforceable obligations of Harvard.
10. In the event there is an inconsistency between a term and condition of
the Purchase Agreement or any other agreement between the Company and Harvard
which is not amended hereby and the terms and conditions of the Purchase
Agreement as amended hereby ("Amended Terms"), the Amended Terms shall control
absolutely.
11. The following capitalized terms are defined in the places set forth
below:
"Agreement" is defined in the introductory paragraph.
"Amended Terms" is defined in Section 10.
"Common Stock" is defined in the fourth "Whereas" clause.
"Company" is defined in the introductory paragraph.
"Event of Default" is defined in Section 4.
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"Exhibit 7" is defined in the fourth "Whereas" clause.
"Guarantee Subsidiary" is defined in Section 3.
"Harvard" is defined in the introductory paragraph.
"Harvard Notes" is defined in the second "Whereas" clause.
"Indenture" is defined in the fifth "Whereas" clause.
"Investor Securities" is defined in the fourth "Whereas" clause.
"Loan Agreement" is defined in the seventh "Whereas" clause.
"Loan Documents" is defined in the seventh "Whereas" clause.
"PIK Notes" is defined in the second "Whereas" clause.
"Purchase Agreement" is defined in the first "Whereas" clause.
"Put Purchase Price" is defined in the fourth "Whereas" clause.
"Subordinated Notes" is defined in the fifth "Whereas" clause.
"Subsidiary Guarantees" is defined in Section 3.
"Trustee" is defined in the fifth "Whereas" clause.
"Warrants" is defined in the fourth "Whereas" clause.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the 23rd day of March, 1998.
NUMATICS, INCORPORATED
By /S/ ROBERT P. ROBESON
--------------------------------------
Title: VICE PRESIDENT
Address: 1450 Milford Road
Highland, MI 48357
HARVARD PRIVATE CAPITAL HOLDINGS, INC.
By /S/ MARK A. ROSEN
--------------------------------------
Title: MANAGING DIRECTOR
By /S/ MICHAEL R. EISENSON
--------------------------------------
Title: PRESIDENT AND CEO
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EXHIBIT A
[PRINTED ON HARVARD PRIVATE CAPITAL GROUP, INC. LETTERHEAD]
Bank: State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
ABA#: 011-000-028
Attn: Harvard College/Private Capital Group
Credit DDA: 3082-068-2
Prior advisement to: Tami Nason at 617-720-4837
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March 23, 1998
Harvard Private Capital Holdings, Inc.
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Michael R. Eisenson
Telecopier Number (617) 523-1063
Re: Securities Purchase Agreement between Numatics,
Incorporated (the "Company") and Harvard Private Capital Holdings,
Inc. ("Harvard") dated as of January 3, 1996 ("Purchase Agreement")
Gentlemen,
This letter is being sent to you to comply with certain notice requirements
set forth in the Purchase Agreement. Capitalized terms, unless the content
clearly requires otherwise, are used as defined in the Agreement.
Section 8.8 of the Agreement requires that the Company give Harvard advance
written notice prior to filing any registration statement under the Securities
Act covering any offering of debt. The Company hereby gives you notice that it
intends to file a registration statement under the Securities Act as described
in that certain Offering Memorandum ("OM") relating to the issuance by the
Company of $115,000,000 Senior Subordinated Notes due 2008, a copy of which OM
was previously supplied to you. The Purchase Agreement provides that the
foregoing notice must be given to you 60 days prior to the filing of said
Registration Statement. By your signature below, you (a) waive the requirement
that the foregoing notice be given you 60 days prior to the filing of the
Registration Statement, (b) agree that the foregoing notice satisfies the
requirements set forth in Section 8.8, and (c) as to the foregoing Registration
only, waive your rights under the second sentence in Section 8.8 (which sentence
begins with the words "Each holder of Investor Securities shall have the
right").
Section 3.5 of the $30,000,000 Senior Subordinated Note due January, 2004
(the "Senior Subordinated Note") and Section 3.5 of the PIK Notes outstanding
require that the Company give you notice in the event that it intends to prepay
principal, interest, and prepayment premium on the Senior Subordinated Note and
the PIK Notes. The Company hereby gives you notice that it intends to prepay in
full on Monday, March 23, 1998 (but, if because of the shortage of time, payment
cannot be made on said date, then on Tuesday, March 24, 1998) the Senior
Subordinated Note and all PIK Notes which will be paid in connection with the
aforesaid prepayment will be $46,365,637.47 on Monday, March 13, 1998 and
$46,387,916.93 on Tuesday, March 24, 1998. The Senior Subordinated Note and the
PIK Notes provide that the foregoing notice must be given not less than three
(3) days prior to the date of such
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prepayment. By your signature below, you (a) waive the requirement that the
foregoing notice be given you 3 days prior to the date of prepayment and (b)
agree that the foregoing note satisfies the requirements set forth in Section
3.5 of the Senior Subordinated Note and the PIK Notes.
Please execute below to set forth your agreement to the foregoing.
Numatics, Incorporated
By: /S/ ROBERT P. ROBESON
----------------------------------
Title: Vice President
Accepted and Agreed To:
Harvard Private Capital Holdings, Inc.
By: /S/ MARK A. ROSEN
----------------------------------
Title: Managing Director
By: /S/ MICHAEL R. EISENSON
----------------------------------
Title: President and CEO
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EXHIBIT B
AMENDED AND RESTATED GUARANTEE
This Amended and Restated Guarantee ("Agreement"), dated as of March 23,
1998, is between Micro-Filtration, Inc., a Michigan corporation (together with
its successors and assigns, the "Guarantor"), and Harvard Private Capital
Holdings, Inc. (together with its successors and assigns, the "Noteholder"). The
parties agree as follows:
1. Reference to Securities Purchase Agreement; Certain Rules of Construction;
Definitions. Reference is made to the Securities Purchase Agreement dated as of
January 3, 1996, as from time to time in effect, as amended (the "Securities
Purchase Agreement"), between Numatics, Incorporated, a Michigan corporation
(the "Company"), and the Noteholder. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) references to a particular Section shall include all subsections
thereof and (c) the word "including" shall be construed as "including without
limitation". Capitalized terms defined in the Securities Purchase Agreement and
not otherwise defined herein are used herein with the meanings so defined. In
addition, the term "Bankruptcy Code" shall mean Title 11 of the United States
Code, and the term "Obligor" shall mean each Person having any obligation or
other liability in respect of the Guaranteed Obligations, including each of the
Company and each Subsidiary of the Company executing a Guarantee Agreement.
2. Guarantee.
2.1. Guarantee. The Guarantor unconditionally guarantees that the
principal of, and interest on the Indebtedness evidenced by, and all other
obligations of the Company in respect of, or arising under or in respect of, the
Notes or to the holders of the Notes, including without limitation all such
obligations arising under Section 14 of the Securities Purchase Agreement
(collectively, the "Guaranteed Obligations"), will be performed and will be paid
in full in cash when due and payable, whether at the stated or accelerated
maturity thereof or otherwise, this guarantee being a guarantee of payment and
not of collectibility and being absolute and in no way conditional or
contingent. In the event any part of the Guaranteed Obligations shall not have
been so paid in full when due and payable, the Guarantor will, immediately upon
notice by the Noteholder or, without notice, immediately upon the occurrence of
a Default, pay or cause to be paid to the Noteholder the amount of such
Guaranteed Obligations which is then due and payable and unpaid. The obligations
of the Guarantor hereunder shall not be affected by the invalidity,
unenforceability or irrecoverability of any of the Guaranteed Obligations as
against any Obligor. For purposes hereof, the Guaranteed Obligations shall be
due and payable when and as the same shall be due and payable under the terms of
the Securities Purchase Agreement or any other
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of the Related Agreements notwithstanding the fact that the collection or
enforcement thereof may be stayed or enjoined under the Bankruptcy Code or other
applicable law.
2.2. Continuing Obligation. The Guarantor acknowledges that the Noteholder
has entered into the Securities Purchase Agreement and the other Related
Agreements (and, to the extent that the Noteholder may enter into any future
Related Agreement, will have entered into such agreement) in reliance on this
Section 2 being a continuing irrevocable agreement, and the Guarantor agrees
that its guarantee may not be revoked in whole or in part. The obligations of
the Guarantor hereunder shall terminate when all of the Guaranteed Obligations
has been indefeasibly paid in full in cash and discharged; provided, however,
that:
(a) if a claim is made upon the Noteholder at any time for repayment
or recovery of any amounts or any property received by the Noteholder from
any source on account of any of the Guaranteed Obligations and the
Noteholder repays or returns any amounts or property so received (including
interest thereon to the extent required to be paid by the Noteholder) or
(b) if the Noteholder become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim,
then the Guarantor shall remain liable under this Agreement for the amounts so
repaid or property so returned or the amounts for which the Noteholder becomes
liable (such amounts being deemed part of the Guaranteed Obligations) to the
same extent as if such amounts or property had never been received by the
Noteholder, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations. Not later
than five days after receipt of notice from the Noteholder, the Guarantor shall
pay to the Noteholder an amount equal to the amount of such repayment or return
for which the Noteholder has so become liable. Payments hereunder by the
Guarantor may be required by the Noteholder on any number of occasions.
2.3. Waivers with Respect to Guaranteed Obligations. Except to the extent
expressly required by the Securities Purchase Agreement, or any other Related
Agreement, the Guarantor waives, to the fullest extent permitted by the
provisions of applicable law, all of the following (including all defenses,
counterclaims and other rights of any nature based upon any of the following):
(a) presentment, demand for payment and protest of nonpayment of any
of the Guaranteed Obligations, and notice of protest, dishonor or
nonperformance;
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(b) notice of acceptance of this guarantee and notice that credit has
been extended in reliance on the Guarantor's guarantee of the Guaranteed
Obligations;
(c) notice of any Default or of any inability to enforce performance
of the obligations of the Company or any other Person with respect to any
Related Agreement, or notice of any acceleration of maturity of any
Guaranteed Obligations;
(d) demand for performance or observance of, and any enforcement of
any provision of the Securities Purchase Agreement, the Guaranteed
Obligations or any other Related Agreement or any pursuit or exhaustion of
rights or remedies under the Security Agreement or against the Company or
any other Person in respect of the Guaranteed Obligations or any
requirement of diligence or promptness on the part of the Noteholder in
connection with any of the foregoing;
(e) any act or omission on the part of the Noteholder which may
impair or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the Company or any other Person, or otherwise operate as
a deemed release or discharge;
(f) failure or delay to perfect or continue the perfection of any
Lien under any Security Agreement or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any right, title and interest in and to the items and types of present and
future property on which a Lien is created as set forth in any Security
Agreement;
(g) any statute of limitations or other Legal Requirement which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(h) any "single action" or "anti-deficiency" law which would
otherwise prevent the Noteholder from bringing any action, including any
claim for a deficiency, against the Guarantor before or after the
Noteholder's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or any other law
which would otherwise require any election of remedies by the Noteholder;
(i) all demands and notices of every kind with respect to the
foregoing; and
(j) to the extent not referred to above, all defenses (other than
payment) which the Company or any other Obligor may now or hereafter have
to the payment of the Guaranteed
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Obligations, together with all suretyship defenses, which could otherwise
be asserted by the Guarantor.
The Guarantor represents that it has obtained the advice of counsel as to the
extent to which suretyship and other defenses may be available to it with
respect to its obligations hereunder in the absence of the waivers contained in
this Section 2.3.
No delay or omission on the part of the Noteholder in exercising any right
under this Agreement or any other Related Agreement or under any guarantee of
the Guaranteed Obligations or with respect to any right under the Security
Agreement shall operate as a waiver or relinquishment of such right. No action
which the Noteholder or any Obligor may take or refrain from taking with respect
to the Guaranteed Obligations, including any amendments thereto or modifications
thereof or waivers with respect thereto, shall affect the provisions of this
Agreement or the obligations of the Guarantor hereunder. None of the
Noteholder's rights shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of any Obligor, or by any noncompliance by
any Obligor with the terms, provisions and covenants of the Securities Purchase
Agreement or any other Related Agreement, regardless of any knowledge thereof
which the Noteholder may have or otherwise be charged with.
2.4. The Noteholder's Power to Waive, etc. The Guarantor grants to the
Noteholder full power in its discretion, without notice to or consent of the
Guarantor, such notice and consent being expressly waived to the fullest extent
permitted by applicable law, and without in any way affecting the liability of
the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default under, and to consent
to any amendment to or modification or termination of any terms or
provisions of, or to give any waiver in respect of, the Securities Purchase
Agreement, any other Related Agreement, the Guaranteed Obligations or any
Guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Guaranteed Obligations (for any
duration), and any other indulgence with respect thereto, and to effect any
total or partial release (by operation of law or otherwise), discharge,
compromise or settlement with respect to the obligations of any Obligors or
any other Person in respect of the Guaranteed Obligations, whether or not
rights against the Guarantor under this Agreement are reserved in
connection therewith;
(c) To take security in any form for the Guaranteed Obligations, and
to consent to the addition to or the substitution, exchange, release or
other disposition of, or to deal in any other manner with, any part of any
property on which a Lien is created under any Security Agreement whether or
not the property, if any, received upon the exercise of
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such power shall be of a character or value the same as or different from
the character or value of any property disposed of, and to obtain, modify
or release any present or future Guarantees of the Guaranteed Obligations
and to proceed against any property on which a Lien is created under any
Security Agreement or such Guarantees in any order;
(d) To collect or liquidate or realize upon or to refrain from
collecting or liquidating or realizing upon any of the Guaranteed
Obligations or the property on which a Lien is created under the Security
Agreement in any manner.
2.5. Information Regarding the Company, etc. The Guarantor has made such
investigation as it deems desirable of the risks undertaken by it in entering
into this Agreement and is fully satisfied that it understands all such risks.
The Guarantor waives any obligation which may now or hereafter exist on the part
of the Noteholder to inform it of the risks being undertaken by entering into
this Agreement or of any changes in such risks and, from and after the date
hereof, the Guarantor undertakes to keep itself informed of such risks and any
changes therein. The Guarantor expressly waives any duty which may now or
hereafter exist on the part of the Noteholder to disclose to the Guarantor any
matter related to the business, operations, character, collateral, credit,
condition (financial or otherwise), income or prospects of any Obligor or its
Affiliates or their properties or management, whether now or hereafter known by
the Noteholder. The Guarantor represents, warrants and agrees that it assumes
sole responsibility for obtaining from the Company all information concerning
the Securities Purchase Agreement and all other Related Agreements and all other
information as to the Obligors and their Affiliates or their properties or
management as the Guarantor deems necessary or desirable.
2.6. Certain Guarantor Representations. The Guarantor represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Noteholder to enter into the Securities Purchase Agreement and to extend
credit to the Company by making the Guarantee contemplated by this Section
2;
(b) the credit available hereunder will directly or indirectly inure
to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the Noteholder for its Guarantee;
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<PAGE>
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured;
(f) it has, and will have, access to adequate capital for the conduct
of its business;
(g) it has the ability to pay its debts from time to time incurred in
connection therewith as such debts mature; and
(h) it has been advised by the Noteholder that the Noteholder is
unwilling to enter into certain Amendments to the Securities Purchase
Agreement unless the Guarantee contemplated by this Section 2 is given by
it.
2.7. Subrogation. The Guarantor agrees that, until the Guaranteed
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against any other Obligor
arising by Contractual Obligation or operation of any Legal Requirement in
connection with any payment made or required to be made by the Guarantor under
this Agreement. After the payment in full of the Guaranteed Obligations, the
Guarantor shall be entitled to exercise against the Company and any other
Obligor all such rights of reimbursement, subrogation, contribution and offset,
and all such other claims, to the fullest extent permitted by law.
2.8. Subordination. The Guarantor covenants and agrees that, after the
occurrence of an Event of Default, all Indebtedness, claims and liabilities then
or thereafter owing by any Obligor to the Guarantor whether arising hereunder or
otherwise are subordinated to the prior payment in full of the Guaranteed
Obligations and are so subordinated as a claim against such Obligor or any of
its assets, whether such claim be in the ordinary course of business or in the
event of voluntary or involuntary liquidation, dissolution, insolvency or
bankruptcy, so that no payment with respect to any such Indebtedness, claim or
liability will be made or received while any Event of Default exists.
2.9. Further Assurances. The Guarantor will, promptly upon the request of
the Noteholder from time to time, execute, acknowledge and deliver, and file and
record, all such instruments, and take all such action, as the Noteholder deems
necessary or advisable to carry out the intent and purposes of this Section 2.
3. Representations and Warranties. In order to induce the Noteholder to extend
credit under the Securities Purchase Agreement, the Guarantor represents and
warrants that:
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3.1. Organization and Business. The Guarantor is a duly organized and
validly existing corporation, in good standing under the laws of Michigan, with
all power and authority, corporate or otherwise, necessary (a) to enter into and
perform this Agreement and each other Related Agreement to which it is a party
and (b) to own its properties and carry on the business now conducted or
proposed to be conducted by it. Certified copies of the Charter and By-laws of
the Guarantor have been previously delivered to the Noteholder and are correct
and complete.
3.2. Authorization and Enforceability. The Guarantor has taken all
corporate action required to execute, deliver and perform this Agreement and
each other Related Agreement to which it is a party. Each of this Agreement and
each other Related Agreement to which the Guarantor is party constitutes the
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms subject to the effect of Bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights and remedies of creditors generally and by general principles of equity,
regardless of whether applied in proceedings in equity or at law, including
limitations imposed by equity on the enforceability of waivers.
3.3. No Legal Obstacle to Agreements. Neither the execution and delivery
of this Agreement or any other Related Agreement, nor the consummation of any
transaction referred to in or contemplated by this Agreement or any other
Related Agreement, nor the fulfillment of the terms hereof or thereof or of any
other Contractual Obligation referred to in this Agreement or any other Related
Agreement, has constituted or resulted, or will constitute or result, in:
(a) Any breach or termination of the provisions of any Contractual
Obligation to which the Guarantor is a party or by which it is bound, or of
the Charter or By-laws of the Guarantor: or
(b) The violation of any Legal Requirement.
No approval, authorization or other action by, or declaration to or filing with,
any Governmental Authority or any other Person is required to be obtained or
made by the Guarantor in connection with the execution, delivery and performance
of this Agreement or any other Related Agreement to which it is party or the
transactions contemplated hereby or thereby.
3.4. Litigation. No Action is pending or, to the knowledge of the
Guarantor, threatened which may involve any material risk of any final judgment,
order or liability which, after giving effect to any applicable insurance, has
resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business, assets, financial condition, income or
prospects or which seeks to enjoin the consummation, or which questions the
validity, of any of the transactions contemplated by
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this Agreement or any other Related Agreement. No judgment, decree or order of
any Governmental Authority has been issued against or binds the Guarantor which
has resulted, or creates a material risk of resulting, in any material adverse
change in the Guarantor's business. assets, financial condition, income or
prospects.
4. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Noteholder and its successors and assigns and shall be binding
upon the Guarantor and its respective successors and assigns. The Guarantor may
not assign its rights or obligations under this Agreement without the written
consent of the Noteholder.
5. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be given if given in writing (including telex,
telecopy or similar teletransmission) addressed as provided below (or to the
addressee at such other address as the addressee shall have specified by notice
actually received by the addressor), and if either (a) actually delivered in
fully legible form to such address (evidenced in the case of a telex by receipt
of the correct answerback) or (b) in the case of a letter, five business days
shall have elapsed after the same shall have been deposited in the United States
mails, with first-class postage prepaid and registered or certified.
If to the Guarantor, to it care of Numatics, Incorporated, 1450 North
Milford Road, Highland, Michigan 48357, to the attention of the chief financial
officer.
If to the Noteholder, to it at its address specified in or pursuant to
Section 15 of the Securities Purchase Agreement.
6. Venue; Service of Process.
(a) The Guarantor and Noteholder agree that any legal proceeding
arising out of or based upon this Agreement or any Specified Related
Agreement relating to the subject matter hereof or thereof shall be brought
in the state courts of the Commonwealth of Massachusetts or the United
States District Court located in the Commonwealth of Massachusetts, and in
no other court or jurisdiction;
(b) The Guarantor and Noteholder irrevocably submit to the exclusive
jurisdiction of the state courts of The Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based
upon this Agreement or the subject matter hereof or thereof brought by the
Guarantor or Noteholder or any of their respective successors or assigns;
and
(c) The Guarantor and Noteholder waive to the extent not prohibited
by applicable law, and agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding
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brought in any of the above-named courts, any claim that they are not
subject personally to the jurisdiction of such court, that their property
is exempt or immune from attachment or execution, that such proceeding is
brought in an inconvenient forum, that the venue of any such proceeding is
improper, or that this Agreement or any other Related Agreement, or the
subject matter hereof or thereof, may not be enforced in or by such court.
The Guarantor and Noteholder consent to service of process in any such
proceeding in any manner permitted by Chapter 223A or any other provision of the
General Laws of The Commonwealth of Massachusetts or the rules and regulations
promulgated thereunder and agree that service of process by registered or
certified mail, return receipt requested, at their address specified in or
pursuant to Section 5 is reasonably calculated to give actual notice.
7. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE NOTEHOLDER AND THE GUARANTOR WAIVE, AND COVENANT
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER RELATED AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE NOTEHOLDER OR THE
GUARANTOR IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR
AND NOTEHOLDER ACKNOWLEDGE THAT EACH HAS BEEN INFORMED BY THE OTHER THAT THE
PROVISIONS OF THIS SECTION 7 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
OTHER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THE SECURITIES
PURCHASE AGREEMENT AND ANY OTHER RELATED AGREEMENT TO WHICH IT IS A PARTY, AND
THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 7 WITH ITS COUNSEL. The
Noteholder or the Guarantor may file an original counterpart or a copy of this
Section 7 with any court as written evidence of the consent of the Noteholder
and the Guarantor to the waiver of the right to trial by jury.
8. Subordination. Notwithstanding anything to the contrary herein contained,
if the Guarantor has executed a Guarantee of any Senior Indebtedness (as defined
in Section 5 of Exhibit 7.2A to the Securities Purchase Agreement), or is
otherwise obligated to pay Senior Indebtedness, then (a) the Noteholder shall
take no action under this Agreement unless the Noteholder would be allowed to
take action directly against the Company under the terms of Section 5 of the
Notes, and (b) the obligations of the Guarantor under this Agreement shall
otherwise be subordinated to the Guarantor's obligations under the Senior
Indebtedness on the same terms and to the same extent as the Subordinated
Indebtedness is subordinated to such Senior Indebtedness.
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9. General. All covenants, agreements, representations and warranties made in
this Agreement or any other Related Agreement or in certificates delivered
pursuant hereto or thereto shall be deemed to have been relied on by The
Noteholder, notwithstanding any investigation made by the Noteholder or its
counsel, and shall survive the execution and delivery to The Noteholder hereof
and thereof. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference only and
shall not limit, alter or otherwise affect the meaning hereof. This Agreement
and the other Related Agreements constitute the entire understanding of the
parties with respect to the subject matter hereof and thereof and supersede all
prior and current understandings and agreements, whether written or oral. This
Agreement is intended to take effect as a sealed document and may be executed in
any number of counterparts, which together shall constitute one instrument. This
Agreement shall be governed by and construed in accordance with the domestic
substantive laws of The Commonwealth of Massachusetts without regard to any
choice or conflict of law provision or rule that would cause the application of
the domestic substantive laws of any other jurisdiction.
10. Amendment and Restatement. This Agreement amends and restates in its
entirety that certain Guarantee dated as of January 3, 1996 executed by the
Guarantor.
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
dated first written above.
MICRO-FILTRATION, INC.
By
-------------------------------------
Title:
---------------------------------
HARVARD PRIVATE CAPITAL HOLDINGS. INC.
By
-------------------------------------
Title:
---------------------------------
By
-------------------------------------
Title:
---------------------------------
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EXHIBIT 7.2A
This Note has not been registered under the Securities
Act of 1933, as amended, or under the securities laws of
any state, and may not be sold or otherwise transferred
in the absence of such registration or an exemption
therefrom under such Act and under such applicable state
laws. Furthermore, this Note may be sold or otherwise
transferred only in compliance with the conditions
specified in the Securities Purchase Agreement (as
defined below), a complete and correct copy of which is
available for inspection at the principal office of the
issuer of this Note and will be furnished without charge
to the Holder of this Note upon written request.
NUMATICS, INCORPORATED
SENIOR SUBORDINATED NOTE
DUE March __, 2009
$________________ ________________, ____
FOR VALUE RECEIVED, the undersigned NUMATICS, INCORPORATED, a Michigan
corporation (the "Company"), hereby promises to pay to HARVARD PRIVATE CAPITAL
HOLDINGS, INC. or registered assigns, at the address set forth in Section 15 of
the Securities Purchase Agreement (as defined below), or at such other place as
the Holder of this Note shall from time to time have designated to the Company
in writing, on or before the last Business Day (as defined in said Securities
Purchase Agreement) in March, 2009 (the "Maturity Date"), $____________
(__________________________________ Dollars) (the "principal amount"), with
interest as provided in Section 2 hereof.
1. THE NOTES. This Note is one of the senior subordinated notes of the
Company (the "Note", and, together with any notes issued in exchange therefor,
the "Notes"), which is issued pursuant to the Securities Purchase Agreement
dated as of January 3, 1996, as amended, between the Company and Harvard Private
Capital Holdings, Inc. (as from time to time in effect, the "Securities Purchase
Agreement"). Terms defined in the Securities Purchase Agreement and not
otherwise defined herein are used herein as so defined. Subject to the terms, of
Section 5.2(b) hereof, in case an Event of Default under the Securities Purchase
Agreement shall occur, the entire principal amount of this Note may become or be
declared to be due and payable in the manner and with the effect provided in the
Securities Purchase Agreement.
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<PAGE>
2. INTEREST PROVISIONS. This Note shall accrue daily interest from the date
hereof, computed on the basis of a 360-day year of twelve (12) thirty-day
months, on the principal amount from time to time unpaid to and including the
maturity hereof at a rate per annum equal to the Basic Rate (as hereinafter
defined), and with interest on overdue payments of principal and, to the extent
permitted by applicable law, on overdue payments of interest at a rate per annum
equal to the sum of the Basic Rate plus two percent (2%), said interest being
payable in quarterly installments in arrears on the last Business Day of each
March, June, September and December in each year (each such day, and the day
that is the Maturity Date, being a "Payment Date"), commencing on the Payment
Date occurring in the first such month occurring after the date hereof, and on
the Maturity Date or at any accelerated maturity hereof. For purposes of this
Note, a payment of principal or interest shall be considered to be overdue if
for any reason, including without limitation the receipt of a Blackout Notice
pursuant to Section 5 hereof, such payment is not made on the date specified for
such payment in Sections 2 and 3 hereof.
The "Basic Rate" shall be equal to 18% per cent per annum from and
including the date hereof through, but not including, (insert herein the date
which is one year after the date of this Note) and shall be equal to 25% per
cent per annum from and including (insert herein the date which is one year
after the date of this Note) and at all times thereafter.
Each payment of interest shall be payable in cash.
3. PAYMENT PROVISIONS. The Company covenants that so long as any of the Notes
are outstanding:
3.1. Payment at Maturity of Notes. On the Maturity Date, or on any
accelerated maturity of the Notes, the Company will pay the entire principal
amount of this Note then outstanding (or, if applicable, such lesser principal
amount hereof as has then been declared or become due and payable), together
with all accrued and unpaid interest thereon.
3.2. Voluntary Prepayments.
The Company may at any time prepay all or any part of the Notes then
outstanding, provided that any such prepayment shall be in an amount equal
to $250,000 or an integral multiples of $250,000) unless such prepayment is
a prepayment of the then outstanding balance hereof in which case it may be
in the amount of the then outstanding balance hereof. Any such prepayment
may be made without penalty, premium, or additional charge, notwithstanding
anything contained in the Stock Purchase Agreement or any other agreement.
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<PAGE>
3.3. Permanent Retirement of Notes. Notes prepaid in full or otherwise
acquired by the Company shall be permanently retired and canceled and shall not
under any circumstances be reissued or resold.
3.4. Selection of Notes for Prepayment. Each prepayment permitted by
Section 3.2 hereof shall be made so that the Notes then held by each Holder
shall be prepaid in a principal amount which shall bear the same ratio, as
nearly as may be, to the total principal amount being prepaid as the principal
amount of the Notes held by such Holder shall bear to the aggregate principal
amount of all Notes then outstanding.
3.5. Notice of Prepayments. Notice of each voluntary prepayment of Notes
pursuant to Section 3.3 hereof shall be given not fewer than three (3) nor more
than thirty (30) days before the prepayment date, in each case by mailing to
each Holder a notice of intention to prepay specifying the date of prepayment,
the aggregate principal amount of the Notes that will be outstanding immediately
prior to such prepayment, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of the Notes to be prepaid on such
date held by the Holder to whom such notice is sent, and the accrued interest
applicable to such prepayment.
3.6. Payment and Interest Cut-Off. Upon each prepayment of Notes, in
whole or in part, the Company will pay to the Holders thereof the principal
amount of their Notes to be prepaid together with unpaid interest in respect
thereof accrued to the prepayment date. Upon notice of prepayment having been
given in compliance with Section 3.5 hereof, the amount of Notes to be prepaid
shall become due and payable on the prepayment date, and from and after such
date (unless the Company shall default in paying the amounts then due) interest
thereon shall cease to accrue.
3.7. Acquisition of Notes. The Company will not, and will not permit any
of its Subsidiaries or Affiliates to, purchase, redeem, or otherwise acquire any
Note except upon the payment or prepayment thereof in accordance with the terms
of this Note.
4. HOLDER. The term "Holder" shall mean each holder (as such term is used in
the Securities Purchase Agreement) of the Subordinated Indebtedness. The Holder
of this Note by acceptance hereof agrees to comply with the provisions of
Section 12 of the Securities Purchase Agreement applicable to transfers of this
Note.
5. SUBORDINATION TO THE SENIOR DEBT.
The payment of principal and interest on this Note is subordinated in right
of payment to the prior payment in full in cash or Cash Equivalents (as defined
in the Indenture) of all Senior Indebtedness (as defined in the Indenture),
whether outstanding on the date hereof or hereafter incurred.
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Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full in cash or Cash Equivalents of all Obligations (as
defined in the Indenture) due in respect of such Senior Indebtedness (including
without limitation, interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Indebtedness) before the Holders of
this Note will be entitled to receive any payment with respect to this Note,
including, until all Obligations with respect to Senior Indebtedness are paid in
full in cash or Cash Equivalents, any distribution to which the Holders of Notes
would be entitled shall be made to the holders of Senior Indebtedness.
The Company also shall not make any payment upon or in respect of this Note
if (i) a default in the payment of the principal of, premium, if any (a "Payment
Default"), or interest on Designated Senior Indebtedness (as defined in the
Indenture) occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Indebtedness that permits holders of the Designated Senior Indebtedness
as to which such default relates to accelerate its maturity and the holder of
this Note receives a notice of such default (a "Payment Blockage Notice") from
the Company or the holders of any Designated Senior Indebtedness. Payments on
the Notes may and shall be resumed (a) in the case of a payment default, upon
the date on which such default is cured or waived and (b) in case of a
nonpayment default, the earlier of the date on which such nonpayment default is
cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Designated Senior
Indebtedness has been accelerated or a Payment Default has occurred. No new
period of payment blockage pursuant to a Payment Blockage Notice may be
commenced unless and until 360 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
holder of this Note shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been cured or waived for a period
of not less than 90 days.
Terms defined herein by reference to the Indenture are used as originally
defined therein and not as they may be amended subsequently.
6. AMENDMENTS AND WAIVERS. Any term of this Note may be amended and the
observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder of this Note. In addition, Section
5 of this Note may be amended only with the written consent of the Company, the
Holder of
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this Note, the holders of the Designated Senior Indebtedness, and the Required
Lenders.
7. MISCELLANEOUS. This Note shall be governed by and construed in accordance
with the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction. The parties hereto, including the undersigned maker and all
guarantors and endorsers, hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided herein or in the Securities Purchase Agreement, and assent to
extensions of the time of payment, or forbearance or other indulgence, without
notice.
NUMATICS, INCORPORATED
BY ____________________________
Title:
[SEAL]
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<PAGE>
EXHIBIT C
"Existing Mortgages" shall mean (a) the Tennessee Deed of Trust, Security
Agreement, Fixture Filing and Assignment of Rents, dated as of January 3, 1996,
made by the Company in favor of 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.
1. Assignment of Policy as Collateral Security, dated January 3, 1996,
executed by Numatics, Incorporated (Policy No. 77 737 604).
2. Assignment of Policy as Collateral Security, dated January 3, 1996,
executed by Numatics, Incorporated (Policy No. 77 737 891).
3. Security Agreement, dated January 3, 1996, executed by Numatics,
Incorporated, in favor of NBD Bank, as collateral agent.
4. Subsidiary Security Agreement, dated January 3, 1996, executed by Numatech,
Inc., Ultra Air Products, Inc., Microsmith, Inc., and Micro-Filtration, Inc. in
favor of NBD Bank, as collateral agent.
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5. Pledge Agreement and Irrevocable Proxy, dated January 3, 1996, executed by
Numatics, Incorporated in favor of NBD Bank, as collateral agent.
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Exhibit 10.3
AMENDED AND RESTATED STOCK TRANSFER AGREEMENT
---------------------------------------------
THIS AMENDED AND RESTATED STOCK TRANSFER AGREEMENT (the "Amended Stock
Transfer Agreement"), is made this 28th day of December, 1995, by and among
Numatics, Incorporated, a Michigan corporation formerly known as Numatics
Acquisition Corporation (the "Company"), JOHN H. WELKER, individually and as
trustee of the John H. Welker Trust Agreement dated December 28, 1995, DAVID K.
DODDS, DONALD E. McGEACHY, HENRY FLEISCHER, individually and as trustee of the
Henry Fleischer Trust Under Agreement Dated March 10, 1993, ROBERT P. ROBESON,
JOHN E. ACUFF, BRUCE W. HOPPE, DAVID KING and PHILIP ROBINSON.
WITNESSETH:
WHEREAS, the undersigned entered into a Stock Transfer Agreement dated as
of November 29, 1990 among the Company; Norwest Equity Partners IV; Greylock
Investments Limited Partnership; Greylock Limited Partnership; State Treasurer
of the State of Michigan, Custodian of Public School Employees' Retirement
System; State Employees' Retirement System; Michigan State Police Retirement
System; Judges' Retirement System; Probate Judges' Retirement System; Heller
Financial, Inc.; John E. Acuff; William L. Behan; Roy A. Clark; David K. Dodds;
Henry Fleischer; Donald E. McGeachy; Robert P. Robeson; and John H. Welker (the
"Stock Transfer Agreement"); and
WHEREAS, the undersigned, constituting all of the current shareholders of
the Company and all of the remaining parties to the Stock Transfer Agreement,
desire to amend the Stock Transfer Agreement as provided in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned amend and restate
the Stock Transfer Agreement as follows:
ARTICLE I
DISPOSITIONS OF SECURITIES
--------------------------
1.1 Restriction on Disposition Generally. No Shareholder shall Dispose of
any of the Securities of the Company, whether now owned or hereafter acquired,
unless such Disposition is in strict compliance with this Agreement.
1.2 Securities Transfer Book(s).
(a) The Company shall maintain at its principal executive office
securities transfer book(s) in which shall be recorded, among other things, the
name and address of each record holder of Securities of the Company and the
number of shares or comparable information of each class series, or type of
Securities of the Company owned by each such record holder.
<PAGE>
(b) No transfer or issuance of Securities of the Company shall be valid or
effective unless made in strict compliance with this Agreement.
(c) The Company shall not register a transfer of Securities unless such
transfer is in strict compliance with the provisions of this Agreement. The
Company may refuse to register a transfer of Securities of the Company until it
shall have received such evidence of compliance with this Agreement as may be
reasonably requested by it. The Company and the Shareholders shall be entitled
to regard the registered holder of the Securities as appearing on the securities
transfer book(s) of the Company as the actual owner thereof for all purposes.
(d) All Shareholders shall be entitled to inspect the securities transfer
book(s) maintained by the Company pursuant to this Section 1.2 during normal
business hours upon reasonable advance notice to the Company.
ARTICLE II
RESTRICTIONS ON DISPOSITIONS BY MANAGEMENT SHAREHOLDERS
-------------------------------------------------------
2.1 General Restrictions.
(a) No Management Shareholder shall Dispose of any Securities of the
Company, now owned or hereafter acquired, prior to the twelfth anniversary of
the Closing Date, except as permitted under Section 2.2 hereof, unless (i) the
Company and the Required Shareholders consent in writing to such Disposition and
approve the proposed transferee of such Securities, (ii) the proposed transferee
executes and delivers to the Company a Supplement hereto, and (iii) the
requirements of Section 6.11 are satisfied, if applicable.
(b) No Management Shareholder shall Dispose of any Securities of the
Company, now owned or hereafter acquired, on or after the twelfth anniversary of
the Closing Date, except as permitted under Section 2.2 hereof, unless (i) such
Management Shareholder shall first comply with the provisions of Section 2.6
hereof and (ii) the requirements of Section 6.11 are satisfied, if applicable.
2.2 Exceptions to General Restrictions. A Management Shareholder may
Dispose of Securities of the Company without compliance with the provisions of
Section 2.1(a) or (b) or Section 2.6, as applicable, only as follows:
(a) pursuant to the mandatory or optional purchase or redemption of
such Securities as provided in Section 2.3 or 2.4 hereof; or
(b) pursuant to a Registered Public Offering of such Securities; or
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<PAGE>
(c) pursuant to an Open Market Transaction following the occurrence
of a Registered Public Offering of such Securities; or
(d) in the case of Welker, (i) up to a total of 2000 shares of Class
A Stock (appropriately adjusted to reflect stock splits, stock dividends,
reorganizations, consolidations and similar changes effected after the
initial issuance of such shares) plus any shares of Class A Stock purchased
by Welker pursuant to the exercise of his rights under Sections 2.3, 2.4 or
2.6 hereof to Person(s) in connection with their full-time employment with
the Company or its subsidiaries, in each such case provided that such
Person(s) execute(s) or deliver(s) a Supplement(s) to the Company and
satisfy(ies) the requirements of Section 6.11 hereof, if applicable; or
(e) in the case of a Management Shareholder other than Welker, (i) to
the Company or another Management Shareholder if unanimously approved by
the Board of Directors of the Company, or (ii) to Welker (if he shall then
own a majority of the outstanding Class A Stock) if the Board of Directors
does not approve a proposed Disposition pursuant to clause (i); or
(f) by a Management Shareholder to a revocable trust if the grantor,
initial and sole trustee, and sole beneficiary of the trust during the
lifetime of the Management Shareholder is such Management Shareholder, if
the trust (i) executes and delivers to the Company a Supplement hereto (for
the purposes of Sections 2.3 and 2.4 hereof the Securities held by the
trust will be deemed owned by the transferring Management Shareholder) and
(ii) satisfies the requirements of Section 6.11 hereof, if applicable; or
(g) upon exercise of the rights of such Management Shareholder with
respect to such Securities as set forth in the Tag-Along and Drag-Along
Agreement.
Any Dispositions by a Management Shareholder pursuant to Section
2.2(b) or (c) shall be made free of any other restriction imposed by this
Agreement upon such Disposition or upon any proposed transferee, and no
direct or indirect transferee shall thereafter be subject to any
restriction imposed by this Agreement.
2.3 Mandatory Redemption and Optional Buy-Sell Agreements Upon Death,
Total and Permanent Disability, Involuntary Discharge Without Cause After 2
Years, Retirement, and Resignation After 12 Years of a Management
Shareholder.
(a) Upon the occurrence of the following events with respect to a
Management Shareholder:
(i) death;
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(ii) Total and Permanent Disability;
(iii) Involuntary Discharge Without Cause after the second
anniversary of the later of (i) the Closing Date or (ii) the date of
hire by the Company or a subsidiary;
(iv) Retirement; or
(v) Resignation after the twelfth anniversary of the later of (A) the
Closing Date or (B) the date of hire by the Company or a subsidiary.
the Company shall, subject to Section 2.3(b) hereof, purchase and redeem
from such Management Shareholder all Securities then owned by such
Management Shareholder and such Management Shareholder shall sell such
Securities to the Company for a redemption price equal to the Value Per
Share of such Securities times the number of Securities being redeemed by
the Company.
The redemption price determined as provided in this Section 2.3(a)
shall be payable by the Company either as follows:
(1) an amount equal to the least of (x) the redemption price, (y) the
greater of (i) the maximum amount of cash of the Company as of the
applicable closing date determined by the Board of Directors of the Company
in good faith as being available for payment of the redemption price after
consideration of the cash requirements for anticipated operations of the
Company, or (ii) the proceeds of any life insurance, if any, maintained on
the life of the affected Management Shareholder (other than life insurance
designated as "key man" insurance by the Company which, in the case of John
H. Welker, shall be not less than $5,000,000) actually received by the
Company prior to the closing of the redemption as provided herein, or (z)
the maximum amount the Company may lawfully pay in cash and which would not
constitute a default under or violation of any agreement with another
Person, shall be paid in cash, by the delivery of a check or by wire
transfer to an account designated by the affected Management Shareholder,
and the balance of the redemption price shall be payable by the delivery of
a five-year subordinated promissory note of the Company in substantially
the form of Attachment III hereto in the principal amount of such balance;
or
(2) upon such other terms as may be agreed upon by the affected
Management Shareholder and the Company (but only if such other terms are
unanimously approved by the Board of Directors of the Company).
Except as otherwise prohibited pursuant to the terms of the Securities
Purchase Agreement, the promissory note described above in this Section
2.3(a) shall bear interest at
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an annual rate equal to the Applicable Federal Rate. The promissory note
will be paid in three equal installments on the third, fourth and fifth
anniversaries of the closing of the redemption and sale. Accrued interest
will be paid annually. The promissory note will provide for mandatory
prepayment out of the net proceeds of any subsequently issued Common Stock
issued to a new member of management of the Company who replaces the
affected Management Shareholder. The promissory note will also provide for
mandatory prepayment out of the proceeds of any life insurance on the life
of the affected Management Shareholder (other than "key man" insurance
which, in the case of John H. Welker, shall not, together with other "key
man insurance" of the Company on his life that is not paid by the Company
pursuant to Section 2.3(a)(1), be less than $5,000,000) received by the
Company after the closing of the redemption. The promissory note will be
subordinated in that non-payment of scheduled payments or mandatory
prepayments of principal and interest on the promissory note because of
legal or contractual restrictions on such payments shall not constitute a
default or permit acceleration of the unpaid principal or interest under
the promissory note.
The closing of the purchase and redemption shall occur on a date
mutually agreeable to the Company and the Management Shareholder not later
than ninety (90) days after the Chief Executive Officer or Chief Financial
Officer of the Company obtains actual knowledge of the occurrence of any of
the events described in clause (i), (ii), (iii) or (iv) or (v) above.
(b) If, but only if, the Company may not lawfully purchase and redeem
all of the Securities owned by a Management Shareholder (other than Welker)
as otherwise required under Section 2.3(a) hereof or the purchase or
redemption thereof would constitute a default under or a violation of any
agreement between the Company and any other Person, then the Company shall
be obligated to purchase and redeem only such portion, if any, of such
Securities as the Company may lawfully purchase or as shall not constitute
such a default or violation, as the case may be, and Welker shall have the
right (but only if Welker shall then own at least a majority of the
outstanding Class A Stock, and, if not, then all Management Shareholders
shall have the right on a pro rata basis in relation to their respective
ownership of the Class A Stock), but not the obligation, to purchase all
or, subject to Section 2.3(d) below, any portion of the Securities owned by
such Management Shareholder not purchased by the Company and such
Management Shareholder shall sell such Securities to Welker (or the
Management Shareholders, as applicable) for a purchase price equal to the
Value Per Share of such Securities times the number of Securities being
purchased by Welker (or the Management Shareholders).
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The purchase price determined as provided in this Section 2.3(b) shall
be paid either as follows:
(1) an amount equal to the lesser of the purchase price or the
maximum amount determined in good faith by Welker (or the Management
Shareholders purchasing a majority of the Securities of the affected
Management Shareholder, as applicable) as being available to pay cash for
such purchase, shall be paid in cash by the delivery of a check or wire
transfer to an account designated by the affected Management Shareholder
and the balance of the purchase price shall be payable by the delivery of a
five year promissory note (or notes of the Management Shareholders on a pro
rata basis) in substantially the form of Attachment IV hereto in the
principal amount of such balance, or
(2) upon such other terms as may be agreed upon by the affected
Management Shareholder and Welker (or the Management Shareholders, as
applicable).
The promissory note(s) described above in this Section 2.3(b) shall
bear interest at an annual rate equal to the Applicable Federal Rate. The
promissory note(s) will be paid in three equal installments on the third,
fourth and fifth anniversaries of the closing of the purchase and sale.
Accrued interest will be paid annually.
The right to purchase hereunder shall be exercised by giving written
notice thereof to the affected Management Shareholder and the Company
within thirty (30) days after the giving by the Company of the notice
specified in Section 2.3(e) below that the Company is unable to purchase
and redeem all or a part of the Securities. A copy of the notice from
Welker shall also be sent to the Company. The closing of the purchase and
sale shall occur on a date mutually agreeable to the affected Management
Shareholder and Welker (or the Management Shareholders, as applicable) and
shall, to the extent practicable, be coordinated with the closing of the
redemption of Securities by the Company under this Section 2.3, if any, but
in any event shall not be later than sixty (60) days after giving the
notice of exercise contemplated in this Section 2.3(b).
(c) In no event shall Welker (or the Management Shareholders, as
applicable) in the exercise of their rights under this Section 2.3 have the
right to purchase less than all of the Securities owned by the affected
Management Shareholder not purchased by the Company, unless otherwise
agreed by the affected Management Shareholder.
(d) The Company shall give written notice to the affected Management
Shareholder and Welker (or the Management Shareholders, as applicable) of
its inability to purchase and
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redeem all or a part of the Securities under Section 2.3(a) as promptly as
practicable under the circumstances.
(e) Any Securities owned by the affected Management Shareholder that
are not redeemed or purchased by the Company or Welker (or the Management
Shareholders, as applicable) as provided in this Section 2.3 may be
Disposed of by the affected Management Shareholder free of any restriction
imposed by this Agreement upon such Disposition or upon any proposed
transferee other than satisfaction of the requirements under Section 6.11,
if applicable, and no direct or indirect transferee shall thereafter be
subject to any restriction imposed by this Agreement.
2.4 Optional Redemption and Buy-Sell Agreements upon Resignation Prior to
12 Years, Involuntary Discharge With Cause, Involuntary Discharge Without Cause
Prior to 2 Years, and certain Other Events With Respect to a Management
Shareholder.
(a) Upon the occurrence of any of the following events with respect
to a Management Shareholder:
(i) Resignation on or prior to the twelfth anniversary of the later
of the (A) Closing Date or (B) the date of hire by the Company or a
subsidiary;
(ii) Involuntary Discharge With Cause;
(iii) any physical or mental impairment as a result of self-inflicted
injury, alcoholism, drug abuse or addiction which, in the reasonable
judgment of the Board of Directors of the Company, has rendered such
Management Shareholder substantially unable to perform his duties as an
officer or employee of the Company for a period of six consecutive months;
(iv) Involuntary Discharge Without Cause on or prior to the second
anniversary of the later of (A) the Closing Date or (B) the date of hire by
the Company or a subsidiary;
(v) any transfer of Securities owned by such Management Shareholder
by operation of law, including by way of example and not of limitation,
pursuant to any court or governmental order or by attachment, execution or
similar process, or pursuant to a divorce decree; or
(vi) the filing of a petition under any bankruptcy or similar law by
or against such Management Shareholder,
the Company (if approved unanimously by its Board of Directors) shall have
the right, but not the obligation, to purchase and redeem from such
Management Shareholder all or, subject to Section 2.4(d) hereof, any
portion of the Securities then owned by such Management Shareholder, and,
if
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such right shall be exercised by the Company as provided herein, such
Management Shareholder shall sell such Securities to the Company for a
redemption price equal to the Adjusted Cost Per Share of such Securities
times the number of Securities being redeemed by the Company.
The redemption price determined as provided in this Section 2.4(a)
shall be payable as provided in Section 2.3(a).
The Company shall give written notice to the affected Management
Shareholder and the Management Shareholders of the election to exercise its
rights under this Section 2.4(a) within thirty (30) days after the Chief
Executive Officer or the Chief Financial Officer of the Company obtains
actual knowledge of the occurrence of any of the events described in clause
(i), (ii), (iii), (iv), (v) or (vi) above. The closing of the redemption
shall occur within ninety (90) days after written notice from the Company
to the affected Management Shareholders specifying that such right is being
exercised.
(b) If the right to redeem provided to the Company in Section 2.4(a)
is not exercised, or is exercised only partially, Welker shall have the
right (but only if Welker shall then own at least a majority of the
outstanding Class A Stock, and, if not, then all Management Shareholders
shall have the right on a pro rata basis in relation to their respective
ownership of the Class A Stock) to purchase all or, subject to Section
2.4(d) below, any portion of the Securities held by such Management
Shareholder, other than Welker, not redeemed by the Company under Section
2.4(a), and, if such right is so exercised, the affected Management
Shareholder shall sell such Securities to Welker (or the Management
Shareholders, as applicable) for the Adjusted Cost Per Share of such
Securities times the number of Securities being purchased.
The purchase price determined in accordance with this Section 2.4(b)
shall be payable on the terms described in Section 2.3(a).
The right to purchase hereunder shall be exercised by giving written
notice thereof to the affected Management Shareholder and the Company
within thirty (30) days after the later of either (i) the giving by the
Company of the notice contemplated in Section 2.4(a) (specifying the
redemption by the Company of less than all of the Securities owned by the
affected Management Shareholder), or (ii) notice from the Company that the
Company declines to exercise its right under Section 2.4(a). A copy of the
notice from Welker (or the Management Shareholders, as applicable) shall be
given to the Company.
The closing of the purchase and sale shall occur on a date mutually
agreeable to the affected Management Shareholder
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and Welker (or the Management Shareholders, as applicable) not later than
sixty (60) days after the date the notice of exercise by Welker (or the
Management Shareholders, as applicable) referred to in the immediately
preceding paragraph is given and, to the extent practicable, shall be
coordinated with the closing of redemption by the Company, if any, pursuant
to Section 2.4(a) above.
(c) In no event shall the Company or Welker (or the Management
Shareholders, as applicable) in the exercise of their rights under this
Section 2.4 have the right to redeem or purchase less than all of the
Securities owned by the affected Management Shareholder, unless otherwise
agreed by the affected Management Shareholder.
(e) Any Securities owned by the affected Management Shareholder that
are not redeemed or purchased by the Company or Welker (or the Management
Shareholders, as applicable) as provided in this Section 2.4 may be
Disposed of by the affected Management Shareholder free of any restriction
imposed by this Agreement upon such Disposition or upon any proposed
transferee other than satisfaction of the requirements of Section 6.11, if
applicable, and no direct or indirect transferee shall thereafter be
subject to any restriction imposed by this Agreement.
2.5 Option(s). In the event that any shares of Class A Stock of the
Company owned of record by any Management Shareholder other than Welker are
purchased and redeemed by the Company pursuant to Sections 2.3, 2.4, or 2.6
hereof, the Company shall, on the date such shares are purchased and
redeemed, grant to such present or prospective officers or employees of the
Company or any subsidiary as may be specified by the Chief Executive
Officer of the Company (and which may include such Chief Executive Officer)
in writing, irrevocable option(s) ("Option(s)") to purchase a number of
authorized but unissued shares of Class A Stock specified by the Chief
Executive Officer, which shall not exceed, in the aggregate, the number of
shares so purchased and redeemed (appropriately adjusted to reflect stock
splits, stock dividends, reorganizations, consolidations and similar
changes effected after the redemption), pursuant to an option agreement(s)
in substantially the form of Attachment V hereto. The Company agrees to
execute and deliver such option agreement(s), appropriately completed, to
the appropriate option holder on the date of the closing of the redemption
and sale of the shares. The Company shall reserve sufficient shares of
Class A Stock as may be required to be issued upon exercise of any
Option(s).
The Option(s) shall be freely transferable by the Chief Executive
Officer of the Company, with respect to options held by such Chief
Executive Officer, to any present or prospective officer or employee of the
Company, provided that any such
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employee or officer who is not a Management Shareholder first (i) executes
and delivers to the Company a Supplement hereto and (ii) executes and
delivers a supplement to the Voting Agreement dated as of even date
herewith (the "Voting Agreement") among the Company and the Management
Shareholders and a proxy as described in Section 4.11 of the Voting
Agreement. Option(s) held by any other option holder shall not be
transferable.
The Option(s) shall be exercisable at any time and from time to time
by the option holder(s) at an exercise price per share equal to the
redemption price per share paid by the Company to redeem the shares. The
provisions of Sections 2.3 and 2.4 shall apply equally to the Option(s) to
the extent not exercised at the time of the occurrence of the event giving
rise to the redemption and/or buy-sell rights set forth in such Sections as
if such Option(s) had been previously exercised for Class A Stock except
that the per share redemption or purchase price determined in accordance
with such Sections shall be reduced by an amount equal to the per share
option exercise price of the Option(s).
In the event of a proposed dissolution or liquidation of the Company
or a proposed sale of substantially all of the assets of the Company or a
proposed merger or consolidation of the Company or a statutory share
exchange involving capital stock of the Company, outstanding Options may be
subject to cancellation and/or replacement as more fully described in the
form of Option Agreement attached hereto as Attachment V hereto.
2.6 Rights of First Refusal. In the event that a Management
Shareholder shall desire to Dispose of any or all of the Securities of the
Company now owned or hereafter acquired by such Management Shareholder on
or after the twelveth anniversary of the Closing Date except as permitted
in Section 2.2 hereof and except for sales pursuant to Section 2.3 or 2.4
hereof (the "Offered Shares"), such Shareholder (the "Offering
Shareholder") must first obtain an Offer to purchase the Offered Shares and
deliver written notice of the Offer to the Company and to Welker (or the
Management Shareholders, as applicable) (the "Non-Offering Shareholders").
The written notice of the Offer must comply with the requirements of
Section 2.6(i) hereof. Thereafter, the following rights shall accrue:
(a) The Company (if approved unanimously by its Board of Directors)
shall have the right to purchase and redeem all or, subject to Section
2.6(e) below, any part of the Offered Shares, and if the Company elects to
exercise such right then the Offering Shareholder shall sell such shares to
the Company for a purchase price equal to the purchase price for the
Offered Shares set forth in the Offer. The Company shall give written
notice to the Offering Shareholder of the election to
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exercise its rights under this Section 2.6(a) within the thirty (30) day
period (the "Initial Exercise Period") following receipt by the Company of
the written notice of the Offer.
(b) If the right to purchase provided in Section 2.6(a) above shall
not be exercised by the Company, or exercised only partially, Welker shall
have the right (but only if Welker shall then own at least a majority of
the outstanding Class A Stock and, if not, then all Management Shareholders
shall have the right on a pro rata basis in relation to their respective
ownership of Class A Stock) to purchase all or, subject to Section 2.6(c)
hereof, any portion of the Offered Shares not purchased by the Company
under Section 2.6(a) above from a Management Shareholder other than Welker,
and if Welker (or the Management Shareholders, as applicable) elect(s) to
exercise such right, then the Offering Shareholder shall sell such shares
to Welker (or the Management Shareholders, as applicable) for a purchase
price equal to the purchase price for the Offered Shares set forth in the
Offer. Welker (or the Management Shareholders, as applicable) shall give
written notice to the Offering Shareholder of his election to exercise his
(or the Management Shareholders, as applicable) right under this Section
2.6(b) within thirty (30) days after the later of (i) the expiration of the
Initial Exercise Period or (ii) the date Welker (or the Management
Shareholders, as applicable) receives written notice from the Offering
Shareholder of the Offer (the "Interim Exercise Period").
(c) In no event shall the Company or Welker (or the Management
Shareholders, as applicable), in the exercise of the rights of first
refusal provided in this Section 2.6 have the right to purchase less than
all the Offered Shares, unless otherwise agreed by the Offering
Shareholder.
(d) Each Management Shareholder hereby agrees to not Dispose of any
Offered Shares until the expiration of the Exercise Period (or until the
Company, Welker (or the Management Shareholders, as applicable) have waived
in writing their rights of first refusal provided for in this Section 2.6).
(e) The purchase price of the Offered Shares determined in accordance
with the provisions of this Section 2.6 shall be payable (x) at the option
of the Company, Welker (or the Management Shareholders, as applicable), as
the case may be, either (1) upon substantially equivalent terms to the
terms set forth in the Offer, or (2) in cash by cashier's check or wire
transfer to an account designated by the Offering Shareholder in an amount
equal to what the Board of Directors of the Company determines in good
faith to be the fair value of an Offer that consists in whole or part of
non-cash consideration, or (y) upon such other terms as may be agreed by
the Offering Shareholder and the Company (if approved
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unanimously by its Board of Directors), Welker (or the Management
Shareholders, as applicable), as the case may be. The closing of the
purchase and sale under this Section 2.6 shall occur on a mutually
agreeable date within thirty days after the expiration of the Exercise
Period but may occur on any other mutually agreeable date.
(f) A refusal or failure to exercise any right of first refusal under
Section 2.6 shall not constitute a waiver or refusal of such rights with
respect to any other or subsequent Offer.
(g) In the event that the Offered Shares are not Disposed of pursuant
to the Offer within ninety (90) days after the expiration of the Exercise
Period (or, if earlier, the date on which the Offering Shareholder receives
written waivers of the Company's and Welker's rights of first refusal),
then the Offer shall thereupon be deemed to be a new Offer for the purposes
of Section 2.6 and the procedures specified herein must be satisfied as to
such new Offer before the Offered Shares may be Disposed of by the Offering
Shareholder.
(h) For the purposes of Section 2.6, the written notice of an Offer
must be a notice in writing complying with the further requirements of this
Section 2.6(h), signed by the Offering Shareholder and sent to the Company
or Welker (or the Management Shareholders, as applicable), in one of the
ways prescribed in Section 6.1. The written notice must contain a true and
complete copy of the Offer setting forth the price and all terms and
conditions of the Offer and the name, address and a description of the
business or other occupation of the offeror. Any notice that does not
contain all of the information required in this Section 2.6(h) or which
otherwise does not comply with the requirements of this Section shall not
constitute "written notice of the Offer" for the purposes of this Section
2.6. The Offering Shareholder agrees to cause the offeror to give the
Company, Welker (or the Management Shareholders, as applicable), such
additional information concerning the Offer and the offeror as may be
reasonably requested by the Company or Welker (or the Management
Shareholders).
ARTICLE III
LEGEND
------
3.1 Legend. All certificates representing Securities held by Management
Shareholders of the Company shall contain a legend on the face of the
certificate substantially to the following effect.
"THIS CERTIFICATE IS SUBJECT TO TRANSFER AND OTHER RESTRICTIONS NOTED
ON THE REVERSE HEREOF."
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A legend shall also be placed on the reverse of certificates or in the body of
instruments representing Securities of the Company substantially to the
following effect.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND ENCUMBRANCE AND RIGHTS OF FIRST REFUSAL AND
OFFER AS GRANTED AND PROVIDED IN A CERTAIN AMENDED AND RESTATED STOCK
TRANSFER AGREEMENT (THE "AGREEMENT") DATED AS OF DECEMBER 28, 1995, BY AND
BETWEEN THE ISSUER AND HOLDERS OF CERTAIN SECURITIES OF THE ISSUER, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER."
Each Shareholder agrees to deliver its or his certificates to the Company
for imposition of the above legends.
3.2 Filing of Agreement. An executed counterpart of this Agreement shall
be put and remain on file during the term hereof at the principal executive
office of the Company.
3.3 Stop Order. A stop transfer order shall be placed with the Company's
transfer agent and/or in the Company's securities transfer records preventing
transfer of any of the Securities pending compliance with the terms of this
Agreement.
ARTICLE IV
TERMINATION
-----------
This Agreement shall remain fully in effect and enforceable until
terminated by written instrument by and between the Company and the Required
Shareholders, or their respective personal representatives, guardians,
conservators, trustees, other legal representatives, successors, and assigns.
ARTICLE V
CERTAIN DEFINITIONS
-------------------
When used in this Agreement, the following capitalized terms shall have the
following meanings respectively:
"Adjusted Cost Per Share" means, as of any Computation Date with respect to
each type of Securities owned by a Management Shareholder, the lesser of the
Value Per Share of such Security or the amount determined below:
(a) in the case of Class A Stock, an amount equal to the sum of (i)
the amount per share paid by the Management Shareholder to acquire such
Securities (as
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established by written documentation satisfactory to the Company) and (ii)
interest thereon at the Applicable Rate (based on a year of 365 or 366 days
for the actual number of days elapsed) from the date such Securities were
acquired by such Management Shareholder to but not including the
Computation Date;
"Affiliate" means with respect to any Person, any Person (a) directly or
indirectly controlling, controlled by, or under common control with, such
Person; (b) directly or indirectly owning or holding ten percent (10%) or more
of the voting stock or equity interest in such Person; or (c) ten percent (10%)
or more of whose voting stock or other equity interest is owned directly or
indirectly or held by such person. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Agreement" means this Stock Transfer Agreement, as the same may be amended
or supplemented from time to time as permitted herein.
"Applicable Federal Rate" means the lowest per annum interest rate allowed
under Section 1274(d) of the Internal Revenue Code of 1986, as amended, as
determined for the month in which the Computation Date shall occur.
"Applicable Rate" shall mean the lesser of (a) or (b) below:
(a) (i) in the case of the Resignation of a Management Shareholder
after the fifth anniversary of the later of (A) the Closing Date or (B) the
date of hire by the Company or a subsidiary, or Involuntary Discharge
Without Cause of such Management Shareholder on or prior to the second
anniversary of the later of (A) the Closing Date or (B) the date of hire by
the Company or a subsidiary, 14% per annum, and (ii) in the case of the
Resignation of a Management Shareholder on or prior to the fifth
anniversary of the later of (A) the Closing Date or (B) the date of hire by
the Company or a subsidiary, or any of the other events described in clause
(ii), (iii), (v) or (vi) of Section 2.4, 10% per annum; or
(b) the maximum rate permitted by law.
"Class A Stock" has the meaning set forth in the Articles of Incorporation
of the Company, as amended.
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"Closing Date" means the date the closing of the transactions contemplated
in the Asset Purchase Agreement dated as of October 5, 1990 among Numatics,
Incorporated, a Michigan corporation, as Seller, William Carls, John H. Welker,
Harold E. Stieg, and Arthur B. Derisley, as Selling Stockholders, and NAC, Inc.,
as Buyer (which rights of NAC, Inc. under the Asset Purchase Agreement were
subsequently assigned by NAC, Inc. to the Company and its subsidiaries).
"Common Stock" shall have the meaning set forth in the Articles of
Incorporation of the Company, as amended.
"Company" means Numatics, Incorporated, a Michigan corporation.
"Computation Date" means the date which is the last day of the month
immediately preceding the month in which any event giving rise to the redemption
and buy-sell agreements set forth in Sections 2.3 or 2.4 shall occur.
"Disposition" (including the verb "Dispose") means and includes any
assignment, sale, transfer, exchange, granting of any option or other, right to
acquire, conveyance, gift, disposition, pledge, hypothecation or encumbrance
whatsoever, whether voluntary or involuntary, or by operation of law (including
by way of example and with limitations, the laws of descent and distribution and
the laws of bankruptcy).
"Final Exercise Period" shall have the meaning set forth in Section 2.6
hereof.
"Initial Exercise Period" shall have the meaning set forth in Section 2.6
hereof.
"Interim Exercise Period" shall have the meaning set forth in Section 2.6
hereof.
"Involuntary Discharge With Cause" means, with respect to any Management
Shareholder, the involuntary termination by the Company or a subsidiary of
employment of such Management Shareholder with the Company or such subsidiary as
a result of any of the following: (i) willful and gross neglect of duties, (ii)
conviction of a felony, or (iii) serious misconduct in the course of employment
involving dishonesty.
"Involuntary Discharge Without Cause" means, with respect to a Management
Shareholder, the termination by the Company or a subsidiary of employment of
such Management Shareholder with the Company or such subsidiary for any reason
other than any such termination constituting Involuntary Discharge With Cause.
"Management Shareholders" means and includes (a) John E. Acuff, David K.
Dodds, Bruce Hoppe, Henry Fleischer, David
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King, Donald E. McGeachy, Robert P. Robeson, Philip Robinson and John H. Welker,
and (b) any other Person after the Closing Date who shall execute and deliver a
Supplement pursuant to Section 2.2(d), Section 2.2(f) or Section 2.5 hereof, and
the respective heirs, successors and permitted assigns of each of the foregoing
Persons, the trustee of any trust created by any such Person or any successor or
assign of any such Person, the executor or administrator of the estate of any
such Person, or any other personal representative, conservator, executor,
successor, trustee of such Person or any other Person charged with the custody,
administration or disposition of the assets of such Person, all of whom by
succession to right in any Securities now owned or hereafter acquired by such
Person shall become bound by the terms of this Agreement.
"Offer" means a legally enforceable bona fide offer to a Management
Shareholder in writing, made and signed by an offeror who (i) is not an
Affiliate of the Offering Shareholder, and (ii) is a Person financially capable
of carrying out the terms of the Offer.
"Offered Shares" has the meaning set forth in Section 2.6 hereof.
"Offering Shareholder" has the meaning set forth in Section 2.6 hereof.
"Open Market Transaction" means a transaction complying with the manner of
sale requirements set forth in paragraph (f) of Rule 144 promulgated under the
Securities Act of 1933, as amended, whether or not Rule 144 is otherwise
applicable to the transaction.
"Option(s)" shall have the meaning set forth in Section 2.5 hereof.
"Person" means any entity, whether an individual, trustee, unincorporated
organization, business association or firm, joint venture, a government or any
agent or instrumentality or political subdivision thereof, or otherwise.
"Registered Public Offering" means, in the case of Securities of the
Company, a sale of such Securities to the public pursuant to a Registration
Statement filed with, and declared effective by, the Securities Exchange
Commission under the Securities Act of 1933, as amended, other than pursuant to
an employee benefit plan or a dividend or interest reinvestment plan.
"Required Shareholders" means shareholders who or which are the registered
holders of not less than a majority of the outstanding Class A Stock of the
Company (on a fully diluted basis including options to acquire Class A Stock).
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"Resignation" means, with respect to a Management Shareholder, the
voluntary termination of employment of such Management Shareholder with the
Company or a subsidiary by such Management Shareholder for any reason other than
Retirement.
"Retirement" means, with respect to a Management Shareholder, any
termination of employment of such Management Shareholder with the Company or a
subsidiary following obtaining the age of sixty-five (65) other than any such
termination constituting Involuntary Discharge With Cause.
"Securities" means any and all of the securities of the Company identified
in Attachment I hereto.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated as of January 3, 1996 among the Company and Harvard Private Capital
Holdings, Inc., as the same may be amended from time-to-time as permitted
therein.
"Supplement" means a Supplement to Stock Transfer Agreement in
substantially the form of Attachment II hereto, appropriately completed.
"Tag-Along and Drag-Along Agreement" means the Tag-Along and Drag-Along
Agreement dated as of January 3, 1996 among the Company, the Shareholders and
Harvard Private Capital Holdings, Inc., as the same may be amended from time-to-
time as permitted therein.
"Total and Permanent Disability" means, with respect to a Management
Shareholder, any physical or mental impairment (other than an impairment as a
result of (i) self-inflicted injuries, (ii) alcoholism or (iii) drug abuse or
addiction) that, on the basis of a written medical opinion satisfactory to the
Company, has rendered such Management Shareholder substantially unable to
perform his duties as an officer or employee of the Company for a period of six
(6) consecutive months.
"Value Per Share" means, as of any Computation Date with respect to each
type of Securities owned by a Management Shareholder, the amount determined on a
per share basis in accordance with Section 7.4.1 of Exhibit 7 (Put and Call
Rights) to the Securities Purchase Agreement.
"Voting Agreement" shall have the meaning set forth in Section 2.5 hereof.
"Welker" means John H. Welker, individually.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Notices. Any notice to be given pursuant to this Agreement shall be
deemed to have been given and received, and to be effective for all purposes,
when delivered personally or when sent by registered mail to the addresses of
the parties hereto as set forth on the signature page hereof (or such other
addresses as the parties may hereafter designate in writing).
6.2 Specific Performance. Each Shareholder acknowledges and agrees that
any breach of this Agreement by any Shareholder will cause incalculable and
irremediable damages to the other Shareholders, and that in the event that any
Shareholder shall breach or attempt to breach the terms of this Agreement, each
of the other Shareholders shall be entitled as a matter of right to obtain from
any court of competent jurisdiction an injunction (i) prohibiting further
breaches of this Agreement, (ii) rescinding any action taken, and (iii)
specifically enforcing the terms of this Agreement.
6.3 Further Instruments and Documents. Each of the parties hereto
covenants and agrees that he/she/it will make, execute and deliver any and all
such other and further instruments, papers and documents, and will do and
perform any and all such further acts and things, as shall be or become
necessary, proper or convenient to carry out, put into effect or make operative
their respective covenants, promises and undertakings contained in this
Agreement.
6.4 Modification. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof, and may not be
amended, modified or varied except by an instrument in writing executed by the
Company and the Required Shareholders.
6.5 Construction. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, under
the laws of the State of Michigan.
6.6 Severance. In the event that any provision hereof shall be determined
to be invalid or unenforceable for any reason, such invalidity or unenforceable
shall not affect the validity and enforceability of the remaining valid and
enforceable provisions hereof, which shall be construed as if such invalid or
unenforceable provisions had not been inserted in this Agreement.
6.7 Successors Bound. This Agreement shall be binding upon the parties
hereto, their personal representatives, successors and assigns and shall inure
to the benefit to the
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<PAGE>
parties hereto, their personal representatives, successors and permitted
assigns.
6.8 Suppression. This Agreement cancels and supersedes any prior verbal
or written agreement between the parties hereto pertaining to the subject matter
hereof.
6.9 Interpretation. Headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Whenever reasonably necessary, pronouns of any gender shall be
deemed synonymous, as shall singular and plural pronouns.
6.10 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but together they shall constitute
one and the same instrument.
6.11 Voting Agreement. Notwithstanding anything to the contrary contained
herein, it shall be a condition to the transfer or issuance of any shares of
Class A Stock of the Company, to any Person otherwise permitted under this
Agreement (other than pursuant to Sections 2.2(b) or (c)), that such Person
execute and deliver a supplement to the Voting Agreement and a proxy as
described in Section 3.11 of the Voting Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
NUMATICS, INCORPORATED, a
Michigan corporation
By /s/ JOHN H. WELKER
-------------------------------
Its: President
/s/ JOHN H. WELKER
---------------------------------
John H. Welker, individually
and as trustee of the John H.
Welker Trust Agreement dated
December 28, 1995
/s/ DAVID K. DODDS
---------------------------------
David K. Dodds
/s/ DONALD E. MCGEACHY
---------------------------------
Donald E. McGeachy
/s/ HENRY FLEISCHER
---------------------------------
Henry Fleischer, individually
and as trustee of the Henry
Fleischer Trust Under Agreement
Dated March 10, 1993
/s/ ROBERT P. ROBESON
---------------------------------
Robert P. Robeson
/s/ JOHN E. ACUFF
---------------------------------
John E. Acuff
/s/ BRUCE W. HOPPE
---------------------------------
Bruce W. Hoppe
/s/ DAVID KING
---------------------------------
David King
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<PAGE>
/s/ PHILIP ROBINSON
---------------------------------
Philip Robinson
/s/ DAVID M. REESE
---------------------------------
David M. Reese
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<PAGE>
ATTACHMENT II
SUPPLEMENT TO STOCK TRANSFER AGREEMENT
This Supplement to Stock Transfer Agreement (the "Supplement") is made,
executed and delivered by the undersigned as of this _____ day of ___________,
19__.
WITNESSETH:
WHEREAS, a Stock Transfer Agreement has been executed and delivered as of
the ___ day of November, 1990 by and between Numatics Acquisition Corporation, a
Michigan corporation (the "Company"); Northwest Equity Partners IV; Greylock
Investments Limited Partnership; Greylock Limited Partnership; State Treasurer
of the State of Michigan, Custodian of Public School Employees' Retirement
System; State Employees' Retirement System; Michigan State Police Retirement
System; Judge's Retirement System; Probate Judges' Retirement System; Heller
Financial, Inc.; John E. Acuff; William L. Behan; Roy A. Clark; David K. Dodds;
Henry Fleischer; Donald E. McGeachy; Robert P. Robeson; and John H. Welker; (the
"Agreement"); and
WHEREAS, it is a condition to either the transfer to the undersigned of any
Securities of the Company or an option to purchase shares of Class A Stock or
Class C Stock purchased and redeemed by the Company pursuant to the terms of the
Agreement, that the undersigned become a party to the Agreement and the
undersigned is executing and delivering this Supplement in satisfaction of such
condition.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the undersigned hereby agrees as follows:
1. Capitalized terms used herein shall have the respective meanings set
forth in the Agreement.
2. By execution and delivery of this Supplement, the undersigned hereby
joins the Agreement and hereby agrees to be bound by and perform all of the
covenants, promises, agreements and undertakings under the Agreement to the same
extent as if the undersigned had been an original signatory to the Agreement.
3. If any Class A Stock or Class C Stock, or an option to acquire the
same, is being transferred or granted to the undersigned, the undersigned is
also executing and delivering contemporaneously herewith (a) a supplement to the
Voting
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<PAGE>
Agreement and a Proxy to Welker and (b) the written agreement contemplated in
Section 3.3 of the Co-Sale Agreement.
4. This Supplement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, under the laws of
the State of Michigan.
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of the
day and year first above written.
______________________________
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<PAGE>
ATTACHMENT III
SUBORDINATED REDEMPTION NOTE
$______________ ___________, 19__
FOR VALUE RECEIVED, the undersigned, Numatics Acquisition Corporation, a
Michigan corporation (the "Buyer"), hereby promises to pay to the order of
__________ ______________________, (the "Seller"), the principal sum of
$____________ in three (3) consecutive equal annual installments of $___________
each, commencing on that date which is the third anniversary of the date of this
Note and continuing thereafter on each anniversary of the date of this Note
through and including the date which is the fifth anniversary of the date of
this Note at which time all remaining principal and accrued interest thereon
shall be due and payable in full. Interest shall accrue on the unpaid principal
balance hereof from the date hereof at the rate per annum equal to the
Applicable Federal Rate (hereinafter defined) (computed on the basis of a 360-
day year, 30-day month) and shall be payable annually on ________________ of
each year, commencing _______________, 19__ and continuing until payment in full
of the principal hereof.
"Applicable Federal Rate" means the lowest per annum interest rate allowed
under Section 1274(d) of the Internal Revenue Code of 1986, as amended, as
determined for a month in which an interest payment hereunder shall be due and
payable.
This Note is prepayable in whole or in part, at any time and from time to
time, at the option of the Buyer, without premium. Any optional prepayment shall
be applied first to accrued and unpaid interest and then to installments of
principal in such order as the Buyer may elect.
After the date of this Note if the Buyer receives the proceeds of any life
insurance which has as its insured the Seller (other than "key man" insurance so
designated by the Buyer prior to the date of this Note [which shall not be less
than $5,000,000]) */ then Buyer shall prepay principal of this Note in the
amount of all such proceeds received by the Buyer. In addition, to the extent
that a new member of
____________________
*/ Bracketed language shall be included only if Seller is John H. Welker,
his heirs or legal representatives. the management of the Buyer who replaces
Seller is issued Common Stock (as that term is defined in the Restated Articles
of Incorporation of the Buyer) then Buyer shall prepay principal of this Note to
the extent of the net proceeds
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<PAGE>
received by the Buyer from any such issuance. Any mandatory prepayment hereunder
shall be applied first to accrued and unpaid interest and then to installments
of principal in inverse order of maturity.
This Note and the indebtedness evidenced hereby are subordinate and junior
in right of payment, to the extent and in the manner herein set forth, to all
Senior Debt (as hereinafter defined) of the Buyer, whether outstanding at the
date hereof or incurred hereafter, so that:
(a) upon any payment or distribution of assets of the Buyer of any
kind or character, whether in cash, property or securities, to creditors in
connection with any dissolution, winding up, total or partial liquidation
or reorganization of the Buyer, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other similar proceedings, all
principal of, premium, if any, and interest due on all Senior Debt and all
other charges, fees and expenses constituting a part of the Senior Debt
shall first be paid in full in cash before the holder of this Note shall be
entitled to receive or retain any assets (other than shares of stock of the
Buyer as reorganized or readjusted under any plan or securities of the
Buyer or any other corporation, the payment of which is subordinated, at
least to the extent provided herein with respect to this Note, to the
payment of all Senior Debt at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment) so paid or distributed in respect thereof for principal,
premium, if any, interest or other amounts due and owing under or in
respect to this Note);
(b) in the event this Note is declared due and payable before its
expressed maturity because of the occurrence of an Event of Default (as
hereinafter defined) (under circumstances when paragraph (a) above shall
not be applicable) and such declaration shall not have been rescinded or
annulled, the holders of Senior Debt outstanding at the time of such
declaration shall be entitled to receive the principal of, premium, if any,
and interest due on all Senior Debt and all other charges, fees and
expenses constituting a part of the Senior Debt before the holder of this
Note shall be entitled to receive any payment on account of the principal
of, or interest due on, this Note or other amounts due and owing under or
in respect to this Note;
(c) upon any such dissolution, winding up, liquidation or
reorganization or in connection with any such proceedings, or upon any such
declaration, of the nature described in paragraph (a) or (b) above, any
payment or distribution of assets of the Buyer of any
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<PAGE>
kind or character, whether in cash, property or securities (other than
shares of stock or securities as aforesaid) to which the holder of this
Note would be entitled, but for the provisions of this Note, shall be paid
by the Buyer or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by
the holder of this Note if received by it, first to the holders of Senior
Debt described in clauses (a) and (b) of the definition thereof (pro rata
to each such holder on the basis of the principal amounts of Senior Debt
held by such holder) or their representatives, and then to the holders of
Senior Debt described in clauses (c) and (d) of the definition thereof (pro
rata to each such holder on the basis of the principal amounts of Senior
Debt held by such holder) or their representatives, to the extent necessary
to pay all Senior Debt in full in cash, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt;
provided, however, that nothing herein contained shall restrict the holder
of this Note, in the case of any declaration described in the foregoing
paragraph (b), from exercising any remedies and receiving any payments if
otherwise permitted by this Note with respect to current and overdue
payments of interest on this Note as well as scheduled payments of
principal on this Note (excluding non-mandatory payments of principal on
this Note and any amounts of interest, premium, if any, and principal due
and payable with respect to this Note solely by reason of such
declaration);
(d) the Senior Debt shall continue to be treated as Senior Debt and
the provisions herein contained shall continue to govern the relative
rights and priorities of the holders of the Senior Debt and the holder of
this Note notwithstanding the fact that part or all of such Senior Debt or
the liens or security interests securing payment thereof are subordinated,
set aside, avoided or disallowed as a result of the fraudulent conveyance
or fraudulent transfer provisions under the United States Bankruptcy Code
or any successor statue or any similar state statute. If post-petition
interest on the Senior Debt is disallowed (i) as a result of such
fraudulent conveyance or fraudulent transfer provisions or (ii) as a result
of a court determining that the Senior Debt was undersecured, then the term
"Senior Debt" shall nonetheless be deemed to include post-petition interest
on the Senior Debt at the applicable rate on such Senior Debt in the
absence of a default with respect thereto, for a period of not longer than
three (3) years;
(e) the Buyer may not pay principal of, premium, if any, or interest
on, or other amounts due and owing under or in respect of, this Note and
may not repurchase,
III-3
<PAGE>
redeem or otherwise retire this Note (collectively, "pay this Note" or the
"payment of this Note") so long as (1) the Buyer shall be in default with
respect to its obligation to make any payment with respect to the Senior
Debt when due or (2) any default under the Credit Agreement between the
Buyer and Heller Financial, Inc. dated as of this date (as amended,
supplemented and modified from time to time, the "Heller Loan Agreement")
(or under agreements pursuant to which Refinancing Debt (as hereafter
defined) or other Senior Debt were issued, if applicable) shall have
occurred and the maturity of the Senior Debt under the Heller Loan
Agreement (or under agreements pursuant to which Refinancing Debt or other
Senior Debt were issued, if applicable) shall have been accelerated in
accordance with its terms unless, in either case, the default shall have
been cured or waived, any such acceleration shall have been rescinded or
such Senior Debt shall have been paid in full;
(f) during the continuance of any default (other than a default or
acceleration described in clause (1) or (2) of paragraph (e) above) with
respect to any Senior Debt under the Heller Loan Agreement (or under
agreements pursuant to which Refinancing Debt or other Senior Debt were
issued, if applicable) pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may
be required to effect such acceleration) or upon the expiration of any
applicable grace periods, the Buyer may not pay this Note for a period
commencing on the date of the receipt by the Buyer and the holder of this
Note of written notice of such default from the Agent under the Heller Loan
Agreement (or the appropriate party under the agreement pursuant to which
Refinancing Debt was issued, if applicable, or if no Senior Debt is
outstanding under clauses (a) or (b) of the definition thereof, from the
holders of a majority of the Senior Debt outstanding under either of
clauses (c) or (d) of the definition thereof) (the "Agent") specifying an
election to effect a payment prohibition (a "Payment Notice") and ending
180 days following the date of receipt by such holder of such Payment
Notice (a "Payment Bar Period" and collectively "Payment Bar Periods").
Notwithstanding the provisions described in the immediately preceding
sentence, unless the maturity of the Senior Debt under the Heller Loan
Agreement (or under agreements pursuant to which the Refinancing Debt or
other Senior Debt were issued, if applicable) shall have been accelerated,
the Buyer shall resume payments on this Note after the expiration of the
Other Default Payment Bar Period. The Agent may not issue any subsequent
Payment Notice with respect to the same default or with respect to other
defaults existing at the time of issuance of the initial Payment Notice and
then known to the Agent, unless such
III-4
<PAGE>
default(s) have been cured or waived for a period of at least 30
consecutive days after the issuance of the initial Payment Notice and prior
to the issuance of any subsequent Payment Notice with respect thereto.
Furthermore, unless the maturity of the Senior Debt under the Heller Loan
Agreement (or under agreements pursuant to which the Refinancing Debt or
other Senior Debt were issued, if applicable) shall have been accelerated,
the aggregate number of Payment Bar Days (as hereinafter defined) included
in Payment Bar Periods commenced pursuant to this paragraph (f) shall not
exceed 270 days during any period of 360 consecutive days; and if any
Payment Bar Period would include a number of Payment Bar Days which, when
added to the number of Payment Bar Days included in any prior Payment Bar
Period or Periods, would result in the number of Payment Bar Days occurring
during any period of 360 consecutive days being in excess of that permitted
by the foregoing limitation, such Payment Bar Period shall be suspended
following the last Payment Bar Day which is permitted to fall within such
360-day period by the foregoing limitation and no subsequent day shall
constitute a Payment Bar Day until the first subsequent day which may be a
Payment Bar Day without entailing a violation of the foregoing limitation,
it being understood and agreed to that the intent of the foregoing
provisions of this paragraph (f) is that during any consecutive 360-day
period the holder of this Note shall have the right, if otherwise permitted
under this Note, to receive payment of all amounts that are overdue and
currently owing on an unaccelerated basis in respect of this Note. For the
purposes hereof, the term "Payment Bar Days" shall mean those days included
in any Payment Bar Period. Nothing herein contained shall prevent (a) the
Buyer at any time, except during the pendency of any dissolution, winding
up, liquidation, reorganization, proceedings or declaration described
herein, or as described in paragraph (e) and this paragraph (f), from
making payments at any time on account of the principal of, premium, if
any, or interest on, this Note; (b) the application by the holder of this
Note of any money received by it from the Buyer to the payment of or on
account of the principal of, premium, if any, or interest on, this Note if,
at the time of such application, the Buyer or the holder of this Note shall
not have received notice prior to such payment that such payment was
prohibited by the subordination provisions of this Note; or (c) the Buyer
from incurring any obligation or liability to the holder of this Note so
long as such obligation or liability is subordinated, to the extent and on
the conditions contained in this Note, to the prior payment in full of the
Senior Debt;
(g) subject to the final payment in full in cash of all principal and
premium, if any, and interest on all
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<PAGE>
Senior Debt and all other charges, fees and expensed constituting a part of
the Senior Debt, the holder of this Note (equally and ratably with the
holders of all other subordinated indebtedness which by its terms ranks on
a parity with this Note and is entitled to like rights of subrogation)
shall be subrogated to the rights of the holders of Senior Debt to receive
payments or distributions of assets of the Buyer of any kind or character,
whether in cash, property or securities, applicable to Senior Debt until
the principal of, premium, if any, and interest on, this Note shall be paid
in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of Senior Debt of cash, securities or other
property to which the holder of this Note would have been entitled except
for these subordination provisions shall, as between the Buyer and its
creditors other than the holders of Senior Debt, on the one hand, and the
holder of this Note on the other, be deemed to be a payment by the Buyer to
or on account of the Senior Debt, it being understood that the provisions
herein are intended solely for the purpose of defining the relative rights
of the holder of this Note, on the one hand, and the holders of Senior
Debt, on the other hand, and nothing herein contained is intended to or
shall impair, as between the buyer and its creditors other than the holders
of Senior Debt, on the one hand, and the holder of this Note, on the other,
the obligation of the Buyer, which is unconditional and absolute, to pay to
the holder of this Note the principal of, premium, if any, and interest on,
this Note as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights of
the holder of this Note and the creditors of the Buyer other than the
holders of Senior Debt, nor shall anything herein or therein prevent the
holder of this Note from exercising all remedies otherwise permitted by
applicable law upon any Event of Default, subject to the rights, if any,
under this Note of the holders of Senior Debt in respect of assets of the
Buyer of any kind or character, whether in cash, property or securities,
received upon the exercise of any such remedy;
(h) the holder of this Note by its acceptance hereof (a) irrevocably
authorizes and empowers (but without imposing any obligation on) each
holder of any Senior Debt described in clauses (a) and (b) of the
definition thereof, or, if no such Senior Debt is outstanding, then each
holder of Senior Debt described in clauses (c) and (d) of the definition
thereof (for purposes of this paragraph, a "Senior Holder") at the time
outstanding, and such Senior Holder's representatives, if the holder of
this Note shall fail to do so prior to 30 days before the expiration of the
time
III-6
<PAGE>
to file any claims, to file and prove (but not to vote) all claims of the
holder of this Note for payments or distributions in respect of this Note
which are required to be paid or delivered to the Senior Holders as
provided in paragraph (a) above, in the name of the holder of this Note or
otherwise, as such Senior Holder or such Senior Holder's representatives
may determine to be necessary or appropriate for the enforcement of the
provisions of paragraph (a) above; and (b) agrees to execute and deliver to
each Senior Holder, and such Senior Holder's representatives, all such
further instruments confirming the authorization hereinabove set forth, and
all such proofs of claim, assignments of claim and other instruments (but
the holder of this Note shall not be required to give any Senior Holder a
power of attorney), and to take such other action, as may be reasonably
requested by such Senior Holder or such Senior Holder's representatives in
order to enable such Senior Holder to enforce all claims of the holder of
this Note upon or in respect of payments or distributions in respect of
this Note. Any Senior Holder taking any action permitted by this paragraph
shall give notice thereof to the holder of this Note. The holder of this
Note by its acceptance hereof acknowledges and agrees that (a) each holder
of Senior Debt (whether such Senior Debt is heretofore or hereafter
existing) shall have acquired or will acquire such Senior Debt in reliance
upon the covenants and provisions of this Note, and (b) the provisions of
this Note may not be amended without the consent of the holders of two-
thirds of each of: (i) the then outstanding principal amount of the Senior
Debt under clauses (a) and (b) of the definition thereof, (ii) the then
outstanding principal amount of the Senior Debt under clause (c) of the
definition thereof and (iii) the then outstanding principal amount of the
Senior Debt under clause (d) of the definition thereof;
(i) no right of any present or future holder of any Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Buyer or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Buyer with the terms, provisions and
covenants of this Note, regardless of any knowledge thereof any such holder
may have or be otherwise charged with. Without in any way limiting the
generality of the preceding sentence, the holders of the Senior Debt may,
at any time and from time to time, without the consent of or notice to the
holder of this Note, without incurring responsibility to the holder of this
Note and without impairing or releasing the subordination provided in this
Note or the obligations of the holder of this Note to the holders of Senior
Debt, do any one or more of the following: (a) change the manner,
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<PAGE>
place or terms of payment of, or renew or alter, any Senior Debt, or
otherwise amend or supplement in any manner (other than to increase the
principal amount of the Senior Debt described in clauses (a) and (b) of the
definition thereof to an amount in excess of the Maximum Heller Amount (as
hereinafter defined)), any Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise deal with any property pledged, mortgaged or otherwise securing
any Senior Debt; (c) release any person liable in any manner for the
collection of any Senior Debt; and (d) exercise or refrain from exercising
any rights against the Buyer or any other person; and
(j) upon any payment or distribution of assets of the Buyer referred
to in this Note, the holder of this Note shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which any
insolvency, bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending, or a
certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other person
making such payment or distribution, delivered to the holder of this Note,
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the holders of the Senior Debt and other
indebtedness of the Buyer, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Note.
For purposes of this Note, the term "Senior Debt" shall mean and include (a) all
Obligations, as defined in the Heller Loan Agreement, the aggregate principal
amount of which shall at no time exceed the sum of (i) $49,900,000 (less the
amount, if any, by which the total Revolving Loan Commitment, as defined in the
Heller Loan Agreement, is permanently reduced by the Company in accordance with
the Heller Loan Agreement, and less the aggregate amount of principal payments
made with respect to the Term Loan and the Bridge Loan, each as defined in the
Heller Loan Agreement) outstanding at any time together with all other
reasonable and customary fees and expenses payable pursuant to the Heller Loan
Agreement, and (ii) $20,000,000 (the amounts set forth in the foregoing clauses
(i) and (ii) being referred to herein as the "Maximum Heller Amount"), and (b)
renewals or extensions of such Obligations or refinancing in substitution for
the Obligations (as defined in the Heller Loan Agreement) in an aggregate
principal amount not to exceed, together with the Obligations then outstanding
under the Heller Loan Agreement, the Maximum Heller Amount (the "Refinancing
Debt"), (c) the Indebtedness (as defined in that
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<PAGE>
certain Junior Subordinated Note Purchase Agreement by and among the Buyer,
Norwest Equity Partners IV, Greylock Investments Limited Partnership, Greylock
Limited Partnership and Heller Financial, Inc., dated ___________, 1990 (the
"Junior Subordinated Note Purchase Agreement")), including accrued interest
thereon, evidenced by the Senior Subordinated Notes (as defined in the Junior
Subordinated Note Purchase Agreement) in the aggregate principal amount of
$11,000,000.00 and all other Obligations (as defined in the Senior Subordinated
Note Purchase Agreement by and among Buyer, Norwest Equity Partners IV, Greylock
Investments Limited Partnership, Greylock Limited Partnership, Heller Financial,
Inc. and certain instrumentalities of the State of Michigan, dated ____________,
1990), and (d) the indebtedness (including accrued interest thereon) evidenced
by the Seller Subordinated Notes (as defined in the Junior Subordinated Note
Purchase Agreement) in an aggregate principal amount of $____________. Copies of
all agreements referred to in this Note are on file at the principal executive
office of the Buyer and may be inspected during reasonable business hours by the
holder of this Note.
Each of the following shall constitute an Event of Default hereunder:
(a) the Buyer shall default in the payment of any installment of
principal on this Note when due and such non-payment is not because of
legal or contractual restrictions on such payment; or
(b) the Buyer shall default in the payment of any interest on this
Note when due and such non-payment is not because of legal or contractual
restrictions on such payment; or
(c) a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in
respect of the Buyer in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Buyer or for any
substantial part of its property, or for the winding-up or liquidation of
its affairs, and such proceeding shall remain undismissed or unstayed and
in effect for a period of ninety consecutive days or such court shall enter
a decree or order granting the relief sought in such proceeding which is
not stayed; or
(d) the Buyer shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case
under
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<PAGE>
any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of the Buyer or for any substantial part of its
property, or shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due.
The following are the consequences of an Event of Default:
(i) Principal Defaults. If an Event of Default specified in
paragraph (a) above shall occur and continue for thirty (30) days, the
holder of this Note may, at its option, by notice in writing to the Buyer,
declare the unpaid principal of this Note, together with interest accrued
and unpaid thereon, to be forthwith due and payable, and the same shall
thereupon become and be immediately due and payable.
(ii) Interest Defaults. If an Event of Default specified in
paragraph (b) above shall occur and continue for sixty (60) days, the
holder of this Note may, at its option, by notice in writing to the Buyer,
declare the unpaid principal of this Note together with interest accrued
and unpaid thereon, to be forthwith due and payable, and the same shall
thereupon become and be immediately due and payable.
(iii) Bankruptcy. If an Event of Default specified in paragraph (c)
or (d) above shall occur, the unpaid principal of this Note, together with
interest accrued and unpaid thereon, shall be immediately due and payable.
The rights and remedies of the holder of this Note upon the occurrence of
an Event of Default set forth above are in addition to and not in derogation of
any other rights such holder may have under applicable law and other agreements.
This Note shall be governed by the laws of the State of Michigan, without
giving effect to principles of conflicts of laws thereof.
The Buyer and each endorser hereby waives presentment, demand, protest,
notice of non-payment, dishonor and notice of dishonor.
All notices hereunder shall be deemed to have been delivered and received,
and to be effective for all purposes, when delivered personally to, and actually
received by, the party entitled to such notice or upon deposit in an official
depository of the United States Mail when sent by registered or certified mail,
return receipt requested, sufficient
III-10
<PAGE>
postage affixed, to the following addresses (or such other addresses as the
parties may hereafter designate in writing and give notice of as herein
provided):
If to Seller: ______________________________
______________________________
______________________________
______________________________
If to Buyer: ______________________________
______________________________
______________________________
______________________________
NUMATICS ACQUISITION CORPORATION
By
----------------------------------
Its
----------------------------
III-11
<PAGE>
ATTACHMENT IV
REDEMPTION NOTE
$______________ ___________, 19__
FOR VALUE RECEIVED, the undersigned, John H. Welker (the "Buyer"), hereby
promises to pay to the order of _________________________________, (the
"Seller"), the principal sum of $____________ in three (3) consecutive equal
annual installments of $___________ each, commencing on that date which is the
third anniversary of the date of this Note and continuing thereafter on each
anniversary of the date of this Note through and including the date which is the
fifth anniversary of the date of this Note at which time all remaining principal
and accrued interest thereon shall be due and payable in full. Interest shall
accrue on the unpaid principal balance hereof from the date hereof at the rate
per annum equal to the Applicable Federal Rate (hereinafter defined) (computed
on the basis of a 360-day year, 30-day month) and shall be payable annually on
________________ of each year, commencing _______________, 19__ and continuing
until payment in full of the principal hereof.
"Applicable Federal Rate" means the lowest per annum interest rate allowed
under Section 1274(d) of the Internal Revenue Code of 1986, as amended, as
determined for a month in which an interest payment hereunder shall be due and
payable.
This Note is prepayable in whole or in part, at any time and from time to
time, at the option of the Buyer, without premium. Any optional prepayment shall
be applied first to accrued and unpaid interest and then to installments of
principal in such order as the Buyer may elect.
Each of the following shall constitute an Event of Default hereunder:
(a) the Buyer shall default in the payment of any installment of
principal on this Note when due; or
(b) the Buyer shall default in the payment of any interest on this
Note when due; or
(c) a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in
respect of the Buyer in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Buyer or for any
substantial part of his
IV-1
<PAGE>
property, or for the winding-up or liquidation of his affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period
of ninety (90) consecutive days or such court shall enter a decree or order
granting the relief sought in such proceeding which is not stayed; or
(d) the Buyer shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Buyer or for any
substantial part of his property, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay his debts as they
become due.
The following are the consequences of an Event of Default:
(i) Principal Defaults. If an Event of Default specified in
paragraph (a) above shall occur and continue for thirty (30) days, the
holder of this Note may, at its option, by notice in writing to the Buyer,
declare the unpaid principal of this Note, together with interest accrued
and unpaid thereon, to be forthwith due and payable, and the same shall
thereupon become and be immediately due and payable.
(ii) Interest Defaults. If an Event of Default specified in
paragraph (b) above shall occur and continue for sixty (60) days, the
holder of this Note may, at its option, by notice in writing to the Buyer,
declare the unpaid principal of this Note together with interest accrued
and unpaid thereon, to be forthwith due and payable, and the same shall
thereupon become and be immediately due and payable.
(iii) Bankruptcy. If an Event of Default specified in paragraph (c)
or (d) above shall occur, the unpaid principal of this Note, together with
interest accrued and unpaid thereon, shall be immediately due and payable.
The rights and remedies of the holder of this Note upon the occurrence of
an Event of Default set forth above are in addition to and not in derogation of
any other rights such Seller may have under applicable law and other agreements.
This Note shall be governed by the laws of the State of Michigan, without
giving effect to principles of conflicts of laws thereof.
IV-2
<PAGE>
The Buyer and each endorser hereby waives presentment, demand, protest,
notice of non-payment, dishonor and notice of dishonor.
All notices hereunder shall be deemed to have been delivered and received,
and to be effective for all purposes, when delivered personally to, and actually
received by, the party entitled to such notice or upon deposit in an official
depository of the United States Mail when sent by registered or certified mail,
return receipt requested, sufficient postage affixed, to the following addresses
(or such other addresses as the parties may hereafter designate in writing and
give notice of as herein provided):
If to Seller: ______________________________
______________________________
______________________________
______________________________
If to Buyer: ______________________________
______________________________
______________________________
______________________________
------------------------------
John H. Welker
IV-3
<PAGE>
Attachment V to Stock Transfer Agreement
----------------------------------------
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT, made and entered into as of this _____ day of
___________, _____, by and between NUMATICS ACQUISITION CORPORATION, a Michigan
corporation (the "Company"), and ______________________, individually.
WITNESSETH:
-----------
WHEREAS, a Stock Transfer Agreement has been executed and delivered as of
November ___, 1990 by and between the Company; Northwest Equity Partners IV;
Greylock Investments Limited Partnership; Greylock Limited Partnership; State
Treasurer of the State of Michigan, Custodian of Public School Employees'
Retirement System; State Employees' Retirement System; Michigan State Police
Retirement System; Judges' Retirement System; Probate Judges' Retirement System;
Heller Financial, Inc.; John E. Acuff; William L. Behan; Roy A. Clark; David K.
Dodds; Henry Fleischer; Donald E. McGeachy; Robert P. Robeson; and John H.
Welker (the "Stock Transfer Agreement"); and
WHEREAS, pursuant to the terms of the Stock Transfer Agreement, in the
event that any shares of Class A Stock or Class C Stock of the Company which are
owned of record by any Management Shareholder (this and other capitalized terms
not otherwise defined herein having the respective meanings set forth in the
Stock Transfer Agreement) other than Welker, are purchased and redeemed by the
Company pursuant to Section 2.3, 2.4 or 2.6 thereof, the Company has agreed to
grant to the Chief Executive Officer of the Company, or such present or
prospective officers or employees as may be specified in writing by him, an
option to purchase the number of authorized but unissued shares of Class A Stock
or Class C Stock of the Company so purchased or redeemed by the Company;
WHEREAS, this Agreement is being executed and delivered by the Company
pursuant to Section 2.5 of the Stock Transfer Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
undertakings and promises herein contained, and other good and valuable
consideration the receipt and adequacy is hereby acknowledged, the parties
hereto agree as follows:
1. On the date hereof, the Company hereby gives and grants to Optionee
(as defined in Section 4 hereof), on the terms and conditions hereinafter set
forth and in accordance with the provisions of the Stock Transfer Agreement, an
irrevocable option (the "Option") to purchase _____ authorized but unissued
shares of Class __ Stock of the Company, subject to adjustment as set forth in
Section 7 below, at an exercise
V-1
<PAGE>
price of $_________ per share, subject to Adjustment as set forth in Section 7
below.
2. Subject to the other provisions hereof, Optionee may exercise all or
any part of the Option at any time and from time to time by giving notice of
exercise to the Chief Executive Officer of the Company. Each exercise of the
Option shall be effective upon the actual receipt of such notice by the Chief
Executive Officer of the Company. Optionee shall not be entitled to any rights
or privileges of a shareholder of the Company in respect of any shares issuable
upon any exercise of the Option, nor shall any other person entitled to exercise
the Option be entitled to such rights and privileges, unless and until
certificates representing the shares as to which the Option shall have been
exercised shall have been issued and delivered. Forthwith, upon receipt of such
notice of exercise, the Company shall cause the necessary certificates to be
prepared and shall promptly thereafter notify Optionee that such certificates
are available for delivery and shall, within seven days after the receipt of the
notice of exercise from Optionee, make such certificates available at the office
of the Company. Optionee, within five days after the delivery of notice to him
of the availability of the certificates, shall take up and pay in cash the
purchase price of the shares of Class A Stock or Class C Stock as to which he
shall have exercised the Option and the Company will cause the certificates to
be delivered against the receipt of the purchase price therefor.
3. */ [The Option granted hereunder may be transferred or assigned to any
present or prospective officer or employee of the Company, provided that any
such employee or officer who is not a Management Shareholder (as defined below)
first does all of the following: (i) executes and delivers to the Company a
Supplement to the Stock Transfer Agreement in substantially the form of
Attachment II thereto, appropriately completed, (ii) executes and delivers a
supplement to the Voting Agreement dated as of November __, 1990 (the "Voting
Agreement") among the Company and the Management Shareholders and a proxy as
described in Section 4.11 of the Voting Agreement, and (iii) executes and
delivers the written agreement contemplated in Section 3.3 of the Common Stock
Co-Sale and Shareholder Agreement dated as of November
____________________
*/ Paragraph to be inserted only into Option Agreement delivered to Chief
Executive Officer of the Company. __, 1990 among the Company and certain
shareholders (the "Co-Sale Agreement") and (iv) executes and delivers a written
agreement to be bound by the Put and Call Agreement (as defined in the Stock
Transfer Agreement).] **/[The Option shall not be transferable by Optionee.]
V-2
<PAGE>
4. The Option may only be exercised by Optionee. For the purpose of this
Agreement, "Optionee" shall mean and include, the person identified on page 1
hereof, and the heirs, successors and assigns permitted under the Stock Transfer
Agreement, the trustee of any trust for the benefit of such person, the executor
or administrator of the estate of any such person, or any personal
representative, conservator, executor, successor, trustee of such person, or any
other person charged with the custody, administration or deposition of the
assets of such person, all of whom by succession the right in the Option shall
become bound by the terms of this Agreement and the Stock Transfer Agreement.
5. The Option may be exercised at any time and from time to time by
Option, in whole or in part, until such time as the Company or any other party
to the Stock Transfer Agreement shall have exercised any rights under Sections
2.3 or 2.4 of the Stock Transfer Agreement concerning the Option. The provisions
of Sections 2.3 and 2.4 of the Stock Transfer Agreement shall apply to the
Option to the extent not exercised at the time of the occurrence of the event
giving rise to the redemption and/or buy-sell rights set forth therein as if the
Option had been previously exercised except the per share redemption or purchase
price determined in accordance with such provisions shall be redeemed by an
amount equal to the per share option exercise price of the Option.
6. In the event of the proposed dissolution of liquidation of the Company
or in the event of a proposed sale of substantially all of the assets of the
Company or in the event of a proposed merger or consolidation of the Company
with or into any other corporation, regardless of whether the Company is the
surviving corporation, or a statutory share exchange involving capital stock of
the Company or any other Sale Transaction pursuant to the Co-Sale Agreement (the
actual effective date of the dissolution, liquidation, sale, merger,
consolidation or exchange being herein called an "Event"):
____________________
**/ Paragraph to be inserted in Option Agreement delivered to any person
other than Chief Executive Officer of the Company.
V-3
<PAGE>
(a) if the Event is a merger or consolidation or statutory share
exchange, the Board, unless it shall make a declaration pursuant to
paragraph 6(b), shall make appropriate provision for the protection of the
Option (if the Board determines that such provision is reasonably necessary
for the protection of the Option) by the substitution of option(s) and
appropriate voting common stock of the corporation surviving any merger or
consolidation or, if appropriate, the parent corporation of the Company or
such surviving corporation, to be issuable upon the exercise of options in
lieu of options and capital stock of the Company; or
(b) the Board of Directors of the Company may, but shall not be
obligated to, at least 30 days prior to the occurrence of an Event,
declare, and provide written notice to each Optionee of the declaration,
that the Option shall be cancelled at the time of, or immediately prior to
the occurrence of, an Event (unless it shall have been exercised prior to
the occurrence of the Event) in exchange for payment to the Optionee at the
time of the Event, of cash equal to the amount (if any), for each share
covered by the cancelled option, by which the Fair Market Value (as
hereinafter defined in this paragraph 6(b)) per share exceeds the exercise
price per share covered by the Option. In the event of a declaration
pursuant to this paragraph 6(b), the Option shall be cancelled at the time
of, or immediately prior to, the Event, as provided in the declaration,
subject to the payment obligations of the Company provided in this
paragraph 6(b). For purposes of this paragraph, "Fair Market Value" per
share shall mean the cash plus the fair market value, as determined in good
faith by the Board of Directors of the Company, of the non-cash
consideration to be received per share by the shareholders of the Company
upon the occurrence of the Event.
The Board of Directors of the Company shall not be obligated to take
any action pursuant to paragraph 6(a) or 6(b) prior to, at the time of, or
after an Event unless the Event is a merger, consolidation or statutory
share exchange and the Board determines that such provision is reasonably
necessary for the protection of the options.
7. In the event that, prior to the delivery by the Company of shares of
Class A Stock or Class C Stock in respect of which the Option has been granted,
a reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Company shall take place, the Board of
Directors of the Company shall make such equitable adjustment in the number and
kind of
V-4
<PAGE>
shares and option price therefor covered by the Option as it shall deem
appropriate.
8. Optionee represents and warrants that any and all shares of Class A
Stock or Class C Stock of the Company purchased upon any and all exercises of
the Option shall be acquired for investment and not with a view to or for sale
in connection with any distribution thereof. Optionee understands and agrees
that the shares of Class A Stock or Class C Stock to be purchased upon exercise
of the Option will not have been registered under the Securities Act of 1933, as
amended (the "Securities Act") or any applicable state securities laws and that
such shares may not be transferred or resold without (a) such registration under
the Securities Act and any applicable state securities laws or (b) any exemption
from the requirements thereof. Each notice of exercise of the Option shall be
deemed to constitute a representation by Optionee that the shares of Class A
Stock or Class C Stock with respect to which the Option is being exercised will
be acquired in good faith for investment and not with a view to or for sale in
connection with any distribution thereof and an agreement that such shares will
not be transferred or resold without registration under the Securities Act and
any applicable state securities laws or exemption therefrom. There shall be
furnished with each notice of exercise of the Option such documents as the
Company in its discretion may deem necessary to insure compliance with the
applicable rules and regulations of any governmental authority having
jurisdiction over the issuance and exercise of the Option or the issuance of
shares pursuant to any exercise thereof. In addition to any other legends deemed
appropriate by the Company, certificates delivered to evidence shares purchased
pursuant to this Agreement shall contain legends substantially to the effect set
forth on Exhibit 1 hereto:
9. This Option Agreement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, under the laws of
the State of Michigan.
10. In the event that any provision hereof shall be determined to be
invalid or unenforceable for any reason, such invalidity or unenforceability
shall not affect the validity and enforceability of the remaining valid and
enforceable provisions hereof, which shall be construed as if such invalid or
unenforceable provisions had not been included in this Option Agreement.
11. This Option Agreement may be executed in several counterparts, each of
which shall be deemed an original, but together they shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be
executed by its officers thereunto duly
V-5
<PAGE>
authorized, and Optionee executed this Option Agreement, all as of the day and
year first above written.
NUMATICS ACQUISITION CORPORATION
By
-------------------------------
Its -----------------------
---------------------------------
[Optionee]
V-6
<PAGE>
EXHIBIT 1 TO STOCK OPTION AGREEMENT
LEGENDS
THE COMPANY WILL FURNISH TO A SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE A FULL
STATEMENT OF THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF
THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED AND THE DESIGNATION, RELATIVE
RIGHTS, PREFERENCES, AND LIMITATIONS OF EACH SERIES SO FAR AS THE SAME HAVE BEEN
PRESCRIBED AND THE AUTHORITY OF THE BOARD TO DESIGNATE AND PRESCRIBE THE
RELATIVE RIGHTS, PREFERENCES, AND LIMITATIONS OF OTHER SERIES.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES LAWS COVERING SUCH SECURITIES OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES (CONCURRED IN
BY COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OFFER,
PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN IRREVOCABLE PROXY
AND TO CERTAIN VOTING AGREEMENTS AS GRANTED AND PROVIDED IN A CERTAIN VOTING
AGREEMENT (THE "VOTING AGREEMENT") DATED AS OF NOVEMBER _____, 1990, BY AND
BETWEEN THE COMPANY AND CERTAIN SHAREHOLDERS OF THE COMPANY. THE VOTING
AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT (i) THE SHARES REPRESENTED BY THIS
CERTIFICATE WILL BE VOTED IN SUCH MANNER AS MAY BE DIRECTED BY JOHN H. WELKER,
AND (ii) THE VOTING AGREEMENTS SET FORTH IN THE VOTING AGREEMENT WILL CONTINUE
TO APPLY TO TRANSFEREES.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND ENCUMBRANCE AND RIGHTS OF FIRST REFUSAL AND OFFER
AS GRANTED AND PROVIDED IN A CERTAIN STOCK TRANSFER AGREEMENT DATED AS OF
NOVEMBER __, 1990, BY AND BETWEEN THE COMPANY AND HOLDERS OF CERTAIN SECURITIES
OF THE COMPANY.
THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY TRANSFER THEREOF ARE SUBJECT TO
THE TERMS OF A CERTAIN COMMON STOCK CO-SALE AND SHAREHOLDER AGREEMENT AND A
REGISTRATION RIGHTS AGREEMENT AMONG THE COMPANY AND CERTAIN SHAREHOLDERS DATED
AS OF NOVEMBER ___, 1990 (INCLUDING CERTAIN VOTING AGREEMENTS UPON THE
OCCURRENCE AT CERTAIN EVENTS SPECIFIED THEREIN).
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A CERTAIN
PUT AND CALL AGREEMENT AMONG THE COMPANY AND CERTAIN SHAREHOLDERS OF THE
COMPANY, DATED AS OF NOVEMBER __, 1990.
<PAGE>
THESE LEGENDS PROVIDE ONLY SUMMARY INFORMATION REGARDING THE AGREEMENTS REFERRED
TO, WHICH SUMMARIES ARE EQUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE
AGREEMENTS. COPIES OF THE FOREGOING DOCUMENTS ARE ON FILE WITH THE SECRETARY OF
THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY.
Bracketed language shall be included only if Seller is John H. Welker, his heirs
or legal representatives.Paragraph to be inserted only into Option Agreement
delivered to Chief Executive Officer of the Company.Paragraph to be inserted in
Option Agreement delivered to any person other than Chief Executive Officer of
the Company.
-2-
<PAGE>
Exhibit 10.4
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made, executed and delivered as
of this 29th day of November, 1990, by and between NUMATICS ACQUISITION
CORPORATION, a Michigan corporation (the "Company"), and the persons listed on
the signature pages hereto, being the record holders of all of the issued and
outstanding Class A Common Stock of the Company (herein together with any person
hereafter executing and delivering a supplement to this Agreement pursuant to
Section 4.11 hereof being collectively referred to as the "Shareholders" and
individually as a "Shareholder").
WITNESSETH:
WHEREAS, the authorized capital stock of the Company consists of Class A
Common Stock, Class B Common Stock, Class C Common Stock, Series A Preferred
Stock and Series B Preferred Stock, as more fully described on Attachment I
hereto and the Restated Articles of Incorporation of the Company (the "Restated
Articles"); and
WHEREAS, all of the issued and outstanding capital stock of the Company is
owned of record as of the date of this Agreement as described on Attachment I
hereto; and
WHEREAS, the Shareholders, as the record holders of all of the issued and
outstanding Class A Common Stock, are entitled to 51% of the voting power of all
outstanding voting securities of the Company, as more fully described in the
Restated Articles; and
WHEREAS, the Shareholders desire to secure a continuity of the management
and business policies of the Company and to provide for certain restrictions and
obligations with respect to the control of the Company by a combination of their
votes (and/or written consents), as shareholders, pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
SHAREHOLDER VOTING AGREEMENT
1.1 Voting Agreement. Each Shareholder hereby agrees to vote all Voting
Securities (as hereinafter defined), whether now owned or hereafter acquired by
such Shareholder, and any Voting Securities that such Shareholder shall
otherwise have the right or power to vote, and/or to take action by written
consent, on all
<PAGE>
matters of any character whatsoever, except only as provided in Section 1.2
hereof, in such manner as may be directed by John H. Welker.
1.2 Exception to Voting Agreement. Other than in respect to the election
of directors, the voting agreements as to other matters specified in Section 1.1
shall not apply at any time, if any, in which the holders of Class B Stock of
the Company (as defined in the Restated Articles) are entitled to direct, and
have directed, the vote of the Class A as provided in the Restated Articles of
the Company and the Common Stock Co-Sale and Shareholder Agreement dated as of
the date of this Agreement among the Company, the signatories hereto and certain
other parties.
1.3 Proxies. Each Shareholder hereby agrees to execute and to deliver to
Welker, simultaneously with the execution and delivery of this Agreement, an
irrevocable proxy substantially in the form of Attachment 2 hereto (a "Proxy")
to secure the voting agreements contained in Section 1.1 of this Agreement. Each
Shareholder intends that each Proxy and all other proxies executed and delivered
by such Shareholder from time to time under this Agreement shall have the effect
of an "irrevocable proxy" under Section 422 of the Michigan Business Corporation
Act, as amended (the "MBCA") and that this Agreement shall be a voting agreement
among shareholders under Section 461 of the MBCA. Each Shareholder further
agrees that each Proxy and all other proxies executed and delivered by such
Shareholder under this Agreement shall be effective as to such Shareholder and
his heirs, personal representatives, guardians, conservators, other legal
representatives, successors and assigns, and any transferee of Voting Securities
held at any time by such Shareholder, until such time as this Agreement shall be
terminated in accordance with Article VIII hereof. During the term of this
Agreement, each Shareholder further agrees to execute and deliver such further
proxies, consents and other documents and instruments, and to take such further
action, as may be necessary or appropriate to further secure and/or effectuate
the voting agreements provided in this Agreement.
1.4 Recognition of Vote. The Company shall recognize the vote (or the
written consent) of Welker, as the holder of the Proxies, taken in accordance
with the provisions of this Article I as the action of the holders of the Voting
Securities subject to such Proxies.
1.5 Definition of Voting Securities. For the purposes of this Agreement,
the term "Voting Securities" shall mean and include the Class A Stock of the
Company and any and all other securities of the Company entitling the holder
thereof to vote upon any matter submitted to a vote of shareholders of the
Company.
2
<PAGE>
1.6 No Liability. Welker shall have no liability of any kind to any
Shareholder or to the Company in connection with the taking of any action, or
the failure to take any action, permitted under this Agreement, except for his
gross negligence or willful misconduct.
ARTICLE II
TERMINATION
This Agreement shall be effective as of the date first above written and
shall remain fully in effect and enforceable until the earlier to occur of (a),
(b) or (c) below:
(a) This Agreement shall be terminated by written instrument by and
between the Company and Shareholders owning of record not less than 51% of
the then outstanding Voting Securities owned by all Shareholders, or their
respective personal representatives, guardians, conservators, trustees,
other legal representatives, successors, or assigns; or
(b) Welker shall no longer own any Voting Securities of the Company
or shall no longer be employed by the Company or a subsidiary in any
capacity; or
(c) Shares of Common Stock of the Company shall have been sold to the
public pursuant to a registration statement filed by the Company with, and
declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or any successor statute providing for
the registration of securities, other than any registration and sale of
Common Stock pursuant to an employee benefit plan or a dividend or interest
reinvestment plan.
ARTICLE III
LEGEND
3.1 Legend. All certificates representing Voting Securities at any time
held of record by any Shareholder shall contain a legend on the face of the
certificate substantially as follows:
"THIS CERTIFICATE IS SUBJECT TO AN IRREVOCABLE PROXY AND VOTING
AGREEMENTS NOTED ON THE REVERSE HEREOF."
and a legend on the reverse of the certificate substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
IRREVOCABLE PROXY AND TO CERTAIN VOTING AGREEMENTS AS GRANTED AND PROVIDED
IN A CERTAIN VOTING AGREEMENT (THE "AGREEMENT") DATED AS OF NOVEMBER 29,
1990, BY AND BETWEEN THE
3
<PAGE>
ISSUER AND CERTAIN SHAREHOLDERS OF THE ISSUER, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE ISSUER. THE AGREEMENT PROVIDES, AMONG OTHER
THINGS, THAT (i) THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE VOTED
IN SUCH MANNER AS MAY BE DIRECTED BY JOHN H. WELKER AND (ii) THE VOTING
AGREEMENTS SET FORTH IN THE AGREEMENT WILL CONTINUE TO APPLY TO
TRANSFEREES. THIS LEGEND PROVIDES ONLY SUMMARY INFORMATION REGARDING THE
AGREEMENT, WHICH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
AGREEMENT."
Each Shareholder agrees to deliver such Shareholder's certificates
representing Voting Securities to the Company for imposition of the above
legends.
3.2 Filing of Agreement. An executed counterpart of this Agreement shall
be put and remain on file during the term hereof at the principal executive
office of the Company.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. Any notice to be given pursuant to this Agreement shall be
deemed to have been given and received, and to be effective for all purposes,
when delivered personally or when sent by registered mail to the addresses of
the parties hereto as set forth on the signature page hereof (or such other
addresses as the parties may hereafter designate in writing).
4.2 Specific Performance. Each Shareholder acknowledges and agrees that
any breach of this Agreement by any Shareholder will cause incalculable and
irremediable damages to the other Shareholders, and that in the event that any
Shareholder shall breach or attempt to breach the terms of this Agreement, each
of the other Shareholders shall be entitled as a matter of right to obtain from
any court of competent jurisdiction an injunction (i) prohibiting further
breaches of this Agreement, (ii) rescinding any action taken, and (iii)
specifically enforcing the terms of this Agreement.
4.3 Further Instruments and Documents. Each of the parties hereto
covenants and agrees that such party will make, execute and deliver any and all
such other and further instruments, papers and documents, and will do and
perform any and all such further acts and things, as shall be or become
necessary, proper or convenient to carry out, put into effect or make operative
their respective covenants, promises and undertakings contained in this
Agreement.
4.4 Modification. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof, and may not be
amended, modified or varied except by an instrument in writing executed by the
parties hereto and by holders of at least 2/3rds of the outstanding Class B
Stock of the
4
<PAGE>
Company in the same manner as this Agreement.
4.5 Construction. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, under
the laws of the State of Michigan.
4.6 Severance. In the event that any provision hereof shall be determined
to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the validity and enforceability of the
remaining valid and enforceable provisions hereof, which shall be construed as
if such invalid or unenforceable provisions had not been included in this
Agreement.
4.7 Successors Bound. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their personal representatives, successors
and assigns, and shall further be binding upon any transferee of any Voting
Securities subject to this Agreement, whether or not such transferee shall have
complied with Section 4.11 hereof.
4.8 Suppression. This Agreement cancels and supersedes any prior verbal or
written agreement between the parties hereto pertaining to the subject matter
hereof.
4.9 Interpretation. Headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement. Whenever reasonably necessary, pronouns of any gender shall be deemed
synonymous, as shall singular and plural pronouns.
4.10 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but together they shall constitute
one and the same instrument.
4.11 Additional Shareholders. It is contemplated that persons other than
the persons listed on the signature pages hereto, including, without limitation,
(a) employees of the Company or a subsidiary and/or a deferred compensation
trust having any interest in Class A Stock or securities convertible into Class
A Stock to be issued by the Company under the Numatics Acquisition Corporation
Deferred Stock Compensation Plan and (b) transferees of Class A Stock or
securities convertible into Class A Stock as permitted under the Stock Transfer
Agreement dated as of even date herewith among the Company and certain
investors, will, as a condition to receiving Class A Stock, become a
"Shareholder" under this Agreement by executing and delivering to Welker a
supplement to this Agreement in substantially the form of Attachment III hereto
together with a Proxy in the form of Attachment II hereto. Welker agrees to give
notice to the other parties hereto of the addition of any person as a
Shareholder hereunder promptly after receipt of the foregoing documents.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
SHAREHOLDERS:
/s/ JOHN E. ACUFF
-----------------------------------
John E. Acuff
11877 Stoney Ridge
Brighton, Michigan 48116
/s/ WILLIAM L. BEHAN
-----------------------------------
William L. Behan
9546 Butler Drive
P. O. Box 1144
Brentwood, Tennessee 37024
/s/ ROY A. CLARK
-----------------------------------
Roy A. Clark
4983 Juniper
Milford, Michigan 48382
/s/ DAVID K. DODDS
-----------------------------------
David K. Dodds
16 Croydon Dr.
P. O. Box 4
Arva, Ontario N0M 1C0
Canada
/s/ HENRY FLEISCHER
-----------------------------------
Henry Fleischer
477 Ashley Drive
Grand Blanc, Michigan 48439
/s/ DONALD E. MCGEACHY
-----------------------------------
Donald E. McGeachy
4808 Ravinewood Drive
Milford, Michigan 48382
/s/ ROBERT P. ROBESON
-----------------------------------
Robert P. Robeson
3940 Penberton Drive
Ann Arbor, Michigan 48105
6
<PAGE>
/s/ JOHN H. WELKER
___________________________________
John H. Welker
4740 Chevron
Highland, Michigan 48356
COMPANY:
NUMATICS ACQUISITION CORPORATION
/s/ JOHN H. WELKER
By
---------------------------------
Its: President
7
<PAGE>
ATTACHMENT I
DESCRIPTION OF AUTHORIZED AND ISSUED CAPITAL STOCK
--------------------------------------------------
Common Stock
------------
Class A
-------
Owned By Number of Shares Owned
-------- ----------------------
John E. Acuff 432
William L. Behan 576
Roy A. Clark 864
David K. Dodds 864
Henry Fleischer 624
Donald E. McGeachy 864
Robert P. Robeson 576
John Welker 15,200
Class B
-------
Owned By Number of Shares Owned
-------- ----------------------
Norwest 42,350.65
Greylock Limited Partnership 13,234.555
Greylock Investments Limited
Partnership 13,234.555
Heller 2,646.91
Class C
Owned By Number of Shares Owned
-------- ----------------------
SMRS 7,757.57
Norwest 459.71
Greylock Limited Partnership 143.66
Greylock Investments Limited
Partnership 143.66
Heller 28.73
Preferred Stock
Series A Preferred
Owned By Number of Shares Owned
-------- ----------------------
Norwest 1,777.778
Greylock Limited Partnership 555.5555
Greylock Investments Limited
Partnership 555.5555
Heller 111.111
8
<PAGE>
Series B Preferred
------------------
Series B Preferred Stock will not be issued at the closing
date. However, Series B Preferred Stock may be issued pursuant to
the Contingent Capital Agreement by and between the Company and
John Welker
John E. Acuff
William L. Behan
Roy A. Clark
David K. Dodds
Henry Fleischer
Donald E. McGeachy
Robert P. Robeson
Norwest
Greylock Limited Partnership
Greylock Investments Limited Partnership and
Heller, as Agent
<PAGE>
ATTACHMENT II
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS, that the Undersigned does hereby constitute
and appoint JOHN H. WELKER (the "Attorney"), as the Undersigned's true and
lawful attorney, for the Undersigned and in the Undersigned's name, place and
stead, at any meeting of Numatics Acquisition Corporation (the "Company"), to
vote all Voting Securities (as defined below) of the Company, now owned or
hereafter acquired by the Undersigned, or which the Undersigned shall have the
right or power to vote, upon any proposal which may come before the shareholders
of the Company. This proxy is executed and delivered by the Undersigned
pursuant to and in accordance with the terms, provisions, requirements and
limitations of the Voting Agreement dated as of November __, 1990 (the
"Agreement") by and between the Company and each of the Shareholders (as defined
therein). The Attorney shall have full power and authority to act for the
Undersigned and in the Undersigned's name, place and stead at said meetings in
voting in accordance with the Agreement as freely as the Undersigned could do if
personally present and acting.
This proxy is irrevocable and is intended to have the effect of an
"irrevocable proxy" under Section 422 of the Michigan Business Corporation Act,
as amended (the "MBCA"), and is made and given pursuant to Article I of the
Agreement which is intended as a voting agreement under Section 461 of the MBCA.
This proxy shall be binding, effective and valid as to the Undersigned, and the
Undersigned's heirs, personal representatives, guardians, conservators, other
legal representatives, successors and assigns, until such time as the Agreement
shall be terminated in accordance with its terms notwithstanding the death,
incompetence or mental illness of the Undersigned or the sale or transfer, if
any, of any or all of the Voting Securities owned by the Undersigned.
As used in this proxy, the term "Voting Securities" means and includes the
Class A Common Stock of the Company and any and all other securities of the
Company entitling the holder to vote upon any matter submitted to a vote of
shareholders of the Company.
IN WITNESS WHEREOF, the Undersigned has executed this Proxy as of the ____
day of November, 1990.
______________________________
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<PAGE>
ATTACHMENT III
SUPPLEMENT TO VOTING AGREEMENT
This Supplement to Voting Agreement (the "Supplement") is made, executed
and delivered by the undersigned as of this _____ day of ___________, 19__.
WITNESSETH:
WHEREAS, Numatics Acquisition Corporation and certain shareholders thereof
have entered into a Voting Agreement dated as of November __, 1990 (the
"Agreement") providing, among other things, certain voting agreements with
respect to the shares of Class A Common Stock and other voting securities of the
Company held by the parties thereto; and
WHEREAS, it is a condition to either (a) the issuance or transfer to the
undersigned of shares of Class A Stock or securities convertible into Class A
Stock, or (b) of the issuance of Class C Stock under the Numatics Acquisition
Corporation Deferred Stock Compensation Plan to or for the benefit of the
undersigned, that the undersigned become a party to the Agreement and the
undersigned is executing and delivering this Supplement in satisfaction of such
condition.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the undersigned hereby agrees as follows:
1. Capitalized terms used herein shall have the respective meanings set
forth in the Agreement.
2. By execution and delivery of this Supplement, the undersigned hereby
joins the Agreement as a "Shareholder" and hereby agrees to be bound by and
perform all of the covenants, promises, agreements and undertakings of a
Shareholder under the Agreement to the same extent as if the undersigned had
been an original signatory to the Agreement.
3. Simultaneously with the execution and delivery of this Supplement, the
undersigned is executing and delivering a Proxy to Welker.
4. This Supplement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, under the laws of
the State of Michigan.
IN WITNESS WHEREOF, the undersigned has executed this Supplement as of the
day and year first above written.
______________________________
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<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of this 3rd day of
January, 1996, by and between NUMATICS, INCORPORATED, a Michigan corporation
with its principal offices at 1450 North Milford Road, Highland, Michigan 48031
(the "Company"), and JOHN H. WELKER, an individual residing at 4340 Chevron,
Highland, Michigan 48356 ("Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Employee, and wishes to have
available and to be assured of his services on the terms and conditions
hereinafter set forth; and
WHEREAS, Employee wishes to be employed by the Company and to provide his
services on the terms and conditions hereinafter set forth; and
WHEREAS, the Company would be severely injured if the Employee should
directly or indirectly, for himself or in the service of others, engage in
certain activities in competition with the Company and the Company desires
certain covenants to protect its reasonable competitive business interests;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Employment. The Company hereby agrees to employ Employee as the
President and Chief Executive Officer of the Company and Employee hereby agrees
to serve the Company in such capacity during the term of the Agreement. Employee
shall have the duties, responsibilities and authority commensurate with and
normally attending such position, as well as such additional powers and
administrative duties as may be reasonably designated from time to time by the
Board of Directors of the Company. Employee shall be in charge of the day-to-day
operations of the business of the Company and all personnel shall report to
Employee or his designees.
2. Extent and Place of Services. Employee shall, subject to the
reasonable vacation periods compatible with his position (the duration of which
shall be determined from time to time by the Board of Directors of the Company
but shall not be less than one
<PAGE>
(1) month each year), periods of illness and the like, devote substantially full
time and attention to his duties hereunder. Employee shall perform his duties
hereunder at such a place or places as the Board of Directors shall reasonably
request from time to time; provided, however, Employee shall not be required to
perform any services under this Agreement which will necessitate moving his
residence from the metropolitan area of Highland, Michigan.
3. Term of Employment/Compensation.
(a) Term. The term of Employee's employment hereunder shall be
effective from the date hereof, and shall continue until and including
December 31, 2003, unless his employment is terminated earlier as
hereinafter provided.
(b) Salary. During the period from the date of this Agreement to
December 31, 1996, Employee will receive as compensation for his services a
salary equal to an annualized salary of TWO HUNDRED AND FIFTY THOUSAND
DOLLARS ($250,000.00) payable twice each month, or as the Company normally
pays, subject to normal federal, state and local tax withholding.
Thereafter, Employee shall receive the following annual salaries payable as
above:
(i) Salary effective January 1, 1997, shall be TWO HUNDRED AND
SEVENTY-FIVE THOUSAND DOLLARS ($275,000.00);
(ii) Salary effective January 1, 1998 shall be THREE HUNDRED
THOUSAND DOLLARS ($300,000.00);
(iii) Salary effective January 1, 1999, shall be THREE HUNDRED
AND TWENTY-FIVE THOUSAND DOLLARS ($325,000.00);
(iv) Salary effective January 1, 2000 shall be THREE HUNDRED
AND FIFTY THOUSAND DOLLARS ($350,000.00);
(v) Salary effective January 1, 2001 shall be THREE HUNDRED
AND EIGHTY THOUSAND DOLLARS ($380,000.00);
(vi) Salary effective January 1, 2002 shall be FOUR HUNDRED AND
TEN THOUSAND DOLLARS ($410,000.00); and
(iv) Salary effective January 1, 2003 through and including
December 31, 2003, shall be FOUR HUNDRED AND FORTY THOUSAND DOLLARS
($440,000.00).
(c) Performance Bonus. Employee shall receive a performance bonus,
or additional compensation (over and above and in addition to the salary
specified in paragraph 3(b)
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<PAGE>
above and any additional discretionary bonus awarded pursuant to paragraph
3(d) below) in respect of each of the Company's calendar years during the
term hereof, commencing with the calendar year ending December 31, 1996,
calculated as follows:
(i) Employee's salary shall be supplemented each year pursuant
to this paragraph 3(c) based on the achieved profits of the Company.
For the purposes of this Agreement, should the pretax, pre-interest
consolidated profits of the Company exceed seventy-five (75%) of the
forecasted amount set forth in the business plan annually submitted to
the Board of Directors and approved thereby, a performance bonus will
be earned. The amount of the performance bonus will be a percent of
Employee's salary for each year in which more than seventy-five (75%)
percent of the forecasted pre-tax, pre-interest consolidated business
plan profit of the Company (the "Forecast Profit") is achieved. The
amount of the performance bonus will be determined by multiplying (A)
the ratio of (x) the amount by which the profits actually achieved
exceeds 75% of the Forecast Profit for such year divided by (y) 25% of
the Forecast Profit for such year times (B) seventy percent (70%) of
Employee's salary; provided, however, no performance bonus shall be
earned if the pretax, pre-interest consolidated profits of the Company
are less than or equal to seventy-five percent (75%) of the Forecast
Profit for any such year.
(ii) For any year the pretax, pre-interest consolidated profits
actually achieved will be determined before any charges for bonuses to
any shareholders of the Company, including any bonuses payable
hereunder, and before any Federal, foreign, state or local income tax
charges, including, but not limited to, any charge for Michigan Single
Business Tax or the German trade or income tax.
(iii) Such performance bonus for any fiscal year shall be paid
within seventy-five (75) days of the close of such fiscal year;
provided, however, that in the event of termination of the employment
of Employee for any reason or in the event the Company's fiscal year
is changed during the term of this Agreement and a performance bonus
is thereby based on less than a full fiscal year, then the performance
bonus shall be prorated (on a monthly basis) for the portion of the
fiscal year during which Employee was employed based upon actual
performance through the end of the most recently-completed fiscal
month ending on or prior to the date of such termination or the end of
the short fiscal year as
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<PAGE>
compared to Forecast Profit for the portion of the fiscal year ended
at the end of such fiscal month.
(d) Discretionary Bonus. At the end of each fiscal year of the
Company after the Company's fiscal year ending December 31, 1996, Employee
shall be considered by the Board of Directors for additional discretionary
bonus compensation. In reaching its decision as to the amount of any such
discretionary bonus, the Board of Directors shall take into account the
performance of the Company and the Employee. The amount of any such
discretionary bonus payment shall be within the sole discretion of the
Board of Directors acting by unanimous consent of all of its members. The
Board of Directors will take into account the state of the economy in the
previous fiscal year in deciding whether or not to award a bonus under this
Section 3(d).
(e) Business Expenses. Upon proper substantiation and documentation
(for all items over $25.00) by Employee, the Company shall reimburse
Employee promptly and not less frequently than once each month for all
reasonable travel, lodging, food, entertainment and other related business
expenses incurred by him in the performance of his duties hereunder
pursuant to the Company's normal and customary policy.
(f) Benefits. During the term of this Agreement, Employee shall be
eligible to participate in any and all medical and dental reimbursement,
wage continuation, profit-sharing, pension, stock option, stock purchase
and other similar plans or fringe benefits of the Company, as the same may
be amended from time to time, on the same basis as other executive officers
of the Company. During the term of this Agreement, the Company agrees to
purchase or lease for the sole use of Employee an automobile at least
comparable to that presently being provided Employee by the Company which
shall be replaced at least every two (2) years. During the term of this
Agreement, the Company agrees to obtain and keep in force public liability
and property damage insurance on such automobile, in amounts and with
insurers reasonably satisfactory to Employee, with Employee named as party
insured.
(g) Salary and Benefit Continuation in the Event of Disability. In
the event of any disability, illness or incapacity during the term hereof
which does not constitute "permanent disability" as defined in Section 4(c)
of this Agreement, Employee shall continue to receive the salary and all
benefits then in effect during the continuance of such disability, illness,
or incapacity.
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<PAGE>
(h) Maximum Salary. In any given calendar year, the Employee's total
compensation under this section 3 shall not exceed 300% of that year's base
salary.
4. Termination of Employment. Notwithstanding the provisions of Section
3 of this Agreement, Employee's employment hereunder and all salary and benefits
referred to in paragraph 3, unless otherwise expressly provided herein shall
terminate on the earliest of the following dates:
(a) The date of the death of Employee, provided that payments of
Employee's regular salary in effect in the year of his death as provided in
paragraph 3(b) shall continue to be paid twice a month for sixty (60) days
after Employee's death;
(b) Not less than thirty (30) days after the date on which the
Company shall have given Employee notice of the termination of his
employment by reason of failure to perform his duties hereunder due to
permanent disability; provided, however, the Company shall only be allowed
to exercise this termination option if the Company shall have obtained and
shall have kept in full force and effect a disability insurance policy
which will pay Employee the greater of fifty percent (50%) of his then
current salary or $15,000.00 per month until his normal retirement date or
until the disability or incapacity shall cease, whichever shall occur
earlier. The term "permanent disability" for purposes of this Agreement
shall mean that Employee is substantially incapable, as established on the
basis of a written medical opinion from a physician acceptable to Employee,
of performing the duties required of him under this Agreement because of
physical or mental impairment for a continuous period of one hundred eighty
(180) days; or
(c) Sixty (60) days after the date on which the Company shall have
given Employee written notice of the termination of his employment for any
reason (including, without limitation, permanent disability with respect to
which the insurance referred to in paragraph 4(b) is not maintained) other
than "for cause" as defined below. If Employee's employment shall be
terminated pursuant to this Section 4(c), Employee's regular salary (less
the proceeds of disability insurance payable, if any, to Employee) for the
year in which Employee is terminated, as provided in paragraph 3(b) shall
be paid for a one year period (payable twice a month) beginning on the
effective date of the Employee's termination of employment.
(d) The date on which the Company shall have given Employee a written
notice of termination, terminating his employment for cause. The term
"cause" as used in this Agreement shall mean: (1) Employee's conviction of
a felony;
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<PAGE>
(2) the willful and gross neglect by Employee of his duties; or (3) serious
misconduct involving dishonesty in the course of employment. In the event
that a member of the Board of Directors believes that "cause" for
Employee's termination exists, such Board member shall give a written
statement of such belief to Employee, the Company and all other members of
the Board. A reasonable determination of whether "cause" for termination
exists shall then be made by the Board of Directors (excluding Employee)
after reasonable notice of not less than ten (10) days to Employee and an
opportunity for Employee to be heard by the Board of Directors. Except as
provided hereafter, if following the hearing the Board of Directors
determines that cause exists, it may then send a written notice of
termination to Employee. In the event cause is based solely on an item
falling under clause (2) above, Company agrees that after its hearing,
Employee shall be given written notice of the event or activity warranting
termination hereunder for cause and shall be given thirty (30) days after
the Board of Directors' determination that cause exists to cure any such
event or cease any such activity delineated in the notice. If the grounds
for cause has not then been ceased or cured, the Board may then send a
written notice of termination to Employee. In the event of any such cure or
cessation, the Company shall no longer be able to terminate Employee on the
basis that such event or activity constituted cause.
(e) The date of Employee's voluntary resignation or retirement.
5. Conventions and Meetings. Employee shall be entitled to attend, at
Company's expense, such conventions, seminars and similar business meetings
which, in his reasonable judgment, he deems necessary or desirable in connection
with the performance of his duties for the Company.
6. Competitive Activities.
(a) Except as provided in Section 6(c) hereof, Employee shall not,
during his employment with the Company and for a period of one (1) year
from the date of the termination of his employment with the Company, either
directly or indirectly, as an employee, director, officer, co-venture, co-
marketer, shareholder, partner, advisor or consultant of any business,
engage in any commercial activity or participate in any venture of any kind
that competes with the Company with respect to the Fluid Power Products
Business, within the United States, Canada, Germany, the United Kingdom or
any other country, territory or jurisdiction or with respect to any other
business in which the Company shall be engaged at any time within two years
prior to termination of the
-6-
<PAGE>
Employee's employment with the Company. For purposes of this Agreement,
"Fluid Power Products Business" shall mean the manufacture, marketing and
distribution of air valves, actuators, air preparation equipment, filters,
lubricators, regulators and other fluid power products (as they pertain to
compressed air systems) to customers, including original equipment
manufacturers and end users.
(b) Employee acknowledges that the Company has expended substantial
time and expense in the research and development of processes, technology,
techniques and products which are unique to the Company or not generally
known to others and which could be unfairly taken or used by others in
competition with the Company, and he further acknowledges that competition
with the Company is not based on geographical location. Accordingly,
Employee agrees that the restrictions contained in this Agreement are
reasonable and appropriate to protect the Company's reasonable competitive
business interests.
(c) Notwithstanding anything herein stated, (i) Section 6(a) of this
Agreement shall not prohibit Employee from owning, with respect to any
corporation, not more than 1% of any class of its securities listed on a
national securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation System and (ii) Section 6(a) of this
Agreement shall apply only if the employee's employment with the Company or
a subsidiary is terminated by Resignation. Resignation means the voluntary
termination of employment with the Company or a subsidiary, including
without limitation such termination after the age of sixty-five.
(d) Employee acknowledges and understands that a breach by him of
provisions 6(a) and 6(b) of this Agreement may cause the Company
irreparable injury and damage which cannot be reasonably or adequately
compensated by damages at law. Employee therefore agrees that the Company
shall be entitled, in addition to any other remedies legally available, to
injunctive and/or other equitable relief to prevent a breach of provisions
6(a) and 6(b) of this Agreement, and reasonable attorneys' fees in
enforcing the provisions of 6(a) and 6(b) of this Agreement.
7. Confidential Information.
(a) Except by written permission from the Company, Employee shall not
disclose or use any Confidential Information of the Company or any of its
subsidiaries of which Employee becomes informed during, or within five
years after termination of, his employment, whether or not generated by
Employee, except as required by his duties to the Company. The term
Confidential Information for purposes of this
-7-
<PAGE>
Agreement shall mean any information of the Company or any of its
subsidiaries or customers of any of the foregoing, including any formula,
pattern, compilation, program, device, method, technique or process that
derives independent economic value from not being generally known to, and
not being readily ascertainable by proper means by, other persons who can
derive economic value from its disclosure or use. Information does not lose
its confidential status merely because it was known by a limited number of
persons or entities or because it was not entirely the origin of the
Company or its subsidiaries. Such non-disclosure and non-use shall mean,
without limiting the generality of the foregoing, that Employee shall not,
during such period, publish, disclose or use, or authorize anyone else to
publish, disclose or use, such Confidential Information.
(b) Upon termination of this employment with the Company, Employee
agrees to deliver to the Company all materials that include Confidential
Information, including without limitation customer cards or lists, product
formulations, instruction sheets, drawings, manuals, letters, notes,
notebooks, reports and copies thereof, and all other materials which are
under his control and which relate to the Fluid Power Products Business or
to any other aspect of the business of the Company or its subsidiaries (if
any), including any product, apparatus, or process owned, manufactured,
used, developed, or investigated by the Company or any subsidiary of the
Company during the course of his employment. Employee agrees and
understands that the same and all information contained therein shall be at
all times the property of the Company. Further, upon termination of his
employment with the Company, Employee agrees to make available to any
person designated by the Company all information concerning pending or
preceding transactions that may affect the operation of the Company or any
subsidiary of the Company about which Employee has knowledge. The
obligations of Employee contained in this paragraph are in addition to the
obligation of Employee to return to the Company, upon the termination of
his employment, all property of the Company then in his possession.
8. Assignment of Inventions. Employee shall promptly disclose to the
Company all inventions, discoveries, improvements, designs, processes,
techniques, equipment, trademarks and copyrightable matter conceived or made by
him during his employment and related to the Fluid Power Products Business or
any other aspect of the business of the Company, and Employee hereby assigns all
of his interest therein, including the good will of the business symbolized by
any trademarks, to the Company. Employee further agrees to execute any
applications, assignments and other instruments which the Company shall deem
necessary to obtain
-8-
<PAGE>
letters patent, trademark registration or copyright registration in the United
States or any foreign country or to otherwise protect the Company's interests
therein. Nothing contained in this provision shall apply to any invention for
which no equipment, supplies, facilities or trade secret information of the
Company or any subsidiary of the Company was used and which was developed
entirely on the Employee's own time, and which does not relate (1) to the Fluid
Power Products Business or to any other aspect of the business of the Company or
any subsidiary of the Company or (2) to the actual or anticipated research or
development of the Company or any subsidiary of the Company.
9. Governing Law. This Agreement shall be construed in accordance with,
and shall be governed by, the laws of the State of Michigan other than the
choice of law rules thereof.
10. Entire Agreement/Binding Effect. This instrument contains the entire
understanding and agreement between the parties relating to the subject matter
hereof and supersedes any prior employment agreement between the parties,
whether written or oral. Neither this Agreement nor any provision hereof may be
waived, modified, amended, changed, discharged or terminated, except by an
agreement in writing signed by the party against whom enforcement of any waiver,
modification, change, amendment, discharge or termination is sought. This
Agreement shall inure to the benefit of and shall be binding upon the parties
hereto and their respective successors and assigns, and in the case of Employee,
Employee's heirs and/or personal representatives.
11. Assignment. The Employee shall not assign any of his obligations
under this Agreement.
12. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and such counterparts shall together
constitute a single Agreement.
13. Provisions Severable. To the extent that any one or more of the
provisions of this Agreement shall 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 or impaired thereby.
14. Construction. Whenever possible, each provision of this Agreement
shall be interpreted so that is valid under applicable law. If any provision of
this Agreement is to any extent found to be invalid, illegal or unenforceable in
any respect under applicable law, that provision shall still be effective to the
extent it remains valid, and the remainder of this Agreement also will continue
to be valid. If any restriction contained in this Agreement is found to be too
broad to permit enforcement of such restriction to its fullest extent, then such
restriction shall be
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<PAGE>
construed or re-written so as to be enforceable to the maximum extent permitted
by law.
15. Headings. The section headings herein are for convenience only and
shall not be used in interpreting or construing this Agreement.
16. Notices. Any notice required or permitted to be given under the
provisions of this Agreement shall be deemed properly given if in writing and
delivered personally or if mailed certified or registered mail, return receipt
requested, sufficient postage prepaid, to the following persons at the following
addresses, or to such other person or other address as either party may
designate by notice in writing to the other party to this Agreement:
(a) To Employee:
John H. Welker
4340 Chevron
Highland, Michigan 48356
(b) To the Company:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48031
With a copy to:
Michael R. Eisenson
Harvard Private Capital Group, Inc.
600 Atlantic Avenue
Boston, Massachusetts 02210
IN WITNESS WHEREOF, the parties hereto have set their hands and executed
this Agreement as of the day and year first above written.
NUMATICS, INCORPORATED
By: /S/ ROBERT P. ROBESON
-------------------------------
Its: VICE-PRESIDENT
/S/ JOHN H. WELKER
-------------------------------
John H. Welker
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<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of this 15th day of
September, 1996, by and between NUMATICS, INCORPORATED, a Michigan corporation
with its principal offices at 1450 North Milford Road, Highland, Michigan 48031
(the "Company"), and DAVID M. TENNISWOOD, an individual residing at 1080
Pilgrim, Birmingham, Michigan 48009 ("Employee").
W I T N E S E T H :
WHEREAS, the Company desires to employ Employee, and wishes to have
available and to be assured of his services on the terms and conditions
hereinafter set forth; and
WHEREAS, Employee wishes to be employed by the Company and to provide his
services on the terms and conditions hereinafter set forth; and
WHEREAS, the Company would be severely injured if the Employee should
directly or indirectly, for himself or in the service of others, engage in
certain activities in competition with the Company and the Company desires
certain covenants to protect its reasonable competitive business interests;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Employment. The Company hereby agrees to employ Employee as the Vice-
President in charge of the Company's European operations and Employee hereby
agrees to serve the Company in such capacity during the term of the Agreement.
Employee shall have the duties, responsibilities and authority commensurate with
and normally attending such position, as well as such additional powers and
administrative duties as may be reasonably designated from time to time by the
President of the Company and shall report to the President of the Company.
2. Extent and Place of Services. Employee shall, subject to the
reasonable vacation periods compatible with his position, periods of illness and
the like, devote his full time and attention to his duties hereunder. Employee
shall perform his duties
<PAGE>
hereunder at such a place or places as the President shall reasonably request
from time to time; provided, however, Employee shall not be required to perform
any services under this Agreement which will necessitate moving his residence
from the metropolitan area of Birmingham, Michigan.
3. Term of Employment/Compensation.
(a) Term. The term of Employee's employment hereunder shall be
effective from the date hereof, and shall continue until the second
anniversary of the date hereof, except that (i) upon the second anniversary
of this Agreement and upon each succeeding anniversary thereof, such term
shall be deemed automatically extended for one additional year unless on or
prior to a date sixty (60) days immediately preceding such anniversary
either Employee or the Board of Directors of the Company determines not to
extend such term; and (ii) such term is subject to the termination
provisions contained in the Agreement.
(b) Salary. During the term of this Agreement, Employee will receive
as compensation for his services a salary equal to an annualized salary of
Two Hundred Thousand ($200,000) payable monthly, or as the Company normally
pays, subject to normal federal, state and local tax withholding.
Employee's performance will be reviewed by the Board of Directors of the
Company at least annually and Employee's salary may be increased in the
discretion of the Board to reflect Employee's contribution to the Company.
(c) Discretionary Bonus. Employee shall receive additional
discretionary bonus compensation at times and in amounts commensurate with,
and on the same basis as, other executive officers of the Company. To the
extent awarded, such consideration shall be in addition to the salary
specified in Section 3(b).
(d) Stock Purchase. As an inducement to Employee to accept
employment pursuant to this Agreement, and as an additional incentive to
Employee, John H. Welker will transfer _____ shares of Class A Common Stock
of the Company to Employee for the purchase price of ______________________
in accordance with the terms of the Stock Purchase Agreement attached
hereto as Exhibit A. Employee will execute and provide a promissory note to
the Company in the form attached hereto as Exhibit B for repayment of any
and all amounts loaned to Employee by the Company for the purchase of such
stock.
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<PAGE>
(e) Business Expenses. Upon proper substantiation and documentation
(for all items over $25.00) by Employee, the Company shall reimburse
Employee promptly and not less frequently than once each month for all
reasonable travel, lodging, food, entertainment and other related business
expenses incurred by him in the performance of his duties hereunder
pursuant to the Company's normal and customary policy.
(f) Benefits. During the term of this Agreement, Employee shall be
eligible to participate in any and all medical and dental plans, wage
continuation, profit-sharing, pension and other similar plans or fringe
benefits of the Company, as the same may be amended from time to time, on
the same basis as other executive officers of the Company. During the term
of this Agreement, the Company will purchase or lease for the use of
Employee an automobile and apartment as agreed between the Company and
Employee.
(g) Salary and Benefit Continuation in the Event of Disability. In
the event of any disability, illness or incapacity during the term hereof
which does not constitute "permanent disability" as defined in Section 4(c)
of this Agreement, Employee shall receive the salary and benefits,
including short-term and long-term disability benefits, commensurate with
and on the same basis as other executive officers of the Company.
4. Termination of Employment. Notwithstanding the provisions of
Section 3 of this Agreement, Employee's employment hereunder and all salary and
benefits referred to in paragraph 3, unless otherwise expressly provided herein
shall terminate on the earliest of the following dates:
(a) The date of the death of Employee, provided that payments of
Employee's regular salary in effect in the year of his death as provided in
paragraph 3(b) shall continue to be paid twice a month for sixty (60) days
after Employee's death;
(b) Not less than thirty (30) days after the date on which the
Company shall have given Employee notice of the termination of his
employment by reason of failure to perform his duties hereunder due to
permanent disability; provided, however, the Company shall only be allowed
to exercise this termination option if the Company shall have obtained and
shall have kept in full force and effect a disability insurance policy
which will pay Employee the greater of fifty percent (50%) of his then
current salary or $15,000.00 per month until his normal retirement date or
until the disability or incapacity shall cease, whichever shall occur
earlier. The term "permanent disability" for purposes of this Agreement
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<PAGE>
shall mean that Employee is substantially incapable, as established on the
basis of a written medical opinion from a physician acceptable to Employee,
of performing the duties required of him under this Agreement because of
physical or mental impairment for a continuous period of ninety (90) days;
or
(c) Sixty (60) days after the date on which the Company shall have
given Employee written notice of the termination of his employment for any
reason (including, without limitation, permanent disability with respect to
which the insurance referred to in paragraph 4(b) is not maintained) other
than "for cause" as defined below. If Employee's employment shall be
terminated pursuant to this Section 4(c), Employee's regular salary (less
the proceeds of disability insurance payable, if any, to Employee) for the
year in which Employee is terminated, as provided in paragraph 3(b) shall
be paid for ninety days (payable monthly) beginning on the effective date
of the Employee's termination of employment.
(d) The date on which the Company shall have given Employee a written
notice of termination, terminating his employment for cause. The term
"cause" as used in this Agreement shall mean: (1) Employee's conviction of
a felony; (2) the willful and gross neglect by Employee of his duties; or
(3) serious misconduct involving dishonesty in the course of employment. In
the event that a member of the Board of Directors of the Company believes
that "cause" for Employee's termination exists, such Board member shall
give a written statement of such belief to Employee, the Company and all
other members of the Board. A reasonable determination of whether "cause"
for termination exists shall then be made by the Board of Directors
(excluding Employee) after reasonable notice of not less than ten (10) days
to Employee and an opportunity for Employee to be heard by the Board of
Directors. Except as provided hereafter, if following the hearing the Board
of Directors determines that cause exists, it may then send a written
notice of termination to Employee. In the event cause is based solely on an
item falling under clause (2) above, Company agrees that after its hearing,
Employee shall be given written notice of the event or activity warranting
termination hereunder for cause and shall be given thirty (30) days after
the Board of Directors' determination that cause exists to cure any such
event or cease any such activity delineated in the notice. If the grounds
for cause has not then been ceased or cured, the Board may then send a
written notice of termination to Employee. In the event of any such cure or
cessation, the Company shall no longer be able to terminate Employee on the
basis that such event or activity constituted cause.
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<PAGE>
(e) The date of Employee's voluntary resignation or retirement.
5. Conventions and Meetings. Employee shall be entitled to attend, at
Company's expense, such conventions, seminars and similar business meetings
which, in his reasonable judgment, he deems necessary or desirable in connection
with the performance of his duties for the Company.
6. Prohibition on Competitive Activities.
(a) Except as provided in Section 6(b) hereof, Employee shall not,
during his employment with the Company and for a period of one (1) year
from the date of Employee's voluntary resignation of his employment with
the Company, either directly or indirectly, in any capacity, engage in any
commercial activity or participate in any venture of any kind that competes
with the Company with respect to the Fluid Power Products Business, or any
other business in which the Company shall be engaged at any time within two
years prior to Employee's termination date, within any country, territory
or jurisdiction. For purposes of this Agreement, "Fluid Power Products
Business" shall mean the manufacture, marketing and distribution of air
valves, actuators, air preparation equipment, filters, lubricators,
regulators and other fluid power products (as they pertain to compressed
air systems) to customers, including original equipment manufacturers and
end users. Employee agrees that the restrictions contained in this
Agreement are reasonable and appropriate to protect the reasonable
competitive business interests of the Company.
(b) Notwithstanding anything herein stated, Section 6(a) of this
Agreement shall not prohibit Employee from owning, with respect to any
corporation, not more than 1% of any class of its securities listed on a
national securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation System.
(c) Employee acknowledges and understands that a breach by him of
paragraph 6(a) of this Agreement may cause the Company irreparable injury
and damage which cannot be reasonably or adequately compensated by damages
at law. Employee therefore agrees that the Company shall be entitled, in
addition to any other remedies legally available, to injunctive and/or
other equitable relief to prevent a breach of the provisions in paragraph
6(a) of this Agreement, and reasonable attorneys' fees in enforcing such
provisions.
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<PAGE>
7. Confidential Information.
(a) Except by written permission from the Company, Employee shall not
disclose, use or publish or allow any other person to disclose, use or
publish any Confidential Information of the Company or any subsidiary of
the Company of which Employee becomes informed during, or within five years
after termination of, his employment, whether or not generated by Employee,
except as required by his duties to the Company. The term Confidential
Information for purposes of this Agreement shall mean any information of
the Company or any subsidiary of the Company or customers of any of the
foregoing, including any formula, pattern, compilation, program, device,
method, technique or process that derives independent economic value from
not being generally known to, and not being readily ascertainable by proper
means by, other persons who can derive economic value from its disclosure
or use. Information does not lose its confidential status merely because it
was known by a limited number of persons or entities or because it was not
entirely the origin of the Company or any subsidiary of the Company.
(b) Upon termination of this employment with the Company, Employee
agrees to deliver to the Company all materials that include Confidential
Information, including all copies thereof, and all other materials which
are under his control and which relate to the Fluid Power Products Business
or to any other aspect of the business of the Company or any subsidiary of
the Company, including any product, apparatus, or process owned,
manufactured, used, developed, or investigated by the Company or any
subsidiary of the Company during the course of his employment. Employee
agrees and understands that the same and all information contained therein
shall be at all times the property of the Company. Further, upon
termination of his employment with the Company, Employee agrees to make
available to any person designated by the Company all information
concerning pending or preceding transactions that may affect the operation
of the Company or any subsidiary of the Company about which Employee has
knowledge. The obligations of Employee contained in this paragraph are in
addition to the obligation of Employee to return to the Company, upon the
termination of his employment, all property of the Company then in
Employee's possession.
8. Assignment of Inventions. Employee shall promptly disclose to the
Company all inventions, discoveries, improvements, designs, processes,
techniques, equipment, trademarks and copyrightable matter conceived or made by
him during his employment and related to the Fluid Power Products Business or
any other aspect of the business of the Company, and Employee hereby assigns all
of his interest therein, including the good will of the
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<PAGE>
business symbolized by any trademarks, to the Company. Employee further agrees
to execute any applications, assignments and other instruments which the Company
shall deem necessary to obtain letters patent, trademark registration or
copyright registration in the United States or any foreign country or to
otherwise protect the Company's interests therein. Nothing contained in this
provision shall apply to any invention for which no equipment, supplies,
facilities or trade secret information of the Company or any subsidiary of the
Company was used and which was developed entirely on the Employee's own time,
and which does not relate (1) to the Fluid Power Products Business or to any
other aspect of the business of the Company or any subsidiary of the Company, or
(2) to the actual or anticipated research or development of the Company or any
subsidiary of the Company.
9. Governing Law. This Agreement shall be construed in accordance with,
and shall be governed by, the laws of the State of Michigan other than the
choice of law rules thereof.
10. Entire Agreement/Binding Effect. This instrument contains the entire
understanding and agreement between the parties relating to the subject matter
hereof and supersedes any prior employment agreement between the parties,
whether written or oral. Neither this Agreement nor any provision hereof may be
waived, modified, amended, changed, discharged or terminated, except by an
agreement in writing signed by the party against whom enforcement of any waiver,
modification, change, amendment, discharge or termination is sought. This
Agreement shall inure to the benefit of and shall be binding upon the parties
hereto and their respective successors and assigns, and in the case of Employee,
Employee's heirs and/or personal representatives.
11. Assignment. The Employee shall not assign any of his obligations
under this Agreement.
12. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and such counterparts shall together
constitute a single Agreement.
13. Provisions Severable. To the extent that any one or more of the
provisions of this Agreement shall 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 or impaired thereby.
14. Construction. Whenever possible, each provision of this Agreement
shall be interpreted so that is valid under applicable law. If any provision of
this Agreement is to any extent found to be invalid, illegal or unenforceable in
any respect under applicable law, that provision shall still be effective to the
extent it remains valid, and the remainder of this Agreement also
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<PAGE>
will continue to be valid. If any restriction contained in this Agreement is
found to be too broad to permit enforcement of such restriction to its fullest
extent, then such restriction shall be construed or re-written so as to be
enforceable to the maximum extent permitted by law.
15. Headings. The section headings herein are for convenience only and
shall not be used in interpreting or construing this Agreement.
16. Notices. Any notice required or permitted to be given under the
provisions of this Agreement shall be deemed properly given if in writing and
delivered personally or if mailed certified or registered mail, return receipt
requested, sufficient postage prepaid, to the following persons at the following
addresses, or to such other person or other address as either party may
designate by notice in writing to the other party to this Agreement:
(a) To Employee:
David M. Tenniswood
1080 Pilgrim
Birmingham, Michigan 48009
(b) To the Company:
Numatics, Incorporated
1450 North Milford Road
Highland, Michigan 48031
Attention: President
IN WITNESS WHEREOF, the parties hereto have set their hands and executed
this Agreement as of the day and year first above written.
NUMATICS, INCORPORATED
By: /s/ JOHN H. WELKER
------------------------------------
Its: PRESIDENT
/s/ DAVID M. TENNISWOOD
------------------------------------
David M. Tenniswood
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<PAGE>
Exhibit 10.7
NUMATICS, INCORPORATED
AMENDED AND RESTATED DEFERRED COMPENSATION PLAN
This Amended and Restated Deferred Compensation Plan is adopted December
28, 1995, by Numatics, Incorporated (the "Company").
RECITALS:
(A) On November 29, 1990, the Company, then known as Numatics Acquisition
Corporation, adopted the Numatics Acquisition Corporation Deferred Stock
Compensation Plan. The plan as amended through December 27, 1995, is called the
"Original Plan." The plan as amended and restated in this document, and as
hereafter amended, is called the "Plan."
(B) Each Eligible Employee was allocated certain benefits under the
Original Plan which would become payable upon the occurrence of a future
Distribution Event, pursuant to paragraph 6 of the Original Plan.
(C) No Eligible Employee has a current right to receive benefits under
the Original Plan.
(D) In connection with a restructuring of the Company's ownership, it is
desirable for the Company to have greater certainty about the dollar amounts and
due dates of the Company's future deferred compensation obligations to Eligible
Employees. Additionally, the senior lender providing financing for the
restructuring transactions requires a pledge of all the Company's outstanding
stock, including that presently held in the "rabbi trust" that secures the
Company's obligations under the Original Plan (subject to claims of the
Company's general creditors in the event of insolvency). The Company therefore
wishes to amend and restate the Original Plan as provided in this document and
to terminate said trust. The Eligible Employees are agreeable to such amendment,
restatement, and termination, having determined that the value of benefits under
the Plan (as amended and restated) are equal to or greater than the value of
benefits accrued under the Original Plan.
NOW, THEREFORE, the Original Plan is hereby amended and restated to read
as follows:
1. Purpose. The purpose of the Plan is to provide deferred compensation
to Company executives who have rendered and continue to render valuable services
to the Company, and by so doing to reward those executives for their efforts on
behalf of the Company and encourage their retention as executives.
<PAGE>
2. Eligible Employees. Benefits shall be paid under this Plan to Company
executives identified in attached Exhibit A, in the corresponding amount set
forth in Exhibit A. Each such executive (herein called an "Eligible Employee")
is a select management or highly compensated employee of the Company (as
described in Section 201(2) of the Employee Retirement and Income Security Act
of 1974, as amended).
3. Deferred Compensation Accounts. The deferred compensation amount
allocated to each Eligible Employee pursuant to Section 2 has been credited to a
deferred compensation account in the name of the Eligible Employee.
4. Payments to Eligible Employees. The Company will pay to each
Eligible Employee who remains in active Company service through the later of (i)
November 29, 2002 or (ii) the twelfth anniversary of his commencement of
employment with the Company and thereafter ceases to be a Eligible Employee as a
result of retirement prior to age 65, voluntary resignation, or discharge (other
than for Involuntary Discharge With Cause), an amount equal to the deferred
compensation account established in his name, without interest, in regular
installments over a period of five years, commencing within 60 days after the
date the individual so ceases to be an Eligible Employee. However, no payments
under the Plan shall commence for any reason prior to January 31, 2004. If the
Company is obligated to make payments under the Plan to more than one Eligible
Employee (or beneficiary) at the same time and if the total annual obligations
exceed 3% of the Company's prior year earnings before interest, taxes,
depreciation, and amortization (as determined by the Company's regular certified
public accountants), then annual payments under the Plan to each Eligible
Employee (or beneficiary) shall be ratably reduced so that such payments do not,
in the aggregate, exceed such 3% amount, and for each year in which there is
such a reduction there shall be a corresponding one-year increase in the
duration of installment payments for each such Eligible Employee (or
beneficiary).
If an Eligible Employee dies while he is an Eligible Employee or ceases to
be a Eligible Employee of the Company by reason of retirement at or after age 65
or mental or physical disability (as determined by the Committee based on a
certificate furnished by a physician acceptable to the Committee), payment of
the deferred compensation account established in the name of the Eligible
Employee, in accordance with the preceding paragraph, will commence within 60
days after the Eligible Employee's death, retirement, or termination by reason
of disability; provided that no payments under the Plan shall commence for any
reason prior to January 31, 2004.
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<PAGE>
5. Release and Non-Disclosure/Non-Competition Agreement. As a condition
precedent to commencement of payments under the Plan, and in consideration of
such payments, an Eligible Employee may be required (if the Company then
requires him to do so) --
(a) to execute and acknowledge a general release of all claims against the
Company in such form as the Company may then reasonably require; and
(b) to execute or ratify and thereafter perform a Non-competition/Non-
disclosure Agreement in such form as the Company may then reasonably
require.
6. Payments to Beneficiaries. In the event of the death of a Eligible
Employee either before or after payments under the Plan have commenced to be
made, but before all payments required to be made to the Eligible Employee have
been made, any remaining payments shall be made to the Eligible Employee's
designated beneficiary. In the event of the death of the Eligible Employee's
designated beneficiary after commencement of payments to the beneficiary and
before receiving all payments required to be made to the beneficiary under the
Plan, an amount equal to the deferred compensation account in the name of the
Eligible Employee shall be paid in a lump sum to the estate of the beneficiary.
The beneficiary designated by the Eligible Employee may be changed by the
Eligible Employee without the consent of any prior beneficiary by filing a new
designation of beneficiary form with the Committee before the Eligible
Employee's death. If no such beneficiary is designated, or if no designated
beneficiary survives the Eligible Employee, an amount equal to the deferred
compensation account in the name of the Eligible Employee shall be paid to the
Eligible Employee's estate.
7. Involuntary Discharge With Cause. If the employment of an Eligible
Employee shall be terminated by the Company or any subsidiary for any of the
following reasons (which shall be determined by the Committee), such termination
shall be deemed to have been for an "Involuntary Discharge With Cause" and his
entire deferred compensation account shall be forfeited simultaneously with such
termination of employment. Such reason shall be deemed to exist where an
Eligible Employee's employment is terminated as a result of (i) willful and
gross neglect of duties, (ii) conviction of a felony, and/or (iii) serious
misconduct in the course of employment involving dishonesty.
8. Administration. The Plan shall be administered by a committee (the
"Committee") of at least one individual who shall be appointed by, and hold
office at the pleasure of, the Board of Eligible Employees of the Company. The
Committee shall administer the Plan and shall have any and all powers, authority
and duties which shall be necessary and proper to enable it to carry out that
function, including by way of illustration and not limitation, the
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<PAGE>
power and duty to construe and interpret the Plan, to prescribe procedures to be
followed by Eligible Employees and beneficiaries for filing designation of
beneficiary forms, applications for benefits, and any other forms required or
desirable under the Plan, to prepare and furnish such forms to Eligible
Employees, to maintain records of the deferred compensation accounts in the
names of Eligible Employees, and to designate individuals to assist in the
administration of the Plan.
9. Unsecured General Creditors. Nothing included in the Plan and no action
taken pursuant to the provisions of the Plan shall create, or be construed to
create, a trust of any kind for the benefit of any Eligible Employee,
beneficiary or other person. Any funds which may be invested or set aside to
provide benefits under the Plan shall continue for all purposes to be part of
the general funds of the Company, and no person other than the Company shall by
virtue of the provisions of the Plan have any interest in such funds. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company, and the Company's obligations under the Plan
constitute only contractual promises by the Company to make benefit payments
under the Plan in the future. It is the intention of the Company that the Plan
be unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended.
10. Non-Assignability. No Eligible Employee or beneficiary of a Eligible
Employee shall have the right to transfer, assign, pledge, or encumber his right
to receive payments under the Plan, except as provided in Section 6 in the event
of the death of a Eligible Employee. A Eligible Employee's rights to payment(s)
under the Plan are not subject in any manner to anticipation, alienation, sale,
attachment, or garnishment by creditors of the Eligible Employee or the Eligible
Employee's beneficiary.
11. No Right to Continue in Company's Employ. Nothing included in the Plan
nor any action taken under the Plan shall be construed as a contract or other
arrangement between the Company and any Eligible Employee giving the Eligible
Employee any right to be retained as an executive, officer, or employee of the
Company for any specific period of time.
12. The Effect of a Company Change in Control.
(a) Rights under this Plan shall be affected as hereinafter described by
a Company Change in Control. A "Company Change in Control," solely for the
purposes of this Plan, shall mean one or more of the following events:
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<PAGE>
(i) The acquisition, after December 31, 1995, of beneficial ownership
of 51% or more of any class of the Company's voting common stock then
outstanding by any person (including a group, within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934 (the "1934 Act")), other
than:
(A) the trustee of any Company-sponsored employee benefit plan,
(B) the Company or any of its subsidiaries,
(C) John H. Welker, his spouse or descendants, or trusts for the
benefit of such individuals, or
(D) trusts or foundations established by John H. Welker or by any of
the individuals or trusts mentioned in (C), above.
(ii) The first purchase, after December 31, 1995, under a tender
offer or exchange offer for 51% or more of any class of the Company's
voting common stock then outstanding, other than an offer by:
(A) the trustee of any Company-sponsored employee benefit plan,
(B) the Company or any of its subsidiaries,
(C) John H. Welker, his spouse or descendants, or trusts for the
benefit of such individuals, or
(D) trusts or foundations established by John H. Welker or by any of
the individuals or trusts mentioned in (C), above.
(iii) The first day on which less than a majority of the total
membership of the Board shall be Continuing Directors;
(iv) The effective date of a transaction (or a group of related
transactions) in which more than 50% in fair market value of the assets of
the Company are disposed of pursuant to a partial or complete liquidation,
a spin-off, a sale of assets or otherwise; or
(v) The date on which the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 51% of the
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<PAGE>
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger of
consolidation.
(b) For purposes of this Section 12, the following terms shall have the
following meanings:
(i) "Continuing Director" shall mean any director of the Company who
either (1) is a member of the Board on the date this Plan is adopted by the
Board and has not terminated membership on the Board, or (2) is recommended
or elected to the Company's Board of Directors by at least three-quarters
of the Continuing Directors.
(ii) "Person" shall mean a person as defined in Section 3(a)(9) of
the 1934 Act, "beneficial ownership" shall be determined in accordance with
Rule 13d-3 promulgated under the 1934 Act or any successor regulation, the
term "group" shall mean a group as described in Rule 13d-5 promulgated
under the 1934 Act or any successor regulation, and the formation of a
group hereunder shall have the effect described in paragraph (b) of said
Rule 13d-5 or any successor regulation. Anything hereinabove to the
contrary notwithstanding, however: (a) relationships by blood, adoption or
marriage between or among two or more persons shall not be deemed to
constitute any of such persons a member of a group with any other such
persons; (b) action taken or agreed to be taken by any person acting in his
official capacity as an officer or director of the Company shall not be
deemed to constitute such person a member of a group with any other person,
and (c) formation of a group shall not constitute an acquisition by the
group (or any member thereof) of beneficial ownership of any shares of the
Company's voting common stock beneficially owned by any member of such
group and acquired by such group member in an Excluded Acquisition.
(iii) "Excluded Acquisition" means any acquisition of shares of
voting common stock from the Company (whether or not for consideration) or
from any person by operation of law (including but not limited to the laws
of descent and distribution), by will, by gift or by foreclosure of a
security interest given to secure a bona fide loan, or any acquisition
consummated prior to January 1, 1996.
(c) At the time a Company Change in Control takes effect, the Account of
each Eligible Employee shall become fully vested and payable in accordance with
the first paragraph of Section 4, commencing within 60 days after the effective
date of the Company Change in Control, provided that payments shall in no event
commence prior to January 31, 2004.
-6-
<PAGE>
(d) It is this Plan's intent not to make "excess parachute payments," as
defined in Section 280G of the Internal Revenue Code of 1986, as it may be
amended or superseded (the "Code"), which would be nondeductible for Federal
income tax purposes by the Company. Consequently, if payments resulting solely
from the operation of this Article would be nondeductible by the Company for
Federal income tax purposes due to Section 280G of the Code, as being in excess
of reasonable compensation or three times the base amount specified in Section
280G(b)(3), such payments shall be reduced by the smallest amount required so
that no payments are nondeductible under Section 280G of the Code. If any
payments previously made to or for the benefit of an Employee from this Plan or
any other plan or agreement are subsequently determined to be nondeductible
because of Section 280G of the Code, such Employee shall be required to promptly
repay the Company, at its request, the smallest amount necessary so that, after
giving effect to such repayments to the Company, no payments to or for the
benefit of the Employee (or the smallest amount possible) will be nondeductible
under said Section 280G; provided, however, that any such repayments, adjusted
for the time value of such amounts under the principles of Section 1274(b)(4) of
the Code, may not exceed the amount of payments originally made from this Plan
or any other plan or agreement. The Committee may establish procedures to carry
out the provisions of this section.
(e) The terms and provisions of this Section 12 shall become effective
only in the event of a Company Change in Control as defined in this section of
the Plan.
13. Arbitration. Any claim or controversy arising out of or relating to
the Plan shall be submitted to arbitration in Michigan in accordance with the
rules then obtaining of the American Arbitration Association. The arbitration
shall be conducted by three arbitrators, one selected by the Company, the second
selected by the Eligible Employee (or beneficiary) and the third mutually agreed
to by the first two. The cost of such arbitration(s) shall be borne equally by
the Company and the Eligible Employee and a majority decision of a panel of
arbitrators shall be binding and conclusive, and judgment thereon may be entered
in any court of competent jurisdiction.
14. Right to Amend or Terminate Plan. The Company reserves the right to
amend or terminate the Plan at any time except that no such amendment or
termination shall adversely affect the payment of any amounts deferred prior to
such amendment or termination. Written notice of any such amendment or
termination shall be given to each Eligible Employee or, if such Eligible
Employee is deceased, to his beneficiary. Upon termination of the Plan, the
Company shall be obligated to pay to each Eligible Employee, or to the Eligible
Employee's beneficiary if the Eligible Employee is deceased, an amount equal to
the deferred compensation account in the name of the Eligible Employee. Such
amount shall be payable in
-7-
<PAGE>
accordance with the first paragraph of Section 4, commencing within 60 days
after the effective date of the termination of the Plan, provided that payments
shall in no event commence prior to January 31, 2004.
15. Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of Michigan.
16. Subordination. The Company's obligations and Eligible Employees'
rights under the Plan are subordinate to the Company's obligations under all
"Notes," as that term is defined in the Securities Purchase Agreement between
the Company and Harvard Private Capital Holdings, Inc. dated January 3, 1996.
IN WITNESS WHEREOF, the Company has caused this amended and restated Plan
to be executed by its duly authorized officer on December 28, 1995.
NUMATICS, INCORPORATED
/S/ JOHN H. WELKER
By ________________________________
John H. Welker
Its: President
ATTEST:
/S/ ROBERT P. ROBESON
________________________
Robert P. Robeson
Its: Secretary
-8-
<PAGE>
EXHIBIT A-1
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $75,878.40, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ JOHN E. ACUFF
________________________
John E. Acuff
December 27, 1995
-9-
<PAGE>
EXHIBIT A-2
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $151,756.80, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ DAVID K. DODDS
________________________
David K. Dodds
December 27, 1995
-10-
<PAGE>
EXHIBIT A-3
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $130,656, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ HENRY FLEISCHER
________________________
Henry Fleischer
December 27, 1995
-11-
<PAGE>
EXHIBIT A-4
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $39,028.80, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ BRUCE W. HOPPE
________________________
Bruce W. Hoppe
December 27, 1995
-12-
<PAGE>
EXHIBIT A-5
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $5,760, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ DAVID KING
________________________
David King
December 27, 1995
-13-
<PAGE>
EXHIBIT A-6
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $151,756.80, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ DONALD E. McGEACHY
________________________________
Donald E. McGeachy
December 27, 1995
-14-
<PAGE>
EXHIBIT A-7
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $105,398.40, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ ROBERT P. ROBESON
_______________________________
Robert P. Robeson
December 27, 1995
-15-
<PAGE>
EXHIBIT A-8
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $17,280, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ PHILLIP ROBINSON
______________________________
Phillip Robinson
December 27, 1995
-16-
<PAGE>
EXHIBIT A-9
THE UNDERSIGNED ELIGIBLE EMPLOYEE ACKNOWLEDGES THAT PARTICIPATION IN THE
NUMATICS, INCORPORATED AMENDED AND RESTATED DEFERRED COMPENSATION PLAN WITH
BENEFITS IN THE AMOUNT OF $2,643,456, SUBJECT TO THE TERMS OF THE AMENDED AND
RESTATED PLAN, IS ACCEPTED IN SUBSTITUTION FOR AND IN LIEU OF ANY RIGHTS HE MAY
HAVE UNDER THE NUMATICS ACQUISITION CORPORATION DEFERRED STOCK COMPENSATION
PLAN.
/S/ JOHN H. WELKER
_____________________________
John H. Welker
December 27, 1995
-17-
<PAGE>
Exhibit 12.1
RATIO OF EARNINGS TO FIXED CHARGES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations before
income taxes $ 2,168 $ 3,903 $10,406 $12,776 $ 6,006
Add back:
Interest expense 16,470 15,999 5,040 2,905 4,370
Amortization of deferred financing costs 551 764 520 131 173
------- ------- ------- ------- -------
Earnings available for fixed charges $19,189 $20,666 $15,966 $15,812 $10,549
------- ------- ------- ------- -------
Fixed charges:
Interest expense $16,470 $15,999 $ 5,040 $ 2,905 $ 4,370
Amortization of deferred financing costs 551 764 520 131 173
------- ------- ------- ------- -------
Total fixed charges $17,021 $16,763 $ 5,560 $ 3,036 $ 4,543
------- ------- ------- ------- -------
Ratio of earnings to fixed charges 1.13 1.23 2.87 5.21 2.32
</TABLE>
Note: The ratio of earnings to fixed charges is computed by dividing earnings
available for fixed charges by total fixed charges.
<PAGE>
Exhibit 21.1
List of Subsidiaries of Issuer
Percentage of
Shares Owned
by Issuer
-------------
Micro-Filtration, Inc.; incorporated in Michigan 80%
Numation Inc.; incorporated in Michigan 90%
Numatech Inc.; incorporated in Michigan 88%
I.A.E. Incorporated; incorporated in Michigan 100%
Ultra Air Products, Inc.; incorporated in Michigan 80%
Microsmith, Inc.; incorporated in Arizona 80%
Numatics B.V.; organized in the Netherlands 100%
Numatics S.A. de C.V.; organized in Mexico 100%
Numatics S.A.R.L.; organized in France 100%
Numatics Ltd.; organized in the United Kingdom 100%
Numatics Ltd.; organized in Canada 100%
NAC Beteilingungs GmbH; organized in Germany 100%
Numatics GmbH; organized in Germany 100%
Numatics K.F.T.; organized in Hungary 100%
Numatics Ltd; organized in Taiwan 95%
Numatics S.R.L.; organized in Italy 100%
Univer GmbH; organized in Germany 100%
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 25, 1998, in the Registration Statement on
Form S-4 and related Prospectus dated April 29, 1998 for the registration of
$115,000,000 principal amount of 9-5/8% Series B Senior Subordinated Notes due
2008 of Numatics, Incorporated dated April 29, 1998.
/s/ Ernst & Young LLP
Detroit, Michigan
April 29, 1998
<PAGE>
Exhibit 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of
a Trustee Pursuant to Section 305(b)(2)___
_______________________________________________________
U.S. BANK TRUST NATIONAL ASSOCIATION
F/K/A FIRST TRUST NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
<TABLE>
<S> <C> <C>
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60601 36-4046888
(Address of principal executive offices) (Zip Code) I.R.S. Employer Identification No.
</TABLE>
James D. Khami
535 Griswold, Suite 740
Detroit, Michigan 48226
Telephone (313) 234-4713
(Name, address and telephone number of agent for service)
NUMATICS, INCORPORATED
(Exact name of obligor as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Michigan 38-2955710
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Michigan NUMATION, INC. 38-3165223
Michigan NUMATECH, INC. 38-3170243
Michigan MICRO-FILTRATION, INC. 38-2796518
Michigan ULTRA AIR PRODUCTS, INC. 38-2565104
Arizona MICROSMITH, INC. 86-0639032
Michigan I.A.E. INCORPORATED -
(Exact name of each guarantor as specified in its charter)
1450 North Milford Road
Highland, Michigan 48357
(Address of Principal Executive Offices) (Zip Code)
9 5/8% Senior Exchange Notes due 2008
(Title of the Indenture Securities)
===================================================================================================================
</TABLE>
<PAGE>
FORM T-1
--------
Item 1. GENERAL INFORMATION. Furnish the following information as to the
Trustee.
a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Washington, D.C.
b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
Trustee, describe each such affiliation.
None
Items 3-15 Not applicable because, to the best of Trustee's knowledge, the
Trustee is not a trustee under any other indenture under which any
other securities or certificates of interest or participation in any
other securities of the obligor are outstanding and there is not,
nor has there been, a default with respect to securities issued
under this indenture.
Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this
statement of eligibility and qualification.
1. A copy of the Articles of Association of the Trustee now in effect,
filed herewith.
2. A copy of the certificate of authority of the Trustee to commence
business, incorporated herein by reference to Exhibit 2 to Item 16
of Form T-1, Registration No. 33-64175.*
3. A copy of the certificate of authority of the Trustee to exercise
corporate trust powers, incorporated herein by reference to Exhibit
3 to Item 16 of Form T-1, Registration No. 33-64175.*
4. A copy of the existing bylaws of the Trustee, as now in effect,
filed herewith.
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Trust
Indenture Act of 1939, incorporated herein by reference to Exhibit
6 of Form T-1, Registration No. 33-64175.*
7. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority, filed herewith.
8. Not applicable.
9. Not applicable.
2
<PAGE>
* Exhibits thus designated are incorporated herein by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 filed by the Trustee with
the Securities and Exchange Commission with the specific references noted.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
Trustee, U.S. BANK TRUST NATIONAL ASSOCIATION, F/K/A FIRST TRUST NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Detroit, State of Michigan on the
17th day of April, 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
f/k/a FIRST TRUST NATIONAL ASSOCIATION
By: /s/ James D. Khami
--------------------------------------
James D. Khami
Vice President and Assistant Secretary
3
<PAGE>
EXHIBIT 25.1
U.S. BANK TRUST NATIONAL ASSOCIATION
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
-----------------------
For the purpose of organizing an association to perform any lawful
activities of national banks, the undersigned do enter into the following
Amended and Restated Articles of Association:
FIRST. The title of this Association shall be "U.S. Bank Trust
National Association."
SECOND. The main office of this Association shall be in the City of
Chicago, County of Cook and State of Illinois. The business of this Association
will be limited to that of a national trust bank, and to support activities
incidental thereto. This Association will not amend these Articles of
Association to expand the scope of or alter its business beyond that stated in
this Article Second without the prior approval of the Comptroller of the
Currency. Prior to the transfer of any stock of the Association, the Association
will seek the prior approval of the appropriate federal depository institution
regulatory agency.
THIRD. The board of directors of the Association shall consist of not
less than five nor more than 25 persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full board of
directors or by resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director shall own common or preferred stock of
this Association with an aggregate par, fair market, or equity value of not less
than $1,000.00, as of either (i) the date of purchase, (ii) the date the person
became a director, whichever is more recent. Any combination of common or
preferred stock of this Association or U.S. Bancorp may be used.
Any vacancy in the board of directors may be filled by action of a
majority of the remaining directors between meetings of shareholders. The board
of directors may not increase the number of directors between meetings of
shareholders to a number that (1) exceeds by more than two the number of
directors last elected by shareholders where the number was fifteen or less; and
(2) exceeds by more than four the number of directors last elected by
shareholders where the number was sixteen or more, but in no event shall the
number of directors exceed twenty-five.
-1-
<PAGE>
Terms of directors, including directors selected to fill vacancies,
shall expire at the next regular meeting of shareholders at which directors are
elected, unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall
continue to serve until his or her successor is elected and qualifies or until
there is a decrease in the number of directors and his or her position is
eliminated.
Honorary or advisory members of the board of directors, without voting
power or power of final decision in matters concerning the business of this
Association, may be appointed by resolution of a majority of the full board of
directors, or by resolution of shareholders at any annual or special meeting.
Honorary or advisory directors shall not be counted for purposes of determining
the number of directors of this Association or the presence of a quorum in
connection with any board action, and shall not be required to own qualifying
shares.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
board of directors may designate, on the day of each year specified therefore in
the bylaws, or if that day falls on a legal holiday in the State in which this
Association is located, on the next following banking day. If no election is
held on the day fixed, or in event of a legal holiday, an election may be held
on any subsequent day within sixty days of the day fixed, to be designated by
the board of directors, or, if the directors fail to fix the day, by
shareholders representing two-thirds of the shares issued and outstanding. In
all cases at least ten-days advance notice of the meeting shall be given to the
shareholders by first class mail.
A director may resign at any time by delivering written or oral notice
to the board of directors, its chairperson, or to this Association, which
resignation shall be effective when the notice is delivered unless the notice
specifies a later effective date.
A director may be removed by shareholders at a meeting called to
remove him or her, when notice of the meeting stating that the purpose or one of
the purposes is to remove him or her is provided, if there is a failure to
fulfill one of the affirmative requirements for qualification, or for cause;
provided, however, that a director may not be removed if the number of votes
sufficient to elect him or her under cumulative voting is voted against his or
her removal.
FIFTH. The authorized amount of capital stock of this Association
shall be 10,000 shares of common stock of the par value of one-hundred dollars
($100.00) each; but said capital stock may be increased or decreased from time
to time, according to the provisions of the laws of the United States.
-2-
<PAGE>
No holder of shares of the capital stock of any class of this
Association shall have any preemptive or preferential right of subscription to
any shares of any class of stock of this Association, whether now or hereafter
authorized, or to any obligations convertible into stock of this Association,
issued, or sold, nor any right of subscription to any thereof other than such,
if any, as the board of directors, in its discretion may from time to time
determine and at such price as the board of directors may from time to time fix.
Unless otherwise specified in these Articles of Association or
required by law, (1) all matters requiring shareholder action, including
amendments to the articles of Association must be approved by shareholders
owning a majority voting interest in the outstanding voting stock, and (2) each
shareholder shall be entitled to one vote per share.
Unless otherwise provided in the bylaws, the record date for
determining shareholders entitled to notice of and to vote at any meeting is the
close of business on the day before the first notice is mailed or otherwise sent
to the shareholders, provided that in no event may a record date be more than
seventy days before the meeting.
SIXTH. The board of directors shall appoint one of its members
president of this Association and one of its members chairperson of the board.
The board of directors shall also have the power to appoint one or more vice
presidents, a secretary who shall keep minutes of the directors' and
shareholders' meetings and be responsible for authenticating the records of this
Association, and such other officers and employees as may be required to
transact the business of this Association. A duly appointed officer may appoint
one or more officers or assistant officers if authorized by the board of
directors in accordance with the bylaws.
The board of directors shall have the power to:
(1) Define the duties of the officers, employees, and agents of this
Association.
(2) Delegate the performance of its duties, but not the
responsibility for its duties, to the officers, employees, and
agents of this Association.
(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions,
consistent with applicable law.
(4) Dismiss officers and employees.
-3-
<PAGE>
(5) Require bonds from officers and employees and to fix the penalty
thereof.
(6) Ratify written policies authorized by this Association's
management or committees of the board.
(7) Regulate the manner in which any increase or decrease of the
capital of this Association shall be made; provided, however,
that nothing herein shall restrict the power of shareholders to
increase or decrease the capital of this Association in
accordance with law, and nothing shall raise or lower from two-
thirds the percentage required for shareholder approval to
increase or reduce the capital.
(8) Manage and administer the business and affairs of this
Association.
(9) Adopt bylaws, not inconsistent with law or these Articles of
Association, for managing the business and regulating the affairs
of this Association.
(10) Amend or repeal bylaws, except to the extent that the articles of
Association reserve this power in whole or in part to
shareholders.
(11) Make contracts.
(12) Generally to perform all acts that are legal for a board of
directors to perform.
SEVENTH. The board of directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Chicago without the approval of the shareholders, and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location permitted under applicable law, without the approval of
the shareholders, subject to approval by the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue
until terminated according to the laws of the United States.
-4-
<PAGE>
NINTH. The board of directors of this Association, or any three (3)
or more shareholders owning, in the aggregate, not less than twenty-five percent
(25%) of the stock of this Association, may call a special meeting of
shareholders at any time. Unless otherwise provided by the bylaws or the laws of
the United States, or waived by shareholders, a notice of the time, place, and
purpose of every annual and special meeting of the shareholders shall be given
by first-class mail, postage prepaid, mailed at least ten, and no more than
sixty, days prior to the date of the meeting to each shareholder of record at
his/her address as shown upon the books of this Association. Unless otherwise
provided by these Articles of Association or the bylaws, any action requiring
approval of shareholders must be effected at a duly called annual or special
meeting.
TENTH. Any action required to be taken at a meeting of the
shareholders or directors or any action that may be taken at a meeting of the
shareholders or directors may be taken without a meeting if consent in writing,
setting forth the action as taken shall be signed by all the shareholders or
directors entitled to vote with respect to the matter thereof. Such action shall
be effective on the date on which the last signature is placed on the writing,
or such earlier date as is set forth therein.
ELEVENTH. Meetings of the board of directors or shareholders, regular
or special, may be held by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can simultaneously hear each other, and participation in such meeting by
such aforementioned means shall constitute presence in person at such meeting.
TWELFTH. (a) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than any action
by or in the right of the Association) by reason of the fact that he is or was a
director, officer, employee or agent of the Association, or is or was serving at
the request of the Association as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified by the Association, unless similar indemnification is
provided by such other corporation, partnership, joint venture, trust or other
enterprise (any funds received by any person as a result of the provisions of
this Article being deemed an advance against his receipt of any such other
indemnification from any such other corporation, partnership, joint venture,
trust or other enterprise), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interest of the Association, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction
-5-
<PAGE>
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person seeking indemnification did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interest of the Association, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Association to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the Association, or
is or was serving at the request of the Association as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other corporation, partnership, joint venture, trust or other enterprise shall
be indemnified by the Association, unless similar indemnification is provided by
such other corporation, partnership, joint venture, trust or other enterprise
(any funds received by any person as a result of the provisions of this Article
being deemed an advance against his receipt of any such other indemnification
from any such other corporation, partnership, joint venture, trust or other
enterprise), against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Association and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Association
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Association has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b), or in defense
of any claim, issue or matter therein, such person shall be indemnified by the
Association against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
(d) Except as set forth in paragraph (c) of this Article, any
indemnification under paragraphs (a) and (b) of this Article (unless ordered by
the court), shall be made by the Association only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in paragraphs (a) and (b) of this
Article. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding,
-6-
<PAGE>
even though less than a quorum, or (2) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion, or
(3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the Association in advance of the final disposition
of such action, suit or proceeding upon receipt of any undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Association.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by this
Article shall not be deemed exclusive of any other rights to which those seeking
indemnification or seeking advancement of expenses may be entitled under any by-
law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office.
(g) By action of the Board of Directors, notwithstanding any interest of
the directors in the action, the Association may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate, on
behalf of any person who is or was a director, officer, employee or agent of the
Association, or is or was serving at the request of the Association as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Association shall have the power to indemnify him against
such liability under the provisions of this Article.
(h) For purpose of this Article, references to "the Association" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this Article with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this Article, references to "other enterprises" shall
include employee benefit plans; reference to "fines" shall include any excise
taxes assessed on a
-7-
<PAGE>
person with respect to an employee benefit plan; and references to "serving at
the request of the Association" shall include any service as a director,
officer, employee or agent of the Association which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
Association" as referred to in this Article.
(j) The indemnification and advancement of expenses hereby provided shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person.
THIRTEENTH. These Articles of Association may be amended at any
regular or special meeting of the shareholders by the affirmative vote of the
holders of a majority of the stock of this Association, unless the vote of the
holders of a greater amount of stock is required by law, and in that case by the
vote of the holders of such greater amount. This Association's board of
directors may propose one or more amendments to these Articles of Association
for submission to the shareholders.
-8-
<PAGE>
EXHIBIT 4
U.S. BANK TRUST NATIONAL ASSOCIATION
BYLAWS
------
As last Amended on March 30, 1998
---------------------------------
ARTICLE I
---------
Meetings of Shareholders
------------------------
Section 1.1. Annual Meeting. The annual meeting of the shareholders, for
the election of directors and the transaction of other business, shall be held
at a time and place as the Chairman or President may designate. Notice of such
meeting shall be given at least ten days prior to the date thereof, to each
shareholder of the Association. If, for any reason, an election of directors is
not made on the designated day, the election shall be held on some subsequent
day, as soon thereafter as practicable, with prior notice thereof.
Section 1.2. Special Meetings. Except as otherwise specially provided by
law, special meetings of the shareholders may be called for any purpose, at any
time by a majority of the board of directors, or by any shareholder or group of
shareholders owning at least ten percent of the outstanding stock. Every such
special meeting, unless otherwise provided by law, shall be called upon not less
than ten days prior notice stating the purpose of the meeting.
Section 1.3. Nominations for Directors. Nominations for election to the
board of directors may be made by the board of directors or by any shareholder.
Section 1.4. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid only
for one meeting and any adjournments of such meeting and shall be filed with the
records of the meeting.
Section 1.5. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of Association.
ARTICLE II
----------
Directors
---------
Section 2.1. Board of Directors. The board of directors (hereinafter
referred to as the "board"), shall have power to manage and administer the
business and affairs of the Association. All authorized corporate powers of the
Association shall be vested in and may be exercised by the board.
Section 2.2. Powers. In addition to the foregoing, the board of directors
shall have and may exercise all of the powers granted to or conferred upon it by
the Articles of Association, the Bylaws and by law.
-1-
<PAGE>
Section 2.3. Number. The board shall consist of a number of members to be
fixed and determined from time to time by resolution of the board or the
shareholders at any meeting thereof, in accordance with the Articles of
Association.
Section 2.4. Organization Meeting. The newly elected board shall meet for
the purpose of organizing the new board and electing and appointing such
officers of the Association as may be appropriate. Such meeting shall be held on
the day of the election or as soon thereafter as practicable, and, in any event,
within thirty days thereafter. If, at the time fixed for such meeting, there
shall not be a quorum present, the directors present may adjourn the meeting
until a quorum is obtained.
Section 2.5. Regular Meetings. The regular meetings of the board shall be
held, without notice, as the Chairman or President may designate and deem
suitable.
Section 2.6. Special Meetings. Special meetings of the board may be called
by the Chairman or the President of the Association, or at the request of two or
more directors. Each member of the board shall be given notice stating the time
and place of each such meeting.
Section 2.7. Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but fewer may adjourn any
meeting. Unless otherwise provided, once a quorum is established, any act by a
majority of those constituting the quorum shall be the act of the board.
Section 2.8. Vacancies. When any vacancy occurs among the directors, the
remaining members of the board may appoint a director to fill such vacancy at
any regular meeting of the board, or at a special meeting called for that
purpose.
ARTICLE III
-----------
Committees
----------
Section 3.1. Advisory Board of Directors. The board may appoint persons,
who need not be directors, to serve as advisory directors on an advisory board
of directors established with respect to the business affairs of either this
Association alone or the business affairs of a group of affiliated organizations
of which this Association is one. Advisory directors shall have such powers and
duties as may be determined by the board, provided, that the board's
responsibility for the business and affairs of this Association shall in no
respect be delegated or diminished.
Section 3.2. Audit Committee. The board shall appoint an Audit Committee
which shall consist of at least two Directors of the Association or of an
affiliate of the Association. If legally permissible, the board may determine
to name itself as the Audit Committee. The Audit Committee shall direct and
review audits of the Association's fiduciary activities.
The members of the Audit Committee shall be appointed each year and shall
continue to act until their successors are named. The Audit Committee shall have
power to adopt its own rules and procedures and to do those things which in the
judgment of such Committee are
-2-
<PAGE>
necessary or helpful with respect to the exercise of its functions or the
satisfaction of its responsibilities.
Section 3.3. Executive Committee. The board may appoint an Executive
Committee which shall consist of at least three directors and which shall have,
and may exercise, all the powers of the board between meetings of the board or
otherwise when the board is not meeting.
Section 3.4. Other Committees. The board may appoint, from time to time,
committees of one or more persons who need not be directors, for such purposes
and with such powers as the board may determine. In addition, either the
Chairman or the President may appoint, from time to time, committees of one or
more officers, employees, agents or other persons, for such purposes and with
such powers as either the Chairman or the President deems appropriate and
proper.
Whether appointed by the board, the Chairman, or the President, any such
Committee shall at all times be subject to the direction and control of the
board.
Section 3.5. Meeting Minutes and Rules. An advisory board of directors
and/or committee shall meet as necessary in consideration of the purpose of the
advisory board of directors or committee, and shall maintain minutes in
sufficient detail to indicate actions taken or recommendations made; unless
required by the members, discussions, votes or other specific details need not
be reported. An advisory board of directors or a committee may, in consideration
of its purpose, adopt its own rules for the exercise of any of its functions or
authority.
ARTICLE IV
----------
Officers and Employees
----------------------
Section 4.1. Chairman of the Board. The board may appoint one of its
members to be Chairman of the board to serve at the pleasure of the board. The
Chairman shall supervise the carrying out of the policies adopted or approved by
the board; shall have general executive powers, as well as the specific powers
conferred by these Bylaws; shall also have and may exercise such powers and
duties as from time to time may be conferred upon or assigned by the board.
Section 4.2. President. The board may appoint one of its members to be
President of the Association. In the absence of the Chairman, the President
shall preside at any meeting of the board. The President shall have general
executive powers, and shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the Office of President, or
imposed by these Bylaws. The President shall also have and may exercise such
powers and duties as from time to time may be conferred or assigned by the
board.
Section 4.3. Vice President. The board may appoint one or more Vice
Presidents who shall have such powers and duties as may be assigned by the board
and to perform the duties of the President on those occasions when the President
is absent, including presiding at any meeting of the board in the absence of
both the Chairman and President.
-3-
<PAGE>
Section 4.4. Secretary. The board shall appoint a Secretary, or other
designated officer who shall be Secretary of the board and of the Association,
and shall keep accurate minutes of all meetings. The Secretary shall attend to
the giving of all notices required by these Bylaws to be given; shall be
custodian of the corporate seal, records, document and papers of the
Association; shall provide for the keeping of proper records of all transactions
of the Association; shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the Secretary, or imposed
by these Bylaws; and shall also perform such other duties as may be assigned
from time to time by the board.
Section 4.5. Other Officers. The board may appoint, and may authorize the
Chairman or the President to appoint, any officer as from time to time may
appear to the board, the Chairman or the President to be required or desirable
to transact the business of the Association. Such officers shall exercise such
powers and perform such duties as pertain to their several offices, or as may be
conferred upon or assigned to them by these Bylaws, the board, the Chairman or
the President.
Section 4.6. Tenure of Office. The Chairman or the President and all other
officers shall hold office for the current year for which the board was elected,
unless they shall resign, become disqualified, or be removed. Any vacancy
occurring in the Office of Chairman or President shall be filled promptly by the
board.
Any officer elected by the board or appointed by the Chairman or the
President may be removed at any time, with or without cause, by the affirmative
vote of a majority of the board or, if such officer was appointed by the
Chairman or the President, by the Chairman or the President, respectively.
ARTICLE V
---------
Stock
-----
Section 5.1. Shares of stock shall be transferable on the books of the
Association, and a transfer book shall be kept in which all transfers of stock
shall be recorded. Every person becoming a shareholder by such transfer shall,
in proportion to such person's shares, succeed to all rights of the prior holder
of such shares. Each certificate of stock shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.
ARTICLE VI
----------
Corporate Seal
--------------
Section 6.1. The Association shall have no corporate seal; provided,
however, that if the use of a seal is required by, or is otherwise convenient or
advisable pursuant to, the laws or regulations of any jurisdiction, the
following seal may be used, and the Chairman, the President, the Secretary and
any Assistant Secretary shall have the authority to affix such seal:
-4-
<PAGE>
ARTICLE VII
-----------
Miscellaneous Provisions
------------------------
Section 7.1. Execution of Instruments. All agreements, checks, drafts,
orders, indentures, notes, mortgages, deeds, conveyances, transfers,
endorsements, assignments, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, guarantees, proxies and other instruments or
documents may be signed, countersigned, executed, acknowledged, endorsed,
verified, delivered or accepted on behalf of the Association, whether in a
fiduciary capacity or otherwise, by any officer of the Association, or such
employee or agent as may be designated from time to time by the board by
resolution, or by the Chairman or the President by written instrument, which
resolution or instrument shall be certified as in effect by the Secretary or an
Assistant Secretary of the Association. The provisions of this section are
supplementary to any other provision of the Articles of Association or Bylaws.
Section 7.2. Records. The Articles of Association, the Bylaws and the
proceedings of all meetings of the shareholders, the board, and standing
committees of the board, shall be recorded in appropriate minute books provided
for the purpose. The minutes or each meeting shall be signed by the Secretary,
or other officer appointed to act as Secretary of the meeting.
Section 7.3. Trust Files. There shall be maintained in the Association
files all fiduciary records necessary to assure that its fiduciary
responsibilities have been properly undertaken and discharged.
Section 7.4. Trust Investments. Funds held in a fiduciary capacity shall
be invested according to the instrument establishing the fiduciary relationship
and according to law. Where such instrument does not specify the character and
class of investments to be made and does not vest in the Association a
discretion in the matter, funds held pursuant to such instrument shall be
invested in investments in which corporate fiduciaries may invest under law.
Section 7.5. Notice. Whenever notice is required by the Articles of
Association, the Bylaws or law, such notice shall be by mail, postage prepaid,
telegram, in person, or by any other means by which such notice can reasonably
be expected to be received, using the address of the person to receive such
notice, or such other personal data, as may appear on the records of the
Association. Prior notice shall be proper if given not more than 30 days nor
less than 10 days prior to the event for which notice is given.
ARTICLE VIII
------------
Indemnification
---------------
Section 8.1. The Association shall indemnify to the full extent permitted
by, and in the manner permissible under, the Articles of Association and the
laws of the United States of America, as applicable and as amended from time to
time, any person made, or threatened to be made, a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person is or was a director, advisory director, officer
-5-
<PAGE>
or employee of the Association, or any predecessor of the Association, or served
any other enterprise as a director or officer at the request of the Association
or any predecessor of the Association.
Section 8.2. The board in its discretion may, on behalf of the
Association, indemnify any person, other than a director, advisory director,
officer or employee, made a party to any action, suit or proceeding by reason of
the fact that such person is or was an agent of the Association or any
predecessor of the Association serving in such capacity at the request of the
Association or any predecessor of the Association.
ARTICLE IX
-----------
Interpretation and Amendment
----------------------------
Section 9.1. These Bylaws shall be interpreted in accordance with and
subject to appropriate provisions of law, and may be amended, altered or
repealed, at any regular or special meeting of the board.
Section 9.2. A copy of the Bylaws, with all amendments, shall at all times
be kept in a convenient place at the main office of the Association, and shall
be open for inspection to all shareholders during Association hours.
-6-
<PAGE>
EXHIBIT 7
First Trust National Association Call Date: 12/31/97 ST-BK: 17-1638 FFIEC 033
400 North Michigan Avenue Vendor ID: D CERT: 34094 Page RC-1
Chicago, IL 60611
Transit Number: 09600069 9
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
insured, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C200(-
Dollar Amount in Thousands:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCON
1. Cash and balances due from depository institutions (from Schedule RC-A): ----
a. Noninterest-bearing balances and currency and coin (1) _______________________________ 0081.... 55,536 1.a
b. Interest-bearing balances (2)_________________________________________________________ 0071.... 0 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)____________________________ 1754.... 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)__________________________ 1773.... 3,216 2.b
3. Federal funds sold and securities purchased under agreements to resell___________________ 1350.... 0 3.
4. Loans and lease financing receivables: RCON
a. Loans and leases, net of unearned income ----
(from Schedule RC-C)_______________________________ 2122.... 0 ............ 4.a
b. LESS: Allowance for loan and lease losses__________ 3123.... 0 ............ 4.b
c. LESS: Allocated transfer risk reserve______________ 3128.... 0 ............ 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)___________________________________ 2125.... 0 4.d
5. Trading assets___________________________________________________________________________ 3545.... 0 5.
6. Premises and fixed assets (Including capitalized leases)_________________________________ 2145.... 95 6.
7. Other real estate owned (from Schedule RC-M)_____________________________________________ 2150.... 0 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)___________________________________________________________________________ 2130.... 0 8.
9. Customers' liability to this bank on acceptances outstanding_____________________________ 2155.... 0 9.
10. Intangible assets (from Schedule RC-M)___________________________________________________ 2143.... 48,072 10.
11. Other assets (from Schedule RC-F)________________________________________________________ 2160.... 2,435 11.
12. Total assets (sum of items 1 through 11)_________________________________________________ 2170.... 109,354 12.
</TABLE>
- ---------
/(1)/ Includes cash items in process of collection and unposted debits.
/(2)/ Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
First Trust National Association Call Date: 12/31/97 ST-BK: 17-1638 FFIEC 003
400 North Michigan Avenue Vendor ID: D CERT: 34094 Page RC-2
Chicago, IL 60611 10
Transit Number: 09600069
Schedule RC -- Continued
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C> <C> <C>
13. Deposits: RCON
a. In domestic offices (sum of totals of ----
columns A and C from Schedule RC-E)________________________________________________________2200. . 0 13.a
RCON
----
(1) Noninterest-bearing (1)______________________6631. . 0 . . . . . . 13.a.1
(2) Interest-bearing_____________________________6636. . 0 . . . . . . 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs__________________________________ . . . . . .
(1) Noninterest-bearing________________________________________________________________________
(2) Interest-bearing___________________________________________________________________________
14. Federal funds purchased and securities sold under agreements to repurchase________________________2800. . 0 14.
15. a. Demand notes issued to the U.S. Treasury_______________________________________________________2840. . 0 15.a
b. Trading liabilities____________________________________________________________________________3548. . 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less__________________________________________________2332. . 0 16.a
b. With a remaining maturity of more than one year through three years____________________________A547. . 0 16.b
c. With a remaining maturity of more than three years_____________________________________________A548. . 0 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding__________________________________________2920. . 0 18.
19. Subordinated notes and debentures (2)_____________________________________________________________3200. . 0 19.
20. Other liabilities (from Schedule RC-G)____________________________________________________________2930. . 2,072 20.
21. Total liabilities (sum of items 13 through 20)____________________________________________________2948. . 2,072 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus_____________________________________________________3838. . 0 23.
24. Common stock______________________________________________________________________________________3230. . 1,000 24.
25. Surplus (exclude all surplus related to preferred stock)__________________________________________3839. . 106,712 25.
26. a. Undivided profits and capital reserves_________________________________________________________3632. . ( 430) 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities_________________________8434. . 0 26.b
27. Cumulative foreign currency translation adjustments_______________________________________________ . . . . . .
28. Total equity capital (sum of items 23 through 27)_________________________________________________3210. . 107,282 28.
29. Total liabilities and equity capital (sum of items 21 and 28)_____________________________________3300. . 109,354 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external auditors
as of any date during 1996_________________________________________________________________________6724. . N/A M.1
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited life preferred stock and related surplus.
<PAGE>
400 North Michigan Avenue FFIEC 033
Chicago, IL 60611 Vendor ID: D CERT: 34094 Page RC-3
Transit Number: 09600069 11
Schedule RC-A -- Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
<TABLE>
<CAPTION>
C205 (-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Cash items in process of collection,
unposted debits, and currency and coin: RCON
a. Cash items in process of collection ----
and unposted debits___________________ 0020. . 0 1.a
b. Currency and coin______________________ 0080. . 0 1.b
2. Balances due from depository institutions
in the U.S.:
a. U.S. branches and agencies of foreign
banks_________________________________ 0083. . 0 2.a
b. Other commercial banks in the U.S. and
other depository institutions in the
U.S.__________________________________ 0085. . 55,536 2.b
3. Balances due from banks in foreign
countries and foreign central banks:
a. Foreign branches of other U.S. banks___ 0073. . 0 3.a
b. Other banks in foreign countries and
foreign central banks_________________ 0074. . 0 3.b
4. Balances due from Federal Reserve Banks___ 0090. . 0 4.
5. Total (sum of items 1 through 4) (must
equal Schedule RC, sum of items 1.a
and 1.b)_________________________________ 0010. . 55,536 5.
Memorandum
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------
1. Noninterest-bearing balances due from
commercial banks in the U.S. RCON
(included in items 2.a and ----
2.b above)_______________________________ 0050. . 55,536 M.1
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
NUMATICS, INCORPORATED
OFFER TO EXCHANGE
9 5/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
FOR ANY AND ALL OF THE OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES DUE 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998 UNLESS THE OFFER IS EXTENDED
U.S. BANK TRUST NATIONAL ASSOCIATION
(THE "EXCHANGE AGENT")
By Registered, Certified, By Hand: By First Class Mail:
or
Overnight Mail or U.S. Bank Trust N.A. U.S. Bank Trust N.A.
Courier: 4th Floor Bond Drop P.O. Box 64485
Window
St. Paul, MN 55164-9549
U.S. Bank Trust N.A. 180 East Fifth Street
Attn: Specialized Finance St. Paul, MN 55101
SPFT0414
180 East Fifth Street
St. Paul, MN 55101
By facsimile:
(For Eligible Institutions Only):
612-244-1537
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the ones listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of
Transmittal is completed.
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus") of Numatics, Incorporated (the "Issuer") and this
Letter of Transmittal, which together constitute the Issuer's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 9 5/8% Series B
Senior Subordinated Notes due 2008 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement of which the Prospectus is a part,
for each $1,000 principal amount of its outstanding 9 5/8% Senior Subordinated
Notes due 2008 (the "Notes"), respectively. The term "Expiration Date" shall
mean 5:00 p.m., New York City time, on , 1998, unless the Issuer, in
its reasonable judgment, extend the Exchange Offer, in which case the term
shall mean the latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them
in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
1
<PAGE>
List below the Notes to which this Letter of Transmittal relates. If the
space indicated is inadequate, the Certificate or Registration Numbers and
Principal Amounts should be listed on a separately signed schedule affixed
hereto.
DESCRIPTION OF NOTES TENDERED HEREBY
- -------------------------------------------------------------------------------
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED
OWNER(S) CERTIFICATE AGGREGATE PRINCIPAL
(PLEASE OF REGISTRATION AMOUNT REPRESENTED PRINCIPAL AMOUNT
FILL IN) NUMBERS* BY NOTES TENDERED**
- -------------------------------------------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Total
- -------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered
the full aggregate principal amount represented by such Notes. All
tenders must be in integral multiples of $1,000.
This Letter of Transmittal is to be used if (i) certificates representing
Notes are to be physically delivered to the Exchange Agent herewith, (ii)
tender of Notes is to be made by book-entry transfer to an account maintained
by the Exchange Agent at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in "The Exchange Offer--Book-Entry Transfer, ATOP" in the
Prospectus or (iii) tender of the Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
Delivery of documents to a book-entry transfer facility does not constitute
delivery to the Exchange Agent.
As used in this Letter of Transmittal, the term "Holder" with respect to the
Exchange Offer means any person in whose name Notes are registered on the
books of the Issuer or, with respect to interests in the Global Notes held by
DTC, any DTC participant listed in an official DTC proxy. The undersigned has
completed, executed and delivered this Letter of Transmittal to indicate the
action the undersigned desires to take with respect to the Exchange Offer.
Holders who wish to tender their Notes must complete this letter in its
entirety.
Holders of Notes that are tendering by book-entry transfer to the Exchange
Agent's account at DTC can execute the tender through the Book-Entry Transfer
Facility Automated Tender Offer Program ("ATOP"), for which the transaction
will be eligible. DTC participants that are accepting the Exchange Offer must
transmit their acceptances to DTC, which will verify the acceptance and
execute a book-entry delivery to the Exchange Agent's account at DTC. DTC will
then send an Agent's Message to the Exchange Agent for its acceptance. Each
DTC participant transmitting an acceptance of the Exchange Offer through the
ATOP procedures will be deemed to have agreed to be bound by the terms of this
Letter of Transmittal.
[_]CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
2
<PAGE>
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date must tender their Notes according to the
guaranteed delivery procedure set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
[_]CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) _______________________________________________
Name of Eligible Institution that Guaranteed Delivery ______________________
----------------------------------------------------------------------------
If delivery by book-entry transfer:
Account Number __________________________________________________________
Transaction Code Number _________________________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name _______________________________________________________________________
Address ____________________________________________________________________
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuer the principal amount of the Notes
indicated above. Subject to, and effective upon, the acceptance for exchange
of such Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order, of, the Issuer all right, title and interest
in and to such Notes as are being tendered hereby, including all rights to
accrued and unpaid interest thereon as of the Expiration Date. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of the Issuer in connection with the
Exchange Offer) to cause the Notes to be assigned, transferred and exchanged.
The undersigned represents and warrants that it has full power and authority
to tender, exchange, assign and transfer the Notes and to acquire Exchange
Notes issuable upon the exchange of such tendered Notes, and that when the
same are accepted for exchange, the Issuer will acquire good and unencumbered
title to the tendered Notes, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim.
The undersigned represents to the Issuer and each of the Guarantors (as
defined in the Prospectus) that (i) the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of
the person receiving such Exchange Notes, whether or not such person is the
undersigned, and (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. If the undesigned or the person receiving
the Exchange Notes covered hereby is a broker-dealer that is receiving the
Exchange Notes for its own account in exchange for Notes that were acquired as
a result of market-making activities or other trading activities, the
undersigned acknowledges that it or such other person will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that is
an "underwriter" within the meaning of the Securities Act. The undersigned and
any such other person acknowledge that, if they are participating in the
Exchange Offer for the purpose of distributing the Exchange Notes, (i) they
cannot rely on the position of the staff of the Securities and Exchange
Commission enunciated in Exxon Capital Holdings Corporation (April 13, 1998),
Morgan Stanley & Co., Inc. (June 5, 1991) or similar no-action letters and, in
the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified
by the Issuer or any Guarantor. If the undersigned or the person receiving the
Exchange Notes covered by this letter is an affiliate (as defined under Rule
405 of the Securities Act) of the Issuer, the undersigned represents to the
Issuer and the Guarantors that the undersigned understands and acknowledges
that such Exchange Notes may not be offered for resale, resold or otherwise
transferred by the undersigned or such other person without registration under
the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Issuer to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Notes or transfer ownership of such Notes on the account books
maintained by a book-entry transfer facility. The undersigned further agrees
that, except in the special situations described in the Prospectus, acceptance
of any tendered Notes by the Issuer and the issuance of Exchange Notes in
exchange therefor shall constitute performance in full by the Issuer and the
Guarantors of their obligations under the Registration Rights Agreement and
the Issuer and the Guarantors shall have no further obligations or liabilities
thereunder for the registration of the Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Issuer), as more particularly set forth in the Prospectus,
the Issuer may not be required to exchange any of the Notes tendered hereby
and, in such event, the Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Notes may be withdrawn at
any time prior to the Expiration Date.
4
<PAGE>
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this
Letter of Transmittal, certificates for all Exchange Notes delivered in
exchange for tendered Notes, and any Notes delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned at the address shown below the signature of the
undersigned. If an Exchange Note is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if the Exchange Note is to be
mailed to someone other than the person(s) signing this Letter of Transmittal
or to the person(s) signing this Letter of Transmittal at an address different
than the address shown on this Letter of Transmittal, the appropriate boxes of
this Letter of Transmittal should be completed. If Notes are surrendered by
Holder(s) that have completed either the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this
Letter of Transmittal, signature(s) on this Letter of Transmittal must be
guaranteed by an Eligible Institution (defined in Instruction 2).
5
<PAGE>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the To be completed ONLY if the
Exchange Notes are to be issued Exchange Notes are to be sent to
in the name of someone other than someone other than the
the undersigned. undersigned, or to the
Name: ____________________________ undersigned at an address other
Address: _________________________ than that shown under
"Description of Notes Tendered
Hereby."
Book-Entry Transfer Facility
Account: Name: ____________________________
---------------------------------- Address: _________________________
----------------------------------
Employee Identification or Social ----------------------------------
Security Number: (Please print or type)
----------------------------------
(Please print or type)
REGISTERED HOLDER(S) OF NOTES OR DTC PARTICIPANT(S) SIGN HERE
(In addition, complete Substitute Form W-9 below)
X __________________________________________________________________________
X __________________________________________________________________________
(Signature(s) of Registered Holder(s) or DTC Participant(s))
Must be signed by registered holder(s) or DTC participant(s) exactly as
name(s) appear(s) on the Notes or on a security position listing as the
owner of the Notes or by person(s) authorized to become registered
holder(s) by properly completed bond powers transmitted herewith. If
signature is by attorney-in-fact, trustee, executor, administrator,
guardian, officer of a corporation or other person acting in a fiduciary
capacity, please provide the following information. (Please print or type):
Name and Capacity (full title): ____________________________________________
Address (including zip code): ______________________________________________
____________________________________________________________________________
Area Code and Telephone Number: ____________________________________________
Taxpayer Identification or Social Security No.: ____________________________
Dated:
SIGNATURE GUARANTEE
(IF REQUIRED--SEE INSTRUCTION 5)
Authorized Signature: ______________________________________________________
(Signature of Representative of Signature Guarantor)
Name and Title: ____________________________________________________________
Name of Plan: ______________________________________________________________
Area Code and Telephone Number: ____________________________________________
(Please print or type)
Dated:
6
<PAGE>
PAYOR'S NAME: NUMATICS, INCORPORATED
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
PLEASE PROVIDE YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION
NUMBER ON THE FOLLOWING SUBSTITUTE FORM W-9 AND CERTIFY THEREIN THAT YOU ARE
NOT SUBJECT TO BACKUP WITHHOLDING.
--------------------------
Social security number
SUBSTITUTE Part 1 -- PLEASE OR _______________________
FORM W-9 PROVIDE YOUR TIN IN Employer identification
DEPARTMENT OF THE THE BOX AT RIGHT AND number
TREASURY CERTIFY BY SIGNING
AND DATING BELOW
---------------------------------------------------------
INTERNAL REVENUE Part 2 -- Check the box if you are not subject to
SERVICE backup withholding under the provisions of Section
PAYOR'S REQUEST 3406(A)(1)(C) of the Internal Revenue Code because
FOR (1) you are exempt from backup withholding, (2) you
TAXPAYER have not been notified that you are subject to
IDENTIFICATION backup withholding as a result of failure to report
all interest or dividends or (3) the Internal
Revenue Service has notified you that you are no
longer subject to backup withholding. [_]
SIGNATURE __________________ DATE _____
Part 3 --
NUMBER ("TIN") Awaiting TIN
[_]
---------------------------------------------------------
Certification: Under penalties of
perjury, I certify that the information
provided on this form is true, correct
and complete.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Officer or (b) I intend to mail or deliver such an
application in the near future. I understand that if I do not provide a
taxpayer identification number within 60 days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a number.
SIGNATURE _____________________________________________________________DATE
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Notes or confirmation of any book-entry transfer to
the Exchange Agent's account at a book-entry transfer facility of Notes
tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any
other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus). The method of delivery of this
Letter of Transmittal, the Notes and any other required documents is at the
election and risk of the Holder, and except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange
Agent. If such delivery is by mail, it is suggested that registered mail with
return receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal
(or facsimile thereof), shall waive any right to receive notice of the
acceptance of the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the one set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Notes, but whose Notes are not immediately
available and thus cannot deliver their Notes, the Letter of Transmittal or
any other required documents to the Exchange Agent (or comply with the
procedures for book-entry transfer) prior to the Expiration Date, may effect a
tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the registration
number(s) of such Notes and the principal amount of Notes tendered,
stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the Expiration
Date, the Letter of Transmittal (or facsimile thereof), together with
the Notes (or a confirmation of book-entry transfer of such Notes into
the Exchange Agent's account at DTC) and any other documents required
by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer (or a confirmation of book-entry transfer of such Notes into
the Exchange Agent's account at DTC) and all other documents required
by the Letter of Transmittal, are received by the Exchange Agent within
three New York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery relating to
such Notes prior to the Expiration Date. Failure to complete the guaranteed
delivery procedures outlined above will not, of itself, affect the validity or
effect a revocation of any Letter of Transmittal form properly completed and
executed by a Holder who attempted to use the guaranteed delivery procedures.
8
<PAGE>
3. BENEFICIAL OWNER INSTRUCTIONS.
Only a Holder of Notes (i.e., a person in whose name Notes are registered on
the books of the registrar or, with respect to interests in the Global Notes
held by DTC, a DTC participant listed in an official DTC proxy), or the legal
representative or attorney-in-fact of a Holder, may execute and deliver this
Letter of Transmittal. Any beneficial owner of Notes who wishes to accept the
Exchange Offer must arrange promptly for the appropriate Holder to execute and
deliver this Letter of Transmittal on his or her behalf through the execution
and delivery to the appropriate Holder of the Instructions to Registered
Holder and/or DTC Participant from Beneficial Owner form accompanying this
Letter of Transmittal.
4. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Notes evidenced by a submitted
certificate is tendered, the tendering Holder should fill in the principal
amount tendered in the column entitled "Principal Amount Tendered" of the box
entitled "Description of Notes Tendered Hereby." A newly issued Note for the
principal amount of Notes submitted but not tendered will be sent to such
Holder as soon as practicable after the Expiration Date. All Notes delivered
to the Exchange Agent will be deemed to have been tendered in full unless
otherwise indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date, after which tenders of Notes are irrevocable. To
be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Notes
to be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn
(including the registration number(s) and principal amount of such Notes, or,
in the case of Notes transferred by book-entry transfer, the name and number
of the account at DTC to be credited), (iii) be signed by the Holder in the
same manner as the original signature on this Letter of Transmittal (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Notes register the transfer
of such Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Issuer, whose determination shall be final and binding on all parties. Any
Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no Exchange Notes will be issued with
respect thereto unless the Notes so withdrawn are validly retendered. Any
Notes which have been tendered but which are not accepted for exchange will be
returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of Exchange
Offer.
5. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered Holder(s) of the
Notes tendered hereby, the signature must correspond with the name(s) as
written on the face of the certificates without alteration or enlargement or
any change whatsoever. If this Letter of Transmittal is signed by a
participant in DTC, the signature must correspond with the name as it appears
on the security position listing as the owner of the Notes.
If any of the Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If a number of Notes registered in different names are tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Notes.
Signatures of this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Notes
tendered hereby are tendered (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Notes (which term, for the purposes described herein, shall include a
participant in DTC whose name appears on a security listing as the owner of
the Notes) listed and tendered hereby, no endorsements of the tendered Notes
or separate written instruments of transfer or exchange are required. In any
other case, the registered Holder (or acting Holder) must either properly
endorse the Notes or transmit properly completed bond powers with this Letter
of Transmittal (in either case, executed exactly as the name(s) of the
registered Holder(s) appear(s) on the Notes, and, with respect to a
participant in DTC whose name appears on a security
9
<PAGE>
position listing as the owner of Notes, exactly as the name of the participant
appears on such security position listing), with the signature on the Notes or
bond power guaranteed by an Eligible Institution (except where the Notes are
tendered for the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and, unless waived by the Issuer, proper evidence
satisfactory to the Issuer of their authority so to act must be submitted.
6. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at DTC) in which the Exchange Notes or substitute Notes
for principal amounts not tendered or not accepted for exchange are to be
issued (or deposited), if different from the names and addresses or accounts
of the person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number
of the person named must also be indicated and the tendering Holder should
complete the applicable box.
If no instructions are given, the Exchange Notes (and any Notes not tendered
or not accepted) will be issued in the name of and sent to the acting Holder
of the Notes or deposited at such Holder's account at DTC.
7. TRANSFER TAXES.
The Issuer will pay all transfer taxes, if any, applicable to the transfer
and exchange of Notes to it or its order pursuant to the Exchange Offer. If a
transfer tax is imposed for any other reason other than the transfer and
exchange of Notes to the Issuer, or its order pursuant to the Exchange Offer,
the amount of any such transfer taxes (whether imposed on the registered
Holder or any other person) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from
the tendering Holder by the Exchange Agent.
Except as provided in this Instruction 7, it will not be necessary for
transfer stamps to be affixed to the Notes listed in this Letter of
Transmittal.
8. WAIVER OF CONDITIONS.
The Issuer reserves the right, in its reasonable judgment, to waive, in
whole or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
9. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number(s) set
forth above. In addition, all questions relating to the Exchange Offer, as
well as requests for assistance or additional copies of the Prospectus and
this Letter of Transmittal, may be directed to Numatics, Incorporated, 1450
North Milford Road, Highland, Michigan 48357, telephone (248) 887-4111.
11. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will
be determined by the Issuer in its sole discretion, which determination will
be final and binding. The Issuer reserves the absolute right to reject any and
all Notes not properly tendered or any Notes the Issuer's acceptance of which
would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also
reserves the right, in its reasonable judgment, to waive any defects,
irregularities or conditions of tender as to particular Notes. The Issuer's
interpretation of the terms and conditions of the Exchange Offer (including
the instructions in this Letter of Transmittal) will be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of Notes must be cured within such time as the Issuer shall determine.
Although the Issuer intends to notify Holders of defects or irregularities
with respect to tenders of Notes, neither the Issuer, the Exchange Agent nor
any other person shall incur any liability for failure to give such
notification. Tenders of Notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders as soon as practicable following the Expiration
Date.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form
W-9 above. If such Holder is an individual, the TIN is the Holder's social
security number. The Certificate of Awaiting Taxpayer Identification Number
should be completed if the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future. If
the Exchange Agent is not provided with the correct TIN, the Holder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such Holder may be subject to backup withholding.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies
one or more of the conditions set forth in Part 2 of the Substitute Form W-9,
should execute the certification following such Part 2. In order for a foreign
Holder to qualify as an exempt recipient, that Holder must submit to the
Exchange Agent a properly completed Internal Revenue Service Form W-8, signed
under penalties of perjury, attesting to that Holder's exempt status. Such
forms can be obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder, the
Holder is required to notify the Exchange Agent of his or her correct TIN by
completing the form herein certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Holder is awaiting a TIN) and that (i) each
Holder is exempt, (ii) such Holder has not been notified by the Internal
Revenue Service that he or she is subject to backup withholding as a result of
failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified such Holder that he or she is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the Notes.
If Notes are in more than one name or are not in the name of the actual
Holder, consult the instructions on Internal Revenue Service Form W-9, which
may be obtained from the Exchange Agent, for additional guidance on which
number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied
For" in the space for the TIN or Substitute Form W-9, sign and date the form
and the Certificate of Awaiting Taxpayer Identification Number and return them
to the Exchange Agent. If such certificate is completed and the Exchange Agent
is not provided with the TIN within 60 days, the Exchange Agent will withhold
31% of all payments made thereafter until a TIN is provided to the Exchange
Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS)
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON
OR PRIOR TO THE EXPIRATION DATE.
11
<PAGE>
INSTRUCTIONS
TO REGISTERED HOLDER AND/OR
DTC PARTICIPANT FROM BENEFICIAL OWNER
OF
NUMATICS, INCORPORATED
9 5/8 SENIOR SUBORDINATED NOTES DUE 2008
To Registered Holder and/or Participant in DTC.
The undersigned hereby acknowledges receipt of the Prospectus, dated
, 1998 (the "Prospectus") of Numatics, Incorporated (the "Issuer"), and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), that
together constitute the Issuer's offer (the "Exchange Offer"). Capitalized
terms used but not defined herein have the meanings ascribed to them in the
Prospectus.
This will instruct you, the registered holder and/or DTC participant, as to
action to be taken by you relating to the Exchange Offer with respect to the 9
5/8% Senior Subordinated Notes due 2008 (the "Notes") held by you for the
account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (fill in amount):
$ of the 9 5/8% Senior Subordinated Notes due 2008.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[_] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY): $
[_] NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are: (a) to make, on
behalf of the undersigned (and the undersigned, by its signature below, hereby
makes to you), the representations and warranties contained in the Letter of
Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i)
the undersigned's principal residence is in the state of (FILL IN THE NAME OF
THE STATE) , (ii) the undersigned is acquiring the Exchange Notes in
the ordinary course of business of the undersigned, (iii) the undersigned is
not participating, does not participate, and has no arrangement or
understanding with any person to participate in the distribution of the
Exchange Notes, (iv) the undersigned acknowledges that any person
participating in the Exchange Offer for the purpose of distributing the
Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Act"), in
connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the Staff of the Securities
and Exchange Commission set forth in no-action letters that are discussed in
the section of the Prospectus entitled "The Exchange Offer--Resale of Exchange
Notes," and (v) the undersigned is not an "affiliate," as defined in Rule 405
under the Act, of the Issuer; (b) to agree, on behalf of the undersigned, as
set forth in the Letter of Transmittal; and (c) to take such other actions as
necessary under the Prospectus or the Letter of Transmittal to effect the
valid tender of such Notes.
[_] Check this box if the beneficial owner of the Notes is a broker-dealer
and such broker-dealer acquired the Notes for its own account as a result of
market-making activities or other trading activities.
12
<PAGE>
SIGN HERE
Name of beneficial owner(s): _______________________________________________
Signature(s): ______________________________________________________________
Name (please print): _______________________________________________________
Address: ___________________________________________________________________
----------------------------------------------------------------------
----------------------------------------------------------------------
Telephone number: __________________________________________________________
Taxpayer Identification or Social Security Number: _________________________
Date: ______________________________________________________________________
13
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9 5/8% SENIOR SUBORDINATED NOTES DUE 2008
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
NUMATICS, INCORPORATED
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Numatics, Incorporated (the "Issuer") made pursuant to the
Prospectus dated , 1998 (the "Prospectus") if certificates for the
outstanding 9 5/8% Senior Subordinated Notes due 2008 of the Issuer (the
"Notes") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by telegram, telex, facsimile transmission, mail or
hand delivery to U.S. Bank Trust National Association (the "Exchange Agent")
as set forth below. In addition, in order to utilize the guaranteed delivery
procedure to tender Notes pursuant to the Exchange Offer, a completed, signed
and dated Letter of Transmittal (or facsimile thereof) must also be received
by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.
U.S. BANK TRUST NATIONAL ASSOCIATION, EXCHANGE AGENT
By Registered, Certified, By Hand: By First Class Mail:
or
Overnight Mail or U.S. Bank Trust N.A. U.S. Bank Trust N.A.
Courier: 4th Floor Bond Drop P.O. Box 64485
Window
St. Paul, MN 55164-9549
U.S. Bank Trust N.A. 180 East Fifth Street
Attn: Specialized Finance St. Paul, MN 55101
SPFT0414
180 East Fifth Street
St. Paul, MN 55101
By facsimile:
(For Eligible Institutions Only):
612-244-1537
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Issuer the principal amount of Notes set forth below pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Notes Tendered.*
$_________________________________
Certificate No(s). (if available):
__________________________________
Total Principal Amount Represented by Certificate(s):
__________________________________
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
1
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
PLEASE SIGN HERE
X ___________________________________________ X ________________________
X ___________________________________________ X ________________________
Signature(s) of Owner(s) or Authorized
Signatory
Area Code and Telephone Number:
Must be signed by the holder(s) of Notes as their name(s) appear on
certificates for Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person
must set forth his or her full title below. If Notes will be delivered by
book-entry transfer to The Depository Trust Company, provide account
number.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Capacity: __________________________________________________________________
____________________________________________________________________________
Address(es): _______________________________________________________________
____________________________________________________________________________
Account Number: ____________________________________________________________
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings
and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program,
hereby guarantees that the undersigned will deliver to the Exchange Agent
the certificates representing the Notes being tendered hereby or
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at The Depository Trust Company, in proper form for transfer,
together with any other documents required by the Letter of Transmittal,
within three New York Stock Exchange trading days after the Expiration
Date.
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
Area Code & Telephone No. __________________________________________________
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
(Please Type or Print)
Title ______________________________________________________________________
Date _______________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES REPRESENTING NOTES WITH THIS FORM.
CERTIFICATES REPRESENTING NOTES SHOULD BE SENT ONLY WITH A COPY OF
THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CIK> 0001007298
<NAME> NUMATICS, INC.
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<CASH> 701,072 853,398 0
<SECURITIES> 0 0 0
<RECEIVABLES> 22,174,234 20,747,103 0
<ALLOWANCES> 61,000 132,000 0
<INVENTORY> 27,953,158 25,444,983 0
<CURRENT-ASSETS> 53,049,316 49,585,640 0
<PP&E> 53,503,467 46,835,744 0
<DEPRECIATION> (24,064,119) (21,168,527) 0
<TOTAL-ASSETS> 98,535,253 93,987,434 0
<CURRENT-LIABILITIES> 25,580,227 21,397,029 0
<BONDS> 135,696,137 136,273,233 0
0 0 0
0 0 0
<COMMON> 1,500,000 1,500,000 0
<OTHER-SE> (71,031,763) (72,295,586) 0
<TOTAL-LIABILITY-AND-EQUITY> 98,535,253 93,987,434 0
<SALES> 147,097,265 132,015,363 125,807,708
<TOTAL-REVENUES> 147,097,265 132,015,363 125,807,708
<CGS> 93,784,880 81,676,256 77,966,493
<TOTAL-COSTS> 32,775,774 29,138,272 30,438,906
<OTHER-EXPENSES> 1,348,059 534,949 1,436,350
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 17,020,961 16,763,096 5,560,086
<INCOME-PRETAX> 2,167,591 3,902,790 10,405,873
<INCOME-TAX> 903,768 1,895,006 4,837,000
<INCOME-CONTINUING> 1,263,823 2,007,784 5,568,873
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1,263,823 2,007,784 5,568,873
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
