<PAGE> 1
As filed with the Securities and Exchange Commission on February 14, 1997
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LDM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
MICHIGAN 3089 38-269-0171
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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2500 EXECUTIVE HILLS DRIVE
AUBURN HILLS, MICHIGAN 48326
(810) 858-2800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
GARY E. BORUSHKO
CHIEF FINANCIAL OFFICER
LDM TECHNOLOGIES, INC.
2500 EXECUTIVE HILLS DRIVE
AUBURN HILLS, MICHIGAN 48326
(810) 858-2800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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WITH COPIES TO:
VERNE C. HAMPTON, II.
DICKINSON, WRIGHT, MOON, VANDUSEN & FREEMAN
500 WOODWARD AVENUE
SUITE 4000
DETROIT, MICHIGAN 48226-3425
(313) 223-3500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
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10 3/4% Senior Subordinated Notes due 2007,
Series B................................. $110,000,000 100% $110,000,000 $22,000
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Guarantees of 10 3/4% Senior Subordinated
Notes due 2007........................... (2) (2) (2) (2)
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(1) Estimated pursuant to Rule 457(f) solely for the purposes of calculating the
registration fee.
(2) Pursuant to Rule 457(n), no registration fee is required with respect to the
Guarantees of the Senior Subordinated Notes registered hereby.
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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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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TABLE OF ADDITIONAL REGISTRANTS
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PRIMARY STANDARD
EXACT NAME OF GUARANTOR REGISTRANT AS I.R.S. EMPLOYER INDUSTRIAL
SPECIFIED IN ITS CHARTER JURISDICTION OF ORGANIZATION IDENTIFICATION NO. CLASSIFICATION CODE NO.
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LDM Holdings, L.L.C..................... Michigan 38-333-3584 3089
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LDM Canada Limited Partnership.......... Michigan 38-331-1998 3089
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LDM Technologies Company................ Nova Scotia N/A 3089
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LDM TECHNOLOGIES, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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FORM S-4 ITEM NUMBER HEADING OR SUBHEADING IN PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement; Cross Reference
Sheet; Outside Front Cover Page of Prospectus.
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front Cover Page of Prospectus; Outside Back Cover
Page of Prospectus.
3. Risk Factors, Ratio of Earnings to Fixed
Charges, and Other Information............ Prospectus Summary; Risk Factors; Selected Financial
Data--LDM; Unaudited Pro Forma Consolidated Financial
Information; Notes to Unaudited Pro Forma Consolidated
Financial Information.
4. Terms of the Transaction.................. Prospectus Summary; The Exchange Offer; Description of New
Notes; Certain Federal Income Tax Consequences Relating to
the Exchange Offer; Description of Senior Debt; Old Notes;
Registration Rights; Book Entry; Delivery and Form; Plan of
Distribution.
5. Pro Forma Financial Information........... Prospectus Summary; Unaudited Pro Forma Consolidated
Financial Information; Notes to Unaudited Pro Forma
Condensed Consolidated Financial Information.
6. Material Contracts With the Company Being
Acquired.................................. Not Applicable.
7. Additional Information Required For
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Not Applicable.
8. Interests of Named Experts and Counsel.... Legal Matters; Experts.
9. Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities............................... Not Applicable.
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3
Registrants............................... Not Applicable.
11. Incorporation of Certain Information by
Reference................................. Not Applicable.
12. Information With Respect to S-2 or S-3
Registrants............................... Not Applicable.
13. Incorporation of Certain Information by
Reference................................. Not Applicable.
14. Information With Respect to Registrants
Other Than S-2 or S-3 Companies........... Prospectus Summary; Capitalization; The Molmec Acquisition;
Selected Financial Data--LDM; Management's Discussion and
Analysis of Financial Condition and Results of
Operations--LDM; Unaudited Pro Forma Consolidated Financial
Information; Notes to Unaudited Pro Forma Condensed
Consolidated Financial Information; Business; Certain
Transactions; Description of New Notes; Financial
Statements.
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3
Companies................................. Not Applicable.
16. Information With Respect to S-2 or S-3
Companies................................. Not Applicable.
17. Information With Respect to Companies
Other Than S-2 or S-3 Companies........... Not Applicable.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations Are to be Solicited........ Not Applicable.
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited, or
in an Exchange Offer...................... Management.
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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 any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 1997
PROSPECTUS
LDM TECHNOLOGIES, INC.
LDM LOGO OFFER TO EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B FOR ALL
OUTSTANDING 10 3/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED
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LDM Technologies, Inc., a Michigan corporation (the "Company" or "LDM"),
hereby offers, upon the terms and subject to conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"; together with the Prospectus, the "Exchange Offer"), to
exchange up to an aggregate principal amount of $110 million of its 10 3/4%
Senior Subordinated Notes Due 2007, Series B (the "New Notes") for up to an
aggregate principal amount of $110 million of its outstanding 10 3/4% Senior
Subordinated Notes Due 2007, Series A (the "Old Notes"). The terms of the New
Notes are identical in all material respects to those of the Old Notes, except
for certain transfer restrictions and registration rights relating to the Old
Notes. The New Notes will be issued pursuant to, and entitled to the benefits
of, the Indenture (as defined herein) governing the Old Notes. The New Notes and
the Old Notes are sometimes referred to collectively as the "Notes".
The New Notes will be general unsecured obligations of the Company ranking
subordinate in right of payment to all existing and future Senior Debt (as
defined). The New Notes will be guaranteed (each, a "Guarantee") on a senior
subordinated basis by certain of the Company's subsidiaries (the "Guarantors").
The Guarantees will be subordinate in right of payment to all Guarantor Senior
Debt (as defined), including all indebtedness under the Senior Credit Facility
(as defined herein).
The New Notes will be subordinated in right of payment to all existing and
future secured indebtedness of the Company and its subsidiaries. The New Notes
will rank pari passu in right of payment with the Old Notes. As of September 29,
1996, on a pro forma basis, after giving effect to the Initial Offering (as
defined herein), the Molmec Acquisition (as defined herein), and the borrowings
outstanding under the Senior Credit Facility, the Company and its subsidiaries
had approximately $16.2 million of Senior Debt outstanding.
The New Notes will bear interest at the rate of 10 3/4% per annum, payable
semiannually on January 15 and July 15, commencing July 15, 1997. Holders of the
New Notes will receive interest on July 15, 1997 from the date of initial
issuance of the New Notes, plus an amount equal to the accrued interest on the
Old Notes from the most recent date to which interest has been paid to the date
of exchange thereof. Interest on the Old Notes accepted for exchange will cease
to accrue upon issuance of the New Notes.
The New Notes are subject to redemption on or after January 15, 2002, at
the option of the Company, in whole or in part, at the redemption prices set
forth herein, plus accrued interest to the date of redemption. In addition, on
or before January 15, 2000, the Company may, at its option, redeem up to $25
million aggregate principal amount of the Notes originally issued with the net
proceeds from one or more Public Equity Offerings (as defined) at the redemption
price set forth herein plus accrued interest to the date of redemption; provided
that at least $75 million aggregate principal amount of the Notes would remain
outstanding after giving effect to any such redemption. In the event of a Change
of Control (as defined), the Company will be obligated to make an offer to
purchase all of the outstanding Notes at a purchase price equal to 101% of the
principal amount thereof plus accrued interest to the date of purchase. In
addition, the Company will be obligated to make an offer to purchase Notes at a
purchase price equal to 100% of the principal amount thereof plus accrued
interest to the date of purchase in the event of certain asset sales. See
"Description of New Notes."
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SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT
HOLDERS OF THE OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 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 , 1997.
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(Continued from Cover)
The Company will accept for exchange any and all Old Notes which are
properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time,
on , 1997, unless extended by the Company in its sole discretion (the
"Expiration Date"). The Expiration Date will not in any event be extended to a
date later than , 1997. Tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Old Notes with respect to the Exchange Offer, the Company will promptly
return the Old Notes to the holders thereof. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange, but is otherwise subject to certain customary conditions. The Old
Notes may be tendered only in integral multiples of $1,000.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Guarantors contained in the Registration
Rights Agreement dated January 22, 1997 (the "Registration Rights Agreement") by
and among the Company, the Guarantors and Smith Barney Inc., as the initial
purchaser (the "Initial Purchaser"), with respect to the initial sale of the Old
Notes. Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by respective holders thereof (other than any such holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, without compliance with the registration and prospectus delivery
provisions of the Securities Act of 1933, as amended (the "Securities Act"),
provided that the New Notes are acquired in the ordinary course of such holder's
business and such holder has no arrangement with any person to participate in
the distribution of such New Notes and is not engaged in and does not intend to
engage in a distribution of the New Notes. Each broker-dealer that receives New
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 New 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 the New Notes received in exchange for Old Notes
if such New Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the New
Notes. There can be no assurance as to the liquidity of any markets that may
develop for the New Notes, the ability of holders to sell the New Notes, or the
price at which holders would be able to sell the New Notes. Future trading
prices of the New Notes will depend on many factors, including among other
things, prevailing interest rates, the Company's operating results and the
market for similar securities. Historically, the market for securities similar
to the New Notes, including non-investment grade debt, has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that any market for the New Notes, if such
market develops, will not be subject to similar disruptions. The Initial
Purchaser has advised the Company that it currently intends to make a market in
the New Notes offered hereby. However, the Initial Purchaser is not obligated to
do so and any market marking may be discontinued at any time without notice.
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to pay the expenses incident to the Exchange Offer.
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AVAILABLE INFORMATION
The Company and the Guarantors have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (the
"Registration Statement," which term shall include all amendments, exhibits,
annexes and schedules thereto) pursuant to the Securities Act, and the rules and
regulations promulgated thereunder, covering the New Notes being offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements made in this Prospectus
as to the contents of any contract, agreement or other document referred to in
the Registration Statement are not necessarily complete. With respect to each
such contract, agreement or other document filed 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 shall be deemed
qualified in its entirety by such reference. The Registration Statement,
including the exhibits thereto, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at its regional offices located at the Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World
Trade Center, 13th Floor, New York, New York 10007. Copies of such material can
be obtained from the Company or the Guarantors upon request. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of such Web site is: http://www.sec.gov.
As a result of the Exchange Offer, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
periodic reports and other information and documents specified in Sections 13
and 15(d) of the Exchange Act, so long as the New Notes are outstanding, whether
or not the Company is subject to such informational requirements of the Exchange
Act. While any New Notes remain outstanding, the Company will make available,
upon request, to any holder of the New Notes, the information required pursuant
to Rule 144A(d)(4) under the Securities Act during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act. Any such
request should be directed to the Chief Financial Officer of the Company at 2500
Executive Hills Drive, Auburn Hills, Michigan 48326 (telephone number (810)
858-2800).
This Prospectus includes certain forward-looking statements which involve
risks and uncertainties as to future events. Actual events or results may differ
materially from those discussed in the forward-looking statements as a result of
various factors including, without limitation, those set forth under "Risk
Factors."
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and consolidated financial
statements of LDM Technologies, Inc. and the notes thereto and the financial
statements of Molmec, Inc. ("Molmec") and the notes thereto appearing elsewhere
in this Prospectus. Unless the context otherwise requires, the information
contained in this Prospectus gives effect to the Molmec Acquisition which was
consummated on January 22, 1997 and all references in this Prospectus to the
Company shall mean LDM Technologies, Inc., its consolidated subsidiaries and the
Molmec business. References to LDM shall mean LDM Technologies, Inc. and its
consolidated subsidiaries excluding Molmec. References to Molmec shall mean
Molmec, Inc. Also, unless the context otherwise requires, all references to
fiscal years in regard to LDM or the Company shall mean twelve-month periods
ending the last Sunday of September, and, in regard to Molmec, twelve-month
periods ending December 31. References to Molmec's twelve-month period ended
September 29, 1996 shall mean the period from September 25, 1995 through
September 29, 1996.
THE COMPANY
LDM is a leading Tier I designer and manufacturer of highly engineered
plastic instrument panel and exterior trim components supplied primarily to
North American automotive original equipment manufacturers ("OEMs"). Instrument
panel components manufactured by LDM include cluster finish panels, center trim
panels, air vents, coin and cup holders, ashtrays, gloveboxes, telephone holders
and consoles. Exterior trim components manufactured by LDM include front and
rear bumper fascias, end caps, body side claddings, rocker panels and grills. As
part of LDM's business strategy to target growing niche markets that require
significant design and engineering capabilities, it recently consummated the
acquisition of Molmec, a Tier I automotive supplier of close tolerance, plastic
components for under-the-hood fluid and air management applications. The
Company, on a pro forma basis, had fiscal year 1996 net sales of $306.4 million
and EBITDA of $26.8 million.
The Company's major OEM customers include Ford, General Motors, Volkswagen
and Chrysler, with pro forma fiscal year 1996 net product sales (which excludes
mold sales) to these customers representing approximately 43%, 30%, 7% and 3%,
respectively, of pro forma fiscal year 1996 net product sales. The Company
supplies components and subassemblies for a variety of light duty trucks, sport
utility vehicles, minivans and passenger cars, including: Ford's F-series truck,
Expedition and Explorer sport utility vehicles, Windstar minivan, and
Contour/Mystique and Taurus/Sable passenger cars; General Motors' Sonoma, Blazer
and Jimmy sport utility vehicles, and Grand Prix/Cutlass, Cadillac Deville and
Seville passenger cars; Volkswagen's Golf/Jetta passenger car; and Chrysler's
Dakota light truck, Caravan/Voyager minivan, and Neon passenger car.
The Company is a full-service supplier with advanced computer design and
engineering capabilities which have enabled the Company to penetrate OEM new
product programs during the concept stage of the product life cycle and promote
long-term customer relationships. The Company recently constructed its Auburn
Hills Design Center to enhance its conceptual design and development
capabilities. The Company has been recognized as a quality supplier by its OEM
customers and, in addition, has received Ford's Q1 Award and is in the process
of being QS 9000 certified. To improve the Company's ability to support its OEM
customers internationally, the Company is finalizing alliances with certain
European automotive suppliers that manufacture products which complement the
Company's three lines of business and have strong product technology and
engineering capabilities.
The Company conducts molding, class A painting and assembly operations in
eleven locations in Michigan, Indiana, Ohio, Tennessee and Canada. In addition
to its injection molding expertise, the Company also possesses a broad range of
paint application capabilities, including recently developed robotic paint
application technology which it believes provides it with competitive advantages
in serving the exterior trim market.
LDM, a privately held Michigan corporation, was incorporated in 1985 to
pursue acquisitions in the automotive industry. In 1986, LDM began to focus on
the market for highly engineered plastic components
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when it acquired Arrow Molded Plastics, Inc. To strengthen its presence in this
market, LDM acquired Knapp Plastics Ltd., a manufacturer of exterior trim
components, in 1993 and purchased selected assets of Windsor Plastic Products
Ltd., a manufacturer of instrument panel components, in 1994. The acquisition of
Molmec is a continuation of LDM's efforts to strengthen its position as a
leading Tier I supplier of niche thermoplastic components and systems.
Management believes that each of these acquisitions has enhanced the Company's
growth opportunities by providing new customers, niche product capabilities,
additional manufacturing capacity and cost reductions through economies of
scale. Through a combination of these and other acquisitions and internal
growth, LDM's net sales and EBITDA have increased from approximately $76.2
million and $4.8 million, respectively, in fiscal year 1992 to approximately
$306.4 million and $26.8 million, respectively, on a pro forma basis in fiscal
year 1996, which represents a compound annual growth rate ("CAGR") of 42% and
53%, respectively.
The Company has developed and is implementing a business strategy to
achieve continued growth while enhancing its competitive position as a Tier I
OEM supplier. The Company's growth is being principally driven by (i) a
strategic focus on niche products, such as under-the-hood components, that the
Company believes possess strong secular growth potential and require significant
design and engineering capabilities and (ii) selected acquisitions to take
advantage of the consolidation trends in the OEM supplier industry. In addition,
the Company continually seeks to enhance its Tier I relationships through a
number of initiatives, including (i) expanding its full service capabilities in
response to increasingly rigorous OEM purchasing and manufacturing policies,
(ii) establishing a global position through participation on World Car programs
and the establishment of alliances with foreign suppliers, and (iii) improving
cost competitiveness through the implementation of lean manufacturing
methodologies and value engineering programs.
The Company was incorporated in Michigan in 1985. The Company's principal
executive offices are located at 2500 Executive Hills Drive, Auburn Hills,
Michigan 48326, and its telephone number is (810) 858-2800.
THE MOLMEC ACQUISITION
On January 22, 1997, LDM acquired substantially all of the assets of
Molmec, a privately held Michigan corporation incorporated in 1959, for
approximately $55 million in cash, subject to certain adjustments, and the
assumption of certain liabilities including $5.0 million of indebtedness and
$11.6 million of current liabilities as of September 29, 1996.
The Molmec Acquisition is a continuation of LDM's efforts to strengthen its
position as a leading supplier of niche thermoplastic components and systems to
the North American automotive market. LDM believes Molmec is an industry leader
in the design, manufacture and integration of fluid and air management
components and assemblies for under-the-hood use. Products manufactured by
Molmec include cowl vent assemblies, fluid reservoirs including degas bottles,
battery trays and covers, air deflectors and sight shields. Molmec's largest OEM
customers are Ford and Chrysler, which accounted for approximately 57% and 11%,
respectively, of Molmec's net product sales for the twelve-month period ended
September 29, 1996. Molmec provides components and subassemblies for a variety
of light duty trucks, sport utility vehicles, minivans and passenger cars,
including: Ford's F-Series truck, Windstar minivan, and Taurus/Sable, Mustang,
Crown Victoria/Grand Marquis and Contour/Mystique passenger cars; General
Motors' Grand Prix/Cutlass passenger car; and Chrysler's Dakota light truck and
Caravan/Voyager minivan.
The Molmec Acquisition is expected to provide the Company with a number of
benefits, including an established market position with strong engineering
capabilities in the growing under-the-hood market for plastic components,
further diversification of revenues through a broader customer base and new
product lines, cost reduction opportunities and a management team with
significant expertise and customer relationships in the under-the-hood market.
During 1993 and 1994, the majority of Molmec's senior management was
replaced with a more experienced and professional management team which has led
to a substantial increase in sales and improved operating performance. The new
management team implemented a number of operating changes which included (i)
establishing a product-focused manufacturing strategy for Molmec's individual
facilities,
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<PAGE> 8
(ii) replacing low margin products with design-intensive integrated systems,
(iii) expanding design, program management and engineering capabilities, and
(iv) implementing a cost reduction program through value analysis and "lean
manufacturing" initiatives. As a result of these efforts and the growing market
for under-the-hood components, Molmec's net sales and EBITDA have increased
substantially from approximately $69.4 million and $3.3 million, respectively,
for the fiscal year ended December 31, 1993, to approximately $88.6 million and
$10.1 million, respectively, for the twelve-month period ended September 29,
1996.
Concurrently with the consummation of the Molmec Acquisition, (i) the
Company issued and sold the Old Notes (the "Initial Offering"), and (ii) the
Company entered into the Senior Credit Facility with Bank America Business
Credit, Inc., as agent, and the other lenders named therein, providing for
borrowings of up to $45 million. The gross proceeds from the Initial Offering,
along with borrowings under the Senior Credit Facility, were used to acquire
Molmec, retire certain indebtedness, general corporate purposes, including
funding for strategic alliances and pay fees and expenses. The Initial Offering,
the Molmec Acquisition and the establishment of the Senior Credit Facility are
referred to herein together as the "Transactions." See "Business--The Molmec
Acquisition" and "Description of Senior Debt--Senior Credit Facility."
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THE EXCHANGE OFFER
THE NEW NOTES................. The forms and terms of the New Notes are
identical in all material respects to the terms
of the Old Notes for which they may be
exchanged pursuant to the Exchange Offer,
except for certain transfer restrictions and
registration rights relating to the Old Notes
described under "--Terms of New Notes."
THE EXCHANGE OFFER............ The Company is offering to exchange up to $110
million aggregate principal amount of 10 3/4%
Senior Subordinated Notes due 2007, Series B
(the "New Notes") for up to $110 million
aggregate principal amount of its outstanding
10 3/4% Senior Subordinated Notes due 2007,
Series A (the "Old Notes"). Old Notes may be
exchanged only in integral multiples of $1,000.
EXPIRATION DATE; WITHDRAWAL OF
TENDER........................ The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1997,
or such later date and time to which it is
extended by the Company (the "Expiration
Date"). The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any time
prior to the Expiration Date. Any Old Notes not
accepted for exchange for any reason will be
returned without expense to the tendering
holder thereof as promptly as practicable after
the expiration or termination of the Exchange
Offer.
CERTAIN CONDITIONS TO THE NOTE
EXCHANGE OFFER................ The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange Offer--Certain
Conditions to the Exchange Offer."
PROCEDURES FOR TENDERING OLD
NOTES......................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions contained
herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with such Old Notes and any
other required documentation to the Exchange
Agent (as defined) at the address set forth
herein. By executing the Letter of Transmittal,
each holder will represent to the Company that,
among other things, (i) any New Notes to be
received by it will be acquired in the ordinary
course of its business, (ii) it has no
arrangement or understanding with any person to
participate in the distribution of the New
Notes and (iii) it is not an "affiliate," as
defined in Rule 405 of the Securities Act, of
the Company or, if it is an affiliate, it will
comply with the registration and prospectus
delivery requirements of the Securities Act to
the extent applicable.
INTEREST ON THE NEW NOTES..... The New Notes will bear interest at the rate of
10 3/4% per annum, payable semiannually on
January 15 and July 15, commencing July 15,
1997 to holders of record on the immediately
preceding January 1 and July 1, respectively.
Holders of the New Notes will receive interest
on July 15, 1997 from the date of initial
issuance of the New Notes, plus an amount equal
to the accrued interest on the Old Notes from
the most recent date to which interest has been
paid to the date of exchange thereof. Interest
on the Old Notes
4
<PAGE> 10
accepted for exchange will cease to accrue upon
issuance of the New Notes.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. Any beneficial owner whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender such Old Notes in the
Exchange Offer should contact such registered
holder promptly and instruct such registered
holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such
owner's name or obtain a properly completed
bond power from the registered holder. The
transfer of registered ownership may take
considerable time and may not be able to be
completed prior to the Expiration Date.
GUARANTEED DELIVERY
PROCEDURES.................... Holders of Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old
Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal
to the Exchange Agent, prior to the Expiration
Date, must tender their Old Notes according to
the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery
Procedures."
REGISTRATION REQUIREMENTS..... The Company has agreed to use its best efforts
to consummate by April 23, 1997 the registered
Exchange Offer pursuant to which holders of the
Old Notes will be offered an opportunity to
exchange their Old Notes for the New Notes
which will be issued without legends
restricting the transfer thereof. In the event
that applicable interpretations of the staff of
the Commission do not permit the Company to
effect the Exchange Offer or in certain other
circumstances, the Company has agreed to file a
Shelf Registration Statement covering resales
of the Old Notes and to use its best efforts to
cause such Shelf Registration Statement to be
declared effective under the Securities Act
and, subject to certain exceptions, keep such
Shelf Registration Statement effective until
three years after the effective date thereof.
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS................ For a discussion of certain federal income tax
considerations relating to the exchange of the
New Notes for the Old Notes, see "Certain U.S.
Federal Income Tax Considerations Relating to
the Exchange Offer."
USE OF PROCEEDS............... There will be no proceeds to the Company from
the exchange of Notes pursuant to the Exchange
Offer.
EXCHANGE AGENT................ IBJ Schroder Bank & Trust Company is the
Exchange Agent. The address and telephone
number of the Exchange Agent are set forth in
"The Exchange Offer--Exchange Agent."
5
<PAGE> 11
TERMS OF THE NEW NOTES
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that the New Notes are registered under the Securities Act
and, therefore, will not bear legends restricting the transfer thereof. See
"Description of the New Notes."
THE OFFERING
New Notes..................... $110 million aggregate principal amount of
10 3/4% Senior Subordinated Notes due 2007,
Series B of the Company.
Maturity Date................. January 15, 2007.
Interest Payment Dates........ January 15 and July 15 of each year, commencing
July 15, 1997.
Ranking....................... The New Notes will be general unsecured
obligations of the Company ranking subordinate
in right of payment with all existing and
future Senior Debt (as defined). As of
September 29, 1996, on a pro forma basis after
giving effect to the Transactions, the Company
would have had approximately $16.2 million of
Senior Debt outstanding. In addition, the
Company would have had available approximately
$31 million of revolving loans undrawn under
its Senior Credit Facility (as defined). See
"Description of Senior Debt."
Guarantors.................... The New Notes will be guaranteed (each, a
"Guarantee") on a senior subordinated basis by
certain of the Company's subsidiaries (the
"Guarantors"). The Guarantees will be
subordinate in right of payment to all
Guarantor Senior Debt (as defined), including
all indebtedness under the Senior Credit
Facility. See "Description of New Notes --
Certain Definitions -- Guarantors."
Optional Redemption........... Except as provided below, the New Notes are not
redeemable at the Company's option prior to
January 15, 2002. Thereafter, the New Notes
will be redeemable, in whole or in part, at the
option of the Company, at the redemption prices
set forth herein plus accrued interest to the
date of redemption. In addition, prior to
January 15, 2000, the Company may, at its
option, redeem up to $25 million principal
amount of Notes originally issued with the net
proceeds from one or more Public Equity
Offerings (as defined herein) at the redemption
price set forth herein plus accrued interest to
the date of redemption; provided that at least
$75 million aggregate principal amount of Notes
would remain outstanding after giving effect to
any such redemption. See "Description of New
Notes -- Redemption."
Change of Control............. In the event of a Change of Control (as defined
herein), the Company will be obligated to make
an offer to purchase all of the outstanding
Notes at a redemption price of 101% of the
principal amount thereof plus accrued interest
to the date of purchase. In the event a Change
of Control were to occur, there can be no
assurance that the Company will have available
funds sufficient to repurchase all of the Notes
that holders elect to tender. See "Description
of New Notes -- Change of Control."
Offer to Purchase............. The Company will be required in certain
circumstances to make an offer to purchase the
New Notes, at a purchase price equal to 100%
6
<PAGE> 12
of the principal amount thereof plus accrued
interest to the date of purchase, with the net
cash proceeds of certain asset sales. See
"Description of New Notes -- Certain Covenants
-- Limitation on Asset Sales."
Certain Covenants............. The indenture under which the Old Notes were
issued and the New Notes will be issued (the
"Indenture") contains covenants including, but
not limited to, covenants with respect to
limitations on the following matters: (i) the
incurrence of additional indebtedness, (ii) the
issuance of preferred stock by subsidiaries,
(iii) the creation of liens, (iv) restricted
payments, (v) the sales of assets and
subsidiary stock, (vi) mergers and
consolidations, (vii) payment restrictions
affecting subsidiaries and (viii) transactions
with affiliates. See "Description of New Notes
-- Certain Covenants."
Risk Factors.................. Holders of Old Notes should carefully consider
the matters set forth under the caption "Risk
Factors" prior to making a decision with
respect to the Exchange Offer. See "Risk
Factors."
7
<PAGE> 13
SUMMARY FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table sets forth (i) summary historical financial data of LDM
Technologies, Inc. for the fiscal years ended September 27, 1992, September 26,
1993, September 25, 1994, September 24, 1995 and September 29, 1996 and (ii)
summary pro forma financial data giving effect to the Molmec Acquisition and the
Offering for the fiscal year ended September 29, 1996. The summary historical
financial data for fiscal 1994, 1995 and 1996 were derived from the audited
consolidated financial statements of LDM included elsewhere in this Prospectus.
The summary historical financial data for fiscal years 1992 and 1993 were
derived from the unaudited consolidated financial statements of LDM. The summary
pro forma statement of operations data and other financial data for the fiscal
year ended September 29, 1996 gives effect to the Molmec Acquisition and the
Initial Offering as if both had occurred on September 25, 1995, and the summary
pro forma balance sheet data at September 29, 1996 gives effect to the Molmec
Acquisition and the Initial Offering as if each had occurred as of such date.
The following table should be read in conjunction with "Selected Financial
Data -- LDM", "Unaudited Pro Forma Consolidated Financial Information",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- LDM" and the historical consolidated financial statements of LDM
presented elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------------------
UNAUDITED AUDITED UNAUDITED
--------------------- --------------------------------- PRO FORMA
SEPT. 27, SEPT. 26, SEPT. 25, SEPT. 24, SEPT. 29, ---------
1992 1993 1994 1995 1996 1996(A)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales(b)....................................... $76,243 $110,251 $177,597 $220,991 $217,759 $306,406
Cost of sales...................................... 59,456 90,674 151,692 182,408 182,896 252,661
Gross profit....................................... 16,787 19,577 25,905 38,584 34,863 53,745
Selling, general and administrative expenses....... 14,735 14,679 17,137 23,515 26,418 40,422
Operating profit................................... 2,052 4,898 8,768 15,069 8,444 13,323
Interest expense................................... 339 779 2,144 3,178 3,280 13,267
Income (loss) from continuing operations, before
extraordinary item(c)............................ 600 3,026 2,570 6,248 1,173 (1,892)
OTHER FINANCIAL DATA
EBITDA(d)(e)....................................... $ 4,820 $ 8,228 $ 15,110 $ 21,261 $ 16,473 $ 26,758
Depreciation and
amortization..................................... 3,680 3,810 6,593 6,778 8,006 13,413
Capital expenditures............................... 1,900 4,000 29,023 15,150 20,286 21,675
Adjusted capital expenditures(f)................... 1,900 4,000 11,594 9,340 8,360 9,749
Ratio of earnings to fixed charges(g).............. 2.9 5.3 3.5 3.9 1.9 1.4
Ratio of EBITDA to interest expense................ 14.2 10.6 7.1 6.7 5.0 2.0
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED AUDITED
--------------------------------- --------------------- UNAUDITED
AT AT AT AT AT PRO FORMA
SEPT. 27, SEPT. 26, SEPT. 25, SEPT. 24, SEPT. 29, ---------
1992 1993 1994 1995 1996 1996(A)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Cash............................................... $ 1,224 $ 318 $ 976 $ 1,138 $ 2,122 $ 10,891
Total assets....................................... 36,390 50,353 86,777 107,655 119,125 204,530
Total debt......................................... 6,998 12,971 36,489 44,936 51,786 126,211
Stockholders' equity............................... 11,548 14,586 17,319 23,635 17,322 17,083
</TABLE>
(footnotes on following page)
8
<PAGE> 14
- ------------------------------
(a) Gives pro forma effect to the Initial Offering and the Molmec Acquisition in
the manner described under "Unaudited Pro Forma Consolidated Financial
Information".
(b) The Company in 1993 acquired a 75% interest in GL Industries of Indiana,
Inc. (d/b/a Como Products) ("Como"), a manufacturer of consumer
thermoplastic components. Net sales of Como for fiscal years 1996, 1995 and
1994 were $22.1 million, $31.8 million and $31.3 million, respectively. See
Note 6, "Segment Data from Continuing Operations" in the Notes to LDM's
Consolidated Financial Statements.
(c) During the fiscal years ended September 27, 1992 and September 26, 1993, LDM
settled separate lawsuits for approximately $1.2 million and $1.4 million,
respectively, relating to an acquisition made in 1988 and the subsequent
sale or transfer of certain of the acquired business assets to LDM.
(d) EBITDA is defined as income from continuing operations before the effect of
changes in accounting principles and extraordinary items plus the following:
interest, income taxes, depreciation and amortization. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to incur and service debt. However, EBITDA should not be considered in
isolation as a substitute for net income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure of
a company's profitability or liquidity.
(e) The Company's 1996 pro forma EBITDA of approximately $26.8 million includes
a $1.2 million charge related to Molmec's termination of its existing
key-man bonus program. The Company believes that this charge may be viewed
as a non-recurring item. If such charge were excluded, the Company's 1996
pro forma EBITDA would be approximately $28.0 million.
(f) Adjusted capital expenditures exclude the following items: (i) approximately
$12.0 million in capital expenditures during fiscal year 1996 and
approximately $5.8 million during fiscal year 1995 associated with the
construction of the Company's new Design Center in Auburn Hills, Michigan,
and (ii) approximately $17.4 million in fiscal year 1994 related to the
acquisition of the Leamington, Ontario facility.
(g) For purposes of the ratio of earnings to fixed charges, (i) earnings include
income from continuing operations before the following: income taxes, the
effect of changes in accounting principles, extraordinary items, minority
interests, and fixed charges and (ii) fixed charges include interest on all
indebtedness, amortization of deferred financing costs and the portion of
rental expense that the Company believes to be representative of interest.
The 1996 pro forma ratio of earnings to fixed charges of 1.4 gives effect
only to the change in interest expense related to the replacement of
existing debt. On a pro forma basis adjusted to give effect to both the
Initial Offering and the Molmec Acquisition, fixed charges would have
exceeded earnings by $0.8 million.
9
<PAGE> 15
RISK FACTORS
Holders of Old Notes should carefully consider the following factors set
forth below as well as the other information included in this Prospectus in
connection with the Exchange Offer. The risk factors set forth below are
generally applicable to the Old Notes as well as the New Notes.
SIGNIFICANT LEVERAGE AND DEBT SERVICE
After giving effect to the Transactions, the Company has indebtedness which
is substantial in relation to its stockholders' equity, as well as interest and
debt service requirements which are significant compared to its cash flow from
operations. As of September 29, 1996, on a pro forma basis after giving effect
to the Transactions, the Company would have had approximately $126.2 million of
debt outstanding, including the Notes. In addition, the Company would have had
available approximately $31 million of revolving loans undrawn under the Senior
Credit Facility. For the year ended September 29, 1996, the Company's ratio of
EBITDA to interest expense was approximately 2.0 to 1 on a pro forma basis after
giving effect to the Transactions.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including, but not limited to the following: (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to debt service and will not be available for other purposes; and (ii) the
Company's ability to obtain additional debt financing in the future for working
capital, capital expenditures or acquisitions may be limited.
The Company's ability to pay interest on the Notes and to satisfy its other
obligations will depend upon its future operating performance, which will be
affected by prevailing economic conditions and financial, business and other
factors, many of which are beyond its control. The Company anticipates that its
operating cash flow together with available borrowings under the Senior Credit
Facility, will be sufficient to meet its operating expenses and to service
interest requirements on its debt obligations as they become due. The Company
may be required to refinance the Notes at maturity. No assurance can be given
that, if required, the Company will be able to refinance the Notes on terms
acceptable to it, if at all. If the Company is unable to service its
indebtedness, it will be forced to adopt an alternative strategy that may
include actions such as reducing or delaying capital expenditures, selling
assets, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these strategies could be
effected on terms acceptable to it, if at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- LDM -- Liquidity
and Capital Resources."
The Indenture contains certain restrictive covenants which will affect, and
in many respects significantly limit or prohibit, among other things, the
ability of the Company to incur indebtedness, make prepayments of certain
indebtedness, make investments, engage in transactions with affiliates, create
liens, sell assets and engage in mergers and consolidations. The Senior Credit
Facility contains similar and more restrictive covenants and also requires the
Company to meet certain financial ratios and tests. These covenants may
significantly limit the operating and financial flexibility of the Company and
may limit its ability to respond to changes in its business or competitive
activities. The ability of the Company to comply with such provisions may be
affected by events beyond its control. In the event of any default under the
Senior Credit Facility, the lenders thereunder could elect to declare all
amounts borrowed under the Senior Credit Facility, together with accrued
interest, to be due and payable. If the Company were unable to repay such
borrowings, the lenders thereunder could proceed against the collateral securing
the Senior Credit Facility, which consists of substantially all of the property
and assets of the Company. If the indebtedness under the Senior Credit Facility
were to be accelerated, there can be no assurance that the assets of the Company
would be sufficient to repay such indebtedness and the Notes in full. See
"Description of Senior Debt -- Senior Credit Facility."
SUBORDINATION
The Notes are subordinated in right of payment to all Senior Debt of the
Company, including, as of September 29, 1996, approximately $16.2 million of
indebtedness under the Molmec Bonds (as defined) and the Arrow Bonds (as
defined) and borrowings under the Senior Credit Facility. In addition, the
Guarantee of
10
<PAGE> 16
each Guarantor is subordinate in right of payment to all Guarantor Senior Debt
of such Guarantor, including indebtedness under the Senior Credit Facility. See
"Description of Senior Debt." In the event of the bankruptcy, liquidation or
reorganization of the Company, the assets of the Company will be available to
pay obligations on the Notes only after all Senior Debt has been paid in full
and sufficient assets may not remain to pay amounts due on any or all of the
Notes then outstanding. In certain circumstances, provisions of the Senior Debt
could prohibit payments of amounts due to holders of the Notes. See "Description
of New Notes -- Subordination." As of September 29, 1996, on a pro forma basis
after giving effect to the Transactions, the Company would have had Senior Debt
in an aggregate amount of approximately $16.2 million. Additional Senior Debt
may be incurred by the Company from time to time, subject to certain
limitations. See "Description of New Notes -- Certain Covenants -- Limitation on
Incurrence of Additional Indebtedness."
RISK OF FRAUDULENT TRANSFER CONSIDERATIONS
The incurrence by a Guarantor of indebtedness under its Guarantee would be
subject to review under relevant federal and state fraudulent transfer laws in a
bankruptcy case or a lawsuit by or on behalf of unpaid creditors of such
Guarantor or a representative of such creditors, such as a trustee or such
Guarantor as debtor-in-possession. Management believes the indebtedness
represented by the Guarantees is being incurred for proper purposes and in good
faith, and that based on present forecasts, asset valuations and other financial
information, each Guarantor is, solvent, has sufficient capital for carrying on
its business and is able to pay its debts as they mature. Notwithstanding
management's belief, if a court were to find that, at the time of the incurrence
of indebtedness represented by a Guarantee, a Guarantor was insolvent, was
rendered insolvent by reason of such incurrence, was engaged in a business or
transaction for which its remaining assets constituted unreasonably small
capital, intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured, or intended to hinder, delay or
defraud its creditors, such court could, among other things, void all or a
portion of such indebtedness and/or subordinate such indebtedness to other
existing and future indebtedness of such Guarantor, the effect of which would be
to entitle such other creditors to be paid in full before any payment could be
made on the Guarantee. The measure of insolvency for purposes of the foregoing
will vary depending upon the law of the relevant jurisdiction. Generally,
however, a Guarantor would be considered insolvent for purposes of the foregoing
if the sum of its debts is greater than all its property at a fair valuation, or
if the present fair saleable value of its assets is less than the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured.
COMPANY STRUCTURE
LDM derived approximately 27% of its fiscal year 1996 net sales from its
subsidiaries. Any right of the holders of the Notes to participate in the assets
of a subsidiary of the Company upon any liquidation or reorganization of such
subsidiary will be subject to the prior claims of such subsidiary's creditors,
including trade creditors. Accordingly, the Notes are structurally subordinated
to all liabilities, including trade payables, of the subsidiaries of the
Company.
INTERNATIONAL OPERATIONS
LDM derived approximately 17% of its fiscal year 1996 net sales from its
indirect Canadian subsidiary, LDM Technologies Company, a Nova Scotia unlimited
liability company ("LDM Canada"). The Company's international operations are
subject to risks inherent in international business activities, including, in
particular, compliance with a variety of foreign laws and regulations,
unexpected changes in regulatory requirements, overlap of different tax
structures, foreign currency exchange rate fluctuations and general economic
conditions. See Note 6, "Segment Data from Continuing Operations" of the Notes
to LDM's Consolidated Financial Statements.
THE OEM SUPPLIER INDUSTRY
The Company competes in the North American automotive original equipment
manufacturer supplier industry. The OEM supplier industry is highly cyclical
and, in large part, dependent upon the overall strength of consumer demand for
light trucks and passenger cars. There can be no assurance that the automotive
11
<PAGE> 17
industry for which the Company supplies components and systems will not
experience downturns in the future. An economic recession typically impacts
substantially leveraged companies such as the Company more than similarly
situated companies with less leverage. A decrease in overall consumer demand for
light trucks or passenger cars could have a material adverse effect on the
Company's financial condition and results of operations.
The automotive industry is characterized by a small number of OEM customers
that are able to exert considerable pressure on component and system suppliers
to reduce costs, improve quality and provide additional design and engineering
capabilities. In the past, OEMs have generally demanded and received price
reductions and measurable increases in quality by implementing competitive
selection processes, rating programs and various other arrangements. Also,
through increased partnering on platform work, OEMs have generally required
component and system suppliers to provide more design engineering input at
earlier stages of the product development process, the costs of which have, in
some cases, been absorbed by the suppliers. There can be no assurance that
future price reductions, increased quality standards or additional engineering
capabilities required by OEMs will not have a material adverse effect on the
financial condition or results of operations of the Company.
COMPETITION
The Company operates in an industry which is highly competitive. There can
be no assurance that the Company's products will continue to compete
successfully with the products of competitors, including the automotive OEMs
themselves, many of which are significantly larger and have greater financial
and other resources than the Company. Management believes that the Company's
experience in design engineering and implementing cost reduction programs and
its ability to control manufacturing and development costs should allow the
Company's product prices to remain competitive. However, there can be no
assurance that the Company will be able to improve or maintain its profit
margins on sales to OEM customers. See "Business -- Competition".
RELIANCE ON PRINCIPAL CUSTOMERS
Sales to the Company's two largest customers, Ford and General Motors,
accounted for approximately 43% and 30%, respectively, of the Company's pro
forma consolidated net product sales in fiscal year 1996. Although the Company
has ongoing supply relationships with Ford and General Motors, there can be no
assurance that sales to these customers will continue at the same levels.
Furthermore, continuation of these relationships is dependent upon the
customers' satisfaction with the price, quality and delivery of the Company's
products. While management believes its relationships with its customers are
mutually satisfactory, if any of these customers were to reduce substantially or
discontinue their purchases from the Company, the financial condition and
results of operations of the Company would be materially adversely affected. See
"Business -- Customers".
INTEGRATION OF MOLMEC
As a result of the Molmec Acquisition, management will have to integrate
into its current business a large, complex manufacturing operation. Management
believes that it has or can obtain the resources necessary to integrate this
business and capitalize on the strengths of Molmec. Integration of the Molmec
business is, however, subject to numerous contingencies, many of which are
beyond management's control. Accordingly, no assurance can be given that the
Company will be able to successfully integrate the Molmec business. If the
Company is not successful in integrating the Molmec business with LDM's
business, it could have a materially adverse effect on the Company's financial
condition and results of operation. See "Business -- The Molmec Acquisition".
CONTROL BY PRINCIPAL SHAREHOLDERS
Richard J. Nash and Joe Balous, each a founder, director and shareholder of
the Company (the "Shareholders"), hold beneficially all of the outstanding
capital stock of the Company. Circumstances may
12
<PAGE> 18
occur in which the interests of the Shareholders could be in conflict with the
interests of the holders of the Notes. For example, if the Company encounters
financial difficulties, or is unable to pay certain of its debts as they mature,
the interests of the Shareholders might conflict with those of the holders of
the Notes. In addition, the Shareholders may have an interest in pursuing
acquisitions, divestitures or other transactions that, in their judgment, could
enhance their equity investment, even though such transactions might involve
risks to the holders of the Notes.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to a wide variety of
international, federal, state and local laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials, substances and wastes, the
remediation of contaminated soil and groundwater, and the health and safety of
employees (collectively, "Environmental Laws"). As such, the nature of the
Company's operations exposes it to the risk of claims with respect to such
matters and there can be no assurance that material costs or liabilities will
not be incurred in connection with such claims.
The Company has taken steps, including the installation of a Facilities
Coordinator, to reduce the environmental risks associated with its operations
and believes that it is currently in substantial compliance with applicable
Environmental Laws. Currently, the Company is involved in negotiations with the
State of Ohio Environmental Protection Agency ("OEPA") concerning air emissions
from the Byesville, Ohio facility. The Company has installed control equipment
and conducted air compliance inspections to bring the operations into compliance
with applicable Environmental Laws. The Company is in the process of negotiating
a consent decree with OEPA to settle a civil penalty for past air permitting and
emissions violations. In addition, the Company has received a notice of
violation letter from OEPA for past violations of air pollution control laws at
the Company's Circleville, Ohio facility. Under the applicable Environmental
Laws, the government can seek civil penalties. The Company has reserved
approximately $250,000 to cover liabilities associated with these two matters;
however, no assurance can be given that the actual amount of these liabilities
will not exceed this reserve.
The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA") and similar state laws impose liability, without
regard to fault or to the legality of the original action, on certain classes of
persons (referred to as potentially responsible parties or "PRPs") associated
with the release or threat of release of certain hazardous substances into the
environment. Generally, liability to the government under CERCLA is joint and
several. Financial responsibility for the remediation of contaminated property
or for natural resource damages can extend to properties owned by third parties.
The Company has received a letter dated October 30, 1996 from a group of
corporations which has entered into an agreement with the United States
Environmental Protection Agency ("EPA") to prepare a remedial design for curing
a failed third-party landfill site in Circleville, Ohio. This letter alleges
that the Company is a PRP under CERCLA in connection with the historic disposal
of hazardous substances at the landfill. The Company has also received a letter
dated December 6, 1996 from a PRP having potential liability with respect to a
failed third-party landfill site in Byesville, Ohio. The letter provides notice
of a private contribution action relating to the Company's alleged PRP liability
under CERCLA in connection with the historic disposal of hazardous substances at
the landfill. The Company is currently investigating these claims but has no
reason to believe that any liability associated with these claims will have a
material effect on the Company's financial position or results of operations.
Based upon its experience to date, the Company believes that the future
cost of compliance with existing Environmental Laws, and liability for known
environmental claims pursuant to such Laws, will occur over a number of years
and not have a material adverse effect on the Company's financial position or
results of operations. However, future events, such as new information, changes
in existing Environmental Laws or their interpretation, and more vigorous
enforcement by regulatory authorities, may give rise to additional expenditures
or liabilities that could be material.
13
<PAGE> 19
SEASONALITY
The Company's automotive business is subject to seasonal fluctuations and,
historically, the Company has reported lower net sales and profitability in its
fiscal fourth quarter due principally to the closure of many automotive OEM
facilities in July due to model changeover and summer vacation.
CONSEQUENCES OF FAILURE TO EXCHANGE; POSSIBLE ADVERSE EFFECT ON TRADING MARKET
FOR OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Notes as set forth in the legend thereon as a consequence of
the issuance of the Old Notes pursuant to exemptions from, or in transactions
not subject to, the registration requirements of the Securities Act and
applicable state securities laws. In general, the Old Notes may not be offered
or sold unless registered under the Securities Act and applicable state laws, or
pursuant to an exemption therefrom. Subject to the obligation by the Company to
file a Shelf Registration Statement covering resales of Old Notes in certain
circumstances, the Company does not intend to register the Old Notes under the
Securities Act and, after consummation of the Exchange Offer, will not be
obligated to do so. In addition, any holder of Old Notes who tenders in the
Exchange Offer for the purpose of participating in a distribution of the New
Notes may be deemed to have received restricted securities and, if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Additionally, as a
result of the Exchange Offer, it is expected that a substantial decrease in the
aggregate principal amount of Old Notes outstanding will occur. As a result, it
is unlikely that a liquid trading market will exist for the Old Notes at any
time. This lack of liquidity will make transactions more difficult and may
reduce the trading price of the Old Notes. See "The Exchange Offer" and "Old
Notes; Registration Rights."
ABSENCE OF PUBLIC MARKET
There is no existing market for the New Notes and, although the Notes have
been approved for trading in the PORTAL Market upon issuance to "qualified
institutional buyers" (as defined in Rule 144A), there can be no assurance as to
the liquidity of any markets that may develop for the Notes, the ability of
holders to sell the Notes or the price at which holders would be able to sell
the Notes. Future trading prices of the New Notes will depend on many factors,
including, among other things, prevailing interest rates, the Company's
operating results and the market for similar securities. Historically, the
market for securities similar to the New Notes, including non-investment grade
debt, has been subject to disruptions that have caused substantial volatility in
the prices of such securities. There can be no assurance that any market for the
New Notes, if such market develops, will not be subject to similar disruptions.
The Initial Purchaser has advised the Company that it currently intends to make
a market in the New Notes offered hereby. However, the Initial Purchaser is not
obligated to do so and any market making may be discontinued at any time without
notice.
USE OF PROCEEDS OF NEW NOTES
This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any proceeds from the issuance of the New Notes offered hereby. In consideration
for issuing the New Notes as contemplated in this Prospectus, the Company will
receive, in exchange, Old Notes in like principal amount. The form and terms of
the New Notes are identical in all material respects to the form and terms of
the Old Notes, except as otherwise described herein under "The Exchange
Offer--Terms of the Exchange Offer." The Old Notes surrendered in exchange for
the New Notes will be retired and cancelled and cannot be reissued. Accordingly,
issuance of the New Notes will not result in any increase in the outstanding
debt of the Company.
14
<PAGE> 20
CAPITALIZATION
The following table sets forth the cash and the capitalization of LDM at
September 29, 1996, on a historical basis, and of the Company, on an as adjusted
basis, giving effect to the Initial Offering and application of the net proceeds
therefrom and the Molmec Acquisition. The historical and as adjusted data should
be read in conjunction with the historical financial statements of LDM and the
Unaudited Pro Forma Consolidated Financial Information of the Company included
elsewhere herein.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 29, 1996
(DOLLARS IN THOUSANDS)
---------------------------
HISTORICAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Cash................................................ $ 2,122 $ 10,891
======= ========
Short-term borrowings............................... $21,023 $ 1,889
Long-term debt, including current portion:
Senior Credit Facility(1)......................... -- --
Other long-term debt.............................. 30,763 14,322
10 3/4% Senior Subordinated Notes due 2007........ -- 110,000
------- --------
Total long-term debt, including current
portion...................................... 30,763 124,322
Stockholders' equity................................ 17,322 17,083
------- --------
Total capitalization........................... $69,108 $143,294
======= ========
</TABLE>
- ------------------------------
(1) The Senior Credit Facility provides borrowings of up to $31 million of
revolving loans for working capital, capital expenditures and general
corporate purposes and is secured by liens on substantially all of the
assets of the Company. See "Description of Senior Debt -- Senior Credit
Facility".
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Pursuant to the Registration Rights Agreement by and among the Company, the
Guarantors and the Initial Purchaser, the Company has agreed (i) to file a
registration statement with respect to an offer to exchange the Old Notes for
New Notes of the Company with terms substantially identical to the Old Notes
(except that the New Notes will not contain terms with respect to transfer
restrictions) within 30 days after the date of original issuance of the Old
Notes and (ii) to use best efforts to cause such registration statement to
become effective under the Securities Act within 90 days after such issue date.
In the event that applicable law or interpretations of the staff of the
Commission do not permit the Company to file the registration statement
containing this Prospectus or to effect the Exchange Offer, or if certain
holders of the Old Notes notify the Company that they are not permitted to
participate in, or would not receive freely tradeable New Notes pursuant to, the
Exchange Offer, the Company will use its best efforts to cause to become
effective a Shelf Registration Statement with respect to the resale of the Old
Notes and to keep the Shelf Registration Statement effective until three years
after the effective date thereof. The interest rate on the Old Notes is subject
to increase under certain circumstances if the Company is not in compliance with
its obligations under the Registration Rights Agreement. See "Old Notes;
Registration Rights."
Each holder of the Old Notes who wishes to exchange such Old Notes for New
Notes in the Exchange Offer will be required to make certain representations,
including representations that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement with
any person to participate in the distribution of the New Notes and (iii) it is
not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company
or, if it is an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable. See "Old
Notes; Registration Rights."
15
<PAGE> 21
RESALE OF NEW NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third-parties, the Company believes that, except as
described below, New Notes issued pursuant to the Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by any
holder thereof (other than a holder which is an "affiliate" of the Company
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 New Notes are acquired in the ordinary course of such
holder's business and such holder does not intend to participate and has no
arrangement or understanding with any person to participate in the distribution
of such New Notes. Any holder who tenders in the Exchange Offer with the
intention or for the purpose of participating in a distribution of the New Notes
cannot rely on such interpretation by the staff of the Commission and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Unless an
exemption from registration is otherwise available, 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. This Prospectus may be used for an offer to resell, resale or
other retransfer of New Notes only as specifically set forth herein. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where such Old 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 New Notes. See
"Plan of Distribution."
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 Company will accept for exchange any and
all Old Notes properly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. The Company will issue $1,000 principal
amount of New Notes in exchange for each $1,000 principal amount of outstanding
Old Notes surrendered pursuant to the Exchange Offer. Old Notes may be tendered
only in integral multiples of $1,000.
The form and terms of the New Notes will be the same as the form and terms
of the Old Notes except the New Notes will be registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes. The New Notes will be issued
under and entitled to the benefits of the Indenture, which also authorized the
issuance of the Old Notes, such that both series will be treated as a single
class of debt securities under the Indenture.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange.
As of the date of this Prospectus, $110 million aggregate principal amount
of the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Notes. There will be
no fixed record date for determining registered holders of Old Notes entitled to
participate in the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable requirements
of the Exchange Act, and the rules and regulations of the Commission thereunder.
Old Notes which are not tendered for exchange in the Exchange Offer will remain
outstanding and continue to accrue interest and will be entitled to the rights
and benefits such holders have under the Indenture and the Registration Rights
Agreement.
The Company shall be deemed to have accepted for exchange properly tendered
Old Notes when, as and if the Company shall have given oral or written notice
thereof to the Exchange Agent and complied with the provisions of Section 2 of
the Registration Rights Agreement. The Exchange Agent will act as agent for the
tendering holders for the purposes of receiving the New Notes from the Company.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions specified below under
"--Certain Conditions to the Exchange Offer."
16
<PAGE> 22
Holders who tender Old 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 Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See --"Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date," shall mean 5:00 p.m., New York City time on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders of Old Notes an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the then Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting for exchange any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer if any of the conditions set forth below under
- --"Certain Conditions to the Exchange Offer" 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 oral or written notice thereof to the
registered holders of Old Notes. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders, and the Company will extend the
Exchange Offer, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such period.
INTEREST ON THE NEW NOTES
The New Notes will bear interest at a rate of 10 3/4% per annum, payable
semi-annually, on each January 15 and July 15, commencing July 15, 1997. Holders
of New Notes will receive interest on July 15, 1997 from the date of initial
issuance of the New Notes, plus an amount equal to the accrued interest on the
Old Notes from the most recent date to which interest has been paid to the date
of exchange thereof for New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange any New Notes for, any Old
Notes, and may terminate the Exchange Offer as provided herein before the
acceptance of any Old Notes for exchange, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the Company's sole judgment, might materially impair the ability
of the Company to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by
the staff of the Commission, which, in the Company's sole judgment, might
materially impair the ability of the Company to proceed with the Exchange
Offer; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the holders thereof. During any such
extensions, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the
17
<PAGE> 23
Company. Any Old Notes not accepted for exchange for any reason will be returned
without expense to the tendering holder thereof as promptly as practicable after
the expiration or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified above under "--Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA").
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or facsimile thereof, have the signature thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile to the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date. In addition, either
(i) Old Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's account at the Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below. To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under --"Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS 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 OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder of Old Notes to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of Transmittal and delivering
such owner's Old Notes, either make appropriate arrangements to register
18
<PAGE> 24
ownership of the Old Notes in such owner's name or obtain a properly completed
bond power from the registered holder of Old Notes. The transfer of registered
ownership may take considerable time and may not be able to be completed prior
to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case be, must be guaranteed by an Eligible Institution (as defined
below) unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
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 Transmittal or a notice of withdrawal, as the case may be, are required
to be guaranteed, such guarantor must be 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 which is a member of one of the recognized
signature guarantee programs identified in the Letter of Transmittal (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers 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 Company,
evidence satisfactory to the Company 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 Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The Company'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 Old Notes must be cured within such time as the Company shall determine.
Although the Company intends to notify holders of defects or irregularities with
respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old 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.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of Notes or a timely Book-Entry Confirmation of such Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal and all other
required documents. If any tendered Old Notes are not accepted for exchange for
any reason set forth in the terms and conditions of the Exchange Offer or if Old
Notes are submitted for a greater principal amount than the holder desires to
exchange, such unaccepted or non-exchanged Old Notes will be returned without
expense to the tendering holder thereof (or, in the case of Old Notes tendered
by book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry transfer procedures described
below, such non-exchanged Notes will be credited to an account maintained with
such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the Exchange Offer.
19
<PAGE> 25
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of the Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at the address
set forth below under "--Exchange Agent" on or prior to the Expiration Date or,
if the guaranteed delivery procedures described below are to be complied with,
within the time period provided under such procedures. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent 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 registered number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
(3) New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the Old Notes or
a Book-Entry Confirmation, as the case may be, 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 Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within three (3) 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 Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes were registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the
20
<PAGE> 26
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering" above at any time on or
prior to the Expiration Date.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as Exchange Agent of
the Exchange Offer. Questions and request for assistance, request for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<CAPTION>
By Mail: Telephone Number: By Hand or Overnight Delivery:
<C> <C> <C>
P.O. Box 84 (212) 858-2103 One State Street
Bowling Green Station New York, N.Y. 10004
New York, N.Y. 10274-0084 Facsimile Number: Attention: Reorganization
Attention: Reorganization Operations Department,
Operations Department (212) 858-2611 Securities Processing Window,
Attention: Reorganization Subcellar One (SC-1)
Operations Department
Telex: 177754
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to broker-dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, 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.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include registration fees, fees and
expenses of the Exchange Agent and Trustee, accounting and legal fees and
printing costs, and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Notes pursuant to the Exchange Offer. If, however, certificates representing
Old 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 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 Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory
21
<PAGE> 27
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes, as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes under the Securities Act. Based on
interpretations by the staff of the Commission, New Notes issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than any such holder which is an "affiliate" of the
Company 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 New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with respect to the distribution of the New Notes to be acquired pursuant to the
Exchange Offer. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes (i) could not rely on the
applicable interpretations of the staff of the Commission and (ii) must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction. In addition, to comply with
the securities laws of certain jurisdictions, if applicable, the New Notes may
not be offered or sold unless they have been registered or complied with. The
Company has agreed, pursuant to the Registration Rights Agreement and subject to
certain specified limitations therein, to register or qualify the New Notes for
offer or sale under the securities or blue sky laws of such jurisdictions as any
holder of the New Notes reasonably requests in writing.
22
<PAGE> 28
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated statement of
operations of the Company, for the fiscal year ended September 29, 1996, gives
effect to the Molmec Acquisition and the Initial Offering as if such events had
occurred on September 25, 1995. The following unaudited pro forma condensed
consolidated balance sheet at September 29, 1996 gives effect to the Molmec
Acquisition and the Initial Offering as if such events had occurred on that
date. The unaudited pro forma consolidated financial information does not
purport to represent what the Company's financial position or results of
operations would actually have been had the transactions occurred on the dates
indicated above or to project the Company's financial position or results of
operations for any future date or period. This unaudited pro forma consolidated
financial information should be read in conjunction with the accompanying notes
and with the historical financial statements of LDM and Molmec, including the
notes thereto, and the information set forth in "Summary Financial Data",
"Selected Financial Data", "Management's Discussion and Analysis of Operations
and Financial Condition -- LDM" and "Management's Discussion and Analysis of
Operations and Financial Condition -- Molmec", all included elsewhere herein.
The Company's 1996 pro forma EBITDA of approximately $26.8 million includes
a $1.2 million charge related to Molmec's termination of its existing key-man
bonus program. The Company believes that this charge may be viewed as a
non-recurring item. If such charge were excluded, the Company's 1996 pro forma
EBITDA would be approximately $28.0 million.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE-MONTH PERIOD ENDED SEPTEMBER 29, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MOLMEC
LDM MOLMEC MOLMEC PRO FINANCING
HISTORICAL HISTORICAL ADJUSTMENTS FORMA ADJUSTMENTS PRO FORMA
---------- ---------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Product sales................ $192,471 $81,052 $81,052 $273,523
Mold sales................... 25,288 7,595 7,595 32,883
-------- ------- ------- --------
217,759 88,647 88,647 306,406
Cost of sales:
Product cost of sales........ 160,094 61,780 $ 1,058(a) 62,838 222,932
Mold cost of sales........... 22,802 6,927 6,927 29,729
-------- ------- ------- ------- --------
182,896 68,707 1,058 69,765 252,661
-------- ------- ------- ------- --------
Gross profit................... 34,863 19,940 (1,058) 18,882 53,745
Selling, general and
administrative expenses...... 26,418 12,440 1,564(b) 14,004 40,422
-------- ------- ------- ------- --------
Operating profit............. 8,445 7,500 (2,622) 4,878 13,323
Interest expense............... 3,280 1,461 (1,141)(c) 320 $ 9,667(e) 13,267
Other expense, net............. 57 57
-------- ------- ------- ------- ------- --------
Income (loss) from continuing
operations before income
taxes and minority
interests................. 5,108 6,039 (1,481) 4,558 (9,667) (1)
Provision for income taxes..... 4,014 1,823(d) 1,823 (3,867)(f) 1,970
-------- ------- ------- ------- ------- --------
Income (loss) from continuing
operations before minority
interests.................... 1,094 6,039 (3,304) 2,735 (5,800) (1,971)
Minority interest.............. 79 79
-------- ------- ------- ------- ------- --------
Income (loss) from continuing
operations before accounting
change and extraordinary
item......................... $ 1,173 $ 6,039 $(3,304) $ 2,735 $(5,800) $ (1,892)
======== ======= ======= ======= ======= ========
OTHER FINANCIAL DATA:
EBITDA......................... $ 16,473 $10,075 $ 210 $10,285 -- $ 26,758
Depreciation and
amortization................. 8,006 2,575 2,832 5,407 -- 13,413
Ratio of EBITDA to interest
expense...................... 5.0 6.9 2.0
Ratio of total debt to
EBITDA....................... 3.1 1.1 4.7
</TABLE>
23
<PAGE> 29
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 29, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUISITION
LDM MOLMEC AND VALUATION FINANCING
HISTORICAL HISTORICAL OF MOLMEC ADJUSTMENTS PRO FORMA
---------- ---------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash............................. $ 2,122 $(55,390)(g) $ 64,159(n) $ 10,891
Accounts receivable (less
allowance for doubtful
accounts)..................... 35,481 $11,859 47,340
Inventories...................... 11,833 3,364 671(h) 15,868
Mold costs....................... 7,129 578 7,707
Other current assets............. 1,648 443 2,091
-------- ------- -------- -------- --------
Total current assets............... 58,213 16,244 (54,719) 64,159 83,897
Property, plant, and equipment,
net.............................. 58,956 15,241 5,100(i) 79,297
Molmec goodwill.................... 34,456(j) 34,456
Other assets....................... 1,956 588 (350)(k) 4,686(o) 6,880
-------- ------- -------- -------- --------
$119,125 $32,073 $(15,513) $ 68,845 $204,530
======== ======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term borrowings............ $ 21,023 $ 544 $ (544)(l) $(19,134)(p) $ 1,889
Accounts payable................. 30,834 9,397 40,231
Accrued liabilities.............. 11,800 1,640 13,440
Advance payments from
customers..................... 3,661 3,661
Income taxes payable............. 2,459 (160)(q) 2,299
Current maturities of long-
term debt..................... 28,742 1,595 (1,395)(l) (28,282)(p) 660
-------- ------- -------- -------- --------
Total current liabilities.......... 98,519 13,176 (1,939) (47,576) 62,180
Long-term debt due after one
year............................. 2,021 9,183 (4,202)(l) 110,000(r) 123,662
6,660(p)
Deferred income taxes.............. 841 841
Minority interests................. 422 422
Other long-term liabilities........ 342 342
Stockholders' equity............... 17,322 9,372 (9,372)(m) (239)(q) 17,083
-------- ------- -------- -------- --------
$119,125 $32,073 $(15,513) $ 68,845 $204,530
======== ======= ======== ======== ========
</TABLE>
24
<PAGE> 30
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(a) To increase Molmec's cost of sales by $523 to reflect the first-in,
first-out method of accounting for inventory costs and to increase
depreciation expense by $535 as a result of the allocation of the purchase
price of Molmec.
(b) Reflects (i) amortization of goodwill, amounting to $2,297, from the
acquisition of Molmec, assuming a 15 year amortization period, less (ii)
assumed savings of $733 from a planned reduction of personnel.
(c) To reduce pro forma interest expense for the interest on Molmec debt
obligations not assumed by LDM.
(d) To provide income taxes on the pro forma pretax income of Molmec using an
assumed effective tax rate of 40%.
(e) Represents the incremental interest expense, using an interest rate of
10 3/4%, on the Notes, the amortization of additional debt issuance costs,
and the additional fees associated with the Senior Credit Facility.
(f) Tax effect of incremental of pro forma adjustments to pretax income using an
incremental income tax rate of 40%.
(g) Reflects the assumed cash acquisition cost of Molmec, including costs
related to the Acquisition.
(h) To adjust Molmec inventory to the first-in, first-out method of accounting
for inventory costs.
(i) To adjust property, plant and equipment of Molmec to fair value.
(j) To record goodwill related to the acquisition of Molmec, amounting to
$34,456.
(k) To eliminate Molmec assets not acquired.
(l) To adjust for Molmec debt obligations not assumed by LDM.
(m) To eliminate the historical stockholders' equity of Molmec.
(n) Cash proceeds from the Notes, net of debt issuance costs and debt assumed to
be repaid with the proceeds from the Notes.
(o) Incremental debt issuance costs related to the Notes and the Senior Credit
Facility.
(p) Reflects the elimination of debt assumed to be repaid with the proceeds from
the Notes and the reclassification to long-term of the Multi-Option
Adjustable Rate Notes assuming a replacement letter of credit is obtained.
(q) To write off debt issuance costs related to debt repaid with the proceeds
from the Notes along with the applicable income tax effect.
(r) Reflects the increase in debt related to borrowings on the Notes.
25
<PAGE> 31
SELECTED FINANCIAL DATA -- LDM
(DOLLARS IN THOUSANDS)
The following table sets forth selected historical financial data of LDM
Technologies, Inc. for the fiscal years ended September 27, 1992, September 26,
1993, September 25, 1994, September 24, 1995 and September 29, 1996. The
selected financial data for fiscal years 1994, 1995 and 1996 were derived from
the audited consolidated financial statements of LDM included elsewhere in this
Prospectus. The selected financial data for fiscal years 1992 and 1993 were
derived from the unaudited consolidated financial statements of LDM. The
following table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- LDM" and the
historical consolidated financial statements of LDM presented elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------------------------------
UNAUDITED AUDITED
----------------------------- ---------------------------------------------
SEPTEMBER 27, SEPTEMBER 26, SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 29,
1992 1993 1994 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales(a).................... $76,243 $110,251 $177,597 $220,991 $217,759
Cost of sales................... 59,456 90,674 151,692 182,408 182,896
Gross profit.................... 16,787 19,577 25,905 38,584 34,863
Selling, general and
administrative expenses....... 14,735 14,679 17,137 23,515 26,418
Operating profit................ 2,052 4,898 8,768 15,069 8,444
Interest expense................ 339 779 2,144 3,178 3,280
Income from continuing
operations, before
extraordinary items(b)........ 600 3,026 2,570 6,248 1,173
OTHER FINANCIAL DATA
EBITDA(c)....................... $ 4,820 $ 8,228 $ 15,110 $ 21,261 $ 16,473
Depreciation and amortization... 3,680 3,810 6,593 6,778 8,006
Capital expenditures............ 1,900 4,000 29,023 15,150 20,286
Adjusted capital
expenditures(d)............... 1,900 4,000 11,594 9,340 8,360
Ratio of earnings to fixed
charges(e).................... 2.9 5.3 3.5 3.9 1.9
Ratio of EBITDA to interest
expense....................... 14.2 10.6 7.1 6.7 5.0
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED AUDITED
--------------------------------------------- -----------------------------
AT AT AT AT AT
SEPTEMBER 27, SEPTEMBER 26, SEPTEMBER 25, SEPTEMBER 24, SEPTEMBER 29,
1992 1993 1994 1995 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Cash............................ $ 1,224 $ 318 $ 976 $ 1,138 $ 2,122
Total assets.................... 36,390 50,353 86,777 107,655 119,125
Total debt...................... 6,998 12,971 36,489 44,936 51,786
Stockholders' equity............ 11,548 14,586 17,319 23,635 17,322
</TABLE>
- ------------------------------
(a) In 1993, the Company acquired a 75% interest in Como, a manufacturer of
consumer thermoplastic components. Net sales of Como for fiscal years 1996,
1995 and 1994 were $22.1 million, $31.8 million, and $31.3 million,
respectively. See Note 6, "Segment Data from Continuing Operations" in the
Notes to LDM's Consolidated Financial Statements.
(b) During the fiscal years ended September 27, 1992 and September 26, 1993, LDM
settled separate lawsuits for approximately $1.2 million and $1.4 million,
respectively, relating to an acquisition made in 1988 and the subsequent
sale or transfer of certain of the acquired business assets to LDM.
(c) EBITDA is defined as income from continuing operations before the effect of
changes in accounting principles and extraordinary items plus the following:
interest, income taxes, depreciation and amortization. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to incur and service debt. However, EBITDA should not be considered in
isolation as a substitute for net income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure of
a company's profitability or liquidity.
(d) Adjusted capital expenditures exclude the following items: (i) approximately
$12.0 million in capital expenditures during fiscal year 1996 and
approximately $5.8 million during fiscal year 1995 associated with the
construction of the Company's new Design Center in Auburn Hills, Michigan,
and (ii) approximately $17.4 million in fiscal year 1994 related to the
acquisition of the Leamington, Ontario facility.
(e) For purposes of the ratio of earnings to fixed charges, (i) earnings include
earnings from continuing operations before the following: income taxes,
minority interests, the effect of changes in accounting, extraordinary items
and fixed charges and (ii) fixed charges include interest on all
indebtedness, amortization of deferred financing costs and the portion of
rental expense that the Company believes to be representative of interest.
26
<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- LDM
GENERAL
LDM is a leading Tier I designer and manufacturer of highly engineered
plastic instrument panel and exterior components supplied primarily to North
American automotive OEMs. LDM supplies components and subassemblies for a
variety of light duty trucks, sport utility vehicles, minivans and passenger
cars, including: Ford's F-series truck, Expedition and Explorer sport utility
vehicles, Windstar minivan, and Contour/Mystique and Taurus/Sable passenger
cars; General Motors' Sonoma, Blazer, and Jimmy sport utility vehicles, and
Grand Prix/Cutlass, Cadillac Deville and Seville passenger cars; Volkswagen's
Golf/Jetta passenger cars; and Chrysler's Dakota light truck, Caravan/Voyager
minivan and Neon passenger car. LDM is a privately held Michigan corporation
incorporated in 1985 to pursue acquisitions in the automotive industry. In
addition to automotive products, LDM's net sales include consumer product sales
and mold sales. Molds used in LDM's operations are requisitioned by LDM's
customers and are purchased from mold builders who design and construct the
molds under LDM supervision. Upon delivery and acceptance of the molds, title is
passed to customers and revenue is recognized.
RESULTS OF CONTINUING OPERATIONS
YEAR ENDED SEPTEMBER 29, 1996 COMPARED TO YEAR ENDED SEPTEMBER 24, 1995
NET SALES: Net sales for fiscal year 1996 were $217.8 million, a decrease of
$3.2 million, or 1.5%, from $221.0 million in fiscal year 1995. For fiscal year
1996, net sales, before intersegment eliminations of $2.3 million, were
comprised of $173.3 million of automotive product sales, $21.5 million of
consumer and other product sales, and $25.3 million of mold sales.
Automotive product sales in fiscal year 1996 were $173.3 million, a
decrease of $10.5 million, or 5.7%, from $183.8 million in fiscal year 1995.
This decrease was principally due to LDM's ceasing production of certain
products related to the General Motors Blazer, Ford Taurus/Sable and the
Volkswagen Golf/Jetta. The reductions in these programs were partially offset by
product launches related to the Ford F-Series truck, General Motors Grand
Prix/Cutlass, and the Cadillac Deville/Concourse. Consumer and other product
sales were $21.5 million, a decrease of $9.2 million, or 29.9%, from $30.7
million in fiscal year 1995. This decline was primarily attributable to a
decline in television housing sales to a television manufacturer due to adverse
market conditions and a decline in television housing sales to a television
manufacturer that resourced the product to a local supplier. Mold sales were
$25.3 million, an increase of $18.6 million, from $6.7 million in fiscal year
1995. The increase in mold sales in fiscal year 1996 was principally due to new
platform launches associated with the Contour/Mystique, Sonoma/Blazer, Bravada,
Cadillac Deville/Concourse and Grand Prix/Cutlass.
GROSS PROFIT: Gross profit for fiscal year 1996 was $34.9 million, or 16.0% of
net sales, compared to $38.6 million, or 17.5% of net sales, for fiscal year
1995. Gross profit from automotive operations in the United States was $33.4
million, or 20.9% of net sales, for fiscal year 1996, compared to $30.4 million,
or 19.7% of net sales, for fiscal year 1995. This increase was principally due
to favorable changes in material cost. The gain in the United States was offset
by a decrease in the gross profit of the Company's Canadian automotive
operations. Gross profit (loss) for the Company's Canadian operations for fiscal
year 1996 was ($0.2 million), or 0.5% of net sales, compared to $4.0 million, or
11.5% of net sales for fiscal year 1995. This decrease was driven by higher
scrap and labor costs resulting from the launch of products at the Company's
Leamington, Ontario facility related to the General Motors Grand Prix/Cutlass
and Cadillac Deville/Concourse programs. The higher scrap also caused a capacity
shortage in certain tonnage machines resulting in increased outsourcing costs.
Gross profit from consumer and other products was $1.6 million, or 7.3% of net
sales, for fiscal year 1996, compared to $4.2 million, or 13.1% of net sales,
for fiscal year 1995. This decrease was primarily attributable to a 29.9%
decrease in consumer product sales during this period.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for fiscal
year 1996 were $26.4 million, or 12.1% of net sales, compared to $23.5 million,
or 10.6% of net sales for fiscal year 1995. The
27
<PAGE> 33
increase in SG&A expenses as a percentage of net sales is primarily attributable
to increased design, engineering, and program management personnel costs.
INTEREST EXPENSE: Interest expense for fiscal year 1996 was $3.3 million, or
1.5% of net sales, compared to $3.2 million, or 1.4% of net sales, for fiscal
year 1995.
INCOME TAXES: The provision for income taxes for the fiscal year ended 1996 was
$4.0 million with an effective tax rate of 78.6%, as compared to $5.1 million
with an effective tax rate of 43.8% in fiscal year 1995. The increase in the
effective tax rate in fiscal year 1996 was the result of the Company not
utilizing Canadian net operating losses and an Internal Revenue Service
settlement of prior year taxes. See Note 8, "Income Taxes" in the Notes to LDM's
Consolidated Financial Statements.
YEAR ENDED SEPTEMBER 24, 1995 COMPARED TO YEAR ENDED SEPTEMBER 25, 1994
NET SALES: Net sales for fiscal year 1995 were $221.0 million, an increase of
$43.4 million, or 24.4%, from $177.6 million in fiscal year 1994. For fiscal
year 1995, net sales, before intersegment eliminations of $0.2 million, were
comprised of $183.8 million of automotive product sales, $30.7 million of
consumer and other product sales, and $6.7 million of mold sales.
Automotive product sales were $183.8 million, an increase of $60.1 million,
or 48.6%, from $123.7 million in fiscal year 1994. This increase was principally
due to a full year's production of parts related to the Ford Contour/Mystique
and General Motors' Blazer and Sonoma. LDM also began the production of parts
related to the Ford F-Series truck and the Ford T-bird/Cougar, formerly
manufactured by one of the Company's competitors. As a result of production
problems experienced by this competitor, Ford requested that LDM assume
responsibility for these parts during the OEM's production run for these models.
Consumer and other sales were $30.7 million, an increase of $0.1 million, or
0.3%, from $30.6 million in fiscal year 1994. Mold sales were $6.7 million, a
decrease of $16.6 million, from $23.3 million in fiscal year 1994. Mold sales in
fiscal year 1995 decreased primarily as a result of fewer new platform launches
as compared to fiscal year 1994, which had a significant number of new platform
launches for the Contour/Mystique, Sonoma/Blazer and Grand Prix/Cutlass.
GROSS PROFIT: Gross profit for fiscal year 1995 was $38.6 million, or 17.5% of
net sales, compared to $25.9 million, or 14.6% of net sales, for fiscal year
1994. Gross profit from automotive operations in the United States was $30.4
million, or 19.7% of net sales, for fiscal year 1995, compared to $17.7 million,
or 15.3% of net sales, for fiscal year 1994. This increase was principally due
to a 48.6% increase in automotive product sales. Gross profit for fiscal year
1995 from Canadian automotive operations was $4.0 million, or 11.5% of net
sales, compared to $3.9 million, or 10.9% of net sales, for fiscal year 1994.
Gross profit from consumer and other products was $4.2 million, or 13.1% of net
sales, for fiscal year 1995, compared to $4.3 million, or 13.6% of net sales,
for fiscal year 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: SG&A expenses for fiscal year 1995
were $23.5 million, or 10.6% of net sales, compared to $17.1 million, or 9.7% of
net sales, for fiscal year 1994. The increase in SG&A expenses as a percentage
of net sales is primarily attributable to increased design, engineering and
program management personnel costs.
INTEREST EXPENSE: Interest expense for fiscal year 1995 was $3.3 million, or
1.5% of net sales, compared to $2.1 million, or 1.4% of net sales, for fiscal
year 1994.
INCOME TAXES: The provision for income taxes for fiscal year 1995 was $5.1
million with an effective tax rate of 43.8%, as compared to $3.8 million with an
effective tax rate of 58.0% for fiscal year 1994.
LIQUIDITY AND CAPITAL RESOURCES -- THE COMPANY
The Company's principal capital requirements are to fund working capital
needs, to meet required debt payments, and capital expenditures for facility
maintenance and expansion. The Company anticipates that its operating cash flow,
together with available borrowings under the Senior Credit Facility, will be
sufficient to meet its working capital and capital expenditure requirements and
its debt obligations. As of September 29, 1996 on a pro forma basis after giving
effect to the Molmec Acquisition and the Initial Offering, the Company would
have had $124.3 million of long-term debt outstanding and would have had the
ability to borrow approximately $31 million in revolving loans under the Senior
Credit Facility.
28
<PAGE> 34
The Company believes that its capital expenditures (exclusive of any
potential acquisitions) will be approximately $9.0 million to $13.5 million in
each of the three fiscal years subsequent to fiscal year 1996, including
maintenance capital expenditures of approximately $4.0 million to $6.0 million
per fiscal year. However, the Company's capital expenditures may be greater than
currently anticipated as a result of new business opportunities.
Capital expenditures for LDM for fiscal year 1996 were $20.2 million
compared to $15.1 million for fiscal year 1995 and $29.0 million in fiscal year
1994. Maintenance capital expenditures for fiscal year 1996 were approximately
$5.2 million, compared to $3.1 million for fiscal year 1995 and $2.7 for fiscal
year 1994. In fiscal year 1996, LDM completed its new design center in Auburn
Hills, which required $12.0 million in capital expenditures during fiscal year
1996 and $5.8 million during fiscal year 1995. Other major capital expenditure
additions in fiscal year 1996 included robotic painting machines and expanded
painting capabilities. Major capital expenditure additions in fiscal year 1995
included leasehold improvements and welding and abatement equipment. Capital
expenditure additions in fiscal year 1994 included expanded press capabilities,
the purchase of the Leamington facility for $17.4 million, and expanded
warehouse facilities. Capital expenditures for Como for fiscal years 1996, 1995
and 1994 were $0.4 million, $0.4 million and $1.2 million, respectively.
The Company's liquidity is affected by both the cyclical nature of its
business and levels of net sales to its major customers. The Company's ability
to meet its working capital and capital expenditure requirements and service its
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond its control.
29
<PAGE> 35
SELECTED FINANCIAL DATA -- MOLMEC
(DOLLARS IN THOUSANDS)
The following table sets forth selected historical financial data of
Molmec, Inc. for the three years ended December 31, 1995. The selected financial
data for the years ended December 31, 1993, 1994 and 1995 were derived from the
audited financial statements of Molmec included elsewhere in this Prospectus.
The selected financial data for the nine-month period from January 1, 1995 to
September 24, 1995 and the nine-month period from January 1, 1996 to September
29, 1996 and twelve-month period from September 25, 1995 through September 29,
1996, are derived from the unaudited financial statements of Molmec included
elsewhere in this Prospectus which, in the opinion of management, include all
adjustments, consisting of only normal, recurring adjustments, necessary for a
fair presentation of the financial condition and results of operations of Molmec
for such periods. The following table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Molmec" and the historical financial statements of Molmec
presented elsewhere in this Prospectus.
<TABLE>
<CAPTION>
UNAUDITED
---------------------------------------------
AUDITED TWELVE MONTHS
--------------------------- NINE MONTHS ENDED ENDED
YEAR ENDED DECEMBER 31, ----------------------------- -------------
--------------------------- SEPTEMBER 24, SEPTEMBER 29, SEPTEMBER 29,
1993 1994 1995 1995 1996 1996
------- ------- ------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales...................... $69,393 $79,963 $82,867 $60,653 $66,433 $88,648
Cost of sales.................. 59,091 71,336 72,901 54,569 50,375 68,708
Gross profit................... 10,302 8,627 9,966 6,084 16,058 19,940
Selling, general and
administrative expenses...... 8,856 9,185 9,285 6,731 8,686 11,240
Stock plan compensation
expense(a)................... -- -- -- -- 1,200 1,200
Operating profit............. 1,446 (558) 681 (648) 6,172 7,500
Interest expense, net.......... 609 715 1,546 1,085 1,001 1,461
Net income (loss).............. 1,277 (6) (864) (1,733) 5,021 5,889
OTHER FINANCIAL DATA
EBITDA(b)...................... $ 3,316 $ 1,459 $ 3,105 $ 970 $ 7,940 $10,075
Depreciation and
amortization................. 1,870 2,016 2,424 1,618 1,769 2,575
Capital expenditures........... 1,140 4,236 6,933 6,589 1,046 1,389
</TABLE>
<TABLE>
<CAPTION>
AUDITED
------------------ UNAUDITED
AT DECEMBER 31, ------------------------------------
------------------ AT SEPTEMBER 24, AT SEPTEMBER 29,
1994 1995 1995 1996
------- ------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Cash...................... $ -- $ -- $ -- $ --
Total assets.............. 35,102 32,585 35,856 32,074
Total debt................ 17,957 18,364 19,849 11,322
Stockholders' equity...... 4,727 3,676 2,887 9,372
</TABLE>
- ------------------------------
(a) Relates to the termination of the existing key-man bonus program.
(b) EBITDA is defined as income from continuing operations before the effect of
changes in accounting principles plus interest, income taxes, depreciation
and amortization and less equity income from joint venture and gain on sale
of joint venture. EBITDA is presented because it is a widely accepted
financial indicator of a company's ability to incur and service debt.
However, EBITDA should not be considered in isolation as a substitute for
net income or cash flow data prepared in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity.
30
<PAGE> 36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- MOLMEC
GENERAL
LDM believes Molmec is an industry leader in the design, manufacture and
integration of fluid and air management components and assemblies for
under-the-hood use. Products manufactured by Molmec include cowl vent
assemblies, fluid reservoirs including degas bottles, battery trays and covers,
air deflectors and sight shields. Molmec provides components and subassemblies
for a variety of light duty trucks, sport utility vehicles, minivans and
passenger cars, including: Ford's F-Series truck, Windstar minivan, and
Taurus/Sable, Mustang, Crown Victoria/Grand Marquis and Contour/Mystique
passenger cars; General Motors' Grand Prix/Cutlass passenger car; and Chrysler's
Dakota light truck and Caravan/Voyager minivan. During 1993 and 1994, the
majority of Molmec's senior management team was replaced with a more experienced
and professional management team which has led to a substantial increase in
sales and improved operating performance. The new management team implemented a
number of operating changes which included (i) establishing a product-focused
manufacturing strategy for Molmec's individual facilities, (ii) replacing low
margin products with design-intensive integrated systems, (iii) expanding
design, program management and engineering capabilities, and (iv) implementing a
cost reduction program through value analysis and "lean manufacturing"
initiatives. As a result of these efforts and the growing market for
under-the-hood components, Molmec's net sales and EBITDA have increased
substantially from approximately $69.4 million and $3.3 million, respectively,
for the fiscal year ended December 31, 1993, to approximately $88.6 million and
$10.1 million, respectively, for the twelve-month period ended September 29,
1996.
RESULTS OF OPERATIONS
NINE-MONTH PERIOD FROM JANUARY 1, 1996 TO SEPTEMBER 29, 1996 COMPARED TO THE
NINE-MONTH PERIOD FROM JANUARY 1, 1995 TO SEPTEMBER 24, 1995
NET SALES: Net sales for the nine-month period ended September 29, 1996 were
$66.4 million, an increase of $5.7 million or 9.5%, from the prior period. The
increase in net sales is primarily the result of achieving a full period of
sales on the Ford Taurus/Sable and Chrysler Caravan/Voyager minivan programs,
which were launched during 1995.
GROSS PROFIT: Gross profit for the nine-month period ended September 29, 1996,
was $16.1 million, or 24.2% of net sales, compared to $6.1 million or 10.0% of
net sales for the prior period. This improvement in gross profits was primarily
due to (i) operational efficiencies achieved by new program managers and a new
cross functional organization established in early 1995, (ii) the full period
impact of higher margin products initiated in fiscal year 1995 and (iii) major
cost reduction programs launched in late 1995 and early 1996.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses for the
nine-month period ended September 29, 1996 were $9.9 million, or 14.9% of net
sales compared to $6.7 million, or 11.1% of net sales for the prior period. This
increase of $3.2 million was the result of a charge of $1.2 million related to
the termination of the existing key-man bonus program, the bonus expense of $0.7
million associated with the new key-man bonus program and higher expenses
associated with engineering and design expenditures.
INTEREST EXPENSE: Interest expense for the nine-month period ended September 29,
1996 was $1.0 million, or 1.5% of net sales, compared to $1.1 million, or 1.8%
of net sales, for the prior period.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES: Net sales for fiscal year 1995 were $82.9 million, an increase of
$2.9 million, or 3.6%, from $80.0 million for fiscal year 1994. The increase was
principally due to higher tooling sales partially offset by lower sales for
selected Ford passengers cars, including the Mustang and T-Bird, and the
Chrysler Caravan/Voyager minivans.
GROSS PROFIT: Gross profit for fiscal year 1995 was $10.0 million, or 12.0% of
net sales compared to $8.6 million, or 10.8% of net sales, for fiscal year 1994.
Higher gross profit in 1995 was attributable to lower
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<PAGE> 37
operating costs for direct labor and manufacturing overhead and improved margins
associated with new products launched. Gross profit improved significantly
despite the major Ford Taurus and Chrysler Caravan/Voyager minivan product
launchings, as well as the opening of a new manufacturing facility.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: SG&A expenses for fiscal year 1995
were $9.3 million, or 11.2% of net sales, compared to $9.2 million, or 11.5% of
net sales for fiscal year 1994.
INTEREST EXPENSE: Interest expense for fiscal year 1995 was $1.5 million, or
1.9% of net sales, compared to $0.7 million, or 0.9% of net sales, for fiscal
year 1994. The increase in interest expense was attributable to increased levels
of debt outstanding and slightly higher interest rates in fiscal year 1995
compared to fiscal year 1994.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
NET SALES: Net sales for fiscal year 1994 were $80.0 million, an increase of
$10.6 million, or 15.2%, from $69.4 million for fiscal year 1993. This increase
is primarily the result of higher under-the-hood component sales. In fiscal year
1994, Molmec launched six new programs, including cowl screen programs on the
Ford Mustang and Windstar, which accounted for the majority of the sales
increase. Partially offsetting these increases was a decrease of $3.4 million in
tooling sales.
GROSS PROFIT: Gross profit for fiscal year 1994 was $8.6 million, or 10.8% of
net sales, compared to $10.3 million, or 14.8% of net sales, for fiscal year
1993. Lower profit for fiscal year 1994 resulted from inefficiencies associated
with new program launches and the outsourcing of certain molding and painting
jobs due to capacity issues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: SG&A expenses for fiscal year 1994
were $9.2 million, or 11.5% of net sales, for fiscal year 1994, compared to $8.9
million, or 12.8% of net sales for fiscal year 1993. The decrease in SG&A
expenses as a percentage of net sales was primarily attributable to higher sales
in fiscal year 1994.
INTEREST EXPENSE: Interest expense for fiscal year 1994 was $0.7 million, or
0.9% of net sales, compared to $0.6 million, or 0.9% of net sales, for fiscal
year 1993. The increase in interest expense was attributable to increased levels
of debt outstanding in fiscal year 1994.
CAPITAL EXPENDITURES:
Capital expenditures were $1.0 million for the nine-month period ended September
29, 1996 compared to $6.6 million for the nine-month period ended September 24,
1995. Capital expenditures for fiscal years 1995, 1994 and 1993 were $6.9
million, $4.2 million and $1.1 million, respectively. A significant portion of
the capital expenditures for fiscal year 1995 related to the construction of the
new Hartland facility and the purchase of machinery for this facility. A
significant portion of the increase in capital expenditures in fiscal year 1994
related to machinery and equipment purchased to manufacture new parts for the
Ford Taurus/Sable passenger car and Windstar minivan.
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<PAGE> 38
BUSINESS
Unless the context otherwise requires, all references in this Prospectus to
the Company shall mean LDM Technologies, Inc., its consolidated subsidiaries and
the Molmec business. References to LDM shall mean LDM Technologies, Inc. and its
consolidated subsidiaries excluding Molmec. References to Molmec shall mean
Molmec, Inc.
GENERAL
LDM is a leading Tier I designer and manufacturer of highly engineered
plastic instrument panel and exterior trim components supplying primarily North
American automotive original equipment manufacturers. Instrument panel
components manufactured by LDM include cluster finish panels, center trim
panels, air vents, coin and cup holders, ashtrays, gloveboxes, telephone holders
and consoles. Exterior trim components manufactured by LDM include front and
rear bumper fascias, end caps, body side claddings, rocker panels and grills. As
part of LDM's business strategy to target growing niche markets that require
significant design and engineering capabilities, it recently consummated the
acquisition of Molmec, a Tier I automotive supplier of close tolerance, plastic
components for under-the-hood fluid and air management applications. The
Company, on a pro forma basis, had fiscal year 1996 net sales of $306.4 million
and EBITDA of $26.8 million.
The Company's major OEM customers include Ford, General Motors, Volkswagen
and Chrysler, with pro forma fiscal year 1996 net product sales (which excludes
mold sales) to these customers representing approximately 43%, 30%, 7% and 3%,
respectively, of pro forma fiscal year 1996 net product sales. The Company
supplies components and subassemblies for a variety of light duty trucks, sport
utility vehicles, minivans and passenger cars including: Ford's F-series truck,
Expedition and Explorer sport utility vehicles, Windstar minivan, and
Contour/Mystique and Taurus/Sable passenger cars; General Motors' Sonoma, Blazer
and Jimmy sport utility vehicles, and Grand Prix/Cutlass, Cadillac Deville and
Seville passenger cars; Volkswagen's Golf/Jetta passenger car and Chrysler's
Dakota light truck, Caravan/Voyager minivan, and Neon passenger car.
The Company is a full-service supplier with advanced computer design and
engineering capabilities which have enabled the Company to penetrate OEM new
product programs during the concept stage of the product life cycle and promote
long-term customer relationships. The Company recently constructed its Auburn
Hills Design Center to enhance its conceptual design and development
capabilities. The Company has been recognized as a quality supplier by its OEM
customers and, in addition, has received Ford's Q1 Award and is in the process
of being QS 9000 certified. To improve the Company's ability to support its OEM
customers internationally, the Company is finalizing alliances with certain
European automotive suppliers that manufacture products which complement the
Company's three automotive lines of business and have strong product technology
and engineering capabilities.
The Company conducts molding, class A painting and assembly operations in
eleven locations in Michigan, Indiana, Ohio, Tennessee and Canada. In addition
to its injection molding expertise, the Company also possesses a broad range of
paint application capabilities, including recently developed robotic paint
application technology which it believes provides it with competitive advantages
in serving the exterior trim market.
LDM, a privately held Michigan corporation, was incorporated in 1985 to
pursue acquisitions in the automotive industry. In 1986, LDM began to focus on
the market for highly engineered plastic components when it acquired Arrow
Molded Plastics, Inc. To strengthen its presence in this market, LDM acquired
Knapp Plastics Ltd., a manufacturer of exterior trim components in 1993 and
purchased selected assets of Windsor Plastic Products Ltd., a manufacturer of
instrument panel components in 1994. The acquisition of Molmec is a continuation
of LDM's efforts to strengthen its position as a leading Tier I supplier of
niche thermoplastic components and systems. Management believes that each of
these acquisitions has enhanced the Company's growth opportunities by providing
new customers, niche product capabilities, additional manufacturing capacity and
cost reductions through economies of scale. Through a combination of these and
other acquisitions and internal growth, LDM's net sales and EBITDA have
increased from approximately $76.2 million and $4.8 million, respectively, in
fiscal year 1992 to approximately $306.4 million and
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<PAGE> 39
$26.8 million, respectively, on a pro forma basis in fiscal year 1996, which
represents a CAGR of 42% and 53%, respectively.
THE MOLMEC ACQUISITION
On January 22, 1997, LDM acquired substantially all of the assets of
Molmec, a privately held Michigan corporation incorporated in 1959, for
approximately $55 million in cash, subject to certain adjustments, and the
assumption of certain liabilities including $5.0 million of indebtedness and
$11.6 million of current liabilities as of September 29, 1996.
The Molmec Acquisition is a continuation of LDM's efforts to strengthen its
position as a leading Tier I supplier of niche thermoplastic components and
systems to the North American automotive market. LDM believes Molmec is an
industry leader in the design, manufacture and integration of fluid and air
management components and assemblies for under-the-hood use. Products
manufactured by Molmec include cowl vent assemblies, fluid reservoirs including
degas bottles, battery trays and covers, air deflectors and sight shields.
Molmec's largest OEM customers are Ford and Chrysler, which accounted for
approximately 57% and 11%, respectively, of Molmec's net product sales for the
twelve-month period ended September 29, 1996. Molmec provides components and
subassemblies for a variety of light duty trucks, sport utility vehicles,
minivans and passenger cars, including: Ford's F-Series truck, Windstar minivan,
and Taurus/Sable, Mustang, Crown Victoria/Grand Marquis and Contour/Mystique
passenger cars; General Motors' Grand Prix/Cutlass passenger car; and Chrysler's
Dakota light truck and Caravan/Voyager minivan.
The Molmec Acquisition is expected to provide the Company with a number of
benefits including:
- An established position and design and engineering capabilities in the
growing market for under-the-hood components.
- A broader range of customers and product lines, which will further
diversify the Company's revenue base. For example, the Company believes
the Molmec Acquisition will provide LDM with a long-term position in
Chrysler's and Ford's supply base for exterior and under-the-hood
products.
- A number of cost reduction opportunities, which include (i) consolidating
corporate offices, (ii) achieving economies of scale in purchasing raw
materials, (iii) minimizing outsourcing requirements due to increased
manufacturing capacity and (iv) reducing other corporate overhead
expenses.
- A management team with significant expertise and customer relationships
in the under-the-hood market.
During 1993 and 1994, the majority of Molmec's senior management was
replaced with a more experienced and professional management team which has led
to a substantial increase in sales and improved operating performance. The new
management team implemented a number of operating changes which included (i)
establishing a product-focused manufacturing strategy for Molmec's individual
facilities, (ii) replacing low margin products with design-intensive integrated
systems, (iii) expanding design, program management and engineering
capabilities, and (iv) implementing a cost reduction program through value
analysis and "lean manufacturing" initiatives. As a result of these efforts and
the growing market for under-the-hood components, Molmec's net sales and EBITDA
have increased substantially from approximately $69.4 million and $3.3 million,
respectively, for the fiscal year ended December 31, 1993, to approximately
$88.6 million and $10.1 million, respectively, for the twelve-month period ended
September 29, 1996.
INDUSTRY OVERVIEW
The North American automotive industry is currently experiencing a number
of trends which are significant to the Company's business.
Increasing Utilization of Plastic. In recent years, OEMs have focused
their efforts on developing and employing lower cost and lighter materials,
such as plastic, in the design of components. Plastic provides OEMs with a
number of design advantages over metal including increased design
flexibility and aesthetic appeal, resistance to corrosion and improved
fuel-efficiency performance due to lighter weight materials. Substituting
plastic for metal can also reduce manufacturing costs by eliminating
machining costs,
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<PAGE> 40
reducing painting costs, facilitating assembly, minimizing tooling costs
and consolidating the number of parts used in a vehicle. The Company
believes that while the majority of opportunities for converting metal into
plastic have already occurred in exterior and interior trim applications,
there are significant growth opportunities in the use of plastic in
under-the-hood components. Suppliers of under-the-hood components, such as
Molmec, are increasingly being asked to develop complex under-the-hood
systems, including plastic transmission covers that consolidate engine
mounts and drive shaft seals and battery trays that integrate fluid
reservoirs. According to an industry source, the amount of plastic used for
the under-the-hood applications for which the Company has been or expects
to be providing products has increased at a CAGR of approximately 11%
between 1991 and 1996, from approximately 174 million pounds in 1991 to an
estimated 293 million pounds in 1996. Use of plastic for these applications
is expected to increase at a CAGR of approximately 5% between 1996 and
2006, from an estimated 293 million pounds to an estimated 485 million
pounds, respectively.
Expansion of OEM Supplier Responsibilities. Since the 1980s, OEMs such
as Ford, General Motors and Chrysler have been actively reducing their
supplier base to include only those suppliers which accept significant
responsibility for product management and meet increasingly strict
standards for product quality, on time delivery and manufacturing costs.
These suppliers are expected to control many aspects of the production of
system components, including design, development, component sourcing,
manufacturing, quality assurance, testing and delivery to the customer's
assembly plant.
Globalization of the OEM Supplier Base. Several OEMs have announced
certain models designed for the world automobile market ("World Car"). This
departure from the historical practice of designing separate models for
each regional market will generally require suppliers to establish
international design and manufacturing capabilities through internal
development, joint ventures or acquisitions. As a result, certain domestic
and European OEMs have encouraged their existing suppliers to establish
foreign production support for World Car programs.
Market-based Pricing. In an effort to reduce costs and to ensure the
affordability and competitiveness of their products, OEMs are sourcing
automotive components using a market-based pricing approach. In using such
a market-based approach, OEMs establish a target price, or the price the
market is willing to pay for a vehicle, and systematically divide this
price into system and component target prices. In addition, under
market-based pricing, the OEMs often require annual price reductions for
the vehicle's systems and components. As a result, the market-based
approach to pricing has generally required automotive suppliers to focus on
continually reducing product costs while improving quality standards.
BUSINESS STRATEGY
The Company has developed and is implementing a business strategy to
achieve continued growth while enhancing its competitive position as a Tier I
OEM supplier. The Company's growth is being principally driven by (i) a
strategic focus on niche products, such as under-the-hood components, that the
Company believes possess strong secular growth potential and require significant
design and engineering capabilities and (ii) selected acquisitions to take
advantage of the consolidation trends in the OEM supplier industry. In addition,
the Company continually seeks to enhance its Tier I relationships through a
number of initiatives, including (i) expanding its full service capabilities in
response to increasingly rigorous OEM purchasing and manufacturing policies,
(ii) establishing a global position through participation on World Car programs
and the establishment of alliances with foreign suppliers, and (iii) improving
cost competitiveness through the implementation of lean manufacturing
methodologies and value engineering programs.
Grow the Under-the Hood Systems Line of Business. The Company has
pursued a strategic plan to focus on niche products within growing markets
that typically require significant design and engineering capabilities. As
an example, Molmec has been designated a long-term supplier of various
exterior and under-the-hood applications to Ford and Chrysler. The Company
intends to capitalize on the Molmec Acquisition by focusing on numerous
metal-to-plastic conversion opportunities, such as intake manifolds, valve
covers, engine covers and transmission covers. In addition, the Company
intends to establish alliances with one or more European under-the-hood
suppliers. The Company believes such alliances
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<PAGE> 41
would provide numerous benefits, including potential access to innovative
under-the-hood products being developed by such manufacturers. One such
alliance has resulted in a purchase order to develop prototype plastic
composite transmission shifters for Ford Europe.
Target Selected Acquisitions to Enhance Growth Opportunities. LDM's
acquisition strategy is focused on enhancing and expanding its three
existing lines of business to provide additional growth. Since its
incorporation in 1985, LDM has completed three such strategic acquisitions,
including Arrow Molded Plastics, Inc. (1986), Knapp Plastics Ltd. (1993)
and selected assets of Windsor Plastic Products Ltd. (1994). The
acquisition of Molmec is a continuation of LDM's efforts to strengthen its
position as a leading Tier I supplier of niche thermoplastic components and
systems. Management believes that each of these acquisitions has enhanced
the Company's growth opportunities by providing new customers, niche
product capabilities, additional manufacturing capacity and cost reductions
through economies of scale. In addition, the Company's experience as a Tier
I supplier has enabled it to improve the operating performance of its
acquisitions.
Full-Service Capabilities. In response to the evolving purchasing and
manufacturing policies of the OEMs, the Company has made substantial
investments to develop comprehensive, full-service capabilities, including
component design and engineering, prototype production, tooling and
manufacturing. This full-service product management capability enables the
Company to penetrate OEM product programs during the product conception
stage and provide OEMs with design, engineering and technology expertise.
The Company has recently made significant investments in creative design
capabilities that enhance its ability to participate in the early stages of
customer programs utilizing, for instance, computer aided simulation as a
way to reduce the cost and time required to develop new products. To
support its advanced engineering efforts, the Company recently constructed
its Auburn Hills Design Center which provides it with a state-of-the-art
facility.
Establish Global Position. The Company began to establish its position
as a World Car supplier through its participation in the Ford
Contour/Mystique program beginning in 1989 and Volkswagen Golf/Jetta World
Car program beginning in 1993. An international development team was formed
in 1993 to focus on serving existing World Car programs and expanding the
Company's global supplier capabilities. Partly as a result of this effort,
the Company is finalizing alliances with certain European suppliers. These
suppliers make products that complement the Company's three lines of
business and also have innovative product technology and engineering
capabilities that can strengthen those of the Company. These suppliers
include a company specializing in intricate instrument panel components, a
global supplier of exterior trim fascia and an under-the-hood components
specialist with a long-term relationship with Chrysler to supply degas
bottles. These alliances are expected to provide the Company with a
European production capability and access to European product development.
For example, one of the Company's alliances is focused on developing
plastic composite transmission shifters for Ford Europe. There can be no
assurance that any such alliances will be finalized on terms acceptable to
the Company. See "Business -- International Alliances."
Improve Cost Competitiveness. The OEMs conversion toward market driven
pricing and long-term productivity commitments have forced suppliers to
focus on eliminating waste and optimizing productivity. The Company has
been successful in implementing lean manufacturing methodologies and
continues to emphasize their implementation as a means of achieving cost
advantages. In particular, the Company emphasizes kanban production
scheduling and materials management techniques and direct labor
productivity improvement methods established by in-plant process
improvement teams. The Company has recently launched an aggressive value
engineering program to pursue cost reductions through increased use of
recycled materials, standardized fasteners and reduced product weight.
AUTOMOTIVE PRODUCTS
The Company designs and manufactures highly-engineered, plastic instrument
panel, exterior trim and under-the-hood components. In recent years, the Company
has significantly expanded its design and
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engineering capabilities which provide the Company with a competitive advantage
in obtaining new business. The Company's three automotive lines of business are
as follows:
Instrument Panel Components. The Company focuses on the production of
complex products such as instrument panel subassemblies which require the
integration of multiple components. Instrument panel components
manufactured by the Company include cluster finish panels, center trim
panels, air vents, coin and cup holders, ashtrays, gloveboxes, telephone
holders and consoles. Certain products in this line of business demand
functional aesthetics appeal and typically require the Company to provide
innovative and design intensive solutions for application requirements
stipulated by OEMs. Historically, LDM's largest customer for its instrument
panel components has been Ford. Instrument panel components and other
interior trim products represented approximately 61% of LDM's fiscal year
1996 net automotive product sales.
Exterior Trim Components. Exterior trim systems manufactured by the
Company include front and rear bumper fascias, end caps, body side
claddings and moldings, rocker panels and grills. The Company's broad range
of exterior trim class A painting capabilities provides it with a
competitive advantage in supplying exterior trim to domestic and foreign
OEMs. The Company is able to provide both high-bake high solids painting,
which is traditionally preferred by domestic OEMs, and low-bake, two
component painting, which is preferred by foreign OEMs. The Company
believes it is also a leader in the development of dry paint technology, a
sophisticated form of insert molding of films upon which exterior paint is
extruded. The Company has also recently developed paint application
technology utilizing innovative robotic applications which has enabled the
Company to reduce costs by improving paint transfer efficiency.
Historically, LDM's largest customer for its exterior trim components has
been General Motors. Exterior trim component sales represented
approximately 39% of LDM's fiscal year 1996 net automotive product sales.
Under-the-Hood Components. The Company is a designer and manufacturer
of fluid and air management components for under-the-hood applications such
as cowl vent assemblies, fluid reservoirs including degas bottles, battery
trays and covers, air deflectors and sight shields. The Company believes
that it supplies, through Molmec, the majority of Ford's cowl vent
assemblies for North American car and truck platforms. OEMs are
increasingly substituting plastic for metal in under-the-hood components
and systems in an effort to reduce cost, noise and weight, to enhance
design flexibility, to improve airflow and to increase aesthetic appeal.
Historically, Molmec's largest customer for its under-the-hood components
has been Ford. Under-the-hood component sales represented approximately
60%, of Molmec's fiscal year 1995 net product sales.
CONSUMER PRODUCTS
Como, a manufacturer of consumer and office products, was acquired by LDM
in 1993. Como is a manufacturer of plastic injection molded products for the
electronics, computer, television, office furniture, appliance, transportation
and business machine markets. Como's extensive finishing capabilities include
painting, EMI/RFI shielding, hot stamping, induction bonding, pad printing and
machining of molded parts. With injection molding machines ranging from 230 tons
to 3,000 tons, Como has the ability to produce a broad range of molded parts,
including injection molded, structural foam and counter pressure structural foam
parts. Como sales represented approximately 11.5% of LDM's fiscal year 1996 net
product sales. See Note 6, "Segment Data from Continuing Operations" of the
Notes to LDM's Consolidated Financial Statements.
CUSTOMERS
The Company's principal customers are Ford, General Motors, Volkswagen and
Chrysler for which it supplies components and subassemblies for a variety of
light duty trucks, minivans and passenger cars. While the Company's products are
generally used on a diverse group of over 40 models, the Company's sales and
marketing efforts have been directed towards those sectors of the automotive
market which have experienced strong consumer demand and growth in sales. The
Company supplies components and subassemblies for a variety of light duty
trucks, sports utility vehicles, minivans and passenger cars including: Ford's
F-Series
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truck, Expedition and Explorer sport utility vehicles, Windstar minivan, and
Contour/Mystique and Taurus/Sable passenger cars; General Motors' Sonoma Blazer
and Jimmy sport utility vehicles, and Grand Prix/Cutlass, Cadillac Deville and
Seville passenger cars; Volkswagen's Golf/Jetta passenger car and Chrysler's
Dakota light truck, Caravan/Voyager minivan, and Neon passenger car.
The approximate percentage of net production sales to the principal
customers for LDM, Molmec and the Company on a pro forma basis for the
twelve-month period ended September 29, 1996 are shown below:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 29, 1996
-----------------------------
CUSTOMER LDM MOLMEC PRO FORMA
-------- ------ ------- ----------
<S> <C> <C> <C>
Ford........................................................ 37.2% 56.5% 42.9%
General Motors.............................................. 41.4 3.3 30.1
Volkswagen.................................................. 10.0 -- 7.0
Chrysler.................................................... -- 11.2 3.3
Other Automotive............................................ -- 23.5 7.0
Other Non-Automotive........................................ 11.4 5.5 9.7
----- ----- -----
Total.................................................. 100.0% 100.0% 100.0%
</TABLE>
The Company's customers typically award purchase orders on a limited source
basis that normally cover components to be supplied for a particular car model.
Such purchase orders generally provide for supplying the customer's requirements
for a model year, although, in practice, such purchase orders are typically
renewed until the component is redesigned or eliminated in a model change.
Products under development are assigned a selling price which is
reevaluated from time to time during the product development cycle. Prior to
production, the Company and the customer generally agree on a final price,
which, in some instances, may be subject to negotiated price reductions or
increases over the term of the project. Consequently, the Company's ability to
improve operating performance is generally dependent primarily on its ability to
reduce costs and operate more efficiently.
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The Company has been chosen as a supplier on a variety of light trucks
(including pick-up trucks, minivans, full size vans and sport utility vehicles)
and passenger car models. The following table presents an overview of the major
models, listed alphabetically, for which LDM and Molmec currently produce
components for their OEM customers:
<TABLE>
<CAPTION>
MODEL
--------------------------------------------------------
CUSTOMER LDM MOLMEC
- --------------------------------------- -------------------- --------------------
<S> <C> <C>
General Motors-truck................... APV/Transport
Astro/Safari
Blazer
Bravada
Jimmy
Sonoma/Blazer
Sonoma Pick-up
1500 Series
General Motors-car..................... Achieva/Grand Am Achieva/Grand Am
Alero Firebird/Camaro
Corvette Grand Prix/Cutlass
Deville/Concourse
El Dorado
Firebird/Camaro
Grand Prix/Cutlass
Malibu/Century
Seville
Ford-truck............................. Aerostar Aerostar
Expedition Econoline
Explorer Explorer
F-Series truck F-Series truck
F-250/F-350 F-250/F-350
Villager
Windstar
Ford-car............................... Continental Continental
Contour/Mystique Contour/Mystique
Mustang Crown Victoria/Grand
Probe Marquis
T-Bird/Cougar Mark VIII
Taurus/Sable Mustang
Town Car T-Bird/Cougar
Taurus/Sable
Town Car
Chrysler-truck......................... Caravan/Voyager
Dakota
Chrysler-car........................... Neon
Volkswagen............................. Golf/Jetta Concept
</TABLE>
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INTERNATIONAL ALLIANCES
In an effort to expand its capabilities to support World Car programs, the
Company is finalizing alliances with three European suppliers. The Company
believes that these suppliers have products that complement the Company's three
lines of business and also have innovative product technology and engineering
capabilities. These alliances, categorized by the Company's line of business,
are as follows:
Instrument Panel Components. The Company is finalizing a joint venture
with a foreign supplier specializing in intricate instrument panel
components such as air vents. The Company believes that, when finalized,
this joint venture will provide the Company with access to state-of-the-art
air vent technology and the capability to supply instrument panel
components for Ford and other OEMs on a global basis. As a result of this
preliminary understanding, the joint venture was selected as a supplier of
air vents for the new Ford Escort, a World Car program that is being
launched in 1999.
Exterior Trim Components. The Company has entered into an agreement in
principle with a large global manufacturer, to supply fascias, wheel liners
and grills for the Volkswagen A4 program in Mexico. When finalized, the
Company will have the majority equity position in this venture.
Under-the-Hood Components. The Company has entered into a stock
purchase agreement to acquire an 80% interest in a U.S. affiliate of a
foreign under-the-hood product specialist with manufacturing capabilities
in both injection and blow molding for a purchase price of approximately
$2.5 million in cash. Consummation of this stock purchase is subject to
usual and customary closing conditions. If consummated, the Company
believes this alliance may provide potential access to innovative
under-the-hood products not currently produced by the Company.
DESIGN AND PRODUCT ENGINEERING
The Company is a full service Tier I supplier with advanced design and
engineering capabilities which enable it to design innovative, high-quality
products that provide value to its customers. LDM recently built its Auburn
Hills Design Center to provide an environment for trend-setting conceptual
design and product development. The Company has made other significant
investments in conceptual design capabilities that allow it to participate in
the earliest stages of programs. For instance, the Company has embraced
computer-aided simulation directly linked to customer computer networks as a
means to reduce the cost and time required to develop new products. The
industrial design activity has augmented the Company's traditional modeling
methods with computer-aided technology reducing staff requirements as well as
simplifying the integration of design and engineering functions. The Company has
transitioned from computer-aided design shell to solid modeling providing a
direct link to rapid prototyping. The Company's design staff employs state-
of-the-art ALIAS computer software to provide three-dimensional virtual modeling
and product animation. Analytical tools employed include finite element analysis
for structural analysis, kinematics for mechanisms, computational fluid dynamics
for airflow studies and moldfilling analysis for injection molding optimization
and warp prediction.
MANUFACTURING
The Company's OEM customers are focusing on suppliers capable of delivering
quality products, controlling manufacturing costs and integrating, through
design capabilities, multiple components into larger systems. The Company has
responded to this challenge by implementing a lean manufacturing program and
adopting advanced processing technology.
The Company's lean manufacturing program has focused on "kanban" production
scheduling and materials management techniques and labor productivity
improvements. Kanban management techniques are characterized by flexible
production scheduling as well as vendor scheduling, reduced work queues, more
frequent vendor deliveries and reduced inventory levels. Through kanban, the
Company has experienced increased inventory turnover and generally reduced
inventory levels.
The Company continually seeks to achieve labor productivity improvement and
has established a work environment which encourages employee involvement in
identifying and eliminating waste. A key factor in the
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<PAGE> 46
Company's operations is maintaining the flexibility to respond to the demands of
different product runs and changing product delivery requirements while
continuously increasing production efficiency.
The Company believes its broad base of class A paint application
capabilities positions it well for supplying the domestic and foreign exterior
trim market. The Company is able to provide both high-bake high solids painting,
which is traditionally preferred by domestic OEMs, and low-bake, two component
painting, which is preferred by foreign OEMs. The Company has also recently
developed paint application technology utilizing innovative robotic applications
which has enabled the Company to reduce costs by improving paint transfer
efficiency.
All of the Company's manufacturing facilities are in the process of
obtaining QS 9000 certification, the standard recently adopted by the Automotive
Industry Action Group. Chrysler and General Motors have each indicated that by
July 1, 1997 and December 31, 1997, respectively, they will allow only Tier I
supplier facilities with QS 9000 certification to bid on new manufacturing
business.
While the Company believes it will achieve QS 9000 certification for its
applicable facilities by the respective dates previously described above, no
assurance can be given that any of the Company's facilities will in fact be
certified.
COMPETITION
The automotive supplier industry in which the Company competes is highly
competitive. A large number of actual or potential competitors exist including
the internal component supply operations of the OEMs as well as independent
suppliers, many of which are larger than the Company. The Company believes its
principal competitors in its three lines of business include: Progressive
Dynamics Inc., Summit Polymers Inc. and Manchester Plastics, a business unit of
Collins & Aikman Corporation, in instrument panel components; Magna
International Inc., Venture Holdings Corporation, and JPE, Inc., in exterior
trim components; and Huron Inc., Key Plastics Inc. and Lacks Industries in
under-the-hood components.
The Company principally competes for new business both at the initial
development of new models and upon the redesign of existing models by its major
customers. New model development generally begins two to four years prior to the
marketing of such models to the public. Because of the large investment by OEMs
and Tier I suppliers in tooling and the long lead time required to commence
production, OEMs and Tier I suppliers generally do not change a supplier during
a model production run.
PROPERTIES
The Company conducts molding, painting and assembly operations in
approximately one million square feet of space in a total of eleven locations
including five plants located in Michigan (Clarkston, Fowlerville, Hartland, New
Hudson and Rochester Hills), one plant in Indiana (Columbus), three plants in
Ohio (Circleville, Napoleon and Byesville), one plant in Tennessee (Franklin)
and one plant in Canada (Leamington, Ontario). Each of the Byesville, Franklin,
Leamington, New Hudson, Hartland, Fowlerville and Clarkston facilities are owned
by the Company. The Circleville and Napoleon facilities are leased from
unaffiliated parties. The Rochester Hills and Columbus facilities and Troy,
Michigan administrative offices are leased from affiliated parties. See "Certain
Transactions". The utilization and capacity of the Company's facilities
fluctuates based upon the mix of components the Company produces and the vehicle
models for which they are being produced.
In October 1996, LDM relocated its principal executive offices and design
and engineering staff from Troy, Michigan to Auburn Hills, Michigan. The Auburn
Hills offices are owned by the Company. The Company believes that its facilities
and equipment are in good condition and are adequate for the Company's present
and anticipated future operations.
RAW MATERIALS
The principal raw materials used by the Company are engineered plastic
resins such as nylon, polypropylene, polycarbonate and
acrylonitrile-butadiene-styrene, paint, and steel for production molds, all of
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<PAGE> 47
which are available from many sources. The resins used in the Company's business
historically have been subject to price fluctuations. In the past, the Company
has been unable to pass price increases in resins through to its customers.
There can be no assurance that a material increase in the price of resin will
not adversely affect the Company's results of operations. The Company has not
experienced significant raw material shortages and does not anticipate raw
material shortages in the foreseeable future.
EMPLOYEES
As of September 29, 1996, the Company's workforce included approximately
2,495 employees, of which 554 were salaried workers, and 1,941 were hourly
workers including temporary and part-time employees. The Company has
approximately 293 hourly employees represented by the Canadian Automobile
Workers union at its Leamington, Canada facility and approximately 213 hourly
employees represented by the United Auto Workers at its Como facility. The
Company's three-year contract with the bargaining unit for the Leamington
facility expires January 15, 1998. None of the Company's other employees are
subject to collective bargaining agreements. The Company has not experienced any
work stoppages and considers relations with its employees to be good.
ENVIRONMENTAL COMPLIANCE
The Company's operations and properties are subject to a wide variety of
federal, state and local laws and regulations, including those governing the
use, storage, handling, generation, treatment, emission, release, discharge and
disposal of certain materials, substances and wastes, the remediation of
contaminated soil and groundwater, and the health and safety of employees
(collectively, "Environmental Laws"). As such, the nature of the Company's
operations exposes it to the risk of claims with respect to such matters and
there can be no assurance that material costs or liabilities will not be
incurred in connection with such claims.
The Company has taken steps, including the installation of a Facilities
Coordinator, to reduce the environmental risks associated with its operations
and believes that it is currently in substantial compliance with applicable
Environmental Laws. Currently, the Company is involved in negotiations with the
State of Ohio Environmental Protection Agency ("OEPA") concerning air emissions
from the Byesville, Ohio facility. The Company has installed control equipment
and conducted air compliance inspections to bring the operations into compliance
with applicable Environmental Laws. The Company is in the process of negotiating
a consent decree with OEPA to settle civil penalty for past air permitting and
emissions violations. In addition, the Company has received a notice of
violation letter from OEPA for past violations of air pollution control laws at
the Company's Circleville, Ohio facility. Under the applicable Environmental
Laws, the government can seek civil penalties. The Company has reserved
approximately $250,000 to cover liabilities associated with these two matters;
however, no assurance can be given that the actual amount of these liabilities
will not exceed this reserve.
The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA") and similar state laws impose liability, without
regard to fault or to the legality of the original action, on certain classes of
persons (referred to as potentially responsible parties or "PRPs") associated
with the release or threat of release of certain hazardous substances into the
environment. Generally, liability to the government under CERCLA is joint and
several. Financial responsibility for the remediation of contaminated property
or for natural resource damages can extend to properties owned by third parties.
The Company has received a letter dated October 30, 1996 from a group of
corporations which has entered into an agreement with the United States
Environmental Protection Agency ("EPA") to prepare a remedial design for curing
a failed third-party landfill site in Circleville, Ohio. This letter alleges
that the Company is a PRP under CERCLA in connection with the historic disposal
of hazardous substances at the landfill. The Company has also received a letter
dated December 6, 1996 from a PRP having potential liability with respect to a
failed third-party landfill site in Byesville, Ohio. The letter provides notice
of a private contribution action relating to the Company's alleged PRP liability
under CERCLA in connection with the historic disposal of hazardous substances at
the landfill. The Company is currently investigating these claims but has no
reason to believe that any liability associated with these claims will have a
material effect on the Company's financial position or results of operations.
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<PAGE> 48
Based upon its experience to date, the Company believes that the future
cost of compliance with existing Environmental Laws, and liability for known
environmental claims pursuant to such Laws, will occur over a number of years
and not have a material adverse effect on the Company's financial position or
results of operations. However, future events, such as new information, changes
in existing Environmental Laws or their interpretation, and more vigorous
enforcement by regulatory authorities, may give rise to additional expenditures
or liabilities that could be material.
LEGAL PROCEEDINGS
The Company is, from time to time, involved in routine litigation arising
out of the ordinary course of its business. The Company believes currently
pending or threatened litigation will not have a material adverse effect on the
consolidated financial condition or results of operations of the Company.
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<PAGE> 49
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The directors, executive officers and significant employees of the Company
are as follows.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Joe Balous............... 71 Chairman of the Board, Secretary and Director
Richard J. Nash.......... 52 President, Chief Executive Officer and Director
Gary E. Borushko......... 51 Chief Financial Officer
Gordon F. Steil.......... 47 Vice President of Manufacturing
William Kessler.......... 50 Vice President of Development
Vincent P. Buscemi....... 48 Group Vice President -- Sales
Michael T. Heneka........ 49 Group Vice President -- Sales
George F. Opie........... 45 Vice President of Product Engineering &
Development
Robert C. Vamos.......... 48 Executive Vice President of Manufacturing
Barry A. Kempa........... 40 Special Projects
</TABLE>
- -------------------------
Joe Balous is a cofounder and shareholder of LDM. He has served as Chairman
of the Board, Secretary and a director since LDM's inception in 1985. Prior to
cofounding LDM, he held interests in a variety of automotive manufacturing
concerns along with an active interest in real estate development.
Richard J. Nash is a cofounder and shareholder of LDM. He has served as
President, Chief Executive Officer and a director of LDM since its inception in
1985. Prior to cofounding LDM, he had interests in several automotive-related
manufacturing concerns, including stamping, zinc diecasting and machine tool
fabrication concerns. Mr. Nash practiced law until 1980.
Gary E. Borushko, Chief Financial Officer, has been employed by LDM as Vice
President Finance or Chief Financial Officer since 1987. Along with his
financial responsibilities, he is actively involved with LDM's acquisition
strategy.
Gordon F. Steil, Vice President of Manufacturing, has been employed by LDM
since 1987 and has served in various manufacturing management capacities. He was
named Vice President of Manufacturing in 1991.
William Kessler, Vice President of Development, joined LDM in 1993. Prior
to joining LDM, Mr. Kessler was vice president of sales at Velcro Industries for
22 years. His current responsibilities include sales, industrial design and
international liaison.
Vincent P. Buscemi, Group Vice President -- Sales, has represented LDM and
its subsidiaries at General Motors since 1982. In 1991 he was named to his
current position.
Michael T. Heneka, Group Vice President -- Sales, has represented LDM and
its subsidiaries at the Ford Motor Company since 1982. In 1991 he was named to
his current position.
George F. Opie, Vice President of Product Engineering & Development, who
joined LDM in 1988 as the Manager of Product Design, was named to his current
position in 1995.
Robert C. Vamos, Executive Vice President of Manufacturing, joined Molmec
in 1992 as Vice President of Manufacturing and was named President in 1993.
Prior to 1992, he held various manufacturing management positions with the Budd
Company. Upon consummation of the Molmec Acquisition, he was named to his
current position.
Barry A. Kempa, Special Projects, joined Molmec in 1985. His
responsibilities at Molmec included materials management and cost reduction
initiatives. Upon consummation of the Molmec Acquisition, he was named to his
current position.
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<PAGE> 50
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to each of the
Company's five highest paid executive officers and significant employees for
fiscal year 1996.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
SALARY OTHER ANNUAL ALL OTHER
NAME YEAR ($) BONUS COMPENSATION COMPENSATION
---- ---- ------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Richard J. Nash........................... 1996 550,000 750,000 -- 2,917(2)
President and Chief Executive Officer 1995 550,000 1,000,000 -- --
1994 550,000 -- --
Joe Balous................................ 1996 -- -- 1,395,000(3) --
Chairman of Board and Secretary 1995 -- -- 1,185,000(3) --
1994 -- -- 430,000(3) --
Michael Polselli(4)....................... 1996 300,000 -- -- 3,000(2)
Treasurer 1995 300,000 250,000 --
1994 300,000 100,000 --
Vincent P. Buscemi........................ 1996 -- -- 446,346(5) --
Group Vice President -- Sales 1995 -- -- 448,326(5) --
1994 -- -- 348,310(5) --
Michael T. Heneka......................... 1996 -- -- 419,398(5) --
Group Vice President -- Sales 1995 -- -- 336,481(5) --
1994 -- -- 243,107(5) --
</TABLE>
- ------------------------------
(1) This table does not include any value that might be attributable to certain
job related benefits, the amount of which for any executive officer does not
exceed the lesser of $50,000 or 5% of combined salary and bonus for such
executive officer.
(2) Represents contributions to the Company's 401(k) plan.
(3) Consulting fees paid to a management company owned by Joe Balous.
(4) Resigned effective September, 1996. See "Certain Transactions".
(5) Represents sales commission paid to a company owned by such individual.
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<PAGE> 51
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
All of the outstanding capital stock of the Company is owned beneficially
and equally by the Shareholders, Messrs. Richard J. Nash and Joe Balous.
CERTAIN TRANSACTIONS
On April 22, 1996, LDM and the Shareholders entered into a stock redemption
agreement which provides that upon the death of either Shareholder, LDM is
required to purchase, and their respective estates are required to sell, all of
the capital stock of LDM owned by such Shareholder, as the case may be, at a
price equal to $33.0 million, which amount would be payable upon receipt of the
proceeds of life insurance policies owned by LDM on each of the lives of the
Shareholders. Pursuant to the terms of the stock redemption agreement, LDM is
required to maintain life insurance policies of $33.0 million and $28.0 million
on the lives of Mr. Nash and Mr. Balous, respectively. The annual premiums for
such policies of insurance are approximately $900,000.
On September 29, 1996, LDM contributed $4.0 million in cash to the capital
of its then 83% owned subsidiary, Industrial Machining Corporation of America
("IMCA"), and immediately thereafter exchanged its stock of IMCA, together with
$500,000 in cash and a $3.0 million 6.5% promissory note maturing on September
29, 1998, for all of the LDM stock held by Michael Polselli, a former
shareholder. See Note 1, "Operations and Significant Accounting Policies" of the
Notes to LDM's Consolidated Financial Statements.
Como, a 75% owned subsidiary of LDM, leases its general office and plant
facility and certain equipment from entities controlled by such subsidiary's
minority stockholder. Payments pursuant to these leases were $487,000 during
fiscal year 1996. Como also pays management fees to its minority stockholder
based on a percentage of sales. Such management fees were $120,799 during fiscal
year 1996.
In September 1996, the Company entered into a five-year lease for its Troy
offices with the Shareholders and a relative of one of the Shareholders. Monthly
rent expense pursuant to this lease is $15,000 per month. See "Business --
Properties".
During fiscal year 1996, the Company paid consulting fees of $1,395,000 to
a management company owned by Joe Balous.
The terms of these leases are not the result of arms-length bargaining;
however, the Company believes that such transactions are on terms no less
favorable to the Company than would be obtained if such transactions or
arrangements were arms-length transactions with non-affiliated persons. See
"Business -- Properties".
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<PAGE> 52
DESCRIPTION OF NEW NOTES
The New Notes will be issued, and the Old Notes were issued, under an
indenture (the "Indenture") dated as of January 15, 1997 by and among the
Company, the Guarantors and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee"). For purposes of the following summary, the Old Notes and the New
Notes shall be collectively referred to as the "Notes". The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act of 1939, as amended (the "TIA"), and to all of the provisions of
the Indenture, including the definitions of certain terms therein and those
terms made a part of the Indenture by reference to the TIA as in effect on the
date of the Indenture. A copy of the Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The definitions of
certain capitalized terms used in the following summary are set forth below
under "-- Certain Definitions." For purposes of this section, references to the
"Company" include only LDM Technologies, Inc. and not its Subsidiaries.
The Notes will be unsecured obligations of the Company, ranking subordinate
in right of payment to all Senior Debt of the Company.
The Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as Paying Agent and Registrar for the Notes. The Notes may be presented
for registration or transfer and exchange at the offices of the Registrar, which
initially will be the Trustee's corporate trust office. The Company may change
any Paying Agent and Registrar without notice to holders of the Notes (the
"Holders"). The Company will pay principal (and premium, if any) on the Notes at
the Trustee's corporate office in New York, New York. At the Company's option,
interest may be paid at the Trustee's corporate trust office or by check mailed
to the registered address of Holders. Any Notes that remain outstanding after
the completion of the Exchange Offer, together with the Exchange Notes issued in
connection with the Exchange Offer, will be treated as a single class of
securities under the Indenture.
Any Old Notes that remain outstanding after completion of the Exchange
Offer, together with the New Notes issued in connection with the Exchange Offer,
will be treated as a single class of securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $110,000,000 and
will mature on January 15, 2007. Interest on the Notes will accrue at the rate
of 10 3/4% per annum and will be payable semiannually in cash on each January 15
and July 15 commencing on July 15, 1997, to the persons who are registered
Holders at the close of business on the January 1 and July 1 immediately
preceding the applicable interest payment date. Interest on the Old Notes will
accrue from and including the most recent date to which interest has been paid
or, if no interest has been paid, from and including the date of issuance.
Holders whose Old Notes are accepted for exchange will receive accrued interest
thereon to, but not including, the date of issuance of the New Notes, such
interest to be payable with the first interest payment on the New Notes, but
will not receive any payment in respect of interest on the Old Notes accrued
after the issuance of the New Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
REDEMPTION
Optional Redemption. The Notes will be redeemable, at the Company's option,
in whole at any time or in part from time to time, on and after January 15,
2002, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed
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<PAGE> 53
during the twelve-month period commencing on January 15 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002........................................................ 105.375%
2003........................................................ 103.583%
2004........................................................ 101.792%
2005 and thereafter......................................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to January 15, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings (as defined below)
to redeem up to 25% of the Notes originally issued at a redemption price equal
to 110.750% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided that at least 75% of the
principal amount of Notes originally issued remains outstanding immediately
after any such redemption. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Company shall make such redemption
not more than 120 days after the consummation of any such Public Equity
Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Notes are not then listed on
a national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part; provided,
further, that if a partial redemption is made with the proceeds of a Public
Equity Offering, selection of the Notes or portions thereof for redemption shall
be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis
as is practicable (subject to DTC procedures), unless such method is otherwise
prohibited. Notice 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 Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the portion
of the principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. On and after the redemption
date, interest will cease to accrue on Notes or portions thereof called for
redemption as long as the Company has deposited with the Paying Agent funds in
satisfaction of the applicable redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Debt. Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Debt shall
first be paid in full in cash or Cash Equivalents, or such payment duly provided
for to the satisfaction of the holders of Senior Debt, before any payment or
distribution of any kind or character is made on account of any Obligations on
the Notes, or for the acquisition of any of the Notes for cash or property or
otherwise. If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character shall be made by or on behalf of the Company or
any other Person on its or their
48
<PAGE> 54
behalf with respect to any Obligations on the Notes or to acquire any of the
Notes for cash or property or otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default have
been cured or waived or have ceased to exist or the Trustee receives notice from
the Representative for the respective issues of Designated Senior Debt
terminating the Blockage Period (as defined below), during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), neither the Company
nor any other Person on its behalf shall (x) make any payment of any kind or
character with respect to any Obligations on the Notes or (y) acquire any of the
Notes for cash or property or otherwise. Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 180 days from the
date the payment on the Notes was due and only one such Blockage Period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any Blockage Period with
respect to the Designated Senior Debt shall be, or be made, the basis for
commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Debt, including
the Holders of the Notes, may recover less, ratably, than holders of Senior
Debt.
After giving effect to the Transactions, on a pro forma basis, at September
29, 1996, the aggregate amount of Senior Debt would have been approximately
$16.2 million.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued interest to the date of purchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Company covenants to (i) repay in full and terminate all commitments under
Indebtedness under the Credit Agreement and all other Senior Debt the terms of
which require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the Credit Agreement and
all other such Senior Debt and to repay the Indebtedness owed to each lender
which has accepted such offer or (ii) obtain the requisite consents under the
Credit Agreement and all other Senior Debt to permit the repurchase of the Notes
as provided below. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase Notes
pursuant to the provisions described below.
Within 30 days following the date upon which the Change of Control
occurred, the Company must send, by first class mail, a notice to each Holder,
with a copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). Holders electing to have a Note purchased pursuant to a Change
of Control Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third business day prior to the Change of Control Payment Date.
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<PAGE> 55
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company and
the Restricted Subsidiaries to incur additional Indebtedness, to grant liens on
its property, to make Restricted Payments and to make Asset Sales may also make
more difficult or discourage a takeover of the Company, whether favored or
opposed by the management of the Company. Consummation of any such transaction
in certain circumstances may require redemption or repurchase of the Notes, and
there can be no assurance that the Company or the acquiring party will have
sufficient financial resources to effect such redemption or repurchase. Such
restrictions and the restrictions on transactions with Affiliates may, in
certain circumstances, make more difficult or discourage any leveraged buyout of
the Company or any of its Subsidiaries by the management of the Company. While
such restrictions cover a wide variety of arrangements which have traditionally
been used to effect highly leveraged transactions, the Indenture may not afford
the Holders of Notes protection in all circumstances from the adverse aspects of
a highly leveraged transaction, reorganization, restructuring, merger or similar
transaction.
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 Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of the Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company or any Guarantor may incur
Indebtedness (including, without limitation, Acquired Indebtedness) and the
Restricted Subsidiaries may incur Acquired Indebtedness, in each case if on the
date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is greater than 2.0 to 1.0, if such incurrence occurs on or prior to January 15,
1998, or 2.25 to 1.0, if such incurrence occurs after January 15, 1998.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of the Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock to holders of such Capital
Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Company or any warrants, rights or options to purchase or acquire
shares of any class of such Capital Stock, (c) make any principal payment on,
purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for
value, prior to any scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Indebtedness of the Company that is subordinate or
junior in right of payment to the Notes or (d) make any Investment (other than
Permitted Investments) (each of the foregoing actions set forth in clauses (a),
(b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of
such Restricted Payment or immediately after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing or (ii) the
Company is not able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the covenant described under "--
Limitation on Incurrence of Additional Indebtedness" or (iii) the aggregate
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amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of Directors of the Company) shall
exceed the sum of: (w) 50% of the cumulative Consolidated Net Income (or if
cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of
the Company earned subsequent to the Issue Date and on or prior to the date the
Restricted Payment occurs (the "Reference Date") (treating such period as a
single accounting period); plus (x) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a Subsidiary of the Company)
from the issuance and sale subsequent to the Issue Date and on or prior to the
Reference Date of Qualified Capital Stock of the Company; plus (y) without
duplication of any amounts included in clause (iii) (x) above, 100% of the
aggregate net cash proceeds of any equity contribution received by the Company
from a holder of the Company's Capital Stock (excluding, in the case of clauses
(iii) (x) and (y), any net cash proceeds from a Public Equity Offering to the
extent used to redeem the Notes); plus (z) an amount equal to the consolidated
net Investments on the date of Revocation made by the Company and/or any of the
Restricted Subsidiaries in any Subsidiary of the Company that has been
designated an Unrestricted Subsidiary after the Issue Date upon its
redesignation as a Restricted Subsidiary in accordance with the covenant
described under "-- Limitation on Designations of Unrestricted Subsidiaries."
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 60
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; (2) if no Default or Event of Default
shall have occurred and be continuing, the acquisition of any shares of Capital
Stock of the Company, either (i) solely in exchange for shares of Qualified
Capital Stock of the Company or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company; (3) if no Default
or Event of Default shall have occurred and be continuing, the acquisition of
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes either (i) solely in exchange for shares of Qualified
Capital Stock of the Company, or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (A) shares of Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; (4) the payment of premiums not to exceed $1,500,000
in any fiscal year for insurance on the lives of stockholders of the Company,
the proceeds of which insurance are intended to fund repurchases by the Company
of Capital Stock of the Company owned by such stockholders; (5) the purchase,
redemption or acquisition of Capital Stock of the Company with the proceeds of
insurance from insurance companies not Affiliated with the Company; (6)
Permitted Tax Payments; and (7) so long as no Default or Event of Default shall
have occurred and be continuing, other Restricted Payments in an aggregate
amount not to exceed $2,500,000. In determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date in accordance with clause
(iii) of the immediately preceding paragraph, amounts expended pursuant to
clauses (1), (2), (4) and (7) shall be included in such calculation.
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 complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations may
be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any of
the Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company
or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (ii) at least 80% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash or Cash Equivalents and is received
at the time of such disposition; and (iii) upon the consummation of an Asset
Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within 180 days of receipt thereof
either (A) to prepay any Senior Debt and, in the case of any Senior Debt under
any revolving credit facility, effect a permanent reduction in the availability
under such revolving credit facility, (B) to make an investment in properties
and assets that replace the properties and assets that were the subject of such
Asset
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Sale or in properties and assets that will be used in the business of the
Company and its Restricted Subsidiaries as existing on the Issue Date or in
businesses reasonably related thereto, or (C) a combination of prepayment and
investment permitted by the foregoing clauses (iii)(A) and (iii)(B). On the
181st day after an Asset Sale or such earlier date, if any, as the Board of
Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding
sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company or
such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date, from
all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds
Offer Amount at a price equal to 100% of the principal amount of the Notes to be
purchased, plus accrued and unpaid interest thereon, if any, to the date of
purchase; provided, however, that if at any time any non-cash consideration
received by the Company or any Restricted Subsidiary, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash (other than interest received with respect to any such non-cash
consideration), then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be
applied in accordance with this covenant. The Company may defer the Net Proceeds
Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to
or in excess of $5,000,000 resulting from one or more Asset Sales (at which
time, the entire unutilized Net Proceeds Offer Amount, and not just the amount
in excess of $5,000,000, shall be applied as required pursuant to this
paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and the Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "-- Merger, Consolidation
and Sale of Assets," the successor corporation shall be deemed to have sold the
properties and assets of the Company and the Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of this covenant with respect to such deemed sale as if it were an Asset Sale.
In addition, the fair market value of such properties and assets of the Company
or the Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this covenant.
Each Net Proceeds Offer will be mailed to the record Holders as shown on
the register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may
elect to tender their Notes in whole or in part in integral multiples of $1,000
in exchange for cash. To the extent Holders properly tender Notes in an amount
exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be
purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer
shall remain open for a period of 20 business days or such longer period as may
be required by law.
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 Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
or to pay any Indebtedness or other obligation owed to the Company or any other
Restricted Subsidiary; or (c) transfer any of its property or assets to the
Company or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) the
Indenture; (3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Restricted Subsidiary; (4) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the properties or assets of the Person so acquired; (5) agreements
existing on the Issue Date to the
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extent and in the manner such agreements are in effect on the Issue Date; or (6)
an agreement governing Refinancing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clause (2), (4) or (5) above; provided, however, that the provisions relating to
such encumbrance or restriction contained in any such Refinancing Indebtedness
are no less favorable to the Company in any material respect as determined by
the Board of Directors of the Company in their reasonable and good faith
judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (4) or (5).
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any of the Restricted Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Restricted Subsidiary) or permit
any Person (other than the Company or a Wholly Owned Restricted Subsidiary) to
own any Preferred Stock of any Restricted Subsidiary.
Limitation on Liens. The Company will not, and will not cause or permit any
of the Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or permit or suffer to exist any Liens of any kind against or upon any property
or assets of the Company or any of the Restricted Subsidiaries whether owned on
the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom
unless (i) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Notes, the Notes are secured by
a Lien on such property, assets or proceeds that is senior in priority to such
Liens and (ii) in all other cases, the Notes are equally and ratably secured,
except for (A) Liens existing as of the Issue Date to the extent and in the
manner such Liens are in effect on the Issue Date; (B) Liens securing Senior
Debt and Liens securing Guarantor Senior Debt; (C) Liens securing the Notes and
any Guarantees; (D) Liens of the Company or a Wholly Owned Restricted Subsidiary
on assets of any Subsidiary of the Company; (E) Liens securing Refinancing
Indebtedness which is incurred to Refinance any Indebtedness which has been
secured by a Lien permitted under the Indenture and which has been incurred in
accordance with the provisions of the Indenture; provided, however, that such
Liens (A) are no less favorable to the Holders and are not more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (B) do not extend to or cover any property or
assets of the Company or any of the Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and (F) Permitted Liens.
Prohibition on Incurrence of Senior Subordinated Debt. The Company will
not, and will not permit any Guarantor to, incur or suffer to exist Indebtedness
that is senior in right of payment to the Notes or any Guarantee and subordinate
in right of payment to any other Indebtedness of the Company or the applicable
Guarantor, as the case may be.
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or into
any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or
cause or permit any Restricted Subsidiary to sell, assign, transfer, lease,
convey or otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless: (i) either (1) the Company shall be the surviving or continuing
corporation or (2) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company and the Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity") (x) shall be a corporation
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, and premium, if any, and interest on all of the Notes and the
performance of every covenant of the Notes, the Indenture and the Registration
Rights Agreement on the part of the Company to be performed or observed; (ii)
immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(2)(y) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction), the Company or such
Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction and (2) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
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covenant described under "-- Limitation on Incurrence of Additional
Indebtedness;" (iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Default or Event of
Default shall have occurred or be continuing; and (iv) the Company or the
Surviving Entity shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of the Indenture
and that all conditions precedent in the Indenture relating to such transaction
have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
The Indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, in which the Company is not the continuing
corporation, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture and the Notes with the same effect as if such
surviving entity had been named as such.
No Guarantor (other than any Guarantor whose Guarantee is to be released in
accordance with the terms of the Guarantee and the Indenture in connection with
any transaction complying with the provisions of the covenant described under
"-- Limitation on Asset Sales") will, and the Company will not cause or permit
any Guarantor to, consolidate with or merge with or into any Person other than
the Company or any other Guarantor unless: (i) the entity formed by or surviving
any such consolidation or merger (if other than the Guarantor) is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (ii) such entity assumes by supplemental indenture
all of the obligations of the Guarantor on the Guarantee; (iii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; (iv) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (ii) of the first paragraph of
this covenant; and (v) the Company shall have delivered to the Trustee an
officers' certificate and Opinion of Counsel, each stating that such
consolidation or merger and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with the
applicable provisions of the Indenture and that all conditions precedent in the
Indenture relating to such transaction have been satisfied. Any merger or
consolidation of a Guarantor with and into the Company (with the Company being
the surviving entity) or another Guarantor need only comply with clause (v) of
this paragraph.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of the Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate of the Company or such Restricted Subsidiary.
All Affiliate Transactions (and each series of related Affiliate Transactions
which are similar or part of a common plan) involving aggregate payments or
other property with a fair market value in excess of $250,000 shall be approved
by the Board of Directors of the Company or such Restricted Subsidiary, as the
case may be, such approval to be evidenced by a Board Resolution stating that
such Board of Directors has determined that such transaction complies with the
foregoing provisions. If the Company or any Restricted Subsidiary enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related to
a common plan) that involves an aggregate fair market value of more than
$2,500,000, the Company or
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such Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary as determined in good faith by the Company's Board of Directors or
senior management; (ii) consulting fees paid by the Company consistent with past
practice; (iii) transactions exclusively between or among the Company and any of
the Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by the
Indenture; and (iv) Restricted Payments permitted by the Indenture.
Issuance of Subsidiary Guarantees. If (a) any Domestic Wholly Owned
Restricted Subsidiary incurs any Indebtedness or (b) any Restricted Subsidiary
(whether or not a Domestic Wholly Owned Restricted Subsidiary) guarantees any
Indebtedness of the Company or any of its Restricted Subsidiaries (other than a
Subsidiary of such Restricted Subsidiary) then, in either case, the Company
shall cause such Domestic Wholly Owned Restricted Subsidiary or such Restricted
Subsidiary, as the case may be, to (i) execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Domestic Wholly Owned Restricted Subsidiary or such Restricted
Subsidiary, as the case may be, shall unconditionally guarantee (each, a
"Guarantee") all of the Company's obligations under the Notes and the Indenture
on the terms set forth in the Indenture and (ii) deliver to the Trustee an
opinion of counsel that such supplemental indenture has been duly authorized,
executed and delivered by such Domestic Wholly Owned Restricted Subsidiary or
such Restricted Subsidiary, as the case may be, and constitutes a legal, valid,
binding and enforceable obligation of such Domestic Wholly Owned Restricted
Subsidiary or such Restricted Subsidiary, as the case may be. Thereafter, such
Domestic Wholly Owned Restricted Subsidiary or such Restricted Subsidiary, as
the case may be, shall be a Guarantor for all purposes of the Indenture.
Each Guarantee will be subordinated to Guarantor Senior Debt on the same
basis as the Notes are subordinated to Senior Debt. In the event all of the
Capital Stock of a Guarantor is sold by the Company and/or one or more of its
Subsidiaries and the sale complies with the provisions set forth under "--
Limitation on Asset Sales," such Guarantor's Guarantee will be released.
Conduct of Business. The Company and the Restricted Subsidiaries will not
engage in any businesses which are not either (i) the same, similar or related
to the businesses in which the Company and the Restricted Subsidiaries are
engaged on the Issue Date or (ii) Permitted Investments.
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 the Indenture, the Notes or the Guarantees unless such
consideration is offered to be paid or agreed to all holders of the Notes who so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
Limitation on Designations of Unrestricted Subsidiaries. The Company may
designate any Subsidiary of the Company (other than a Subsidiary of the Company
which owns Capital Stock of a Restricted Subsidiary) as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and
(b) the Company would be permitted under the Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the sum of
(i) fair market value of the Capital Stock of such Subsidiary owned by the
Company and the Restricted Subsidiaries on such date and (ii) the aggregate
amount of Indebtedness of such Subsidiary owed to the Company and the
Restricted Subsidiaries on such date; and
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(c) the Company would be permitted to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the covenant
described under "-- Limitation on Incurrence of Additional Indebtedness" at
the time of Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment in the Designation Amount
pursuant to the covenant described under "-- Limitation on Restricted Payments"
for all purposes of the Indenture. The Indenture further provides that the
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time (x) provide direct or indirect credit support for or a guarantee of any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case of
clause (x) or (y), to the extent permitted under the covenant described under
"-- Limitation on Restricted Payments."
The Indenture further provides that the Company may revoke any Designation
of a Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such
Subsidiary shall then constitute a Restricted Subsidiary, if
(a) no default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted outstanding
immediately following such Revocation would, if incurred at such time, have
been permitted to be incurred for all purposes of the Indenture.
All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Trustee certifying compliance with the foregoing
provisions.
Reports to Holders. The Indenture provides that the Company will deliver to
the Trustee within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents and
other reports, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide the Trustee
and Holders with such annual and quarterly reports and such information,
documents and other reports specified in Section 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of TIA sec. 314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default:"
(i) the failure to pay interest on any Notes when the same becomes due
and payable and the default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions of the
Indenture);
(ii) the failure to pay the principal on any Notes, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer)
(whether or not such payment shall be prohibited by the subordination
provisions of the Indenture);
(iii) a default in the observance or performance of any other covenant
or agreement contained in the Indenture which default continues for a
period of 30 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or
the Holders of at least 25% of the outstanding principal amount of the
Notes (except in the case of a default with respect to the covenant
described under "-- Certain Covenants -- Merger, Consolidation and Sale of
Assets,"
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which will constitute an Event of Default with such notice requirement but
without such passage of time requirement);
(iv) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or of any Restricted Subsidiary (or the payment
of which is guaranteed by the Company or any Restricted Subsidiary),
whether such Indebtedness now exists or is created after the Issue Date,
which default (a) is caused by a failure to pay principal of such
Indebtedness after any applicable 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 $2,500,000;
(v) one or more judgments in an aggregate amount in excess of
$2,500,000 shall have been rendered against the Company or any of the
Restricted Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable;
(vi) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries; or
(vii) any Guarantee of a Significant Subsidiary ceases to be in full
force and effect or any Guarantee of a Significant Subsidiary is declared
to be null and void and unenforceable or any Guarantee of a Significant
Subsidiary is found to be invalid or any of the Guarantors which is a
Significant Subsidiary denies its liability under its Guarantee (other than
by reason of release of a Guarantor in accordance with the terms of the
Indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above shall occur and be continuing, the Trustee or the Holders of at least
25% in principal amount of outstanding Notes may declare the principal of and
accrued interest on all the Notes to be due and payable by notice in writing to
the Company and the Trustee specifying the respective Events of Default and that
it is a "notice of acceleration," and the same shall become immediately due and
payable. If an Event of Default specified in clause (vi) above occurs and is
continuing, then all unpaid principal of, and premium, if any, and accrued and
unpaid interest on all of the outstanding Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in principal amount of the Notes may rescind and
cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description above
of Events of Default, the Trustee shall have received an officers' certificate
and an opinion of counsel that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its consequences,
except a default in the payment of the principal of or interest on any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the then outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
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Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge of
any Default or Event of Default (provided that such officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations any Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, except for (i) the rights of Holders to
receive payments in respect of the principal of, premium, if any, and interest
on the Notes when such payments are due, (ii) the Company's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payments, (iii) the rights, powers, trust, 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 Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, reorganization and insolvency
events) described under "-- Events of Default" will no longer constitute an
Event of Default with respect to the Notes.
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 cash in U.S. dollars, non-callable U.S. government obligations,
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 on the Notes on the stated date of
payment thereof or on the applicable redemption date, as the case may be; (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 Trustees
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 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; (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 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 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
shall not result in a breach or violation of, or constitute a default under the
Indenture or any other material 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 is bound; (vi) 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 or others; (vii) the Company shall have delivered to
the Trustee an officers' certificate and an 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; (viii) the Company shall
have delivered to the Trustee an opinion of counsel to the effect that (A) the
trust funds will not be subject to any rights of holders of Senior Debt,
including, without limitation, those arising under the Indenture and (B) after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency,
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reorganization or similar laws affecting creditors' rights generally; and (ix)
certain other customary conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (ii)
the Company has paid all other sums payable under the Indenture by the Company;
and (iii) the Company has delivered to the Trustee an officers' certificate and
an opinion of counsel stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
MODIFICATION OF THE INDENTURE
From time to time, the Company and the Trustee, without the consent of the
Holders, may amend the Indenture for certain specified purposes, including
curing ambiguities, defects or inconsistencies, so long as such change does not,
in the opinion of the Trustee, adversely affect the rights of any of the Holders
in any material respect. In formulating its opinion on such matters, the Trustee
will be entitled to rely on such evidence as it deems appropriate, including,
without limitation, solely on an opinion of counsel. Other modifications and
amendments of the Indenture may be made with the consent of the Holders of a
majority in principal amount of the then outstanding Notes issued under the
Indenture, except that, without the consent of each Holder affected thereby, no
amendment may: (i) reduce the amount of Notes whose holders must consent to an
amendment; (ii) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes; (iii)
reduce the principal of or change or have the effect of changing the fixed
maturity of any Notes, or change the date on which any Notes may be subject to
redemption or repurchase, or reduce the redemption or repurchase price therefor;
(iv) make any Notes payable in money other than that stated in the Notes; (v)
make any change in provisions of the Indenture protecting the right of each
Holder to receive payment of principal of and interest on such Note on or after
the due date thereof or to bring suit to enforce such payment, or permitting
Holders of a majority in principal amount of Notes to waive Defaults or Events
of Default; (vi) amend, change or modify in any material respect the obligation
of the Company to make and consummate a Change of Control Offer in the event of
a Change of Control or make and consummate a Net Proceeds Offer with respect to
any Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto; (vii) modify or change any provision of the
Indenture or the related definitions affecting the subordination or ranking of
the Notes or any Guarantee in a manner which adversely affects the Holders; or
(viii) release any Guarantor from any of its obligations under its Guarantee or
the Indenture otherwise than in accordance with the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it, the Notes and any Guarantees will be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be required
thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of
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Default, the Trustee will exercise such rights and powers vested in it by the
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.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions; provided that if the
Trustee acquires any conflicting interest as described in the TIA, it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of the Restricted
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" 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, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
"Affiliate Transaction" has the meaning set forth under "-- Certain
Covenants -- Limitation on Transactions with Affiliates."
"Alliance Debt" means Indebtedness of the person to become a Subsidiary of
the Company upon consummation of the transactions contemplated by the stock
purchase agreement to be entered into among the Company, the Corporation (as
defined therein), GKG (as defined therein) and Valk (as defined therein).
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary, or shall be merged with or into the Company or
any Restricted Subsidiary, or (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
the Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any person other than the Company, a Guarantor, or an Unleveraged Wholly Owned
Restricted Subsidiary of (a) any Capital Stock of any Restricted Subsidiary; or
(b) any other property or assets of the Company or any Restricted Subsidiary
other than in the ordinary course of business; provided, however, that Asset
Sales shall not include (i) a transaction or series of related transactions for
which the Company or the Restricted Subsidiaries receive aggregate consideration
of less than $500,000 and (ii) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets of the Company as permitted
by the covenant described under "-- Certain Covenants -- Merger, Consolidation
and Sale of Assets."
"Blockage Period" has the meaning set forth under "-- Subordination."
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
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"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
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"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group"), together with any Affiliates thereof (whether
or not otherwise in compliance with the provisions of the Indenture); (ii) the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of the Indenture); or (iii) any Person or Group
(other than the Permitted Holder(s)) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 50% of
the aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company.
"Change of Control Offer" has the meaning set forth under "-- Change of
Control."
"Change of Control Payment Date" has the meaning set forth under "-- Change
of Control."
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated EBITDA" means, with respect to the Company, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
the Company and the Restricted Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (B) Consolidated Interest
Expense, (C) Consolidated Non-cash Charges and (D) the amount of Permitted Tax
Payments made during such period, less any non-cash items increasing
Consolidated Net
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Income for such period, all as determined on a consolidated basis for the
Company and the Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company, the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of the Company or any of the Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of the Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness and also including
any Consolidated EBITDA (provided that such Consolidated EBITDA shall be
included only to the extent includable pursuant to the definition of
"Consolidated Net Income" attributable to the assets which are the subject of
the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability for
any such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. If the Company or any of the Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if the
Company or any Restricted Subsidiary had directly incurred or otherwise assumed
such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (i) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(including amortization or write-off of deferred financing costs of the Company
and the Restricted Subsidiaries during such period and any premium or penalty
paid in connection with redeeming or retiring Indebtedness of the Company and
the Restricted Subsidiaries prior to the stated maturity thereof pursuant to the
agreements governing such Indebtedness), plus (ii) the product of (x) the amount
of all dividend payments on any series of Preferred Stock of the Company (other
than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be
paid or accrued during such period times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state and local income tax rate of the Company, expressed
as a decimal.
"Consolidated Interest Expense" means, with respect to the Company for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any
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amortization of debt discount, (b) the net costs under Interest Swap
Obligations, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the
Company and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company, for any
period, the aggregate net income (or loss) of the Company and the Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains, (c) the net income of
any Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary or is merged or consolidated with the
Company or any Restricted Subsidiary, (d) the net income (but not loss) of any
Restricted Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is restricted by a
contract, operation of law or otherwise, (e) the net income of any Person, other
than a Restricted Subsidiary, except to the extent of cash dividends or
distributions paid to the Company or to a Restricted Subsidiary by such Person,
(f) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), (h) the amount of Permitted Tax Payments made during such period
and (i) in the case of a successor to the Company by consolidation or merger or
as a transferee of the Company's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets. For
purposes of calculating cumulative Consolidated Net Income pursuant to clause
(w) of the first paragraph under "-- Certain Covenants -- Limitation on
Restricted Payments," Consolidated Net Income shall be increased (to the extent
Consolidated Net Income has been reduced thereby) by the amount of premiums (not
to exceed $1,500,000 in any fiscal year) for insurance on the lives of
stockholders of the Company the proceeds of which insurance are intended to fund
repurchases by the Company of Capital Stock of the Company owed by such
stockholders.
"Consolidated Net Worth" of the Company means the consolidated
stockholders' equity of the Company, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of the Company.
"Consolidated Non-cash Charges" means, with respect to the Company, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
the Company and the Restricted Subsidiaries reducing Consolidated Net Income of
the Company for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charges constituting an extraordinary item or loss
or any such charge which requires an accrual of or a reserve for cash charges
for any future period).
"Covenant Defeasance" has the meaning set forth under "-- Legal Defeasance
and Covenant Defeasance."
"Credit Agreement" means the Credit Agreement dated as of the Issue Date,
between the Company, the lenders party thereto in their capacities as lenders
thereunder and Bank America Business Credit, Inc., as agent, together with the
related documents thereto (including, without limitation, any guarantee
agreements 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 permitted by the covenant described under "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness") or adding
Restricted Subsidiaries as additional borrowers or guarantors thereunder) all or
any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.
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"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Default Notice" has the meaning set forth under "-- Subordination."
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
Credit Agreement and (ii) any other Indebtedness constituting Senior Debt which,
at the time of determination, has an aggregate principal amount of at least
$10,000,000 and is specifically designated in the instrument evidencing such
Senior Debt as "Designated Senior Debt" by the Company.
"Designation" has the meaning set forth under "-- Certain Covenants --
Limitation on Designations of Unrestricted Subsidiaries."
"Designation Amount" has the meaning set forth under "-- Certain Covenants
- -- Limitations on Designation of Unrestricted Subsidiaries."
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the Notes.
"Domestic Wholly Owned Restricted Subsidiary" means a Wholly Owned
Restricted Subsidiary incorporated or otherwise organized or existing under the
laws of the United States, any state thereof or any territory or possession of
the United States.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Trustee.
"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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Guarantee" has the meaning set forth under "-- Certain Covenants --
Issuance of Subsidiary Guarantees."
"Guarantor" means (i) on the Issue Date, each of LDM Holdings, L.L.C., LDM
Canada Limited Partnership and LDM Technologies Company and (ii) each other
Person that in the future executes a Guarantee pursuant to the covenant
described under "-- Certain Covenants -- Issuance of Subsidiary Guarantees" or
otherwise; provided that any Person constituting a Guarantor as described above
shall cease to constitute a Guarantor when its Guarantee is released in
accordance with the terms of the Indenture.
"Guarantor Senior Debt" means, with respect to any Guarantor, (i) the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Guarantee of such Guarantor. Without limiting the generality of the foregoing,
"Guarantor Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a petition
of bankruptcy at the rate provided for in the documentation with respect
thereto, whether or not such interest is an allowed claim under applicable law)
on,
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and all other amounts owing in respect of, (x) all Interest Swap Obligations and
(y) all obligations under Currency Agreements, in each case whether outstanding
on the Issue Date or thereafter incurred. Notwithstanding the foregoing,
"Guarantor Senior Debt" shall not include (i) any Indebtedness of such Guarantor
to a Subsidiary of such Guarantor or any Affiliate of such Guarantor or any of
such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of,
any shareholder, director, officer or employee of such Guarantor or any
Subsidiary of such Guarantor (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal state,
local or other taxes owed or owing by such Guarantor, (vi) Indebtedness incurred
in violation of the Covenant described under "-- Certain Covenants -- Limitation
on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to the Company and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment to
any other Indebtedness of such Guarantor.
"incur" has the meaning set forth under "-- Certain Covenants -- Limitation
on Incurrence of Additional Indebtedness."
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, (ii) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all Obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all Obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the lesser of
the fair market value of such property or asset or the amount of the Obligation
so secured, (viii) all Obligations under currency agreements and interest swap
agreements of such Person and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Purchaser" means Smith Barney Inc.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Investment" means, with respect to any Person, (i) any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash
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or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any Person, and (ii) any premiums paid by such Person
for insurance on the lives of stockholders of such Person, the proceeds of which
insurance are intended to fund repurchases by such Person of Capital Stock of
such Person owned by such stockholder. "Investment" shall exclude extensions of
trade credit by the Company and the Restricted Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of the Company or
such Restricted Subsidiary, as the case may be. If the Company or any Wholly
Owned Restricted Subsidiary sells or otherwise disposes of any Common Stock of
any Wholly Owned Restricted Subsidiary that is not a Guarantor such that, after
giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, all of the outstanding Common Stock of such Wholly Owned
Restricted Subsidiary, 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
Common Stock of such Wholly Owned Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Notes.
"Legal Defeasance" has the meaning set forth under "-- Legal Defeasance and
Covenant Defeasance."
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of the Restricted Subsidiaries from such Asset Sale net of
(a) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), (b) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements, (c) repayment of Indebtedness that
is required to be repaid in connection with such Asset Sale and (d) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Net Proceeds Offer" has the meaning set forth under "-- Certain Covenants
- -Limitation on Asset Sales."
"Net Proceeds Offer Amount" has the meaning set forth under "-- Certain
Covenants - Limitation on Asset Sales."
"Net Proceeds Offer Payment Date" had the meaning set forth under "--
Certain Covenants - Limitation on Asset Sales."
"Net Proceeds Offer Trigger Date" has the meaning set forth under "--
Certain Covenants - Limitation on Asset Sales."
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Permitted Holder(s)" means (i) each of Joe Balous and Richard J. Nash and
(ii) any person or entity controlled by either, or both of, Joe Balous or
Richard J. Nash.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Notes, the Indenture and any Guarantees;
(ii) Indebtedness incurred pursuant to the Credit Agreement in an
aggregate principal amount at any time outstanding not to exceed the
greater of (x) $45,000,000, reduced by any required permanent repayments
with the Net Cash Proceeds of Asset Sales (which are accompanied by a
corresponding permanent commitment reduction) thereunder and (y) the sum of
80% of the net book value of accounts
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receivable of the Company and the Restricted Subsidiaries and (b) 60% of
the net book value of the inventory of the Company and the Restricted
Subsidiaries;
(iii) other Indebtedness of the Company and the Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments when actually paid
or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any Guarantor and Interest Swap Obligations of any
Restricted Subsidiary covering Indebtedness of such Restricted Subsidiary;
provided, however, that such Interest Swap Obligations are entered into to
protect the Company and the Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with the Indenture to
the extent the notional principal amount of such Interest Swap Obligations
does not exceed the principal amount of the Indebtedness to which such
Interest Swap Obligations relates;
(v) Indebtedness under Currency Agreements; provided that in the case
of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and the
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary to the Company, a
Guarantor or an Unleveraged Wholly Owned Restricted Subsidiary for so long
as such Indebtedness is held by the Company, a Guarantor or an Unleveraged
Wholly Owned Restricted Subsidiary, in each case subject to no Lien held by
a Person other than the Company, a Guarantor or an Unleveraged Wholly Owned
Restricted Subsidiary; provided that if as of any date any Person other
than the Company, a Guarantor or an Unleveraged Wholly Owned Restricted
Subsidiary owns or holds any such Indebtedness or holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the issuer of such
Indebtedness;
(vii) Indebtedness of the Company to a Guarantor or an Unleveraged
Wholly Owned Restricted Subsidiary for so long as such Indebtedness is held
by a Guarantor or an Unleveraged Wholly Owned Restricted Subsidiary, in
each case subject to no Lien; provided that (a) any Indebtedness of the
Company to any Guarantor or Unleveraged Wholly Owned Restricted Subsidiary
is unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Indenture and the Notes and (b) if as of
any date any Person other than a Guarantor or Unleveraged Wholly Owned
Restricted Subsidiary owns or holds any such Indebtedness or any person
holds a Lien in respect of such Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted Indebtedness by the
Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(ix) Indebtedness of the Company or any of the Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness;
(xi) additional Indebtedness of the Company and the Guarantors in an
aggregate principal amount not to exceed $7,500,000 at any one time
outstanding; and
(xii) Indebtedness of Restricted Subsidiaries that are not Guarantors
in an aggregate principal amount not to exceed $2,500,000 at any one time
outstanding.
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"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary in any Person that is or will become immediately after
such Investment a Guarantor or an Unleveraged Wholly Owned Restricted Subsidiary
or that will merge or consolidate into the Company or a Guarantor or an
Unleveraged Wholly Owned Restricted Subsidiary, (ii) investments in the Company
by any Restricted Subsidiary; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated, pursuant to a written agreement, to
the Company's obligations under the Notes and the Indenture; (iii) investments
in cash and Cash Equivalents; (iv) loans and advances to employees and officers
of the Company and the Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes not in excess of $1,000,000 at any one
time outstanding; (v) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of the Company's or the Restricted Subsidiaries'
businesses and otherwise in compliance with the Indenture; (vi) Investments in
Restricted Subsidiaries that are not Guarantors or Unleveraged Wholly Owned
Restricted Subsidiaries not to exceed $1,000,000 at any one time outstanding;
(vii) Investments in Unrestricted Subsidiaries not to exceed $1,000,000 at any
one time outstanding; (viii) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers; (ix)
Investments made by the Company or the Restricted Subsidiaries as a result of
consideration received in connection with an Asset Sale made in compliance with
the covenant described under "-- Certain Covenants - Limitation on Asset Sales";
(x) Investments in persons, including, without limitation, joint ventures,
engaged in a business similar or related to the businesses in which the Company
and the Restricted Subsidiaries are engaged on the Issue Date not to exceed
$7,500,000 at any one time outstanding and (xi) a guarantee by the Company of up
to $2,500,000 aggregate principal amount of Alliance Debt.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or the Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of the Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall
not be secured by any property or assets of the Company or any Restricted
Subsidiary other than the property and assets so
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acquired and (B) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of the Restricted Subsidiaries, including rights of offset and
set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements; and
(xiii) Liens securing Acquired Indebtedness incurred in accordance
with the covenant described under "-- Certain Covenants -- Limitation on
Incurrence of Additional Indebtedness"; provided that (A) such Liens
secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and were not granted in connection with, or in anticipation of,
the incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and (B) such Liens do not extend to or cover any property or
assets of the Company or of any of the Restricted Subsidiaries other than
the property or assets that secured the Acquired Indebtedness prior to the
time such Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary and are no more favorable to the lienholders than
those securing the Acquired Indebtedness prior to the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary.
"Permitted Tax Payments" means distributions to the stockholders of the
Company to reimburse them for federal and state income taxes actually paid and
attributable to the income of the Company for any tax period during which the
Company is not a taxable entity for federal or state, as the case may be, income
tax purposes pursuant to an election under Subchapter S of the Internal Revenue
Code of 1986, as amended, or a similar provision under state law, as the case
may be.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Public Equity Offering" has the meaning set forth under "-- Redemption --
Optional Redemption upon Public Equity Offerings."
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Reference Date" has the meaning set forth under "-- Certain Covenants --
Limitation on Restricted Payments."
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
the covenant described under "-- Certain Covenants - Limitation on Incurrence of
Additional Indebtedness" (other than pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii), (ix), (xi) or (xii) of the definition of Permitted Indebtedness),
in each case that does not (1) result in an increase in the aggregate principal
amount of Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any premium required to be paid under the terms
of the instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing) or (2)
create Indebtedness with (A) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being Refinanced
or (B) a final maturity earlier than the final maturity of the Indebtedness
being Refinanced;
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provided that (x) if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness solely of the
Company and (y) if such Indebtedness being Refinanced is subordinate or junior
to the Notes or a Guarantee, then such Refinancing Indebtedness shall be
subordinate to the Notes or such Guarantee, as the case may be, at least to the
same extent and in the same manner as the Indebtedness being Refinanced.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the Issue Date between the Company, and the Initial Purchaser.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then the
Representative for such Designated Senior Debt shall at all times constitute the
holders of a majority in outstanding principal amount of such Designated Senior
Debt in respect of any Designated Senior Debt.
"Restricted Payment" has the meaning set forth under "-- Certain Covenants
- -- Limitations on Restricted Payments."
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under "-- Certain Covenants -- Limitation
on Designations of Unrestricted Subsidiaries." Any such Designation may be
revoked by a Board Resolution of the Company delivered to the Trustee, subject
to the provisions of such covenant.
"Revocation" has the meaning set forth under "-- Certain Covenants --
Limitation on Designations of Unrestricted Subsidiaries."
"Revolving Credit Facility" means one or more revolving credit facilities
under the Credit Agreement.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Senior Debt" means, (i) the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Debt" shall also include the principal of, premium, if
any, interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Company under the Credit Agreement,
including, without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not
include (i) any Indebtedness of the Company to a Restricted Subsidiary or any
Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Restricted Subsidiary (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) Indebtedness incurred in violation of the covenant
described under "-- Certain Covenants -- Limitation on Incurrence of Additional
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Indebtedness," (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w)
of Regulation S-X under the Securities Act.
"Subsidiary," with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Surviving Entity" has the meaning set forth under "-- Certain Covenants --
Merger, Consolidation and Sale of Assets."
"Term Loan Facility" means one or more term loan facilities under the
Credit Agreement.
"Unleveraged Wholly Owned Restricted Subsidiary" means a Wholly Owned
Restricted Subsidiary that has no Indebtedness outstanding (other than
Indebtedness owed to the Company or a Guarantor).
"Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to and in compliance with the covenant described under "-- Certain
Covenants -- Limitation on Designations of Unrestricted Subsidiaries." Any such
designation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such covenant.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date the making of such payment.
"Wholly Owned Restricted Subsidiary" of the Company means any Restricted
Subsidiary of which all the outstanding voting securities (other than in the
case of a foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by the Company or any Wholly Owned Restricted
Subsidiary.
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DESCRIPTION OF SENIOR DEBT
MOLMEC BONDS
In December 1994, the Michigan Strategic Fund (the "Fund") sold $5.0
million in aggregate principal amount of its Variable Rate Demand Limited
Obligation Revenue Bonds, Series 1994 (the "Molmec Bonds"), to finance, for the
benefit of Molmec, the acquisition of and equipment in connection with the
construction of Molmec's Hartland facility. LDM assumed this debt in the Molmec
Acquisition. The Molmec Bonds are subject to the terms of a trust indenture (the
"Molmec Indenture") with Society Bank (the "Molmec Trustee"). The Molmec Bonds
mature December 1, 2014 and pay interest at the variable rate each June 1 and
December 1. The current variable rate on the Molmec Bonds, which rate is
adjusted weekly, is 4% but is subject to a maximum rate of 12%.
The Molmec Bonds are subject to redemption in whole or in part at the
direction of Molmec prior to maturity on any interest payment date at the
principal amount thereof plus accrued interest to the redemption date. The
Molmec Bonds are convertible to fixed rate bonds at the option of Molmec. The
Molmec Bonds are backed by an irrevocable letter of credit issued to the Molmec
Trustee.
The Loan Agreement between the Fund and Molmec sets forth events of
default, including: (a) Molmec's failure to pay any loan repayments in the
amounts and at the times provided in the agreement; (b) Molmec's having made any
untrue representations or warranties in connection with the issuance, sale and
delivery of the bonds; and (c) the occurrence of an event of default under the
Molmec Indenture or the Molmec Reimbursement Agreement (as defined). Pursuant to
a Reimbursement Agreement with Comerica dated December 1, 1994 and the First
Amendment to the Reimbursement Agreement dated May 12, 1995 (the "Molmec
Reimbursement Agreement"), Molmec agreed, among other things, to: (1) preserve
and maintain its corporate existence; (2) maintain a specific tangible effective
net worth; (3) maintain a specific debt to tangible net worth ratio; and (4)
maintain a specific working capital amount. Events of default under the Molmec
Indenture and Molmec Reimbursement Agreement include entry of a judgment against
Molmec involving aggregate liability of $300,000 or more which remains
unsatisfied for over 30 days, Molmec's suspension of business or commencement of
bankruptcy proceedings, Molmec's failure to meet its minimum funding obligations
under ERISA, and a change in control over Molmec's assets having a materially
adverse effect on the business' assets, operations or financial condition. In
connection with LDM's assumption of the Molmec Bonds, the Molmec Reimbursement
Agreement has been amended to provide that LDM is the primary obligor
thereunder.
ARROW BONDS
In April, 1995, Arrow N.A., Inc. ("Arrow"), then a wholly owned subsidiary
of LDM which subsequently merged into LDM, sold $9.0 million in aggregate
principal amount of its Multi-Option Adjustable Rate Notes due April 11, 2015
(the "Arrow Bonds"). The Arrow Bonds are subject to a Reimbursement Agreement
(the "Arrow Reimbursement Agreement") between Arrow and The Huntington National
Bank (the "Bank") and Trust Indenture (the "Arrow Indenture") dated April 1,
1995 with the Bank, as trustee (the "Arrow Trustee"), and are backed by an
irrevocable letter of credit. The Arrow Bonds were issued to finance the
acquisition, construction and improvement of LDM's new corporate headquarters
and design facilities in Auburn Hills, Michigan. The Arrow Bonds mature on April
1, 2015 and pay interest monthly. The current interest rate is 6.99% and may not
exceed 12% per annum. Pursuant to Arrow's merger with LDM in September, 1996,
LDM assumed all of Arrow's obligations under Arrow's letter of credit documents
with the Bank. Although the Arrow Bonds were initially backed by a guaranty
agreement between LDM and the Bank, the guaranty agreement has been extinguished
by virtue of the merger and related amendments to the Arrow Reimbursement
Agreement.
Under the Arrow Reimbursement Agreement, LDM has agreed, among other
things, to: (a) maintain the lien created by the mortgage as a first lien,
subject only to permitted encumbrances; (b) maintain at all times a ratio of
current assets to current liabilities of not less than 0.75 to 1.00: (c)
restrict its aggregate annual capital expenditures to no more than $9.0 million
without the Bank's prior written consent; (d) maintain a
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tangible net worth of not less than the sum of (1) $13.5 million, plus (2) the
aggregate amount of Arrow's net income for each of its fiscal quarters; (e)
maintain a ratio of (1) EBITDA to (2) debt service of not less than 2.00 to
1.00; and (f) refrain from causing or permitting any of its property to become
subject to a lien or encumbrance except in the ordinary course of business. The
Company intends to obtain a replacement letter of credit with respect to the
Arrow Bonds.
Upon conversion of the Arrow Bonds to a different interest rate, the Arrow
Bonds are subject to mandatory tender by the holders.
The Arrow Indenture sets forth events of default including: (i) failure to
pay any principal, premium or interest on any Arrow Bonds as the interest
becomes due and payable; (ii) failure to pay amounts due to holders of any
tendered Arrow Bonds; (iii) failure to perform any obligation in the Arrow
Indenture; (iv) receipt by the Arrow Trustee of a written notice from the Bank
that default has occurred under the terms of the Arrow Reimbursement Agreement;
(v) the Bank commences bankruptcy, insolvency, or reorganization proceedings, or
has any such proceedings commenced against it; or (vi) a receiver, conservator,
liquidator, or trustee is appointed for the Bank or any substantial part of its
property. Upon occurrence of an event of default in the Arrow Indenture, the
Arrow Trustee will declare the principal of all Arrow Bonds then outstanding,
together with an accrued interest, to be due and payable immediately.
COMO LINE OF CREDIT AND REVOLVING LOAN
Como has a line of credit with KeyBank which provides for borrowings up to
the lesser of aggregate advances of $3.5 million or 80% of eligible accounts
receivable and 50% of eligible inventory. Borrowings outstanding under the line
of credit were approximately $1.6 million at September 29, 1996. Interest
accrues at the bank's prime rate (8.25% at September 30, 1996) plus 0.5%. The
line of credit expires on January 31, 1997. The long-term debt and line of
credit are collateralized by substantially all the assets of Como and are
guaranteed by LDM up to $1.0 million.
SENIOR CREDIT FACILITY
On January 22, 1997, LDM, the Guarantors and Bank of America Business
Credit, Inc. entered into a new five-year credit facility (the "Senior Credit
Facility"). The Senior Credit Facility is secured by substantially all of the
assets of the Company and the Guarantors. The Senior Credit Facility provides
for advances to LDM of up to (i) 85% of eligible accounts receivable, and (ii)
the lesser of $12.0 million or 60% of eligible inventory, up to a maximum
availability of $45.0 million. The Senior Credit Facility provides for the
issuance of commercial and stand-by letters of credit up to a portion of the
$45.0 million Senior Credit Facility. The Senior Credit Facility bears interest
at rates based upon a prime rate or a LIBOR rate, in each case plus an
applicable basis point spread; and that LDM will pay an issuance fee with
respect to letters of credit based on a percentage of the full amount of such
letters of credit, and an unused line fee equal to a percentage of the unused
portion of the Senior Credit Facility. The Senior Credit Facility contains
customary covenants, including financial covenants relating to, among other
things, minimum net worth, fixed charge coverage ratios and capital expenditure
limitations.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
RELATING TO THE EXCHANGE OFFER
The following summary of the material anticipated federal income tax
consequences of the issuance of New Notes and the Exchange Offer is based upon
the provisions of the Internal Revenue Code of 1986, as amended, the final,
temporary and proposed regulations promulgated thereunder, and administrative
rulings and judicial decisions now in effect, all of which are subject to change
(possibly with retroactive effect) or different interpretations. The following
summary is not binding on the Internal Revenue Service ("IRS") and there can be
no assurance that the IRS will take a similar view with respect to the tax
consequences described below. No ruling has been or will be requested by the
Company from the IRS on any tax matters relating to the New Notes or the
Exchange Offer. This discussion is for general information only and does not
purport to address all of the possible federal income tax consequences or any
state, local or foreign tax consequences of the acquisition, ownership and
disposition of the Old Notes, the New Notes or the Exchange Offer. It is limited
to investors who will hold the Old Notes and the New Notes as capital assets and
does not address the federal income tax consequences that may be relevant to
particular investors in light of their unique circumstances or to certain types
of investors (such as dealers in securities; insurance companies; financial
institutions; foreign corporations; partnerships; trusts; nonresident
individuals; and tax-exempt entities) who may be subject to special treatment
under federal income tax laws.
INDEBTEDNESS
The Old Notes and the New Notes should be treated as indebtedness of the
Company. In the unlikely event the Old Notes or the New Notes were treated as
equity, the amount treated as a distribution on any such Old Note or New Note
would first be taxable to the holder as dividend income to the extent of the
Company's current and accumulated earnings and profits, and would next be
treated as a return of capital to the extent of the holder's tax basis in the
Old Notes or New Notes, with any remaining amount treated as a gain from the
sale of an Old Note or a New Note. In addition, in the event of equity
treatment, amounts received in retirement of an Old Note or a New Note might in
certain circumstances be treated as a dividend, and the Company could not deduct
amounts paid as interest on such Old Notes or New Notes. The remainder of this
discussion assumes that the Old Notes and the New Notes will constitute
indebtedness.
EXCHANGE OFFER
The exchange of the Old Notes for New Notes pursuant to the Exchange Offer
should not be treated as an "exchange" because the New Notes should not be
considered to differ materially in kind or extent from the Old Notes. Rather,
the New Notes received by a holder of the Old Notes should be treated as a
continuation of the Old Notes in the hands of such holder. As a result, there
should be no federal income tax consequences to holders exchanging the Old Notes
for the New Notes pursuant to the Exchange Offer.
INTEREST
A holder of an Old Note or a New Note will be required to report stated
interest on the Old Note and the New Note as interest income in accordance with
the holder's method of accounting for tax purposes. Because the Old Notes were
issued at 100.00% of par there is no original issue discount pursuant to the de
minimis exception to the "original issue discount" rules.
TAX BASIS IN OLD NOTES AND NEW NOTES
A holder's tax basis in an Old Note will be the holder's purchase price for
the Old Note. If a holder of an Old Note exchanges the Old Note for a New Note
pursuant to the Exchange Offer, the tax basis of the New Note immediately after
such exchange should equal the holder's tax basis in the Old Note immediately
prior to the exchange.
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DISPOSITION OF OLD NOTES OR NEW NOTES
The sale, exchange, redemption or other disposition of an Old Note or a New
Note, except in the case of an exchange pursuant to the Exchange Offer (see the
above discussion), generally will be a taxable event. A holder generally will
recognize gain or loss equal to the difference between (i) the amount of cash
plus the fair market value of any property received upon such sale, exchange,
redemption or other taxable disposition of the Old Note or the New Note (except
to the extent attributable to accrued interest) and (ii) the holder's adjusted
tax basis in such debt instrument. Such gain or loss will be capital gain or
loss, and will be long term if the Old Notes have been held for more than one
year at the time of the sale or other disposition.
PURCHASERS OF OLD NOTES AT OTHER THAN ORIGINAL ISSUANCE PRICE
The foregoing does not discuss special rules which may affect the treatment
of purchasers that acquired Old Notes other than at par, including those
provisions of the Internal Revenue Code relating to the treatment of "market
discount," and "amortizable bond premium." Any such purchaser should consult its
tax advisor as to the consequences to him of the acquisition, ownership, and
disposition of Old Notes.
BACKUP WITHHOLDING
Unless a holder provides its correct taxpayer identification number
(employer identification number or social security number) to the Company and
certifies that such number is correct, generally under the federal income tax
backup withholding rules, 31% of (1) the interest paid on the Old Notes and the
New Notes, and (2) proceeds of sale of the Old Notes and the New Notes, must be
withheld and remitted to the United States Treasury. Therefore, each holder
should complete and sign the Substitute Form W-9 included so as to provide the
information and certification necessary to avoid backup withholding. However,
certain holders (including, among others, certain foreign individuals) are not
subject to these backup withholding and reporting requirements. For a foreign
individual to qualify as an exempt foreign recipient, that exchanging holder
must submit a statement, signed under penalties of perjury, attesting to that
individual's exempt foreign status. Such statements can be obtained from the
Company. For further information concerning backup withholding and instructions
for completing the Substitute Form W-9 (including how to obtain a taxpayer
identification number if you do not have one and how to complete the Substitute
Form W-9 if the Old Notes are held in more than one name), contact the Company's
Chief Financial Officer, 2500 Executive Hills Drive, Auburn Hills, Michigan
48326 or telephone number (810) 858-2800.
Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to 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 IRS.
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OLD NOTES; REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company agreed to file
with the Commission the Exchange Offer Registration Statement on the appropriate
form under the Securities Act with respect to an offer to exchange the Old Notes
for the New Notes. Upon the effectiveness of the Exchange Offer Registration
Statement, the Company will offer to the holders of Old Notes who are able to
make certain representations the opportunity to exchange their Old Notes for New
Notes. If (i) the Company is not permitted to file the Exchange Offer
Registration Statement or to consummate the Exchange Offer because the Exchange
Offer is not permitted by applicable law or Commission policy, (ii) any holder
of Old Notes notifies the Company within the specified time period that (a) due
to a change in law or policy it is not entitled to participate in the Exchange
Offer, (b) due to a change in law or policy it may not resell the New 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)
it is a broker-dealer and owns Old Notes acquired directly from the Company or
an affiliate of the Company or (iii) the Company has not consummated the
Exchange Offer within 120 days of the Issue Date and holders of majority in
principal amount of Old Notes outstanding so request, the Company will file with
the Commission the Shelf Registration Statement to cover resales of the Transfer
Restricted Notes (as defined) by the holders thereof. The Company will use its
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 Notes" means each Old Note until (i) the date on
which such Old Note has been exchanged by a person other than a broker-dealer
for a New Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of an Old Note for a New Note, the date on
which such New Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of this Prospectus, (iii) the date
on which such Old Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iv) the
date on which such Old Note may be distributed to the public pursuant to Rule
144 under the Securities Act without volume or manner of sale restrictions.
Under existing Commission interpretations, the New Notes would, in general,
be freely transferable after the Exchange Offer without further registration
under the Securities Act; provided that in the case of broker-dealers
participating in the Exchange Offer, a prospectus meeting the requirements of
the Securities Act will be delivered upon resale by such broker-dealer in
connection with resales of the New Notes. The Company has agreed, for a period
of 180 days after consummation of the Exchange Offer, to make available a
prospectus meeting the requirements of the Securities Act to any such
broker-dealer for use in connection with any resale of any New Notes acquired in
the Exchange Offer. A broker-dealer which delivers such a prospectus to
purchasers in connection with such resales will be subject to certain of the
civil liability provisions under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
Each holder of the Old Notes who wishes to exchange such Old Notes for New
Notes in the Exchange Offer will be required to make certain representations,
including representations that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement with
any person to participate in the distribution of the New Notes and (iii) it is
not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company
or, if it is an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
New Notes. If the holder is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
The Registration Rights Agreement provides that (i) unless the Exchange
Offer would not be permitted by applicable law or Commission policy, the Company
will file an Exchange Offer Registration Statement with the Commission on or
prior to 30 days after the date of original issuance of the Old Notes (the
"Issue
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Date"), (ii) unless the Exchange Offer would not be permitted by applicable law
or Commission policy, the Company will use its best efforts to have the Exchange
Offer Registration Statement declared effective by the Commission on or prior to
90 days after the Issue Date, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, the Company will commence the
Exchange Offer and use its best efforts to issue, on or prior to 20 business
days after the date on which the Exchange Offer Registration Statement was
declared effective by the Commission, New Notes in exchange for all Old Notes
tendered prior thereto in the Exchange Offer and (iv) if obligated to file the
Shelf Registration Statement, the Company will file prior to the later of (x) 60
days after the Issue Date or (y) 30 days after such filing obligation arises and
use their best efforts to cause the Shelf Registration Statement to be declared
effective by the Commission on or prior to 90 days after such obligation arises.
The Company shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended until the third anniversary of
the Issue Date or such shorter period that will terminate when all the Transfer
Restricted Notes covered by the Shelf Registration Statement have been sold
pursuant thereto or cease being Transfer Restricted Notes. 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 are not declared effective by the Commission on or
prior to the date specified for such effectiveness (the "Effectiveness Target
Date"), (c) the Company fails to consummate the Exchange Offer within 20
business days of the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement or (d) the Shelf Registration Statement or the
Exchange Offer Registration Statement is declared effective but thereafter,
subject to certain exceptions, ceases to be effective or usable in connection
with the Exchange Offer or resales of Transfer Restricted Notes, as the case may
be, 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 interest rate on Transfer Restricted Notes will increase ("Additional
Interest"), with respect to the first 90-day period immediately following the
occurrence of such Registration Default by 0.50% per annum and will increase by
an additional 0.50% per annum with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of 1.50%
per annum. Following the cure of all Registration Defaults, the accrual of
Additional Interest will cease and the interest rate will revert to the original
rate.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
BOOK ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the New Note initially will be
represented by a single, permanent global certificate in definitive, fully
registered form (the "Global Note"). The Global Note will be deposited on the
Issue Date with, or on behalf of, DTC and registered in the name of a nominee of
DTC.
Notes (i) originally purchased by or transferred to foreign purchasers or
Accredited Investors who are not QIBs or (ii) held by QIBs who elect to take
physical delivery of their certificates instead of holding their interest
through the Global Note (and which are thus ineligible to trade through DTC)
(collectively referred to herein as the "Non-Global Purchasers") will be issued
in registered certificated form ("Certificated Notes"). Upon the transfer to a
QIB of any Certificated Note initially issued to a Non-Global Purchaser, such
Certificated Note will, unless the transferee requests otherwise or the Global
Note has previously been exchanged in whole for Certificated Notes, be exchanged
for an interest in the Global Note.
THE GLOBAL NOTE
The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Global Note, DTC or its custodian will credit, on its
internal system, the principal amount of Notes of the individual beneficial
interest represented by such Global Note to the respective accounts for persons
who have accounts with DTC and (ii) ownership of beneficial interest in the
Global Note will be shown on, and the transfer of such ownership will be
effected only through, records maintained by DTC or its nominee (with
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respect to interests of persons who have accounts with DTC ("Participants")) and
the records of Participants (with respect to interests of persons other than
Participants). Such accounts initially will be designated by or on behalf of the
Initial Purchaser and ownership of beneficial interests in the Global Note will
be limited to Participants or persons who hold interest through Participants.
QIBs may hold their interests in the Global Note directly through DTC, if they
are Participants in such system, or indirectly through organizations which are
Participants in such system.
So long as DTC or its nominee is the registered owner or holder of the New
Notes, DTC or such nominee, as the case may be, will considered the sole owner
or holder of the New Notes represented by such Global Note for all purposes
under the Indenture. No beneficial owner of an interest in the Global Note will
be able to transfer that interest except in accordance with DTC's procedures, in
addition to those provided for under the Indenture.
Payments of the principal of, premium, if any, and interest (including
Additional Interest) on, the Global Note will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any paying agent of the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest (including Additional Interest) in
respect of the Global Note, will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Global Note as shown on the records of DTC or its nominee. The
Company also expects that payments by Participants to owners of beneficial
interest in the Global Note held through such Participants will be governed by
standing instructions and customary practice, as is now the case with securities
held for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a Certificated Note for any reason,
including to sell Notes to persons in states which required physical delivery of
the Certificated Notes, or to pledge such securities, such holder must transfer
its interest in the Global Note in accordance with the normal procedures of DTC
and with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more Participants
to whose account the DTC interests in the Global Note are credited and only in
respect of such portion of the aggregate principal amount of Notes as to which
such Participant or Participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Note for Certificated Notes, which it will distribute to its Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
Participants and facilitate the clearance and settlement of securities
transactions between Participants through electronic book entry changes in
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among Participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. None of the Company, the Initial Purchaser or the
Trustee will
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have any responsibility for the performance by DTC or its Participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Note and a successor depositary is not appointed by the Company
within 90 days, Certificated Notes will be issued in exchange for the Global
Note.
PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Company believes that New Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for resale, resold
and otherwise transferred by holders thereof (other than any holder which is (i)
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Notes directly from the
Company or (iii) broker-dealers who acquired Notes as a result of market-making
or other trading activities) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Notes are acquired in the ordinary course of such holders' business, and such
holders are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of such New Notes; provided that broker-dealers ("Participating Broker-Dealers")
receiving New Notes in the Exchange Offer will be subject to a prospectus
delivery requirement with respect to resales of such New Notes. To date, the
Staff has taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to transactions involving an
exchange of securities such as the exchange pursuant to the Exchange Offer
(other than a resale of an unsold allotment from the sale of the Old Notes to
the Initial Purchasers) with the Prospectus contained in the Exchange Offer
Registration Statement. Pursuant to the Registration Rights Agreement, the
Company has agreed to permit Participating Broker-Dealers and other persons, if
any, subject to similar prospectus delivery requirements to use this Prospectus
in connection with the resale of such New Notes. The Company and the Guarantors
have agreed that, for a period of 180 days after the Expiration Date, they will
make this Prospectus, and any amendment or supplement to this Prospectus,
available to any broker-dealer that requests such documents in the Letter of
Transmittal.
Each holder of the Old Notes who wishes to exchange its Old Notes for New
Notes in the Exchange Offer will be required to make certain representations to
the Company as set forth in "The Exchange Offer--Purpose and Effect of the
Exchange Offer." In addition, each holder who is a broker-dealer and who
receives New Notes for its own account in exchange for Old Notes that were
acquired by it as a result of market-making activities or other trading
activities, will be required to acknowledge that it will deliver a prospectus in
connection with any resale by it of such New Notes.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New 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 New 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 at negotiated prices. Any such resale may be
made directly to purchasers 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 New Notes. Any broker-dealer
that resells New 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 New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New 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.
79
<PAGE> 85
The Company has agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Old Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act, as set
forth in the Registration Rights Agreement.
LEGAL MATTERS
Certain legal matters regarding the validity of the New Notes offered
hereby will be passed upon for the Company by Dickinson, Wright, Moon, Van Dusen
& Freeman, Detroit, Michigan.
EXPERTS
The consolidated financial statements of LDM Technologies, Inc. at
September 29, 1996 and September 24, 1995 and for each of the three years in the
period ended September 29, 1996, included in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Molmec, Inc. at December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995, included in
this Prospectus and Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as stated in their report thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing. Reference is made
to the report, which includes an explanatory paragraph with respect to the
change in method of accounting for inventories as discussed in Note 1 to the
financial statements.
80
<PAGE> 86
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LDM TECHNOLOGIES, INC.
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets as of September 29, 1996 and
September 24, 1995........................................ F-3
For each of the three years in the period ended September
29, 1996:
Consolidated Statements of Income......................... F-4
Consolidated Statements of Stockholders' Equity........... F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements.................. F-7
MOLMEC, INC.
Report of Independent Public Accountants.................... F-22
Balance Sheets as of December 31, 1995 and December 31,
1994...................................................... F-23
For each of the three years in the period ended December 31,
1995:
Statements of Operations.................................. F-24
Statements of Stockholders' Investment.................... F-25
Statements of Cash Flows.................................. F-26
Notes to Financial Statements............................... F-27
Balance Sheet as of September 24, 1995...................... F-32
For the period ended from January 1 through September 24,
1995:
Statement of Operations................................... F-33
Statement of Stockholders' Investment..................... F-34
Statement of Cash Flows................................... F-35
Notes to Financial Statements............................... F-36
Balance Sheet as of September 29, 1996...................... F-40
For the period from September 25, 1995 through September 29,
1996:
Statement of Operations................................... F-41
Statement of Stockholders' Investment..................... F-42
Statement of Cash Flows................................... F-43
Notes to Financial Statements............................... F-44
For the period from January 1 through September 29, 1996:
Statement of Operations................................... F-48
Statement of Stockholders' Investment..................... F-49
Statement of Cash Flows................................... F-50
Notes to Financial Statements............................... F-51
</TABLE>
F-1
<PAGE> 87
REPORT OF INDEPENDENT AUDITORS
Board of Directors
LDM Technologies, Inc.
We have audited the accompanying consolidated balance sheets of LDM
Technologies, Inc. as of September 29, 1996, and September 24, 1995 and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended September 29, 1996. 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.
Since the date of completion of our audit of the accompanying consolidated
financial statements and initial issuance of our report thereon dated November
22, 1996, which report contained an explanatory paragraph regarding the
Company's ability to continue as a going concern, the Company, as discussed in
Note 11, has completed a debt issuance resulting in net proceeds of
approximately $105 million and has obtained a new senior credit facility which
provides available borrowings of $45 million under revolving loans. Therefore,
the conditions that raised substantial doubt about whether the Company will
continue as a going concern no longer exist.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of LDM
Technologies, Inc. at September 29, 1996, and September 24, 1995 and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended September 29, 1996 in conformity with generally
accepted accounting principles.
Detroit, Michigan
November 22, 1996, except for
Note 11, as to which the
date is January 22, 1997 ERNST & YOUNG LLP
F-2
<PAGE> 88
LDM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 29, SEPTEMBER 24,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash...................................................... $ 2,121,862 $ 1,137,849
Accounts receivable....................................... 35,481,400 29,331,702
Inventories............................................... 11,833,202 12,797,877
Mold costs................................................ 7,128,974 5,702,240
Prepaid expenses.......................................... 454,427 375,966
Refundable income tax..................................... 364,725 --
Deferred income taxes..................................... 828,500 1,144,500
------------ ------------
Total current assets................................. 58,213,090 50,490,134
Cash and equivalents restricted as to use................... 658,018 7,343,552
Net property, plant and equipment, at cost.................. 58,955,956 46,499,743
Other....................................................... 1,298,132 3,322,066
------------ ------------
$119,125,196 $107,655,495
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Lines of credit and revolving loan........................ $ 1,800,976 $ 20,102,490
Lines of credit and revolving loan in default............. 19,134,290 --
Accounts payable.......................................... 30,834,395 25,236,694
Demand notes payable to shareholders...................... 87,500 87,500
Accrued liabilities....................................... 7,597,886 5,804,723
Accrued compensation...................................... 4,201,751 3,969,980
Advance mold payments from customers...................... 3,661,046 509,640
Income taxes payable...................................... 2,459,567 2,106,655
Current maturities of long-term debt...................... 1,320,583 2,909,054
Long-term debt in default................................. 27,421,760 --
------------ ------------
Total current liabilities......................... 98,519,754 60,726,736
Long-term debt due after one year........................... 2,020,845 21,837,306
Deferred income taxes....................................... 841,000 774,019
Minority interests.......................................... 421,532 682,420
Stockholders' equity
Common stock ($.10 par value; 100,000 shares authorized,
600 shares and 700 shares issued and outstanding in
1996 and 1995, respectively)........................... 60 70
Additional paid in capital................................ 94,072 109,751
Retained earnings......................................... 17,290,116 23,561,845
Currency translation adjustments.......................... (62,183) (36,652)
------------ ------------
Total stockholders' equity........................ 17,322,065 23,635,014
------------ ------------
$119,125,196 $107,655,495
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 89
LDM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------
SEPTEMBER 29, SEPTEMBER 24, SEPTEMBER 25,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales
Product sales.................................... $192,470,660 $214,289,121 $154,261,899
Mold sales....................................... 25,288,234 6,702,224 23,334,700
------------ ------------ ------------
217,758,894 220,991,345 177,596,599
Cost of sales
Product cost of sales............................ 160,093,701 176,057,556 129,342,527
Mold cost of sales............................... 22,802,654 6,350,269 22,349,088
------------ ------------ ------------
182,896,355 182,407,825 151,691,615
------------ ------------ ------------
Gross margin....................................... 34,862,539 38,583,520 25,904,984
Selling, general and administrative expenses....... 26,418,453 23,514,930 17,136,576
------------ ------------ ------------
Operating profit................................... 8,444,086 15,068,590 8,768,408
Other expenses
Interest......................................... 3,279,904 3,177,826 2,144,093
Other, net....................................... 56,108 353,313 65,200
------------ ------------ ------------
3,336,012 3,531,139 2,209,293
------------ ------------ ------------
Income from continuing operations before income
taxes, minority interest and extraordinary
item............................................. 5,108,074 11,537,451 6,559,115
Provision for income taxes......................... 4,013,745 5,058,205 3,802,730
------------ ------------ ------------
Income from continuing operations before minority
interest and extraordinary item.................. 1,094,329 6,479,246 2,756,385
Minority interest (income) loss.................... 79,078 (231,735) (186,725)
------------ ------------ ------------
Income from continuing operations before
extraordinary item............................... 1,173,407 6,247,511 2,569,660
Extraordinary item, gain on debt refinancing, no
income tax effect................................ 753,510 -- --
------------ ------------ ------------
Income from continuing operations.................. 1,926,917 6,247,511 2,569,660
Income (loss) from discontinued operations, net of
income taxes and minority interest............... (57,610) 86,546 182,283
------------ ------------ ------------
Net income......................................... $ 1,869,307 $ 6,334,057 $ 2,751,943
============ ============ ============
</TABLE>
See accompanying notes.
F-4
<PAGE> 90
LDM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CURRENCY
---------------- PAID-IN RETAINED TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS TOTAL
------ ------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 23, 1993....... 700 $ 70 $109,751 $14,475,845 $ -- $14,585,666
Net income for 1994............... -- -- 2,751,943 -- 2,751,943
Currency translation adjustment... -- -- -- (18,157) (18,157)
---- ---- -------- ----------- -------- -----------
Balance at September 25, 1994....... 700 70 109,751 17,227,788 (18,157) 17,319,452
Net income for 1995............... -- -- 6,334,057 -- 6,334,057
Currency translation adjustment... -- -- -- (18,495) (18,495)
---- ---- -------- ----------- -------- -----------
Balance at September 24, 1995....... 700 70 109,751 23,561,845 (36,652) 23,635,014
Redemption of a stockholder's
interest (Note 1)............... (100) (10) (15,679) (8,141,036) (8,156,725)
Net income for 1996............... 1,869,307 1,869,307
Currency translation adjustment... (25,531) (25,531)
---- ---- -------- ----------- -------- -----------
Balance at September 29, 1996....... 600 $ 60 $ 94,072 $17,290,116 $(62,183) $17,322,065
==== ==== ======== =========== ======== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE> 91
LDM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------
SEPTEMBER 29, SEPTEMBER 24, SEPTEMBER 25,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 1,869,307 $ 6,334,057 $ 2,751,943
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 8,005,518 6,777,781 6,593,367
Extraordinary gain on retirement of debt.................. (753,510) -- --
(Gain) loss on sale of property and equipment............. 102,853 (39,318) 9,365
Deferred income taxes..................................... 382,981 (612,211) (83,469)
Other..................................................... (505,206) 526,540 536,988
Changes in assets and liabilities, net of the 1996 effect
of the distribution of IMCA:
Accounts and notes receivable........................... (7,379,182) (1,916,290) (10,115,257)
Refundable income taxes................................. (364,725) -- --
Inventory and mold costs................................ (974,530) (1,258,995) (1,745,129)
Prepaid expenses........................................ (78,461) 59,861 (119,597)
Other assets............................................ 6,997 (224,050) 213,307
Accounts payable and accrued liabilities................ 12,247,032 5,253,495 7,618,345
Income taxes payable.................................... 352,912 (112,952) 2,140,743
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES............. 12,911,986 14,787,918 7,800,606
INVESTING ACTIVITIES
Purchase of Canadian operations, net of cash acquired....... -- -- (17,428,500)
Additions to property, plant and equipment.................. (20,286,378) (15,149,972) (11,594,156)
Proceeds from disposal of property and equipment............ 284,310 100,600 15,300
Cash and cash equivalents restricted for construction of new
corporate facility........................................ 6,685,534 (7,343,552) --
Other....................................................... 1,246,889 (1,222,779) (1,541,907)
------------ ------------ ------------
NET CASH USED FOR INVESTING ACTIVITIES................ (12,069,645) (23,615,703) (30,549,263)
FINANCING ACTIVITIES
Redemption of stockholder's interest, including cash owned
by IMCA of $212,968....................................... (4,712,968) -- --
Proceeds from issuance of long-term debt.................... 35,493,596 9,000,000 15,864,603
Net proceeds (repayments) from borrowings on line of
credit.................................................... (14,667,223) 3,831,837 11,501,854
Payments on notes payable and long-term debt................ (16,134,416) (3,529,752) (3,877,002)
Other....................................................... 162,683 (312,315) (83,363)
------------ ------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES............. 141,672 8,989,770 23,406,092
------------ ------------ ------------
Net increase in cash........................................ 984,013 161,985 657,435
Cash at beginning of year................................... 1,137,849 975,864 318,429
------------ ------------ ------------
Cash at end of year......................................... $ 2,121,862 $ 1,137,849 $ 975,864
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid............................................... $ 2,502,411 $ 2,931,301 $ 1,351,126
============ ============ ============
Income taxes paid........................................... $ 3,050,739 $ 5,328,489 $ 2,109,105
============ ============ ============
Interest capitalized........................................ $ 780,478 $ 161,770 $ --
============ ============ ============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
On September 29, 1996 LDM Technologies, Inc. issued a note payable to a
former shareholder in the amount of $3,000,000 as part of the consideration for
the redemption of LDM Technologies, Inc. common stock owned by that shareholder.
In connection with that transaction, the stock of IMCA was distributed to the
former shareholder (Note 1).
See accompanying notes.
F-6
<PAGE> 92
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 29, 1996
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of LDM
Technologies, Inc. (the "Company") and its majority owned subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.
On September 29, 1996, the Company entered into a series of transactions
which resulted in a reorganization of its corporate structure and the redemption
of a shareholder's interest in the Company. The reorganization was undertaken to
redeem the shareholder's stock and to allow the Company to qualify as a Small
Business Corporation ("S Corporation") for tax purposes. The Company and its
shareholders have not yet decided to file such election with the Internal
Revenue Service.
The Company is currently in default with respect to certain of its bank
borrowings as a result of covenant violations which have not been waived by the
banks (see Notes 4 and 5). As a result, the banks may declare the borrowings to
be due and payable. Other than the classification of the debt in default as
current liabilities, no adjustments have been made in the financial statements
to reflect the potential effects of the defaults. As discussed in Note 11, the
Company is currently pursuing a replacement letter of credit with respect to its
$8.8 million Multi-Option Adjustable Rate Notes and a refinancing of all other
debt in default. The Company also intends to refinance the $3 million note
payable to a former shareholder.
DISCONTINUED OPERATIONS
Effective at the close of business on September 29, 1996, the Company
contributed $4,000,000 in cash to the capital of its 83% owned subsidiary,
Industrial Machining Corporation of Arkansas ("IMCA") and immediately exchanged
its stock of IMCA plus $500,000 in cash and a two year 6.5% interest bearing
promissory note in the amount of $3,000,000 for all of the LDM stock held by the
shareholder. No gain or loss was recognized on the distribution of IMCA, since
its carrying value was deemed to approximate fair value. IMCA's results of
operation have been classified as discontinued operations in the accompanying
statements of income. The net assets of IMCA, which are not included in the
September 29, 1996 balance sheet, consisted of the following at the date of
distribution:
<TABLE>
<S> <C>
Assets
Cash...................................................... $4,212,968
Accounts receivable....................................... 1,229,484
Inventory................................................. 512,471
Other current assets...................................... 47,974
----------
Total current assets.............................. 6,002,897
Property, plant and equipment............................. 295,454
----------
Total assets...................................... $6,298,351
==========
Liabilities and Equity
Accrued expenses.......................................... $1,352,398
Other liabilities......................................... 155,200
Equity, including $134,025 of minority interest........... 4,790,753
----------
Total liabilities and equity...................... $6,298,351
==========
</TABLE>
F-7
<PAGE> 93
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMCA had net sales of $4,737,007, $6,285,214, and $6,721,381 and net income
(loss) of ($69,410), $104,272, and $219,618, for the nine months ended September
30, 1996 and the years ended December 31, 1995 and 1994, respectively.
DESCRIPTION OF BUSINESS
The Company's domestic automotive operations are conducted through
divisions and, in Canada, through LDM Technologies Company ("LDM Canada"). Such
operations principally consist of manufacturing of molded plastic interior and
exterior components for sale principally to several North American automobile
manufacturers and their suppliers. GL Industries of Indiana, Inc. (d/b/a Como
Products) ("Como"), a 75% owned subsidiary of the Company, is a manufacturer of
molded plastic products for end-use application primarily in the consumer
appliance, office products, and commercial furniture markets.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company operates with a 52/53 week fiscal year ending on the last
Sunday in September. The fiscal years ended September 29, 1996, September 24,
1995 and September 25, 1994 included 53, 52 and 52 weeks, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
At September 29, 1996 and September 24, 1995, approximately $658,000 and
$7,344,000 were held by a trustee and have been restricted to expenditures for
construction of a new corporate headquarters facility.
INVENTORIES
Inventories are stated at the lower of cost or market using the first-in,
first-out method. Inventories at September 29, 1996 and September 24, 1995
consist of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Raw materials and supplies.......................... $ 7,713,312 $ 8,220,108
Work-in-process..................................... 1,368,032 1,615,383
Finished goods...................................... 2,751,858 2,962,386
----------- -----------
Total............................................... $11,833,202 $12,797,877
=========== ===========
</TABLE>
MOLDS
Molds used in Company operations are requisitioned by the Company's
customers and are purchased from mold builders who design and construct the
molds under Company supervision. Upon delivery and acceptance of the molds,
title is passed to customers and revenue is recognized.
F-8
<PAGE> 94
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION
Depreciation of property, plant and equipment is determined principally
using the straight-line method based upon the following estimated useful lives:
<TABLE>
<CAPTION>
ESTIMATED USEFUL
LIFE (YEARS)
----------------
<S> <C>
Buildings and improvements.................................. 10 - 20
Machinery and equipment..................................... 3 - 12
Transportation equipment.................................... 3 - 10
Furniture and fixtures...................................... 3 - 12
</TABLE>
Leasehold improvements are amortized using the straight-line method over
the useful life of the improvement or the term of the lease, whichever is less.
Effective September 26, 1994, the Company extended the estimated useful
lives of certain machinery and equipment from five to ten years to conform to
the Company's actual experience with such machinery and equipment. The extended
useful lives are being used to depreciate the remaining September 26, 1994
undepreciated costs of such machinery and equipment at that date and the cost of
acquisitions of such machinery and equipment after that date. In the fiscal year
ended September 24, 1995, the effect of the change was to decrease depreciation
expense by approximately $1,680,000 and increase net income by approximately
$1,008,000, after a $672,000 provision for income taxes.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Short and long-term debt: The carrying amounts of the Company's
borrowings under its short-term revolving credit agreements approximate
their fair value. Substantially all of the Company's long-term debt carries
variable interest rates and, accordingly, the carrying amount approximates
fair value. Given that the duration of the remaining non-variable rate
long-term debt is two years or less and given the related party nature and
subordination of certain borrowings, the Company does not believe it is
practicable to estimate a fair value for these securities; however, the
Company believes the carrying value does not differ materially from fair
value.
IMPACT OF ACCOUNTING STANDARD TO BE ADOPTED IN THE FISCAL YEAR ENDING IN
SEPTEMBER, 1997
In March 1995, the Financial Accounting Standards Board issued Statement
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company will adopt Statement 121 in the first quarter of the fiscal year ending
in September, 1997 and, based on current circumstances, does not believe the
effect of adoption will be material.
F-9
<PAGE> 95
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ACQUISITION AND FOREIGN OPERATIONS
LDM Canada was capitalized in November, 1993 with $1,350,000 of equity and
approximately $2,000,000 of intercompany loans. In November, 1993, LDM Canada
purchased the business and certain assets of a Canadian plastics manufacturer
for cash of approximately $17,428,500, which was funded with corporate cash of
$4,563,897 and $12,864,603 of bank loans.
The summarized financial position of LDM Canada at September 29, 1996 and
September 24, 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Current assets.................................. $13,056,390 $ 6,637,883
Property, plant and equipment................... 16,040,296 15,557,675
Intangible assets............................... 165,283 393,518
----------- -----------
Total assets.................................... $29,261,969 $22,589,076
=========== ===========
Current liabilities (exclusive of intercompany
payables)..................................... $25,419,352 $ 9,832,802
Noncurrent liabilities.......................... 2,407 8,615,617
Liabilities to LDM Technologies, Inc.:
Subordinated debt............................. 3,908,825 2,547,116
Current trade payables and interest........... 654,327 76,597
Stockholder's equity (deficit).................. (722,942) 1,516,944
----------- -----------
Total liabilities and stockholder's equity...... $29,261,969 $22,589,076
=========== ===========
</TABLE>
Sales and net income of LDM Canada, included in the Company's consolidated
financial statements are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Sales.............................. $31,036,436 $33,777,902 $29,095,708
Gross profit (loss)................ (168,241) 4,008,490 3,937,619
Net income (loss).................. (2,214,355) 165,263 38,334
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
At September 29, 1996 and September 24, 1995 property, plant and equipment,
at cost, consists of the following:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Land, buildings and improvements..................... $ 27,657,829 $ 11,093,637
Machinery and equipment.............................. 59,960,713 56,032,774
Transportation equipment............................. 1,947,778 1,976,714
Furniture and fixtures............................... 2,703,408 2,107,899
Construction in process.............................. 3,515,676 7,254,579
------------ ------------
Total................................................ 95,785,404 78,465,603
Less accumulated depreciation........................ (36,829,448) (31,965,860)
------------ ------------
Net property, plant, and equipment................... $ 58,955,956 $ 46,499,743
============ ============
</TABLE>
4. LINES OF CREDIT AND REVOLVING LOAN
In December, 1995, LDM Technologies, Inc. refinanced its credit facilities.
The new credit facilities include a revolving loan up to the maximum principal
sum of $25,000,000, standby letters of credit up to $2,000,000 outstanding at
any one time (provided that the outstanding principal balance of the revolving
loan
F-10
<PAGE> 96
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LINES OF CREDIT AND REVOLVING LOAN (CONTINUED)
plus the outstanding balance of the letters of credit does not exceed
$25,000,000) and a line of credit up to the principal sum of $15,000,000. The
line of credit expired on November 30, 1996 and all outstanding borrowings on
the revolving loan must be paid in full on March 31, 1997. Additionally, under
the facilities, LDM Technologies, Inc. has two term loans of $6,920,000 and
$2,061,111 at September 29, 1996 (see Note 5).
The total outstanding principal of all of the above credit facilities in
aggregate may not exceed the borrowing base which is defined as the sum of 85%
of the eligible accounts receivable plus the lesser of 30% of eligible inventory
or $2,000,000, plus the fixed asset borrowing base. The fixed asset borrowing
base is calculated using a range of 70% to 85% of the appraised value of various
fixed assets. In addition to the limitations imposed by the borrowing base, the
maximum principal amount available under the revolving loan is reduced by a
reserve amount determined by the bank. The amount of this reserve at September
29, 1996 is $4,519,429, which represents guarantees of debt by the Company for
LDM Canada ($3,500,000) and Como ($1,000,000) and an outstanding letter of
credit for worker's compensation in the amount of $19,429. Borrowings are
collateralized by substantially all of the Company's otherwise unencumbered
assets.
All advances under the revolving loan and the line of credit bear interest
at the prime commercial rate or the applicable Eurodollar Rate, as elected by
LDM Technologies, Inc. Subsequent to September 29, 1996, the Eurodollar rate
will no longer be available to the Company.
The applicable interest rate on all loans within the new credit facility
are subject to adjustment within a range of plus .5% to minus .5% based upon the
leverage ratio of the Company which is the ratio of total liabilities to
adjusted tangible net worth. This calculation is performed on a quarterly basis.
At September 29, 1996, under the revolving loan LDM Technologies, Inc. had
$8,000,000 outstanding bearing interest at the Eurodollar rate (7.4% at
September 29, 1996) and $7,500,000 outstanding bearing interest at the bank's
prime rate (8.25% at September 29, 1996). LDM Technologies, Inc. had no
borrowings outstanding under the line of credit at September 29, 1996. Credit
available under the revolving loan and the line of credit was $4,980,571 and
$15,000,000, respectively at September 29, 1996.
The line of credit, revolving note and long-term debt agreements contain
covenants which, among other things, limit additional borrowings, investments
(including investments in subsidiaries), commitments under new leases, loans or
advances made by LDM Technologies, Inc. and capital expenditures and limit the
payment of dividends to no more than 10% of the net income for the year to which
the dividends pertain. The covenants also require the maintenance of adjusted
tangible net worth of not less than $14,000,000 at September 29, 1996. Adjusted
tangible net worth is defined as tangible net worth (stockholders' equity less
intangibles, deferred costs and loans or advances to affiliates of LDM
Technologies, Inc.) plus subordinated debt. Additionally, the covenants require
the maintenance of a ratio of total liabilities to tangible net worth of not
greater than 5.50:1. LDM Technologies, Inc. is in breach of the covenants
related to advances to its subsidiaries, maintenance of adjusted tangible net
worth and the ratio of total liabilities to tangible net worth. The Company has
not obtained waivers for these defaults.
LDM CANADA:
LDM Canada has a line of credit from the Bank of Nova Scotia for a maximum
of $4,000,000 bearing interest at the bank's prime rate plus 1%. The line of
credit is due on demand. At September 29, 1996, LDM Canada had drawn $3,634,290
on that line of credit.
As collateral for the Bank of Nova Scotia credit facilities, LDM Canada has
provided the bank with a security interest in substantially all of the assets of
LDM Canada. In addition, LDM Canada has a postponement agreement covering
$3,500,000 of promissory notes due to LDM Technologies, Inc. and a
F-11
<PAGE> 97
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LINES OF CREDIT AND REVOLVING LOAN (CONTINUED)
guarantee from LDM Technologies, Inc. for $3,500,000 in favor of the Bank of
Nova Scotia. See Note 5 for a discussion of defaults on the Bank of Nova Scotia
debt.
COMO:
Como has a line of credit with KeyBank which provides for borrowings up to
the lesser of aggregate advances of $3,500,000 or 80% of eligible accounts
receivable and 50% of eligible inventory. Borrowings outstanding under the line
of credit were $1,620,976 at September 29, 1996. Interest accrues at the bank's
prime rate (8.25% at September 29, 1996) plus 0.5%. Additional borrowings
available at September 29, 1996 are $598,643. The line of credit expires on
January 31, 1997.
The long-term debt and line of credit are collateralized by substantially
all the assets of Como and are guaranteed by LDM Technologies, Inc. The
guarantee is limited to $1,000,000.
Summary of line of credit and revolving debt at September 29, 1996:
<TABLE>
<S> <C>
Borrowings under lines of credit:
LDM Canada - In Default................................ $ 3,634,290
Como................................................... 1,620,976
-----------
5,255,266
Borrowings under revolving debt:
LDM Technologies, Inc. - In Default.................... 15,500,000
Como................................................... 180,000
-----------
$20,935,266
===========
</TABLE>
Borrowings in default and not in default aggregate $19,134,290 and
$1,800,976, respectively.
The weighted average interest rates on all short-term borrowings as of
September 29, 1996 and September 24, 1995 was 7.91% and 6.79%, respectively.
F-12
<PAGE> 98
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. LONG-TERM DEBT
Long-term debt at September 29, 1996 and September 24, 1995 consists of the
following:
LDM TECHNOLOGIES, INC.:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Multi-Option Adjustable Rate Notes, principal payable in
various annual installments ranging from $200,000 to
$780,000 commencing April 1, 1996; ending April 1, 2015,
plus interest payable monthly at the higher of the 30 day
commercial paper rate or 90 day commercial paper rate
(5.49% at September 29, 1996). Borrowings are
collateralized by funds held by trustee of $658,000 at
September 29, 1996 and by the corporate headquarters
facility which had a carrying value of approximately
$15,941,000 at September 29, 1996, as well as a Huntington
National Bank standby letter of credit in the amount of
$9,168,000 for which a fee of 1 1/2% per annum is charged.
The loan is presently in default (See Note 4). ........... $ 8,800,000 $ 9,000,000
Note payable to Huntington National Bank, payable in monthly
installments of $120,000 through March 31, 1997, at which
time the balance is due, plus monthly interest based on a)
.25 over the bank's prime rate, b) the applicable
Eurodollar Rate or c) the adjusted treasury rate, as
elected by the Company. Borrowings are secured by
substantially all of the otherwise unencumbered assets of
the Company. The loan is presently in default (See Note
4). ...................................................... 6,920,000 --
Note payable to former shareholder, payable in monthly
installments of $90,000 with a final payment of $930,000
due on September 27, 1998, plus interest at 6.5%. The note
is subordinate to all Huntington National Bank debt. ..... 3,000,000 --
Note payable to Huntington National Bank, payable in monthly
installments of $18,403, plus interest at a fixed rate of
7.7% through March 31, 1997 at which time the balance is
due. Borrowings are collateralized by a manufacturing
facility and its assets with a net carrying value of
$6,892,000. The loan is presently in default (See Note
4)........................................................ 2,061,111 2,281,944
Note payable to bank. ...................................... -- 2,225,000
Mortgage note payable to bank. ............................. -- 684,000
------------ -----------
Total....................................................... 20,781,111 14,190,944
Current maturities of long-term debt........................ (1,080,000) (824,236)
Long-term debt in default................................... (17,781,111) --
------------ -----------
Long-term debt due after one year........................... $ 1,920,000 $13,366,708
============ ===========
</TABLE>
F-13
<PAGE> 99
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. LONG-TERM DEBT (CONTINUED)
LDM Technologies, Inc. has the option to convert the interest rate on the
Multi-Option Adjustable Rate Notes to the Six Month, One Year, Three Year, Five
Year, Seven Year, or the Fixed Interest Rates Modes.
LDM CANADA:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Term loan payable to the Bank of Nova Scotia. The loan bears
interest at LDM Canada's election of either LIBOR plus 2%
or U.S. prime rate plus 1.5%, with monthly principal
payments of $11,100 and a final payment of $1,345,100 due
November 2000. The loan is for a five year term with an
amortization of 15 years but is presently in default ..... $ 1,889,000 $ --
Term loan payable to the Bank of Nova Scotia. The loan bears
interest at LDM Canada's election of either LIBOR plus 2%
or U.S. prime rate plus 1.5% with monthly principal
payments of $111,740. The loan is for a five year term
with an amortization of five years but is presently in
default .................................................. 5,586,973 --
Term loan payable to the Bank of Nova Scotia. The loan bears
interest at the Bank's prime lending rate plus 1.5% with
monthly principal payments of $23,449 Canadian and a final
payment of $25,917 due November 2000. The loan is for a
five year term with an amortization of five years but is
presently in default ..................................... 1,217,064 --
Term loan payable to the Bank of Nova Scotia. The loan bears
interest at the Bank's prime lending rate plus 1.5% with
monthly principal payments of $15,907 commencing September
1996 and a final payment of $15,908 due August 2001. The
loan is for a five year term with an amortization of five
years but is presently in default ........................ 947,612 --
Promissory notes payable to Barclays Bank of Canada (52.71%)
and Gentra Canada Investments Inc. (47.29%) (as
assignees) ............................................... -- 9,811,781
Other ...................................................... 6,740 8,635
----------- -----------
Total....................................................... 9,647,389 9,820,416
Current maturities of long-term debt........................ (4,333) (1,454,818)
Long-term debt in default-Bank of Nova Scotia............... (9,640,649) --
----------- -----------
Long-term debt due after one year........................... $ 2,407 $ 8,365,598
=========== ===========
</TABLE>
Under the terms of its debt agreements, LDM Canada has agreed to various
restrictive covenants relating to financial statement ratios including minimum
working capital and tangible net worth requirements. LDM Canada is in breach of
these covenants. The Bank of Nova Scotia has not waived the covenant
requirements and accordingly, the debt due to the Bank of Nova Scotia has been
classified in current liabilities. Due to the covenant violations, LDM
Technologies, Inc. has agreed to postpone the repayment of its $3,500,000 loan
to LDM Canada in favor of the Bank of Nova Scotia, and additionally has provided
a guarantee of $3,500,000 to the Bank of Nova Scotia on the outstanding loans
(See Note 4 also).
F-14
<PAGE> 100
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. LONG-TERM DEBT (CONTINUED)
During the year ended September 29, 1996, LDM Canada retired the notes
payable to Barclays Bank of Canada and Gentra Canada, resulting in a $753,510
extraordinary gain on extinguishment. Because of the Canadian operating losses,
there was no tax effect related to the gain.
COMO:
<TABLE>
<S> <C> <C>
Note payable to KeyBank, due in monthly installments of
$19,687 plus interest at the bank's prime rate (8.25% at
September 29, 1996) plus 0.5% through February 1998....... $ 334,688 $ 735,000
Current maturities of long-term debt........................ (236,250) (630,000)
------------ -----------
Long-term debt due after one year........................... $ 98,438 $ 105,000
============ ===========
Total
Aggregate long-term debt.................................... $ 30,763,188 $24,746,360
Aggregate current maturities of long-term debt.............. (1,320,583) (2,909,054)
Aggregate long-term debt in default......................... (27,421,760) --
------------ -----------
Aggregate long-term debt due after one year................. $ 2,020,845 $21,837,306
============ ===========
</TABLE>
Annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1997...................................................... $28,742,343
1998...................................................... 2,020,845
-----------
Total..................................................... $30,763,188
===========
</TABLE>
6. SEGMENT DATA FROM CONTINUING OPERATIONS
The Company currently operates in two principal industries; automotive
components and consumer products. Machined parts operations for marine outboard
engine manufacturers were discontinued in 1996. The Company's automotive
components include the design and manufacture of plastic injection molded
products for certain North American original equipment manufacturers of cars,
minivans and sport utility vehicles. The Company's products include exterior and
interior trim components. The Company's consumer
F-15
<PAGE> 101
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. SEGMENT DATA FROM CONTINUING OPERATIONS (CONTINUED)
products segment manufacturers plastic molded products for the consumer
appliance, office products and commercial furniture markets.
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------
SEPTEMBER 26, SEPTEMBER 24, SEPTEMBER 25,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales
Automotive products
U.S. operations............................... $161,060,037 $154,592,897 $115,863,730
Canadian operations........................... 36,970,296 34,709,953 30,656,226
------------ ------------ ------------
198,030,933 189,302,850 146,519,956
Consumer and other non automotive
products-Como................................. 22,058,056 31,845,361 31,299,795
Eliminations -- intersegment sales............... (2,330,095) (156,866) (223,152)
------------ ------------ ------------
Total revenue...................................... $217,758,894 $220,991,345 $177,596,599
============ ============ ============
Operating profit (loss)
Automotive products
U.S. operations............................... $ 9,712,195 $ 10,254,006 $ 4,467,327
Canadian operations........................... (1,444,962) 2,300,345 2,023,717
------------ ------------ ------------
8,267,233 12,554,351 6,491,044
Consumer and other non automotive
products-Como................................. 176,853 2,514,239 2,277,364
------------ ------------ ------------
Total operating profit............................. 8,444,086 15,068,590 8,768,408
Corporate expenses, net............................ 56,108 353,313 65,200
Interest expense................................... 3,279,904 3,177,826 2,144,093
------------ ------------ ------------
Income from continuing operations before taxes,
minority interest and extraordinary item......... $ 5,108,074 $ 11,537,451 $ 6,559,115
============ ============ ============
Identifiable assets
Automotive products
U.S. operations............................... $ 81,966,346 $ 75,402,101 $ 55,997,414
Canadian operations........................... 29,019,086 22,418,557 18,764,488
------------ ------------ ------------
110,985,432 97,820,658 74,761,902
Consumer and other non automotive
products-Como................................. 8,139,764 8,493,987 9,792,459
General corporate assets......................... -- -- 305,322
------------ ------------ ------------
Total assets....................................... $119,125,196 $106,314,645 $ 84,859,683
============ ============ ============
Depreciation and amortization expense
Automotive products
U.S. operations............................... $ 5,274,032 $ 4,583,521 $ 4,647,074
Canadian operations........................... 2,027,751 1,423,101 1,261,973
------------ ------------ ------------
7,301,783 6,006,622 5,909,047
Consumer and other non automotive
products-Como................................. 614,952 671,775 612,167
------------ ------------ ------------
Total depreciation and amortization................ $ 7,916,735 $ 6,678,397 $ 6,521,214
============ ============ ============
Capital expenditures
Automotive products
U.S. operations............................... $ 17,104,697 $ 12,248,949 $ 9,338,835
Canadian operations........................... 2,691,850 2,219,873 967,782
------------ ------------ ------------
19,796,547 14,468,822 10,306,617
Consumer and other non automotive
products-Como................................. 401,048 387,365 1,178,444
------------ ------------ ------------
Total capital expenditures....................... $ 20,197,595 $ 14,856,187 $ 11,485,061
============ ============ ============
</TABLE>
F-16
<PAGE> 102
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. SEGMENT DATA FROM CONTINUING OPERATIONS (CONTINUED)
Operating profit is total revenue less operating expenses, excluding
interest expense and general corporate expenses. Identifiable assets by industry
include assets directly identified with those operations.
During the years ended September 1996, 1995 and 1994, approximately 90%,
86% and 83% of consolidated sales were to customers in the automotive industry.
Following is a summary of customers that accounted for more than 10% of
consolidated net product sales:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------
SEPTEMBER 29, SEPTEMBER 24, SEPTEMBER 25,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Ford Motor Company................. $71,519,000 $60,925,000 $23,672,000
General Motors Corporation......... 79,640,000 87,657,000 64,050,000
Volkswagen A.G. ................... 19,172,000 25,963,000 27,152,000
</TABLE>
As of September 29, 1996 receivables from Ford Motor Company, General
Motors Corporation, and Volkswagen A.G. represented 41%, 35% and 2% of total
accounts receivable, respectively, and at September 24, 1995 receivables from
said customers were 23%, 48% and 7% of total accounts receivable, respectively.
7. RELATED PARTY TRANSACTIONS
Como leases its general office and plant facilities, in addition to certain
computer and manufacturing equipment, from corporations whose directors and
stockholders include Como's minority stockholder. Lease rental payments made to
these corporations for 1996, 1995, and 1994 were $487,000, $533,300 and
$513,621, respectively. Como also pays management fees to its minority
stockholder based on a percentage of sales. Selling, general and administrative
expenses include $120,799, $205,611 and $205,037 in 1996, 1995 and 1994,
respectively, for management fees to the minority stockholder.
The Company leases certain corporate administrative facilities from its
shareholders. Lease rental payments were $156,000 for each of its three years
ended in September, 1996, 1995 and 1994. The Company also pays the repairs and
maintenance, insurance and property taxes on these facilities.
The Company formerly purchased tooling services from a related entity,
which is owned by its stockholders. Such purchases totaled approximately
$1,376,000 and $366,000 for the fiscal years ended in 1995 and 1994,
respectively.
F-17
<PAGE> 103
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
The Company's provision for income taxes for continuing operations for the
years ended September 29, 1996, September 24, 1995 and September 25, 1994 is
comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Domestic
Federal
Current............................................. $2,770,364 $4,515,416 $3,222,090
Deferred............................................ 612,181 (693,716) (236,200)
---------- ---------- ----------
3,382,545 3,821,700 2,985,890
State and local
Current............................................. 840,400 1,138,960 639,268
Deferred............................................ 16,800 (14,400) 1,100
---------- ---------- ----------
857,200 1,124,560 640,368
Foreign
Current............................................. 20,000 16,120 24,841
Deferred............................................ (246,000) 95,825 151,631
---------- ---------- ----------
(226,000) 111,945 176,472
---------- ---------- ----------
Total income tax provision............................... $4,013,745 $5,058,205 $3,802,730
========== ========== ==========
</TABLE>
Deferred income taxes are provided for the temporary differences between
the financial reporting basis and tax basis of the Company's assets and
liabilities. At September 29, 1996 and September 24, 1995 deferred tax assets
and liabilities are comprised of the following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
DEFERRED TAX ASSETS:
Canadian net operating loss carryovers...................... $2,528,000 $ 957,335
Accounts receivable......................................... 69,700 93,500
Inventory................................................... 256,600 383,000
Other accrued liabilities................................... 167,700 291,200
Employee benefits........................................... 334,500 171,800
Marketable equity securities................................ -- 205,000
---------- ----------
Total deferred tax assets................................. 3,356,500 2,101,835
Less valuation allowances for Canadian loss carryovers...... (728,000) --
---------- ----------
Total net deferred tax asset................................ 2,628,500 2,101,835
DEFERRED TAX LIABILITIES:
Property, plant and equipment............................... 2,641,000 1,731,354
---------- ----------
Net deferred tax asset (liability).......................... $ (12,500) $ 370,481
========== ==========
</TABLE>
For Canadian income tax purposes, approximately $5,812,000 of net operating
losses are available at September 29, 1996 for carryover against taxable income
in future years. These carryovers expire $1,082,000 in 2002 and $4,730,000 in
2003. The net operating loss carryforwards include timing differences,
principally tax depreciation in excess of financial statement depreciation of
approximately $4,138,000 for which a $1,800,000 deferred tax liability has been
recorded. For financial statement purposes, a valuation allowance of $728,000
has been established for the full amount of the Canadian carryovers less the
timing differences, principally the excess of tax depreciation over financial
statement depreciation at September 29, 1996.
F-18
<PAGE> 104
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES (CONTINUED)
A reconciliation of the Company's income tax expense at the federal
statutory tax rate to the actual income tax expense follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 29, SEPTEMBER 24, SEPTEMBER 25,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Tax at federal statutory rate of 34%....... $1,736,745 $3,922,733 $2,230,099
State and local taxes, net of federal tax
effect................................... 565,762 742,210 422,643
Settlement of prior years' income tax
liabilities.............................. 581,574 -- --
Nondeductible expenses..................... 211,474 314,430 1,062,084
Effect of Canadian operations.............. 857,000 -- --
Other, net................................. 61,190 78,832 87,904
---------- ---------- ----------
Provision for income taxes................. $4,013,745 $5,058,205 $3,802,730
========== ========== ==========
</TABLE>
9. RETIREMENT AND PROFIT SHARING PLANS
The Company provides defined contribution retirement plans to substantially
all employees of LDM Technologies, Inc. and Como. Costs under the plans amounted
to $251,732, $256,482 and $194,748 in 1996, 1995 and 1994, respectively.
10. COMMITMENTS AND CONTINGENCIES
LEASES AND PURCHASE COMMITMENTS
The Company leases certain of its facilities, furniture and fixtures, and
equipment. Rental expense, including short-term cancelable leases, approximated
$1,865,000, $2,000,000 and $1,305,000 for the years ended September 29, 1996,
September 24, 1995 and September 25, 1994, respectively. Future commitments
under noncancelable operating leases for the Company are as follows:
<TABLE>
<CAPTION>
RELATED UNRELATED
FISCAL YEAR PARTIES PARTIES TOTAL
----------- ---------- ---------- ----------
<S> <C> <C> <C>
1997................................ $ 678,000 $1,293,000 $1,971,000
1998................................ 678,000 870,000 1,548,000
1999................................ 678,000 813,000 1,491,000
2000................................ 678,000 762,000 1,440,000
2001................................ 663,000 539,000 1,202,000
Thereafter.......................... 747,000 317,000 1,064,000
---------- ---------- ----------
Total............................... $4,122,000 $4,594,000 $8,716,000
========== ========== ==========
</TABLE>
At September 29, 1996, the Company has committed to purchase equipment
aggregating approximately $1,615,000.
STOCK REDEMPTION AGREEMENT
On April 22, 1996 the Company and two of its shareholders entered into a
binding stock redemption agreement providing the following:
- Upon the death of a shareholder, the Company is required to purchase and
the shareholder's estate is required to sell all of the shareholder's
stock at a price equal to $33,000,000. This amount is payable
F-19
<PAGE> 105
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
upon receipt of the proceeds of the life insurance policies owned by the
Company on the shareholders life. Any shortfall between the insurance
proceeds and the amount payable to the shareholder's estate will require
funding by the Company, subject to restrictions in the Company's loan
agreements.
- The Company is required to purchase and maintain life insurance policies
of $33,000,000 and $28,000,000 respectively on the life of the
shareholders for as long as the Stock Redemption Agreement is in effect.
The aggregate premium for these policies presently approximates $900,000
per year. Further, the Company is prohibited from assigning, pledging or
borrowing against these life insurance policies without the consent of the
insured shareholder.
- The Agreement may be terminated by mutual agreement of all parties or by
any shareholder after October 22, 1996 with respect to that shareholder's
stock only.
CONTINGENCY
The Company has been notified of violations and possible violations of
certain permitted air emission levels for organic compounds at two of its plant
locations. It is the Company's policy to accrue environmental expenses when it
is both probable that a liability has been incurred and the amount can be
reasonably estimated. The Company believes that, based on available information,
the ultimate liability with respect to these issues will not materially exceed
the recorded liability of $250,000; however, the ultimate resolution of such
matters cannot be predicted with certainty.
The Company has received letters from a corporation and a group of
corporations, which have entered into agreements with the United States
Environmental Protection Agency to prepare remedial designs for curing two
separate failed land fill sites. In each letter, the Company was identified as a
potentially responsible party for its alleged waste disposal at such landfills.
The Company has no reason to believe that any liability associated with these
landfills will have a material impact on the Company's financial position or
results of operations and, accordingly, no liability for such contingencies has
been accrued in the accompanying financial statements.
11. SUBSEQUENT EVENTS
BUSINESS ACQUISITION AND ISSUANCE OF DEBT
Acquisition
On November 4, 1996, the Company signed a definitive agreement to acquire,
effective December 1, 1996, the business and certain net assets of Molmec, Inc.
for approximately $55 million in cash, subject to certain adjustments and the
assumption of certain liabilities, aggregating approximately $16.6 million as of
September 29, 1996 (the "Acquisition"). The acquisition was consummated on
January 22, 1997.
The Acquisition will be accounted for using the purchase method.
Accordingly, the assets acquired and the liabilities assumed will be recorded at
fair values and the excess of the purchase price over the net assets acquired
will be recorded as goodwill and amortized over 15 years.
Issuance of Debt
On January 22, 1997, the Company issued, in a private placement (the
"Initial Offering"), $110 million aggregate principal amount of its 10 3/4%
Senior Subordinated Notes due 2007, Series A (the "Notes"). The net proceeds of
the Initial Offering, which amounted to approximately $105 million, were used to
repay debt in default amounting to $37.8 million, to repay the $3 million note
payable to a former shareholder, to fund the Acquisition and for general
corporate purposes. In addition, the Company obtained a new senior credit
facility which provides available borrowings of $45 million under revolving
loans. The Company also obtained a replacement letter of credit with respect to
its $8.8 million Multi-Option Adjustable Rate Notes.
F-20
<PAGE> 106
LDM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. SUBSEQUENT EVENTS (CONTINUED)
The Company intends to register Exchange Notes, which will have
substantially the same terms and conditions as the Notes, with the Securities
and Exchange Commission and to exchange the Exchange Notes for the Notes. The
Notes are, and the Exchange Notes will be, guaranteed by LDM Canada, but will
not be guaranteed by Como. Financial information for LDM Canada is disclosed in
Note 2. Financial information for Como is disclosed in Note 6.
The following unaudited pro forma condensed consolidated results of
operations of the Company, for the fiscal year ended September 29, 1996, gives
effect to the Acquisition and the Offering as if such events had occurred on
September 25, 1995. The following unaudited pro forma condensed consolidated
balance sheet data at September 29, 1996 gives effect to the Acquisition and the
Offering as if such events had occurred on that date. The unaudited pro forma
consolidated financial information does not purport to represent what the
Company's financial position or results of operations would actually have been
had the transactions occurred on the dates indicated above or to project the
Company's financial position or results of operations for any future date or
period.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 29,
1996
--------------
(IN THOUSANDS)
<S> <C>
Net sales................................................... $306,406
Cost of sales............................................... 252,661
--------
Gross margin................................................ 53,745
Selling, general and administrative expenses................ 40,422
Other expenses, principally interest........................ 13,324
--------
Loss from continuing operations before income taxes,
minority interests and extraordinary item................. (1)
Provision for income taxes.................................. 1,970
--------
Loss from continuing operations before minority interest and
extraordinary item........................................ (1,971)
Minority interest........................................... 79
--------
Loss from continuing operations before extraordinary item... $ (1,892)
========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 29,
1996
--------------
(IN THOUSANDS)
<S> <C>
Current assets.............................................. $ 83,897
Noncurrent assets........................................... 120,633
--------
$204,530
========
Current liabilities......................................... $ 62,180
Noncurrent liabilities...................................... 125,267
Stockholders' equity........................................ 17,083
--------
$204,530
========
</TABLE>
F-21
<PAGE> 107
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders,
Molmec, Inc.:
We have audited the accompanying balance sheets of MOLMEC, INC. (a Michigan
corporation) as of December 31, 1995 and 1994, and the related statements of
operations, stockholders' investment and cash flows for each of the three years
in the period ended December 31, 1995. 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 financial position of Molmec, Inc. as of December
31, 1995 and 1994, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As explained in Note 1 to the financial statements, effective January 1,
1995, the Company changed its method of accounting for inventories.
Detroit, Michigan,
April 2, 1996, except as to the Arthur Andersen LLP
information presented in Note 12 for
which the date is January 22, 1997.
F-22
<PAGE> 108
MOLMEC, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable --
Trade (less allowance for doubtful accounts of $38,000
in 1995 and 1994)...................................... $10,780,921 $12,015,832
Other................................................... 246,852 599,265
Inventories --
Raw materials and component parts....................... 2,093,473 2,356,645
Work-in-process and finished goods...................... 1,747,876 1,884,436
Prepaid tooling........................................... 937,344 1,638,215
Prepaid expenses and other................................ 214,693 169,429
----------- -----------
Total current assets............................... 16,021,159 18,663,822
----------- -----------
Property, plant and equipment, at cost:
Land...................................................... 688,893 688,893
Buildings and improvements................................ 9,642,887 6,959,794
Machinery and equipment................................... 24,344,638 19,718,104
Furniture and fixtures.................................... 1,588,291 1,472,347
Construction-in-progress.................................. -- 618,551
----------- -----------
36,264,709 29,457,689
Less -- Accumulated depreciation and amortization......... 20,297,927 17,978,866
----------- -----------
Net property, plant and equipment.................. 15,966,782 11,478,823
----------- -----------
Other assets:
Restricted cash and cash equivalents...................... -- 2,471,124
Deposits.................................................. -- 1,885,884
Cash surrender value of officers' life insurance (face
amount of $7,200,000 and $9,800,000 in 1995 and 1994,
respectively)........................................... 349,780 352,328
Other, net................................................ 247,259 250,127
----------- -----------
Total other assets................................. 597,039 4,959,463
----------- -----------
$32,584,980 $35,102,108
=========== ===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current portion of long-term debt --
Real estate............................................. $ 296,123 $ 280,999
Equipment and other..................................... 1,298,877 669,001
Borrowings under line of credit........................... 5,824,571 6,360,621
Accounts payable.......................................... 8,820,920 10,729,405
Accounts payable -- related parties....................... 406,907 318,222
Accrued workers' compensation............................. 150,085 105,991
Accrued liabilities....................................... 776,156 807,235
----------- -----------
Total current liabilities.......................... 17,573,639 19,271,474
----------- -----------
Long-term liabilities, less current portions above:
Real estate debt........................................ 1,667,343 1,963,735
Equipment and other debt................................ 9,277,462 8,682,667
Accrued workers' compensation........................... 290,234 300,000
Other long-term liabilities............................. 100,000 157,234
----------- -----------
Total long-term liabilities........................ 11,335,039 11,103,636
----------- -----------
Commitments
Stockholders' investment:
Common stock, $1 par value, 1,500,000 shares authorized,
100,736 and 102,144 shares issued and outstanding in
1995 and 1994, respectively............................. 100,736 102,144
Paid-in capital........................................... 209,239 325,207
Retained earnings......................................... 3,526,870 4,391,311
----------- -----------
3,836,845 4,818,662
Less -- Notes receivable from sale of stock................. 160,543 91,664
----------- -----------
Total stockholders' investment..................... 3,676,302 4,726,998
----------- -----------
$32,584,980 $35,102,108
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-23
<PAGE> 109
MOLMEC, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net sales:
Molding............................................. $72,661,670 $73,411,584 $59,457,910
Tooling............................................. 10,205,694 6,551,600 9,935,255
----------- ----------- -----------
82,867,364 79,963,184 69,393,165
----------- ----------- -----------
Cost of sales:
Material............................................ 18,253,264 19,673,951 17,735,492
Component costs..................................... 13,763,173 15,198,306 10,537,074
Direct labor........................................ 6,080,403 7,246,749 5,609,244
Manufacturing and subcontracting expenses........... 24,732,300 23,052,407 15,915,273
Tooling............................................. 10,071,876 6,164,889 9,294,273
----------- ----------- -----------
72,901,016 71,336,302 59,091,356
----------- ----------- -----------
Gross profit..................................... 9,966,348 8,626,882 10,301,809
Selling and administrative expenses................... 9,285,017 9,184,737 8,856,217
----------- ----------- -----------
Operating income (loss).......................... 681,331 (557,855) 1,445,592
----------- ----------- -----------
Other income (expense):
Gain on sale of joint venture....................... -- 1,146,933 --
Interest expense, net............................... (1,545,772) (714,638) (609,007)
Equity income from joint venture.................... -- 119,113 440,137
----------- ----------- -----------
Total other income (expense)..................... (1,545,772) 551,408 (168,870)
----------- ----------- -----------
Net income (loss)..................................... $ (864,441) $ (6,447) $ 1,276,722
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-24
<PAGE> 110
MOLMEC, INC.
STATEMENTS OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED NOTES
STOCK CAPITAL EARNINGS RECEIVABLE TOTAL
-------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1992........... $151,808 $ 443,997 $ 7,604,678 $ (91,664) $ 8,108,819
Distributions to stockholders..... -- -- (29,972) -- (29,972)
Net income........................ -- -- 1,276,722 -- 1,276,722
-------- --------- ----------- --------- -----------
Balance December 31, 1993........... 151,808 443,997 8,851,428 (91,664) 9,355,569
Distributions to stockholders..... -- -- (1,000,000) -- (1,000,000)
Redemption of stock............... (49,664) (118,790) (3,453,670) -- (3,622,124)
Net loss.......................... -- -- (6,447) -- (6,447)
-------- --------- ----------- --------- -----------
Balance December 31, 1994........... 102,144 325,207 4,391,311 (91,664) 4,726,998
Redemption of stock............... (2,918) (183,337) -- -- (186,255)
Sale of common stock.............. 1,510 67,369 -- (68,879) --
Net loss.......................... -- -- (864,441) -- (864,441)
-------- --------- ----------- --------- -----------
Balance December 31, 1995........... $100,736 $ 209,239 $ 3,526,870 $(160,543) $ 3,676,302
======== ========= =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-25
<PAGE> 111
MOLMEC, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................... $ (864,441) $ (6,447) $ 1,276,722
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations --
LIFO provision (credit)................................... 165,169 (21,483) (203,882)
Depreciation and amortization............................. 2,423,793 2,016,439 1,870,128
Gain on sale of joint venture............................. -- (1,146,933) --
Equity income from joint venture.......................... -- (119,113) (440,137)
(Gain) loss on sale of property, plant and equipment...... (18,343) 2,319 (432,277)
Source (use) of cash resulting from change in assets and
liabilities --
Accounts receivable..................................... 1,587,324 (1,931,274) (2,167,215)
Inventories............................................. 234,563 (1,310,963) (313,566)
Prepaid expenses........................................ 655,607 (1,298,242) 203,555
Other assets............................................ 2,868 13,901 43,565
Accounts payable........................................ (1,898,800) 3,317,392 2,098,341
Accrued liabilities and other........................... (53,985) (402,180) 84,833
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATIONS............. 2,233,755 (886,584) 2,020,067
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of joint venture......................... -- 3,760,134 --
Dividends received from joint venture....................... -- -- 145,000
Proceeds from sale of property, plant and equipment......... 39,300 8,425 827,282
Decrease in cash surrender value of officers' life
insurance, net............................................ 2,548 18,053 46,046
Deposits on machinery and equipment......................... -- (1,885,884) --
(Increase) decrease in restricted cash and cash
equivalents............................................... 2,471,124 (2,471,124) --
Purchases of property, plant and equipment.................. (5,046,825) (4,235,743) (1,140,354)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES................. (2,533,853) (4,806,139) (122,026)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under line of credit
agreement................................................. (536,050) 2,537,025 (976,404)
Redemption of common stock.................................. (107,255) (3,622,124) --
Distributions to stockholders............................... -- (1,000,000) (29,972)
Proceeds from long-term debt................................ 1,956,065 8,612,683 --
Repayment of long-term debt................................. (1,012,662) (834,861) (891,665)
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES... 300,098 5,692,723 (1,898,041)
----------- ----------- -----------
Change in cash and cash equivalents......................... -- -- --
Cash and cash equivalents, beginning of year................ -- -- --
----------- ----------- -----------
Cash and cash equivalents, end of year...................... $ -- $ -- $ --
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION --
Cash paid for interest.................................... $ 1,553,000 $ 677,000 $ 607,000
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY --
Issuance of 1,510 shares of common stock in exchange for a
note receivable........................................... $ 68,879 $ -- $ --
=========== =========== ===========
Retirement of 1,459 shares of common stock in exchange for a
note payable.............................................. $ 79,000 $ -- $ --
=========== =========== ===========
Purchases of property, plant and equipment funded by
deposits on machinery and equipment....................... $ 1,885,884 $ -- $ --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-26
<PAGE> 112
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS OF THE COMPANY
Molmec, Inc. (the Company) is engaged in the manufacturing and assembly of
plastic parts primarily for the domestic automotive industry. The Company grants
credit on standard industry terms.
For the years ended December 31, 1995, 1994 and 1993 sales to two customers
represented 68%, 72% and 66%, respectively of net sales.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RESTRICTED CASH AND CASH EQUIVALENTS
Restricted cash includes investments in a money market fund which invests
primarily in highly liquid government obligations with a maturity of three
months or less.
CONCENTRATION OF CREDIT RISK
Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. Automotive manufacturers comprise
a significant portion of the Company's customer base. Trade receivables from the
Company's two largest customers represented approximately 66% and 65% of the
Company's total trade receivables as of December 31, 1995 and 1994,
respectively.
The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral.
INVENTORIES
The Company values certain raw material inventory and the raw material
content of finished goods inventory at the lower of cost, using the last-in,
first-out (LIFO) method of accounting, or market. The total value of this
inventory at December 31, 1994 was $1,502,955.
At December 31, 1994, the remaining inventory was valued using the
first-in, first-out (FIFO) method. During 1995, the Company changed its method
of accounting for the remaining inventory to the LIFO method of accounting to
conform with the raw materials inventory. The effect of the change in 1995 was
to increase the net loss by $165,000. The cumulative effect of this accounting
change can not be reasonably determined.
Under the LIFO method, quantity increments are valued at the most recent
purchase price and base quantities are valued in base year dollars. Had the FIFO
method been used for all inventories, inventories would have been increased by
$868,373 and $703,204 at December 31, 1995 and 1994, respectively.
INVESTMENT IN JOINT VENTURE
During 1994, the Company sold its 50% share in a joint venture. This
investment was accounted for on the equity method. The joint venture was in a
similar line of business to that of the Company. As a result of
F-27
<PAGE> 113
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the sale, the Company recorded a gain on the sale, net of related reorganization
expenses, which has been reflected in the accompanying 1994 statement of
operations.
DEPRECIATION AND AMORTIZATION
Depreciable property, stated at cost, is depreciated over the estimated
useful lives of the assets, using principally accelerated methods as follows:
<TABLE>
<S> <C>
Buildings and improvements............................... 15 to 39 years
Machinery and equipment.................................. 5 to 7 years
Furniture and fixtures................................... 3 to 7 years
</TABLE>
Amortizable assets are amortized over a 15 year period.
HARTLAND PLANT CONSTRUCTION
During 1994, the Company began construction of a new plant located in
Hartland, Michigan. The Company financed the construction through the issuance
of $5,000,000 in Demand Limited Obligation Revenue Bonds. The proceeds from the
bonds were restricted in their use to costs related to the construction of the
Hartland plant.
As of December 31, 1994, the unused proceeds from the bond issuance
amounted to $2,471,124 which was reflected as restricted cash and cash
equivalents in the accompanying 1994 balance sheet. The Company also purchased
and received certain machinery and equipment totaling approximately $354,000 for
the Hartland plant which were classified in property, plant and equipment as of
December 31, 1994.
During 1995, construction on the plant was completed using the balance of
the restricted cash. The Company began depreciating all related assets over
their estimated useful lives. No depreciation expense was taken on these assets
for the year ended December 31, 1994, as they had not yet been placed into
service.
RECLASSIFICATIONS
Certain items in prior years financial statements have been reclassified to
conform with the presentation used in the year ended December 31, 1995.
2. LINE OF CREDIT
The Company has a line of credit with a bank. The Company may borrow up to
$11,000,000 with interest at 1 1/4% above the prime rate (9.75% and 9% at
December 31, 1995 and 1994, respectively). Borrowings under this line of credit
are secured by trade accounts receivable and totaled $5,824,571 and $6,360,621
at December 31, 1995 and 1994, respectively.
F-28
<PAGE> 114
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Demand Limited Obligation Revenue Bonds, interest at a
variable rate (4% at December 31, 1995), payable in annual
installments ranging from $160,000 to $630,000 plus
interest beginning December 1996 through 2009,
collateralized by a letter of credit and a first security
interest in substantially all assets of the Company....... $ 5,000,000 $ 5,000,000
Term loan, interest at 9.93%, payable in monthly
installments of $41,667 plus interest through November
2001, collateralized by all assets of the Company......... 2,958,333 3,458,333
Subordinated notes payable to shareholders, interest at 18%,
collateralized by a real estate mortgage and a second
security interest in all property of the Company.......... 1,500,000 --
Mortgage note, interest at 8.5%, payable in monthly
installments of $8,333 plus interest through July 1995,
$10,417 from August 1995 through July 1998 and $12,500
from August 1998 through July 1999, collateralized by real
estate.................................................... 1,248,333 1,359,024
Term loan, interest at 8.5%, payable in monthly installments
of $25,000 plus interest through February 2000,
collateralized by trade accounts receivable, inventories,
real estate, machinery and equipment and furniture and
fixtures.................................................. 1,225,000 1,525,000
Term loan, interest at 9%, payable in monthly installments
of $3,036 through August 2002, collateralized by
equipment................................................. 242,858 --
Capital lease obligation, interest at 10%, payable in
monthly installments of $4,827 through March 1999,
collateralized by equipment............................... 156,673 --
Notes payable, other........................................ 208,608 254,045
----------- -----------
12,539,805 11,596,402
Less -- Current portion..................................... 1,595,000 950,000
----------- -----------
$10,944,805 $10,646,402
=========== ===========
</TABLE>
The following is a summary of future principal payments at December 31,
1995:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
---------- ------
<S> <C>
1996...................................................... $ 1,595,000
1997...................................................... 1,604,093
1998...................................................... 1,619,628
1999...................................................... 2,307,670
2000...................................................... 1,165,211
Thereafter................................................ 4,248,203
-----------
$12,539,805
===========
</TABLE>
The term loan agreements and line of credit (see Note 2) above contain
various restrictive covenants which, among other restrictions, require certain
levels of stockholders' investment, net income, debt to equity and working
capital. As of December 31, 1995, the Company was in violation of certain of
these covenants. On
F-29
<PAGE> 115
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. LONG-TERM DEBT (CONTINUED)
April 2, 1996, the Company entered into an agreement with the bank which
provides for a waiver of the non-compliance.
The fair value of long-term debt has been estimated using the expected
future cash flows discounted at market interest rates. The carrying amount of
long-term debt approximates fair value.
4. WORKERS' COMPENSATION INSURANCE
The Company established a self-insurance program in prior years to provide
statutory workers' compensation coverage. Reinsurance coverage is carried for
risks in excess of $300,000 per occurrence and $1,390,934 in aggregate for the
two year period ending July 1, 1996. The Company incurred workers' compensation
expense of approximately $363,000, $502,000 and $431,000 during the years ended
December 31, 1995, 1994 and 1993, respectively.
5. INCOME TAXES
The Company has elected to be treated as a Small Business Corporation under
Subchapter S of the Internal Revenue Code. Therefore, taxable income of the
Company is included in the taxable income of the individual stockholders, and no
provision for Federal income taxes has been included in the statement of
operations.
6. STOCK REPURCHASE AGREEMENTS
Under the provisions of agreements between the Company and its
stockholders, the Company has agreed, among other things, to purchase at an
agreed value the shares held by any stockholder in the event of his death or
termination of employment. The agreements are partially funded by both term and
whole life insurance policies on the lives of the stockholders.
7. EMPLOYEE CASH AND STOCK BONUS PLAN
Effective April 11, 1995, the Board of Directors approved a Cash and Stock
Bonus Plan. The Plan provides for a fixed percentage of pre-tax operating income
to be set aside and distributed in the form of cash and common stock to certain
key employees of the Company, as determined by the Board of Directors. Stock
awards vested upon three years employment from the date of grant. The Plan also
provided for additional awards upon sale or merger of the Company. The Company
did not issue any awards during 1995.
8. TRANSACTIONS WITH RELATED PARTIES
The Company purchases certain tooling from an affiliated entity. These
purchases totaled approximately $2,650,000, $2,059,000 and $1,641,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.
The Company leases a manufacturing facility from an affiliated entity. The
lease requires monthly payments of $13,500 through August 1999.
9. ENVIRONMENTAL RESERVE
During 1993, the Company became aware of the need to perform some
environmental clean-up at one of its plants. The Company is in the process of
identifying the required clean-up costs and performing the necessary clean-up.
The Company has a reserve of $100,000 as of December 31, 1995 which reflects the
Company's best estimate of the remaining clean-up cost. The Company will
continue to review the adequacy of the reserve on a periodic basis and make such
adjustments to its reserve as may then be appropriate.
F-30
<PAGE> 116
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REDEMPTION OF STOCK
During 1994, the Company repurchased the outstanding shares of stock of one
of its stockholders. A total of 49,664 shares of stock were redeemed for
approximately $3,600,000. This transaction was financed through a term loan from
a bank.
11. BENEFIT PLAN
Effective January 1, 1989, the Company adopted the Molmec, Inc. MI Choice
Retirement and Savings 401k Plan and Trust (the Plan).
All full-time employees of the Company are eligible to participate in the
Plan once they have completed one year of credited service and have attained age
eighteen.
The Plan is a defined contribution plan, qualified as a profit sharing plan
under Section 401(k) of the Internal Revenue Code. The Plan allows eligible
employees to contribute up to 15% of their compensation not to exceed certain
limits set forth by the Internal Revenue Service. The Plan provides that the
Company may make an annual matching contribution of up to $1,000 per
participant. Effective January 1, 1996, the Company amended the Plan to limit
the annual matching contribution to years in which the Company generates net
income.
Contributions made by the Company amounted to approximately $80,000,
$75,000 and $81,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.
12. SUBSEQUENT EVENT
Subsequent to December 31, 1995, the Company sold substantially all of its
assets and liabilities.
F-31
<PAGE> 117
MOLMEC, INC.
BALANCE SHEET
AS OF SEPTEMBER 24, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Accounts receivable --
Trade (less allowance for doubtful accounts of $38,000)... $ 12,640,472
Other..................................................... 262,523
Inventories --
Raw materials and component parts....................... 2,428,583
Work-in-process and finished goods...................... 2,117,566
Prepaid tooling........................................... 990,923
Prepaid expenses and other................................ 297,075
------------
Total current assets............................... 18,737,142
------------
Property, plant and equipment, at cost:
Land...................................................... 688,893
Buildings and improvements................................ 9,391,302
Machinery and equipment................................... 24,322,587
Furniture and fixtures.................................... 1,570,439
------------
35,973,221
Less -- Accumulated depreciation and amortization....... (19,537,059)
------------
Net property, plant and equipment.................. 16,436,162
------------
Other Assets:
Cash surrender value of officers' life insurance (face
amount of $7,200,000 in 1995)........................... 332,413
Other, net................................................ 350,330
------------
Total other assets................................. 682,743
------------
Total assets....................................... $ 35,856,047
============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current portion of long-term debt --
Real estate............................................. $ 295,582
Equipment and other..................................... 712,418
Borrowings under line of credit........................... 7,558,437
Accounts payable.......................................... 11,432,272
Accounts payable -- related parties....................... 282,899
Accrued workers' compensation............................. 161,045
Accrued compensation...................................... 427,586
Accrued liabilities....................................... 358,750
------------
Total current liabilities.......................... 21,228,989
------------
Long-term liabilities, less current portions above:
Real estate debt.......................................... 1,740,833
Equipment and other debt.................................. 9,541,760
Accrued workers' compensation............................. 300,000
Other long-term liabilities............................... 157,194
------------
Total long-term liabilities........................ 11,739,787
------------
Commitments
Stockholders' investment:
Common stock, $1 par value, 1,500,000 shares authorized,
102,195 shares issued and outstanding................... 102,195
Paid-in capital........................................... 287,236
Retained earnings......................................... 2,658,383
------------
3,047,814
Less -- Notes receivable from sale of stock........ 160,543
------------
Total stockholders' investment..................... 2,887,271
------------
Total liabilities and stockholders' equity......... $ 35,856,047
============
</TABLE>
The notes to the financial statements should be read in
conjunction with this balance sheet.
F-32
<PAGE> 118
MOLMEC, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1 THROUGH SEPTEMBER 24, 1995
(UNAUDITED)
<TABLE>
<S> <C>
Net sales:
Molding................................................... $52,201,499
Tooling................................................... 8,451,499
-----------
60,652,998
-----------
Cost of sales:
Material.................................................. 13,323,952
Component costs........................................... 10,128,579
Direct labor.............................................. 4,592,190
Manufacturing and subcontracting expenses................. 18,055,855
Tooling................................................... 8,468,840
-----------
54,569,416
-----------
Gross profit........................................... 6,083,582
Selling and administrative expenses......................... 6,731,343
-----------
Operating loss......................................... (647,761)
-----------
Interest expense............................................ 1,085,167
-----------
Net loss.................................................... $(1,732,928)
===========
</TABLE>
The notes to the financial statements should be read in
conjunction with this statement.
F-33
<PAGE> 119
MOLMEC, INC.
STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE PERIOD FROM JANUARY 1 THROUGH SEPTEMBER 24, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED NOTE
STOCK CAPITAL EARNINGS RECEIVABLE TOTAL
-------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994....... $102,144 $ 325,207 $ 4,391,311 $ (91,664) $ 4,726,998
Redemption of common stock....... (1,459) (105,340) -- -- (106,799)
Sale of common stock............. 1,510 67,369 -- (68,879) --
Net loss......................... (1,732,928) (1,732,928)
-------- --------- ----------- --------- -----------
Balance at September 24, 1995...... $102,195 $ 287,236 $ 2,658,383 $(160,543) $ 2,887,271
======== ========= =========== ========= ===========
</TABLE>
The notes to the financial statements should be read in
conjunction with this statement.
F-34
<PAGE> 120
MOLMEC, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1 THROUGH SEPTEMBER 24, 1995
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $(1,732,928)
Adjustments to reconcile net loss to net cash provided by
operations --
LIFO provision............................................ 341,423
Depreciation and amortization............................. 1,617,894
Gain on sale of property, plant and equipment............. (18,855)
Source (use) of cash resulting from change in assets and
liabilities --
Accounts receivable, net............................... (287,898)
Inventories............................................ (646,491)
Prepaid tooling........................................ 647,292
Prepaid expenses and other............................. (127,646)
Other assets........................................... 2,370,921
Accounts payable....................................... 667,544
Accrued liabilities, accrued compensation and other.... 34,115
-----------
NET CASH PROVIDED BY OPERATIONS...................... 2,865,371
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment......... 32,800
Purchases of property, plant and equipment.................. (4,703,294)
Decrease in cash surrender value of officers' life
insurance, net............................................ 19,915
-----------
NET CASH USED IN INVESTING ACTIVITIES................ (4,650,579)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit agreement............... 1,197,816
Net borrowings under debt agreement......................... 1,456,105
Repayment of long-term debt................................. (761,914)
Redemption of common stock.................................. (106,799)
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES............ 1,785,208
-----------
Change in cash and cash equivalents......................... --
Cash and cash equivalents, beginning of period.............. --
-----------
Cash and cash equivalents, end of period.................... $ --
===========
SUPPLEMENTAL CASH FLOW INFORMATION --
Cash paid for interest...................................... $ 1,080,139
===========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY --
Issuance of 1,510 shares of common stock in exchange for a
note receivable........................................... $ 68,879
===========
Purchases of property, plant and equipment funded by
deposits on machinery and equipment....................... $ 1,885,884
===========
</TABLE>
The notes to the financial statements should be read in
conjunction with this statement.
F-35
<PAGE> 121
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS OF THE COMPANY
Molmec, Inc. (the Company) is engaged in the manufacturing and assembly of
plastic parts primarily for the domestic automotive industry. The Company grants
credit on standard industry terms.
For the period ended September 24, 1995, sales to two customers represented
59% of net sales.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. Automotive manufacturers comprise
a significant portion of the Company's customer base. Trade receivables from the
Company's two largest customers represented approximately 64% of the Company's
total trade receivables as of September 24, 1995.
The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral.
INVENTORIES
The Company values certain raw material inventory and the raw material
content of finished goods inventory at the lower of cost, using the last-in,
first-out (LIFO) method of accounting, or market.
At December 31, 1994, the remaining inventory was valued using the
first-in, first-out (FIFO) method. During 1995, the Company changed its method
of accounting for the remaining inventory to the LIFO method to conform with the
raw material inventory. The effect of the change in 1995 was to increase net
loss by $341,243. The cumulative effect of this accounting change is not
reasonably determinable.
Under the LIFO method, quantity increments are valued at the most recent
purchase price and base quantities are valued in base year dollars. Had the FIFO
method been used for all inventories, inventories would have been increased by
approximately $1,044,000 at September 24, 1995.
DEPRECIATION AND AMORTIZATION
Depreciable property, stated at cost, is depreciated over the estimated
useful lives of the assets, using principally accelerated methods as follows:
<TABLE>
<S> <C>
Buildings and improvements.................................. 15 to 39 years
Machinery and equipment..................................... 5 to 7 years
Furniture and fixtures...................................... 3 to 7 years
</TABLE>
Other depreciable assets are amortized over a 15 year period.
F-36
<PAGE> 122
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. LINE OF CREDIT
The Company has a line of credit with a bank. The Company may borrow up to
$11,000,000 with interest at prime rate plus 1 1/4% (10% at September 24, 1995).
Borrowings under this line of credit are secured by trade accounts receivable
and total $7,558,437 at September 24, 1995.
3. LONG-TERM DEBT
Long-term debt consists of the following at September 24, 1995:
<TABLE>
<S> <C>
Demand Limited Obligation Revenue Bonds, interest at a
variable rate (4% at September 24, 1995), payable in
annual installments ranging from $160,000 to $630,000 plus
interest beginning December 1996 through 2009,
collateralized by a letter of credit and a first security
interest in substantially all assets of the Company....... $ 5,000,000
Term loan, interest at 9.93%, payable in monthly
installments of $41,667 plus interest through November
2001, collateralized by all assets of the Company......... 3,083,333
Subordinated notes payable to stockholders, interest at 18%,
collateralized by a real estate mortgage and a second
security interest in all property of the Company.......... 1,000,000
Mortgage note, interest at 8.5%, payable in monthly
installments of $10,417 from October 1995 through July
1998 and $12,500 from August 1998 through July 1999,
collateralized by the related real estate................. 1,279,583
Term loan, interest at 8.5%, payable in monthly installments
of $25,000 plus interest through February 2000,
collateralized by trade accounts receivable, inventories,
real estate, machinery and equipment and furniture and
fixtures.................................................. 1,300,000
Term loan, interest at 9%, payable in monthly installments
of $3,036 through August 2002, collateralized by
equipment................................................. 251,965
Capital lease obligation, interest at 10%, payable in
monthly installments of $4,827 through March 1999,
collateralized by equipment............................... 167,103
Notes payable, other........................................ 208,609
-----------
12,290,593
Less -- Current portion..................................... 1,008,000
-----------
$11,282,593
===========
</TABLE>
The following is a summary of future principal payments of long-term debt
at September 24, 1995:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
---------- -----------
<S> <C>
1996................................................. $ 1,008,000
1997................................................. 1,597,891
1998................................................. 1,609,966
1999................................................. 2,356,301
2000................................................. 1,235,211
Thereafter........................................... 4,483,224
-----------
$12,290,593
===========
</TABLE>
The term loan agreements and line of credit (see Note 2) contain various
restrictive covenants which, among other restrictions, require certain levels of
stockholders' investment, net income, debt to equity and
F-37
<PAGE> 123
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. LONG-TERM DEBT (CONTINUED)
working capital. As of September 24, 1995, the Company was not in compliance
with certain of these covenants. These events of noncompliance were subsequently
cured by the Company.
The fair value of long-term debt has been estimated using the expected
future cash flows discounted at market interest rates. The carrying amount of
long-term debt approximates fair value.
4. WORKERS' COMPENSATION INSURANCE
The Company has a self-insurance program to provide statutory workers'
compensation coverage. Reinsurance coverage is carried for risks in excess of
$300,000 per occurrence and $1,390,934 in aggregate for the two year period
ending July 1, 1996. The Company incurred workers' compensation expense of
approximately $285,000 during the period ended September 24, 1995.
5. INCOME TAXES
The Company has elected to be treated as a Small Business Corporation under
Subchapter S of the Internal Revenue Code. Therefore, taxable income of the
Company is included in the taxable income of the individual stockholders, and no
provision for Federal income taxes has been included in the statement of
operations.
6. STOCK REPURCHASE AGREEMENTS
Under the provisions of agreements between the Company and its
stockholders, the Company has agreed, among other things, to purchase at an
agreed value the shares held by any stockholder in the event of his death or
termination of employment. The agreements are partially funded by both term and
whole life insurance policies on the lives of the stockholders.
7. EMPLOYEE CASH AND STOCK BONUS PLAN
Effective April 11, 1995, the Board of Directors approved a Cash and Stock
Bonus Plan (Stock Plan). The Stock Plan provides for a fixed percentage of
pre-tax operating income to be set aside and distributed in the form of cash and
common stock to certain key employees of the Company, as determined by the Board
of Directors. Stock awards vested upon three years employment from the date of
grant. The Stock Plan also provides for additional awards upon sale or merger of
the Company. The Company did not issue any awards during 1995.
8. TRANSACTIONS WITH RELATED PARTIES
The Company purchases certain tooling from an affiliated entity. These
purchases totaled approximately $1,615,160 for the period ended September 24,
1995.
The Company leases a manufacturing facility from an affiliated entity. The
lease requires monthly payments of $13,500 through August 1999.
9. ENVIRONMENTAL RESERVE
During 1993, the Company became aware of the need to perform some
environmental clean-up at one of its plants. The Company is in the process of
identifying the required clean-up costs and performing the necessary clean-up.
The Company has a reserve of $58,000 as of September 24, 1995 which reflects the
Company's best estimate of the remaining clean-up cost. The Company will
continue to review the adequacy of the reserve on a periodic basis and make such
adjustments to the reserve as may then be appropriate.
F-38
<PAGE> 124
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
10. BENEFIT PLAN
Effective January 1, 1989, the Company adopted the Molmec, Inc. MI Choice
Retirement and Savings 401k Plan and Trust (the Plan).
All full-time employees of the Company are eligible to participate in the
Plan once they have completed one year of credited service and have attained age
eighteen.
The Plan is a defined contribution plan, qualified as a profit sharing plan
under Section 401(k) of the Internal Revenue Code. The Plan allows eligible
employees to contribute up to 15% of their compensation not to exceed certain
limits set forth by the Internal Revenue Service. The Plan provides that the
Company may make an annual matching contribution of up to $1,000 per
participant. Effective January 1, 1996, the Company amended the Plan to limit
the annual matching contribution to years in which the Company generates net
income.
Contributions made by the Company amounted to approximately $80,000 for the
period ended September 24, 1995.
11. SUBSEQUENT EVENT
Subsequent to September 24, 1995, the Company sold substantially all of its
assets and liabilities.
F-39
<PAGE> 125
MOLMEC, INC.
BALANCE SHEET
AS OF SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Accounts receivable --
Trade (less allowance for doubtful accounts of
$33,055)............................................... $11,794,315
Other................................................... 64,509
Inventories --
Raw materials and component parts....................... 1,738,423
Work-in-process and finished goods...................... 1,625,659
Prepaid tooling........................................... 577,998
Prepaid expenses and other................................ 443,261
-----------
Total current assets.................................. 16,244,165
-----------
Property, plant and equipment, at cost:
Land...................................................... 758,875
Buildings and improvements................................ 9,958,142
Machinery and equipment................................... 24,753,445
Furniture and fixtures.................................... 1,825,219
-----------
37,295,681
Less -- Accumulated depreciation and amortization......... 22,054,626
-----------
Net property, plant and equipment..................... 15,241,055
-----------
Other assets:
Cash surrender value of officers' life insurance (face
amount of $7,200,000 in 1996)........................... 349,780
Other, net................................................ 238,500
-----------
Total other assets.................................... 588,280
-----------
Total assets.......................................... $32,073,500
===========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current portion of long-term debt --
Real estate............................................. $ 296,123
Equipment and other..................................... 1,298,877
Borrowings under line of credit........................... 543,803
Accounts payable.......................................... 8,907,660
Accounts payable -- related parties....................... 490,352
Accrued workers' compensation............................. 106,473
Accrued compensation...................................... 668,000
Accrued liabilities....................................... 865,237
-----------
Total current liabilities............................. 13,176,525
-----------
Long-Term liabilities, less current portions above:
Real estate debt.......................................... 1,427,765
Equipment and other debt.................................. 7,755,072
Accrued workers' compensation............................. 241,906
Other long-term liabilities............................... 100,000
-----------
Total long-term liabilities........................... 9,524,743
-----------
Commitments
Stockholders' investment:
Common stock, $1 par value, 1,500,000 shares authorized,
110,699 shares issued and outstanding................... 110,699
Paid-in capital........................................... 874,276
Retained earnings......................................... 8,547,800
-----------
9,532,775
Less -- Notes receivable from sale of stock............... 160,543
-----------
Total stockholders' investment........................ 9,372,232
-----------
Total liabilities and stockholders' equity............ $32,073,500
===========
</TABLE>
The notes to the financial statements should be read in conjunction with this
balance sheet.
F-40
<PAGE> 126
MOLMEC, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 25, 1995 THROUGH SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Net sales:
Molding................................................... $81,052,739
Tooling................................................... 7,594,925
-----------
88,647,664
-----------
Cost of sales:
Material.................................................. 19,278,350
Component costs........................................... 14,983,547
Direct labor.............................................. 5,671,246
Manufacturing and subcontracting expenses................. 21,846,851
Tooling................................................... 6,927,264
-----------
68,707,258
-----------
Gross profit......................................... 19,940,406
-----------
Operating expenses:
Selling and administrative expenses....................... 11,239,954
Stock Plan compensation expense........................... 1,200,000
-----------
Total operating expenses............................. 12,439,954
-----------
Operating income..................................... 7,500,452
Interest expense............................................ 1,461,484
-----------
Net income before cumulative effect of change in accounting
principle................................................. 6,038,968
Cumulative effect of change in accounting principle......... (149,551)
-----------
Net income.................................................. $ 5,889,417
===========
</TABLE>
The notes to the financial statements should be read in conjunction with this
statement.
F-41
<PAGE> 127
MOLMEC, INC.
STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE PERIOD FROM SEPTEMBER 25, 1995 THROUGH SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED NOTES
STOCK CAPITAL EARNINGS RECEIVABLE TOTAL
------ ------- -------- ---------- -----
<S> <C> <C> <C> <C> <C>
Balance at September 25, 1995......... $102,195 $287,236 $2,658,383 $(160,543) $2,887,271
Sale of common stock................ 9,963 665,037 -- -- 675,000
Purchase of common stock............ (1,459) (77,997) (79,456)
Net income.......................... -- -- 5,889,417 -- 5,889,417
-------- -------- ---------- --------- ----------
Balance at September 29, 1996......... $110,699 $874,276 $8,547,800 $(160,543) $9,372,232
======== ======== ========== ========= ==========
</TABLE>
The notes to the financial statements should be read in conjunction with this
statement.
F-42
<PAGE> 128
MOLMEC, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM SEPTEMBER 25, 1995 THROUGH SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 5,889,417
Adjustments to reconcile net income to net cash provided
by operations --
LIFO credit............................................ (523,408)
Depreciation and amortization.......................... 2,574,698
Loss on sale of property, plant and equipment.......... 512
Distribution of stock to employees (see note 7)........ 675,000
Cumulative effect of change in accounting principle.... 149,551
Source (use) of cash resulting from change in assets
and liabilities --
Accounts receivable, net............................. 1,044,171
Inventories.......................................... 1,555,924
Prepaid tooling...................................... 412,925
Prepaid expenses and other........................... (146,186)
Other assets......................................... 111,830
Accounts payable..................................... (2,317,159)
Accrued liabilities, accrued compensation and
other............................................... 577,041
-----------
NET CASH PROVIDED BY OPERATIONS................... 10,004,316
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment....... 9,000
Decrease in cash surrender value of officers' life
insurance, net......................................... (17,367)
Purchases of property, plant and equipment................ (1,389,103)
-----------
NET CASH USED IN INVESTING ACTIVITIES............. (1,397,470)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under line of credit agreement............. (7,014,634)
Redemption of common stock................................ (79,456)
Proceeds from issuance of long-term debt.................. 537,418
Repayment of long-term debt............................... (2,050,174)
-----------
NET CASH USED IN FINANCING ACTIVITIES............. (8,606,846)
-----------
Change in cash and cash equivalents......................... --
Cash and cash equivalents, beginning of period.............. --
-----------
Cash and cash equivalents, end of period.................... $ --
===========
Supplemental cash flow information -- Cash paid for
interest.................................................. $ 1,548,281
===========
</TABLE>
The notes to the financial statements should be read in conjunction with this
statement.
F-43
<PAGE> 129
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS OF THE COMPANY
Molmec, Inc. (the Company) is engaged in the manufacturing and assembly of
plastic parts primarily for the domestic automotive industry. The Company grants
credit on standard industry terms. The Company's fiscal year is on a calendar
basis.
For the period ended September 29, 1996, sales to two customers represented
63% of net sales.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. Automotive manufacturers comprise
a significant portion of the Company's customer base. Trade receivables from the
Company's two largest customers represented approximately 64% of the Company's
total trade receivables as of September 29, 1996.
The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral.
INVENTORIES
The Company values all inventories at the lower of cost, using the last-in,
first-out (LIFO) method of accounting, or market. Effective January 1, 1996 the
Company changed its LIFO method to more accurately reflect LIFO costs. The
cumulative effect of this accounting change on periods prior to January 1, 1996
resulted in a $149,551 decrease in net income in 1996. The effect of this change
on the results of operations in 1996 was to decrease net income before
cumulative effect of change in accounting principles by approximately $415,000.
Under the LIFO method, quantity increments are valued at the most recent
purchase price and base quantities are valued in base year dollars. Had the FIFO
method been used for all inventories, inventories would have been increased by
$670,770 at September 29, 1996.
DEPRECIATION AND AMORTIZATION
Depreciable property, stated at cost, is depreciated over the estimated
useful lives of the assets, using principally accelerated methods as follows:
<TABLE>
<S> <C>
Buildings and improvements.................................. 15 to 39 years
Machinery and equipment..................................... 5 to 7 years
Furniture and fixtures...................................... 3 to 7 years
</TABLE>
Amortizable assets are amortized over a 15 year period.
F-44
<PAGE> 130
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. LINE OF CREDIT
The Company has a line of credit with a bank. The Company may borrow up to
$11,000,000 with interest at prime rate plus 1/2% (8.25% at September 29, 1996).
Borrowings under this line of credit are secured by trade accounts receivable
and total $543,803 at September 29, 1996.
3. LONG-TERM DEBT
Long-term debt consists of the following at September 29, 1996:
<TABLE>
<S> <C>
Demand Limited Obligation Revenue Bonds, interest at a
variable rate (4% at September 29, 1996), payable in
annual installments ranging from $160,000 to $630,000 plus
interest beginning December 1996 through 2009,
collateralized by a letter of credit and a first security
interest in substantially all assets of the Company....... $ 5,000,000
Term loan, interest at 9.93%, payable in monthly
installments of $41,667 plus interest through November
2001, collateralized by all assets of the Company......... 2,541,666
Subordinated notes payable to stockholders, interest at 18%,
collateralized by a real estate mortgage and a second
security interest in all property of the Company.......... 500,000
Mortgage note, interest at 8.5%, payable in monthly
installments of $10,417 from August 1995 through July 1998
and $12,500 from August 1998 through July 1999,
collateralized by the related real estate................. 1,154,598
Term loan, interest at 8.25%, payable in monthly
installments of $25,000 plus interest through February
2000, collateralized by trade accounts receivable,
inventories, real estate, machinery and equipment and
furniture and fixtures.................................... 1,000,000
Term loan, interest at 9%, payable in monthly installments
of $3,036 through August 2002, collateralized by
equipment................................................. 212,501
Capital lease obligation, interest at 10%, payable in
monthly installments of $4,827 through March 1999,
collateralized by equipment............................... 181,206
Notes payable, other........................................ 187,866
-----------
10,777,837
Less -- Current portion..................................... 1,595,000
-----------
$ 9,182,837
===========
</TABLE>
The following is a summary of future principal payments of long-term debt
at September 29, 1996:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
- ---------- -----------
<S> <C>
1997........................................................ $ 1,595,000
1998........................................................ 1,604,824
1999........................................................ 2,380,120
2000........................................................ 1,274,832
2001........................................................ 1,180,307
Thereafter.................................................. 2,742,754
-----------
$10,777,837
===========
</TABLE>
The term loan agreements and line of credit (see Note 2) contain various
restrictive covenants which, among other restrictions, require certain levels of
stockholders' investment, net income, debt to equity and working capital.
F-45
<PAGE> 131
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. LONG-TERM DEBT (CONTINUED)
The fair value of long-term debt has been estimated using the expected
future cash flows discounted at market interest rates. The carrying amount of
long-term debt approximates fair value.
4. WORKERS' COMPENSATION INSURANCE
The Company has a self-insurance program to provide statutory workers'
compensation coverage. Reinsurance coverage is carried for risks in excess of
$300,000 per occurrence and $1,590,833 in aggregate for the two year period
ending July 1, 1998. The Company incurred workers' compensation expense of
approximately $388,000 during the period ended September 29, 1996.
5. INCOME TAXES
The Company has elected to be treated as a Small Business Corporation under
Subchapter S of the Internal Revenue Code. Therefore, taxable income of the
Company is included in the taxable income of the individual stockholders, and no
provision for Federal income taxes has been included in the statement of
operations.
6. STOCK REPURCHASE AGREEMENTS
Under the provisions of agreements between the Company and its
stockholders, the Company has agreed, among other things, to purchase at an
agreed value the shares held by any stockholder in the event of his death or
termination of employment. The agreements are partially funded by both term and
whole life insurance policies on the lives of the stockholders.
7. EMPLOYEE CASH AND STOCK BONUS PLAN
Effective April 11, 1995, the Board of Directors approved a Cash and Stock
Bonus Plan (Stock Plan). The Stock Plan provided for a fixed percentage of
pre-tax operating income to be set aside and distributed in the form of cash and
common stock to certain key employees of the Company, as determined by the Board
of Directors. Stock awards vested upon three years employment from the date of
grant. The Stock Plan also provided for additional awards upon sale or merger of
the Company.
On June 18, 1996, as part of a settlement with key employees to terminate
the Stock Plan, the Company granted to certain key employees 9,963 shares of
common stock, valued at $675,000, plus an additional cash payment of
approximately $525,000. The Stock Plan was terminated on June 18, 1996.
Effective January 1, 1996, the Board of Directors approved a Key Employee
Cash Bonus Plan (Cash Plan). The Cash Plan provides for a fixed percentage of
pre-tax operating income to be set aside and paid in cash to certain key
employees of the Company, as determined annually by the Board of Directors. The
Company has accrued approximately $668,000 for expected payments under this plan
as of September 29, 1996.
8. TRANSACTIONS WITH RELATED PARTIES
The Company purchases certain tooling from an affiliated entity. These
purchases totaled approximately $2,726,026 for the period ended September 29,
1996.
The Company leases a manufacturing facility from an affiliated entity. The
lease requires monthly payments of $13,500 through August 1999.
F-46
<PAGE> 132
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
9. ENVIRONMENTAL RESERVE
During 1993, the Company became aware of the need to perform some
environmental clean-up at one of its plants. The Company is in the process of
identifying the required clean-up costs and performing the necessary clean-up.
The Company has a reserve of $100,000 as of September 29, 1996 which reflects
the Company's best estimate of the remaining clean-up cost. The Company will
continue to review the adequacy of the reserve on a periodic basis and make such
adjustments to the reserve as may then be appropriate.
10. BENEFIT PLAN
Effective January 1, 1989, the Company adopted the Molmec, Inc. MI Choice
Retirement and Savings 401k Plan and Trust (the Plan).
All full-time employees of the Company are eligible to participate in the
Plan once they have completed one year of credited service and have attained age
eighteen.
The Plan is a defined contribution plan, qualified as a profit sharing plan
under Section 401(k) of the Internal Revenue Code. The Plan allows eligible
employees to contribute up to 15% of their compensation not to exceed certain
limits set forth by the Internal Revenue Service. The Plan provides that the
Company may make an annual matching contribution of up to $1,000 per
participant. Effective January 1, 1996, the Company amended the Plan to limit
the annual matching contribution to years in which the Company generates net
income.
Contributions made by the Company amounted to approximately $80,000 for the
period ended September 29, 1996.
11. SUBSEQUENT EVENT
Subsequent to September 29, 1996 the Company sold substantially all of its
assets and liabilities.
F-47
<PAGE> 133
MOLMEC, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1 THROUGH SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Net sales:
Molding................................................... $60,592,568
Tooling................................................... 5,840,730
-----------
66,433,298
-----------
Cost of sales:
Material.................................................. 14,349,038
Component costs........................................... 11,348,953
Direct labor.............................................. 4,183,033
Manufacturing and subcontracting expenses................. 15,170,406
Tooling................................................... 5,324,228
-----------
50,375,658
-----------
Gross profit................................................ 16,057,640
-----------
OPERATING EXPENSES:
Selling and administrative expenses......................... 8,686,280
Stock plan compensation expense............................. 1,200,000
-----------
Total operating expenses.................................... 9,886,280
-----------
Operating income............................................ 6,171,360
Interest expense............................................ 1,000,879
-----------
Net income before cumulative effect of change in accounting
principle................................................. 5,170,481
Cumulative effect of change in accounting principle......... (149,551)
-----------
Net income.................................................. $ 5,020,930
===========
</TABLE>
The notes to the financial statements should be read in conjunction with this
statement.
F-48
<PAGE> 134
MOLMEC, INC.
STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE PERIOD FROM JANUARY 1 THROUGH SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED NOTES
STOCK CAPITAL EARNINGS RECEIVABLE TOTAL
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995.......... $100,736 $209,239 $3,526,870 $(160,543) $3,676,302
Sale of common stock................ 9,963 665,037 -- -- 675,000
Net income.......................... -- -- 5,020,930 -- 5,020,930
-------- -------- ---------- --------- ----------
Balance at September 29, 1996......... $110,699 $874,276 $8,547,800 $(160,543) $9,372,232
======== ======== ========== ========= ==========
</TABLE>
The notes to the financial statements should be read in conjunction with this
statement.
F-49
<PAGE> 135
MOLMEC, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1 THROUGH SEPTEMBER 29, 1996
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 5,020,930
Adjustments to reconcile net income to net cash provided by
operations --
LIFO credit............................................... (347,154)
Depreciation and amortization............................. 1,768,799
Distribution of stock to employees (see note 7)........... 675,000
Cumulative effect of change in accounting principle....... 149,551
Source (use) of cash resulting from change in assets and
liabilities --
Accounts receivable, net............................... (831,051)
Inventories............................................ 674,870
Prepaid tooling........................................ 359,346
Prepaid expenses and other............................. (228,568)
Other assets........................................... 8,759
Accounts payable....................................... 170,185
Accrued liabilities, accrued compensation and other.... 665,141
-----------
NET CASH PROVIDED BY OPERATIONS...................... 8,085,808
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment......... 2,500
Purchases of property, plant and equipment.................. (1,045,572)
-----------
NET CASH USED IN INVESTING ACTIVITIES................ (1,043,072)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under line of credit agreement............... (5,280,768)
Proceeds from issuance of long-term debt.................... 37,458
Repayment of long-term debt................................. (1,799,426)
-----------
NET CASH USED IN FINANCING ACTIVITIES................ (7,042,736)
-----------
Change in cash and cash equivalents......................... --
Cash and cash equivalents, beginning of period.............. --
-----------
Cash and cash equivalents, end of period.................... $ --
===========
SUPPLEMENTAL CASH FLOW INFORMATION --
Cash paid for interest...................................... $ 1,075,420
===========
</TABLE>
The notes to the financial statements should be read in conjunction with this
statement.
F-50
<PAGE> 136
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS OF THE COMPANY
Molmec, Inc. (the Company) is engaged in the manufacturing and assembly of
plastic parts primarily for the domestic automotive industry. The Company grants
credit on standard industry terms.
For the period ended September 29, 1996, sales to two customers represented
63% of net sales.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATION OF CREDIT RISK
Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade receivables. Automotive manufacturers comprise
a significant portion of the Company's customer base. Trade receivables from the
Company's two largest customers represented approximately 64% of the Company's
total trade receivables as of September 29, 1996.
The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral.
INVENTORIES
The Company values all inventories at the lower of cost, using the last-in,
first-out (LIFO) method of accounting, or market. Effective January 1, 1996 the
Company changed its LIFO method to more accurately reflect LIFO costs. The
cumulative effect of this accounting change on periods prior to January 1, 1996
resulted in a $149,551 decrease in net income in 1996. The effect of this change
on the results of operations in 1996 was to decrease net income before
cumulative effect of change in accounting principles by approximately $415,000.
Under the LIFO method, quantity increments are valued at the most recent
purchase price and base quantities are valued in base year dollars. Had the FIFO
method been used for all inventories, inventories would have been increased by
$670,770 at September 29, 1996.
DEPRECIATION AND AMORTIZATION
Depreciable property, stated at cost, is depreciated over the estimated
useful lives of the assets, using principally accelerated methods as follows:
<TABLE>
<S> <C>
Buildings and improvements.................................. 15 to 39 years
Machinery and equipment..................................... 5 to 7 years
Furniture and fixtures...................................... 3 to 7 years
</TABLE>
Amortizable assets are amortized over a 15 year period.
F-51
<PAGE> 137
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. LINE OF CREDIT
The Company has a line of credit with a bank. The Company may borrow up to
$11,000,000 with interest at prime rate plus 1/2% (8.25% at September 29, 1996).
Borrowings under this line of credit are secured by trade accounts receivable
and total $543,803 at September 29, 1996.
3. LONG-TERM DEBT
Long-term debt consists of the following at September 29, 1996:
<TABLE>
<S> <C>
Demand Limited Obligation Revenue Bonds, interest at a
variable rate (4% at September 29, 1996), payable in
annual installments ranging from $160,000 to $630,000 plus
interest beginning December 1996 through 2009,
collateralized by a letter of credit and a first security
interest in substantially all assets of the Company....... $ 5,000,000
Term loan, interest at 9.93%, payable in monthly
installments of $41,667 plus interest through November
2001, collateralized by all assets of the Company......... 2,541,666
Subordinated notes payable to stockholders, interest at 18%,
collateralized by a real estate mortgage and a second
security interest in all property of the Company.......... 500,000
Mortgage note, interest at 8.5%, payable in monthly
installments of $10,417 from August 1995 through July 1998
and $12,500 from August 1998 through July 1999,
collateralized by the related real estate................. 1,154,598
Term loan, interest at 8.25%, payable in monthly
installments of $25,000 plus interest through February
2000, collateralized by trade accounts receivable,
inventories, real estate, machinery and equipment and
furniture and fixtures.................................... 1,000,000
Term loan, interest at 9%, payable in monthly installments
of $3,036 through August 2002, collateralized by
equipment................................................. 212,501
Capital lease obligation, interest at 10%, payable in
monthly installments of $4,827 through March 1999,
collateralized by equipment............................... 181,206
Notes payable, other........................................ 187,866
-----------
10,777,837
Less -- Current portion..................................... 1,595,000
-----------
$ 9,182,837
===========
</TABLE>
The following is a summary of future principal payments of long-term debt
at September 29, 1996:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
---------- -----------
<S> <C>
1997...................................................... $ 1,595,000
1998...................................................... 1,604,824
1999...................................................... 2,380,120
2000...................................................... 1,274,832
2001...................................................... 1,180,307
Thereafter................................................ 2,742,754
-----------
$10,777,837
===========
</TABLE>
The term loan agreements and line of credit (see Note 2) contain various
restrictive covenants which, among other restrictions, require certain levels of
stockholders' investment, net income, debt to equity and working capital.
F-52
<PAGE> 138
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. LONG-TERM DEBT (CONTINUED)
The fair value of long-term debt has been estimated using the expected
future cash flows discounted at market interest rates. The carrying amount of
long-term debt approximates fair value.
4. WORKERS' COMPENSATION INSURANCE
The Company has a self-insurance program to provide statutory workers'
compensation coverage. Reinsurance coverage is carried for risks in excess of
$300,000 per occurrence and $1,590,833 in aggregate for the two year period
ending July 1, 1998. The Company incurred workers' compensation expense of
approximately $310,000 during the period ended September 29, 1996.
5. INCOME TAXES
The Company has elected to be treated as a Small Business Corporation under
Subchapter S of the Internal Revenue Code. Therefore, taxable income of the
Company is included in the taxable income of the individual stockholders, and no
provision for Federal income taxes has been included in the statement of
operations.
6. STOCK REPURCHASE AGREEMENTS
Under the provisions of agreements between the Company and its
stockholders, the Company has agreed, among other things, to purchase at an
agreed value the shares held by any stockholder in the event of his death or
termination of employment. The agreements are partially funded by both term and
whole life insurance policies on the lives of the stockholders.
7. EMPLOYEE CASH AND STOCK BONUS PLAN
Effective April 11, 1995, the Board of Directors approved a Cash and Stock
Bonus Plan (Stock Plan). The Stock Plan provided for a fixed percentage of
pre-tax operating income to be set aside and distributed in the form of cash and
common stock to certain key employees of the Company, as determined by the Board
of Directors. Stock awards vested upon three years employment from the date of
grant. The Stock Plan also provided for additional awards upon sale or merger of
the Company.
On June 18, 1996, as part of a settlement with key employees to terminate
the Stock Plan, the Company granted to certain key employees 9,963 shares of
common stock, valued at $675,000, plus an additional cash payment of
approximately $525,000. The Stock Plan was terminated on June 18, 1996.
Effective January 1, 1996, the Board of Directors approved a Key Employee
Cash Bonus Plan (Cash Plan). The Cash Plan provides for a fixed percentage of
pre-tax operating income to be set aside and paid in cash to certain key
employees of the Company, as determined annually by the Board of Directors. The
Company has accrued approximately $668,000 for expected payments under this plan
as of September 29, 1996.
8. TRANSACTIONS WITH RELATED PARTIES
The Company purchases certain tooling from an affiliated entity. These
purchases totaled approximately $1,691,186 for the period ended September 29,
1996.
The Company leases a manufacturing facility from an affiliated entity. The
lease requires monthly payments of $13,500 through August 1999.
F-53
<PAGE> 139
MOLMEC, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
9. ENVIRONMENTAL RESERVE
During 1993, the Company became aware of the need to perform some
environmental clean-up at one of its plants. The Company is in the process of
identifying the required clean-up costs and performing the necessary clean-up.
The Company has a reserve of $100,000 as of September 29, 1996 which reflects
the Company's best estimate of the remaining clean-up cost. The Company will
continue to review the adequacy of the reserve on a periodic basis and make such
adjustments to the reserve as may then be appropriate.
10. BENEFIT PLAN
Effective January 1, 1989, the Company adopted the Molmec, Inc. MI Choice
Retirement and Savings 401k Plan and Trust (the Plan).
All full-time employees of the Company are eligible to participate in the
Plan once they have completed one year of credited service and have attained age
eighteen.
The Plan is a defined contribution plan, qualified as a profit sharing plan
under Section 401(k) of the Internal Revenue Code. The Plan allows eligible
employees to contribute up to 15% of their compensation not to exceed certain
limits set forth by the Internal Revenue Service. The Plan provides that the
Company may make an annual matching contribution of up to $1,000 per
participant. Effective January 1, 1996, the Company amended the Plan to limit
the annual matching contribution to years in which the Company generates net
income.
Contributions made by the Company amounted to approximately $80,000 for the
period ended September 29, 1996.
11. SUBSEQUENT EVENT
Subsequent to September 29, 1996 the Company sold substantially all of its
assets and liabilities.
F-54
<PAGE> 140
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS OFFERING MEMORANDUM, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASER. THIS OFFERING
MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER
TO BUY, ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER 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 OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN 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>
Prospectus Summary.................... 1
Risk Factors.......................... 10
Use of Proceeds of New Notes.......... 14
Capitalization........................ 15
The Exchange Offer.................... 15
Unaudited Pro Forma Consolidated
Financial Information............... 23
Notes to Unaudited Pro Forma Condensed
Consolidated Financial
Information......................... 25
Selected Financial Data -- LDM........ 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations -- LDM................ 27
Selected Financial Data -- Molmec..... 30
Management's Discussion and Analysis
of Financial Condition and Results
of Operations -- Molmec............. 31
Business.............................. 33
Management............................ 44
Beneficial Ownership of Capital
Stock............................... 46
Certain Transactions.................. 46
Description of New Notes.............. 47
Description of Senior Debt............ 72
Certain U.S. Federal Income Tax
Considerations Relating to the
Exchange Offer...................... 74
Old Notes; Registration Rights........ 76
Book Entry; Delivery and Form......... 77
Plan of Distribution.................. 79
Legal Matters......................... 80
Experts............................... 80
Index to Financial Statements......... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$110,000,000
LDM LOGO
LDM TECHNOLOGIES, INC.
10 3/4% SENIOR SUBORDINATED
NOTES DUE 2007, SERIES B
------------
PROSPECTUS
------------
OFFER TO EXCHANGE 10 3/4%
SENIOR SUBORDINATED NOTES
DUE 2007, SERIES A FOR 10 3/4%
SENIOR SUBORDINATED NOTES
DUE 2007, SERIES B
, 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 141
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") govern the indemnification of officers, directors and other persons. In
this regard, the MBCA provides for indemnification of directors and officers
acting in good faith and in a manner they reasonably believe to be in, or not
opposed to, the best interest of the Company or its shareholders (and, with
respect to a criminal proceeding, if they have no reasonable cause to believe
their conduct to be unlawful). Such indemnification may be made against (a)
expenses (including attorney's fees), judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred in connection with any
threatened, pending or completed action, suit or proceeding (other than an
action by, or in the right of, the Company) arising by reason of the fact that
they were serving as a director, officer, employee or agent of the Company (or
some other entity at the Company's request), and (b) expenses (including
attorney's fees) and amounts paid in settlement actually and reasonably incurred
in connection with a threatened, pending or completed action or suit by, or in
the right of, the Company, unless the director or officer is found liable to the
Company and an appropriate court does not determine that he or she is
nevertheless fairly and reasonably entitled to indemnification. The MBCA
requires indemnification for expenses to the extent that a director or office is
successful in defending against any such action, suit or proceeding, and
otherwise requires in general that the indemnification provided for in (a) and
(b) above be made only on a determination by a majority vote of a quorum of the
Board of Directors comprised of members who were not parties to or threatened to
be made parties to such action. In certain circumstances, the MBCA further
permits advances to cover such expenses before a final determination that
indemnification is permissible, upon receipt of (i) a written affirmation by the
director or officer of his or her good faith belief that he or she has met the
applicable standard of conduct set forth in the MBCA, and (ii) a written
undertaking by or on behalf of the director or officer to repay such amounts
unless it shall ultimately be determined that he or she is entitled to
indemnification and a determination that the facts then known to those making
the advance would not preclude indemnification. The Company's Articles of
Incorporation do not provide indemnification rights.
The Company's Bylaws contain indemnification provisions which provide that
the Company 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
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he or she is or was a director, officer or employee of the
Company or is, or while serving as such a director, officer or employee was,
serving at the request of the Company as a director, officer, employee or agent
of another corporation, against all liability and reasonable expenses (including
attorney's fees), judgments, penalties, fees and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to officers and directors pursuant to the foregoing provisions,
the Company has been informed 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.
II-1
<PAGE> 142
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------- ----------------------- ----------
<C> <S> <C>
3.1 Articles of Incorporation of LDM Technologies, Inc. (the
"Company"), as amended
3.2 Articles of Organization of LDM Holdings, L.L.C. ("LDM
Holdings")
3.3 Certificate of Limited Partnership of LDM Canada Limited
Partnership ("LDM Partnership"), as amended
3.4 Articles of Incorporation of Arrow Molded Plastics of
Canada, Inc., Certificate of Incorporation of 3001422 Nova
Scotia Company, and Certificates of Status, of Registration,
and of Amalgamation for LDM Technologies Company ("LDM
Canada")
3.5 By-laws of the Company
3.6 Operating Agreement of LDM Holdings
3.7 Amended and Restated Limited Partnership Agreement of LDM
Partnership
3.8 Articles of Association of LDM Canada
4.1 Indenture dated as of January 15, 1997 by and among the
Company, LDM Holdings, LDM Partnership, LDM Canada and IBJ
Schroder Bank & Trust Company, as Trustee
4.2 Form of 10 3/4% Senior Subordinated Note Due 2007, Series B
4.3 Form of Guarantee
5 Opinion of Dickinson, Wright, Moon, Van Dusen and Freeman
10.1 Purchase Agreement dated November 4, 1996, as amended on
November 27, 1996, December 23, 1996 and January 21, 1997
between the Company and Molmec, Inc.
10.2 Loan and Security Agreement dated as of January 22, 1997 by
and between the Company, as Borrower, and BankAmerica
Business Credit, Inc. ("BankAmerica"), as Agent for the
Lenders
10.3 Pledge and Security Agreements dated as of January 22, 1997
between the Company, LDM Holdings, LDM Partnership, and LDM
Holding Canada, Inc., as Pledgors, in favor of BankAmerica,
as Agent for the Lenders
10.4 Intellectual Property Security Agreement dated as of January
22, 1997 made by the Company in favor of BankAmerica, as
Agent for Lenders
10.5 Registration Rights Agreement dated as of January 22, 1997
between the Company, LDM Holdings, LDM Partnership, LDM
Canada and Smith Barney, Inc.
10.6 Interim Stock Redemption Agreement dated April 22, 1996
between the Company and Richard J. Nash, Michael Polselli,
and Joe Balous
10.7 Stockholder Consent Agreement dated June 10, 1996 between
the Company, GL Industries of Indiana, Inc., Lawrence M.
Luke, and Lawrence M. Luke as Trustee of Revocable Living
Trust Dated March 22, 1996
10.8 Agreement for Exchange of Stock dated July 25, 1996, as
amended on September 27, 1996 between the Company and
Michael Polselli
10.9 Promissory Note dated September 28, 1996 between the Company
and Michael Polselli
10.10 Debt Subordination Agreement dated September 28, 1996
between The Huntington National Bank and Michael Polselli
10.11 Production and Non-Competition Agreement dated October 31,
1996 between the Company and DDM Plastics, Inc.
10.12 Stock Purchase Agreement dated as of December 31, 1996 among
Geiger technic, Inc., the Company and others
</TABLE>
II-2
<PAGE> 143
<TABLE>
<C> <S> <C>
10.13 Lease Agreement dated January 7, 1986, as amended on September 8, 1986 and December 1, 1994
between Arrow Moulded Plastics, Inc., as lessee, and C.J. Edwards Company, Inc., as lessor
10.14 First Amended and Restated Lease Agreement dated April 28, 1993 between G.L. Industries of
Indiana, Inc., as lessee, and CPC Associates, Inc., lessor
10.15 Lease Agreement dated August 14, 1984, as amended on August 13, 1994 and June 1, 1996 between
the Company, as lessee, and M.O.L. Investments, as assigned by Molmec, Inc. to the Company on
January 21, 1997
10.16 Lease Agreement dated September 1, 1996 between the Company, as lessee, and Richard J. Nash,
Susanna Nash, and Joe Balous as Trustee of the Joe Balous Revocable Living Trust, as lessors
10.17 Loan Agreement dated as of December 1, 1994 between Molmec, Inc. and the Michigan Strategic
Fund
10.18 Amended and Restated Credit Facility and Security Agreement, Accounts Receivable, Inventory
and Equipment dated March 1, 1996 between G.L. Industries of Indiana, Inc. and Keybank
National Association
10.19 Employment Agreement dated as of January 21, 1997 between the Company and Barry A. Kempa
12 Statement of Ratio of Earnings to Fixed Charges
12.1 Pro Forma Computation of Ratio of Earnings to Fixed Charges
21 Subsidiaries and Affiliates of the Company
23.1 Consent of Dickinson, Wright, Moon, Van Dusen & Freeman (included in Exhibit 5)
23.2 Consent of Ernst & Young for the Company
23.3 Consent of Arthur Andersen for Molmec
25 Statement of Eligibility and Qualification, Form T-1, of IBJ Schroder Bank & Trust Company
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
The Registrant hereby agrees to furnish to the Securities and Exchange
Commission, upon request, copies of the following Indentures relating to the
issuance of revenue bonds, which Indentures define the rights of holders of
long-term debt of the Registrant:
Trust Indenture dated as of December 1, 1994 between the Michigan
Strategic Fund and Society Bank Michigan
Trust Indenture dated as of April 1, 1995 between Arrow N.A., Inc. and
The Huntington National Bank
(b) Financial Statement Schedules
None.
All financial statement schedules have been omitted since the required
information is not present, is not present in amounts sufficient to require
submission of the schedule or because the required information is included in
the financial statements or notes thereto.
II-3
<PAGE> 144
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 20 or otherwise, the
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 the
registrant of expenses incurred or paid by a director, officer or controlling
person of the 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, the 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.
(b) The undersigned registrant hereby undertakes 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 the registration statement through the date
of responding to the request.
(c) The undersigned registrant hereby undertakes 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 the registration statement when it became effective.
II-4
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Auburn
Hills, State of Michigan, on the 13th day of February, 1997.
LDM TECHNOLOGIES, INC.
By: /s/ RICHARD J. NASH
------------------------------------
Richard J. Nash
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on February 13, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ RICHARD J. NASH Director, President and Chief Executive Officer
- ------------------------------------------------ (principal executive officer)
Richard J. Nash
/s/ JOE BALOUS Chairman of the Board and Secretary
- ------------------------------------------------
Joe Balous
/s/ GARY E. BORUSHKO Chief Financial Officer (principal financial
- ------------------------------------------------ officer)
Gary E. Borushko
/s/ JOSEPH E. BLAKE Director of Finance (principal accounting officer)
- ------------------------------------------------
Joseph E. Blake
</TABLE>
II-5
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Auburn
Hills, State of Michigan, on the 13th day of February, 1997.
LDM HOLDINGS, L.L.C.
By: LDM TECHNOLOGIES, INC.
Its: Member
By: /s/ RICHARD J. NASH
----------------------------------
Richard J. Nash
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on February 13, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ RICHARD J. NASH Director, President and Chief Executive Officer
- ------------------------------------------------ (principal executive officer)
Richard J. Nash
/s/ GARY E. BORUSHKO Principal Financial and Accounting Officer
- ------------------------------------------------
Gary E. Borushko
</TABLE>
II-6
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Auburn
Hills, State of Michigan, on the 13th day of February, 1997.
LDM CANADA LIMITED PARTNERSHIP
By: LDM Holdings, L.L.C.
------------------------------------
Its: general partner
By: LDM Technologies, Inc.
------------------------------------
Its: Member
By: /s/ RICHARD J. NASH
------------------------------------
Richard J. Nash
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on February 13, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ GARY E. BORUSHKO Principal Financial and Accounting Officer
- ------------------------------------------------
Gary E. Borushko
</TABLE>
II-7
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Auburn
Hills, State of Michigan, on the 13th day of February, 1997.
LDM TECHNOLOGIES COMPANY
By: /s/ RICHARD J. NASH
------------------------------------
Richard J. Nash
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on February 13, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ RICHARD J. NASH Director, President and Chief Executive Officer
- ------------------------------------------------ (principal executive officer)
Richard J. Nash
/s/ JOE BALOUS Chairman of the Board and Secretary
- ------------------------------------------------
Joe Balous
/s/ GARY E. BORUSHKO Chief Financial Officer
- ------------------------------------------------ (principal financial and accounting officer)
Gary E. Borushko
</TABLE>
II-8
<PAGE> 1
C&S-500 (Rev. 1-84) EXHIBIT 3.1
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
(FOR BUREAU USE ONLY) FILED DATE RECEIVED
JAN 15 1985 JAN 1985
ADMINISTRATOR
MICHIGAN DEPT. OF COMMERCE
CORPORATION & SECURITIES BUREAU
EFFECTIVE DATE:
CORPORATION IDENTIFICATION NUMBER 122-088
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:
LDM INDUSTRIES 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:
1. Common Shares 100,000 Par Value Per Share $ 0.10 cents.
------------------
Preferred Shares Par Value Per Share $
--------------- -------------
and/or shares without par value as follows:
2. Common Shares Stated Value Per Share $
------------------- -------------
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 SHARES SHALL BE ON ONE (1) CLASS, COMMON, AND SHALL BE ENTITLED
TO ONE (1) VOTE PER SHARE AND HAVE EQUAL RIGHTS TO DIVIDENDS AND DISTRIBUTION
UPON LIQUIDATION. NO EXISTING OR FUTURE SHAREHOLDER SHALL HAVE ANY PRE-EMPTIVE
RIGHTS AND THERE SHALL BE NO RESTRICTIONS UPON TRANSFER.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 2
ARTICLE IV
1. The address of the registered office is:
23501 Mound Road Warren, Michigan 48091
- ---------------------------------------------------- ------------
(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:
Richard J. Nash
- ------------------------------------------------------------------------------
ARTICLE V
The name(s) and address(es) of the incorporator(s) is (are) as follows:
Name Residence or Business Address
Richard J. Smith 23501 Mound Road Warren, MI 48091
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 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.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 3
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 15 day of January, 1985.
Richard J. Smith
- ----------------------------------- -------------------------------------
- ----------------------------------- -------------------------------------
- ----------------------------------- -------------------------------------
- ----------------------------------- -------------------------------------
- ----------------------------------- -------------------------------------
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 4
NOTE: THE FOLLOWING ANNUAL REPORT HAS BEEN INCLUDED WITHIN
THE RECORD FOR THIS CORPORATION DUE TO THE FILING OF A
CHANGE OF REGISTERED OFFICE AND/OR RESIDENT AGENT ON THE
ANNUAL REPORT. THE PRESENCE OF THIS REPORT IN NO WAY
IMPLIES THAT THE REPORT ITSELF, OTHER THAN THE INFORMATION
RELATED TO THE CHANGE OF REGISTERED OFFICE AND/OR RESIDENT
AGENT, HAS BEEN ACCEPTED BY THE CORPORATION AND SECURITIES
BUREAU.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 5
C&S 2500 (REV 1087)
MICHIGAN DEPARTMENT
OF COMMERCE
FOR BUREAU USE ONLY 894E O202 0117 P-MAR $15.00
894E 0202 0117 ORG&FI $5.00
1988 MICHIGAN ANNUAL REPORT - PROFIT CORPORATIONS
(Please read instructions before completing form)
This report shall be filed by all profit corporations before May 16,
1988 showing the corporate condition at the close of business on December 31
or upon the date of the close of the latest fiscal year next preceding the time
for filing. The report is required in accordance with the provisions of
Section 911, Act 284, Public Acts of 1972, as amended. Penalties may be
assessed under the Act for failure to file.
<TABLE>
<S><C> Insert
This Report Must Report of Condition on Corporation
be Filed before May 16, 1988 December 31, 1987 or 3/31/88 Number 122088
1. Corporate Name
L D M INDUSTRIES INC. (7)
1250 Maplelawn 8
Troy, MI 48084 9
2. Resident Agent - do not alter preprinted information 4. Federal 5.Term of
in this item or item 3 Employer No. Existence
Richard J. Nash 38-2690171 PERPETUAL
3. Registered Office Address in 6. Incorporation Date 7. State of Incorporation
Michigan - No., Street, City, Zip 01/15/1985 MI
23501 MOUND RD. 8. Date of Admittance 9. Act Under Which Incorporated
WARREN 48091 (Foreign Corp.) (If other than 1931, P.A.
327 or 1972, P.A. 284)
10.(DOMESTIC CORPORATIONS ONLY) COMPLETE THIS SECTION ONLY IF THE RESIDENT AGENT
IN ITEM 2 OR THE REGISTERED OFFICE IN ITEM 3 HAS CHANGED
a. The name of the successor resident agent is:
------------------------------------------------
b. The address of the registered office is changed to:
1250 Maplelawn Troy , Michigan 48084
- ---------------------------------------------------------------------- -------------
(Street Address) (City) (ZIP Code)
c. The mailing address of the registered office if different than above is:
, Michigan
------------------------------------------------------------------- ----------
(Address) (City) (ZIP Code)
ADD $5.00 TO THE $15.00 ANNUAL REPORT FILING FEE IF THIS SECTION IS COMPLETED FILED BY DEPARTMENT JAN 20 '89
11. Principal business office, and, if different, principal place of business in Michigan:
1250 Maplelawn, Troy, MI 48084
12. Nature and type of business in which corporation is engaged: holding company
13. a. Name of parent corporation:
b. List any subsidiary corporations: Industrial Machining Corporation of Arkansas;
LDM Sales Associates, Inc.; LOR, Inc.; OBM, Inc.
14. Corporate Stock Report - Total Authorized Capital Stock (Not merely outstanding)
a. Shares With No. of Shares Authorized Par-Value Total Authorized Amount Amount
Par-Value With Par-Value Per Share Capital Subscribed Paid-in
COMMON 100,000 $0.100 $10000.000 $ $ 70.00
$ $
$ $
$ $
b. Shares Without No. of Shares Authorized Stated Value No. of Shares Amount Amount
Par-Value Without Par Value Per Share Subscribed or Issued Subscribed Paid-in
$ $
$ $
0123 1989 3172 0169 JAN 17 1989
</TABLE>
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 6
15. The following is a statement of assets and liabilities as shown by the
books of the corporation on December 31, 1987 or 3/31/88 (close of
fiscal year next preceding May 15, 1988) listed separately as to property
within and without Michigan. The balance sheet of a Michigan corporation
must be the same balance sheet as furnished to shareholders.
<TABLE>
<CAPTION>
WITHIN WITHOUT
ASSETS TOTAL MICHIGAN MICHIGAN LIABILITIES AND EQUITY
<S> <C> <C> <C>
Cash $338,660 Notes and Accounts Payable, Trade $775,000
Notes and Accounts Receivable 66,707 Notes and Accounts Payable, Other
Inventories Accrued Expenses 198,768
Prepaid Expenses 81,220 Long Term Indebtedness 485,715
Non-current Notes and Reserves and Contingent
Accounts Receivable Liabilities
Land Deferred Income Tax
Depreciable Assets
Machinery and Equipment 793,837
Furniture and Fixtures
Buildings Stockholders Equity
Other Common Stock (par value) 70
Preferred Stock (par value)
Less Depreciation 295,725 No Par Value Stock
(state value)
Net Depreciable Assets 498,112 Additional Paid-In Capital 109,752
Investments Retained Earnings (deficit) 222,795
Investments in Subsidiaries 482,392 Other
Other Investments 325,009 Total Stockholders Equity 332,617
Other Assets --------- ----------
TOTAL ASSETS $1,792,100 TOTAL LIABILITIES & EQUITY $1,792,100
========== ==========
</TABLE>
<TABLE>
<S><C>
16. Corporate Officers and Directors
- ------------------------------------------------------------------------------------
OFFICE NAME, STREET & NUMBER, CITY, STATE & ZIP CODE
- ------------------------------------------------------------------------------------
President Richard J. Nash, 1250 Maplelawn, Troy, MI 48084
- ------------------------------------------------------------------------------------
Secretary Michael Polselli, 1250 Maplelawn, Troy, MI 48084
-------------------------------------------------------------------
If Different
than President Treasurer Michael Polselli, 1250 Maplelawn, Troy, MI 48084
-------------------------------------------------------------------
Vice-President
- ------------------------------------------------------------------------------------
Director Joe Balous, 1250 Maplelawn, Troy, MI 48084
-------------------------------------------------------------------
If Different
than Officers Director
-------------------------------------------------------------------
Director
-------------------------------------------------------------------
Director
17. Is 51% or more of this corporation owned and controlled
by woman/women? / / Yes /xx/ No
(A response to this question is voluntary and will be used for statistical
purposes only).
18. The corporation states that the address of its registered office and the
address of the business office of its resident agent are identical. Any
changes were authorized by resolution duly adopted by its board of
directors. After filing, this report is open to reasonable inspection by
the public pursuant to Section 915, Act 284, Public Acts of 1972, as
amended.
Filing Fee $15.00 (without change of agent or
registered office) Signed this 9th day of January, 1989.
Filing Fee $20.00 (with change of agent or
registered office in Item 10)
MAKE REMITTANCE PAYABLE TO: "STATE OF MICHIGAN" By Michael Polselli
----------------------------------------------------
(Signature of Authorized Officer or Agent)*
Michael Polselli, Secretary
----------------------------------------------------
RETURN TO: (Type or Print Name and Title)
DEPARTMENT OF COMMERCE
CORPORATION AND SECURITIES BUREAU *If Item 10 has been completed, this report must be signed by the
CORPORATION DIVISION president, vice-president, chairperson, vice-chairperson, secretary or
6546 MERCANTILE WAY assistant secretary of the corporation.
P.O. BOX 30057
LANSING, MICHIGAN 48909 0123 1989 3172 0170
</TABLE>
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 7
C&S-541(3/92) 944E#7896 0518 ORG&FI $10.00
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
MAY 18, 1994 FILED
MAY 23, 1994
Name Michael B. Lewis, Esq. ADMINISTRATOR
Kerr, Russell and Weber MICHIGAN DEPARTMENT OF COMMERCE
- --------------------------------------- CORPORATION & SECURITIES BUREAU
Address Suite 2500, 500 Woodward Avenue
Detroit Michigan 48226
- ----------------------------------------------------
City State Zip Code
EXPIRATION DATE: DECEMBER 31, 1999
DOCUMENT WILL BE RETURNED TO NAME AND ADDRESS INDICATED ABOVE
CERTIFICATE OF ASSUMED NAME
FOR USE BY CORPORATIONS AND LIMITED PARTNERSHIPS
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), or
Act 213, Public Acts of 1982 (limited partnerships), the corporation or limited
partnership in item one below executes the following Certificate:
1. The true name of the corporation or limited partnership is: L D M
Industries, Inc.
2. The identification number assigned by the Bureau is: 1 2 2 - 0 8 8
3. The location of the corporate registered office or the office at which the
limited partnership records are maintained is:
1250 Maplelawn Troy Michigan 48084
------------------------------------------------------------------------
(STREET ADDRESS) (CITY) (STATE) (ZIP CODE)
4. The assumed name under which business is to be transacted is: LDM
Technologies, Inc.
Signed this 13th day of May, 1994
By Joe Balous
------------------------------------
(SIGNATURE)
Joe Balous Chairman
--------------------------------------
(TYPE OR PRINT NAME) (TYPE OR PRINT TITLE)
-------------------------------------------
(LIMITED PARTNERSHIPS ONLY-INDICATE NAME OF
GENERAL PARTNER IF A CORPORATION OR OTHER
ENTITY)
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 8
C&S 560 (10/93) 942A#5905 0727 ORG&FI $187.50
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
JUL 26 1994 FILED
Name Michael B. Lewis, Esquire JUL 26 1994
- ------------------------------------------
Address Administrator
500 Woodward Avenue, Suite 2500 MICHIGAN DEPARTMENT OF COMMERCE
- ------------------------------------------ Corporation & Securities Bureau
City State ZIP Code EFFECTIVE DATE: July 31, 1994
Detroit MI 48226
- ------------------------------------------
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE.
CERTIFICATE OF MERGER / CONSOLIDATION
FOR USE BY DOMESTIC OR FOREIGN CORPORATIONS
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), and/or Act 162, Public Acts of 1982 (nonprofit corporations),
the undersigned corporations execute the following Certificate:
1. The Plan of Merger (Consolidation) is as follows:
a. The name of each constituent corporation and its identification number
is:
LOR, Inc. 387 - 584
LDM Sales Associates, Inc. 388 - 584
---------------------------------------------------------------------------
LDM Industries, Inc. 122 - 088
---------------------------------------------------------------------------
b. The name of the surviving (new) corporation and its identification
number is:
LDM Industries Inc. 122 - 088
---------------------------------------------------------------------------
c. For each constituent stock corporation, state:
<TABLE>
<CAPTION>
Designation and
number of outstanding Indicate class or Indicate class or
shares in each class series of shares series entitled
Name of corporation or series entitled to vote to vote as a class
<S> <C> <C> <C>
40,000 Series A Common
LOR, Inc. 10,000 Series B Common Series A and B
- -------------------------- ----------------------- --------------- ----------------------
40,000 Series A Common
LDM Sales Associates, Inc. 10,000 Series B Common Series A and B
- -------------------------- ----------------------- --------------- ----------------------
LDM Industries Inc. 700 Common Common
- -------------------------- ----------------------- --------------- ----------------------
</TABLE>
If the number of shares is subject to change prior to the effective date of the
merger or consolidation, the manner in which the change may occur is as follows:
N/A
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 9
d. For each constituent nonstock corporation
[(i) If it is organized on a membership basis, state (a) the name of
the corporation, (b) a description of its members, and (c) the
number, classification and voting rights of its members.
(ii) If it is organized on a directorship basis, state (a) the name of
the corporation, (b) a description of the organization of its
board, and (c) the number, classification and voting rights of
its directors.]
e. The terms and conditions of the proposed merger (consolidation),
including the manner and basis of converting the shares of, or
membership or other interests in, each constituent corporation into
shares, bonds, or other securities of, or membership or other interest
in, the surviving (consolidated) corporation, or into cash or other
consideration, are as follows:
Each authorized share of common stock of LOR, Inc. and LDM Sales
Associates, Inc., issued or unissued, including those shares of stock
issued and held by LDM Industries Inc. and Arrow Molded Plastics, Inc.
shall be cancelled on the effective date of this Merger.
See complete Plan of Merger, a copy of which is attached.
f. If a consolidation, the Articles of Incorporation of the consolidated
corporation are attached to this Certificate and are incorporated
herein. If a merger, the amendments to the Articles, or a restatement of
the Articles, of the surviving corporation to be effected by the merger
are as follows:
NONE
g. Other provisions with respect to the merger (consolidation) are as
follows:
NONE
[2. (Complete for any foreign corporation only)
This merger (consolidation) is permitted by the laws of the state of
the jurisdiction under which
--------------------------------- -----------
--------------------------------------------------------------------------
(name of foreign corporation)
is organized and the plan of merger (consolidation) was adopted and
approved by such corporation pursuant to and in accordance with the laws
of that jurisdiction.]
3. (Complete only if an effective date is desired other than the date of
filing. The date must be no more than 90 days after receipt of this document
in this office).
The merger (consolidation) shall be effective on the 31st day of July, 1994.
---- ----- ----
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 10
4. (Complete applicable section for each constituent corporation)
[a. (For domestic profit corporations only)
The plan of merger was approved by the unanimous consent of the
incorporators of
------------------------------------------------,
which has not commenced business, has not issued any shares, and has not
elected a Board of Directors. (Incorporators must sign on this page of
the Certificate.)
b. (For profit corporations involved in a merger only)
The plan of merger was approved by the Board of Directors of
------------------------------------------------, the surviving
corporation, without the approval of the shareholders of that
corporation in accordance with Section 701 of the Act.]
c. (For profit corporations only)
The plan of merger was adopted by the Board of Directors of the following
constituent corporations:
LOR, Inc.
LDM Sales Associates, Inc.
LDM Industries Inc.
and was approved by the shareholders of those corporations in accordance with
Section 703a.
[d. (For nonprofit corporations only)
The plan of merger or consolidation was adopted by the Board of Directors
(i) (Complete if organized upon a stock or membership basis)
of and
--------------------------------------------------------------
was approved by the shareholders or members of that corporation in
accordance with Sections 701 and 703(1) and (2), or pursuant to
Section 407 by written consent and written notice, if required.
(ii) (Complete if organized upon a directorship basis)
of in
-------------------------------------------------------------
accordance with Section 703(3).]
<TABLE>
<S><C>
Sign this area for item 4(a).
- ----------------------------
Signed this day of , 19 .
------------------ ------------------------ ------
- --------------------------------------------------- -----------------------------------------------------------------
- --------------------------------------------------- -----------------------------------------------------------------
Sign this area for items 4(b), 4(c), or 4(d).
Signed this day of ,19 .
--------------- --------------------------------------------- -----
See Attached
---------------------------------------------------------------------------------------
(Name of Corporation)
By
------------------------------------------------------------------------------------
(Only signature of: President, Vice-President, Chairperson or Vice-Chairperson)
------------------------------------------------------------------------------------
(Type or Print Name and Title)
Signed this day of ,19 .
--------------- --------------------------------------------- -----
---------------------------------------------------------------------------------------
(Name of Corporation)
By
------------------------------------------------------------------------------------
(Only signature of: President, Vice-President, Chairperson or Vice-Chairperson)
------------------------------------------------------------------------------------
(Type or Print Name and Title)
</TABLE>
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 11
CERTIFICATE OF MERGER/CONSOLIDATION
SIGNATURES FOR ITEM 4(c).
Signed this 14th day of July, 1994.
LOR, INC.
By: Joe Balous
---------------------------
Joe Balous
Its: Vice-President
LDM SALES ASSOCIATES, INC.
By: Joe Balous
---------------------------
Joe Balous
Its: Vice-President
LDM INDUSTRIES INC.
By: Joe Balous
---------------------------
Joe Balous
Its: Chairman
<PAGE> 12
PLAN OF MERGER
THIS PLAN OF MERGER is made this 14th day of July, 1994 by and among LDM
Sales Associates, Inc., a Michigan corporation (hereinafter "LDM Sales"), LOR,
Inc., a Michigan corporation (hereinafter "LOR"), and LDM Industries Inc., a
Michigan corporation (hereinafter "LDM Industries"), as follows:
RECITALS:
A. LDM Sales, LOR, and LDM Industries are corporations duly organized,
existing, and in good standing under the laws of the State of
Michigan.
B. The authorized capital of LDM Sales consists of 40,000 shares of $0.10
par value Series A common stock of which 40,000 shares are
outstanding, and 10,000 shares of $0.10 par value Series B common
stock of which 10,000 shares are outstanding.
C. The authorized capital of LOR consists of 40,000 shares of $0.10 par
value Series A common stock of which 40,000 shares are outstanding,
and 10,000 shares of $0.10 par value Series B common stock of which
10,000 shares are outstanding.
D. The authorized capital of LDM Industries consists of 100,000 shares of
$0.10 par value common stock, of which 700 shares are outstanding.
E. LDM Industries is the record owner of 100% of the outstanding shares
of the Series A common stock of LDM Sales and LOR, representing 80% of
the total outstanding common shares of stock of LDM Sales and LOR.
F. Arrow Molded Plastics, Inc., an Ohio corporation ("Arrow"), is the
owner of 100% of the outstanding shares of the Series B common stock
of LDM Sales and LOR, representing 20% of the total outstanding common
shares of stock of LDM Sales and LOR.
G. The Directors of LDM Sales, LOR and LDM Industries believe that it is
in the best interest of each of the respective corporations that LDM
Sales and LOR be merged into LDM Industries.
NOW, THEREFORE, in consideration of the mutual undertakings hereinafter set
forth, LDM Sales, LOR and LDM Industries agree as follows:
1. The Recitals set forth above are hereby incorporated into the body of
this Plan of Merger.
<PAGE> 13
2. LDM Sales and LOR shall be merged into LDM Industries by the transfer
to LDM Industries of all of the assets of LDM Sales and LOR, subject
to all of their liabilities and obligations, which liabilities and
obligations shall be assumed by LDM Industries in complete
cancellation of all of the outstanding capital stock of LDM Sales and
LOR.
3. LDM Sales and LOR shall cease to exist and all of their business
operations and activities shall thereafter be conducted by LDM
Industries. All outstanding capital stock of LDM Sales and LOR shall
be cancelled.
4. In conformance with Internal Revenue Code Section 304(a)(2), Arrow
will not receive stock of LDM Industries as a result of this merger.
5. The Articles of Incorporation and Bylaws of LDM Industries, the
surviving corporation, shall remain unchanged.
6. The Directors and Officers of LDM Industries shall continue to hold
office until their successors are chosen or elected in accordance with
the Bylaws of LDM Industries.
7. A Certificate of Merger will be filed with the Michigan Department of
Commerce in accordance with the Michigan Business Corporation Act.
8. The constituent corporations are LDM Sales Associates, Inc., a
Michigan corporation, LOR, Inc., a Michigan corporation, and LDM
Industries Inc., a Michigan corporation.
9. Following the adoption of this Plan by LDM Sales, LOR and LDM
Industries, the merger, the transfer of assets from LDM Sales and LOR
to LDM Industries, the assumption of obligations and liabilities of
LDM Sales and LOR by LDM Industries, and the cancellation of the
capital stock of LDM Sales and LOR shall all be effective on July 31,
1994, upon the filing of a Certificate of Merger with the Michigan
Department of Commerce, Corporation and Securities Bureau.
LDM SALES ASSOCIATES, INC.
By: Joe Balous
------------------
Joe Balous
Its: Vice-President
-2-
<PAGE> 14
LOR, INC.
By: Joe Balous
------------------------
Joe Balous
Its: Vice-President
LDM INDUSTRIES INC.
By: Joe Balous
------------------------
Joe Balous
Its: Chairman
-3-
<PAGE> 15
C&S-541 (3/92) 943D#9751 0728 ORG&FI $10.00
MICHIGAN DEPARTMENT OF COMMERCE-CORPORATION AND SECURITIES BUREAU
Date Received (FOR BUREAU USE ONLY)
JUL 28 1994 FILED
The certificate must reflect the corporate
name as it appears on record with this AUG 02 1994
office. We have adjusted Item #1 accordingly.
ADMINISTRATOR
Name Michael B. Lewis, Esq. MICHIGAN DEPARTMENT OF COMMERCE
Kerr, Russell and Weber CORPORATION & SECURITIES BUREAU
- ----------------------------------------
Address Detroit Center, Suite 2500
500 Woodward Avenue
- ----------------------------------------
City State Zip Code
Detroit Michigan 48226 EXPIRATION DATE: DECEMBER 31, 1999
- ----------------------------------------
DOCUMENT WILL BE RETURNED TO NAME AND ADDRESS INDICATED ABOVE
CERTIFICATE OF ASSUMED NAME
FOR USE BY CORPORATIONS AND LIMITED PARTNERSHIPS
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), or Act
213, Public Acts of 1982 (limited partnerships), the corporation or limited
partnership in item one below executes the following Certificate:
1. The true name of the corporation or limited partnership is:
L D M Industries Inc.
2. The identification number assigned by the Bureau is: 122-088
3. The location of the corporate registered office or the office at which the
limited partnership records are maintained is:
1250 Maplelawn Avenue Troy Michigan 48084
------------------------------------------------------------------------
(STREET ADDRESS) (CITY) (STATE) (ZIP CODE)
4. The assumed name under which business is to be transacted is:
LDM Industries, Inc.
Signed this day of July , 1994
------ -----------------
By Michael B. Lewis
------------------------------------------------------
(SIGNATURE)
Michael B. Lewis Assistant Secretary
------------------------------------------------------
(TYPE OR PRINT NAME) (TYPE OR PRINT TITLE)
------------------------------------------------------
(LIMITED PARTNERSHIPS ONLY-INDICATE NAME OF GENERAL
PARTNER IF A CORPORATION OR OTHER ENTITY)
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 16
C&S 551 (8/93) 096A#5304 0923 ORG&FI $62.50
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES
& LAND DEVELOPMENT BUREAU
Date Received (FOR BUREAU USE ONLY)
SEP 20 1996 FILED
ADJUSTED PURSUANT TO SEP 20 1996
TELEPHONE AUTHORIZATION
ADMINISTRATOR
Name Michael B. Lewis, Esq. MI DEPARTMENT OF CONSUMER &
Kerr, Russell and Weber, P.L.C. INDUSTRY SERVICES CORPORATION,
- -------------------------------------- SECURITIES & LAND DEVELOPMENT BUREAU
Address Suite 2500, Detroit Center
500 Woodward Avenue
- --------------------------------------
City State Zip
Detroit Michigan 48226 EFFECTIVE DATE: 9-28-96
- --------------------------------------
Document will be returned to the name and address you enter above.
CERTIFICATE OF MERGER
FOR USE BY PARENT AND SUBSIDIARY PROFIT CORPORATIONS
(Please read information and instructions on last page)
Pursuant to the provisions of Act 284, Public Acts of 1972, the undersigned
corporations execute the following Certificate:
1. a. The name of each constituent corporation and its identification number
is/are:
L D M Industries Inc. CID 122-088
----------------------------------------------------
Arrow N.A., Inc., CID 619-350
----------------------------------------------------
b. The name of the surviving corporation and its identification number is:
L D M Industries Inc. CID 122-088
----------------------------------------------------
c. For each subsidiary corporation, state:
<TABLE>
<CAPTION>
Number of outstanding Number of shares owned by the
Name of corporation shares in each class parent corporation in each class
<S> <C> <C>
Arrow N.A., Inc. 1,243 Common 1,243
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
------------------------ ------------------------ ------------------------
</TABLE>
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 17
d. The manner and basis of converting the shares of each constituent
corporation is as follows:
At the Effective Time, each issued and outstanding share of Arrow N.A.,
Inc., all of which are owned by L D M Industries Inc., shall be
retired and cancelled.
e. The amendments to the Articles of Incorporation of the surviving
corporation to be effected by the merger are as follows:
None.
f. Other provisions with respect to the merger are as follows:
N/A
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 18
2. (Complete for any foreign corporation only)
This merger is permitted by the laws of the State of Ohio, the
jurisdiction under which Arrow N.A., Inc.
--------------------------------------
(Name of Foreign Corporation)
is formed and the plan of merger was adopted and approved by such
corporation pursuant to and in accordance with the laws of that
jurisdiction.
[3. (Delete if not applicable)
The consent to the merger by the shareholders of the SUBSIDIARY
corporation was obtained pursuant to its Articles of
Incorporation. (Such consent is necessary if the Articles of
Incorporation require approval of the merger by the vote of the holders
of more than the percentage of the shares owned by the parent
corporation.)
[4. (Delete if not applicable)
The consent to the merger by the shareholders of the PARENT
corporation was obtained pursuant to its Articles of
Incorporation. (Such consent is necessary if its Articles of
Incorporation require shareholder approval of the merger, the plan of
merger amends its Articles of Incorporation, or a subsidiary is to be
the surviving corporation.)]
[5. (Complete only if an effective date is desired other than the date of
filing)]
The merger shall be effective on the 28th day of September, 1996.
Signed this 17th day of September, 1996.
L D M Industries Inc.
-----------------------------------------------------
(Name of parent corporation)
By:
Joe Balous
------------------------------
(Only Signature of: President,
Vice-President, Chairperson,
Vice-Chairperson)
Joe Balous, Chairman of the Board
----------------------------------------------
(Type or Print Name and Title)
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 19
<TABLE>
<S><C>
C&S 541 (13/96) 096D#3421 0925 ORG&FI $10.00
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
- -----------------------------------------------------------------------------------------------------------------------------
Date Received
Sep 25 1996 (FOR BUREAU USE ONLY)
- ------------------------------------
FILED
- -------------------------------------------------------------- OCT 17 1996
Name Michael B. Lewis, Esq.
Kerr, Russell and Weber, P.L.C. Administrator
- -------------------------------------------------------------- MI DEPARTMENT OF CONSUMER & INDUSTRY SERVICES
Address Suite 2500, Detroit Center CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
500 Woodward Avenue
- -------------------------------------------------------------- EXPIRATION DATE:
City State Zip DECEMBER 31, 2001
Detroit Michigan 48226
- ---------------------------------------------------------------------------------------------------------------------------
Document will be returned to the name and address you enter above.
CERTIFICATE OF ASSUMED NAME
FOR USE BY CORPORATIONS, LIMITED PARTNERSHIPS AND LIMITED LIABILITY COMPANIES
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), or Act 162, Public
Acts of 1982 (nonprofit corporations), or Act 213, Public Acts of 1982 (limited partnerships), or Act 23, Public Acts of 1993
(limited liability companies), the corporation, limited partnership, or limited liability company in item one executes the following
Certificate:
1. The true name of the corporation, limited partnership, or limited liability company is:
L D M Industries Inc.
2. The identification number assigned by the Bureau is: 122-088
3. The location of the corporation or limited liability company registered office in Michigan or the office at which the
limited partnership records are maintained is:
1250 Maplelawn Avenue Troy Michigan 48084
(Street Address) (City) (State) (Zip code)
4. The assumed name under which business is to be transacted is: Arrow N.A., Inc.
COMPLETE ITEM 5 ON LAST PAGE IF THIS NAME IS ASSUMED BY MORE THAN ONE ENTITY.
Signed this 23rd day of September , 1996
By: Michael B. Lewis
(Signature)
Michael B. Lewis, Assistant Secretary
(Type or Print Name and Title)
-------------------------------------------------------------------------------------------------
(Limited Partnerships Only - Indicate Name of General Partner if a Corporation or Other Entity)
KM
SEAL APPEARS ONLY ON ORIGINAL
</TABLE>
<PAGE> 20
C&S 515 (6/95) 096D#0879 1114 ORG&FI $12.50
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES
& LAND DEVELOPMENT BUREAU
Date Received (FOR BUREAU USE ONLY)
NOV 13 1996 FILED
NOV 13 1996
ADMINISTRATOR
Name Michael B. Lewis, Esq. MI DEPARTMENT OF CONSUMER &
Kerr, Russell and Weber, P.L.C. INDUSTRY SERVICES CORPORATION,
Address Suite 2500, Detroit Center SECURITIES & LAND DEVELOPMENT BUREAU
500 Woodward Avenue
City State Zip
Detroit Michigan 48226 EFFECTIVE 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 CORPORATIONS
(Please read information and instructions on 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: L D M Industries Inc.
2. The identification number assigned by the Bureau is: 122-088
---------------------
3. The location of its registered office is:
1250 Maplelawn Avenue Troy MICHIGAN 48084
--------------------------------------------------------------------------
(Street Address) (City) (Zip Code)
4. Article 1 of the Articles of Incorporation is hereby amended to
---------
read as follows:
The name of the corporation is LDM Technologies, Inc.
Article IV Section 1 of the Articles of Incorporation is hereby amended to
read as follows:
1. The address of the registered office is: 2500 Executive Hills Drive,
Auburn Hills, Michigan 48326
AN 12.50 37677 CK
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 21
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS CONSENT
OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD OF DIRECTORS
OR TRUSTEES; OTHERWISE, COMPLETE SECTION (b). DO NOT COMPLETE BOTH.
a. The foregoing amendment to the Articles of Incorporation were 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 of 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)
b. X The foregoing amendment to the Articles of Incorporation was duly
--- adopted on 1st day of November, 1996.
The amendment: (check one of the following)
was duly adopted in accordance with Section 611(2) of the Act by
--- the vote of the shareholders if a profit corporation, or by the
vote of the shareholders or members if a nonprofit corporation,
or by the vote of the directors if a nonprofit corporation
organized on a non-stock directorship basis. The necessary votes
were cast in favor of the amendment.
was duly adopted by the written consent of all the directors
--- pursuant to Section 525 of the Act and the corporation is a
nonprofit corporation organized on a non-stock directorship basis.
was duly adopted by the 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, and Section 407(1) of the Act if a
profit corporation. Written notice to shareholders 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 was duly adopted by the written consent of all the shareholders or
--- members entitled to vote in accordance with Section 407(3) of the
Act if a non-profit corporation, and Section 407(2) of the Act if
a profit corporation.
Signed this 1st day of November, 1996
By: Richard J. Nash
-------------------------------------
(Signature)
Richard J. Nash, President
-----------------------------------------
(Type or Print Name and Title)
SEAL APPEARS ON ORIGINAL
<PAGE> 22
C&S 541 (3/96) 096D#0880 1114 ORG&FI $12.50
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES
& LAND DEVELOPMENT BUREAU
Date Received (FOR BUREAU USE ONLY)
NOV 13 1996 FILED
NOV 13 1996
ADMINISTRATOR
Name Michael B. Lewis, Esq. MI DEPARTMENT OF CONSUMER &
Kerr, Russell and Weber, P.L.C. INDUSTRY SERVICES CORPORATION,
Address Suite 2500, Detroit Center SECURITIES & LAND DEVELOPMENT BUREAU
500 Woodward Avenue
City State Zip
Detroit Michigan 48226 EXPIRATION DATE: 12-31-2001
Document will be returned to the name and address you enter above.
CERTIFICATE OF ASSUMED NAME
FOR USE BY CORPORATIONS, LIMITED PARTNERSHIPS AND LIMITED LIABILITY COMPANIES
(Please read information and instructions on reverse side)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), or Act
213, Public Acts of 1982 (limited partnerships), or Act 23, Public Acts of 1993
(limited liabilities companies), the corporation, limited partnership, or
limited liability company in item one executes the following Certificate:
1. The true name of the corporation, limited partnership, or limited
liability company is: LDM Technologies, Inc.
2. The identification number assigned by the Bureau is: 122-088
---------------------
3. The location of the corporation or limited liability company registered
office in Michigan or the office at which the limited partnership records
are maintained is:
2500 Executive Hills Drive Auburn Hills MI 48326
------------------------------------------------------------------------
(Street Address) (City) (State) (Zip Code)
4. The assumed name under which business is to be transacted is:
LDM Industries, Inc.
COMPLETE ITEM 5 ON LAST PAGE IF THIS NAME IS ASSUMED BY MORE THAN ONE ENTITY.
Signed this 1st day of November , 1996
------ ----------------- ----
By Richard J. Nash
------------------------------------------------------
(Signature)
Richard J. Nash, President
------------------------------------------------------
(Type or Print Name and Title)
------------------------------------------------------
(Limited Partnerships Only-Indicate Name of General
Partner if a Corporation or Other Entity)
AN CK 12.50 37678
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 1
EXHIBIT 3.2
C&S 700 (5/95) 096B#6962 1211 ORG&FI $62.50
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES
& LAND DEVELOPMENT BUREAU
Date Received (FOR BUREAU USE ONLY)
DEC 10 1996 FILED
DEC 10 1996
Name Michael B. Lewis, Esq.
Kerr, Russell and Weber, P.L.C. ADMINISTRATOR
MI DEPARTMENT OF CONSUMER &
Address Suite 2500, Detroit Center INDUSTRY SERVICES CORPORATION,
500 Woodward Avenue SECURITIES & LAND DEVELOPMENT BUREAU
City State Zip EFFECTIVE DATE:
Detroit Michigan 48226
Document will be returned to the name and address you enter above.
ARTICLES OF ORGANIZATION B08-850
FOR USE BY DOMESTIC LIMITED LIABILITY COMPANIES -------
(Please read information and instructions on last page)
Pursuant to the provisions of Act 23, Public Acts of 1993, the
undersigned execute the following Articles:
ARTICLE I
The name of the limited liability company is: LDM Holdings, L.L.C.
ARTICLE II
The purpose or purposes for which the limited liability company is formed is
to engage in any activity within the purposes for which a limited liability
company may be formed under the Limited Liability Company Act of Michigan.
ARTICLE III
The duration of the limited liability company is: 30 years unless terminated
earlier pursuant to the Operating Agreement.
ARTICLE IV
1. The address of the registered office is:
2500 Executive Hills Drive, Auburn Hills, MICHIGAN 48326
--------------------------------------------------------------------------
(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:
Richard J. Nash
ARTICLE V (Insert any desired additional provision authorized by the Act;
attach additional pages if needed.)
None
Signed this 9th day of December, 1996
LDM Holding Canada, Inc.
LDM Technologies, Inc.
f/k/a LDM Industries Inc.
<TABLE>
<S><C>
By: Michael B. Lewis By: Michael B. Lewis By:
-------------------- ------------------- -------------------
(Signature) (Signature) (Signature)
Michael B. Lewis, Michael B. Lewis,
Assistant Secretary Assistant Secretary -------------------
(Type or print name and title) (Type or print name and title) (Type or print name and title)
</TABLE>
KM 62.50 CK 38968
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 1
EXHIBIT 3.3
C&S 401 (3/96) 096A#5303 0923 ORG&FI $12.50
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES
& LAND DEVELOPMENT BUREAU
Date Received (FOR BUREAU USE ONLY)
SEP 20 1996 FILED
SEP 20 1996
ADMINISTRATOR
Name Michael B. Lewis, Esq. MI DEPARTMENT OF CONSUMER &
Kerr, Russell and Weber, P.L.C. INDUSTRY SERVICES CORPORATION,
SECURITIES & LAND DEVELOPMENT BUREAU
Address Suite 2500, Detroit Center
500 Woodward Avenue
City State Zip
Detroit Michigan 48226 EFFECTIVE DATE:
Document will be returned to the name and address you enter above.
CERTIFICATE OF LIMITED PARTNERSHIP L19-189
For use by Domestic Limited Partnerships -------
(Please read information and instructions on last page)
Pursuant to the provisions of Act 213, Public Acts of 1982, the undersigned
person(s) execute the following Certificate:
SECTION 1
The name of the limited partnership is: LDM Canada Limited Partnership
SECTION 2
The general character of its business is: to acquire investments of all
kinds, to invest and reinvest distributions and proceeds therefrom and to
carry on all other activities which are incident to or related to the
foregoing.
SECTION 3
a. The address of the office at which the limited partnership records are
kept is:
2500 Executive Hills Drive, Auburn Hills, Michigan 48236
b. The name of the agent for service of process is: Richard J. Nash
c. The address of the agent for service of process is:
2500 Executive Hills Drive, Auburn Hills, Michigan 48236
SECTION 4
The power of a limited partner to grant the right to become a limited partner
to an assignee of any part of the partnership interest, and the terms and
conditions of the power, are as follows:
The limited partner does not have the power to grant the right to
become a limited partner to any assignee of the partnership interest.
The limited partner does not have the right to transfer, sell, pledge,
assign, encumber, hypothecate, or distribute a limited partnership
interest without the prior written consent of the general partner in
compliance with the provisions of a right of first refusal granting an
option to the other partners to purchase the limited partnership
interest which is desired to be sold, acquired or transferred ("right
of first refusal").
12.50 CK 34832
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 2
SECTION 5
a. Describe the times, or events when a GENERAL PARTNER may terminate
membership in the limited partnership, and the terms and conditions of the
termination.
The general partner may terminate membership in the limited
partnership at any time, and automatically upon the death,
bankruptcy, insanity or incompetence of the general partner.
In such case, the interest of such general partner shall become a
limited partnership interest.
b. Describe the times or events when a LIMITED PARTNER may terminate
membership in the limited partnership. Include the amount or the method of
determining, any distribution the limited partner is entitled to receive
upon termination of their membership.
A limited partner may not terminate membership in the limited
partnership except upon a sale of such membership interest with
the express consent of the general partner and compliance
with the right of first refusal, or upon dissolution, winding up
and liquidation of the limited partnership as described in
Section 8 hereof.
SECTION 6
The right of the limited partner to receive distributions of property, including
cash, from the limited partnership, other than indicated in 5(b), is:
The amount and timing of all distributions of cash and/or
property are determined solely by the general partner. The
limited partner is entitled to receive 99% of all cash and other
property that may be distributed by the limited partnership, in
accordance with the terms and conditions of the limited
partnership agreement.
SECTION 7
The right of the limited partner to receive, or a general partner to make to
a limited partner, distributions of property, which include a return of all or
any part of the limited partner's contribution, other than indicated in 5(b),
is:
The general partner has the right, in the sole discretion of
the general partner, to make any distribution to the limited
partner which may constitute a return of capital. The limited
partner has no right to a return of part or all of the limited
partner's capital contribution.
SECTION 8
The times or events at which the limited partnership is to be dissolved and its
affairs wound up are:
Upon the expiration of the term of the limited partnership
agreement on December 31, 2036, or upon any other event
causing the dissolution of the limited partnership under the
Michigan Revised Uniform Limited Partnership Act, unless the
limited partnership is reconstituted and/or continued as
permitted under said Act or the limited partnership agreement.
<PAGE> 3
SECTION 9
The right of the remaining general partner(s) to continue the business upon
the event of withdrawal of a general partner is:
N/A. The limited partnership has one (1) general partner. Upon withdrawal
of the general partner, the limited partner may reconstitute the limited
partnership by appointing a substitute general partner as permitted under
the Michigan Revised Uniform Limited Partnership Act or the limited
partnership agreement.
SECTION 10
Enter any other matters the partners may desire to include. If additional
space is required, attach Supplement O. Attached are none page(s) of
Supplement O.
Disclaimer: The summary of the provisions of the limited partnership
agreement referred to in this Certificate is incomplete and must be
reviewed in connection with other provisions of the agreement dealing with
related subjects. The limited partnership agreement should be carefully
reviewed to eliminate any errors, omissions, misinterpretations or improper
construction of the provisions of this Certificate. The limited
partnership agreement shall control any conflicts between such agreement
and this Certificate.
SECTION 11
Complete one section for each partner (general or limited). General partners
must be listed first followed by limited partners.
Item 1 - The type of partner must be either general or limited. The
Certificate must include a definition of the title classification
for any partner identified as other than only general or limited.
Item 2 - Partner names of individuals must appear in the last name, first
name, middle initial sequence. Partner names of trusts should be
the trust name excluding the name of the trust or trustees.
Item 3 - Indicate the business or residence address of the partner. The
address should include the street number and name, city state and
ZIP code.
ITEMS 4 & 5 - LIMITED PARTNERS ONLY - ONE OR BOTH MUST BE COMPLETED
Item 4 - If applicable, indicate the amount of cash previously
contributed. If contributions have been made in the form of
property or services, indicate the agreed dollar value of the
contribution in the "other $_____" space and complete Item 6.
Item 5 - If applicable, indicate the amount of cash to be contributed in
the future and complete Item 7. If there are future
contributions in the form of property or services, indicate the
agreed dollar value of the contribution in the "other
$______" space and complete Items 6 and 7.
Item 8 - This certificate must be signed and dated by all partners
(general and limited) named in the certificate. Identify the
person or persons signing on behalf of a trust as trustee. A
partner may sign by attorney in fact.
<PAGE> 4
SECTION 11
<TABLE>
<S><C>
1. Type of Partner 2. Partner Name (see instructions for Section 11, Item 2)
x General
--- LDM Holding Canada, Inc.
Limited
---
3. Address (No., Street, City, State, ZIP Code)
2500 Executive Hills Drive, Auburn Hills, Michigan 48326
4. Contributions Previously Made (Limited Partners Only) 5. Future Contributions to be Made (Limited Partners Only)
Cash $ 100 Other $ Cash $ Other $
-------- ---------- -------- ----------
6. Description of Contributions Other than Cash: (Include all property or services contributed or to be contributed)
None
7. Times or Events Requiring Future Contributions: (Cash, Property or Services)
None
8. Signature Michael B. Lewis, Assistant Secretary Michael B. Lewis 9. Date
Assistant Secretary 9/20/96
- -----------------------------------------------------------------------------------------------------------------------
1. Type of Partner 2. Partner Name (see instructions for Section 11, Item 2)
General
--- LDM Industries Inc.
x Limited
---
3. Address (No., Street, City, State, ZIP Code)
2500 Executive Hills Drive, Auburn Hills, Michigan 48326
4. Contributions Previously Made (Limited Partners Only) 5. Future Contributions to be Made (Limited Partners Only)
Cash $ 9,900 Other $ None Cash $ None Other $ None
-------- ---------- -------- ----------
6. Description of Contributions Other than Cash: (Include all property or services contributed or to be contributed)
N/A
7. Times or Events Requiring Future Contributions: (Cash, Property or Services)
N/A
8. Signature Michael B. Lewis, Assistant Secretary Michael B. Lewis 9. Date
Assistant Secretary 9/20/96
- -----------------------------------------------------------------------------------------------------------------------
1. Type of Partner 2. Partner Name (see instructions for Section 11, Item 2)
General
---
Limited
---
3. Address (No., Street, City, State, ZIP Code)
4. Contributions Previously Made (Limited Partners Only) 5. Future Contributions to be Made (Limited Partners Only)
Cash $ Other $ Cash $ Other $
-------- ---------- -------- ----------
6. Description of Contributions Other than Cash: (Include all property or services contributed or to be contributed)
7. Times or Events Requiring Future Contributions: (Cash, Property or Services)
8. Signature 9. Date
</TABLE>
<PAGE> 5
<TABLE>
<S><C>
C&S 402 (1/96)
MICHIGAN DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES - CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
- -----------------------------------------------------------------------------------------------------------------------------
Date Received
Dec 10 1996 (FOR BUREAU USE ONLY)
- ------------------------------------
FILED
- -------------------------------------------------------------- Dec 10 1996
Name Michael B. Lewis, Esq.
Kerr, Russell and Weber, P.L.C. Administrator
- -------------------------------------------------------------- MI DEPARTMENT OF CONSUMER & INDUSTRY SERVICES
Address Suite 2500, Detroit Center CORPORATION, SECURITIES & LAND DEVELOPMENT BUREAU
500 Woodward Avenue
- -------------------------------------------------------------- EFFECTIVE DATE:
City State Zip
Detroit Michigan 48226
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Document will be returned to the name and address you enter above
RESTATED CERTIFICATE OF LIMITED PARTNERSHIP
For use by Domestic Limited Partnerships
(Please read information and instructions on last page)
Pursuant to the provisions of Act 213, Public Acts of 1982,
the undersigned person(s) execute the following Certificate:
A. The present name of the limited partnership is: LDM Canada Limited
Partnership
B. The limited partnership number assigned by the Bureau is: L19-189
C. The former name(s) of the limited partnership are: N/A
D. The date the original Certificate of Limited Partnership was filed is:
September 20, 1996
E. The name and address of the office or agency with which the original
Certificate of Limited Partnership was filed is: Michigan Department
of Consumer and Industry Services - Corporation, Securities & Land
Development Bureau, 6546 Mercantile Way, Lansing, Michigan 48910
The following Restated Certificate of Limited Partnership supersedes
the original Certificate of Limited Partnership, as amended, and shall be the
Certificate of Limited Partnership for the Limited Partnership:
SECTION 1
The name of the limited partnership is: LDM Canada Limited Partnership
SECTION 2
The general character of its business is: to acquire investments of all kinds,
to invest and reinvest distributions and proceeds therefrom and to carry on
all other activities which are incident to or related to the foregoing.
<PAGE> 6
SECTION 3
a. The address of the office at which the limited partnership records are kept
is:
2500 Executive Hills Drive, Auburn Hills, Michigan 48326
b. The name of the agent for service of process is: Richard J. Nash
c. The address of the agent for service of process is: 2500 Executive Hills
Drive, Auburn Hills, Michigan 48326
SECTION 4
The power of a limited partner to grant the right to become a limited partner
to an assignee of any part of the partnership interest, and the terms and
conditions of the power, are as follows:
A Limited Partner does not have the power to grant the right to become a
limited partner to any assignee of the partnership interest. The Limited
Partner does not have the right to transfer, sell, pledge, assign, encumber,
hypothecate, or distribute a limited partnership interest without the prior
written consent of the General Partner in compliance with the provisions of a
right of first refusal granting an option to the other partners to purchase the
limited partnership interest which it desires to be sold, acquired or
transferred ("Right of First Refusal").
SECTION 5
a. Describe the times, or events when a GENERAL PARTNER may terminate
membership in the limited partnership, and the terms and conditions of the
termination.
The General Partner may terminate membership in the Limited Partnership at
any time, and automatically on the death, bankruptcy, insanity or
incompetence of the General Partner. In such case, the interest of such
General Partner shall become a limited partnership interest.
b. Describe the times, or events when a LIMITED PARTNER may terminate
membership in the limited partnership. Include the amount or method of
determining any distribution the limited partner is entitled to receive
upon termination of their membership.
A Limited Partner may not terminate membership in the Limited Partnership
except upon a sale of such membership interest with the express consent of
the General Partner in compliance with the Right of First Refusal, or upon
dissolution, winding up and liquidation of the Limited Partnership as
described in Section 8.
SECTION 6
The right of a Limited Partner to receive distributions of property, including
cash, from the Limited Partnership, other than indicated in 5(b), is:
The amount and timing of all distributions of cash and/or property are
determined solely by the General Partner. The Limited Partner is entitled to
receive 97% of all cash and other property that may be distributed by the
Limited Partnership, in accordance with the terms and conditions of the Limited
Partnership Agreement.
SECTION 7
The right of a limited partner to receive, or a general partner to make a
limited partner, distributions of property, which include a return of all or
any part of the limited parnter's contribution, other than indicated in 5(b),
is:
The General Partner has the right and in the sole discretion of the General
Partner to make any distributions to the Limited Partner which may constitute a
return of capital. The Limited Partner has no right to a return of part or all
of the Limited Partner's capital contribution.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 7
SECTION 8
The times or events at which the limited partnership is to be dissolved and
its affairs wound up, are:
On the expiration of the term of the Limited Partnership Agreement on December
31, 2036, or upon any other event causing dissolution of the Limited
Partnership under the Michigan Revised Uniform Limited Partnership Act, unless
the Limited Partnership is reconstituted and/or constituted as permitted under
said Act or the Limited Partnership Agreement.
SECTION 9
The right of the remaining general partner(s) to continue the business upon the
event of withdrawal of a general partner is:
N/A. The Limited Partnership has only one General Partner. Upon withdrawal of
the General Partner, the Limited Partner may reconstitute the Limited
Partnership by appointing a substitute General Partner as permitted under the
Michigan Revised Uniform Limited Partnership Act 6 or the Limited Partnership
Agreement.
SECTION 10
Enter any other matters the partners may desire to include. If additional space
is required, attach Supplement O. Attached are -0- page(s) of Supplement O.
Disclaimer: The summary of the provisions of the Limited Partnership Agreement
referred to in this Certificate is incomplete and must be reviewed in
connection with other provisions of the Limited Partnership Agreement dealing
with related subjects. The Limited Partnership Agreement should be carefully
reviewed to eliminate any errors, omissions, misinterpretations or improper
construction of the provisions of this Certificate. The Limited Partnership
Agreement shall control any conflicts between such Agreement and the
Certificate.
SECTION 11
Complete one section for each partner (general or limited). General partners
must be listed first followed by limited partners.
Item 1 - The type of partner must be either general or limited.
Item 2 - Partner names of individuals must appear in the last name,
first name, middle initial sequence. Partner names of trusts should be
the trust name excluding the name of the trustee or trustees.
Item 3 - Indicate the business or residence address of the partner. The
address should include the street number and name, city state and ZIP
code.
ITEMS 4 & 5 - LIMITED PARTNERS ONLY - ONE OR BOTH MUST BE COMPLETED
Item 4 - If applicable, indicate the amount of cash previously
contributed. If contributions have been made in the form of property or
services indicate the agreed dollar value of the contribution in the
"other $____" space and complete Item 6.
Item 5 - If applicable, indicate the amount of cash to be contributed
in the future and complete Item 7. If there are future contributions
in the form of property or services, indicate the agreed dollar value
of the contribution in the "other $____" space and complete Items 6
and 7.
Item 8 - This certificate must be signed and dated by a general
partner, all new partners, and all limited partners whose contributions
have increased. Identify the person or persons signing on behalf of a
trust as "trustee". A partner may sign by attorney in fact.
SEAL APPEARS ONLY ON ORIGINAL
<PAGE> 8
SECTION 11
<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------------------
1. Type of Partner 2. Partner Name (Last, First, Middle Initial)
X General LDM Holdings, L.L.C.
---
Limited
---
- ------------------------------------------------------------------------------------------------------------------------------------
3. Address (No., Street, City, State, ZIP Code)
2500 Executive Hills Drive, Auburn Hills, Michigan 48326
- -----------------------------------------------------------------------------------------------------------------------------------
4. Contributions Previously Made (Limited Partners Only) 5. Future Contributions to be Made (Limited Partners Only)
Cash $ 300 Other $ Cash $ Other $
--------- ---------- ------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
6. Description of Contributions Other than Cash: (Include all property or services contributed or to be contributed)
None
- -----------------------------------------------------------------------------------------------------------------------------------
7. Times or Events Requiring Future Contributions: (Cash, Property or Services)
None
- -----------------------------------------------------------------------------------------------------------------------------------
8. Signature 9. Date
LDM Technologies, Inc.
Its Member
Michael B. Lewis
-------------------------------------
By: Michael B. Lewis 12/9/96
Its: Assistant Secretary
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1. Type of Partner 2. Partner Name (Last, First, Middle Initial)
General LDM TECHNOLOGIES, INC., f/k/a LDM INDUSTRIES, INC.
---
X Limited
---
- -----------------------------------------------------------------------------------------------------------------------------------
3. Address (No., Street, City, State, ZIP Code)
2500 Executive Hills Drive, Auburn Hills, Michigan 48326
- -----------------------------------------------------------------------------------------------------------------------------------
4. Contributions Previously Made (Limited Partners Only) 5. Future Contributions to be Made (Limited Partners Only)
Cash $9,700 Other $ Cash $ Other $
--------- ---------- ------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
6. Description of Contributions Other than Cash: (Include all property or services contributed or to be contributed)
None
- -----------------------------------------------------------------------------------------------------------------------------------
7. Times or Events Requiring Future Contributions: (Cash, Property or Services)
None
- -----------------------------------------------------------------------------------------------------------------------------------
8. Signature 9. Date
Michael B. Lewis, Assistant Secretary 12/9/96
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1. Type of Partner 2. Partner Name (Last, First, Middle Initial)
General
---
Limited
---
- -----------------------------------------------------------------------------------------------------------------------------------
3. Address (No., Street, City, State, ZIP Code)
- -----------------------------------------------------------------------------------------------------------------------------------
4. Contributions Previously Made (Limited Partners Only) 5. Future Contributions to be Made (Limited Partners Only)
Cash $ Other $ Cash $ Other $
--------- ---------- ------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
6. Description of Contributions Other than Cash: (Include all property or services contributed or to be contributed)
- -----------------------------------------------------------------------------------------------------------------------------------
7. Times or Events Requiring Future Contributions: (Cash, Property or Services)
- -----------------------------------------------------------------------------------------------------------------------------------
8. Signature 9. Date
- -----------------------------------------------------------------------------------------------------------------------------------
SEAL APPEARS ONLY ON ORIGINAL
</TABLE>
<PAGE> 1
EXHIBIT 3.4
For Ministry Use Only Ontario Corporation Number
Ministry of
Consumer and
Commercial 1037054
Ontario Relations
CERTIFICATE
This is to certify that
these articles are effective on EXHIBIT "D"
AUGUST 13, 1993
- --------------- Trans Line Comp Method
Code No. Stat Type Incorp.
[A] [O] [O] [A] [3]
18 20 28 29 30
[SIG]
Director Notice
Business Corporation Act Share Req'd Jurisdiction
[S] [N] [ ONTARIO ]
31 32 33 47
ARTICLES OF INCORPORATION
Form 1 1. The name of the corporation is:
Business
Corporation ARROW MOLDED PLASTICS OF CANADA INC.
Act.
1982
2. The address of the registered office is:
1000 - 374 OUELLETTE AVENUE
-----------------------------------------------------------
(Street & Number or R.R. Number & if Multi-
Office Building give Room No.)
WINDSOR, ONTARIO [N9A1A9]
-----------------------------------------------------------
(Name of Municipality or Post Office) (Postal Code)
CITY OF WINDSOR in the COUNTY OF ESSEX
--------------------------- ----------------
(Name of Municipality, (County, District,
Geographical Township) Regional Municipality)
3. Number (or minimum and maximum number) of directors is:
Minimum of One (1) and a Maximum of Ten (10)
4. The first director(s) is/are: Premier(s)
Residence address, giving street Resident
First name, & No. or R.R. No. or Canadian State
initials and municipality and postal Yes or No
surname code.
GERALD E. 2508 VILLA BORGHESE COURT YES
SkILLINGS WINDSOR, ONTARIO
N9G 2K2
<PAGE> 2
5. Restrictions, if any, on business the corporation may carry on or on powers
the corporation may exercise.
None
6. The classes and any maximum number of shares that the corporation is
authorized to issue.
An unlimited number of common shares.
<PAGE> 3
7. Rights, privileges, restrictions and conditions (if any) attaching to
each class of shares and directors authority with respect to any class of
shares which may be issued in series:
The Common Shares shall have attached thereto the following rights,
privileges, restrictions and conditions:
(i) Subject to the prior rights of the holders of any other
shares ranking senior to the common shares with respect to priority in
the payment of dividends, the holders of common shares shall be
entitled to receive dividends and the corporation shall pay dividends
thereof, as and when declared by the board of directors of the
corporation out of moneys properly applicable to the payment of
dividends, in such amount and in such form as the board of directors
may from time to time determine and all dividends which the directors
may declare on the common shares shall be declared and paid in equal
amounts per share on all common shares at the time outstanding.
(ii) In the event of the dissolution, liquidation or winding-up of
the corporation, whether voluntary or involuntary, or any other
distribution of assets of the corporation among its shareholders for
the purpose of winding-up its affairs, subject to the prior rights of
the holders of any other shares ranking senior to the common shares
with respect to priority in the distribution of assets upon
dissolution, liquidation or winding-up, the holders of the common
shares shall be entitled to receive the remaining property and assets
of the corporation.
(iii) The holders of the common shares shall be entitled to receive
notice of and to attend all meetings of the shareholders of the
corporation and shall have one vote for each common share held at all
meetings of the shareholders of the corporation, except for meetings
at which only holders of another specified class or series of shares
of the corporation are entitled to vote separately as a class or
series.
<PAGE> 4
8. The issue, transfer or ownership of shares is/is not restricted and the
restrictions (if any) are as follows:
The right to transfer shares in the Corporation shall be restricted in that no
share shall be transferred without the express consent of the Board of
Directors of the Corporation.
<PAGE> 5
9. Other provisions, if any, are:
(a) The number of shareholders of the corporation exclusive of persons who are
in its employment and exclusive of person who, having been formerly in the
employment of the Corporation, were, after the termination of that
employment to be shareholders of the corporation, is limited to not more
than fifty (50), two (2) or more persons who are the joint registered
owner of one or more shares being counted as one (1) shareholder.
(b) Any invitation to the public to subscribe for securities of the corporation
is prohibited.
(c) The directors of the corporation may, from time to time:
(i) borrow money upon the credit of the corporation;
(ii) issue, sell or pledge debt obligations of the corporation, including
without limitation, bonds, debentures, notes or other similar
obligations of the corporation whether secured or unsecured;
(iii) charge, mortgage, hypothecate or pledge all or any currently owned or
subsequently acquired real or personal movable or immovable property
of the corporation, including book debts, rights, powers, franchises
and undertaking, to secure any debt obligations or any money
borrowed, or other debt or liability of the corporation;
(iv) delegate to such one or more of the officers and directors of the
corporation as may be designated by the directors all or any of the
powers conferred by the foregoing clauses above to determine at the
time of each such delegation.
<PAGE> 6
10. The names and addresses of the incorporators are First name, initials
and last name or corporate name
- ----------------------------------------------------------
GERALD E. SKILLINGS
These articles are signed in duplicate.
Full residence address or address of registered office or
of principal place of business giving street & No. or R.R.
No., municipality and postal code
- -----------------------------------------------------------
2508 VILLA BORGHESE COURT
WINDSOR, ONTARIO
N9G 2K2
- -----------------------------------------------------------
Signatures of incorporators
-----------------------------
GERALD E. SKILLINGS
<PAGE> 7
Form 2 Business Corporations Act. 1982
CONSENT TO ACT AS FIRST DIRECTOR
i./je soussigne(e), GERALD E. SKILLINGS
-----------------------------------------------------------
(First name, initials and surname)
residing at/du 2508 VILLA BORGHESE COURT, WINDSOR, ONTARIO N9G 2K2
---------------------------------------------------------------
(Street & No. R.R. No., Municipality & Postal Code)
hereby consent to act as a first director of.
ARROW MOLDED PLASTICS OF CANADA INC.
- ------------------------------------------------------------------------------
(Name of Corporation)
[SIG]
--------------------------------------
Signature of the Consenting Person
<PAGE> 8
For Ministry Use Only Ontario Corporation Number
[SEAL] 1037054
[SIG] [5]
TRANS
CODE
C
18
Director/
Business Corporations Act/
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
Form 3 1. The present name of the corporation is:
Business
Corporation ARROW MOLDED PLASTICS
Act OF CANADA INC.
1982
2. The name of the corporation is changed to (if applicable):
ARROW MOULDED PLASTICS OF CANADA LTD.
3. Date of incorporation/amalgamation:
13 AUGUST 1993
- --------------------------------------------------------------------------------
(Day, Month, Year)
4. The articles of the corporation are amended as follows:
WHEREAS the Corporation was incorporated by Articles of
Incorporation dated August 13, 1993;
AND WHEREAS it is considered necessary and expedient and in
the best interests of the Corporation to amend its' Articles
of Incorporation by filing Articles of Amendment as
hereinafter provided;
NOW THEREFORE BE IT RESOLVED THAT:
1. The Articles of Incorporation of the Corporation be
amended by changing the name of the Corporation to:
ARROW MOULDED PLASTICS OF CANADA LTD.
2. The President or any one of the Directors of the
Corporation be and he is hereby authorized and directed
to sign such Articles of Amendment or such further or
other documents as may be required to give effect to the
Special Resolutions herein.
<PAGE> 9
3. Upon Articles of Amendment having became effective in accordance with the
provisions of the Business Corporations Act, the Articles of Incorporation
of the Corporation are amended accordingly.
5. The amendment has been duly authorized as required by Sections 167 and 169
(as applicable) of the Business Corporations Act.
6. The resolution authorizing the amendment was approved by the
shareholders/directors (as applicable) of the corporation on
08 NOVEMBER 1993
----------------------------------------------------------------
(Day, Month, Year)
These articles are signed in duplicate.
ARROW MOLDED PLASTICS OF CANADA INC.
-------------------------------------------
(Name of Corporation)
By Par: [SIG]
-----------------------------------
(Signature) (Description of Office)
(Signature) (Function)
<PAGE> 10
[SEAL]
Nova Scotia
CERTIFICATE OF INCORPORATION
Companies Act
Registry Number
3001422
Name of Company
3001422 NOVA SCOTIA COMPANY
I hereby certify that the above-mentioned company was incorporated this
date under the Companies Act and that the liability of the members is
unlimited.
Karen Richard September 24, 1996
- ------------------------------------------- ---------------------
A/Deputy Registrar of Joint Stock Companies Date of Incorporation
<PAGE> 11
[NOVA SCOTIA LOGO]
CERTIFICATE OF STATUS
Registry Number
3002457
I hereby certify that according to the records of this office
LDM TECHNOLOGIES COMPANY
was formed by virtue of amalgamation on September 29, 1996 under the Companies
Act of Nova Scotia as an unlimited liability company
and is a valid and subsisting company.
I further certify that according to the records of this office
LDM TECHNOLOGIES COMPANY
was registered under the Corporations Registration Act of Nova Scotia on
September 27, 1996 and the certificate is still in force.
I further certify that according to the records of this office, there are no
encumbrances filed with respect to the company under the Corporations
Securities Registration Act.
Karen Richard January 14, 1997
----------------------------------------- -------------------
Deputy Registrar of Joint Stock Companies Date of Issue
<PAGE> 12
[NOVA SCOTIA LOGO]
CERTIFICATE OF REGISTRATION
Corporations Registration Act
Registry Number
3002457
Name of Company
LDM TECHNOLOGIES COMPANY
I hereby certify that the above-mentioned company, resulting from the
amalgamation of:
3001422 NOVA SCOTIA COMPANY
ARROW MOULDED PLASTICS OF CANADA LIMITED
is hereby registered this date under the Corporations Registration Act.
N M Homans September 29, 1996
- -------------------------------------------- --------------------
A/Deputy Registrar of Joint Stock Companies Date of Registration
<PAGE> 13
[NOVA SCOTIA LOGO]
CERTIFICATE OF AMALGAMATION
Companies Act
Registry Number
3002457
I hereby certify that
3001422 NOVA SCOTIA COMPANY
ARROW MOULDED PLASTICS OF CANADA LIMITED
having entered into an amalgamation subsequently approved by Order of the
Supreme Court of Nova Scotia, have amalgamated and the name of the amalgamated
company is:
LDM TECHNOLOGIES COMPANY
and the amalgamation is approved by the Registrar of Joint Stock Companies
effective this date and the liability of the members is unlimited.
N M Homans September 29, 1996
- -------------------------------------------- --------------------
A/Deputy Registrar of Joint Stock Companies Date of Amalgamation
<PAGE> 1
EFFECTIVE 7/26/93
EXHIBIT 3.5
BYLAWS
OF
LDM INDUSTRIES, INC.
ARTICLE I
OFFICES
SECTION 1. The principal and registered offices of the Corporation shall
be in the County of Oakland, State of Michigan.
SECTION 2. The Corporation may also have offices at such other places as
the Board of Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS AND STOCKHOLDERS' MEETINGS
SECTION 1. The stockholders of this Corporation shall be those who appear
on the books of the Corporation as holders of one or more shares of the capital
stock.
SECTION 2. Any and all meetings of stockholders, and of the Board of
Directors, may be held within or without the State of Michigan, provided that no
meeting of the stockholders shall be held at a place other than the registered
office in the State of Michigan, except pursuant to Bylaw, or resolution adopted
by the Board of Directors.
SECTION 3. The annual meeting of stockholders for the election of the
Directors and for transacting such other business as may properly come before
such meeting shall be held each year on a date selected at the discretion of the
Board of Directors. In lieu of any date specified in the first sentence of this
sub-paragraph, such annual meeting in any year may be held on another date which
is not a Sunday or legal holiday, and which is not earlier than three (3) months
before and not later than eight (8) months after the ending of the Corporation's
fiscal year.
SECTION 4. Notice of meetings, written or printed, for every annual
meeting or special meeting of stockholders shall be prepared by the Secretary
and by him mailed to the last known post office address of each stockholder
having voting rights, not less than ten (10) nor more than sixty (60) days prior
to the date of such meeting. Such notice shall state the time, place and
purposes thereof; provided, however, that any annual or special meeting of
stockholders may be held without notice when all stockholders having voting
rights are represented in person or by proxy at such
<PAGE> 2
meeting, except when the stockholder attends the 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. In no case
shall a failure to mail the notice required in this paragraph, or any
irregularity in such notice, affect the validity of any annual meeting of
stockholders, or of any proceedings had at such meetings.
SECTION 5. The holders of a majority of the stock issued and outstanding,
and entitled to vote thereat, present in person, or represented by proxy, shall
be requisite and shall constitute a quorum at all meetings of the stockholders
for the transaction of business except as otherwise provided by law. If,
however, such majority shall not be present or represented at any meeting of
stockholders, the stockholders (entitled to vote thereat) present in person or
by proxy shall have the power to adjourn the meeting from time to time without
notice other than announcement at the meeting, until the requisite amount of
voting stock shall be present. At such adjourned meeting, at which the
requisite amount of voting stock shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 6. At such meeting of stockholders every stockholder having the
right to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing and subscribed by such stockholder or his authorized
agent or representative and bearing a date not more than three (3) months prior
to the said meeting. The vote for Directors shall be by ballot. All elections
shall be had and all questions decided by a plurality vote, unless otherwise
provided by statute or the Bylaws.
SECTION 7. A complete list of stockholders entitled to vote at a
stockholders' meeting or any adjournment thereof, arranged alphabetically,
within each class and series, with the address of, and the number of shares held
by, each stockholder, shall be prepared and certified by the Secretary, shall be
produced at the time and place of the meeting, shall be subject to inspection by
any stockholder during the whole time of the meeting, and shall be prima facie
evidence as to who are the stockholders entitled to examine the list or to vote
at the meeting.
SECTION 8. A special meeting of stockholders may be called at any time by
the Chairman of the Board, President, by a majority of the Board of Directors,
or by stockholders entitled to vote, upon not less than an aggregate of 50% of
the outstanding shares of the Corporation having the right to vote at such
meeting. Upon receipt of a specification in writing setting forth the date and
objects of such proposed special meeting, signed by the Chairman of the Board,
President, a majority of the Board of Directors or by stockholders as above
provided, the Secretary of this Corporation shall prepare, sign and call the
notice requisite to such meeting.
SECTION 9. The order of business at all stockholders' meetings shall be:
A. Roll Call.
B. Proof of proper notice of meetings.
-2-
<PAGE> 3
C. Reports of Officers.
D. Reports of committees.
E. Transaction of business set forth in the Notice.
F. Adjournment.
In the absence of any objection, the presiding officer may vary the order of
business at his discretion.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. The affairs of this Corporation shall be managed by a Board of
not less than one (1) or more than five (5) Directors, who need not be
stockholders. They shall be elected by stockholders at each regular annual
meeting and shall hold office for one (1) year or until their successors have
been elected and seated, unless sooner displaced. A majority of the Directors
shall constitute a quorum for transacting business.
SECTION 2. In addition to the powers and authorities expressly conferred
upon it by the Bylaws, the Board may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by the Bylaws directed or required to be exercised or done
by the stockholders.
SECTION 3. In the event of a vacancy or vacancies in the Board of
Directors, however caused, the remaining Directors, though less than a majority
of the whole authorized number of Directors, may, by the vote of a majority of
their number, fill any such vacancy until the next annual meeting of
stockholders, at which time the stockholders shall fill the vacancy.
SECTION 4. Any Director may resign at any time by an oral statement made
at a meeting of the Board of Directors or in a writing to that effect delivered
to the Secretary. Such resignation may take effect immediately or at such other
time as the Director may specify.
SECTION 5. Immediately after each annual meeting of stockholders, the
newly-elected Directors shall hold an organizing meeting to elect officers and
to transact any other appropriate business. Notice of such meeting need not be
given.
SECTION 6. Regular meetings of the Board of Directors shall be held at
such times and places within or without the State of Michigan as may be
determined by the Board of Directors.
SECTION 7. Special meetings of the Board of Directors may be held at any
time within or without the State of Michigan upon call by the Chairman of the
Board, President or any two
-3-
<PAGE> 4
Directors. Written notice of the time and place of such meeting shall be given
to each Director either by personal delivery or by mail, telegram or cablegram
at least three (3) days before the meeting. The notice need not specify the
purpose of the meeting; provided, however, that attendance of any Director at
such meeting, without protesting, prior to or at the commencement of the
meeting, the lack of proper notice, shall be deemed to be a waiver by him of
notice of such meeting. Such notice may be waived in writing by any Director
either before or after such meeting, which waiver shall be filed with or
entered upon the records of the meeting. Unless otherwise indicated in the
notice, any business may be transacted at any organizational, regular or special
meeting.
SECTION 8. A quorum of the Board of Directors shall consist of a majority
of the Directors then in office; provided, that a majority of the Directors
present at a meeting duly held, whether or not a quorum present, may adjourn
such meeting from time to time. If a meeting is adjourned, notice of such
adjournment need not be given if the time and place to which such meeting is
adjourned are fixed and announced at such meeting. At each meeting of the Board
of Directors at which a quorum is present, all of the questions and business
shall be decided by a majority vote of those present except as otherwise
specifically provided by statute, the Articles of Incorporation or the Bylaws.
SECTION 9. Any action which may be authorized or taken at a meeting of the
Board of Directors may be authorized or taken without a meeting in a writing or
writings approved and signed by all of the Directors. Such writing or writings
shall be filed with or entered upon the records of the Corporation.
SECTION 10. The Board of Directors may, at any time, appoint from its
members an executive, finance or other committee or committees, consisting of
such number of members, but not less than two (2), as the Board of Directors may
deem advisable, together with such alternates as the Board of Directors may deem
advisable, to take the place of any absent member, all of whom shall hold office
at the pleasure of the Board of Directors. Any such committee shall act only in
the intervals between meetings of the Board of Directors and shall have such
authority of the Board of Directors as may, from time to time, be delegated by
the Board of Directors, except the authority to amend the Articles of
Incorporation, adopt an agreement of merger or consolidation, recommend to
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommend to Stockholders the dissolution of
the Corporation or a revocation of dissolution, amend the Bylaws of the
Corporation, fill vacancies in the Board of Directors or in any committee of the
Board of Directors, fix compensation of the Board of Directors for serving on
the Board, or on a committee, declare a dividend or authorize the insurance of
stock. Subject to the aforesaid exceptions, any person dealing with the
Corporation shall be entitled to rely upon any act or authorization of any act
by any such committee, to the same extent as an act or authorization of the
Board of Directors. Each committee shall keep full and complete records of all
dealings and actions, which shall be open to inspection by the Directors. Unless
otherwise determined by the Board of Directors, such committee may adopt its own
methods of procedure. Such committee may act at a meeting by a majority of its
members or without a meeting by a writing or writings signed by all of its
members.
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SECTION 11. The compensation of Directors and officers shall be fixed by
the Board. Compensation of employees and agents may be fixed by the Board.
ARTICLE IV
OFFICERS
SECTION 1. The officers of the Corporation (who need not be stockholders)
shall be appointed by the Directors and shall be a Chairman of the Board,
President, Secretary and Treasurer. The Board of Directors may also appoint an
Assistant Secretary, Assistant Treasurer and one or more Vice-Presidents at its
discretion. Any two offices except for those of Chairman of the Board,
President and Vice-President may be held by the same person simultaneously. No
officer except the Chairman of the Board and the President need be a Director,
but no person who is not a Director may succeed to or fill the office(s) of
Chairman of the Board or President.
SECTION 2. The Board may appoint such other officers and agents as it shall
deem necessary. They shall hold office for such terms and shall exercise such
powers and duties as determined by the Board.
SECTION 3. The officers of the Corporation shall hold office until their
successors are elected. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the Board of
Directors. If any office becomes vacant for any reason, the vacancy shall be
filled by the affirmative vote of a majority of the Board of Directors.
SECTION 4. The Chairman of the Board shall preside at all meetings of
stockholders, and of the Board of Directors in the absence of the President. In
the absence of the President, he shall assume such other powers and duties of
the President as are delegated to him by a majority of the Board of Directors.
SECTION 5. The President shall be the chief executive officer of the
Corporation. He shall preside at all meetings of the Board of Directors. The
President shall perform all of the duties usually appertaining to the office of
president and chief executive officer of a Corporation. He shall have general
charge, subject to the Board of Directors, of the business affairs of the
Corporation. He shall have such other powers and duties as may be given him by
the Board of Directors.
SECTION 6. The Vice-President shall perform all the duties usually
appertaining to that office, and shall exercise the duties of the President in
the absence of the President, other than those powers and duties assumed by the
Chairman of the Board of Directors in accordance with Article IV, Section 4, of
these Bylaws.
SECTION 7. The Secretary shall keep the minutes of the stockholders' and
Directors' meetings. He shall have custody of the corporate seal and all
records, papers, books and files of the Corporation, except the books of
account. He shall issue notice of all meetings required by the
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<PAGE> 6
Bylaws, affix the corporate seal to all instruments of the company requiring the
same and attest the same by his signature whenever such attestation shall be
required. He shall perform all of the duties usually appertaining to the office
of Secretary of a Corporation.
SECTION 8. The Treasurer shall have the custody of all corporate funds and
securities. He shall keep in books belonging to the Corporation, full and
accurate accounts of all receipts and disbursements. He shall deposit all
monies, 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 shall disburse funds of the Corporation as ordered by the Board,
taking vouchers for such disbursements, and shall render to the President and
Directors at the regular meetings of the Board, and whenever requested by them,
an account of his transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board, he shall deliver to the President of
the Company and shall keep in force a bond in form and amount and with surety or
sureties satisfactory to the Board. Such bond shall be conditioned upon the
faithful performance of the duties of his office and the restoration to the
Corporation in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and property of whatever kind in
his possession or under his control belonging to the Corporation.
SECTION 9. The Assistant Secretary shall possess the powers and perform the
duties of the Secretary in the absence or disability of the latter. He shall at
all times act as an assistant to the Secretary and have such powers and perform
such duties of the Secretary as shall be assigned to him by the Board of
Directors or by the Secretary. In case both the Secretary and Assistant
Secretary are at the same time absent or unable to perform their duties, the
Board of Directors may appoint a Secretary pro tempore with powers and duties to
act as Secretary during the absence and disability of both the Secretary and
Assistant Secretary.
SECTION 10. The Assistant Treasurer shall possess the powers and perform
the duties of the Treasurer in the absence or disability of the latter and he
shall at all times act as an assistant to the Treasurer. He shall have such
powers to perform such duties of the Treasurer as shall be assigned to him by
the Board of Directors or the Treasurer.
SECTION 11. When the execution of any contract, conveyance, or other
instrument has been authorized without specification of the officers authorized
to execute, the Chairman of the Board, President or the Vice-President and the
Secretary or the Treasurer may execute the same in the name and on behalf of the
Corporation and may affix the corporate seal thereto. The Board of Directors
shall have the power to designate the officers and agents who shall have the
authority to execute any instrument on behalf of the Corporation.
SECTION 12. In case of the absence of any officer of the Corporation, or
for any other reason that the Board may deem sufficient, the Board may delegate,
for the time being, the powers or duties, or any of them, of such officer to any
other officer, or to any Director, provided a majority of the Board concur
therein.
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SECTION 13. The several officers of the Corporation are empowered and
authorized to perform such other and further duties as from time to time may be
assigned to their respective offices by action of the Board of Directors.
SECTION 14. The Directors may by resolution require any and all
officers of the Corporation and any and all employees of the Corporation to give
bond to the Corporation with sufficient sureties conditioned upon the faithful
performance of the duties of their respective offices or employment.
ARTICLE V
INDEMNIFICATION
SECTION 1. Every person who is or has been a Director or officer of the
Corporation or an agent of the Corporation serving on any committee
administering the Corporation's employee benefit plans, or any other agent of
the Corporation designated by resolution of the Board of Directors to be
entitled to indemnification, including the personal representatives of any such
deceased person, of the Corporation, or of any other corporation which he serves
or served as such at the request of the Corporation because of the Corporation's
interest, direct or indirect, as owner of shares of capital stock or as a
creditor, shall to the full extent now or hereafter permitted by law, be
indemnified by the Corporation against any and all liability and reasonable
expense (including but not limited to, counsels' and accountants fees,
investigation cost, travel, transcripts, disbursements, settlement amounts,
judgments, fines or penalties) paid by or incurred by him in connection with, in
settlement of or resulting from any claim, action, suit or proceeding (whether
by or in the name of the Corporation or such other corporation, or otherwise),
civil, criminal, administrative or investigative, including any appeals relating
thereto, in which he may be involved or threaten to be involved, as a party or
otherwise, by reason of his being or having been a Director, officer or
employee of the Corporation or such other corporation, or by reason of any
action taken or not taken in the course and scope of his function as such
officer or employee or in his capacity as such Director.
The Corporation shall indemnify, insure and save harmless all officers,
Directors and advisory committees, past, present and future, and all other
persons now or hereafter involved, or deemed to be, in a fiduciary capacity in
connection with the Company's pension plan or other plans governed by, subject
to and/or covered by the Employee Retirement Income Security Act of 1974; said
self-insurance is to indemnify, insure and save harmless all such officers,
Directors, advisory committees and other persons from and against all loss,
cost, damage or expense, including attorney fees and any other expenses incurred
as a result of or arising out of their activity, jointly and/or severally, in
connection with such pension plan or other plan covered by the Employee
Retirement Income Security Act of 1974, as amended, pertaining to any such
fiduciary liability.
The foregoing rights of indemnification shall be in addition to any other
rights to which any such director or officer may be entitled as a matter of law.
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SECTION 2. The Board of Directors (whether or not a quorum of disinterested
Directors), in granting indemnification, may rely upon the written advice of
legal counsel that in the latter's opinion such indemnification is permitted by
law. Any Director, officer or employee who has been refused indemnification by
the Corporation shall, nevertheless, be indemnified if a court of competent
jurisdiction determines such indemnification is permitted by law.
SECTION 3. The Corporation may advance funds to cover expenses incurred
with respect to any claim, action, suit or proceeding of the character, actual
or threatened, described in Section 1 of this Bylaw, prior to the final
disposition thereof, upon receipt of an undertaking by such person to repay the
amount so advanced if and to the extent it should ultimately be determined by a
court of competent jurisdiction that he was not entitled to indemnification
under this Bylaw.
SECTION 4. The intention of this Bylaw is to provide indemnification with
the broadest and most inclusive coverage permitted by law (a) at the time of the
act or omission to be indemnified against or (b) so permitted at the time of
carrying out such indemnification, whichever of (a) and (b) may be the broader
or more inclusive, and permitted by law to be applicable. If the
indemnification, permitted by law at this present time, or any future time,
shall be broader or more inclusive than the provisions contained in this Bylaw,
then indemnification shall nevertheless extend to the broadest and most
inclusive permitted by the law at any time, and this Bylaw shall be deemed to
have been amended accordingly. If any provision or portion of this Article
shall be found in any action, suit or proceeding to be invalid or ineffective,
the validity and effect of the remaining parts shall not be affected.
ARTICLE VI
CAPITAL STOCK
SECTION 1. Every stockholder shall be entitled to a stock certificate
signed by the Chairman of the Board, President or Vice President and by the
Secretary, Assistant Secretary or Treasurer (except that where any such
certificate is signed by a transfer agent, and by a registrar, the signatures of
such Chairman of the Board, President, Vice-President, Secretary, Assistant
Secretary or Treasurer may be facsimiles, engraved or printed) and sealed with
the seal of the Corporation (or bearing a facsimile of such seal), certifying
the number of shares represented by such certificates.
SECTION 2. Shares shall be transferable on the books of the Corporation by
the persons named in the certificate or by power of attorney lawfully
constituted in writing, upon surrender of the certificate thereof. A record
shall be made of every transfer and issue. Whenever any transfer is made for
collateral security only and not absolutely, that fact shall be noted in the
entry of such transfer.
SECTION 3. The Board of Directors shall set a record date, which shall be
not less than ten (10) nor more than sixty (60) days prior to (a) the date of
any meeting of stockholders, (b) the date for the payment of any dividends, (c)
the date for the allotment of rights, (d) the date when any change of conversion
or exchange of capital stock shall go into effect, as the record date for
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<PAGE> 9
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, or entitled to receive payment of any such dividend, or to any
such allotment of rights or to exercise the rights in respect of any such
change, conversion, or exchange of capital stock. In such case such stockholders
and only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to notice of, and to vote at, such meeting, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of stock
on the books of the Corporation or otherwise after the record date is fixed as
aforesaid. Nothing in this Section shall affect the rights of the stockholder
and his transferee or transferor as between themselves.
SECTION 4. 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 receive actual or
other notice thereof, save as may be otherwise provided by the statutes of
Michigan.
SECTION 5. The Board of Directors shall have power and the authority to
make such rules and regulations as the Board shall deem expedient regulating the
issue, transfer and registration of certificates for shares of stock of this
Corporation.
SECTION 6. No certificates for shares of the capital stock of the
Corporation shall be issued in place of any certificate alleged to have been
lost, stolen or destroyed, except by consent of the Board of Directors. The
Board of Directors may at its discretion require the owner of the lost or
destroyed certificates, 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 loss or destruction of any such
certificate. The Board of Directors, in its discretion, may refuse to issue
such new certificate, save upon the order of a court having jurisdiction in such
matters.
ARTICLE VII
VOTING STOCK IN OTHER CORPORATIONS
Unless otherwise voted by the Board of Directors, the President shall have
full power and authority, on behalf of this Corporation, to attend, to act and
to vote at any meetings of stockholders of any corporation in which this
Corporation may hold stock, and at any such meeting, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock
and which, as the owner thereof, the Corporation might have possessed and
exercised if present. The Board of Directors, by resolution, may confer like
powers upon any other person or persons.
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ARTICLE VIII
CHECKS
All checks, drafts, orders for the payment of money, notes or evidences of
indebtedness issued in the name of the Corporation shall be signed by such
officer, officers, agent or agents of the Corporation, and in such manner, as
shall be determined by action of the Board of Directors.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall end on the last Sunday in
September of each year.
ARTICLE X
DIVIDENDS
Dividends upon the capital stock of the Corporation, subject to the
provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting pursuant to law. Dividends
may be paid in cash, in property or in shares of capital stock, from earned
surplus or capital surplus. In determining earned surplus the judgment of the
Board of Directors shall be conclusive, in the absence of bad faith or gross
negligence.
The Board of Directors shall have authority to set apart, out of any funds
available for dividends, such reserve or reserves, for any purpose, as the Board
in its discretion shall approve. The Board shall have power and authority to
abolish any reserve created by the Board.
ARTICLE XI
NOTICES
SECTION 1. Whenever under the provisions of these Bylaws, notice is
required to be given to any Director, officer or stockholder, it shall not be
construed to mean personal notice. Such notice, unless otherwise provided by
these Bylaws or by statute, may be given in writing by depositing the same in
the Post Office or letterbox in a postpaid sealed wrapper, addressed to such
stockholder, officer or Director at his address as it appears on the records of
the Corporation.
SECTION 2. Whenever any notice is required to be given by statute or under
the provisions of the Articles of Incorporation or Bylaws of this Corporation, 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 deemed
equivalent thereto.
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ARTICLE XII
SEAL
The Board of Directors may, in their discretion, obtain a corporate seal
for this Corporation which shall be an impression upon paper or wax of a
circular device, within which shall be the words "Corporate Seal" surrounded by
the name of the Corporation and the word "Michigan" within containing
circumferential lines. Said seal may be used by causing it or a facsimile
thereof to be impressed, affixed or reproduced.
ARTICLE XIII
AMENDMENT OF BYLAWS
These Bylaws may be amended, altered, changed, added to or repealed by the
affirmative vote of a majority of shares entitled to vote at any regular or
special meeting of the stockholders if notice of the proposed amendment,
alteration, change, addition or repeal be contained in the notice of the
meeting, or by the affirmative vote of a majority of the Board of Directors at a
regular or special meeting of the Board; provided that, any Bylaws made by the
affirmative vote of a majority of the Board of Directors as provided herein may
be amended, altered changed, added to or repealed by the affirmative vote of a
majority of the shares entitled to vote at any regular or special meeting of the
stockholders.
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EXHIBIT 3.6
OPERATING AGREEMENT
FOR
LDM HOLDINGS, L.L.C.
A MICHIGAN LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT is made and entered into as of December 10, 1996,
by and among LDM Holdings, L.L.C., a Michigan limited liability company
("Company") and LDM Technologies, Inc., a Michigan corporation f/k/a LDM
Industries Inc., and LDM Holding Canada, Inc., a Michigan corporation
(individually "Member" and collectively "Members") who agree as follows:
ARTICLE I
ORGANIZATION
1.1 FORMATION
The Company has been organized as a Michigan limited liability company
pursuant to the Michigan Limited Liability Company Act, 1993 PA 23 ("Act") by
the filing of Articles of Organization ("Articles") with the Michigan Department
of Consumer and Industry Services-Corporation and Land Development Bureau.
1.2 NAME
The name of the Company is LDM Holdings, L.L.C. The Company may also
conduct its business under one or more assumed names.
1.3 PURPOSES
The purpose of the Company is to engage in any activity for which limited
liability companies may be formed under the Act. The Company shall have all the
powers necessary or convenient to effect any purpose for which it is formed,
including all powers granted by the Act.
1.4 DURATION
The Company shall continue in existence for the period fixed in the
Articles for the duration of the Company or until the Company dissolves and its
affairs are wound up in accordance with the Act or this Operating Agreement.
1.5 REGISTERED OFFICE AND RESIDENT AGENT
The Registered Office and Resident Agent of the Company shall be as
designated in the initial or amended Articles. The Registered Office and/or
Resident Agent may be changed from
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time to time. Any such change shall be made in accordance with the Act. If the
Resident Agent resigns, the Company shall promptly appoint a successor.
1.6 INTENTION FOR COMPANY
The Members have formed the Company as a limited liability company under
the Act. The Members specifically intend and agree that the Company shall not
be a partnership (including a limited partnership), association or any other
venture, but a limited liability company under and pursuant to the Act. No
Member or Manager shall be construed to be a partner or agent in the Company or
a partner of any other Member, or person, and the Articles, this Operating
Agreement, and the relationships created by and arising from them shall not be
construed to suggest otherwise.
ARTICLE II
MEMBERSHIP INTERESTS, CAPITAL ACCOUNTS, CAPITAL CONTRIBUTIONS
2.1 MEMBERSHIP INTERESTS
Each of the Members has made an initial capital contribution, and owns a
membership interest in the Company ("Membership Interest") as specified below:
Initial Capital
Name of Member Contribution Membership Interest
LDM Technologies, Inc. $200 66-1/3 %
LDM Holding Canada, Inc. $l00 33-1/3 %
---- ------
Total $300 100%
==== ======
2.2 MEMBER'S CAPITAL ACCOUNTS
2.2.1 The Company shall maintain a separate Capital Account for each
Member, which Capital Account shall be:
A. Increased for the amount of cash and fair market value of
any property (net of any liabilities secured by the property that the
Company assumes or takes subject to) contributed by the Member and for
the Member's share of any income or gain of the Company; and
B. Decreased for the amount of any cash and fair market value of
any property (net of any liabilities secured by the property that the
Member assumes or takes subject to) distributed to the Member, for the
Member's share
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of any losses and deductions of the Company and for any expenditures
under IRC Section 705(a)(2)(B).
2.2.2 In the event that a Membership Interest, or any portion
thereof, shall be transferred in accordance with this Operating Agreement,
the transferee shall succeed to the Capital Account of the transferor
Member or any portion thereof so transferred.
2.2.3 All of the foregoing provisions regarding the establishment and
maintenance of Capital Accounts are intended to comply with Treas Reg
Section 1.704-1(b)(2)(iv) and shall be interpreted and applied to comply
with said Treasury Regulation. The Members further agree to make such
adjustments to the Capital Accounts as may be necessary or appropriate in
order to comply with said Treasury Regulation.
2.2.4 Except as otherwise expressly provided herein or under the Act,
no Member shall be entitled to receive any interest or return on any
contributions to the Company or on the Members' Capital Accounts, nor shall
any Member have any interest, right or claim in or to any assets of the
Company.
2.3 ADDITIONAL CONTRIBUTIONS BY MEMBERS
Although no Member shall be required to contribute additional funds to the
Company, the Members acknowledge that the business of the Company may not
produce sufficient income to discharge its operating costs and that additional
cash contributions may be necessary to pay the obligations of the Company as
they become due. Accordingly, should the Members determine that it is necessary
or appropriate to raise additional funds, then the following provisions shall
apply:
2.3.1 The Company shall issue a written notice of capital
request ("Notice of Capital Request") to each Member to contribute
additional funds to the Company. The Notice of Capital Request shall
include the following information:
A. The total amount of capital requested from all of the
Members ("Total Capital Request");
B. Each Member's share of the Total Capital Request, which
shall be determined by multiplying the Total Capital Request by the
Membership Interest of each Member ("Member Capital Contribution");
and
C. The date on or before which the Member Capital
Contribution shall be due, which date shall not be less than thirty
(30) days from the date of the Notice of Capital Request.
3
<PAGE> 4
2.3.2 Should any Member neglect, fail or refuse to timely
contribute any portion of such Member's Capital Contribution ("Delinquent
Member"), then the Company shall so notify the other Members ("Member
Notice") and the other Members who have paid their Member's Capital
Contribution in full ("Non-Delinquent Members") shall have the option to
contribute the Delinquent Member's Capital Contribution on a pro-rata basis
(in accordance with the then respective Membership Interest of each other
Non-Delinquent Member as compared to the total Membership Interests of all
Non-Delinquent Members). In the event that any Non-Delinquent Member
neglects, fails or refuses to contribute the Member's pro-rata share of the
Delinquent Member's Capital Contribution within thirty (30) days of the
Member Notice, then all other Non-Delinquent Members shall have the right
to contribute the remaining deficiency in the Delinquent Member's Capital
Contribution on a pro-rata basis (as to all such other Non-Delinquent
Members and in the manner hereinabove provided), which procedure shall be
repeated until the Delinquent Member's Capital Contribution is satisfied or
all Non-Delinquent Members fail to contribute any additional capital.
2.3.3 The Membership Interests of the Members shall be adjusted
so that the Membership Interest of each Member shall equal an amount
determined by the following formula:
Aggregate Capital Contributions of Member
----------------------------------------------
Aggregate Capital Contributions of All Members X 100
ARTICLE III
ADMINISTRATIVE PROVISIONS
3.1 BOOKS OF ACCOUNT
At all times during the continuance of the Company, the Company shall keep
or cause to be kept full and true books of account, which shall reflect each
transaction of the Company. Such books of account, together with a list of the
names and addresses of each Member, a copy of the Articles, copies of the
Company's financial statements and federal, state and local tax returns and
reports for the three most recent fiscal years, and copies of records that would
enable a Member to determine the Member's Membership Interests and relative
voting rights, shall be maintained at all times at the registered office of the
Company and shall be open to reasonable inspection and examination of the
Members or their duly authorized representatives at the registered office of the
Company during reasonable business hours upon reasonable notice to the Company.
The Company may engage certified public accountants to assist in the preparation
of the Company's books and financial statements, and to render such other
services requested by the Company.
4
<PAGE> 5
3.2 REPORTS
The Company shall endeavor to furnish to each Member within ninety (90)
days after the end of each fiscal year or as soon as practical after such ninety
(90) day period, an annual report of the business and operations of the Company
during such year, together with such information as may be necessary for the
preparation of each Member's federal and state income or other tax returns.
Such annual report shall contain a copy of the annual financial statement of the
Company showing the gross receipts and expenses and profit or loss and
allocation thereof to each Member for the year.
3.3 FISCAL YEAR AND ACCOUNTING METHOD
The fiscal year of the Company shall be the calendar year. The books and
records of the Company shall be kept on the accrual method.
3.4 TAX MATTERS MEMBER; MEMBER TAX RETURNS
3.4.1 As used in this Operating Agreement, "Tax Matters Member" has
the same meaning as the term "tax matters partner" as set forth in the
Internal Revenue Code of 1986 or successor law ("IRC"), Section 6231(a)(7).
Richard J. Nash is hereby designated Tax Matters Member for the Company.
3.4.2 The Tax Matters Member designated pursuant to subsection 3.4.1
hereof shall have full power and authority to act as such for the Company
and the Members, with all the rights and responsibilities of that position
described in IRC Section 6222 through IRC Section 6233, except, however, to
the extent IRC Section 6224(c)(3)(B) provides certain rights and privileges
to the non-tax matters partners of a Company. The duty of the Tax Matters
Member to keep each Member informed of administrative and judicial
proceedings involving tax issues relating to the Company, its property or
business shall be limited to a duty to inform each Member of the beginning,
completion and results of such proceedings.
3.4.3 The Tax Matters Member shall in no event be liable for loss or
damage to the Company or any Member arising from the exercise of any of the
Members' rights and/or the performance of any of the Members'
responsibilities referred to in this Section. To the fullest extent
permitted by law, the Company shall indemnify the Tax Matters Member from
any and all claims, liabilities, costs and expenses, including, without
limitation, reasonable attorney fees, incurred by him or her in connection
with any act or omission as the Tax Maters Member other than acts or
omissions which constitute fraud, breach of fiduciary duty, willful or
intentional misconduct, gross misconduct or a breach of this Operating
Agreement.
5
<PAGE> 6
3.4.4 Each Member shall reflect on the Member's individual
income tax returns all items of income, gain, loss deduction or credit
relating to the Company, its property or business in a manner which is
consistent with the treatment of such items on the Company returns.
3.5 BANK ACCOUNTS
One or more Company bank accounts may be established, and checks issued on
such accounts shall be signed by one or more Members who shall be designated by
the Members.
ARTICLE IV
TAX ALLOCATIONS
4.1 ALLOCATION OF PROFITS AND LOSSES
4.1.1 Profit and loss from Operations. After giving effect to the
allocations set forth in Sections 4.2, 4.3 and 4.4 hereof, any income,
gain, loss, deduction or credit of the Copmany ("Profits and
Losses"), except as otherwise provided under Sections 4.1.2 and 4.1.3
hereof, shall be allocated among the Members in accordance with their
Membership Interests.
4.1.2 Income and Gain from Capital Sale. Any income or gain arising
from the sale of all or substantially all of the assets of the Company
("Capital Sale") shall be allocated in the following order:
A. First, to those Members having negative Capital Account
balances, pro-rata in proportion to their respective negagive Capital
Account balances, to the extent of such negative Capital Account
balances;
B. Second, to the Members in proportion to their respective
unreturned capital contributions, until their Capital Account balances
shall equal the amount of their respective unreturned capital
contributions;
C. Third, to the Members, so that their Capital Account
balances are, as nearly as possible, in the same ratios as their
respective Membership Interests; and
D. Last, to the Members in proportion to their respective
Membership Interests.
4.1.3 Loss from Capital Sale. Any loss arising from a Capital
Sale shall be allocated in the following order:
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<PAGE> 7
A. First, to the Members so that their Capital Account
balances are, as nearly as possible, in the same ratio as their
respective Membership Interests;
B. Second, to those Members having positive Capital Account
balances, in proportion to and to the extent of, their respective
positive Capital Account balances; and
C. Last, to the Members in accordance with their respective
Membership Interests.
4.2 REGULATORY ALLOCATIONS
The following regulatory allocations shall be made as follows:
4.2.1 Minimum Gain Chargeback. To the extent and in the manner
required by Treasury Regulation Section 1.704-2(f), if there is a net
decrease in Company Minimum Gain during any fiscal year, each Member
shall be allocated items of Company income or gain for such fiscal year
(and, if necessary, subsequent fiscal years) equal to such Member's share
of the net decrease in Company Minimum Gain determined under Treasury
Regulation Section 1.704-2(g). This Section 4.2.1 is intended to comply
with the minimum gain Chargeback requirements of Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
4.2.2 Member Minimum Gain Chargeback. To the extent and in the
manner required by Treasury Regulation Section 1.704-2(i)(4), if there is a
net decrease in Member Minimum Gain, each Member with a share of such
Member Minimum Gain shall be allocated items of Company income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in
amount equal to such Member's share of the net decrease in Member Minimum
Gain. The items to be so allocated shall be determined in accordance with
Treasury Regulations 1.704-2(i)(4) and 1.704-2(j)(2). This section 4.2.2
is intended to comply with the minimum gain Chargeback requirement of
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
4.2.3 Qualified Income Offset. Any Member who unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), shall be allocated
items of Company income and gain in amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, any
deficit in the Capital Account of such Member as quickly, as possible.
4.2.4 Company Non-Recourse Deductions. Any Company Non-Recourse
Deductions shall be allocated among the Members in accordance with Treasury
Regulation Section 1.704-2(e).
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4.2.5 Member Non-Recourse Deductions. Member Non-Recourse
Deductions shall be allocated to the Members who bear the economic risk of
loss with respect to the Member Non-Recourse Debt to which Member
Non-Recourse Deductions are attributable in accordance with Treasury
Regulation Section l.704-2(i)(1).
4.3 ALLOCATIONS REGARDING CONTRIBUTED PROPERTY
Items of income, gain, loss and deduction with respect to any property
contributed to the Company by any Member shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such propery to the Company for federal income tax purposes
and its value for Capital Account purposes in accordance with IRC Section
704(c) and the Treasury Regulations thereunder. In the event the value of said
property is later adjusted, subsequent allocations of income, gain, loss and
deduction with respect to such property shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and
such adjusted value in accordance with any method permitted by IRC Section
704(c) and the Treasury Regulations thereunder.
4.4 CURATIVE ALLOCATIONS
4.4.1 The allocations contained in Section 4.2 hereof (the
"Regulatory Allocations") are necessary to comply with the requirements of
the Treasury Regulations. To the maximum extent possible, the Regulatory
Allocations shall be offset by other items of Company income, gain, loss or
deduction so that, after such offsetting allocations are made, the Members'
Capital Account balances are, to the extent possible, equal to the Capital
Account balances the Members would have if the Regulatory Allocations were
not made and all items of Profit and Loss were allocated in accordance with
each Member's respective Membership Interest.
4.4.2 The tax allocation provisions under this Article IV are
intended to produce final Capital Account balances upon liquidation of the
Company ("Target Final Balances") that will cause all liquidating
distributions under Section 5.2 of this Operating Agreement to be
allocated to the Members in the same manner as non-liquidating
distributions under Section 5.1 hereof. To the extent that the tax
allocation provisions under this Article IV would not produce such result,
the Members agree to any special and/or corrective allocations of one or
more items of the Profits and Losses necessary to produce the Target Final
Balances and avoid any distortion in the manner in which the Members intend
to share distributions from the Company.
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4.5 DEFINITIONS
For purposes of this Operating Agreement, the following definitions shall
apply:
4.5.1 "Company Non-Recourse Deductions" has the same meaning as
provided in Treasury Regulation Section 1.704-2(b)(1).
4.5.2 "Member Non-Recourse Deductions" has the same meaning as
provided in Treasury Regulation Section 1.704-2(i)(2).
4.5.3 "Member Non-Recourse Debt" has the same meaning as provided
in Treasury Regulation Section 1.704-2(b)(4).
4.5.4 "Member Minimum Gain" means an amount, with respect to any
Member Non-Recourse Debt, as determined in accordance with Treasury
Regulation Section l.704-2(i)(3).
4.5.5 "Company Minimum Gain" has the same meaning as provided in
Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
4.6 INTERPRETATION
The Members intend that the allocations of the Profits and Losses of the
Company shall be applied in a manner consistent with IRC Section 704 and the
Treasury Regulations thereunder, and the provisions of this Article IV shall be
interpreted in a manner consistent therewith.
ARTICLE V
DISTRIBUTIONS
5.1 NON-LIQUIDATING DISTRIBUTIONS
The Members may, in their discretion, make distributions to the Members
from time to time. Distributions may be made only after the Members determine
that the Company has cash on hand exceeding the Company's current and
anticipated needs (including operating expenses, debt service, capital
expenditures, establishment of reserves and other needs) which shall not be
retained in order to pursue any existing, potential or future business or
investment opportunities. All non-liquidating distributions shall be made to the
Members in accordance with their Membership Interests. Distributions shall be
in cash or property, or both, as the Members determine. No distribution shall
be declared or made if, after giving it effect, the Company would
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not be able to pay its debts as they became due in the usual course of
business, or the Company's total assets would be less than the sum of its total
liabilities.
5.2 LIQUIDATING DISTRIBUTIONS
Notwithstanding Section 4.2.1 of this Operating Agreement, in the event
that the Company is liquidated under Section 9.3 hereof or is "liquidated"
within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), then
all distributions shall be made to the Members who have positive Capital
Accounts in compliance with Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2),
but only after such Capital Accounts have been adjusted for all contributions
and distributions, and all allocations under Article IV for all periods.
ARTICLE VI
MANAGEMENT
6.1 MANAGEMENT OF COMPANY
The business and affairs of the Company shall be managed by the Members in
accordance with the affirmative vote or written consent of any Member(s) holding
a majority of the total Membership votes entitled to vote. Unless a greater
vote is expressly provided for herein, all approvals, consents, decisions,
actions and determinations by the Members, whether required or provided under
this Operating Agreement or the Act, shall be made upon and require the approval
of the affirmative vote or written consent of a majority of all votes held by
the Members entitled to vote thereon as provided under Section 6.2 hereof.
Without limiting the generality of the foregoing, subject to the limitations and
restrictions set forth in this Operating Agreement, the business and affairs of
the Company, including, without limitation, the following specific rights,
actions and powers, shall be conducted by the affirmative vote or written
consent of a majority of all votes held by the Members entitled to vote thereon:
6.1.1 Acquire by purchase, lease or otherwise any real or
personal property which may be necessary, convenient or incidental to the
accomplishment of the purposes of the Company;
6.1.2 Operate, maintain, finance, improve, construct, own, grant
options with respect to, sell, convey, assign, mortgage or lease any real
estate and any personal property necessary, convenient or incidental to the
accomplishment of the purposes of the Company;
6.1.3 Execute any and all agreements, contracts, documents,
certifications and instruments necessary or convenient in connection with
the management, maintenance, and operation of property, or in connection
with managing the affairs of the Company,
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including executing amendments to this Operating Agreement in accordance
with the terms of this Operating Agreement;
6.1.4 Borrow money and issue evidences of indebtedness
necessary, convenient or incidental to the accomplishment of the
purposes of the Company, and secure the same by mortgage, pledge or other
lien on any property;
6.1.5 Execute, in furtherance of any or all of the purposes
of the Company, any deed, lease, mortgage, deed of trust, mortgage note,
promissory note, bill of sale, contract or other instrument purporting to
convey or encumber property of the Company;
6.1.6 Maintain, invest and/or distribute funds to the
Members in accordance with the provisions of this Operating Agreement;
6.1.7 Contract on behalf of the Company for the employment
and service of employees and/or independent contractors, such as lawyers,
consultants and accountants;
6.1.8 Engage in any kind of activity and perform and carry
out contracts of any kind (including contracts of insurance covering risks
to property and Member's liability) necessary or incidental to, or in
connection with, the accomplishment of the purposes of the Company, as may
be lawfully carried on or performed under the Act;
6.1.9 Institute, prosecute, defend, settle, compromise or
dismiss lawsuits or other judicial or administrative proceedings brought on
or in behalf of, or against the Company, the property of the Company, in
connection with activities arising out of, connected with, or incidental to
this Operating Agreement, the Company or the business of the Company, and
to engage counsel or others in connection therewith.
6.2 MEMBER VOTING; CONSENT
For purposes of voting and acting by written consent on any matter
submitted to the Members as provided under this Operating Agreement or the
Act, each Member shall have the right to vote that number of votes determined by
multiplying the Membership Interest of each Member by one hundred (100).
Notwithstanding anything contained in this Operating Agreement to the contrary,
any approval, consent, action, decision or determination required or permitted
under this Operating Agreement or the Act to be taken by a vote of the Members
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 any
Member(s) having a majority of the total Membership votes.
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6.3 OPERATING RESTRICTIONS
6.3.1 Except as may otherwise be approved by a vote of the
Members entitled to vote thereon, no loans or guarantees of loans shall be
made by the Company to any Member.
6.3.2 No rebates, kickbacks, or reciprocal arrangements may be
received or entered into by any Member.
6.3.3 Except as may otherwise be approved by a vote of the
Members entitled to vote thereon, all property in the form of cash not
otherwise invested shall be deposited for the benefit of the Company in
one or more accounts of the Company, maintained in such financial
institutions as the Member shall determine or shall be invested in
short-term liquid securities or other cash-equivalent assets, and
withdrawals shall be made only in the regular course of Company business on
such signature or signatures as the Members may determine from time to
time.
6.4 RESTRICTIONS ON MEMBERS
Each Member hereby covenants and agrees that he shall not engage in any
of the following acts without the prior vote or written consent of
Members:
6.4.1 Cause or permit the Company to engage in any activity that
is not consistent with the purpose of the Company as set forth in Section
1.3 of this Operating Agreement;
6.4.2 Engage in any act or cause the Company to engage in any act
or otherwise operate in any manner, which is in contravention of this
Operating Agreement; and
6.4.3 Engage in any act or transaction on behalf of or otherwise
binding the Company.
6.5 COMPENSATION AND EXPENSES
Except as approved by a vote of the Members entitled to vote thereon, no
Member shall receive any salary, fee, or draw for services rendered to or on
behalf of the Company, nor shall any Member be reimbursed for any expenses
incurred by such Member on behalf of the Company.
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6.6 RELATED PARTY TRANSACTIONS
The Company may engage any Member, or persons or firms affiliated or
associated with any Member for specific purposes and may otherwise deal with the
Members on such terms and compensation as established by the Members.
6.7 MEETINGS OF MEMBERS
Meetings of the Members of the Company may be called at any time by Members
holding at least 25% of the total Membership votes for any purpose. Such
Member(s) shall give written notice to the Members that a meeting will be held
at a time and place fixed in the notice, which is not less than fifteen (15)
days nor more than sixty (60) days after the receipt of such request and stating
the purpose(s) of the meeting.
ARTICLE VII
MEMBER LIABILITY AND INDEMNIFICATION
7.1 LIABILITY OF MEMBERS
No Member shall have any personal liability whatsoever to the Company or to
its Members or creditors for any debts, liabilities or obligations of the
Company except as expressly provided in this Operating Agreement or as under the
Act. Notwithstanding anything contained in this Operating Agreement to the
contrary, no Member shall be personally liable for either the return of the
capital contributions of any other Member or the repayment of loans or advances
(or any interest thereon) to the Company by any Member, it being expressly
understood that any such return or repayment shall be made solely from the
Company assets. No Member shall be liable to the Company or any Member for any
loss on account of any action or inaction by a Member provided such action or
inaction was taken in good faith and does not constitute willful misconduct or
gross negligence.
7.2 INDEMNIFICATION OF MEMBERS
7.2.1 In any threatened, pending or completed action, suit or
proceeding, or other civil, criminal, investigative or administrative
action, brought by or in the name or right of the Company, to which any
Member was or is a party or is threatened to be made a party, the
Company shall indemnify the Member against the expenses, including
attorneys' fees, actually and reasonably incurred by the Member in
connection with the defense or settlement of such action, suit or
proceeding if such Member acted in good faith and in a manner the Member
reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that no indemnification shall be made in
respect to any claim, issue or matter as to which the Member shall have
been adjudged to be liable for fraud, gross negligence, breach of this
Operating Agreement, willful or
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wanton misconduct, the receipt of a financial benefit which the Member is
not entitled, the liability of a Member for a violation of Section 4308 of
the Act, any act or omission occurring prior to the date of this Operating
Agreement or breach of fiduciary obligation in the performance of any duty
to the Company, or, with respect to any knowing violation of law or any
criminal action or proceeding, where the Member had reasonable cause to
believe the Member's conduct was unlawful, except to the extent that the
court in which such action, suit or proceeding was brought shall determine
upon application that, despite such adjudication of liability, in view of
all circumstances of the case, the Member is fairly and reasonably entitled
to indemnity for such expenses as such court shall deem proper. Any
indemnification shall only be made from Company assets.
7.2.2 In any threatened, pending or completed action, suit or
proceeding to which the Member was or is a party or is threatened to be
made a party by reason of the fact that the Member is or was a Member of
the Company (other than an action by or in the right of the Company)
involving an alleged cause of action for damages arising from the
activities relative to management and disposition of the Company properties
and business, the Company shall indemnify the Members against expenses,
including attorneys' fees, judgments and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action,
suit or proceeding if the Member acted in good faith and in a manner the
Member reasonably believed to be in or not opposed to the best interests of
the Company and provided that the Member's conduct does not constitute
fraud, gross negligence, breach of this Operating Agreement, willful or
wanton misconduct, the receipt of a financial benefit which the Member is
not entitled, the liability of a Member for a violation of Section 4308 of
the Act, any act or omission occurring prior to the date of this Operating
Agreement or a breach of any fiduciary obligation to the Company. The
termination of any action, suit or proceeding by settlement shall not, of
itself, create a presumption that the Member did not act in good faith and
in a manner which the Member reasonably believed to be in or not opposed to
the best interest of the Company. Any indemnification shall only be made
from Company assets.
7.2.3 The termination of any action, suit or proceeding
by judgment, order, conviction or upon a plea of nolo contendere,
or its equivalent, shall create a presumption that the act or omission was
done fraudulently or in bad faith, or as a result of wanton or willful
misconduct, or with respect to any criminal action or proceeding, that the
person had reasonable cause to believe that the Member's conduct was
unlawful.
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ARTICLE VIII
TRANSFERS OF MEMBERSHIP INTERESTS
ADMISSION OF MEMBERS
8.1 RESTRICTIONS ON TRANSFERS
The Members agree that they will not, whether voluntarily, involuntarily or
by operation of law, sell, transfer, assign, encumber, pledge, convey or
otherwise dispose of part or all of the Membership interests owned by them, or
hereafter acquired by them, except pursuant to the terms of this Operating
Agreement. Any encumbrance, pledge, assignment, sale, transfer or other
disposition of such Membership Interest contrary to this Operating Agreement
shall be null and void and of no effect whatsoever.
8.2 SALE PURSUANT TO BONAFIDE OFFER
In the event that any Member ("Selling Member") shall desire for any reason
to sell part or all of such Member's Membership Interest pursuant to a bonafide
offer, the Selling Member shall immediately provide the Company and each of the
Members with written notice of such bonafide offer, along with copies of all
agreements and documents related thereto. For a period of thirty (30) days
following the receipt of such written notice and documents, the Company shall
have the exclusive right and option ("First Option") to elect to purchase and
liquidate the Membership Interest subject to the bonafide offer at the same
price and terms as contained in the bonafide offer. If the Company shall fail
to exercise the First Option, then for an additional thirty (30) day period, the
other Members of the Company shall have the exclusive right and option to elect
to purchase the Membership Interest subject to the bonafide offer ("Second
Option") upon the terms as contained in the bonafide offer, which Members shall
purchase such interest on a "Pro-Rata Basis" (as hereinafter defined). If the
other Members shall fail to exercise the Second Option, then the Selling Member
may sell the Membership Interest subject to the bonafide offer to the purchaser
named therein ("Purchaser"), but only strictly in accordance with all of the
terms and provisions of said bonafide offer and only upon compliance with all of
the following conditions:
8.2.1 Prior to the sale of any Membership Interest, the Selling
Member shall provide to the Company, an opinion of counsel, in form and
substance satisfactory to counsel for the Company, that neither the
offering nor the sale of such Membership Interest (i) violates any
provision of federal or state securities laws or comparable laws or causes
the loss of any exemption from federal or state securities laws which may
be available with respect to any of the Membership Interests, (ii) violates
the Act or other laws of the state governing the Company, or (iii) results
in the termination of the Company for federal income tax purposes;
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8.2.2 The Purchaser shall furnish to the Company, the Purchaser's
taxpayers' identification number and any and all other information
necessary or appropriate for the Company to file all required federal and
state tax returns;
8.2.3 The Purchaser shall execute and deliver to the Company, an
agreement, in form and substance satisfactory to the Company, whereby the
Purchaser agrees to be bound by all of the terms and provisions of this
Article VIII and agrees that the Membership Interest acquired by the
Purchaser shall be subject to all of the transfer restrictions herein;
8.2.4 The Selling Member or Purchaser shall reimburse the Company
for all reasonable costs and expenses incurred by the Company in connection
with the transfer of the Membership Interest and/or in assuring compliance
with the terms and provisions of this Article VIII in connection with said
transfer; and
8.2.5 In the event that the sale of the Membership Interest
subject to the bonafide offer is not consummated within sixty (60) days
following the expiration of the Second Option, the Selling Member must
again comply with all the terms and provisions of Section 8.2 (including,
without limitation, the First Option and Second Option) prior to any sale
or disposition of such Membership Interest.
Notwithstanding compliance with all of the provisions of this Section 8.2,
no Purchaser shall be admitted as a Member of the Company except pursuant to
Section 8.6 hereof.
8.3 MANDATORY OFFER UPON DEATH OR WITHDRAWAL
Upon the death or withdrawal of any Member ("Terminating Member"), the
Company shall have the option for a period of sixty (60) days to elect to
purchase and liquidate the Membership Interest of the Terminating Member for the
purchase price and upon the terms as hereinafter provided. In the event that
the Company shall fail to exercise the foregoing option, the remaining Members
shall, for an additional thirty (30) day period, have the option to elect to
purchase the Membership Interest of the Terminating Member on a Pro-Rata Basis
as hereinafter defined. The purchase price for the purchase of a Terminating
Member's Membership Interest shall be equal to the fair market value of such
Membership Interest on the date of the Terminating Member's death, and shall be
payable by the delivery of ten (10) percent of the purchase price payable in
cash at the closing, with the unpaid balance of the purchase price payable in
twenty (20) equal quarterly installments, together with interest thereon at the
prime rate of interest as established by Comerica Bank, which rate shall be
adjusted annually to said prime rate in effect on each anniversary of the
closing date. The unpaid balance of the purchase price shall be evidenced by a
non-negotiable promissory note of the purchaser(s) which shall provide for
commercially reasonable terms and provisions, including, without limitation, the
right of the maker to prepay part or all of the note at any time without
penalty, and the right of the holder thereof to accelerate the balance due upon
a default which remains uncured for a period of forty-five (45) days. The
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closing on the sale of the Membership Interest pursuant to this Section shall
take place within thirty (30) days following the exercise of the option
to purchase the Membership Interest or the establishment of the purchase price
for the Membership Interest as provided herein, if later.
If the Terminating Member (or the Member's representative) and the
purchaser(s) of the Terminating Member's Membership Interest cannot agree upon
the fair market value of the Terminating Member's Membership Interest within ten
(10) days following the exercise of the option to purchase same, then the
Terminating Member (or the Member's representative) and the purchaser(s) (and in
the event of more than one (1) purchaser, all the purchasers shall be treated as
one (1) party for purposes of the balance of this Section) shall each appoint a
mutually agreeable appraiser to establish the fair market value of said
Membership Interest, which fair market value shall be the purchase price
thereof. Such appraiser shall submit a written appraisal of the fair market
value of the Terminating Member's Membership Interest within thirty (30) days
after the appraiser's appointment, which appraisal shall be final and binding
upon the parties and enforceable by the issuance of appropriate orders by a
court of competent jurisdiction. If the parties cannot agree upon a mutually
agreeable appraiser within the allotted time period, then each party shall,
within fifteen (15) days thereafter, designate one (1) qualified independent
appraiser by written notice to the other party containing the name of such
appraiser. The appraisers so designated shall themselves, within ten (10) days,
designate a third qualified independent appraiser ("Independent Appraiser").
Each of the three (3) appraisers shall submit, within thirty (30) days after all
the appraisers have been designated, a written appraisal of the fair market
value of the Terminating Member's Membership Interest. The numerical average of
the two (2) closest appraisals shall determine the fair market value of same and
shall be final and binding upon the parties and enforceable by the issuance of
appropriate orders by a court of competent jurisdiction. The appraisal which is
not one of the two (2) numerically closest appraisals shall be rejected. Each
party shall pay the costs and expenses of the respective appraiser and the party
whose appraisal is rejected shall pay the costs and expenses of the Independent
Appraiser.
In the event that the appraisal of the Independent Appraiser is rejected,
then the costs and expenses of such appraiser shall be borne by the parties
equally. In the event that one (1) party fails, refuses, or otherwise neglects
to appoint an appraiser, the other party's appraiser shall solely determine the
fair market value of the Terminating Member's Membership Interest and such
determination shall be final and binding upon the parties. In the event that
the Membership Interest of a deceased Member is not purchased pursuant to the
foregoing options, the Membership Interest may be validly transferred and
conveyed to such Terminating Member's successor, estate, beneficiaries or heirs,
as applicable ("Successor"), but such Membership Interest shall be and remain
subject to all of the terms, provisions and restrictions of this Article VIII,
and such Successor shall not be admitted as a Member except pursuant to
Section 8.6 hereof. In the event that the Membership Interest of a withdrawn or
expelled Member is not purchased pursuant to the foregoing option, then such
Member shall remain a Member in the Company and such withdrawal or expulsion
shall have no effect.
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8.4 INVOLUNTARY TRANSFERS
The Membership Interests of the Members shall not be subject to any
involuntary transfer whatsoever. In the event that any Member suffers any
involuntary transfer or purported involuntary transfer of part or all of the
Member's Membership Interest, including, but not limited to, transfers resulting
from bankruptcy, creditor attachment, insolvency, divorce or separation, then
the Company shall have the option for a period of six (6) months to elect to
purchase and liquidate said Membership Interest pursuant to the terms and
provisions of Section 8.3 hereof, on the same basis as if the Member suffering
such involuntary transfer or purported involuntary transfer became a Terminating
Member. In the event the Company shall not exercise the foregoing option, then
the remaining Members shall have the option pursuant to the terms and provisions
of Section 8.3 hereof for an additional period of ninety (90) days, to elect to
purchase said Membership Interest, on the same basis as if the Member suffering
such involuntary transfer or purported involuntary transfer became a Terminating
Member.
8.5 TRANSFEREE'S RIGHTS
Notwithstanding the voluntary or involuntary sale, transfer, assignment,
encumbrance, pledge, conveyance or other disposition of part or all of any
Membership Interest, whether or not in compliance with the provisions of this
Article VIII, under no circumstances shall any actual or purported purchaser,
assignee, transferee, Successor, creditor or other party (collectively
"Transferee") be admitted as a substitute Member, except in accordance with
Section 8.6. No Transferee shall have any right to vote or participate in the
affairs of the Company, to receive any Company information or an accounting of
Company funds or affairs, or to be admitted as a Member, nor shall such
Transferee have any rights as a Member under the Act or this Operating
Agreement. Any Transferee acquiring a Membership Interest in compliance with
Article VIII ("Qualifying Transferee") shall be entitled only to the allocations
and distributions provided to such Membership Interest in accordance with this
Operating Agreement.
8.6 ADMISSION AS MEMBER
A Qualifying Transferee shall be admitted to the Company as a substitute
Member only upon satisfaction of all of the following terms and conditions:
8.6.1 The Members shall unanimously consent to the admission of
the Qualifying Transferee as a Member;
8.6.2 The Qualifying Transferee shall execute an amendment to this
Operating Agreement agreeing to be bound by all the terms and provisions of
this Operating Agreement; and
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8.6.3 The Qualifying Transferee shall reimburse the Company for
all reasonable costs and expenses incurred by the Company in connection
with the Member's admission to the Company.
8.7 RIGHT OF WITHDRAWAL
The Members have agreed to the provisions of this Article VIII which shall
govern the disposition of their Membership Interests to the exclusion of any
other rights the Members may have under the Act to receive any payment or
distribution upon the disposition of their Membership Interests or upon the
death, expulsion or withdrawal of any Member. The Members hereby waive any right
under the Act to receive any payment or distribution upon any actual or
purported withdrawal and agree not to withdraw from the Company unless the
Membership Interest of the withdrawing Member is acquired pursuant to Section
8.3.
8.8 DEFINITION OF "PRO-RATA BASIS"
For purposes of this Operating Agreement, the term "Pro-Rata Basis" with
reference to the purchase of any Membership Interest by any of the Members
("Remaining Members") shall mean (i) pursuant to the unanimous written agreement
of the Remaining Members, or (ii) pursuant to each of the Remaining Members'
respective Membership Interests in the total outstanding Membership Interests of
the Company (excluding any Membership Interest owned by the Selling Member or
Terminating Member), and in the event that one (1) or more of the Remaining
Members shall decline to purchase the Member's entire share of the Membership
Interest being sold ("Declining Member"), then such unpurchased Membership
Interest shall again be offered to the Remaining Members (other than any
Declining Member), in accordance with their respective Membership Interests in
the total outstanding Membership Interests of the Company (excluding the
Membership Interests of any Selling, Terminating or Declining Member), and the
foregoing process shall be repeated until none of the Remaining Members wishes
to purchase any additional Membership Interest.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
9.1 DISASSOCIATION OF A MEMBER
For purposes of this Operating Agreement, the "Disassociation" of a Member
shall mean the death, withdrawal, expulsion, bankruptcy, dissolution of any
Member or any other event that terminates the continued membership of the Member
in the Company.
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9.2 DISSOLUTION
The Company shall be dissolved upon the occurrence of any of the following
events:
9.2.1 The Disassociation of a Member.
9.2.2 The arrival of the termination date specified in Section 1.4;
9.2.3 Any event in which causes there to be only one (1) Member;
9.2.4 The affirmative vote of the Members holding more than 50% of
all Membership votes to dissolve, wind up and liquidate the Company; or
9.2.5 Any other event making it unlawful or impossible for the
Company to conduct business or causing the dissolution or the Company under
the laws of the State of Michigan.
9.3 LIQUIDATION UPON DISSOLUTION
Upon the dissolution of the Company by the occurrence of any event
described in Section 9.2 hereof, the Member or such other person, who shall be
designated within 60 days of such event by the Members (which Member or
designated person shall, for purposes hereof, be referred to as the
"Liquidation"), shall wind up its affairs and apply and distribute the proceeds
of such liquidation: first, to discharge and/or establish reserves for the
obligations of the Company to creditors other than the Members; second, to
discharge the obligations of the Company to Members who are creditors of the
Company; and third, to the Members as provided in Section 5.2 hereof.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 AMENDMENTS
Amendments to this Operating Agreement may be proposed by any Member by
submitting to the Members a verbatim statement of any proposed amendment.
Any such proposed amendment shall become effective upon approval by Members
owning a seventy five percent (75%) of the total Membership votes.
Notwithstanding the foregoing, unless unanimously approved by all Members, no
amendment to this Operating Agreement shall (i) cause the Company to lose its
status as a limited liability company under the Act or be taxed for federal
income tax purposes as a corporation or association, (ii) change the term of the
Company, (iii) change any Member's Membership Interest (except in accordance
with Section 3.2 hereof) or
20
<PAGE> 21
directly and adversely impact any Member's Membership Rights, or (iv) change the
provisions of this Section 10.2.
10.2 INVESTMENT AND SECURITY MATTERS
Each of the Members hereby represent, acknowledge and agree as of the date
of this Operating Agreement and as of the date on which any of them may acquire
additional Membership Interests in the Company under this Operating Agreement
that:
10.2.1 Each of the Members is a resident of the state of Michigan
and that the principal office and place of business of the Company is also
in the state of Michigan.
10.2.2 The Membership Interests in the Company are not and will not
be registered under either the Securities Act of 1933 or any applicable
state securities law and, therefore, cannot be resold or transferred unless
registered or unless an exemption from registration is available
thereunder.
10.2.3 The Company has not agreed to register any of the
Membership Interests in the Company for distribution in accordance with the
provisions of the Securities Act of 1933 or any applicable state securities
law and, the Company has not agreed to comply with any exemption from
registration under the Securities Act of 1933 or any applicable state
securities law for the sale or transfer of such Membership Interests.
Consequently, the Members may be required to hold the Membership Interests
indefinitely, unless and until registered under the Securities Act of 1933
and any applicable state securities law, or unless and until an exemption
from registration is available, in which case the Members may still be
limited as to the amount of Membership Interests that may be sold or
transferred. In any case, the Members each agree that they will not sell,
assign, pledge, hypothecate, donate or otherwise transfer any membership
interest in the Company unless in compliance with this Operating Agreement
and, in no case, whether or not for consideration, unless and until such
membership interest is registered or determined to be exempt from
registration on the basis of a favorable opinion of the Company's counsel
and/or submission to the Company of such other evidence as may be
satisfactory to such counsel that any such transfer shall not be in
violation of the Securities Act of 1933 or any applicable state securities
law.
10.2.4 Each Member has had full and complete access to any and
all of the information pertaining to the Company and the Member's
investment in the Membership Interests in the Company has considered
appropriate. Each Member has received and reviewed, to the Member's
satisfaction, and is familiar with, the contents of all the agreements,
reports, financial statements and other materials relating to the Company
and the Membership Interests which the Member has considered appropriate.
21
<PAGE> 22
10.2.5 Each Member has had an opportunity to ask questions and
receive answers concerning their investment in the Membership Interests in
the Company and to obtain any additional information which the Company
possesses or can obtain without unreasonable effort and expense that might
be necessary in the Member's judgment to verify any information which has
been provided to the Member.
10.2.6 There are restrictions on the transferability of the
Membership Interests in the Company, there is no established public market
for such Membership Interests and, accordingly, it may not be possible to
liquidate such Membership Interests readily, or at all, in case of an
emergency or otherwise.
10.2.7 An investment in the Membership Interests in the Company
involves a certain degree of risk and each Member has taken full cognizance
of and understands all of the risks associated with the investment. The
investment will be highly speculative and no assurance has or can be given
with respect to the suitability or performance of the investment.
10.2.8 Each Member has such knowledge and experience in financial
and business matters that each Member is capable of evaluating the merits
and risks associated with the investment in the Membership Interests in the
Company or that each Member has obtained the advice of an attorney,
certified public accountant or registered investment advisor with respect
to the investment.
10.2.9 Each Member has adequate means of providing for the Member's
own current needs and possible personal contingencies and the Member has no
need for liquidity in the Member's investment in the Membership Interests
in the Company and the Member is able to bear the economic risks of the
investment for an indefinite period.
10.2.10 Each Member has acquired Membership Interests in the Company
for the Member's own account for investment purposes only and not for the
account of others and not with a view to the distribution or transfer
thereof.
10.2.11 No federal or state agency has made any finding or
determination as to the fairness for investment, nor any recommendation or
endorsement of the Membership Interests of the Company.
10.2.12 The Membership Interests in the Company have not been
offered or sold by means of any general advertising or general
solicitation.
10.2.13 No commission has not been paid or given directly or
indirectly for soliciting any Member's investment in the Membership
Interests in the Company.
22
<PAGE> 23
10.3 GOVERNING LAW
This Operating Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan notwithstanding the fact that any party
is or may hereafter become domiciled in a different state or jurisdiction.
10.4 WAIVER OF BREACH
The waiver of breach of any provision of this Operating Agreement shall not
operate or be construed as a waiver of any subsequent breach. Each and every
right, remedy and power hereby granted to any party or allowed it by law shall
be cumulative and not exclusive of any other.
10.5 SEVERABILITY
If any of the provisions of this Operating Agreement or the application
thereof to any party under any circumstances is adjudicated to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Operating Agreement or the application thereof.
10.6 ENTIRE AGREEMENT
This Operating Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof. This Operating Agreement
supersedes and terminates any and all other previous or contemporaneous
communications, representations, understandings, agreements, negotiations and
discussions, either oral or written, between the parties with respect to the
subject matter hereof. The parties acknowledge and agree that there are no
written or oral agreements, understandings, or representations, directly or
indirectly related to this Operating Agreement or the subject matter hereof that
are not expressly set forth herein.
10.7 INTERPRETATION
Where appropriate in this Operating Agreement, words used in the singular
shall include the plural, and words used in the masculine shall include the
feminine and neuter.
10.8 SURVIVAL OF PROVISIONS
The rights and obligations of the parties under this Operating Agreement
may not be assigned or delegated, except for the assignment of a Membership
Interest in compliance with and subject to the terms and conditions of Article
VIII hereof.
23
<PAGE> 24
10.9 NOTICE
All notices required to be sent by this Operating Agreement shall be
personally delivered or mailed by certified or registered mail to the addresses
of the Members indicated in the books of the Company. Notice of any change of
address by a Member shall be mailed to the Company by certified mail to the
registered office of the Company.
10-10 COUNTERPARTS
This Operating Agreement may be executed in duplicate original counterparts
and all copies of this Operating Agreement so executed shall be deemed to be one
Agreement.
IN WITNESS WHEREOF, the Members have signed this Operating Agreement
effective the day and year first above written.
WITNESSES: THE COMPANY:
LDM HOLDINGS, L.L.C.,
A MICHIGAN LIMITED LIABILITY COMPANY
Michael B. Lewis By: Richard J. Nash
- --------------------- -----------------------------
Michael B. Lewis Richard J. Nash
Its: President
Linda A. Christians
- ---------------------
Linda A. Christians Date: December 10, 1996
--------------------
MEMBERS:
LDM TECHNOLOGIES, INC., F/K/A
LDM INDUSTRIES INC.,
A MICHIGAN CORPORATION
Michael B. Lewis By: Richard J. Nash
-------------------- ----------------------------
Michael B. Lewis Richard J. Nash
Its: President
Linda A. Christians
- ---------------------
Linda A. Christians Date: December 10 , 1996
--------------------
24
<PAGE> 25
LDM HOLDING CANADA, INC.,
A MICHIGAN CORPORATION
Michael B. Lewis By: Richard J. Nash
- ------------------------------------ --------------------------------
Michael B. Lewis Richard J. Nash
Its: President
Linda A. Christians
- ------------------------------------
Linda A. Christians Date: December 10, 1996
------------------------------
25
<PAGE> 1
EXHIBIT 3.7
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
LDM CANADA
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 FORMATION, NAME, OFFICE AND PURPOSES....................... 1
1.1 Formation of Partnership .......................... 1
1.2 Name............................................... 1
1.3 Office............................................. 1
1.4 Term............................................... 1
1.5 Purpose............................................ 1
ARTICLE 2 CAPITAL AND OTHER CONTRIBUTIONS............................ 2
2.1 General Partner's Contribution..................... 2
2.2 Limited Partner's Contributions.................... 2
2.3 Capital Accounts................................... 2
2.4 Additional Contributions by Partners............... 2
2.5 Loans to Partnership............................... 4
2.6 Use of Capital Contributions....................... 4
ARTICLE 3 PARTICIPATION IN PARTNERSHIP PROPERTY...................... 5
3.1 Ownership by Partners of the Partnership........... 5
3.2 Limitation on Distributions........................ 5
ARTICLE 4 MANAGEMENT................................................. 5
4.1 General Management................................. 5
4.2 Management Expenses................................ 5
4.3 Powers of the General Partner...................... 6
4.4 Self Dealing....................................... 8
4.5 Activities of the General Partner.................. 8
4.6 Holding of Property................................ 8
4.7 Meetings and Voting................................ 8
ARTICLE 5 PARTNERSHIP DISTRIBUTIONS.................................. 9
5.1 Definitions........................................ 9
5.2 Distribution of Net Cash Flow From Operations...... 9
5.3 Distribution of Capital Proceeds................... 10
5.4 Liquidation of Partnership......................... 10
ARTICLE 6 TAX ALLOCATIONS............................................ 10
6.1 Allocation of Profits and Losses................... 10
6.2 Regulatory Allocations............................. 11
6.3 Property Contributions............................. 13
6.4 Curative Allocations............................... 13
<PAGE> 2
6.5 Definitions......................................... 14
6.6 Determinations...................................... 15
ARTICLE 7 LIABILITY................................................. 15
7.1 Liability of General Partner...................... 15
7.2 Indemnification of General Partner................ 15
7.3 Limited Liability of Limited Partner.............. 16
7.4 Status of Limited Partner......................... 16
ARTICLE 8 ACCOUNTING................................................ 16
8.1 List of Partners and Books and Records............ 16
8.2 Fiscal Year....................................... 16
8.3 Tax Returns....................................... 16
8.4 Reports........................................... 16
8.5 Tax Matters Partner and Tax Elections............. 17
ARTICLE 9 TERMINATION AND DISSOLUTION............................... 17
9.1 Admission or Incapacity of Limited Partner........ 17
9.2 Dissolution and Liquidation....................... 18
9.3 Distribution on Liquidation....................... 18
ARTICLE 10 ASSIGNMENT AND TRANSFERS.................................. 19
10.1 Transfer by General Partner...................... 19
10.2 Transfer by Limited Partner...................... 20
10.3 Involuntary Transfers; Claims by Creditors and
Others........................................... 22
10.4 Transfer Election................................ 22
ARTICLE 11 GENERAL PROVISIONS........................................ 22
11.1 Investment Representation........................ 22
11.2 Certificates..................................... 23
11.3 Power of Attorney................................ 23
11.4 Partners' Relationship Inter Se.................. 23
11.5 Amendments....................................... 23
11.6 Notices, Statements, Etc......................... 24
11.7 Entire Agreement................................. 24
11.8 Interpretation................................... 24
11.9 Counterparts..................................... 25
11.10 Assets in Control of General Partner............. 25
11.11 Binding Effect................................... 25
ii
<PAGE> 3
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
LDM CANADA
THIS AMENDED & RESTATED LIMITED PARTNERSHIP AGREEMENT is made
and entered into as of the 10th day of December, 1996, by and between LDM
HOLDINGS, L.L.C., A MICHIGAN LIMITED LIABILITY COMPANY, as General Partner
(hereinafter the "General Partner"), and LDM TECHNOLOGIES, F/K/A LDM INDUSTRIES
INC., a Michigan corporation (hereinafter the "Limited Partner").
ARTICLE 1
FORMATION, NAME, OFFICE AND PURPOSES
1.1 FORMATION OF PARTNERSHIP.
In accordance with the terms and conditions hereof, the Partnership shall
be constituted as a Limited Partnership under and subject to the Michigan
Revised Uniform Limited Partnership Act (MCLA 449.1101 et. seq.), hereinafter
"Revised Act", upon filing of a Certificate of Limited Partnership for record
with the chief officer of the Michigan Department of Consumer and Industry
Services, Corporation, Securities and Land Development Bureau.
1.2 NAME.
The name of the Partnership shall be "LDM Canada Limited Partnership".
1.3 OFFICE.
The principal office and place of business of the Partnership shall be
located at 2500 Executive Hills Drive, Auburn Hills, Michigan 48326, or
such other place as the General Partner shall from time to time designate.
1.4 TERM.
The term of the Partnership shall commence with the execution and filing
of the Certificate of Limited Partnership and shall continue until December 31,
2036 or until prior dissolution as provided herein.
1.5 PURPOSE.
The Partnership may engage in any activity and carry on any business which
a Limited Partnership may carry on under the Revised Act, including, but not
limited to, investing capital,
<PAGE> 4
either directly or indirectly, to purchase, acquire, own, hold, develop,
improve, lease, finance, refinance, manage, operate, sell, assign, exchange or
otherwise dispose of certain real and personal property.
ARTICLE 2
CAPITAL AND OTHER CONTRIBUTIONS
2.1 GENERAL PARTNER'S CONTRIBUTION.
The General Partner shall contribute to the capital of the Partnership the
sum of One Hundred Dollars ($300) in exchange for an interest in the Partnership
("Partnership Interest") equal to three percent 3%).
2.2 LIMITED PARTNER'S CONTRIBUTIONS.
The Limited Partner shall contribute to the capital of the Partnership the
sum of Nine Thousand Nine Hundred Dollars ($9,700) in exchange for a
Partnership Interest equal to ninety-seven percent (97%).
2.3 CAPITAL ACCOUNTS.
Capital Accounts shall be established for each Partner to which
contributions and profits shall be credited and from which distributions and
losses shall be deducted. The Partners' Capital Accounts shall at all times
be determined and maintained in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv), as amended, or successor law and regulations.
2.4 ADDITIONAL CONTRIBUTIONS BY PARTNERS.
Under no circumstances shall any Partner be required to advance or
contribute any additional funds to the Partnership. Any and all additional
advances or contributions to the Partnership shall be strictly voluntary. In
the event the General Partner determines that additional capital would be
beneficial for Partnership operations, then the following provisions shall
apply:
(a) The General Partner shall issue a written notice of capital
request ("Notice of Capital Request") to each Partner to
contribute additional funds to the Partnership. The Notice of
Capital Request shall include the following information:
(i) The total amount of capital requested from all of the
Partners ("Total Capital Request");
- 2 -
<PAGE> 5
(ii) Each Partner's share of the Total Capital Request, which
shall be determined by multiplying the Total Capital Request
by the Partnership Interest of each Partner ("Partner
Capital Contribution"); and
(iii) The date on or before which the Partner Capital
Contribution shall be due, which date shall not be less than
thirty (30) days from the date of the Notice of Capital
Request (the "Payment Date").
(b) Should any Partner decline, neglect, fail or refuse to timely
contribute to the Partnership any portion of his, her or its Partner Capital
Contribution on or before the Payment Date ("Delinquent Partner"), the General
Partner may thereafter without further notice or opportunity to cure given to
the Delinquent Partner, notify the other Partners ("Partner Notice") and the
other Partners who have paid their Partner Capital Contribution in full
("Non-Delinquent Partners") shall have the option to contribute the Delinquent
Partner's Partner Capital Contribution on a pro-rata basis (in accordance with
the then respective Partnership Interest of each other Non-Delinquent Partner as
compared to the total Partnership Interest of all Non-Delinquent Partners). In
the event that any Non-Delinquent Partner neglects, fails or refuses to
contribute his or her pro-rata share of the Delinquent Partner's Partner Capital
Contribution within thirty (30) days of his or her receipt of the Partner
Notice, then all other Non-Delinquent Partners shall have the right to
contribute the remaining deficiency in the Delinquent Partner's Capital
Contribution on a pro-rata basis (as to all such other Non-Delinquent Partners
and in the manner hereinabove provided), which procedure shall be repeated until
the Delinquent Partner's Capital Contribution is satisfied or all Non-Delinquent
Partners fail to contribute any additional capital. If the Non-Delinquent
Partners fail to contribute sufficient capital to satisfy the Delinquent
Partner's Partner Capital Contribution, the General Partner may without any
further notice or opportunity to cure given to any of the Partners fund the
Delinquent Partner's Partner Capital Contribution from persons or entities
outside of the Partnership; provided, however, that in any instance where
outside persons or entities are brought into the Partnership in such manner,
such persons or entities shall be deemed Limited Partners and must meet all of
the requirements set forth for the transfer of a Limited Partner's Partnership
Interest contained in Sections 10.2.2 and 10.2.3.
(c) If any Delinquent Partner's Partner Capital Contribution is
not funded or is funded (whether in whole or part) in accordance with Section
2.4(b), then the Partnership Interests in the Partnership shall be reallocated
and adjusted among all Partners and any persons or entities admitted to the
Partnership to fund any Delinquent Partners' Capital Contribution ("Additional
Partners") in accordance with the following formula: The Partnership Interest of
each Partner or Additional Partner shall be equal to a fraction converted to a
percentage, the numerator of which shall be the total amount of capital
contributed to the Partnership (original and all previous and current Partner
Capital Contributions) actually contributed by the Partner or Additional Partner
(or the predecessor
- 3 -
<PAGE> 6
in interest of such Partner or Additional Partner) and the denominator of
which shall be the total amount of capital contributed by all Partners to
the Partnership (original and all previous and current Partner Capital
Contributions) actually contributed by all Partners and Additional
Partners. In the event any Partner fails to make any Partner Capital
Contribution requested under this Section 2.4 and the Partnership is
indebted to such Partner for any loan made pursuant to Section 2.5, then
the indebtedness due for such loan, including all accrued interest, shall
be applied pro tanto in satisfaction of his Partner Capital Contribution;
and any balance of the Partner Capital Contribution remaining unsatisfied
shall be used as a basis for adjusting the Partnership Interest of such
Partner in accordance with this Section.
2.5 LOANS TO PARTNERSHIP.
In the event the Partnership requires additional cash in order to satisfy
the Partnership's operating expenses, the General Partner and/or Limited
Partners, upon the request of the General Partner, shall have the right (but not
the obligation) to make loans to the Partnership reasonably necessary for the
Partnership activities. The terms and conditions of such loans shall be
mutually agreeable to the General Partner and each Partner making a loan, and
such loans may be secured or unsecured in the discretion of the General Partner.
No distributions of any kind shall be made to the Partners until all then
outstanding loans, together with accrued interest, are paid in full, unless the
Partners making such loans agree otherwise.
2.6 USE OF CAPITAL CONTRIBUTIONS.
The aggregate of all the contributions to the capital of the Partnership by
the Partners shall be available to the Partnership to carry out the purposes of
the Partnership and shall be used and applied as follows:
(a) To reimburse the General Partner for any amounts advanced by
it or its affiliates in connection with the acquisition or
financing of any property owned by the Partnership and to pay and
satisfy all of the costs related to the acquisition and financing
of any property owned by the Partnership incurred in behalf of
the Partnership;
(b) To reimburse the General Partner for the expenses and costs
incurred by it in connection with the organization of the
Partnership, the admission of the Partners and the implementation
of this Limited Partnership Agreement; and
(c) The balance of said funds, if any, to cover any expenses
necessary to carry out the purposes set forth in Section 1.5.
- 4 -
<PAGE> 7
ARTICLE 3
PARTICIPATION IN PARTNERSHIP PROPERTY
3.1 OWNERSHIP BY PARTNERS OF THE PARTNERSHIP.
Each Partner shall have and own an undivided interest in the Partnership
equal to the Partner's respective Partnership Interest as initially set forth in
Section 2.1 or Section 2.2, and as may be subsequently modified pursuant to this
Limited Partnership Agreement; provided, however, that no Partner shall have a
specific interest in any Partnership property nor any right of partition with
respect to any property or assets of the Partnership.
3.2 LIMITATION ON DISTRIBUTIONS.
No Partner shall have the right to demand and receive any distribution from
the Partnership in any form other than cash.
ARTICLE 4
MANAGEMENT
4.1 GENERAL MANAGEMENT.
The management and control of the affairs of the Partnership and the
maintenance of the property of the Partnership shall rest exclusively with the
General Partner; and in connection with the management of the affairs of the
Partnership, the General Partner shall have the right and absolute discretion to
use the capital contributions of the Limited Partner for Partnership purposes.
The Limited Partner shall take no part in the conduct or control of the
operation, management or performance of the Partnership and its business and
shall have no right or authority to act for or bind the Partnership.
4.2 MANAGEMENT EXPENSES.
The General Partner or any corporation, partnership, limited liability
company, firm or business entity controlled or owned by (51 percent or more) the
General Partner (hereinafter referred to as "Affiliate"), shall be reimbursed
for all reasonable expenses incurred by it or by its Affiliate to the extent
that such expenses are incurred directly on behalf of the Partnership and shall
be reimbursed for all reasonable expenses, if any, incurred prior to the
commencement of business of the Partnership, and in the preparation and/or
execution of documents in connection with the formation of the Partnership. The
Partnership shall also pay to the General Partner or Affiliate all reasonable
fees, costs and expenses incurred in connection with the management, operation
and conduct of the partnership business, including but not limited to management
services, secretarial services, accounting services, insurance costs, taxes,
filing fees, communication expenses, supplies and similar costs and expenses.
- 5 -
<PAGE> 8
4.3 POWERS OF THE GENERAL PARTNER.
The General Partner shall devote such time as may be necessary to supervise
and conduct the affairs of the Partnership. The General Partner is hereby
authorized and empowered to carry out and implement any and all of the purposes
of the Partnership; and, in that connection, the General Partner, except as
otherwise expressly provided herein, has all the rights and powers of and shall
be subject to all restrictions and liabilities of a general partner under the
Revised Act. The powers of the General Partner shall include, but shall not be
limited to the following:
(a) To purchase or otherwise acquire and to hold, sell, transfer,
exchange, or otherwise dispose of or turn to account or realize upon
securities, commodities and commodity contracts of any and all types and
descriptions including, but not limited to, shares of capital stock,
treasury stock bonds, notes, debentures, trust receipts, mortgages,
evidences of indebtedness, certificate of deposits, choses in action,
certificate of interest, or participation in any profit sharing agreements,
limited partnership interests, collateral trust certificates, voting trust
certificates, fractional undivided interests in oil, gas or other mineral
rights, put and call options and any and all combinations thereof,
certificates, receipts, warrants and other instruments representing rights
to receive, purchase, sell or subscribe for any of the foregoing or
representing any other rights or interests therein or in other property or
assets, and any and all other interests, certificates, instruments and
documents whether now known or hereafter devised which are or may hereafter
be commonly known or referred to as securities (all such items being
hereinafter collectively referred to as "Securities").
(b) To sell Securities short and to cover such sales.
(c) Distribute to the Partners all income, profits and losses,
cash distributions or other distributions in accordance with this
Agreement.
(d) Acquire, construct, manage, sell, assign, convey, lease,
mortgage, or otherwise dispose of the Partnership property (either real or
personal) upon terms and conditions acceptable to the General Partner.
(e) Make reasonably necessary capital expenditures and improvements
with respect to the Partnership property and take all actions reasonably
necessary to maintain, operate, and manage such property.
(f) Borrow money, sell, assign, pledge, grant security interests
in or otherwise encumber or dispose of all or any part of the Partnership
property or any and all collateral securing payment thereof.
- 6 -
<PAGE> 9
(g) Perform or cause to be performed all of the Partnership's
obligations under any agreement to which the Partnership is a party or with
respect to any indebtedness of the Partnership whether secured or
unsecured.
(h) Establish, maintain, deposit into, sign checks and otherwise
draw upon Partnership bank accounts, certificates of deposit, money market
accounts or similar accounts or investment vehicles and execute, accept and
deliver any instrument or agreement in connection therewith; including the
specific right to invest funds not needed in the operation of the business
as it deems appropriate in its reasonable discretion; provided, however,
all such funds commingled with the funds of any other person shall be
accounted for separately.
(i) Enter into, execute and deliver all agreements and instruments
to which the Partnership may be a party, with such agreements and
instruments being signed in the name of the Partnership by the General
Partner. This power given to the General Partner includes the ability to
enter into and perform contracts, agreements, undertakings and transactions
with the General Partner, its agents, representatives, employees or any
persons with which the General Partner is affiliated or with which it has a
substantial direct or indirect financial interest.
(j) Employ, engage, terminate and deal with managing agents,
brokers, accountants or lawyers or persons in such other capacities as the
General Partner may deem necessary or desirable; provided the compensation
for such services is reasonable and fair to the Partnership. The fact that
a General Partner or a Limited Partner is employed by or affiliated with or
has a financial interest in such person shall not prohibit the General
Partner from employing and otherwise dealing with such person.
(k) Admit or replace Partners (either General or Limited) as
permitted by this Limited Partnership Agreement and the Revised Act.
(l) Make elections under and to modify, construe and apply and
provisions of the Limited Partnership Agreement to conform with applicable
provisions of the Internal Revenue Code of 1986, as amended ("Code") the
laws, rules and Treasury Regulations thereunder and any corresponding
provisions of any succeeding law as the General Partner shall deem to be in
the best interests of the Partnership.
(m) Institute and defend or arbitrate lawsuits as is necessary to
protect the Partnership business and properties.
(n) Take such other actions and incur such other expenses on behalf
of the Partnership as may be necessary, prudent, or advisable in conducting
the Partnership business.
- 7 -
<PAGE> 10
(o) To enter into, make, and perform all things necessary,
advisable, incidental or convenient to the carrying out of any of the
foregoing.
4.4 SELF DEALING.
Any Partner and any affiliate of any Partner may deal with the Partnership,
directly or indirectly, as a vendor, purchaser, employee, agent or otherwise,
provided the terms of dealings are fair with respect to the Partnership. No
contract or other act of the Partnership shall be violated or affected in any
manner by the fact that a Partner or affiliate is directly or indirectly
interested in such contract or other act apart from his interest as a Partner,
nor shall any Partner or any affiliate of a Partner be accountable to the
Partnership or the other Partners in respect of any profits directly or
indirectly realized by him by reason of such contract or other act, and such
interested Partner shall be eligible to vote or take any other action as a
Partner in respect of such contract or other act as he would be entitled were he
or his affiliate not interested therein. All such contracts shall be made
available to any Partner upon written request for inspection and copying at the
expense of such Partner.
4.5 ACTIVITIES OF THE GENERAL PARTNER.
Nothing herein shall require the General Partner to devote its or its
Affiliates full time to the conduct of the affairs of the Partnership. The
General Partner shall use reasonable efforts in carrying out and implementing
the purposes of the Partnership and shall devote to the conduct of the affairs
of the Partnership such time and activity as shall be reasonably necessary
therefor. It is understood that the General Partner and its Affiliates may be
presently engaged in other businesses, investments and real estate ventures, in
which ventures the Limited Partner shall have no right to participate and may
continue such activity. These activities shall not be prohibited or restricted
because they might be competitive with the business of the Partnership.
4.6 HOLDING OF PROPERTY.
Property owned by the Partnership shall be held in the name of the
Partnership or in a nominee name.
4.7 MEETINGS AND VOTING.
The General Partner may call a meeting of the Partners for any Partnership
purpose, at any reasonable time, in the county in which the registered office is
located or such other place designated by the General Partner, upon at least
fifteen (15) days' notice to the other Partners. Such meetings shall be held not
less than fifteen (15) days nor more than thirty (30) days after receipt of said
request and shall be for the purposes set forth in the notice. The Limited
Partner shall have no right to vote or participate in the affairs of the
Partnership, except as may be expressly required by this Limited Partnership
Agreement or the Revised Act. For purposes of any voting or consent by the
Limited Partner which may be expressly required under this Limited
- 8 -
<PAGE> 11
Partnership Agreement or the Revised Act, the Limited Partner shall be entitled
to cast one vote and, except as otherwise required by the Revised Act, the
consent of the Limited Partner shall be requisite to approve any matter which
must be approved by the Limited Partner under this Limited Partnership
Agreement or the Revised Act. Partnership meetings called pursuant to this
paragraph may be held by telephone conference or other form of
telecommunication. Votes may be cast in writing, by telegram, telecopy, fax,
or other form of telecommunication or verbally in connection with telephone
conferences provided such votes are transcribed or recorded by a stenographer,
recorder or other independent third party and the evidence of such votes are
maintained as part of the Partnership books and records.
ARTICLE 5
PARTNERSHIP DISTRIBUTIONS
5.1 DEFINITIONS.
For purposes of this Limited Partnership Agreement, the following
definitions shall apply:
(a) "Net Cash Flow From Operations" shall mean the cash proceeds
from Partnership operations (exclusive of any "Capital Proceeds" as
hereinafter defined) less the portion thereof used to pay or establish
reserves for expenses (exclusive of depreciation, amortization and other
non-cash expenses) and liabilities (including, without limitation, loan
repayments to Partners, capital improvements, replacements and
contingencies), all as determined solely by the General Partner.
(b) "Capital Proceeds" shall mean the net cash proceeds from all
sales, dispositions and refinancing of Partnership property, less any
portion thereof used to pay or establish reserves for the costs associated
with any such sale, disposition or refinancing, for debt repayment
(including, without limitation, loan repayments to Partners), and for any
other obligations and contingencies, all as determined solely by the
General Partner.
5.2 DISTRIBUTION OF NET CASH FLOW FROM OPERATIONS.
The Net Cash Flow From Operations shall be distributed, in such amounts and
at such times as shall be determined solely by the General Partner, but all such
distributions shall be made in the following order of priority:
(a) First, to the repayment of loans made by Partners to the
Partnership; and
(b) Second, in accordance with the respective Partnership
Interests of the Partners.
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5.3 DISTRIBUTION OF CAPITAL PROCEEDS.
(a) The Capital Proceeds of the Partnership shall be distributed, in
such amounts and at such times as shall be determined solely by the General
Partner, but all such distributions shall be made in the following order of
priority:
(i) First, to the repayment of loans made by Partners to the
Partnership; and
(ii) Second, in accordance with the respective Partnership
Interests of the Partners.
(b) In the event that the Partnership shall distribute any asset
in-kind, to one (1) or more of its Partners, such in-kind distribution
shall be deemed a distribution of Capital Proceeds in an amount equal to
the fair market value of the asset on the date of distribution, as
determined solely by the General Partner.
5.4 LIQUIDATION OF PARTNERSHIP.
Notwithstanding anything contained in Sections 5.2 or 5.3 to the contrary,
in the event that the Partnership is liquidated under Section 9.2 hereof or is
"liquidated" within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g), then the Net Cash Flow From Operations and Capital
Proceeds shall thereafter be distributed to the Partners who have positive
Capital Accounts in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), but only after such Capital Accounts have been adjusted
for all contributions and distributions, and all allocations under Article 6,
for all periods.
ARTICLE 6
TAX ALLOCATIONS
6.1 ALLOCATION OF PROFITS AND LOSSES.
After giving effect to the allocations set forth in Sections 6.2, 6.3 and
6.4 hereof, any income, gain, loss, deduction or credit of the Partnership
("Profits and Losses") for any fiscal year of the Partnership shall be allocated
among the Partners first, so that their Capital Accounts, increased by their
respective shares of Partnership Minimum Gain and their respective shares of
Partner Minimum Gain are, as nearly as possible, in the same ratios as their
Partnership Interests, and then, pro rata, in accordance with their Partnership
Interests; provided, however, that no Limited Partner shall be allocated any
Loss for any fiscal year to the extent that such Loss would create or increase a
deficit in such Limited Partner's Capital Account (as referenced under Treas.
Reg. 1.704-1(b)(2)(ii)(d)). All Losses in excess of the limitations set forth in
this Section shall be allocated to the General Partner.
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6.2 REGULATORY ALLOCATIONS.
The following regulatory allocations ("Regulatory Allocations") shall be
made in the following order:
(a) Partnership Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulation Section 1.704-2(f), if there
is a net decrease in Partnership Minimum Gain during any
fiscal year, each Partner shall be specifically allocated
items of Partnership income and gain for such fiscal year
(and, if necessary, subsequent fiscal years) in an amount
equal to such Partner's share of the net decrease in
Partnership Minimum Gain, determined in accordance with
Treasury Regulation Section 1.704-2(g). Allocations pursuant
to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulation Sections
1.704-2(f)(6) and 1.704-20(j)(2). This Section 6.2(a) is
intended to comply with the minimum gain chargeback
requirements of Treasury Regulation Section 1.704-2(f) and
shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided
in Treasury Regulation Section 1.704-2(i)(4), if there is a
net decrease in Partner Minimum Gain attributable to a Partner
Non-Recourse Debt during any fiscal year, each Partner who has
a share of the Partner Minimum Gain attributable to such
Partner Non-Recourse Debt, determined in accordance with
Treasury Regulation Section 1.704-2(i)(5), shall be
specifically allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Partner's share of the net
decease in Partner Minimum Gain attributable to such Partner
Non-Recourse Debt, determined in accordance with Regulation
Section 1.704-2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance
with Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 6.2(b) is intended to comply with
the minimum gain chargeback requirement of Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(c) Qualified Income Offset. In the event that any Partner
unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership
income and gain shall be specifically allocated to each such
Partner in amount and manner sufficient to eliminate, to the
extent required by the
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<PAGE> 14
Treasury Regulations, any deficit in the Capital Account of
such Partner as quickly as possible, provided that an
allocation pursuant to this Section 6.2(c) shall be made only
if and to the extent that such Partner would have a deficit in
such Partner's Capital Account after all other allocations
provided for in this Section 6.2 have been tentatively made as
if this Section 6.2(c) were not in this Agreement.
(d) Gross Income Allocation. In the event that any Partner has a
deficit in such Partner's Capital Account at the end of any
fiscal year that is in excess of the sum of (i) the amount
such Partner may be obligated to restore pursuant to any
provision of this Agreement, and (ii) the amount such Partner
is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulation Sections
1.704-2(g)(1) and 1.704-2(i)(5), then such Partner shall be
specifically allocated items of Partnership income and gain in
the amount of such excess as quickly as possible, provided
that an allocation pursuant to this Section 6.2(d) shall be
made only if and to the extent that such Partner would have a
deficit in such Partner's Capital Account in excess of said
sum after all other allocations provided for in this Section
6.2 have been made as if Section 6.2(c) and this Section
6.2(d) were not in this Agreement.
(e) Partnership Non-Recourse Deductions. Any Partnership
Non-Recourse Deductions under Treasury Regulation Section
1.704-2(b)(1) for any fiscal year shall be allocated among the
Partners in accordance with their respective Partnership
Interests to the extent and in a manner as may be required
under Treasury Regulation Section 1.704-2(e) and otherwise in
any manner determined by the Partners to satisfy the Treasury
Regulations.
(f) Partner Non-Recourse Deductions. Partner Non-Recourse
Deductions under Treasury Regulation Section 1.704-2(i)(2) for
any fiscal year shall be allocated to the Partners who bear
the economic risk of loss with respect to the Partner
Non-Recourse Debt to which Partner Non-Recourse Deductions are
attributable in accordance with and to the extent required by
Treasury Regulation Section 1.704-2(i)(1).
(g) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to
Code Sections 734(b) or 743(b) is required in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv)(m) to be taken
into account in determining Capital Accounts, the amount
of such adjustment to the Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and
such gain or loss shall be specifically allocated to the
Partners in a manner consistent with the manner
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<PAGE> 15
in which Capital Accounts are required to be adjusted pursuant
to said Treasury Regulation.
(h) Allocations Relating to Taxable Issuance of Partnership
Interests. Any income, gain, loss or deduction realized as a
direct or indirect result of the issuance of an interest by
the Partnership to a Partner ("Issuance Items") shall be
allocated among the Partners so that, to the extent possible,
the net amount of such Issuance Items, together with all other
allocations under this Agreement to each Partner shall be
equal to the net amount that would have been allocated to such
Partners if the Issuance Items had not be realized.
6.3 PROPERTY CONTRIBUTIONS.
In accordance with Code Section 704(c) and the Treasury Regulations
hereunder, income, gain, loss and deduction with respect to any property
contributed to the capital of the Partnership shall, solely for tax purposes, be
allocated among the Partners so as to take account of any variation between the
adjusted basis of such property to the Partnership for federal income tax
purposes and its initial value for Capital Account purposes ("Book Value"). In
the event the Book Value of any Partnership asset is later adjusted, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Book Value in the same manner as under Code
Section 704(c)and the Treasury Regulations thereunder.
6.4 CURATIVE ALLOCATIONS.
(a) The Regulatory Allocations are necessary to comply with the
requirements of the Treasury Regulations. To the maximum
extent possible, the Regulatory Allocations shall be offset,
either with other Regulatory Allocations or with special
allocations of other items of Partnership income, gain, loss
or deduction pursuant to this Section 6.4. Therefore,
notwithstanding any other provision of this Article 6, the
Partners shall make such offsetting special allocations of
Partnership income, gain, loss or deduction in whatever manner
determined appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance
is, to the maximum extent possible, equal to the Capital
Account balance such Partner would have had if the Regulatory
Allocations were not part of this Agreement and all items of
Partnership Profit and Loss were allocated in accordance with
each Partner's respective Partnership Interest.
(b) The manner in which the Partners intend and desire
distributions from the Partnership to be divided among them is
set forth in Sections 5.2 and 5.3 hereof. The Partners do not
intend either the allocations under this Article 6 or the
application of Section 5.4 due to the liquidation of the
Partnership,
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to directly or indirectly distort the manner in which they
share Partnership distributions under Sections 5.2 and 5.3
hereof. Therefore, it is the express intent of this Limited
Partnership Agreement and the Partners that allocations of
Profits and Losses among the Partners and the Regulatory
Allocations shall, to the maximum extent possible, be made in
such a manner so as to prevent any distortion in the manner in
which Partnership distributions are divided among the Partners
as set forth under Sections 5.2 and 5.3 hereof, and so that
upon the application of Section 5.4 due to the liquidation of
the Partnership, the Capital Accounts of each Partner shall
equal the distributions otherwise payable to such Partners
under Sections 5.2 and 5.3.
(c) Notwithstanding anything contained in this Limited Partnership
Agreement to the contrary, the Partners agree to any special,
corrective or other allocations of items of Profits and Losses
as the General Partner may deem necessary or appropriate, from
time to time, in order to carry out the purposes and intents
of the Partners as described herein and avoid any distortion
in the manner in which the Partners receive distributions
under Sections 5.2 and 5.3 hereof, whether due to the
application of Section 5.4 resulting from the liquidation of
the Partnership or any other factors whatsoever. The
Partners agree that the special and/or corrective allocations
referred to under this Section 6.4 may include, without
limitation, a special allocation of the gain and income
associated with or arising out of the disposition of
Partnership assets and/or the liquidation of the Partnership,
to one or more Partners as necessary or appropriate, in order
to carry out the purposes and intents of this Section 6.4.
6.5 DEFINITIONS.
For purposes of this Limited Partnership Agreement, the following
definitions shall apply:
(a) "Partnership Non-Recourse Deductions" has the same meaning as
provided in Treasury Regulation Section 1.704-2(b)(1).
(b) "Partner Non-Recourse Deductions" has the same meaning as
provided in Treasury Regulation Sections 1.704-2(i)(1) and
(2).
(c) "Partner Non-Recourse Debt" has the same meaning as provided in
Treasury Regulation Section 1.704-2(b)(4).
(d) "Partner Minimum Gain" means an amount, with respect to each
Partner Non-Recourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Non-Recourse Debt were
treated as a Non-Recourse
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<PAGE> 17
Liability determined in accordance with Treasury Regulation
Section 1.704-2(i)(3).
(e) "Partnership Minimum Gain" has the same meaning as provided in
Treasury Regulation Sections 1.704-2(b(2) and 1.704-2(d).
6.6 DETERMINATIONS.
Any and all actions and decisions regarding the application and/or
interpretation of any term or provision of this Article 6, shall be determined
by the General Partner, which determination shall be final, adhered to by the
Partners, and not subject to further review or challenge.
ARTICLE 7
LIABILITY
7.1 LIABILITY OF GENERAL PARTNER.
Any liability of the Partnership shall first be satisfied out of the assets
of the Partnership, including the proceeds of any liability insurance which the
Partnership may recover. If such assets shall not be sufficient to satisfy such
liability, such liability shall be borne by the General Partner, except for a
liability with respect to which the creditor has agreed that no Partner has
personal liability.
7.2 INDEMNIFICATION OF GENERAL PARTNER.
(a) The General Partner shall be entitled to indemnity (including
expenses of litigation and appeal and attorneys' fees) from the
Partnership for any act performed by it or its Affiliates within the scope
of the authority conferred upon it or such Affiliate by this Limited
Partnership Agreement, except for those acts caused by it or its
Affiliates' own fraud, misrepresentation, bad faith, or willful breach of
a fiduciary duty; provided, however, that any indemnity under this Section
be provided out of and to the extent of Partnership assets only, and the
Limited Partner shall have any personal liability on account thereof.
(b) The General Partner shall not be liable, responsible or
accountable, in damages or otherwise, to any of the Partners or the
Partnership for any acts performed by it within the scope of the authority
conferred upon it by this Limited Partnership Agreement, except for those
acts caused by it or its Affiliates' own fraud, misrepresentation, bad
faith or willful breach of fiduciary duty.
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7.3 LIMITED LIABILITY OF LIMITED PARTNER.
The liability of the Limited Partner in all respects shall be limited to
the capital contributions paid by such Limited Partner under the provisions of
Sections 2.2 and 2.3 hereof.
7.4 STATUS OF LIMITED PARTNER.
The Limited Partner shall not participate in the control or management of
the business of the Partnership. The interest of the Limited Partner in the
Partnership shall not in any way prohibit or restrict same from engaging in or
owning an interest in any other business venture of any nature, including any
venture which might be competitive with the business of the Partnership.
ARTICLE 8
ACCOUNTING
8.1 LIST OF PARTNERS AND BOOKS AND RECORDS.
The General Partner shall keep a true, exact and complete list of the names
and addresses of the Partners and books of account recording the transactions of
the Partnership. The books of account shall be kept on the cash or accrual
method, as determined by the General Partner. Such list of Partners and books
of account, together with all tax returns, correspondence, papers and other
documents, shall be kept at the principal office of the Partnership or such
other office as may be designated by the General Partner, and shall be at all
reasonable times, available to all or any of the Partners or their
representatives designated in writing for inspection and copying at the sole
cost and expense of such partner.
8.2 FISCAL YEAR.
The fiscal and the taxable year of the Partnership shall end on the last
Sunday in September.
8.3 TAX RETURNS.
The General Partner shall cause to be prepared and transmitted to all
Partners and the State of Michigan and Internal Revenue Service a Schedule K-1
or other required form for the reporting of income or loss for federal and state
tax purposes.
8.4 REPORTS.
The General Partner shall cause to be furnished to the Limited Partner
within 120 days after the end of each fiscal year, an annual report containing a
balance sheet, a profit and loss
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statement and a statement showing distribution to the Partners and an allocation
to the Partners of income, gains, losses, deductions and credits and a statement
of changes in capital account.
8.5 TAX MATTERS PARTNER AND TAX ELECTIONS.
(a) As used in this Limited Partnership Agreement, "Tax Matters
Partner" has the same meaning as the term "tax matters partner" as
set forth in Code Section 6231(a)(7). The General Partner, acting
through Richard J. Nash, in his capacity as Treasurer of the General
Partner, is hereby designated Tax Matters Partner for the Company.
(b) The Tax Matters Partner designated pursuant to subsection (a)
hereof shall have full power and authority to act as such for the
Partnership and the Partners, with all the rights and
responsibilities of that position described in Code Sections 6222
through 6233, except, however, to the extent Code Section
6224(c)(3)(B) provides certain rights and privileges to the non-tax
matters partners of a Company. The duty of the Tax Matters Partner
to keep each Partner informed of administrative and judicial
proceedings involving tax issues relating to the Partnership, its
property or business shall be limited to a duty to inform each
Partner of the beginning, completion and results of such proceedings.
(c) The Tax Matters Partner shall in no event be liable for loss
or damage to the Partnership or any Partner arising from the exercise
of any of his rights and/or the performance of any of his
responsibilities referred to in this Section. The Partnership
shall reimburse the Tax Matters Partner for all costs and expenses
incurred by him in this exercise of the rights and/or the performance
of the responsibilities referred to in this Section. The Partnership
shall indemnify and hold harmless the Tax Matters Partner from all
claims, liabilities, costs and expenses, including reasonable
attorneys' fees and court costs, incurred in the exercise of the
rights and/or the performance of the responsibilities referred to in
this Section.
(d) Each Partner shall reflect on his individual income tax
returns all items of income, gain, loss deduction or credit relating
to the Partnership, its property or business in a manner which is
consistent with the treatment of such items on the Partnership
returns.
ARTICLE 9
TERMINATION AND DISSOLUTION
9.1 ADMISSION OR INCAPACITY OF LIMITED PARTNER.
The Partnership shall not terminate or dissolve upon the admission,
withdrawal, death, bankruptcy, insolvency, assignment for the benefit of
creditors, receivership or legal incapacity
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of any Limited Partner (hereinafter "Incapacitated Limited Partner"). Subject to
the provisions of Article 9 hereof, the heirs, legal representative, trustee,
receiver, successor or assignee (hereinafter "Successor") of any Incapacitated
Limited Partner may become an assignee of such Limited Partner and have the
rights provided for in Section 705 of the Revised Act, but shall not have the
rights of a Limited Partner unless the General Partner has consented to same and
Sections 10.2.2 and 10.2.3 have been complied with. Such successor shall
execute and deliver, in a form satisfactory to the General Partner, an addendum
to this Limited Partnership Agreement agreeing to be bound by all the terms and
conditions hereof and to assume all the obligations of the Incapacitated Limited
Partner hereunder.
9.2 DISSOLUTION AND LIQUIDATION.
The Partnership shall be dissolved and liquidated upon the occurrence of
any of the following events:
(a) The arrival of the termination date specified in Section 1.4
hereof;
(b) The entry of a final judgment, order or decree of a court of
competent jurisdiction adjudicating the Partnership to be bankrupt, and the
expiration of the period, if any, allowed by applicable law in which to
appeal therefrom; or
(c) The General Partner ceases to be a General Partner as provided
in Section 402 of the Revised Act, or the withdrawal of the General Partner
unless the Limited Partner affirmatively elects to reconstitute the
Partnership by admitting a new General Partner as provided under Section
801(3) of the Revised Act. In the event of such reconstitution, the
General Partner's interest shall be automatically converted to a limited
partnership interest, which resultant limited partnership interest shall
have the same economic characteristics as existed prior to such conversion.
(d) The affirmative consent of the General Partner and the Limited
Partner holding a majority of Partnership Interests.
9.3 DISTRIBUTION ON LIQUIDATION.
(a) Upon the dissolution of the Partnership by the occurrence of
any event described in Section 9.2 hereof, the General Partner or such
other person, who shall be designated within 60 days of such event by the
General Partners (which General Partner or designated person shall, for
purposes hereof, be referred to as the "Liquidator"), shall wind up its
affairs and apply and distribute the proceeds of such liquidation in the
same manner as provided for the distribution of Capital Proceeds in Section
5.4 (with the profits and losses arising from the sale or other disposition
of the assets of the Partnership being allocated in the same manner as the
allocation of profits and losses in Article 6).
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(b) In the event of liquidation hereunder, each Partner shall
make, constitute and appoint the Liquidator, with full power of
substitution, the true and lawful attorney for such Partner and in
such Partner's name, place and stead and for such Partner's use and
benefit, to wind up the affairs of the Partnership, manage the
business and assets of the Partnership until such is completed; to
execute, acknowledge and deliver documents with or without warranty
for such purpose; and to do and perform all and every act and thing
whatsoever necessary to be done in connection with the business and
assets of the Partnership. To evidence the appointment of the
Liquidator as attorney-in-fact for the Partners hereunder, each
Partner shall, from time to time, execute and deliver such power of
attorney or other instrument as shall be reasonably requested by the
Liquidator. The foregoing grant of authority shall be irrevocable
and shall constitute a power coupled with an interest binding upon
the heirs, legal representatives, successors and assigns of each
Partner.
(c) A reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the discharge of
its liabilities so as to enable the Liquidator to minimize the normal
losses attendant upon such liquidation. The provisions of Article 6
hereof relating to the allocation of distributive shares of items of
gain, loss, deduction and credit of the Partnership shall be
applicable during the period of liquidation.
(d) The Liquidator shall furnish each Partner with a
statement, from such firm of certified public accountants as he or
it shall designate, showing the manner in which the proceeds of
liquidation of the Partnership have been distributed.
(e) The Partnership shall terminate when all property owned
by the Partnership shall have been liquidated and the net proceeds,
after satisfaction of liabilities to creditors, shall have been
distributed among the Partners pursuant to this Agreement.
ARTICLE 10
ASSIGNMENT AND TRANSFERS
10.1 TRANSFER BY GENERAL PARTNER.
The General Partner shall not sell, transfer or exchange ("Transfer")
its Partnership Interest in one or more transfers, or substitute one or
more General Partners in its place or admit one or more General Partners or
voluntarily withdraw or terminate its participation in the Partnership as
General Partner, unless the Transfer is approved by the Limited Partner. In
the event of any Transfer under this Section or the substitution of one or
more General Partners with said approval of the Limited Partner, the
General Partner shall comply with the following additional conditions: (i)
the Transfer will not cause the Partnership to be taxed as a corporation
rather than a partnership for federal income tax purposes (ii) the
Transfer when added to the total of all other Partnership Interests
transferred within a period of 12 consecutive months prior thereto will not
result in the
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termination of the Partnership under Section 708 of the Code, (iii) the Transfer
will not violate any federal or state securities laws or cause the loss of any
exemption from registration available to the Partnership, (iv) the Transferee
shall execute an addendum in a form satisfactory to the General Partner
containing the Transferee's agreement to be bound by all the terms and
conditions of this Limited Partnership Agreement and any existing amendments,
and (v) the Transferee shall pay such reasonable expenses as may be incurred by
the Partnership in connection with the admission of the Transferee as a Partner.
In the event of a Transfer not resulting in the withdrawal of the General
Partner or the admission of one or more additional General Partners, the
Partnership Interest transferred shall automatically be converted to a Limited
Partnership Interest, the Transferee shall have no right to participate in the
management of the Partnership and in the event of a Transfer of less than all of
the Partnership Interest, the Transferor shall remain as a General Partner.
10.2 TRANSFER BY LIMITED PARTNER.
The Limited Partner shall not sell, transfer or exchange, ("Transfer"), all
or any portion of the Limited Partner's Partnership Interest without the prior
written consent of the General Partner and compliance with the following terms
and conditions:
(a) The Limited Partner ("Selling Partner") shall, after receipt
of a bona fide offer to purchase or exchange, which the Limited Partner
intends to accept, have the right to Transfer all or a portion of such
Limited Partner's Partnership Interest, but only after first offering, in
writing, to sell such Partnership Interest to the General Partner. Such
written offer shall be upon all of the same terms and conditions as the
aforesaid bona fide offer to purchase; and the General Partner shall have
the option, ("First Option") for a period of thirty (30) days after receipt
of such written offer, to purchase such interest upon the same terms and
conditions as the bona fide offer. In the event that the General Partner
shall decline to exercise the First Option, then the Selling Partner shall
offer in writing to sell such Partnership Interest pro rata to all the
Partners (General and Limited), unless there are no Limited Partners other
than Selling Partner. The offer shall be upon all the same terms and
conditions as the bona fide offer to purchase; and the Partners shall have
a second option ("Second Option") for a period of fifteen (15) days after
the expiration of the First Option to purchase such Partnership Interest.
In the event one or more of the Partners decline to exercise the Second
Option, then the remaining Partners exercising the Second Option
("Purchasing Partners") shall have a third option ("Third Option") for a
period of five (5) business days after the expiration of the Second Option
to acquire the pro rata share of the declining Partners in equal
proportions or as the Purchasing Partners shall otherwise agree. In the
event the entire Partnership Interest of the Selling Partner subject to the
bona fide offer to purchase is not purchased by the exercise of the
foregoing options, the Selling Partner shall have the right to proceed with
the Transfer pursuant to the bona fide offer to purchase; provided the
Transfer is completed within ninety (90) days after the expiration of the
Third Option. Failure to complete the sale or Transfer within
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said ninety (90) day period shall require the Selling Partner to again comply
with the conditions of this subsection.
(b) In the event of a Transfer pursuant to the provisions of this
Section 10.2, the purchaser, transferee or exchanging party ("Transferee"),
shall execute, with the consent of the General Partner and in form satisfactory
to the General Partner, an addendum to this Limited Partnership Agreement
pursuant to which the Transferee agrees to be bound by all the terms and
conditions hereof and to assume all the obligations of the Transferor Limited
Partner.
(c) The Transferee has:
(i) Provided an opinion of counsel, in form and substance
satisfactory to counsel for the Partnership, that neither the
offering nor the Transfer of the partnership interest violates
any provisions of federal or state securities or comparable laws,
nor causes the loss of any exemption from federal or state
securities laws which may be available to the limited partnership
interests, nor violates the limited partnership laws of the state
governing this Limited Partnership, nor causes the Partnership to
be taxed as a corporation rather than a partnership under the
Code; and
(ii) Paid such reasonable expenses as may be incurred by the
Partnership in connection with such admission as a substituted
Limited Partner; and
(iii) Satisfied the Partnership that the Partnership interest sought to
be transferred when added to the total of all other Partnership
interests transferred within the period of twelve (12)
consecutive months prior thereto will not result in the
termination of the Partnership under Code Section 708; and
(iv) Executed a statement providing that he or she is acquiring the
Partnership Interest for his or her own account, for investment
and not with a view towards distribution and providing any other
representations and warranties reasonably requested by the
Partnership; and
(v) The Transferor and Transferee, and if requested by the General
Partner, all other Partners shall execute and deliver all such
certificates, documents and agreements which the General Partner
deems necessary or appropriate in connection with the transfer
and/or to effectuate and preserve the status and existence of the
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Partnership, the terms and provisions of this Limited
Partnership Agreement, and the rights and obligations of the
Partners, the Transferor and Transferee.
(d) Under no circumstances may any Limited Partner, transfer,
assign or convey part his Partnership Interest, or any right,
benefit or interest as a Limited Partner, to any party, without the
express prior written consent of the General Partner.
10.3 INVOLUNTARY TRANSFERS: CLAIMS BY CREDITORS AND OTHERS
The Partnership Interests of the Partners are not subject to any
voluntary or involuntary encumbrance, sale, transfer, assignment or other
disposition without strict compliance with all the provisions of this
Article 10. Any such actual or purported transfer, sale, assignment or
other disposition in violation of this Article 10 shall be null and void.
In the event that any Partnership Interest is subject to any actual or
purported transfer or encumbrance, whether by attachment, seizure, levy,
divorce, order of any bankruptcy or other court, any procedure for the
benefit of creditors or through any other procedure, action or method, in
violation of any term or provision of this Agreement, then in such event,
the affected Partnership interest shall automatically (i) be subject to the
First Option, Second Option and Third Option under Section 10.2 hereof for
a period of one (1) year following written notice to the Partnership and
the other Partners of such transfer or purported transfer or encumbrance,
and (ii) have no right to participate, consent or vote in the management or
affairs of the Partnership or otherwise receive any distribution or
payment whatsoever.
10.4 TRANSFER ELECTION.
In the case of the transfer of a Partner's interest in the Partnership
pursuant to any provisions hereof, the Partnership may file the election
specified by Code Section 754.
ARTICLE 11
GENERAL PROVISIONS
11.1 INVESTMENT REPRESENTATION.
The Limited Partner represents and warrants to the Partnership that it
is acquiring its interest in the Partnership for its own account for
investment and not with a view toward transfer, resale or distribution
thereof, and that its interest shall not be sold or disposed of in
violation of the Securities Act of 1933 (the "Act") as amended, (including
any regulations promulgated thereunder) or the Uniform Securities Act of
the State of Michigan ("Uniform Act") (including any regulations
promulgated thereunder), nor in the absence of either an effective
registration statement under said Act or Uniform Act or an opinion of
counsel satisfactory to the Partnership and to its counsel that
registration is not required under the Act and/or the Uniform Act, and that
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<PAGE> 25
any such sale will not invalidate any exemption from registration which
may otherwise be available to the partnership interests. The Limited Partner
shall indemnify and hold the Partnership harmless for all costs and expenses,
including reasonable attorneys' fees, incurred by the Partnership as a result
of a breach hereof by such Limited Partner.
11.2 CERTIFICATES.
At the expense of the Partnership, the General Partner shall promptly
cause to be filed a Certificate of Limited Partnership and any necessary
amendments, restated certificates or other documents with the chief officer of
the Michigan Department of Consumer & Industry and shall cause to be prepared,
executed and filed for record all other legally required fictitious name or
other applications, registrations, publications, certificates, affidavits and
amendments required to be filed with any governmental authority.
11.3 POWER OF ATTORNEY.
The Limited Partner hereby makes, constitutes and appoints Joe Balous,
Secretary of the General Partner, with full power of substitution, true and
lawful attorney-in-fact for it and in its name, place and stead, and for its
use and benefit: (a) to sign, file and record this Limited Partnership
Agreement and Certificate of Limited Partnership as provided in Section 11.2
and any amendments, restated certificates and other documents or filings
required under the Revised Act or required by any other governmental
authority; (b) to enter into, sign and record any other agreements or documents
authorized by this Limited Partnership Agreement; and (c) to sign, execute,
certify, acknowledge, file and record any other instruments referred to in
Section 11.2 hereof or required of the Partnership or Partners by law.
11.4 PARTNERS' RELATIONSHIP INTER SE.
Nothing herein contained shall be interpreted or construed to
constitute any Partner the agent of any other Partner, except as expressly
provided herein, or in any manner to limit the Partner in carrying on his own
businesses or activities.
11.5 AMENDMENTS.
This Limited Partnership Agreement and any part hereof may be amended
at any time or from time to time by the vote of the General Partner and the
Limited Partner.
Notwithstanding the foregoing, Amendments to this Limited Partnership
Agreement or the Certificate of Limited Partnership for purposes of properly
enforcing the provisions of this Agreement existing as of the date of execution
by the General Partner and the Limited Partner (such as reallocation of
Partnership interests under Section 2.3.3) and admitting additional Limited
Partners in compliance with this Limited Partnership Agreement shall not
require the vote of the Limited Partner. An Amendment to this Limited
Partnership Agreement removing, adding or
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<PAGE> 26
substituting Limited Partners shall only require the signature of the
General Partner, the person being added or substituted (and if substituted,
also by the transferring Limited Partner). An Amendment removing, adding
or substituting a General Partner shall be signed by the current General
Partner, additional or successor General Partner and the General Partner on
behalf of the Limited Partner pursuant to the power of attorney in Section
11.3, provided the applicable voting requirements for the Limited Partner
are satisfied. All other amendments and any certificate, amendment, notice
or other document required to be filed with any governmental agency having
jurisdiction thereof in connection with any valid Amendment under this
Limited Partnership Agreement shall be signed by the General Partner and,
at the option of the General Partner, either the Limited Partner or the
General Partner on behalf of the Limited Partner pursuant to the power of
attorney in Section 11.3.
11.6 NOTICES, STATEMENTS, ETC.
All notices, statements or other documents which are required or
contemplated by this Limited Partnership Agreement shall be in writing and
shall be either personally served upon the person entitled thereto or
mailed postage prepaid, certified mail, return receipt requested, addressed
to such person at his last known mailing address, as set forth on the
latest Certificate of Limited Partnership or amendment thereof filed with
respect to the Partnership, or on any subsequent written instructions
delivered by him to the Partnership. Any mailed notice shall be deemed
served two days after the date mailed pursuant to this Section.
11.7 ENTIRE AGREEMENT.
This Limited Partnership Agreement represents the entire understanding
of the parties with respect to the subject matter hereof. Except as
provided in Section 11.5 hereof, no waiver, modification or amendment
("Amendment") of this Limited Partnership Agreement shall be binding unless
in writing and signed by each of the Partners affected by the Amendment.
11.8 INTERPRETATION.
(a) This Limited Partnership Agreement shall be interpreted,
construed and enforced in accordance with the laws of the State of
Michigan and in the event of a conflict between this Limited
Partnership Agreement and the Revised Act, the Revised Act shall
control.
(b) As used in this Limited Partnership Agreement, any
gender shall include any other gender and the plural shall include the
singular and the singular shall include the plural wherever
applicable.
(c) The titles of the Articles and Sections herein have been
inserted as a matter of convenience for reference only and shall not
control or affect the meaning of construction of any of the terms or
provisions hereof.
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<PAGE> 27
11.9 COUNTERPARTS.
The parties hereto may execute this Limited Partnership Agreement
in any number of counterparts, each of which, when executed and delivered
by all the parties named as signatories hereto, shall have the force and
effect of an original; but all such counterparts shall constitute one and
the same instrument.
11.10 ASSETS IN CONTROL OF GENERAL PARTNER.
The General Partner has a fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or
not in its immediate possession or control, and it shall not employ or
permit another to employ such funds or assets in any manner except for the
exclusive benefit of the Partnership.
11.11 BINDING EFFECT.
This Limited Partnership Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs, legal
representatives, successors and assignees.
IN WITNESS WHEREOF, this Limited Partnership Agreement has been
executed by the General Partner and by the Limited Partner, effective on the
day and year first above written.
IN THE PRESENCE OF: GENERAL PARTNER:
LDM HOLDINGS, L.L.C.,
A MICHIGAN LIMITED LIABILITY COMPANY
BY: LDM TECHNOLOGIES, INC.,
A MICHIGAN CORPORATION, MEMBER
Michael B. Lewis Richard J. Nash
- --------------------------- By: -----------------------------------
Michael B. Lewis Richard J. Nash
Its: President
LIMITED PARTNER:
LDM TECHNOLOGIES, INC.
a Michigan corporation
Michael B. Lewis By: Richard J. Nash
- --------------------------- --------------------------
Michael B. Lewis Richard J. Nash
Its: President
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<PAGE> 28
STATE OF MICHIGAN)
) SS.
COUNTY OF OAKLAND)
Personally came before me this 10th day of December, 1996, the above
named Richard J. Nash, to me known to be the person who executed the foregoing
Agreement, who acknowledged that as the duly authorized President of LDM
Technologies, Inc., a member of LDM Holdings, L.L.C., he executed the same as
the free act and deed of such corporation, by its authority.
MICHAEL B. LEWIS MICHAEL B. LEWIS
Notary Public, Oakland County, MI -----------------------------------
My Commission Expires Aug. 2, 1998 Notary Public, County, MI
----------
My Commission Expires:
-------------
STATE OF MICHIGAN)
) SS.
COUNTY OF OAKLAND)
Personally came before me this 10th day of December, 1996, the above
named Richard J. Nash, to me known to be the person who executed the foregoing
Agreement, who acknowledged that as the duly authorized President of LDM
Technologies, Inc. he executed the same as the free act and deed of such
corporation, by its authority.
MICHAEL B. LEWIS MICHAEL B. LEWIS
Notary Public, Oakland County, MI -----------------------------------
My Commission Expires Aug. 2, 1998 Notary Public, County, MI
----------
My Commission Expires:
-------------
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<PAGE> 1
EXHIBIT 3.8
SCHEDULE A
ARTICLES OF ASSOCIATION
OF
3001422 NOVA SCOTIA COMPANY
INTERPRETATION
1. In these Articles, unless there be something in the subject or context
inconsistent therewith:
(1) "Act" means the Companies Act (Nova Scotia);
(2) "Articles" means these Articles of Association of the Company and
all amendments hereto;
(3) "Company" means 3001422 Nova Scotia Company;
(4) "director" means a director of the Company;
(5) "Memorandum" means the Memorandum of Association of the Company and
all amendments thereto;
(6) "month" means calendar month;
(7) "Office" means the registered office of the Company;
(8) "person" including a body corporate;
(9) "Proxyholder" includes an alternate proxyholder;
(10) "Register" means the register of members kept pursuant to the Act,
and where the context permits includes a branch register of members;
(11) "Registrar" means the Registrar as defined in the Act;
(12) "Secretary" includes any person appointed to perform the duties of
the Secretary temporarily;
(13) "shareholder" means member as that term is used in the Act in
connection with an unlimited company having share capital;
(14) "special resolution" has the meaning assigned by the Act;
(15) "in writing" and "written" include printing, lithography and other
modes of representing or reproducing words in visible form;
(16) words importing number or gender include all numbers and genders
unless the context otherwise requires;
<PAGE> 2
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2. The regulations in Table A in the First Schedule to the Act shall not
apply to the Company.
3 . The directors may enter into and carry into effect or adopt and
carry into effect any agreement made by the promoters of the Company on
behalf of the Company and may agree to any modification in the terms of
any such agreement, either before or after its execution.
4. The directors may, out of the funds of the Company, pay all expenses
incurred for the incorporation and organization of the Company.
5. The Company may commence business as soon after incorporation as the
directors think fit, notwithstanding that part only of the shares
has been allotted.
SHARES
6. The Company is authorized to issue One Hundred Thousand (100,000) common
shares without nominal or par value.
7. The directors shall control the issue of shares and, subject to the
provisions of these Articles, may allot shares from the Treasury of the
Company to such persons at such times, on such terms and conditions and, if
the shares have a par value, either at a premium or at par, as they
think fit.
8. Save as herein otherwise provided, the Company may treat the registered
holder of any share as the absolute owner thereof and accordingly
shall not, except as ordered by a court of competent jurisdiction
or required by statute, be bound to recognize any equitable or
other claim to or interest in such share on the part of any other
person.
CERTIFICATES
9. Certificates of title to shares shall comply with the Act and may
otherwise be in such form as the directors may from time to time determine.
Every certificate of title to shares shall be signed manually by at
least one of the Chairman, President, Secretary, treasurer, a
vice-president, an assistant secretary, any other officer of the
Company or any director of the Company. All such certificates when
signed as provided in this Article shall be valid and binding upon
the Company.
10. Except as the directors may determine, each director's shares
may be evidenced by any number of certificates so long as the aggregate of
the shares stipulated in such certificates equals the aggregate
registered in the name of the shareholder.
<PAGE> 3
<PAGE> 4
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11. Any certificate that has become worn, damaged or defaced may,
upon its surrender to the directors, be cancelled and replaced by a new
certificate. Any certificate that has become lost or destroyed may
be replaced by a new certificate upon proof of such loss or destruction
to the satisfaction of the shareholders and the furnishing to the Company
of such undertakings of indemnity as the directors deem adequate.
PROHIBITION ON TRANSFER OF SHARES
12. No share of any class or series shall be transferable except:
(1) shares issued to individual subscribers to the
Memorandum on incorporation which may be transferred on the
date of incorporation by depositing the certificates
representing such shares at the Office of the Company on the
date of incorporation; or
(2) on the death of a shareholder, that shareholder's shares may be
transferred to his or her estate.
The Company shall decline to register any other purported transfer of
shares by any person in any circumstances.
PRIVATE COMPANY
13. The Company is a private company, and:
(1) no transfer of prescribed securities of the Company,
other than a transfer allowed under Article 12 hereof
shall be effective;
(2) the number of holders of issued and outstanding prescribed
securities or shares of the Company, exclusive of persons who
are in the employment of the Company and exclusive of persons
who, having been formerly in the employment of the Company,
were, while in that employment, to own at least one
prescribed security or share of the Company, shall not exceed
50 in number, two or more persons or companies who are the
joint registered owners of one or more prescribed securities or
shares being counted as one holder; and
(3) the Company shall not invite the public to subscribe for any
of its securities.
In this Article, "private company" and "securities" have the meanings
ascribed to those terms in the Securities Act (Nova Scotia), and
"prescribed security" means any of the securities prescribed by the Nova
Scotia Securities
<PAGE> 5
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Commission from time to time for the purpose of the definition of "private
company" in the Securities Act (Nova Scotia).
INCREASE AND REDUCTION OF CAPITAL
14. Subject to the Act, the Company may by resolution of its shareholders
increase its share capital by the creation of new shares of such amount as
it thinks expedient.
15. Subject to the Act and the restrictions on transferability in these
Articles, the new shares may be issued upon such terms and conditions and
with such rights, privileges, limitations, restrictions and conditions
attached thereto as the Company by resolution of its shareholders
determines or, if no direction is given, as the directors
determine.
16. Except as otherwise provided by the conditions of issue, or by
these Articles, any capital raised by the creation of new shares shall be
considered part of the original capital and shall be subject to the
provisions herein contained.
BORROWING POWERS
17. The directors on behalf of the Company may:
(1) raise or borrow money for the purposes of the Company or
any of them;
(2) secure, subject to the sanction of a special resolution
where required by the Act, the repayment of funds so raised or
borrowed in such manner and upon such terms and conditions in
all respects as they think fit, and in particular by the
execution and delivery of mortgages of the Company's real or
personal property, or by the issue of bonds, debentures or
other securities of the Company secured by mortgage or other
charge upon all or any part of the property of the Company,
both present and future including its uncalled capital for the
time being;
(3) sign or endorse bills, notes, acceptances, cheques,
contracts, and other evidence of or securities for funds
borrowed or to be borrowed for the purposes aforesaid;
(4) pledge debentures as security for loans;
(5) guarantee obligations of any person.
<PAGE> 6
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18. Bonds, debentures and other debt securities (but not shares or securities
convertible into shares) may be made assignable, free from any equities
between the Company and the person to whom such securities were
issued.
19. Any bonds, debentures and other securities may be issued at a discount,
premium or otherwise and with special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at
general meetings of the Company, appointment of directors and other
matters.
GENERAL MEETINGS
20. Ordinary general meetings of the Company shall be held at least once in
every calendar year at such time and place as may be determined by the
directors and not later than 15 months after the preceding ordinary
general meeting. All other meetings of the Company shall be called
special general meetings. Ordinary or special general meetings may
be held either within or without the Province of Nova Scotia.
21. The President, a vice-president or the directors may at any time convene
a special general meeting.
22. At least seven clear days' notice, or such longer period of notice as
may be required by the Act, of every general meeting, specifying the
place, day and hour of the meeting and, when special business is to be
considered, the general nature of such business, shall be given to the
shareholders entitled to be present at such meeting by notice given as
permitted by these Articles. With the consent in writing of all the
shareholders entitled to vote at such meeting, a meeting may be convened by
a shorter notice and in any manner they think fit, or notice of the time,
place and purpose of the meeting may be waived by all of the shareholders.
23. When it is proposed to pass a special resolution, the two meetings may be
convened by the same notice, and it shall be no objection to such
notice that it only convenes the second meeting contingently upon
the resolution being passed by the requisite majority at the first
meeting.
24. The accidental omission to give notice to a shareholder, or non-receipt of
notice by a shareholder, shall not invalidate any resolution passed
at any general meeting.
PROCEEDINGS AT GENERAL MEETINGS
25. The business of an ordinary general meeting shall be to receive and
consider the financial statements of the Company and the report of the
directors and the report, if any, of the auditors, to elect directors in
the place of those retiring
<PAGE> 7
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and to transact any other business which under these Articles ought to be
transacted at an ordinary general meeting.
26. No business shall be transacted at any general meeting unless the
requisite quorum is present at the commencement of the business. A
corporate shareholder of the Company that has a duly authorized agent or
representative present at any such meeting shall, for the purpose
of this Article, be deemed to be personally present at such
meeting.
27. Two persons, being shareholders, proxyholders or representatives of
corporate shareholders, present and entitled to vote shall constitute a
quorum for a general meeting, and may hold a meeting.
28. The Chairman shall be entitled to take the chair at every general meeting
or, if there be no Chairman, or if the Chairman is not present within
fifteen (15) minutes after the time appointed for holding the
meeting, the President or, failing the President, a vice-president
shall be entitled to take the chair. If the Chairman, the
President or a vice-president is not present within fifteen (15)
minutes after the time appointed for holding the meeting or if all
such persons present decline to take the chair, the shareholders
present entitled to vote at the meeting shall choose another
director as chairman and if no director is present or if all the
directors present decline to take the chair, then such shareholders
shall choose one of their number to be chairman.
29. If, within half an hour from the time appointed for a general meeting, a
quorum is not present, the meeting, if it was convened pursuant to
a requisition of shareholders, shall be dissolve; if it was
convened in any other way, it shall stand adjourned to the same
day, in the next week, at the same time and place. If at the
adjourned meeting a quorum is not present within half an hour from
the time appointed for the meeting, the shareholders present shall
be a quorum and may hold the meeting.
30. Subject to the Act, at any general meeting a resolution put to the meeting
shall be decided by show of hands unless, either before or on the
declaration of the result of the show of hands, a poll is demanded
by the chairman, a shareholder or a proxyholder; and unless a poll
is so demanded, a declaration by the chairman that the resolution
has been carried, carried by a particular majority, lost, or not
carried by a particular majority and an entry to that effect in the
Company's book of proceedings shall be conclusive evidence of the
fact without proof of the number or proportion of the votes
recorded in favour or against such resolution.
31. When a poll is demanded, it shall be taken in such manner and at
such time and place as the chairman directs, and either at once or
after an interval or adjournment or otherwise. The result of the
poll shall be the resolution of the
<PAGE> 8
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meeting at which the poll was demanded. The demand of a poll may be
withdrawn. When any dispute occurs over the admission or rejection of a
vote, it shall be resolved by the chairman and such determination made in
good faith shall be final and conclusive.
32. The chairman shall not have a casting vote in addition to any vote or votes
that the chairman has as a shareholder.
33. The chairman of a general meeting may, with the consent of the meeting,
adjourn the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting other than
the business left unfinished at the meeting that was adjourned.
34. Any poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith without adjournment.
35. The demand of a poll shall not prevent the continuance of a meeting for the
transaction of any business other than the question on which a poll has
been demanded.
VOTES OF SHAREHOLDERS
36. Subject to the Act
(1) on a show of hands every shareholder present in
person, every duly authorized representative of a corporate
shareholder, and, if not prevented from voting by the Act,
every proxyholder, shall have one vote; and
(2) on a poll every shareholder present in person, every authorized
representative of a corporate shareholder, and every
proxyholder, shall have one vote for every share held;
whether or not such representative or proxyholder is a shareholder.
37. Votes may be cast either personally or by proxy or, in the case of a
corporate shareholder, by a representative duly authorized under the Act.
38. A proxy shall be in writing and executed in the manner provided in the
Act. A proxy or other authority of a corporate shareholder does not
require its seal.
39. A proxy and the power of attorney or other authority, if any,
under which it is signed or a notarially certified copy of that power or
authority shall be deposited at the Office of the Company or at such other
place as the shareholders may direct. The directors may, by resolution,
fix a time not
<PAGE> 9
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exceeding 48 hours, excluding Saturdays and holidays, preceding any
meeting or adjourned meeting before which time proxies to be used at that
meeting must be deposited with the Company at its Office or with an agent
of the Company. Notice of the requirement for depositing proxies shall be
given in the notice calling the meeting. The chairman of the meeting
shall determine all questions as to validity of proxies and other
instruments of authority.
40. A vote given in accordance with the terms of a proxy shall be valid
notwithstanding the revocation of the proxy provided no intimation
in writing of the revocation is received at the Office of the
Company before the meeting or by the chairman of the meeting before
the vote is given.
41. A resolution, including a special resolution, in writing and signed by
every shareholder who would be entitled to vote on the resolution at a
meeting is as valid as if it were passed by such shareholders at a
meeting and satisfies all of the requirements of the Act respecting
meetings of shareholders.
MODIFICATION OF RIGHTS OF SHAREHOLDERS
42. If at any time the share capital of the Company, by reason of
the issue of preference shares or otherwise, is divided into different
classes of shares, all or any of the rights and privileges attached to any
such class may, whether such shares of the class carry the right to
vote, and subject to such additional approvals required by
subsection 12(1) of the Third Schedule to the Act, be modified,
altered, varied, affected, commuted, abrogated or otherwise dealt
with by a resolution passed and confirmed by at least three-fourths
in number of the issued shares of the class in the same manner as a
special resolution at extraordinary general meetings of the holders
of shares of that class, and all the provisions herein contained as
to general meetings shall, mutatis mutandis apply to every such
meeting, but so that the quorum thereof shall be members holding,
or representing by proxy one-fifth in number of the issued shares
of the class.
DIRECTORS
43. Unless otherwise determined by resolution of shareholders, the number of
directors shall not be less than one or more than ten.
44. Notwithstanding anything herein contained the subscribers to the Memorandum
shall be the first directors of the Company.
45. The directors may be paid out of the funds of the Company as
remuneration for their service such sums, if any, as the Company may by
resolution of its shareholders determine, and such remuneration shall be
divided among them in
<PAGE> 10
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such proportions and manner as the directors determine. The directors
may also be paid their reasonable travelling, hotel and other expenses
incurred in attending meetings of directors and otherwise in the execution
of their duties as directors.
46. The continuing directors may act notwithstanding any vacancy in their body.
47. A director may, in conjunction with the office of director, and on such
terms as to remuneration and otherwise as the directors arrange or
determine, hold any other office or place of profit under the
Company or under any company in which the Company is a shareholder
or is otherwise interested.
48. The office of a director shall ipso facto be vacated, if the director:
(1) becomes bankrupt or makes an assignment for the
benefit of creditors;
(2) is, or is found by a court of competent
jurisdiction to be, of unsound mind;
(3) by notice in writing to the Company, resigns the
office of director; or
(4) is removed the manner provided by these Articles.
49. No director shall be disqualified by holding the office of director
from contracting with the Company, either as vendor, purchaser, or
otherwise, nor shall any such contract, or any contract or
arrangement entered into or proposed to be entered into by or on
behalf of the Company in which any director is in any way interested,
either directly or indirectly, be avoided, nor shall any director so
contracting or being so interested be liable to account to the
Company for any profit realized by any such contract or arrangement
by reason only of such director holding that office or of the
fiduciary relations thereby established, provided the director makes
a declaration or gives a general notice in accordance with the Act.
No director shall, as a director, vote in respect of any contract or
arrangement in which the director is so interested, and if the
director does so vote, such vote shall not be counted. This
prohibition may at any time or times be suspended or relaxed to any
extent by a resolution of the shareholders and shall not apply to any
contract by or on behalf of the Company to give to the directors or
any of them any security for advances or by way of indemnity.
ELECTION OF DIRECTORS
50. At the dissolution of every ordinary general meeting at which their
successors are elected, all the directors shall retire from office and be
succeeded by the
<PAGE> 11
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directors elected at such meeting. Retiring directors shall be
eligible for reelection.
51. If at any ordinary general meeting at which an election of directors
ought to take place no such election takes place, or if no ordinary general
meeting is held in any year or period of years, the retiring
directors shall continue in office until their successors are elected.
52. The Company may by resolution of its shareholders elect any number of
directors permitted by these Articles and may determine or alter their
qualification.
53. The Company may, by special resolution or in any other manner permitted by
statute, remove any director before the expiration of such director's
period of office and may, if desired, appoint a replacement to hold
office during such time only as the director so removed would have held
office.
54. The directors may appoint any other person as a director so long as
the total number of directors does not at any time exceed the maximum
number permitted. No such appointment, except to fill a casual vacancy,
shall be effective unless two-thirds of the directors concur in it. Any
casual vacancy occurring among the directors may be filled by the
directors, but any person so chosen shall retain office only so long as the
vacating director would have retained it if the vacating director had
continued as director.
CHAIRMAN OF THE BOARD
55. The directors may elect one of their number to be Chairman and may
determine the period during which the Chairman is to hold office. The
Chairman shall perform such duties and receive such special remuneration
as the directors may provide.
PRESIDENT AND VICE-PRESIDENTS
56. The directors shall elect the President of the Company, who need not be a
director, and may determine the period for which the President is
to hold office. The President shall perform such duties as may be
assigned from time to time by the directors.
57. The directors may also elect vice-presidents, who need not be directors,
and may determine the periods for which they are to hold office. A
vice-president shall, at the request of the president or the
directors and subject to the directions of the directors, perform
the duties of the president during the absence, illness or
incapacity of the President, and shall also perform such duties as
may be assigned by the president or the directors.
<PAGE> 12
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SECRETARY AND TREASURER
58. The directors shall appoint a Secretary of the Company to keep minutes of
shareholders' and directors' meetings and perform such other duties as
may be assigned by the directors. The directors may also appoint a
temporary substitute for the Secretary who shall, for the purposes of
these Articles, be deemed to be the Secretary.
59. The directors may appoint a treasurer of the Company to carry out such
duties as the directors may assign.
OFFICERS
60. The directors may elect or appoint such other officers of the Company,
having such powers and duties, as they think fit.
61. If the directors so decide the same person may hold more than one of the
offices provided for in these Articles.
PROCEEDINGS OF DIRECTORS
62. The directors may meet together for the dispatch of business,
adjourn and otherwise regulate their meetings and proceedings, as they
think fit, and may determine the quorum necessary for the transaction of
business. Until otherwise determined, one director shall
constitute a quorum and may hold a meeting.
63. If all directors of the Company entitled to attend a meeting either
generally or specifically consent, a director may participate in a
meeting of directors or of a committee of directors by means of such
telephone or other communications to hear each other, and a director
participating in such a meeting by such means is deemed to be
present at that meeting for purposes of these Articles.
64. Meetings of directors may be held either within or without the Province
of Nova Scotia and the directors may from time to time make arrangements
relating to the time and place of holding directors' meetings, the notices
to be given for such meetings and what meetings may be held without
notice. Unless otherwise provided by such arrangements:
(1) A meeting of directors may be held at the close of
every ordinary general meeting of the Company without notice.
(2) Notice of every other directors' meeting may be given
as permitted by these Articles to each director at least two
hours before the time fixed for the meeting.
<PAGE> 13
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(3) A meeting of directors may be held without formal notice if all
the directors are present or if those absent have signified their
assent to such meeting or their consent to the business transacted
at such meeting.
65. The President or any director may at any time, and the Secretary, upon the
request of the President or any director, shall summon a meeting of
the directors to be held at the Office of the Company. The
President, the Chairman or a majority of the directors may at any
time, and the Secretary, upon the request of the President, the
Chairman or a majority of the directors, shall summon a meeting to
be held elsewhere.
66. (1) Questions arising at any meeting of directors shall be decided by a
majority of votes. The chairman of the meeting may vote as a
director but shall not have a second or casting vote.
(2) At any meeting of directors the chairman shall receive and
count the vote of any director not present in person at such
meeting on any question or matter arising at such meeting whenever
such absent director has indicated by telegram, letter or other
writing lodged with the chairman of such meeting the manner in
which the absent director desires to vote on such question or
matter and such question or matter has been specifically mentioned
in the notice calling the meeting as a question or matter to be
discussed or decided thereat. In respect of any such question or
matter so mentioned in such notice any director may give to any
other director a proxy authorizing such other director to vote for
such first named director at such meeting, and the chairman of
such meeting, after such proxy has been lodged, shall receive and
count any vote given in pursuance thereof notwithstanding the
absence of the director giving such proxy.
67. If no Chairman is elected, or if at any meeting of directors the Chairman
is not present within five minutes after the time appointed for
holding the meeting, or declines to take the chair, the President,
if a director, shall preside. If the President is not a director,
is not present at such time or declines to take the chair, a
vice-president who is also a director shall preside. If no person
described above is present at such time and willing to take the
chair, the directors present shall choose someone of their number
to be chairman of the meeting.
68. A meeting of the directors at which a quorum is present shall be
competent to exercise all or any of the authorities, powers and
discretions for the time being vested in or exercisable by the directors
generally.
<PAGE> 14
- 13 -
69. The directors may delegate any of their powers to committees consisting of
such number of directors as they think fit. Any committee so formed
shall in the exercise of the powers so delegated conform to any
regulations that may be imposed on them by the directors.
70. The meetings and proceedings of any committee of directors shall be
governed by the provisions contained in these Articles for regulating the
meetings and proceedings of the directors insofar as they are applicable
and are not superseded by any regulations made by the directors.
71. All acts done at any meeting of the directors or of a committee of
directors or by any person acting as a director shall, notwithstanding
that it is afterwards discovered that there was some defect in the
appointment of the director or person so acting, or that they or any of
them were disqualified, be as valid if every such person had been duly
appointed and was qualified to be a director.
72. A resolution in writing and signed by every director who would be entitled
to vote on the resolution at a meeting is as valid as if it were passed by
such directors at a meeting.
73. If any one or more of the directors is called upon to perform extra
services or to make any special exertions in going or residing abroad or
otherwise for any of the purposes of the Company or the business thereof,
the Company may remunerate the director or directors so doing, either by a
fixed sum or by a percentage of profits or otherwise. Such remuneration
shall be determined by the directors and may be either in addition to or
in substitution for remuneration otherwise authorized by these Articles.
REGISTERS
74. The directors shall cause to be kept at the Company's Office, in
accordance with the provisions of the Act, a Register of the shareholders
of the Company, a register of the holders of bonds, debentures and other
securities of the Company and a register of its directors.
MINUTES
75. The directors shall cause minutes to be entered in books designated for
the purpose:
(1) of all appointments of officers;
(2) of the names of all directors present at each meeting of directors
and of any committees of directors;
<PAGE> 15
- 14 -
(3) of all orders made by the shareholders and committees of directors;
and
(4) of all resolutions and proceedings of meetings of shareholders and
of directors.
Any such minutes of any meeting of directors or of any committee of
directors or of shareholders, if purporting to be signed by the chairman
of such meeting or by the chairman of the next succeeding meeting, shall
be receivable as prima facie evidence of the matters stated in such
minutes.
POWERS OF DIRECTORS
76. The management of the business of the Company is vested in the directors
who, in addition to the powers and authorities by these Articles or
otherwise expressly conferred upon them, may exercise all such powers and
do all such acts and things as may be exercised or done by the Company,
but subject nevertheless to the provisions of any statute, the Memorandum
or these Articles. No modification of the Memorandum or these Articles
shall invalidate any prior act of the directors that would have been valid
if such modification had not been made.
77. Without restricting the generality of the terms of any of these Articles
and without prejudice to the powers conferred thereby, the directors may:
(1) take such steps as they think fit to carry out any agreement or
contract made by or on behalf of the Company;
(2) pay costs, charges and expenses preliminary and incidental to the
promotion, formation, establishment, and registration of the Company;
(3) purchase or otherwise acquire for the Company any property, rights or
privileges that the Company is authorized to acquire, at such price
and generally on such terms and conditions as they think fit;
(4) pay for any property, rights or privileges acquired by, or services
rendered to the Company either wholly or partially in cash or in
shares (fully paid-up or otherwise), bonds, debentures or other
securities of the Company;
(5) subject to the Act, secure the fulfillment of any contracts or
engagements entered into by the Company by mortgaging or charging all
or any of the property of the Company and its unpaid capital for the
time being, or in such other manner as they think fit;
<PAGE> 16
- 15 -
(6) appoint, remove or suspend at their discretion such experts,
managers, secretaries, treasurers, officers, clerks, agents and
servants for permanent, temporary or special services, as they from
time to time think fit, and determine their powers and duties and fix
their salaries or emoluments and require security in such instances
and to such amounts as they think fit;
(7) appoint any person or persons to accept and hold in trust for the
Company any property belonging to the Company, or in which it is
interested, execute and do all such deeds and things as may be
required in relation to such trust, and provide of the remuneration
of such trustee or trustees;
(8) institute, conduct, defend, compound or abandon any legal proceedings
by and against the Company, its directors or its officers or
otherwise concerning the affairs of the Company, and also compound
and allow time for payment or satisfaction of any debts due and of
any claims or demands by or against the Company;
(9) refer any claims or demands by or against the Company to arbitration
and observe and perform the awards;
(10) make and give receipts, releases and other discharges for amounts
payable to the Company and for claims and demands of the Company;
(11) determine who may exercise the borrowing powers of the Company and
sign on the Company's behalf bonds, debentures or other securities,
bills, notes, receipts, acceptances, assignments, transfers,
hypothecations, pledges, endorsements, cheques, drafts, releases,
contracts, agreements and all other instruments and documents;
(12) provide for the management of the affairs of the Company abroad in
such manner as they think fit, and in particular appoint any person
to be the attorney or agent of the Company with such powers
(including power to sub-delegate) and upon such terms as may be
thought fit;
(13) invest and deal with any funds of the Company in such securities and
in such manner as they think fit; and vary or realize such
investments;
(14) subject to the Act, execute in the name and on behalf of the Company
in favour of any director or other person who may incur or be about
to incur any personal liability for the benefit of the Company such
mortgages of the Company's property, present and future, as they
think fit;
<PAGE> 17
- 16 -
(15) give any officer or employee of the Company a commission on the
profits of any particular business or transaction or a share in the
general profits of the Company;
(16) set aside out of the profits of the Company before declaring any
dividend such amounts as they think proper as a reserve fund to meet
contingencies or provide for dividends, depreciation, repairing,
improving and maintaining any of the property of the Company and such
other purposes as the directors may in their absolute discretion
think in the interests of the Company; and invest such amounts in
such investments as they think fit, and deal with and vary such
investments, and dispose of all or any part of them for the benefit
of special funds as they think fit, with full power to employ the
assets constituting the reserve fund in the business of the Company
without being bound to keep them separate from the other assets;
(17) make, vary and repeal rules respecting the business of the Company,
its officers and employees, the shareholders of the Company or any
section or class of them;
(18) enter into all such negotiations and contracts, rescind and vary all
such contracts, and execute and do all such acts, deeds and things
in the name and on behalf of the Company as they consider expedient
for or in relation to any of the matters aforesaid or otherwise for
the purposes of the Company;
(19) provide for the management of the affairs of the Company in such
manner as they think fit.
SOLICITORS
78. The Company may employ or retain solicitors any of whom may, at the
request or on the instruction of the directors, the Chairman or the
President, attend meetings of the directors or shareholders, whether or
not the solicitor is a shareholder or a director of the Company. A
solicitor who is also a director may nevertheless charge for services
rendered to the Company as a solicitor.
THE SEAL
79. The directors shall arrange for the safe custody of the common seal of the
Company (the "Seal"). The Seal may be affixed to any instrument in the
presence of and contemporaneously with the attesting signature of (i) any
director or officer acting within such person's authority or (ii) any
person under the authority of a resolution of the directors or a committee
thereof. For the purpose of certifying documents or proceedings the Seal
may be
<PAGE> 18
- 17 -
affixed by any director or the President, a vice-president, the Secretary,
an assistant secretary or any other officer of the Company without the
authorization of a resolution of the directors.
80. The Company may have facsimiles of the Seal which may be used
interchangeably with the Seal.
81. The Company may have for use at any place outside the Province of Nova
Scotia, as to all matters to which the corporate existence and capacity of
the Company extends, an official seal that is a facsimile of the Seal of
the Company with the addition on its face of the name of the place where
it is to be used; and the Company may by writing under its Seal authorize
any person to affix such official seal at such place to any document to
which the Company is a party.
DIVIDENDS
82. The directors may from time to time declare such dividend as they deem
proper upon shares of the Company according to the rights and restrictions
attached to any class or series of shares, and may determine the date upon
which such dividend will be payable.
83. No dividends shall be payable except out of the profits, retained earnings
or contributed surplus of the Company and no interest shall be payable on
any dividend except insofar as the rights attached to any class or series
of shares provide otherwise.
84. The declaration of the directors as to the amount of the profits, retained
earnings or contributed surplus of the Company shall be conclusive.
85. The directors may from time to time pay to the shareholders such interim
dividends as in their judgment the position of the Company justifies.
86. The directors may declare that a dividend be paid by the distribution of
cash, paid-up shares (at par or at a premium), debentures, bonds or
other securities of the Company or of any other company or any other
specific assets held or to be acquired by the Company or in any one or
more of such ways.
87. The directors may settle any difficulty that may arise in regard to the
distribution of a dividend as they think expedient, and in particular,
without restricting the generality of the foregoing, may issue fractional
certificates, may fix the value for distribution of any specific assets,
may determine that cash payments will be made to any shareholders upon
the footing of the value so fixed or that fractions may be disregarded in
order to adjust the rights of all
<PAGE> 19
- 18 -
parties, and may vest cash or specific assets in trustees upon such trusts
for the persons entitled to the dividend as may seem expedient to the
directors.
88. Unless otherwise determined by the directors, any dividend may be paid by
a cheque or warrant delivered to or sent through to post to the registered
address of the member entitled. Every cheque or warrant delivered or sent
shall be made payable to the order of the person to whom it is delivered
or sent. The mailing or other transmission to a shareholder at the
shareholder's registered address of a cheque payable to the order of the
person to whom it is addressed for the amount of any dividend payable in
cash after the deduction of any tax which the Company has properly
withheld, shall discharge the Company's liability for the dividend unless
the cheque is not paid on due presentation. If any cheque for a dividend
payable in cash is not received, the Company shall issue to the
shareholder a replacement cheque for the same amount on such terms as to
indemnity and evidence of non-receipt as the shareholders may impose. No
shareholder may recover by action or other legal process against the
Company any dividend represented by a cheque that has not been duly
presented to a banker of the Company for payment or that otherwise
remains unclaimed for 6 years from the date on which it was payable.
ACCOUNTS
89. The directors shall cause proper books of account to be kept of the
amounts received and expended by the Company, the matters in respect of
which such receipts and expenditures take place, all sales and purchases
of goods by the Company, and the assets, credits and liabilities of the
Company.
90. The books of account shall be kept at the head office of the Company or at
such other place or places as the directors may direct.
91. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions the accounts and
books of the Company or any of them shall be open to inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Company except as conferred by statute
or authorized by the directors or a resolution of the shareholders.
92. At the ordinary general meeting in every year the directors shall lay
before the Company such financial statements and reports in connection
therewith as may be required by the Act or other applicable statute or
regulation thereunder and shall distribute copies thereof at such times
and to such persons as may be required by statute or regulation.
<PAGE> 20
- 19 -
AUDITORS AND AUDIT
93. Except in respect of a financial year for which the Company is exempt
pursuant to Section 118 of the Act, the Company shall at each ordinary
general meeting appoint an auditor or auditors to hold office until the
next ordinary general meeting. If at any general meeting at which the
appointment of an auditor or auditors is to take place and no such
appointment takes place, or if no ordinary general meeting is held in any
year or period of years, the directors, unless the Company is exempt from
so doing, shall appoint an auditor or auditors to hold office until the
next ordinary general meeting.
94. The first auditors of the Company may be appointed by the directors at any
time before the first ordinary general meeting and the auditors so
appointed shall hold office until such meeting unless previously removed
by a resolution of the shareholders, in which event the shareholders may
appoint auditors.
95. The directors may fill any casual vacancy in the office of the auditor but
while any such vacancy continues the surviving or continuing auditor or
auditors, if any, may act.
96. The Company may appoint as auditor any person, including a shareholder,
not disqualified by statute.
97. An auditor may be removed or replaced in the circumstances and in the
manner specified in the Act.
98. The remuneration of the auditors shall be fixed by the shareholders, or by
the directors pursuant to authorization given by the shareholders, except
that the remuneration of an auditor appointed to fill a casual vacancy may
be fixed by the directors.
99. The auditors, if any, shall conduct such audit as may be required by the
Act and their report, if any, shall be dealt with by the Company as
required by the Act.
NOTICES
100. A notice (including any communication or document) shall be sufficiently
given, delivered or served by the Company upon a shareholder, director,
officer or auditor by personal delivery at such person's registered
address (or, in the case of a director, officer or auditor, last known
address) or by prepaid mail, telegraph, telex, facsimile machine or other
electronic means of communication addressed to such person at such
address.
<PAGE> 21
- 20 -
101. Shareholders having no registered address shall not be entitled to
receive notice.
102. Any notice sent by mail shall be deemed to be given, delivered or served
on the earlier of actual receipt and the third business day following that
upon which it is mailed, and in proving such service it shall be
sufficient to prove that the notice was properly addressed and mailed with
the postage prepaid thereon. Any notice given by electronic means of
communication shall be deemed to be given when entered into the
appropriate transmitting device for transmission. A certificate in
writing signed on behalf of the Company that the notice was so addressed
and mailed or transmitted shall be conclusive evidence thereof.
103. Any notice may bear the name or signature, manual or reproduced, of the
person giving the notice written or printed.
104. When a given number of days' notice or notice extending over any other
period is required to be given, the day of service and the day upon which
notice expires shall not, unless it is otherwise provided, be counted in
such number of days or other period.
INDEMNITY
105. Every director, proxyholder, other shareholder representative or officer,
former director, proxyholder, other shareholder representative or officer,
or person who acts or acted at the Company's request, as a director or
officer of the Company, a body corporate, partnership or other association
of which the Company is or was a shareholder, partner, member or creditor,
and the heirs and legal representatives of such person, in the absence of
any dishonesty on the part of such person, shall be indemnified by the
Company against, and it shall be the duty of the directors out of the
funds of the Company to pay, all costs, losses and expenses, including an
amount paid to settle and action or claim or satisfy a judgment, that such
director, officer or person may incur or become liable to pay in respect
of any claim made against such person or civil, criminal or administrative
action or proceeding to which such person is made a party by reason of
being or having been a director, proxyholder, other shareholder
representative or officer of the Company or such body corporate,
partnership or other association, whether the Company is a claimant or
party to such action or proceeding or otherwise; and the amount for which
such indemnity is proved shall immediately attach as a lien on the
property of the Company and have priority as against the shareholders
over all other claims.
106. No director, proxyholder, other shareholder representative or officer,
former director, proxyholder, other shareholder representative or officer,
or person who acts or acted at the Company's request, as a director or
officer of the
<PAGE> 22
- 21 -
Company, a body corporate, partnership or other association of which the
Company is or was a shareholder, partner, member or creditor, in the
absence of any dishonesty on such person's part, shall be liable for the
acts, receipts, neglects or defaults of any other director, officer or
such person, or for joining in any receipt or other act for conformity,
or for any loss, damage or expense happening to the Company through the
insufficiency or deficiency of title to any property acquired for or on
behalf of the Company, or through the insufficiency or deficiency of any
security in or upon which any of the funds of the Company are invested,
or for any loss or damage arising from the bankruptcy, insolvency or
tortious acts of any person with whom any funds, securities or effects
are deposited, or for any loss occasioned by error of judgment or
oversight on the part of such person, or for any other loss, damage or
misfortune whatsoever which happens in the execution of the duties of
such person or in relation thereto.
REMINDERS
107. The shareholders shall comply with the following provisions of the Act or
the Corporations Registration Act (Nova Scotia) where indicated:
(1) Keep a current register of shareholders (Section 42);
(2) Keep a current register of directors, officers and managers, send to
the Registrar a copy thereof and notice of all changes therein
(Section 98);
(3) Keep a current register of holders of bonds, debentures and other
securities (Section 111 and Third Schedule);
(4) Send notice to the Registrar of any redemption or purchase of
preference shares (Section 50);
(5) Send notice to the Registrar of any consolidation, division,
conversion or reconversion of the share capital or stock of the
Company (Section 53);
(6) Send notice to the Registrar of any increase of capital (Section 55);
(7) Call a general meeting every year within the proper time (Section
83). Meetings must be held no later than 15 months after the
preceding general meeting;
(8) Send to the Registrar copies of all special resolutions (Section 88);
<PAGE> 23
- 22 -
(9) When shares are issued for a consideration other than cash, file a
copy of the contract with the Registrar on or before the date on
which the shares are issued (Section 109);
(10) Send to the Registrar notice of the address of the Company's
registered Office and of all changes in such address (Section 79);
(11) Keep proper minutes of all shareholders' meetings and directors'
meetings in the Company's minute book kept at the Company's
registered Office (Sections 89 and 90);
(12) Obtain a certificate under the Corporations Registration Act (Nova
Scotia) as soon as business is commenced; and
(13) Send notice of recognized agent to the Registrar under the
Corporations Registration Act (Nova Scotia).
Name, Address, and Description of Subscriber(s) No. of Shares Taken
- --------------------------------------------------------------------------
Harvey E. Clarke One (1) common
400-1791 Barrington Street share without
Halifax, NS B3J 2N7 nominal or par value
Barrister
HAYLEYE, CLARKE
Dated this 24th day of September, 1996.
Witness to the above signature(s): DARIUS L. BENNETT
-----------------
Darius L. Bennett
<PAGE> 24
- 23 -
Pursuant to subsection 134(4) of the Companies Act (Nova Scotia), R.S.N.S.
1989, c. 81, I hereby certify that the foregoing is a true copy of the
Amalgamation Agreement between 3001422 Nova Scotia Company and Arrow Moulded
Plastics of Canada Limited, dated the 25th day of September, 1996, which was
submitted to a Special General Meeting of the Shareholders of 3001422 Nova
Scotia Company called for that purpose and held on the 25th day of September,
1996, all the Shareholders being present, either in person or by proxy, and was
unanimously approved at the Meeting.
DATED at the City of Auburn Hills, in the State of Michigan, one of the
United States of America, this 25th day of September, 1996.
3001422 NOVA SCOTIA COMPANY
Per: Richard J. Nash
--------------------------
Richard J. Nash, President
Neal S. Newman
Neal Stephen Newman, a Commissioner,
etc., Province of Ontario, while
a Student-at-Law.
Expires August 30, 1999.
<PAGE> 25
- 24 -
Pursuant to subsection 134(4) of the Companies Act (Nova Scotia), R.S.N.S.
1989, c. 81, I hereby certify that the foregoing is a true copy of the
Amalgamation Agreement between 3001422 Nova Scotia Company and Arrow Moulded
Plastics of Canada Limited, dated the 25th day of September, 1996, which was
submitted to a Special General Meeting of the Shareholders of Arrow Moulded
Plastics of Canada Limited called for that purpose and held on the 25th day of
September, 1996, all the Shareholders being present, either in person or by
proxy, and was unanimously approved at the Meeting.
DATED at the City of Auburn Hills, in the State of Michigan, one of the
United States of America, this 25th day of September, 1996.
ARROW MOULDED PLASTICS OF
CANADA LIMITED
Per: Richard J. Nash
--------------------------
Richard J. Nash, President
Neal S. Newman
Neal Stephen Newman, a Commissioner,
etc., Province of Ontario, while
a Student-at-Law.
Expires August 30, 1999.
<PAGE> 1
EXHIBIT 4.1
================================================================================
================================================================================
INDENTURE
Dated as of January 15, 1997
among
LDM TECHNOLOGIES, INC.,
as Issuer,
LDM HOLDINGS, LLC,
LDM CANADA LIMITED PARTNERSHIP and
LDM TECHNOLOGY COMPANY,
as Guarantors,
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
______________________
$110,000,000
10 3/4% Senior Subordinated Notes due 2007, Series A
10 3/4% Senior Subordinated Notes due 2007, Series B
================================================================================
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . . 7.06; 7.07
(c) . . . . . . . . . . . . . . . . . . . . . 7.05; 7.06; 11.02
(d) . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . 4.08; 4.10; 11.02
(b) . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . 4.08; 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . 4.08; 11.04
(d) . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(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; 9.04
(c) . . . . . . . . . . . . . . . . . . . . . 9.04
317(a)(1) . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . 11.01
(c) . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
- ---------------
"N.A." means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.02 Incorporation by Reference of TIA . . . . . . . . . . . . .
Section 1.03 Rules of Construction . . . . . . . . . . . . . . . . . . .
ARTICLE TWO
THE SECURITIES
Section 2.01 Form and Dating . . . . . . . . . . . . . . . . . . . . . .
Section 2.02 Execution and Authentication . . . . . . . . . . . . . . .
Section 2.03 Registrar and Paying Agent . . . . . . . . . . . . . . . .
Section 2.04 Paying Agent To Hold Assets in Trust . . . . . . . . . . .
Section 2.05 Securityholder Lists . . . . . . . . . . . . . . . . . . .
Section 2.06 Transfer and Exchange . . . . . . . . . . . . . . . . . . .
Section 2.07 Replacement Securities . . . . . . . . . . . . . . . . . .
Section 2.08 Outstanding Securities . . . . . . . . . . . . . . . . . .
Section 2.09 Treasury Securities . . . . . . . . . . . . . . . . . . . .
Section 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . .
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . .
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . .
Section 2.13 CUSIP Number . . . . . . . . . . . . . . . . . . . . . . .
Section 2.14 Deposit of Moneys . . . . . . . . . . . . . . . . . . . . .
Section 2.15 Book-Entry Provisions for Global
Securities . . . . . . . . . . . . . . . . . . . . . . .
Section 2.16 Registration of Transfers and Exchanges . . . . . . . . . .
ARTICLE THREE
REDEMPTION
Section 3.01 Notices to Trustee . . . . . . . . . . . . . . . . . . . .
Section 3.02 Selection of Securities To Be Redeemed . . . . . . . . . .
Section 3.03 Notice of Redemption . . . . . . . . . . . . . . . . . . .
Section 3.04 Effect of Notice of Redemption . . . . . . . . . . . . . .
Section 3.05 Deposit of Redemption Price . . . . . . . . . . . . . . . .
Section 3.06 Securities Redeemed in Part . . . . . . . . . . . . . . . .
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Securities . . . . . . . . . . . . . . . . . . .
</TABLE>
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Section 4.02 Maintenance of Office or Agency . . . . . . . . . . . . . .
Section 4.03 Limitation on Incurrence of Additional
Indebtedness . . . . . . . . . . . . . . . . . . . . . .
Section 4.04 Limitation on Restricted Payments . . . . . . . . . . . . .
Section 4.05 Corporate Existence . . . . . . . . . . . . . . . . . . . .
Section 4.06 Payment of Taxes and Other Claims . . . . . . . . . . . . .
Section 4.07 Maintenance of Properties and Insurance . . . . . . . . . .
Section 4.08 Compliance Certificate; Notice of Default . . . . . . . . .
Section 4.09 Compliance with Laws . . . . . . . . . . . . . . . . . . .
Section 4.10 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.11 Waiver of Stay, Extension or Usury Laws . . . . . . . . . .
Section 4.12 Limitation on Asset Sales . . . . . . . . . . . . . . . . .
Section 4.13 Limitation on Dividend and Other
Payment Restrictions Affecting
Restricted Subsidiaries . . . . . . . . . . . . . . . .
Section 4.14 Limitation on Preferred Stock of
Restricted Subsidiaries . . . . . . . . . . . . . . . .
Section 4.15 Limitation on Liens . . . . . . . . . . . . . . . . . . .
Section 4.16 [Intentionally Omitted] . . . . . . . . . . . . . . . . . .
Section 4.17 Prohibition of Incurrence of Senior
Subordinated Debt . . . . . . . . . . . . . . . . . . .
Section 4.18 Limitations on Transactions with
Affiliates . . . . . . . . . . . . . . . . . . . . . . .
Section 4.19 Issuance of Subsidiary Guarantees . . . . . . . . . . . . .
Section 4.20 [Intentionally Omitted] . . . . . . . . . . . . . . . . . .
Section 4.21 Lines of Business . . . . . . . . . . . . . . . . . . . . .
Section 4.22 Payments for Consent . . . . . . . . . . . . . . . . . . .
Section 4.23 Limitation on Designations of
Unrestricted Subsidiaries . . . . . . . . . . . . . . .
Section 4.24 Change of Control . . . . . . . . . . . . . . . . . . . .
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Mergers, Consolidations and Sales
of Assets . . . . . . . . . . . . . . . . . . . . . . .
Section 5.02 Successor Corporation Substituted . . . . . . . . . . . .
ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01 Events of Default . . . . . . . . . . . . . . . . . . . . .
Section 6.02 Acceleration . . . . . . . . . . . . . . . . . . . . . . .
Section 6.03 Other Remedies . . . . . . . . . . . . . . . . . . . . . .
Section 6.04 Waiver of Past Defaults . . . . . . . . . . . . . . . . . .
Section 6.05 Control by Majority . . . . . . . . . . . . . . . . . . . .
Section 6.06 Limitation on Suits . . . . . . . . . . . . . . . . . . . .
Section 6.07 Rights of Holders To Receive Payment . . . . . . . . . . .
</TABLE>
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Section 6.08 Collection Suit by Trustee . . . . . . . . . . . . . . . .
Section 6.09 Trustee May File Proofs of Claim . . . . . . . . . . . . .
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . .
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee . . . . . . . . . . . . . . . . . . . . .
Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . . .
Section 7.03 Individual Rights of Trustee . . . . . . . . . . . . . . .
Section 7.04 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . .
Section 7.05 Notice of Default . . . . . . . . . . . . . . . . . . . . .
Section 7.06 Reports by Trustee to Holders . . . . . . . . . . . . . . .
Section 7.07 Compensation and Indemnity . . . . . . . . . . . . . . . .
Section 7.08 Replacement of Trustee . . . . . . . . . . . . . . . . . .
Section 7.09 Successor Trustee by Merger, Etc. . . . . . . . . . . . . .
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . .
Section 7.11 Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . .
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.01 Legal Defeasance and Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . .
Section 8.02 Satisfaction and Discharge . . . . . . . . . . . . . . . .
Section 8.03 Survival of Certain Obligations . . . . . . . . . . . . . .
Section 8.04 Acknowledgment of Discharge by Trustee . . . . . . . . . .
Section 8.05 Application of Trust Assets . . . . . . . . . . . . . . . .
Section 8.06 Repayment to the Company or
Guarantors; Unclaimed Money . . . . . . . . . . . . . .
Section 8.07 Reinstatement . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders . . . . . . . . . . . . . . . .
Section 9.02 With Consent of Holders . . . . . . . . . . . . . . . . . .
Section 9.03 Compliance with TIA . . . . . . . . . . . . . . . . . . . .
Section 9.04 Revocation and Effect of Consents . . . . . . . . . . . . .
Section 9.05 Notation on or Exchange of Securities . . . . . . . . . . .
Section 9.06 Trustee To Sign Amendments, Etc. . . . . . . . . . . . . .
</TABLE>
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ARTICLE TEN
GUARANTEES
Section 10.01 Unconditional Guarantee . . . . . . . . . . . . . . . . . .
Section 10.02 Severability . . . . . . . . . . . . . . . . . . . . . . .
Section 10.03 Release of a Guarantor . . . . . . . . . . . . . . . . . .
Section 10.04 Limitation of a Guarantor's Liability . . . . . . . . . . .
Section 10.05 Contribution . . . . . . . . . . . . . . . . . . . . . . .
Section 10.06 Waiver of Subrogation . . . . . . . . . . . . . . . . . . .
Section 10.07 Execution of Guarantees . . . . . . . . . . . . . . . . . .
Section 10.08 Waiver of Stay, Extension or Usury Laws . . . . . . . . . .
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01 TIA Controls . . . . . . . . . . . . . . . . . . . . . . .
Section 11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 11.03 Communications by Holders with
Other Holders . . . . . . . . . . . . . . . . . . . .
Section 11.04 Certificate and Opinion as to
Conditions Precedent . . . . . . . . . . . . . . . . .
Section 11.05 Statements Required in Certificate
or Opinion . . . . . . . . . . . . . . . . . . . . . .
Section 11.06 Rules by Trustee, Paying Agent,
Registrar . . . . . . . . . . . . . . . . . . . . . .
Section 11.07 Legal Holidays . . . . . . . . . . . . . . . . . . . . .
Section 11.08 Governing Law . . . . . . . . . . . . . . . . . . . . . .
Section 11.09 No Adverse Interpretation of
Other Agreements . . . . . . . . . . . . . . . . . . .
Section 11.10 No Recourse Against Others . . . . . . . . . . . . . . .
Section 11.11 Successors . . . . . . . . . . . . . . . . . . . . . . .
Section 11.12 Duplicate Originals . . . . . . . . . . . . . . . . . . .
Section 11.13 Severability . . . . . . . . . . . . . . . . . . . . . .
ARTICLE TWELVE
SUBORDINATION
Section 12.01 Securities Subordinated to Senior
Debt; Guarantees Subordinated to
Guarantor Senior Debt . . . . . . . . . . . . . .
Section 12.02 No Payment on Securities in Certain
Circumstances . . . . . . . . . . . . . . . . . . .
Section 12.03 Payment Over of Proceeds upon
Dissolution, Etc. . . . . . . . . . . . . . . . . .
Section 12.04 Payments May Be Paid Prior to
Dissolution . . . . . . . . . . . . . . . . . . . .
Section 12.05 Subrogation . . . . . . . . . . . . . . . . . . . . . . .
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Section 12.06 Obligations of the Company
Unconditional . . . . . . . . . . . . . . . . . .
Section 12.07 Notice to Trustee . . . . . . . . . . . . . . . . . . .
Section 12.08 Reliance on Judicial Order or
Certificate of Liquidating Agent . . . . . . . . .
Section 12.09 Trustee's Relation to Senior Debt
or Guarantor Senior Debt . . . . . . . . . . . . .
Section 12.10 Subordination Rights Not Impaired
by Acts or Omissions of the Company
or a Guarantor or Holders of Senior
Debt . . . . . . . . . . . . . . . . . . . . . . .
Section 12.11 Holders Authorize Trustee To
Effectuate Subordination of
Securities . . . . . . . . . . . . . . . . . . . .
Section 12.12 This Article Twelve Not To Prevent
Events of Default . . . . . . . . . . . . . . . .
Section 12.13 Trustee's Compensation Not Prejudiced . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit A - Form of Series A Security
Exhibit B - Form of Series B Security
Exhibit C - Form of Legend for Global Securities
Exhibit D - Transfer Certificate
Exhibit E - Transferee Certificate for Institutional
Accredited Investors
Exhibit F - Transferee Certificate for Regulation S Transfers
Exhibit G - Form of Guarantee
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to
be a part of the Indenture.
v
<PAGE> 8
INDENTURE dated as of January 15, 1997, among LDM
TECHNOLOGIES, INC., a Michigan corporation (the "Company"), as Issuer, LDM
HOLDINGS, LLC, a Michigan limited liability company, LDM CANADA LIMITED
PARTNERSHIP, a Michigan limited partnership, and LDM TECHNOLOGIES COMPANY, a
Nova Scotia unlimited liability company, as Guarantors, and IBJ SCHRODER BANK &
TRUST COMPANY, as Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 10
3/4% Senior Subordinated Notes due 2007, Series A, and 10 3/4% Senior
Subordinated Notes due 2007, Series B, to be issued in exchange for the 10 3/4%
Senior Subordinated Notes due 2007, Series A, pursuant to the Registration
Rights Agreement and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture. All things necessary to make the
Securities, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid and binding obligations of the Company and to
make this Indenture a valid and binding agreement of the Company have been
done.
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or at the time it merges or consolidates with the Company or any of
the Restricted Subsidiaries or assumed by the Company or a Restricted
Subsidiary in connection with the acquisition of assets by such Person and in
each case not incurred in connection with, or in anticipation or contemplation
of, such Person becoming a Restricted Subsidiary or such acquisition, merger or
consolidation.
"Affiliate" means, with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person. The term "control" 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, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative of the foregoing.
<PAGE> 9
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"Affiliate Transaction" has the meaning provided in Section
4.18.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Alliance Debt" means Indebtedness of the Person to become a
Subsidiary of the Company upon consummation of the transactions contemplated by
the stock purchase agreement to be entered into among the Company, the
Corporation (as defined therein), GKG (as defined therein) and Valk (as defined
therein).
"Asset Acquisition" means (a) an Investment by the Company or
any Restricted Subsidiary in any other Person pursuant to which such Person
shall become a Restricted Subsidiary, or shall be merged with or into the
Company or any Restricted Subsidiary, or (b) the acquisition by the Company or
any Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of the Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any person other than the Company, a Guarantor, or an
Unleveraged Wholly Owned Restricted Subsidiary of (a) any Capital Stock of any
Restricted Subsidiary; or (b) any other property or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business;
provided, however, that Asset Sales shall not include (i) a transaction or
series of related transactions for which the Company or the Restricted
Subsidiaries receive aggregate consideration of less than $500,000 and (ii) the
sale, lease, conveyance, disposition or other transfer of all or substantially
all of the assets of the Company as permitted by Article Five hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Blockage Period" has the meaning provided in Section 12.02.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
<PAGE> 10
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"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banking institutions in the City of New York are
required or authorized by law or other governmental action to be closed.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP, and the amount of such
obligations at any date shall be the capitalized amount of such obligations at
such date, determined in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (b) 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"); (c) commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any United States branch of a foreign bank having at
the date of acquisition thereof combined capital and surplus of not less than
$250,000,000; (e) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in clause (d)
above; and (f) investments
<PAGE> 11
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in money market funds which invest substantially all their assets in securities
of the types described in clauses (a) through (e) of this definition.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "Group"), together with any
Affiliates thereof (whether or not otherwise in compliance with the provisions
of this Indenture); (ii) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of this
Indenture); or (iii) any Person or Group (other than the Permitted Holder(s))
shall become the owner, directly or indirectly, beneficially or of record, of
shares representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the Company.
"Change of Control Offer" has the meaning provided in Section
4.24.
"Change of Control Payment Date" has the meaning provided in
Section 4.24.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
such successor.
"Consolidated EBITDA" means with respect to the Company, for
any period, the sum (without duplication) of (a) Consolidated Net Income and
(b) to the extent Consolidated Net Income has been reduced thereby, (i) all
income taxes of the Company and the Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business), (ii)
Consolidated Interest Expense, (iii) Consolidated Non-cash
<PAGE> 12
-5-
Charges and (iv) the amount of Permitted Tax Payments made during such period,
less any non-cash items increasing Consolidated Net Income for such period, all
as determined on a consolidated basis for the Company and the Restricted
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to the Company, the ratio of Consolidated EBITDA of the Company during the four
full fiscal quarters (the "four Quarter Period") ending on or prior to the date
of the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of the Company or any of the Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four Quarter Period and
(ii) any Asset Sales or Asset Acquisitions (including, without limitation, any
Asset Acquisition giving rise to the need to make such calculation as a result
of the Company or one of the Restricted Subsidiaries (including any Person who
becomes a Restricted Subsidiary as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired Indebtedness and
also including any Consolidated EBITDA (provided that such Consolidated EBITDA
shall be included only to the extent includable pursuant to the definition of
"Consolidated Net Income" attributable to the assets which are the subject of
the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of the Four
Quarter Period. If the Company or any of the Restricted Subsidiaries directly
or indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if the
Company or any Restricted Subsidiary had directly incurred or otherwise assumed
such guaranteed Indebtedness. Furthermore, in calculating
<PAGE> 13
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"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of
the Transaction Date and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; (2) if
interest on any Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period; and (3) notwithstanding clause (i)
above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to the
Company for any period, the sum, without duplication, of (i) Consolidated
Interest Expense (including amortization or write-off of deferred financing
costs of the Company and the Restricted Subsidiaries during such period and any
premium or penalty paid in connection with redeeming or retiring Indebtedness
of the Company and the Restricted Subsidiaries prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness), plus (ii) the
product of (x) the amount of all dividend payments on any series of Preferred
Stock of the Company (other than dividends paid in Qualified Capital Stock)
paid, accrued or scheduled to be paid or accrued during such period times (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local income
tax rate of the Company, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to the
Company for any period, the sum of, without duplication: (i) the aggregate of
the interest expense of the Company and the Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP, including
without limitation, (a) any amortization of debt discount, (b) the net costs
under Interest Swap Obligations, (c) all capitalized interest and (d) the
interest portion of any deferred payment obligation; and (ii) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company and the Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company,
for any period, the aggregate net income (or loss) of the
<PAGE> 14
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Company and the Restricted Subsidiaries for such period on a consolidated
basis, determined in accordance with GAAP; provided that there shall be
excluded therefrom (a) after-tax gains from Asset Sales or abandonments or
reserves relating thereto, (b) after-tax items classified as extraordinary or
nonrecurring gains, (c) the net income of any Person acquired in a "pooling of
interests" transaction accrued prior to the date it becomes a Restricted
Subsidiary or is merged or consolidated with the Company or any Restricted
Subsidiary, (d) the net income (but not loss) of any Restricted Subsidiary to
the extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by a contract, operation of
law or otherwise, (e) the net income of any Person, other than a Restricted
Subsidiary, except to the extent of cash dividends or distributions paid to the
Company or to a Restricted Subsidiary by such Person, (f) any restoration to
income of any contingency reserve, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date, (g) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such period
whether or not such operations were classified as discontinued), (h) the amount
of Permitted Tax Payments made during such period and (i) in the case of a
successor to the Company by consolidation or merger or as a transferee of the
Company's assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets. For purposes of calculating
cumulative Consolidated Net Income pursuant to clause (iii) (w) of the first
paragraph of Section 4.04, Consolidated Net Income shall be increased (to the
extent Consolidated Net Income has been reduced thereby) by the amount of
premiums (not to exceed $1,500,000 in any fiscal year) for insurance on the
lives of stockholders of the Company, the proceeds of which insurance are
intended to fund repurchases by the Company of Capital Stock of the Company
owned by such stockholders.
"Consolidated Net Worth" of the Company means the consolidated
stockholders' equity of the Company, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of the Company.
"Consolidated Non-cash Charges" means, with respect to the
Company, for any period, the aggregate depreciation, amortization and other
non-cash expenses of the Company and the Restricted Subsidiaries reducing
Consolidated Net Income of the Company for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
<PAGE> 15
-8-
"Covenant Defeasance" has the meaning provided in Section
8.01.
"Credit Agreement" means the Credit Agreement dated as of
January 22, 1997, between the Company, the lenders party thereto in their
capacities as lenders thereunder and Bank America Business Credit, Inc., as
agent, together with the related documents thereto (including, without
limitation, any guarantee agreements 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 permitted by Section
4.03) or adding Restricted Subsidiaries as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in
currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an
Event of Default.
"Default Notice" has the meaning provided in Section 12.02.
"Depository" means, with respect to the Securities issued in
the form of one or more Global Securities, The Depository Trust Company or
another Person designated as Depository by the Company, which must be a
clearing agency registered under the Exchange Act.
"Designated Senior Debt" means (i) Indebtedness under or in
respect of the Credit Agreement and (ii) any other Indebtedness constituting
Senior Debt which, at the time of determination, has an aggregate principal
amount of at least $10,000,000 and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Designation" has the meaning provided in Section 4.23.
<PAGE> 16
-9-
"Designation Amount" has the meaning provided in Section 4.23.
"Disqualified Capital Stock" means that portion of any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Securities.
"Domestic Wholly Owned Restricted Subsidiary" means a Wholly
Owned Restricted Subsidiary incorporated or otherwise organized or existing
under the laws of the United States, any state thereof or any territory or
possession of the United States.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors
of the Company acting reasonably and in good faith and shall be evidenced by a
Board Resolution of the Company delivered to the Trustee.
"Final Maturity Date" means January 15, 2007.
"Four Quarter Period" has the meaning provided in the
definition of "Consolidated Fixed Charge Coverage Ratio" above.
"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 may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Issue Date.
"Global Security" means a security evidencing all or a part of
the Securities issued to the Depository in accordance with Section 2.01 and
bearing the legend prescribed in Exhibit C.
"Guarantee" has the meaning provided in Section 4.19.
<PAGE> 17
-10-
"Guarantor" means (i) each of LDM Holdings, LLC, LDM Canada
Limited Partnership and LDM Technology Company and (ii) each Person that in the
future executes a Guarantee pursuant to Section 4.19 or otherwise; provided
that any Person constituting a Guarantor as described above shall cease to
constitute a Guarantor when its Guarantee is released in accordance with the
terms of this Indenture.
"Guarantor Senior Debt" means, with respect to any Guarantor,
(i) the principal of, premium, if any, and interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness of a
Guarantor, whether outstanding on the Issue Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Guarantee of such Guarantor. Without limiting the
generality of the foregoing, "Guarantor Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (x) all Interest Swap Obligations and (y) all obligations under Currency
Agreements, in each case whether outstanding on the Issue Date or thereafter
incurred. Notwithstanding the foregoing, "Guarantor Senior Debt" shall not
include (i) any Indebtedness of such Guarantor to a Subsidiary of such
Guarantor or any Affiliate of such Guarantor or any of such Affiliate's
Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of such Guarantor or any Subsidiary
of such Guarantor (including, without limitation, amounts owed for
compensation), (iii) Indebtedness to trade creditors and other amounts incurred
in connection with obtaining goods, materials or services, (iv) Indebtedness
represented by Disqualified Capital Stock, (v) any liability for federal state,
local or other taxes owed or owing by such Guarantor, (vi) Indebtedness
incurred in violation of Section 4.03, (vii) Indebtedness which, when incurred
and without respect to any election under Section 1111(b) of Title 11, United
States Code, is without recourse to such Guarantor and (viii) any Indebtedness
which is, by its express terms, subordinated in right of payment to any other
Indebtedness of such Guarantor.
"Holder" or "Securityholder" means a Person in whose name a
Security is registered on the Registrar's books.
<PAGE> 18
-11-
"incur" has the meaning provided in Section 4.03.
"Indebtedness" means with respect to any Person, without
duplication, (a) all Obligations of such Person for borrowed money, (b) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all Capitalized Lease Obligations of such Person, (d)
all Obligations of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations and all Obligations under any
title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (e) all Obligations
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (f) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (a) through (e)
above and clause (h) below, (g) all Obligations of any other Person of the type
referred to in clauses (a) through (f) above which are secured by any Lien on
any property or asset of such Person, the amount of such Obligation being
deemed to be the lesser of the fair market value of such property or asset or
the amount of the Obligation so secured, (h) all Obligations under currency
exchange agreements and Interest Swap Obligations of such Person and (i) all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the fair market value of such Disqualified Capital
Stock, such fair market value shall be determined reasonably and in good faith
by the Board of Directors of the issuer of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Independent" when used with respect to any specified Person
means such a Person who (a) is in fact independent; (b) does not have any
direct financial interest or any material indirect financial interest in the
Company or any of its Subsidiaries, or in any Affiliate of the Company or any
of its Subsidiaries; and (c) is not an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions
for the Company or
<PAGE> 19
-12-
any of its Subsidiaries. Whenever it is provided in this Indenture that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by the Company, and such opinion or certificate
shall state that the signer has read this definition and that the signer is
Independent within the meaning hereof.
"Independent Financial Advisor" means a firm (a) which does
not, and whose directors, officers and employees or Affiliates do not, have a
direct or indirect financial interest in the Company and (b) which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Initial Purchaser" means Smith Barney Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Securities.
"Interest Swap Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
other Person calculated by applying a fixed or a floating rate of interest on
the same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"Investment" means, without respect to any Person, (i) any
direct or indirect loan or other extension of credit (including, without
limitation, a guarantee) or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition by such Person of
any Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any Person and (ii) any premiums paid by such Person
for insurance on the lives of stockholders of such Person, the proceeds of
which insurance are intended to fund repurchases by such Person of Capital
Stock of such Person owned by such stockholders. "Investment" shall exclude
extensions of trade credit by the Company and the Restricted Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of the
Company or such Restricted Subsidiary, as the case may be. If the Company or
any Wholly Owned Restricted Subsidiary sells or otherwise disposes of any
Common
<PAGE> 20
-13-
Stock of any Wholly Owned Restricted Subsidiary that is not a Guarantor such
that, after giving effect to any such sale or disposition, the Company no
longer owns, directly or indirectly, all of the outstanding Common Stock of
such Wholly Owned Restricted Subsidiary, 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 Common Stock of such Wholly Owned Restricted
Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the
Securities.
"Legal Defeasance" has the meaning provided in Section 8.01.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and
any agreement to give any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by the Company or any of the Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions, (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness that is required to be repaid in connection with such
Asset Sale and (d) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.12.
"Net Proceeds Offer Amount" has the meaning provided in
Section 4.12.
<PAGE> 21
-14-
"Net Proceeds Offer Payment Date" has the meaning provided in
Section 4.12.
"Net Proceeds Offer Trigger Date" has the meaning provided in
Section 4.12.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Controller, or the Secretary of such Person.
"Officers' Certificate" means a certificate signed by two
Officers of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel which and who are acceptable to the Trustee.
"Participants" has the meaning provided in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Holder(s)" means (i) each of Joe Balous and Richard
J. Nash and (ii) any person or entity controlled by either, or both of, Joe
Balous or Richard J. Nash.
"Permitted Indebtedness" means, without duplication, each of
the following:
(i) Indebtedness under the Securities, this Indenture and
any Guarantees;
(ii) Indebtedness incurred pursuant to the Credit
Agreement in an aggregate principal amount at any time outstanding not
to exceed the greater of (x) $45,000,000, reduced by any required
permanent repayments with the Net Cash Proceeds of Asset Sales (which
are accompanied by a corresponding permanent commitment reduction)
thereunder and (y) the sum of 80% of the net book value of accounts
receivable of the Company and the Restricted Subsidiaries and (b) 60%
of the net book value of the inventory of the Company and the
Restricted Subsidiaries;
(iii) other Indebtedness of the Company and the Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of
any scheduled amortization payments or mandatory
<PAGE> 22
-15-
prepayments when actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any Guarantor and Interest
Swap Obligations of any Restricted Subsidiary covering
Indebtedness of such Restricted Subsidiary; provided, however,
that such Interest Swap Obligations are entered into to
protect the Company and the Restricted Subsidiaries from
fluctuations in interest rates on Indebtedness incurred in
accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligations does not
exceed the principal amount of the Indebtedness to which such
Interest Swap Obligations relates;
(v) Indebtedness under Currency Agreements; provided that
in the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the Indebtedness of the Company
and the Restricted Subsidiaries outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary to the
Company, a Guarantor or an Unleveraged Wholly Owned Restricted
Subsidiary for so long as such Indebtedness is held by the Company, a
Guarantor or an Unleveraged Wholly Owned Restricted Subsidiary, in
each case subject to no Lien held by a Person other than the Company,
a Guarantor or an Unleveraged Wholly Owned Restricted Subsidiary;
provided that if as of any date any Person other than the Company,
a Guarantor or an Unleveraged Wholly Owned Restricted
Subsidiary owns or holds any such Indebtedness or holds a Lien in
respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer
of such Indebtedness;
(vii) Indebtedness of the Company to a Guarantor or an
Unleveraged Wholly Owned Restricted Subsidiary for so long as such
Indebtedness is held by a Guarantor or an Unleveraged Wholly Owned
Restricted Subsidiary, in each case subject to no Lien; provided that
(a) any Indebtedness of the Company to any Guarantor or Unleveraged
Wholly Owned Restricted Subsidiary is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under
this Indenture and the Securities and (b) if as of any date any Person
other than a Guarantor or Unleveraged Wholly Owned Restricted
Subsidiary owns or holds any such Indebtedness or any person holds a
Lien in respect of such Indebtedness, such date shall be deemed the
<PAGE> 23
-16-
incurrence of Indebtedness not constituting Permitted Indebtedness by
the Company;
(viii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within two
Business Days of incurrence;
(ix) Indebtedness of the Company or any of the Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations
in connection with self-insurance or similar requirements in the
ordinary course of business;
(x) Refinancing Indebtedness;
(xi) additional Indebtedness of the Company and the
Guarantors in an aggregate principal amount not to exceed $7,500,000
at any one time outstanding; and
(xii) Indebtedness of Restricted Subsidiaries that are not
Guarantors in an aggregate principal amount not to exceed $2,500,000
at any one time outstanding.
"Permitted Investments" means (i) Investments by the Company
or any Restricted Subsidiary in any Person that is or will become immediately
after such Investment a Guarantor or an Unleveraged Wholly Owned Restricted
Subsidiary or that will merge or consolidate into the Company or a Guarantor or
an Unleveraged Wholly Owned Restricted Subsidiary, (ii) Investments in the
Company by any Restricted Subsidiary; provided that any Indebtedness evidencing
such Investment is unsecured and subordinated, pursuant to a written agreement,
to the Company's obligations under the Securities and this Indenture; (iii)
investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of the Company and the Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not in excess of $1,000,000
at any one time outstanding; (v) Currency Agreements and Interest Swap
Obligations entered into in the ordinary course of the Company's or the
Restricted Subsidiaries' businesses and otherwise in compliance with this
Indenture; (vi) Investments in Restricted Subsidiaries that are not Guarantors
or Unleveraged Wholly Owned Restricted Subsidiaries not to exceed $1,000,000 at
any one time outstanding; (vii) Investments in Unrestricted Subsidiaries not to
exceed $1,000,000 at any one time outstanding; (viii) Investments in securities
of trade creditors or customers received pursuant to any plan of reorganization
or similar
<PAGE> 24
-17-
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (ix) Investments made by the Company or the Restricted Subsidiaries
as a result of consideration received in connection with an Asset Sale made in
compliance with Section 4.12; (x) Investments in Persons, including, without
limitation, joint ventures, engaged in a similar or related business to that in
which the Company and the Restricted Subsidiaries are engaged on the Issue Date
not to exceed $7,500,000 at any one time outstanding; and (xi) a guarantee by
the Company of up to $2,500,000 aggregate principal amount of Alliance Debt.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges
or claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or the Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, including
any Lien securing letters of credit issued in the ordinary course of
business consistent with past practice in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default
so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and
other similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of the Restricted Subsidiaries;
<PAGE> 25
-18-
(vi) any interest or title of a lessor under any
Capitalized Lease Obligation; provided that such Liens do not extend
to any property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of
the Company or any Restricted Subsidiary acquired in the ordinary
course of business;
provided, however, that (A) the related
purchase money Indebtedness shall not exceed the cost of such property
or assets and shall not be secured by any property or assets of the
Company or any Restricted Subsidiary other than the property and
assets so acquired and (B) the Lien securing such Indebtedness shall
be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(ix) Liens securing reimbursement obligations with respect
to commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of the Restricted Subsidiaries,
including rights of offset and set-off;
(xi) Liens securing Interest Swap Obligations which
Interest Swap Obligations relate to Indebtedness that is otherwise
permitted under this Indenture;
(xii) Liens securing Indebtedness under Currency
Agreements; and
(xiii) Liens securing Acquired Indebtedness incurred in
accordance with Section 4.03; provided that (A) such Liens secured
such Acquired Indebtedness at the time of and prior to the incurrence
of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and were not granted in connection with, or in anticipation
of, the incurrence of such Acquired Indebtedness by the Company or a
Restricted Subsidiary and (B) such Liens do not extend to or cover any
property or assets of the Company or of any of the Restricted
Subsidiaries other than the property or assets that secured the
Acquired
<PAGE> 26
-19-
Indebtedness prior to the time such Indebtedness became Acquired
Indebtedness of the Company or a Restricted Subsidiary and are no more
favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired Indebtedness by
the Company or a Restricted Subsidiary.
"Permitted Tax Payments" means distributions to the
stockholders of the Company to reimburse them for federal and state income
taxes actually paid and attributable to the income of the Company for any tax
period during which the Company is not a taxable entity for federal or state,
as the case may be, income tax purposes pursuant to an election under
Subchapter S of the Internal Revenue Code of 1986, as amended, or a similar
provision under state law, as the case my be.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency
or political subdivision thereof.
"Physical Securities" has the meaning provided in Section
2.01.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"Private Placement Legend" means the legend initially set
forth on the Securities in the form set forth on Exhibit A.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act as
interpreted by the Company's Board of Directors in consultation with its
independent certified public accountants.
"Public Equity Offering" has the meaning provided in Paragraph
6 of the Securities.
"Purchase Agreement" means the purchase agreement dated as of
January 16, 1997 by and among the Company, the Guarantors and the Initial
Purchaser.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
<PAGE> 27
-20-
"Record Date" means the Record Dates specified in the
Securities; provided that if any such date is not a Business Day, the Record
Date shall be the first day immediately preceding such specified day that is a
Business Day.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to this
Indenture and the Securities.
"Redemption Price," when used with respect to any Security to
be redeemed, means the price fixed for such redemption, payable in immediately
available funds, pursuant to this Indenture and the Securities.
"Reference Date" has the meaning provided in Section 4.04.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with Section 4.03 (other than pursuant to clause (ii), (iv), (v),
(vi), (vii), (viii), (ix), (xi) or (xii) of the definition of Permitted
Indebtedness), in each case that does not (1) result in an increase in the
aggregate principal amount of Indebtedness of such Person as of the date of
such proposed Refinancing (plus the amount of any premium required to be paid
under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by the Company in connection with such
Refinancing) or (2) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of the Company, then such
Refinancing Indebtedness shall be Indebtedness solely of the Company and (y) if
such Indebtedness being Refinanced is subordinate or junior to the Securities
or a Guarantee, then such Refinancing Indebtedness shall be subordinate to the
Securities or such Guarantee, as the case may be, at least to the same extent
and in the same manner as the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
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"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date between the Company and the Initial
Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Representative" means the indenture trustee or other trustee,
agent or representative in respect of any Designated Senior Debt; provided that
if, and for so long as, any Designated Senior Debt lacks such a representative,
then the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.
"Responsible Officer" shall mean, when used with respect to
the Trustee, any officer in the Corporate Trust Department of the Trustee
including any vice president, assistant vice president, assistant secretary,
treasurer, assistant treasurer, or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Restricted Payment" has the meaning provided in Section 4.04.
"Restricted Security" has the meaning set forth in Rule
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely upon an Opinion of Counsel with respect to
whether any Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company
that has not been designated by the Board of Directors of the Company, by a
Board Resolution delivered to the Trustee, as an Unrestricted Subsidiary
pursuant to and in compliance with Section 4.23. Any such Designation may be
revoked by a Board Resolution of the Company delivered to the Trustee, subject
to the provisions of such covenant.
"Revocation" has the meaning provided in Section 4.23.
"Revolving Credit Facility" means one or more revolving credit
facilities under the Credit Agreement.
"Rule 144A" means Rule 144A under the Securities Act.
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"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such Person or to any other Person from whom
funds have been or are to be advanced by such Person on the security of such
property.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and the Series B
Securities treated as a single class of securities, as amended or supplemented
from time to time in accordance with the terms hereof, that are issued pursuant
to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Senior Debt" means, (i) the principal of, premium, if any,
and interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on any Indebtedness of the Company, whether outstanding on the
Issue Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Securities.
Without limiting the generality of the foregoing, "Senior Debt" shall also
include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other amounts
owing in respect of, (x) all monetary obligations of every nature of the
Company under the Credit Agreement, including, without limitation, obligations
to pay principal and interest, reimbursement obligations under letters of
credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and
(z) all obligations under Currency Agreements, in each case whether outstanding
on the Issue Date or thereafter incurred. Notwithstanding the foregoing,
"Senior Debt" shall not include (i) any Indebtedness of the Company to a
Restricted Subsidiary or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Company or any Restricted
Subsidiary (including, without limitation, amounts owed
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for compensation), (iii) Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services, (iv)
Indebtedness represented by Disqualified Capital Stock, (v) any liability for
federal, state, local or other taxes owed or owing by the Company, (vi)
Indebtedness incurred in violation of Section 4.03, (vii) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of
Title 11, United States Code, is without recourse to the Company and (viii) any
Indebtedness which is, by its express terms, subordinated in right of payment
to any other Indebtedness of the Company.
"Series A Securities" means the 10 3/4% Senior Subordinated
Notes due 2007, Series A, of the Company issued pursuant to this Indenture and
sold pursuant to the Purchase Agreement.
"Series B Securities" means the 10 3/4% Senior Subordinated
Notes due 2007, Series B, of the Company to be issued in exchange for the
Series A Securities pursuant to the Registered Exchange Offer and the
Registration Rights Agreement.
"Significant Subsidiary" shall have the meaning set forth in
Rule 1.02(w) of Regulation S-X under the Securities Act.
"Subsidiary", with respect to any Person, means (a) any
corporation of which the outstanding Capital Stock having at least a majority
of the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person or (b) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
"Surviving Entity" has the meaning provided in Section 5.01.
"Term Loan Facility" means one or more term loan facilities
under the Credit Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
Section 77aaa-77bbbb), as amended, as in effect on the date of the execution
of this Indenture until such time as this Indenture is qualified under the TIA,
and thereafter as in effect on the date on which this Indenture is qualified
under the TIA, except as otherwise provided in Section 9.03.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
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"Unleveraged Wholly Owned Restricted Subsidiary" means a
Wholly Owned Restricted Subsidiary that has no Indebtedness (other than
Indebtedness owing to the Company or a Guarantor) outstanding.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 4.23. Any such
designation may be revoked by a Board Resolution of the Company delivered to
the Trustee, subject to the provisions of such covenant.
"U.S. Government Obligations" shall have the meaning
provided in Section 8.01.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"U.S. Physical Securities" shall have the meaning set forth in
Section 2.01.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of the directors of such corporation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary of which all the outstanding voting securities (other than in the
case of a foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by the Company or another Wholly Owned Restricted
Subsidiary.
"Wholly Owned Subsidiary" of any Person means a corporation of
which all the outstanding voting securities (other than in the case of a
foreign corporation, director's qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable laws) are
owned by such Person or a Wholly Owned Subsidiary of such Person.
<PAGE> 32
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SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
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:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, any
Guarantor and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words
in the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
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ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Series A Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit A annexed
hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Series B Securities and the Trustee's certificate of
authentication thereof shall be substantially in the form of Exhibit B annexed
hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements
(including notations relating to any Guarantees, stock exchange rule or usage).
The Company and the Trustee shall approve the form of the Securities and any
notation, legend or endorsement (including notations relating to any
Guarantees) on them. Each Security shall be dated the date of its issuance and
shall show the date of its authentication.
Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Securities in
registered form, substantially in the form set forth in Exhibit A, deposited
with the Trustee, as custodian for the Depository, and shall bear the legend
set forth on Exhibit C. The aggregate principal amount of any Global Security
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Securities offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of certificated Securities
in registered form in substantially the form set forth in Exhibit A (the
"Offshore Physical Securities"). Securities offered and sold in reliance on
any other exemption from registration under the Securities Act other than as
described in the preceding paragraph shall be issued, and Securities offered
and sold in reliance on Rule 144A may be issued, in the form of certificated
Securities in registered form in substantially the form set forth in Exhibit A
(the "U.S. Physical Securities"). The Offshore Physical Securities and the
U.S. Physical Securities are sometimes collectively herein referred to as the
"Physical Securities."
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SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Securities for the Company by manual or
facsimile signature. The Company's seal shall also be reproduced on the
Securities.
If an Officer or Assistant Secretary whose signature is on a
Security was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless. Each Guarantor shall
execute its Guarantee in the manner set forth in Section 10.07.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate (i) Series A Securities for
original issue in the aggregate principal amount not to exceed $110,000,000 and
(ii) Series B Securities from time to time for issue only in exchange for a
like principal amount of Series A Securities, in each case upon a written order
of the Company in the form of an Officers' Certificate and an Opinion of
Counsel in a form reasonably required by the Trustee as to the compliance with
applicable law of the exchange of Series B Notes for Series A Notes. The
Officers' Certificate shall specify the amount of Securities to be
authenticated, the series of Securities and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $110,000,000, except as provided in
Section 2.07. Upon receipt of a written order of the Company in the form of an
Officers' Certificate, the Trustee shall authenticate Securities in
substitution for Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless otherwise
provided in the appointment, an authenticating agent may authenticate
Securities 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 the Company
and Affiliates of the Company.
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The Securities shall be issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
Securities may be presented or surrendered for payment ("Paying Agent") and (c)
notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon written notice to the Trustee, may
have one or more co- Registrars and one or more additional Paying Agents
reasonably acceptable to the Trustee. The term "Paying Agent" includes any
additional Paying Agent. The Company initially appoints the Trustee as
Registrar and Paying Agent until such time as the Trustee has resigned or a
successor has been appointed. Neither the Company nor any Affiliate of the
Company may act as Paying Agent except as otherwise expressly provided in the
form of the Security.
To the extent the Company makes such payments directly to the
Holders, the Company shall simultaneously notify the Trustee thereof in
writing.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, or interest on, the Securities, and shall notify the
Trustee in writing of any Default by the Company in making any such payment.
The Company at any time may require a Paying Agent to distribute all assets
held by it to the Trustee and account for any assets disbursed and the Trustee
may at any time, but shall be under no obligation to, during the continuance of
any payment Default, upon written request to a Paying Agent, require such
Paying Agent to distribute all assets held by it to the Trustee and to account
for any assets distributed. Upon distribution to the Trustee of all assets
that shall have been delivered by the Company to the Paying Agent, the Paying
Agent shall have no further liability for such assets.
SECTION 2.05. Securityholder 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 Holders. If the Trustee is not the
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Registrar, the Company shall furnish to the Trustee before each Record Date and
at such other times as the Trustee may request in writing a list as of such
date and in such form as the Trustee may reasonably require of the names and
addresses of Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when
Securities are presented to the Registrar or a co-Registrar with a request to
register the transfer of such Securities or to exchange such Securities for an
equal principal amount of Securities of other authorized denominations of the
same series, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.12,
4.24 or 9.05). The Registrar or co-Registrar shall not be required to register
the transfer of or exchange of any Security (i) during a period beginning at
the opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Security being redeemed in part.
Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of beneficial interests in such Global
Security may be effected only through a book-entry system maintained by the
Depository (or its agent), and that ownership of a beneficial interest in a
Global Security shall be required to be reflected in a book entry system.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate
upon written notice from the Company a
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replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee and any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for
its reasonable out-of-pocket expenses in replacing a Security, including
reasonable fees and expenses of counsel. Every replacement Security is an
additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.07.
If on a Redemption Date or the Final Maturity Date the Paying
Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay
all of the principal and interest due on the Securities payable on that date,
then on and after that date such Securities cease to be outstanding and
interest on them ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, any Guarantor or any of their respective
Affiliates shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities that a Responsible Officer of the Trustee actually
knows are so owned shall be disregarded.
The Trustee may require an Officers' Certificate listing
Securities owned by the Company, any Guarantor or any of their respective
Affiliates.
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SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities
upon receipt of a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Securities to be authenticated and the date on which the temporary Securities
are to be authenticated. Temporary Securities shall be substantially in the
form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate upon receipt of a
written order of the Company pursuant to Section 2.02 definitive Securities in
exchange for temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue
new Securities to replace Securities that it has paid or delivered to the
Trustee for cancellation. If the Company or any Guarantor shall acquire any of
the Securities, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Securities unless and
until the same are surrendered to the Trustee for cancellation pursuant to this
Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay interest on overdue principal and on overdue
installments of interest (without grace periods) from time to time on demand at
the rate of 2% per annum in excess of the rate shown on the Security.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed
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in the notice or on the Securities, and that reliance may be placed only on the
other identification numbers printed on the Securities.
SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest
Payment Date and the Final Maturity Date, the Company shall have either
delivered by wire transfer or check such interest or principal and interest, as
the case may be to Holders at such Holders registered address or deposited with
the Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or the Final Maturity Date,
as the case may be, in a timely manner which permits the Paying Agent to remit
payment to the Holders on such Interest Payment Date or the Final Maturity
Date, as the case may be. If the Company is to deliver funds by wire transfer,
it shall give the Trustee fifteen (15) days prior written notice.
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be
registered in the name of the Depository or the nominee of such Depository,
(ii) be delivered to the Trustee as custodian for such Depository and (iii)
bear legends as set forth in Exhibit C.
Members of, or participants in, the Depository
("Participants") shall have no rights under this Indenture with respect to any
Global Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and Participants, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Securities
may be transferred or exchanged for Physical Securities in accordance with the
rules and procedures of the Depository and the provisions of Section 2.16. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days
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of such notice or (ii) an Event of Default has occurred and is continuing and
the Registrar has received a request from the Depository to issue Physical
Securities.
(c) In connection with the transfer of Global Securities
as an entirety to beneficial owners pursuant to paragraph (b) of this Section
2.15, the Global Securities shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the Trustee shall upon
written instructions from the Company authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted
Security delivered in exchange for an interest in a Global Security pursuant to
paragraph (b) or (d) of this Section 2.15 shall, except as otherwise provided
by Section 2.16, bear the Private Placement Legend.
(e) The Holder of any Global Security may grant proxies
and otherwise authorize any Person, including Participants and Persons that may
hold interests through Participants, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When
Physical Securities are presented to the Registrar with a request:
(i) to register the transfer of the Physical Securities;
or
(ii) to exchange such Physical Securities for an equal
number of Physical Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.16 for
such transactions are met; provided, however, that the Physical Securities
presented or surrendered for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the
Registrar or co-Registrar, duly executed by the
Holder thereof or his attorney duly authorized in
writing; and
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(II) in the case of Physical Securities the offer and sale
of which have not been registered under the
Securities Act, such Physical Securities shall be
accompanied, in the sole discretion of the Company,
by the following additional information and
documents, as applicable:
(A) if such Physical Security is being delivered
to the Registrar by a holder for registration
in the name of such holder, without transfer,
a certification from such holder to that
effect (in substantially the form of Exhibit
D hereto); or
(B) if such Physical Security is being
transferred to a Qualified Institutional
Buyer in accordance with Rule 144A under the
Securities Act, a certification to that
effect (in substantially the form of Exhibit
D hereto); or
(C) if such Physical Security is being
transferred to an Institutional Accredited
Investor, delivery of a certification to that
effect (in substantially the form of Exhibit
D hereto) and a Transferee Certificate for
Institutional Accredited Investors in
substantially the form of Exhibit E hereto;
or
(D) if such Physical Security is being
transferred in reliance on Regulation S,
delivery of a certification to that effect
(in substantially the form of Exhibit D
hereto) and a Transferee Certificate for
Regulation S Transfers in substantially the
form of Exhibit F hereto and an Opinion of
Counsel reasonably satisfactory to the
Company to the effect that such transfer is
in compliance with the Securities Act; or
(E) if such Physical Security is being
transferred in reliance on Rule 144 under the
Securities Act, delivery of a certification
to that effect (in substantially the form of
Exhibit D hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to the
effect that such transfer is in compliance
with the Securities Act; or
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(F) if such Physical Security is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that
effect (in substantially the form of Exhibit
D hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to
the effect that such transfer is in
compliance with the Securities Act.
(b) Restrictions on Transfer of a Physical Security for a
Beneficial Interest in a Global Security. A Physical Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Registrar of a Physical Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with:
(A) a certification, in substantially the form of Exhibit
D hereto, that such Physical Security is being
transferred to a Qualified Institutional Buyer; and
(B) written instructions directing the Registrar to make,
or to direct the Depository to make, an endorsement
on the Global Security to reflect an increase in the
aggregate amount of the Securities represented by the
Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depository to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Registrar, the number of
Securities represented by the Global Security to be increased accordingly. If
no Global Security is then outstanding, the Company shall issue and the Trustee
shall upon written instructions from the Company authenticate a new Global
Security in the appropriate amount.
(c) Transfer and Exchange of Global Securities. The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depository, in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depository therefor.
(d) Transfer of a Beneficial Interest in a Global
Security for a Physical Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial
interest for a Physical Security. Upon receipt by
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the Registrar of written instructions or such other
form of instructions as is customary for the
Depository from the Depository or its nominee on
behalf of any Person having a beneficial interest in
a Global Security and upon receipt by the Trustee of
a written order or such other form of instructions as
is customary for the Depository or the Person
designated by the Depository as having such a
beneficial interest containing registration
instructions and, in the case of any such transfer or
exchange of a beneficial interest in Securities the
offer and sale of which have not been registered
under the Securities Act, the following additional
information and documents:
(A) if such beneficial interest is being
transferred to the Person designated by the
Depository as being the beneficial owner, a
certification from such Person to that effect
(in substantially the form of Exhibit D
hereto); or
(B) if such beneficial interest is being
transferred to a Qualified Institutional
Buyer in accordance with Rule 144A under the
Securities Act, a certification to that
effect (in substantially the form of Exhibit
D hereto); or
(C) if such beneficial interest is being
transferred to an Institutional Accredited
Investor, delivery of a certification to that
effect (in substantially the form of Exhibit
D hereto) and a Certificate for Institutional
Accredited Investors in substantially the
form of Exhibit E hereto; or
(D) if such beneficial interest is being
transferred in reliance on Regulation S,
delivery of a certification to that effect
(in substantially the form of Exhibit D
hereto) and a Transferee Certificate for
Regulation S Transfers in substantially the
form of Exhibit F hereto and an Opinion of
Counsel reasonably satisfactory to the
Company to the effect that such transfer is
in compliance with the Securities Act; or
(E) if such beneficial interest is being
transferred in reliance on Rule 144 under the
<PAGE> 44
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Securities Act, delivery of a certification
to that effect (in substantially the form
of Exhibit D hereto) and an Opinion of C
reasonably satisfactory to the Company to
the effect that such transfer is in
compliance with the Securities Act; or
(F) if such beneficial interest is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that
effect (in substantially the form of Exhibit
D hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to the
effect that such transfer is in compliance
with the Securities Act,
then the Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository
and the Registrar, the aggregate amount of the Global Security
to be reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the
form of an Officers' Certificate, the Trustee will
authenticate and deliver to the transferee a Physical
Security.
(ii) Securities issued in exchange for a beneficial interest in a
Global Security pursuant to this Section 2.16(d) shall be
registered in such names and in such authorized denominations
as the Depository, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the
Registrar in writing. The Registrar shall deliver such
Physical Securities to the Persons in whose names such
Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture, a Global
Security may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless, and the Trustee is hereby authorized to
<PAGE> 45
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deliver Securities without the Private Placement Legend if, (i) there is
delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act or (ii) such Security has been sold pursuant
to an effective registration statement under the Securities Act.
(g) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to
Paragraph 5 or Paragraph 6 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the Redemption Price and the principal amount
of Securities to be redeemed. The Company shall give notice of redemption to
Trustee at least 30 days but not more than 60 days before the Redemption Date
(unless a shorter notice shall be agreed to by the Trustee in writing),
together with an Officers' Certificate stating that such redemption will comply
with the conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
If fewer than all of the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which
the Securities are listed or, if the Securities are not listed on a national
securities exchange, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided, however, that if the
Securities are redeemed pursuant to Paragraph 6 of the Securities,
<PAGE> 46
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the Securities shall be redeemed solely on a pro rata basis or on as nearly a
pro rata basis as is practicable (subject to the procedures of the Depository)
unless the securities exchange, if any, on which the Securities are listed
requires a different method. If the Securities are listed on any national
securities exchange, the Company shall notify the Trustee in writing of the
requirements of such exchange in respect of any redemption. The Trustee shall
make the selection from the Securities outstanding and not previously called
for redemption and shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected
for partial redemption, the principal amount thereof to be redeemed.
Securities in denominations of less than $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail or cause to be mailed a notice of redemption by
first-class mail, postage prepaid, to each Holder whose Securities are to be
redeemed. At the Company's written request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. Each notice
for redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued
interest, if any, to be paid;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price plus
accrued interest, if any;
(5) that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption
ceases to accrue on and after the Redemption Date, and the only
remaining right of the Holders of such Securities is to receive
payment of the Redemption Price and accrued interest, if any, to the
Redemption Date upon surrender to the Paying Agent of the Securities
redeemed;
<PAGE> 47
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(6) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the Redemption Date, and upon surrender of such Security,
a new Security or Securities in aggregate principal amount equal to
the unredeemed portion thereof will be issued;
(7) if fewer than all the Securities are to be redeemed,
the identification of the particular Securities (or portion thereof)
to be redeemed, as well as the aggregate principal amount of
Securities to be redeemed and the aggregate principal amount of
Securities to be outstanding after such partial redemption; and
(8) the Paragraph of the Securities pursuant to
which the Securities are to be redeemed.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price plus accrued interest, if any. Upon surrender
to the Paying Agent, such Securities called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is on or
prior to the Redemption Date, shall be payable to Holders of record at the
close of business on the relevant Record Dates.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price
plus accrued interest, if any, of all Securities to be redeemed on that date.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such Redemption Price plus
accrued interest, if any, interest on the Securities to be redeemed will cease
to accrue on and after the applicable Redemption Date, whether or not such
Securities are presented for payment.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Trustee shall upon written instruction from the Company authenticate for
the Holder a new Security or Securities equal in
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principal amount to the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities in the manner provided in the Securities. An installment of
principal of or interest on the Securities shall be considered paid on the date
it is due if the Trustee or Paying Agent holds on that date U.S. Legal Tender
designated for and sufficient to pay the installment.
The Company shall pay, to the extent such payments are lawful,
interest on overdue principal and it shall pay interest on overdue installments
of interest (without regard to any applicable grace periods) from time to time
on demand at the rate borne by the Securities plus 2% per annum. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, the office or agency required under Section 2.03. 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 address of the
Trustee set forth in Section 11.02. The Company hereby initially designates
the office of the Trustee at One State Street Plaza, Corporate Trust
Administration, New York, New York 10004, as its office or agency in the
Borough of Manhattan, The City of New York.
SECTION 4.03. Limitation on Incurrence of Additional
Indebtedness.
The Company will not, and will not permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise, with respect to,
or otherwise become responsible for payment of (collectively, "incur") any
Indebtedness (other than Permitted Indebtedness); provided, however, that if no
Default or Event of Default shall have occurred and be continuing at the time
of or as a consequence of the incurrence of any such Indebtedness,
<PAGE> 49
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the Company or any Guarantor may incur Indebtedness (including, without
limitation, Acquired Indebtedness) and the Restricted Subsidiaries may incur
Acquired Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0, if such
incurrence occurs on or prior to January 15, 1998, or 2.25 to 1.0, if such
incurrence occurs after January 15, 1998.
Indebtedness of a Person existing at the time such Person
becomes a Restricted Subsidiary or which is secured by a Lien on an asset
acquired by the Company or a Restricted Subsidiary (whether or not such
Indebtedness is assumed by the acquiring Person) shall be deemed incurred at
the time the Person becomes a Restricted Subsidiary or at the time of the asset
acquisition, as the case may be.
SECTION 4.04. Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any
dividend or make any distribution (other than dividends or distributions
payable in Qualified Capital Stock of the Company) on or in respect of shares
of the Company's Capital Stock to holders of such Capital Stock, (b) purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the
Company or any warrants, rights or options to purchase or acquire shares of any
class of such Capital Stock, (c) make any principal payment on, purchase,
defease, redeem, prepay, decrease or otherwise acquire or retire for value,
prior to any scheduled final maturity, scheduled repayment or scheduled sinking
fund payment, any Indebtedness of the Company that is subordinate or junior in
right of payment to the Securities or (d) make any Investment (other than a
Permitted Investment) (each of the foregoing actions set forth in clauses (a),
(b) (c) and (d) being referred to as a "Restricted Payment"), if at the time of
such Restricted Payment or immediately after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing or (ii)
the Company is not able to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.03 or (iii)
the aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property
as determined reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date") (treating such
period as a single accounting
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period); plus (x) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of the Company; plus (y) without duplication of
any amounts included in clause (iii)(x) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from a holder of
the Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (y)
above, any net cash proceeds from a Public Equity Offering to the extent used
to redeem the Securities pursuant to the redemption provisions thereof); plus
(z) an amount equal to the consolidated net Investments on the date of
Revocation made by the Company and/or any of the Restricted Subsidiaries in any
Subsidiary of the Company that has been designated an Unrestricted Subsidiary
after the Issue Date upon its redesignation as a Restricted Subsidiary in
accordance with Section 4.23.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any
dividend within 60 days after the date of declaration of such dividend if the
dividend would have been permitted on the date of declaration; (2) if no
Default or Event of Default shall have occurred and be continuing, the
acquisition of any shares of Capital Stock of the Company, either (i) solely in
exchange for shares of Qualified Capital Stock of the Company or (ii) through
the application of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock of the Company; (3) if no Default or Event of Default shall have occurred
and be continuing, the acquisition of any Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities either (i) solely
in exchange for shares of Qualified Capital Stock of the Company, or (ii)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of the Company) of (A) shares of Qualified
Capital Stock of the Company or (B) Refinancing Indebtedness; (4) the payment
of premiums not to exceed $1,500,000 in any fiscal year for insurance on the
lives of stockholders of the Company, the proceeds of which insurance are
intended to fund repurchases by the Company of Capital Stock of the Company
owned by such stockholders; (5) the purchase, redemption or acquisition of
Capital Stock of the Company with proceeds of insurance from insurance
companies not Affiliated with the Company; (6) Permitted Tax Payments; and (7)
so long as no Default or Event of Default shall have occurred and be
continuing, other Restricted Payments in an aggregate amount not to exceed
$2,500,000. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the immediately
preceding paragraph, amounts expended pursuant to clauses (1), (2), (4) and (7)
shall be included in such calculation.
<PAGE> 51
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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 complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal
quarterly financial statements.
SECTION 4.05. Corporate Existence.
Except as otherwise permitted by Article Five, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership or
other existence of each of the Restricted Subsidiaries in accordance with the
respective organizational documents of each Restricted Subsidiary and the
rights (charter and statutory) and material franchises of the Company and each
of its Restricted Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right or franchise, or the corporate existence
of any Restricted Subsidiary, if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Restricted Subsidiaries, taken as a
whole, and that the loss thereof is not, and will not be, adverse in any
material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges levied or imposed upon it or any of the
Restricted Subsidiaries or upon the income, profits or property of it or any of
the Restricted Subsidiaries and (ii) all lawful claims for labor, materials and
supplies which, in each case, if unpaid, might by law become a material
liability or Lien upon the property of it or any of the Restricted
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate provision has been
made.
SECTION 4.07. Maintenance of Properties and Insurance.
(1) The Company shall cause all material properties owned
by or leased by it or any of the Restricted Subsidiaries used or useful to the
conduct of its business or the business of any of the Restricted Subsidiaries
to be improved or maintained and kept in normal condition, repair and working
order and supplied with
<PAGE> 52
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all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in its
judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4.07 shall prevent the Company or any of
the Restricted Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or of the Board of Directors of any Restricted Subsidiary, or of an
officer (or other agent employed by the Company or of any of the Restricted
Subsidiaries) of the Company or any of its Restricted Subsidiaries having
managerial responsibility for any such property, desirable in the conduct of
the business of the Company or any Restricted Subsidiary, and if such
discontinuance or disposal is not adverse in any material respect to the
Holders.
(2) The Company shall maintain, and shall cause the
Restricted Subsidiaries to maintain, insurance with responsible carriers
against such risks and in such amounts, and with such deductibles, retentions,
self-insured amounts and co-insurance provisions, as are customarily carried by
similar businesses of similar size, including property and casualty loss,
workers' compensation and interruption of business insurance.
SECTION 4.08. Compliance Certificate; Notice of Default.
(1) The Company shall deliver to the Trustee, within 100
days after the close of each fiscal year an Officers' Certificate stating that
a review of the activities of the Company has been made under the supervision
of the signing officers with a view to determining whether it has kept,
observed, 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 knowledge the Company during such preceding fiscal year has kept,
observed, performed and fulfilled each and every such covenant and no Default
or Event of Default occurred during such year and at the date of such
certificate no Default or Event of Default has occurred and is continuing or,
if such signers do know of such Default or Event of Default, the certificate
shall describe its status with particularity. The Officers' Certificate shall
also notify the Trustee should the Company elect to change the manner in which
it fixes its fiscal year end.
(2) The annual financial statements delivered pursuant to
Section 4.10 shall be accompanied by a written report of the Company's
independent accountants (who shall be a firm of established national
reputation) that in conducting their audit of such financial statements nothing
has come to their attention that
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would lead them to believe that the Company has violated any provisions of
Article Four, Five or Six of this Indenture insofar as they relate to
accounting matters 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.
(3) The Company shall deliver to the Trustee, within ten
days of becoming aware of any Default or Event of Default in the performance of
any covenant, agreement or condition contained in this Indenture, an Officers'
Certificate specifying the Default or Event of Default and describing its
status with particularity.
SECTION 4.09. Compliance with Laws.
The Company shall comply, and shall cause each of the
Restricted Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all
states and municipalities thereof, and of any governmental department,
commission, board, regulatory authority, bureau, agency and instrumentality of
the foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as
would not in the aggregate have a material adverse effect on the financial
condition or results of operations of the Company and the Restricted
Subsidiaries taken as a whole.
SECTION 4.10. SEC Reports.
(1) The Company will file with the SEC all information
documents and reports to be filed with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, whether or not the Company is subject to such filing
requirements so long as the SEC will accept such filings. The Company (at its
own expense) will file with the Trustee within 15 days after it files them with
the SEC, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company files with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification of
this Indenture under the TIA, the Company shall also comply with the provisions
of TIA Section 314(a).
(2) At the Company's expense, regardless of whether the
Company is required to furnish such reports to its stockholders pursuant to the
Exchange Act, the Company shall cause its consolidated financial statements,
comparable to that which would have been required to appear in annual or
quarterly reports, to be delivered to the Trustee and the Holders. The Company
will also make such reports available to prospective purchasers of the
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Securities, securities analysts and broker-dealers upon their request.
(3) For so long as any of the Securities remain
outstanding the Company will make available to any prospective purchaser of the
Securities or beneficial owner of the Securities in connection with any sale
thereof the information required by Rule 144A(d)(4) under the Securities Act
during any period when the Company is not subject to Section 13 or 15(d) under
the Exchange Act.
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.
The Company 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 or extension law
or any usury law or other law that would prohibit or forgive the Company from
paying all or any portion of the principal of and/or interest on the Securities
as contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this Indenture,
and (to the extent that it may lawfully do so) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 4.12. Limitation on Asset Sales.
The Company will not, and will not permit any of the
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (ii) at least 80% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash or Cash Equivalents and is
received at the time of such disposition; and (iii) upon the consummation of an
Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to
apply, the Net Cash Proceeds relating to such Asset Sale within 180 days of
receipt thereof either (A) to prepay any Senior Debt and, in the case of any
Senior Debt under any revolving credit facility, effect a permanent reduction
in the availability under such revolving credit facility, (B) to make an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties and assets that will be
used in the business of the Company and its Restricted Subsidiaries as existing
on the Issue Date or in
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businesses reasonably related thereto, or (C) a combination of prepayment and
investment permitted by the foregoing clauses (iii)(A) and (iii)(B). On the
181st day after an Asset Sale or such earlier date, if any, as the Board of
Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding
sentence (each a "Net Proceeds Offer Amount") shall be applied by the Company
or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders on a pro rata basis, that amount of Securities equal to the
Net Proceeds Offer Amount at a price equal to 100% of the principal amount of
the Securities to be purchased, plus accrued and unpaid interest thereon, if
any, to the date of purchase; provided, however, that if at any time any
non-cash consideration received by the Company or any Restricted Subsidiary, as
the case may be, in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received with respect to
any such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this covenant. The Company may defer the
Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $5,000,000 resulting from one or more Asset
Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not
just the amount in excess of $5,000,000, shall be applied as required pursuant
to this paragraph).
In the event of the transfer of substantially all (but not
all) of the property and assets of the Company and the Restricted Subsidiaries
as an entirety to a Person in a transaction permitted under Section 5.01, the
successor corporation shall be deemed to have sold the properties and assets of
the Company and the Restricted Subsidiaries not so transferred for purposes of
this covenant, and shall comply with the provisions of this covenant with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
market value of such properties and assets of the Company or the Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this covenant.
Notice of each Net Proceeds Offer pursuant to this Section
4.12 will be mailed or caused to be mailed, by first class mail, by the Company
within 25 days following the Net Proceeds Offer Trigger Date to all Holders at
their last registered
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addresses, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Net Proceeds Offer and shall state the following
terms:
(1) that the Net Proceeds Offer is being made pursuant to
Section 4.12 and that all Securities tendered in whole or in part in
integral multiples of $1,000 will be accepted for payment;
provided, however, that if the principal amount of Securities
tendered in a Net Proceeds Offer exceeds the aggregate amount of the
Net Cash Proceeds Offer Amount, the Company shall select the
Securities to be purchased on a pro rata basis;
(2) the purchase price (including the amount of accrued
interest, if any) and the Net Proceeds Offer Payment Date (which shall
be at least 20 Business Days from the date of mailing of notice of
such Net Proceeds Offer, or such longer period as required by law);
(3) that any Security not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net Proceeds
Offer Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to a Net Proceeds Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
Net Proceeds Offer Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the Business Day
prior to the Net Proceeds Offer Payment Date, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount
of the Security the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Security
purchased; and
(7) that Holders whose Securities are purchased only in
part will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered.
On or before the Net Proceeds Offer Payment Date, the Company
shall (i) accept for payment Securities or portions thereof
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tendered pursuant to the Net Proceeds Offer which are to be purchased in
accordance with item (1) above, (ii) deposit with the Paying Agent in
accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase
price plus accrued interest, if any, of all Securities to be purchased and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price plus accrued
interest, if any. For purposes of this Section 4.12, the Trustee shall act as
the Paying Agent.
The Company shall and shall cause its Subsidiaries to comply
with all tender offer rules under state and Federal securities laws, including,
but not limited to, Section 14(e) under the Exchange Act and Rule 14e-1
thereunder, to the extent applicable to such offer. To the extent that the
provisions of any securities laws or regulations conflict with the foregoing
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the foregoing provisions of this Indenture by virtue thereof.
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries
.
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
or to pay any Indebtedness or other obligation owed to the Company or any other
Restricted Subsidiary; or (c) transfer any of its property or assets to the
Company or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Indenture; (3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Restricted Subsidiary; (4) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the properties or assets of the Person so acquired; (5)
agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; or (6) an agreement governing
Refinancing Indebtedness incurred to Refinance the Indebtedness issued, assumed
or incurred pursuant to an agreement referred to in clause (2), (4) or (5)
above; provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Refinancing Indebtedness are no less
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favorable to the Company in any material respect as determined by the Board of
Directors of the Company in their reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (2), (4) or (5).
SECTION 4.14. Limitation on Preferred Stock
of Restricted Subsidiaries.
The Company will not permit any of the Restricted Subsidiaries
to issue any Preferred Stock (other than to the Company or to a Wholly Owned
Restricted Subsidiary) or permit any Person (other than the Company or a
Wholly Owned Restricted Subsidiary) to own any Preferred Stock of any
Restricted Subsidiary.
SECTION 4.15. Limitation on Liens.
The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist any Liens of any kind against or upon any property or
assets of the Company or any of the Restricted Subsidiaries whether owned on
the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom
unless (i) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Securities, the Securities are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Securities are equally
and ratably secured, except for (A) Liens existing as of the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date; (B) Liens
securing Senior Debt and Liens securing Guarantor Senior Debt; (C) Liens
securing the Securities and any Guarantees; (D) Liens of the Company or a
Wholly Owned Restricted Subsidiary on assets of any Subsidiary of the Company;
(E) Liens securing Refinancing Indebtedness which is incurred to Refinance any
Indebtedness which has been secured by a Lien permitted under this Indenture
and which has been incurred in accordance with the provisions of this
Indenture; provided, however, that such Liens (A) are no less favorable to the
Holders and are not more favorable to the lienholders with respect to such
Liens than the Liens in respect of the Indebtedness being Refinanced and (B) do
not extend to or cover any property or assets of the Company or any of the
Restricted Subsidiaries not securing the Indebtedness so Refinanced; and (F)
Permitted Liens.
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SECTION 4.16. [Intentionally Omitted]
SECTION 4.17. Prohibition on Incurrence of
Senior Subordinated Debt.
The Company will not, and will not permit any Guarantor to,
incur or suffer to exist Indebtedness that is senior in right of payment to the
Securities or any Guarantee and subordinate in right of payment to any other
Indebtedness of the Company or the applicable Guarantor, as the case may be.
SECTION 4.18. Limitations on Transactions with Affiliates.
(a) The Company will not, and will not permit any of the
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
(each an "Affiliate Transaction"), other than (x) Affiliate Transactions
permitted under paragraph (b) below and (y) Affiliate Transactions on terms
that are no less favorable than those that might reasonably have been obtained
in a comparable transaction at such time on an arm's-length basis from a Person
that is not an Affiliate of the Company or such Restricted Subsidiary. All
Affiliate Transactions (and each series of related Affiliate Transactions which
are similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $250,000 shall be approved by
the Board of Directors of the Company or such Restricted Subsidiary, as the
case may be, such approval to be evidenced by a Board Resolution stating that
such Board of Directors has determined that such transaction complies with the
foregoing provisions. If the Company or any Restricted Subsidiary enters into
an Affiliate Transaction (or a series of related Affiliate Transactions related
to a common plan) that involves an aggregate fair market value of more than
$2,500,000, the Company or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to the Company
or the relevant Restricted Subsidiary, as the case may be, from a financial
point of view, from an Independent Financial Advisor and file the same with the
Trustee.
(b) The restrictions set forth in clause (a) shall not
apply to (i) reasonable fees and compensation paid to and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary as determined in good faith by the Company's Board of
Directors or senior management; (ii) consulting fees paid by the Company
consistent with past practice; (iii) transactions exclusively
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between or among the Company and any of the Restricted Subsidiaries or
exclusively between or among such Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by this Indenture; and (iv)
Restricted Payments permitted by this Indenture.
SECTION 4.19. Issuance of Subsidiary Guarantees.
If (a) any Domestic Wholly Owned Restricted Subsidiary incurs
any Indebtedness or (b) any Restricted Subsidiary (whether or not a Domestic
Wholly Owned Restricted Subsidiary) guarantees any Indebtedness of the Company
or any of its Restricted Subsidiaries (other than a Subsidiary of such
Restricted Subsidiary) then, in either case, the Company shall cause such
Domestic Wholly Owned Restricted Subsidiary or such Restricted Subsidiary, as
the case may be, to (i) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to which such
Domestic Wholly Owned Restricted Subsidiary or such Restricted Subsidiary, as
the case may be, shall unconditionally guarantee (each, a "Guarantee") all of
the Company's obligations under the Securities and this Indenture on the terms
set forth in Article Ten and (ii) deliver to the Trustee an Opinion of Counsel
that such supplemental indenture has been duly authorized, executed and
delivered by such Domestic Wholly Owned Restricted Subsidiary or such
Restricted Subsidiary, as the case may be, and constitutes a legal, valid,
binding and enforceable obligation of such Domestic Wholly Owned Restricted
Subsidiary or such Restricted Subsidiary, as the case may be. Thereafter, such
Domestic Wholly Owned Restricted Subsidiary or such Restricted Subsidiary, as
the case may be, shall be a Guarantor for all purposes of this Indenture.
SECTION 4.20. [Intentionally Omitted].
SECTION 4.21. Lines of Business.
The Company and the Restricted Subsidiaries will not engage in
any businesses which are not either (i) the same, similar or related to the
businesses in which the Company and the Restricted Subsidiaries are engaged on
the Issue Date or (ii) Permitted Investments.
SECTION 4.22. 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 Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture, the Securities or any Guarantees unless such
consideration is offered
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to be paid or agreed to be paid to all holders of the Securities who so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.23. Limitation on Designations of
Unrestricted Subsidiaries.
The Company may designate any Subsidiary of the Company (other
than a Subsidiary of the Company which owns Capital Stock of a Restricted
Subsidiary) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if:
(1) no Default shall have occurred and be continuing at
the time of or after giving effect to such Designation; and
(2) the Company would be permitted under this Indenture
to make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the sum of (i) fair market value of the Capital
Stock of such Subsidiary owned by the Company and the Restricted
Subsidiaries on such date and (ii) the aggregate amount of
Indebtedness of such Subsidiary owed to the Company and the Restricted
Subsidiaries on such date; and
(3) the Company would be permitted to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant
to Section 4.03 at the time of Designation (assuming the effectiveness
of such Designation).
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment in the
Designation Amount pursuant to Section 4.04 for all purposes of this Indenture.
The Company shall not, and shall not permit any Restricted Subsidiary to, at
any time (x) provide direct or indirect credit support for or a guarantee of
any Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case
of clause (x) or (y), to the extent permitted under Section 4.04.
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The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at
the time of and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if
incurred at such time, have been permitted to be incurred for all
purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
SECTION 4.24. Change of Control.
(a) Upon the occurrence of a Change of Control, the
Company shall within 30 days of the Change of Control either (i) repay in full
and terminate all commitments under Indebtedness under the Credit Agreement and
all other Senior Debt the terms of which require repayment upon a Change of
Control or offer to repay in full and terminate all commitments under all
Indebtedness under the Credit Agreement and all other such Senior Debt and to
repay the Indebtedness owed to each lender which has accepted such offer or
(ii) obtain the requisite consents under the Credit Agreement and all other
Senior Debt to permit the repurchase of the Securities as provided below.
After the Company complies with the covenant in the immediately preceding
sentence, the Company shall make an offer to purchase (a "Change of Control
Offer"), and shall purchase, on a Business Day not more than 60 nor less than
30 days following the occurrence of the Change of Control (the "Change of
Control Payment Date"), all of the then outstanding Securities at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the Change of Control Payment Date. The Change of
Control Offer shall remain open for 20 Business Days (or such longer period as
may be required by law) and until the close of business on the Change of
Control Payment Date.
(b) Within 30 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), the Company shall
mail, or cause to be mailed, by first class mail, a notice to each Holder, with
a copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. The notice to the Holders shall contain all instructions and
materials necessary to enable such Holders to tender Securities pursuant to the
Change of Control Offer. Such notice shall state:
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(1) that the Change of Control Offer is being made
pursuant to this Section 4.24 and that all Securities tendered and not
withdrawn will be accepted for payment;
(2) the purchase price (including the amount of accrued
interest) and the Change of Control Payment Date;
(3) that any Security not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to a Change of Control Offer will be required to surrender
the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of
business on the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the Business Day
prior to the Change of Control Payment Date, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount
of the Securities the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Securities
purchased;
(7) that Holders whose Securities are purchased only in
part will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such
Change of Control.
On or before the Change of Control Payment Date, the Company
shall (i) accept for payment Securities or portions thereof tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent in
accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase
price plus accrued interest, if any, of all Securities so tendered and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. Upon receipt by the Paying Agent of the monies specified in clause
(ii) above and a copy of the Officers' Certificate specified in clause (iii)
above, the Paying Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount
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equal to the purchase price plus accrued interest, if any, and the Trustee
shall promptly authenticate and mail to such Holders new Securities equal in
principal amount to any unpurchased portion of the Securities surrendered. Any
Securities not so accepted shall be promptly mailed by the Company to the
Holder thereof. For purposes of this Section 4.24, the Trustee shall act as
the Paying Agent.
Any amounts remaining after the purchase of all validly
tendered and not validly withdrawn Securities pursuant to a Change of Control
Offer shall be returned by the Trustee to the Company.
The Company shall and shall cause its Subsidiaries to comply
with all tender offer rules under state and Federal securities laws, including,
but not limited to, Section 14(e) under the Exchange Act and Rule 14e-1
thereunder, to the extent applicable to such offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.24, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.24 by virtue thereof.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, in a single transaction or
series of related transactions, consolidate or merge with or into any Person,
or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or
permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's
Restricted Subsidiaries), whether as an entirety or substantially as an
entirety, to any Person unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the
Restricted Subsidiaries substantially as an entirety (the "Surviving Entity")
(x) shall be a corporation organized and validly existing under the laws of the
United States or any state thereof or the District of Columbia and (y) shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the
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principal of, and premium, if any, and interest on all of the Securities and
the performance of every covenant of the Securities, this Indenture and the
Registration Rights Agreement on the part of the Company to be performed or
observed; (ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect to
any Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction), the Company or such Surviving Entity, as the
case may be, (1) shall have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of the Company immediately prior to such transaction
and (2) shall be able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.03 hereof; provided that in
determining the Consolidated Fixed Charge Coverage Ratio of the Company or the
Surviving Entity, as the case may be, such ratio shall be calculated as if the
transaction (including the incurrence of any Indebtedness or Acquired
Indebtedness) took place on the first day of the Four Quarter Period; (iii)
immediately before and immediately after giving effect to such transaction and
the assumption contemplated by clause (i)(2)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred or anticipated to be incurred and any Lien granted in connection with
or in respect of the transaction) no Default or Event of Default shall have
occurred or be continuing; and (iv) the Company or the Surviving Entity, as the
case may be, shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of this Indenture
and that all conditions precedent in this Indenture relating to such
transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
(c) No Guarantor (other than any Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of Section 4.12) will, and the Company will not cause or permit any Guarantor
to, consolidate with or merge with or into any Person other than the Company or
any other Guarantor unless: (i) the entity formed by or surviving any
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such consolidation or merger (if other than the Guarantor) is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (ii) such entity assumes by supplemental indenture
all of the obligations of the Guarantor on the Guarantee; (iii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; (iv) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (a)(ii) of this Section 5.01;
and (v) the Company shall have delivered to the Trustee an Officers'
Certificate and Opinion of Counsel, each stating that such consolidation or
merger and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
of this Indenture and that all conditions precedent in this Indenture relating
to such transaction have been satisfied. Any merger or consolidation of a
Guarantor with and into the Company (with the Company being the surviving
entity) or another Guarantor need only comply with subclause (v) of this clause
(c).
SECTION 5.02. Successor Corporation Substituted.
In accordance with the foregoing, upon any such consolidation,
merger, conveyance, lease or transfer of all or substantially all of the assets
of the Company in which the Company is not the continuing corporation, the
Surviving Entity formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture and the Securities with the same effect as if such
successor had been named as the Company herein, and thereafter (except in the
case of a sale, assignment, transfer, lease, conveyance or other disposition)
the predecessor corporation will be relieved of all further obligations and
covenants under this Indenture, the Securities and the Registration Rights
Agreement; provided that solely for purposes of computing amounts described in
subclause (iii) of Section 4.04, any such Surviving Entity shall only be deemed
to have succeeded to and be substituted for the Company with respect to periods
subsequent to the effective time of such merger, consolidation or transfer of
assets.
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Security for
a period of 30 days after the same becomes due and payable (whether or
not such payment shall be prohibited by Article Twelve); or
(2) the Company fails to pay the principal of any
Security, when such principal becomes due and payable, whether at
maturity, upon redemption or otherwise (including the failure to make
a payment to purchase Securities tendered pursuant to a Change of
Control Offer or Net Proceeds Offer) (whether or not such payment
shall be prohibited by Article Twelve); or
(3) the Company or any Guarantor defaults in the
observance or performance of any other covenant or agreement contained
in this Indenture, the Securities or any Guarantee, which default
continues for a period of 30 days after (x) the Company receives
written notice specifying the default and requiring the Company to
remedy the same from the Trustee or (y) the Company and the Trustee
receive such a notice from Holders of at least 25% in principal amount
of outstanding Securities (except in the case of a default with
respect to Article Five, which will constitute an Event of Default
with such notice requirement but without such passage of time
requirement); or
(4) the Company or a Restricted Subsidiary defaults under
any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness of the
Company or of any Restricted Subsidiary (or the payment of which is
guaranteed by the Company or any Restricted Subsidiary) which default
(a) is caused by a failure to pay principal of such Indebtedness after
any applicable grace period provided in such Indebtedness on the date
of such default (a "principal 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 principal payment default or the
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maturity of which has been so accelerated, aggregates at least
$2,500,000; or
(5) the Company or any of its Significant Subsidiaries
(A) admits in writing its inability to pay its debts generally as they
become due, (B) commences a voluntary case or proceeding under any
Bankruptcy Law with respect to itself, (C) consents to the entry of a
judgment, decree or order for relief against it in an involuntary case
or proceeding under any Bankruptcy Law, (D) consents to the
appointment of a Custodian of it or for substantially all of its
property, (E) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (F) makes a general
assignment for the benefit of its creditors, or (G) takes any
corporate action to authorize or effect any of the foregoing; or
(6) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of the Company or any of its
Significant Subsidiaries in an involuntary case or proceeding under
any Bankruptcy Law, which shall (A) approve as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company or any of its Significant
Subsidiaries, (B) appoint a Custodian of the Company or any of its
Significant Subsidiaries or for substantially all of any of their
property or (C) order the winding-up or liquidation of its affairs;
and such judgment, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(7) one or more judgments, orders or decrees of any court
or regulatory or administrative agency of competent jurisdiction for
the payment of money in excess of $2,500,000, either individually or
in the aggregate, shall be entered against the Company or any
Restricted Subsidiary of the Company or any of their respective
properties and shall not be discharged or fully bonded and there shall
have been a period of 60 days after the date on which any period for
appeal has expired and during which a stay of enforcement of such
judgment, order or decree shall not be in effect; or
(8) any Guarantee of a Significant Subsidiary ceases to
be in full force and effect, or any Guarantee of a Significant
Subsidiary is declared to be null and void and unenforceable or any
Guarantee of a Significant Subsidiary is found to be invalid or any
Guarantor which is a Significant Subsidiary denies its liability under
its Guarantee (other than by reason of release of a Guarantor in
accordance with the terms of this Indenture).
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The Trustee shall, within 30 days after the occurrence of any
Default actually known to a Responsible Officer of the Trustee, give to the
holders of Securities notice of such Default; provided that, except in the case
of a Default in the payment of principal of or interest on any of the
Securities, the Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities.
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (5) or (6) above) occurs and is continuing, then the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the then outstanding Securities may declare the unpaid principal of, premium,
if any, and accrued and unpaid interest on, all the Securities then outstanding
to be immediately due and payable, by a notice in writing to the Company (and
to the Trustee, if given by Holders) specifying the respective Event(s) of
Default and that it is a "notice of acceleration" and upon such declaration
such principal amount, premium, if any, and accrued and unpaid interest will
become immediately due and payable. If an Event of Default specified in clause
(5) or (6) above occurs, all unpaid principal of, and premium, if any, and
accrued and unpaid interest on, the Securities then outstanding will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect
to the Securities as described in the preceding paragraph, the Holders of a
majority in principal amount of the Securities then outstanding may rescind and
cancel such declaration and its consequences (a) if the rescission would not
conflict with any judgment or decree, (b) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (c) to the extent the payment of
such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (d) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (e) in the event of the cure or waiver of an
Event of Default of the type described in clauses (5) and (6) of the
description of Events of Default above, the Trustee shall have received an
Officers' Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
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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 by proceeding at law or in equity to collect
the payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Indenture or any
Guarantee.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder 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. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of not less
than a majority in principal amount of the outstanding Securities by written
notice to the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of, premium or
interest on any Security as specified in clauses (1) and (2) of Section 6.01.
The Company shall deliver to the Trustee an Officers' Certificate stating that
the requisite percentage of Holders have consented to such waiver and attaching
copies of such consents upon which the Trustee may conclusively rely. When a
Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
The Holders of not less than a majority in principal amount of
the outstanding Securities may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. Subject to Section 7.01, however, the Trustee may
refuse to follow any direction that conflicts with any law or this Indenture,
that the Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability; provided
that the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction.
In the event the Trustee takes any action or follows any
direction pursuant to this Indenture, the Trustee shall be entitled to
indemnification from the Company satisfactory to it in its sole discretion
against any loss, liability, cost or expense caused by taking such action or
following such direction.
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SECTION 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture, the Securities or any Guarantee unless:
(1) The Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holder or Holders of at least 25% in principal
amount of the outstanding Securities make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(4) the Trustee does not comply with the request within
30 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(5) during such 30-day period the Holder or Holders of a
majority in principal amount of the outstanding Securities do not give
the Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
such other Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of, premium and interest on
a Security, on or after the respective due dates expressed in such Security, 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 the
Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or
interest specified in clause (1) or (2) of Section 6.01 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Securities for
the whole amount of principal and accrued interest remaining unpaid, together
with interest on overdue principal and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each case
at the rate per annum borne by the Securities and such further amount as shall
be sufficient to cover the costs and expenses of
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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 may 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, legal
fees, disbursements and advances of the Trustee, its agents, nominees,
custodians, counsel, accountants and experts) and the Securityholders allowed
in any judicial proceedings relating to the Company, its creditors or its
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same, and any Custodian in any such judicial proceedings is hereby
authorized by each Securityholder 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 Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, legal fees, disbursements and advances
of the Trustee, its agents, nominees, custodians and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the
Company, a Guarantor or any other obligor on the Securities directly
without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the
Securities for principal, premium and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal, premium and interest,
respectively; and
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Fourth: to the Company or any Guarantors, as their respective
interests may appear.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Securityholders 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 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 and expenses, 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 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or
Holders of more than 10% in principal amount of the outstanding Securities.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default actually known to a
Responsible Officer of the Trustee 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 their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own
affairs. Subject to such provisions, the Trustee shall be under no obligation
to exercise any of its rights or powers under this Indenture at the request of
any of the holders of Securities, unless they shall have offered to the Trustee
security and indemnity satisfactory to it in its sole discretion.
(b) Except during the continuance of an Event of Default
actually known to a Responsible Officer of the Trustee:
(1) The Trustee need perform only those duties as are
specifically set forth herein and no others and no implied covenants
or obligations shall be read into this Indenture against the Trustee.
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(2) 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 and such other documents delivered to it pursuant to Section
11.04 hereof 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 liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts.
(3) 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.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or take any action at the request or
direction of Holders if it shall have reasonable grounds for believing that
repayment of such funds is not assured to it or it does not receive an
indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to this Section 7.01.
(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.
Subject to Section 7.01:
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(a) The Trustee may conclusively rely and shall be
protected in acting or refraining from acting on 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 and an Opinion of Counsel, which
shall conform to the provisions of Section 11.05. The Trustee shall
not be liable for any action it takes or omits to take in good faith
in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys, agents,
custodians and nominees and shall not be responsible for the
misconduct or negligence of any attorney, agent, custodian or nominee
(other than such a person who is an employee of the Trustee) appointed
with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes to
be authorized or within its rights or powers.
(e) The Trustee may consult with counsel and the advice
or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(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, order or direction of any of the Holders pursuant to the
provisions of this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
(g) The Trustee shall not be deemed to have notice or
knowledge of any matter unless a Responsible Officer assigned to and
working in the Trustee's Corporate Trust Administration has actual
knowledge thereof or unless written notice thereof is received by the
Trustee, attention: Corporate Trust Administration and such notice
references the Securities generally, the Company or this Indenture.
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SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, any Guarantors and their respective Affiliates with the same
rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
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
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication. The Trustee makes no representations with
respect to the effectiveness or adequacy of this Indenture. The Trustee shall
not be responsible for independently ascertaining or maintaining such validity,
if any, and shall be fully protected in relying upon certificates and opinions
delivered to it in accordance with the terms of this Indenture.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing
and a Responsible Officer of the Trustee receives actual notice of such event,
the Trustee shall mail to each Securityholder, as their names and addresses
appear on the Securityholder list described in Section 2.05, notice of the
uncured Default or Event of Default within 30 days after the Trustee receives
such notice. Except in the case of a Default or an Event of Default in payment
of principal of, premium or interest on, any Security, including the failure to
make payment on (i) the Change of Control Payment Date pursuant to a Change of
Control Offer or (ii) the Excess Proceeds Payment Date pursuant to an Asset
Sale Offer, the Trustee may withhold the notice if and so long as the board of
directors, the executive committee, or a trust committee of directors, of the
Trustee in good faith determines that withholding the notice is in the interest
of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
This Section 7.06 shall not be operative as a part of this
Indenture until this Indenture is qualified under the TIA,
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and, until such qualification, this Indenture shall be construed as if this
Section 7.06 were not contained herein.
Within 60 days after each May 15 of each year beginning with
1997, the Trustee shall, to the extent that any of the events described in TIA
Section 313(a) occurred within the previous twelve months, but not otherwise,
mail to each Securityholder a brief report dated as of such date that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section
Section 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
securities exchange, if any, on which the Securities are listed.
The Company shall notify a Responsible Officer of the Trustee
if the Securities become listed on any securities exchange or of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its 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 upon request for all reasonable
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for its
services, except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence or bad faith. Such expenses shall
include the reasonable compensation, legal fees, disbursements and expenses of
the Trustee's agents, accountants, experts, nominees, custodians and counsel
and any taxes or other expenses incurred by a trust created pursuant to Section
8.01 hereof.
The Company shall indemnify the Trustee, its directors,
officers and employees and each predecessor trustee for, and hold it harmless
against, any loss, liability or expense incurred by the Trustee without
negligence or bad faith on its part arising out of or in connection with the
administration of this trust and its duties under this Indenture, including the
reasonable expenses and attorneys' fees of defending itself against any claim
of liability arising hereunder. The Trustee shall notify the Company promptly
of any claim asserted against the Trustee for which it may seek indemnity.
However, the 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 (and may employ its own counsel)
at the Company's expense. The Company need not pay for any settlement made
without
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its written consent, which consent shall not be unreasonably withheld or
delayed. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee as a result of the violation of this
Indenture by the Trustee if such violation arose from the Trustee's negligence
or bad faith.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a senior claim prior to the Securities against all
money or property held or collected by the Trustee, in its capacity as Trustee.
When the Trustee incurs expenses or renders services after an
Event of Default specified in clause (5) or (6) of Section 6.01 occurs, the
expenses (including the reasonable fees and expenses of its agents and counsel)
and the compensation for the services shall be preferred over the status of the
Holders in a proceeding under any Bankruptcy Law and are intended to constitute
expenses of administration under any Bankruptcy Law. The Company's obligations
under this Section 7.07 and any claim arising hereunder shall survive the
resignation or removal of any Trustee, the discharge of the Company's
obligations pursuant to Article Eight and any rejection or termination under
any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company
in writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee
in writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes legally incapable of acting with
respect to its duties hereunder.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and 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 Securities may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer, after payment of all sums then owing
to the Trustee pursuant to Section 7.07, all property held by it as Trustee to
the successor Trustee, subject to the lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture; provided, however, that no Trustee under this Indenture
shall be liable for any act or omission of any successor Trustee. A successor
Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee and the Company shall pay to any such
replaced or removed Trustee all amounts owed under Section 7.07 upon such
replacement or removal.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Section Section 310(a)(1) and 310(a)(5). The Trustee shall
have a combined capital and surplus of at least $50,000,000
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as set forth in its most recent published annual report of condition. The
Trustee shall comply with TIA Section 310(b); provided, however, that there
shall be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of
Claims Against Company.
The Trustee, in its capacity as Trustee hereunder, shall
comply with TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution,
at any time, with respect to the Securities, elect to have either paragraph (b)
or paragraph (c) below be applied to the outstanding Securities upon compliance
with the conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of
the option applicable to this paragraph (b), the Company shall be deemed to
have been released and discharged from its obligations with respect to the
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of the Sections and matters
under this Indenture referred to in (i) and (ii) below, and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are concerned, except for the following, which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of the
Holders of outstanding Securities to receive payment in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due, (ii) the Company's obligations to issue temporary Securities,
register the transfer or exchange of any Securities, replace mutilated,
destroyed, lost or stolen Securities and maintain an office or agency for
payments in
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respect of the Securities, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and (iv) the defeasance provisions of this
Indenture. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of
the option applicable to this paragraph (c), the Company shall be released and
discharged from its obligations under any covenant contained in Article Five
and in Sections 4.03 through 4.24 with respect to the outstanding Securities on
and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose 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. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Securities, the Company and any Guarantor 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(3), nor shall any event referred to in
Section 6.01(4) or (7) thereafter constitute a Default or an Event of Default
thereunder but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application
of either paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust
with the Trustee, pursuant to an irrevocable trust and security
agreement in form and substance satisfactory to the Trustee, U.S.
Legal Tender or direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged ("U.S. Government
Obligations") maturing as to principal and interest in such amounts
and at such times as are sufficient, without consideration of the
reinvestment of such interest and principal and after payment of all
Federal, state and local taxes or other charges or assessments in
respect thereof payable by the Trustee, in the opinion of a nationally
recognized firm of Independent public accountants expressed in a
written certification thereof (in form and
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substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium, if any, and interest on all
the outstanding Securities on the dates on which any such payments are
due and payable in accordance with the terms of this Indenture and of
the Securities;
(2) Such deposits shall not cause the Trustee to have a
conflicting interest as defined in and for purposes of the TIA;
(3) The Trustee shall have received Officers'
Certificates stating that No Default of Event of Default or event
which with notice or lapse of time or both would become a Default or
an Event of Default with respect to the Securities shall have occurred
and be continuing on the date of such deposit or, insofar as Section
6.01(5) or (6) is concerned, at any time during the period ending on
the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period);
(4) The Trustee shall have received Officers'
Certificates stating that such deposit will not result in a Default
under this Indenture or a breach or violation of, or constitute a
default under, any other material instrument or agreement to which the
Company or any of its Subsidiaries is a party or by which it or its
property is bound;
(5) (i) In the event the Company elects paragraph (b)
hereof, the Company shall deliver to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee
to the effect that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since
the Issue Date, 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 state that Holders of the Securities
will not recognize income gain or loss for Federal income tax purposes
as a result of such deposit and the defeasance contemplated hereby and
will be subject to Federal income taxes in the same manner and at the
same times as would have been the case of such deposit and defeasance
had not occurred, or (ii) in the event the Company elects paragraph
(c) hereof, the Company shall deliver to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee,
to the effect that, Holders of the Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of
such deposit and the defeasance contemplated hereby and will be
subject to Federal income tax in the same amounts
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and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred;
(6) The deposit shall not result in the Company, the
Trustee or the trust becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940, as amended;
(7) The Company shall have delivered to the Trustee an
Officers' Certificate, in form and substance reasonably satisfactory
to the Trustee, stating that the deposit under clause (1) was not made
by the Company, a Guarantor or any Subsidiary of the Company with the
intent of defeating, hindering, delaying or defrauding any other
creditors of the Company, a Guarantor, or any Subsidiary of the
Company or others;
(8) The Company shall have delivered to the Trustee an
Opinion of Counsel, in form and substance reasonably satisfactory to
the Trustee, to the effect that, (A) the trust funds will not be
subject to the rights of holders of Indebtedness of the Company or
any Guarantor other than the Securities and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and
the 91st day following the deposit and that no Holder of Securities is
an insider of the Company, after the passage of 90 days following the
deposit, the trust funds will not be subject to any applicable
bankruptcy, insolvency, reorganization or similar law affecting
creditors' rights generally; and
(9) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent specified herein relating to the defeasance
contemplated by this Section 8.01 have been complied with; provided,
however, that no deposit under clause (1) above shall be effective to
terminate the obligations of the Company under the Securities or this
Indenture prior to 90 days following any such deposit.
In the event all or any portion of the Securities are to be
redeemed through such irrevocable trust, the Company must make arrangements
satisfactory to the Trustee, at the time of such deposit, for the giving of the
notice of such redemption or redemptions by the Trustee in the name and at the
expense of the Company.
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SECTION 8.02. Satisfaction and Discharge.
In addition to the Company's rights under Section 8.01, the
Company may terminate all of its obligations under this Indenture (subject to
Section 8.03) when:
(1) all Securities theretofore authenticated and
delivered (other than Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
2.07) have been delivered to the Trustee for cancellation; or
(2) all Securities not theretofore delivered to the
Trustee for cancellation (except lost, stolen or destroyed Securities
which have been replaced or paid) have been called for redemption
pursuant to the terms of the Securities or have otherwise become due
and payable and the Company has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and
discharge the entire Indebtedness on the Securities not theretofore
delivered to the Trustee for cancellation, for principal of, premium,
if any, and interest on the Securities to the date of deposit together
with irrevocable instructions from the Company directing the Trustee
to apply such funds to the payment thereof at maturity or redemption,
as the case may be; and
(3) the Company has paid or caused to be paid all other
sums payable hereunder and under the Securities by the Company; and
(4) there exists no Default or Event of Default under
this Indenture; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with.
SECTION 8.03. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this
Indenture and of the Securities referred to in Section 8.01 or 8.02, the
respective obligations of the Company and the Trustee under Sections 2.02,
2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13, 4.01, 4.02 and 6.07, Article
Seven and Sections 8.05, 8.06 and 8.07 shall survive until the Securities are
no longer outstanding, and thereafter the obligations of the Company and the
Trustee under Sections 7.07, 8.05, 8.06 and 8.07 shall survive.
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Nothing contained in this Article Eight shall abrogate any of the rights,
obligations or duties of the Trustee under this Indenture.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
Subject to Section 8.07, after (i) the conditions of Section
8.01 or 8.02 have been satisfied, (ii) the Company has paid or caused to be
paid all other sums payable hereunder by the Company and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent referred to in clause (i) above
relating to the satisfaction and discharge of this Indenture have been complied
with, the Trustee upon written request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in Section 8.03.
SECTION 8.05. Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S.
Government Obligations deposited with it in the irrevocable trust established
pursuant to Section 8.01. The Trustee shall apply the deposited U.S. Legal
Tender or the U.S. Government Obligations, together with earnings thereon,
through the Paying Agent, in accordance with this Indenture and the terms of
the irrevocable trust agreement established pursuant to Section 8.01, to the
payment of principal of and interest on the Securities. The U.S. Legal Tender
or U.S. Government Obligations so held in trust and deposited with the Trustee
in compliance with Section 8.01 shall not be part of the trust estate under
this Indenture, but shall constitute a separate trust fund for the benefit of
all Holders entitled thereto.
SECTION 8.06. Repayment to the Company or
Guarantors; Unclaimed Money.
Subject to Sections 7.07 and 8.01, the Trustee shall promptly
pay to the Company, or if deposited with the Trustee by any Guarantor, to such
Guarantor, upon receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Section 8.01, held by it at any time. The
Trustee and the Paying Agent shall pay to the Company or any Guarantor, as the
case may be, upon receipt by the Trustee or the Paying Agent, as the case may
be, of an Officers' Certificate, any money held by it for the payment of
principal, premium, if any, or interest that remains unclaimed for two years
after payment to the Holders is required; provided, however, that the Trustee
and the Paying Agent before being required to make any payment may, but need
not, at the expense of the Company cause to be published once in a newspaper of
general circulation in the City of New York or mail to each Holder
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entitled to such money notice that such money remains unclaimed and that after
a date specified therein, which shall be at least 2 years from the date of such
publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company or any Guarantor, as
the case may be, Security holders entitled to money must look solely to the
Company for payment as general creditors unless an applicable abandoned
property law designates another Person, and all liability of the Trustee or
Paying Agent with respect to such money shall thereupon cease.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with this Indenture by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then and only then the Company's and each Guarantor's, if any,
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had been made pursuant to this Indenture until
such time as the Trustee is permitted to apply all such money or U.S.
Government Obligations in accordance with this Indenture; provided, however,
that if the Company or the Guarantors, as the case may be, have made any
payment of principal of, premium, if any, or interest on any Securities because
of the reinstatement of their obligations, the Company or the Guarantors, as
the case may be, shall be, subrogated to the rights of the holders of such
Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company and any Guarantors (when authorized by Board
Resolutions), and the Trustee, together, may amend or supplement this Indenture
or the Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to evidence the succession in accordance with Article
Five hereof of another Person to the Company or a Guarantor and the
assumption by any such successor of the
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covenants of the Company or a Guarantor herein and in the Securities
or a Guarantee, as the case may be;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities;
(4) to make any other change that does not materially
adversely affect the rights of any Securityholders hereunder; or
(5) to comply with any requirements of the SEC in
connection with the qualification of this Indenture under the TIA; or
(6) to add or release any Guarantor pursuant to the terms
of this Indenture;
provided that each of the Company and any Guarantors has delivered to the
Trustee an Opinion of Counsel and an Officers' Certificate, each stating that
such amendment or supplement complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and any Guarantors (when
authorized by Board Resolutions) and the Trustee, together, with the written
consent of the Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Securities, may amend or supplement this Indenture,
the Securities and any Guarantees without notice to any other Securityholders.
Subject to Section 6.07, the Holder or Holders of a majority in aggregate
principal amount of the outstanding Securities may waive compliance by the
Company with any provision of this Indenture or the Securities without notice
to any other Securityholder. Without the consent of each Securityholder
affected, however, no amendment, supplement or waiver, including a waiver
pursuant to Section 6.04, may:
(1) reduce the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any
provision of this Indenture, the Securities or any Guarantees;
(2) reduce the rate or change or have the effect of
changing the time for payment of interest, including default interest,
on any Security;
(3) reduce the principal amount of any Security;
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(4) change or have the effect of changing the Final
Maturity Date of any Security, or alter the redemption or repurchase
provisions contained in this Indenture or the Securities in a manner
adverse to any Holder;
(5) make any change in provisions of this Indenture
protecting the right of each Holder to receive payment of principal of
and interest on such Security on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a
majority in principal amount of the Securities to waive Defaults or
Events of Default;
(6) make any changes in Section 6.04, 6.07 or this
Section 9.02;
(7) make the principal of, premium or the interest on any
Security payable in money other than as provided for in this Indenture
as in effect on the date hereof;
(8) affect the ranking of the Securities or any
Guarantee, in each case in a manner adverse to the Holders;
(9) amend, modify or change the obligation of the Company
to make or consummate a Change of Control Offer, a Net Proceeds Offer
or waive any default in the performance thereof or modify any of the
provisions or definitions with respect to any such offers; or
(10) release any Guarantor from any of its obligations
under its Guarantee or this Indenture otherwise than in accordance
with the terms of this Indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders 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 supplemental indenture.
SECTION 9.10. Compliance with TIA.
From the date on which this Indenture is qualified under the
TIA, every amendment, waiver or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
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SECTION 9.11. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of his Security by notice to
the Trustee or the Company received before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Securities have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (10) of Section 9.02, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security;
provided that any such waiver shall not impair or affect the right of any
Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in such Security, or to bring suit for
the enforcement of any such payment on or after such respective dates without
the consent of such Holder.
SECTION 9.12. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
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SECTION 9.13. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and constituted the legal, valid and binding obligations of the
Company enforceable in accordance with its terms. Such Opinion of Counsel
shall be at the expense of the Company, and the Trustee shall have a lien under
Section 7.07 for any such expense.
ARTICLE TEN
GUARANTEE
SECTION 10.01. Unconditional Guarantee.
Each Guarantor agrees to unconditionally, jointly and
severally, guarantee to each Holder of a Security authenticated and delivered
by the Trustee, and to the Trustee and its successors and assigns, that: (i)
the principal of, premium and interest on the Securities will be promptly paid
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration or otherwise and interest on the overdue principal, if any, and
interest on any interest, to the extent lawful, of the Securities 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 Securities or of any such other Obligations, the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
10.03. Each Guarantor agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities 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 waives
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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 covenants that its Guarantee will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture and each Guarantee. If any Securityholder or the Trustee is required
by any court or otherwise to return to the Company, any Guarantor or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Guarantor, any amount paid by the Company or any Guarantor
to the Trustee or such Securityholder, each Guarantee to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor
further agrees that, as between each Guarantor, 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 Six for the
purposes of each 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 acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of its
Guarantee.
SECTION 10.02. Severability.
In case any provision of a Guarantee 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 10.03. Release of a Guarantor.
If all of the assets of any Guarantor or all of the Capital
Stock of any Guarantor is sold (including by issuance or otherwise) by the
Company or any of its Subsidiaries in a transaction constituting an Asset Sale,
and if the Net Cash Proceeds from such Asset Sale are used in accordance with
Section 4.12, then such Guarantor (in the event of a sale or other disposition
of all of the Capital Stock of such Guarantor) or the corporation or other
entity acquiring such assets (in the event of a sale or other disposition of
all or substantially all of the assets of such Guarantor) shall be released and
discharged of its Obligations under its Guarantee.
The Trustee shall deliver an appropriate instrument evidencing
such release upon receipt of a request by the Company accompanied by an
Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 10.03. Any Guarantor not so released remains liable for the
full amount of
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principal of an interest on the Securities as provided in this Article Ten.
SECTION 10.04. Limitation of a Guarantor's Liability.
Each Guarantor and, by its acceptance hereof, each Holder
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal or state law. To effectuate the foregoing intention, the Holders and
each Guarantor irrevocably agree that the obligations of each Guarantor under
its Guarantee shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor, and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor under
its Guarantee, or pursuant to Section 10.05, result in the obligations of such
Guarantor under its Guarantee not constituting such fraudulent transfer or
conveyance.
SECTION 10.05. Contribution.
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment
or distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Securities or any other Guarantor's obligations
with respect to its Guarantee. "Adjusted Net Assets" of a Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Guarantee of such Guarantor at such date and
(y) the present fair salable value of the assets of such Guarantor at such date
exceeds the amount that will be required to pay the probable liability of such
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), excluding debt in respect of the
Guarantee of such Guarantor as they become absolute and matured.
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SECTION 10.06. Waiver of Subrogation.
Until all Guarantee Obligations are paid in full, each
Guarantor hereby irrevocably waives any claims or other rights which it may now
or hereafter acquire against the Company that arise from the existence,
payment, performance or enforcement of such Guarantor's obligations under its
Guarantee and this Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Holder of Securities against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account
of such claim or other rights. If any amount shall be paid to any Guarantor in
violation of the preceding sentence and the Securities shall not have been paid
in full, such amount shall have been deemed to have been paid to such Guarantor
for the benefit of, and held in trust for the benefit of, the Holders of the
Securities, and shall forthwith be paid to the Trustee for the benefit of such
Holders to be credited and applied upon the Securities, in accordance with the
terms of this Indenture. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and that the waiver set forth in this Section 10.06 is knowingly
made in contemplation of such benefits.
SECTION 10.07. Execution of Guarantees.
To evidence its guarantee to the Securityholders set forth in
this Article Ten, each Guarantor shall execute a Guarantee in substantially the
form of Exhibit G attached hereto, which shall be endorsed on each Security
ordered to be authenticated and delivered by the Trustee. Each Guarantor
agrees that its Guarantee set forth in this Article Ten shall remain in full
force and effect notwithstanding any failure to endorse on each Security a
notation of such Guarantee. Each such Guarantee shall be signed on behalf of
each Guarantor by two Officers, or an Officer and an Assistant Secretary or one
Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to such Guarantee prior to the authentication of the
Security on which it is endorsed, and the delivery of such Security by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such Guarantee on behalf of such Guarantor. Such signatures upon
the Guarantee may be by manual or facsimile signature of such officers and may
be imprinted or otherwise reproduced on the Guarantee, and in case any such
officer who shall have signed the Guarantee shall cease to be such officer
before the
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Security on which such Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Security
nevertheless may be authenticated and delivered or disposed of as though the
person who signed the Guarantee had not ceased to be such officer of the
Guarantor.
SECTION 10.08. Waiver of Stay, Extension or Usury Laws.
Each Guarantor convenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive each such
Guarantor from performing its Guarantee as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each such Guarantor hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of Section 318(c) of the TIA,
the imposed duties shall control.
SECTION 11.02. Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by telex, by telecopier or registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
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if to the Company or a Guarantor:
LDM Technologies, Inc.
2500 Executive Hills Drive
Auburn Hills, Michigan 48326
Attention: Gary E. Borushko
Facsimile: (810) 858-2812
Telephone: (810) 858-2800
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street Plaza
New York, New York 10004
Attention: Corporate Trust Administration
Facsimile: (212) 858-2952
Telephone: (212) 858-2000
Each of the Company and the Trustee by written notice to each
other such person may designate additional or different addresses for notices
to such person. Any notice or communication to the Company or a Guarantor or
the Trustee, shall be deemed to have been given or made as of the date so
delivered if personally delivered; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and five (5) calendar days after mailing if
sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail or other equivalent means at his address
as it appears on the registration books of the Registrar and shall be
sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section
312(b) with other Securityholders with respect to their rights under this
Indenture, the Securities or any Guarantees. The Company, the
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Trustee, the Registrar and any other Person shall have the protection of TIA
Section 312(c).
SECTION 11.04. 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 at the request of the Trustee:
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 11.05. 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 the Officers'
Certificate required by Section 4.08, shall include:
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such person, he
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 complied with; and
(4) a statement as to whether or not, in the opinion of
each such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee, Paying Agent or Registrar may make reasonable
rules for its functions.
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SECTION 11.07. Legal Holidays.
If a payment date is not a Business Day, payment may be made
on the next succeeding day that is a Business Day with the same force and
effect as if made on such payment date.
SECTION 11.08. Governing Law.
THIS INDENTURE, THE SECURITIES AND ANY GUARANTEES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each of the parties hereto
agrees to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Indenture.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Company or any of its Subsidiaries or any
Guarantor. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as
such, of the Company or any of its Subsidiaries or any Guarantor shall not have
any liability for any obligations of the Company or any Guarantor under the
Securities, this Indenture or any Guarantee or for any claim based on, in
respect of or by reason of such obligations or their creations. Each
Securityholder by accepting a Security waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Securities.
SECTION 11.11. Successors.
All agreements of the Company and any Guarantors in this
Indenture, the Securities and any Guarantees shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture.
Each signed copy or counterpart shall be an original, but all of them together
shall represent the same agreement.
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SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture,
in the Securities or in any Guarantee shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
ARTICLE TWELVE
SUBORDINATION
SECTION 12.01. Securities Subordinated to Senior
Debt; Guarantees Subordinated to
Guarantor Senior Debt.
The Company and each Guarantor covenants and agrees, and each
Holder of the Securities, by its acceptance thereof, likewise covenants and
agrees, that all Securities and Guarantees shall be issued subject to the
provisions of this Article Twelve; and each Person holding any Security,
whether upon original issue or upon transfer, assignment or exchange thereof,
accepts and agrees that the payment of all Obligations on the Securities and
Guarantees by the Company and any Guarantors shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents (or such payment shall be
duly provided for to the satisfaction of the holders of the Senior Debt and
Guarantor Senior Debt, as the case may be) of all Obligations on the Senior
Debt and Guarantor Senior Debt, as the case may be; that the subordination is
for the benefit of, and shall be enforceable directly by, the holders of Senior
Debt and Guarantor Senior Debt, as the case may be, and that each holder of
Senior Debt and Guarantor Senior Debt, as the case may be, whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Senior Debt and Guarantor Senior Debt, as the case may
be, in reliance upon the covenants and provisions contained in this Indenture.
SECTION 12.02. No Payment on Securities in
Certain Circumstances.
(a) If any default occurs and is continuing in the
payment when due, whether at maturity, upon any redemption, by declaration or
otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of, or regularly
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accruing fees with respect to, any Senior Debt or Guarantor Senior Debt, no
payment of any kind or character shall be made by or on behalf of the Company
or any other Person on its or their behalf with respect to any Obligations on
the Securities or to acquire any of the Securities for cash or property or
otherwise. In addition, if any other event of default occurs and is continuing
with respect to any Designated Senior Debt, as such event of default is defined
in the instrument creating or evidencing such Designated Senior Debt,
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof and if the Representative for the respective
issue of Designated Senior Debt gives written notice of the event of default to
the Trustee (a "Default Notice"), then neither the Company nor any other Person
on its behalf shall (x) make any payment of any kind or character with respect
to any Obligations on the Securities or (y) acquire any of the Securities for
cash or property or otherwise for a period of time (the "Blockage Period")
terminating on the earliest to occur of (1) the date all events of default have
been cured or waived or shall have ceased to exist and the Company and the
Trustee receive written notice thereof from the Representative for the
applicable issue of Designated Senior Debt, (2) the Trustee receives written
notice from the Representative for the applicable issue of Designated Senior
Debt terminating the Blockage Period or the benefits of this sentence are
waived by the Representative for the applicable issue of Designated Senior
Debt, (3) the applicable issue of Designated Senior Debt is discharged or paid
in full in cash or Cash Equivalents or (4) the expiration of the 180-day
consecutive period commencing on the date of the giving of such Default Notice.
Upon the termination of such Blockage Period, the Company shall (to the extent
not otherwise prohibited by this Article Twelve) promptly resume making all
payments on the Securities, including all payments not made during such
Blockage Period. Notwithstanding anything herein to the contrary, in no event
shall a Blockage Period extend beyond 180 days from the date the payment on the
Securities was due and only one such Blockage Period may be commenced within
any 360 consecutive days. No event of default which existed or was continuing
on the date of the commencement of any Blockage Period with respect to the
Designated Senior Debt shall be, or be made, the basis for commencement of a
second Blockage Period by the Representative of such Designated Senior Debt,
whether or not within a period of 360 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default
for this purpose).
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(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 12.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior Debt
or Guarantor Senior Debt, as the case may be, (pro rata to such holders on the
basis of the respective amount of Senior Debt or Guarantor Senior Debt, as the
case may be, held by such holders) as their respective interests may appear.
The Trustee shall be entitled to rely on information regarding amounts then due
and owing on the Senior Debt or Guarantor Senior Debt, as the case may be, if
any, received from the holders of Senior Debt (or their Representatives) or
Guarantor Senior Debt, as the case may be, or, if such information is not
received from such holders or their Representatives, from the Company and only
amounts included in the information provided to the Trustee shall be paid to
the holders of Senior Debt or Guarantor Senior Debt, as the case may be. The
Company shall keep complete and accurate records of the names, addresses and
amounts owed to all holders of Senior Debt and Guarantor Senior Debt, shall
produce such records to the Trustee upon request and the Trustee shall be
absolutely protected in relying on such records in paying over or delivering
moneys pursuant to this Article Twelve.
Nothing contained in this Article Twelve shall limit or
compromise the right of the Trustee or the Holders to take any action to
accelerate the maturity of the Securities pursuant to Section 6.02 or to pursue
any rights or remedies hereunder or otherwise; provided, however, that all
Senior Debt and Guarantor Senior Debt thereafter due or declared to be due
shall first be paid in full in cash or Cash Equivalents before the Holders are
entitled to receive any payment of any kind or character with respect to
Obligations on the Securities.
SECTION 12.03. Payment Over of Proceeds
upon Dissolution, Etc.
(a) Upon any payment or distribution of assets of the
Company or a Guarantor of any kind or character, whether in cash, property or
securities to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors or marshaling of assets
of the Company or a Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Company or its
property or a Guarantor or its property, whether voluntary or involuntary, all
Obligations due or to become due upon all Senior Debt or Guarantor Senior Debt
of such Guarantor, as the case may be, shall first be paid in full in cash or
Cash Equivalents, or such payment shall be duly provided for to the
satisfaction of the holders of Senior Debt or Guarantor Senior Debt of such
Guarantor, as the case may be, before any payment or distribution of any kind
or character is made
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on account of any Obligations on the Securities or the Guarantee or such
Guarantor, or for the acquisition of any of the Securities for cash or property
or otherwise. Upon any such dissolution, winding-up, liquidation,
reorganization, receivership or similar proceeding, any payment or distribution
of assets of the Company or a Guarantor of any kind or character, whether in
cash, property or securities, to which the Holders or the Trustee under this
Indenture would be entitled, except for the provisions hereof, shall be paid by
the Company or such Guarantor or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders or by the Trustee under this Indenture if received by them,
directly to the holders of Senior Debt or Guarantor Senior Debt of such
Guarantor, as the case may be (pro rata to such holders on the basis of the
respective amounts of Senior Debt or Guarantor Senior Debt of such Guarantor,
as the case may be, held by such holders) or their respective Representatives,
or to the trustee or trustees under any indenture pursuant to which any of such
Senior Debt or Guarantor Senior Debt of such Guarantor, as the case may be, may
have been issued, as their respective interests may appear, for application to
the payment of Senior Debt or Guarantor Senior Debt of such Guarantor, as the
case may be, remaining unpaid until all such Senior Debt or Guarantor Senior
Debt of such Guarantor, as the case may be, has been paid in full in cash or
Cash Equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt or Guarantor Senior
Debt of such Guarantor, as the case may be.
(b) To the extent any payment of Senior Debt or Guarantor
Senior Debt (whether by or on behalf of the Company or a Guarantor, as proceeds
of security or enforcement of any right of setoff or otherwise) is declared to
be fraudulent or preferential, set aside or required to be paid to any
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then, if such payment is recovered by, or paid over to, such
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person, the Senior Debt or Guarantor Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company or a Guarantor of any kind or
character, whether in cash, property or securities, shall be received by any
Holder when such payment or distribution is prohibited by Section 12.03(a),
such payment or distribution shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt or Guarantor
Senior Debt of such Guarantor, as the case may be (pro rata to such
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holders on the basis of the respective amount of Senior Debt or Guarantor
Senior Debt of such Guarantor, as the case may be, held by such holders) or
their respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Debt or Guarantor Senior Debt of
such Guarantor, as the case may be, may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt or
Guarantor Senior Debt of such Guarantor, as the case may be, remaining unpaid
until all such Senior Debt or Guarantor Senior Debt of such Guarantor, as the
case may be, has been paid in full in cash or Cash Equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of such Senior Debt or Guarantor Senior Debt of such Guarantor, as
the case may be.
(d) The consolidation of the Company with, or the merger
of the Company with or into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of all or
substantially all of its assets, to another corporation upon the terms and
conditions provided in Article Five hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section if,
in the event the Company is not the surviving corporation, such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, assume the Company's obligations hereunder in accordance with Article
Five hereof.
SECTION 12.04. Payments May Be Paid
Prior to Dissolution.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Sections 12.02 and 12.03, from making payments at any time for the purpose
of making payments of principal of and interest on the Securities, or from
depositing with the Trustee any monies for such payments, or (ii) in the
absence of actual knowledge by the Trustee that a given payment would be
prohibited by Section 12.02 or 12.03, the application by the Trustee of any
monies deposited with it for the purpose of making such payments of principal
of, and interest on, the Securities to the Holders entitled thereto unless at
least one Business Day prior to the date upon which such payment would
otherwise become due and payable, the Trustee shall have received the written
notice provided for in Section 12.02(a) or in Section 12.07. The Company shall
give prompt written notice to the Trustee of any dissolution, winding-up,
liquidation or reorganization of the Company.
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SECTION 12.05. Subrogation.
Subject to the payment in full in cash or Cash Equivalents of
all Senior Debt and Guarantor Senior Debt, the Holders shall be subrogated to
the rights of the holders of Senior Debt and Guarantor Senior Debt to receive
payments or distributions of cash, property or securities of the Company and
such Guarantor applicable to the Senior Debt and Guarantor Senior Debt until
the Securities shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Senior
Debt and Guarantor Senior Debt by or on behalf of the Company or any Guarantor
or by or on behalf of the Holders by virtue of this Article Twelve which
otherwise would have been made to the Holders shall, as between the Company or
any Guarantor and the Holders, be deemed to be a payment by the Company or any
Guarantor to or on account of the Senior Debt or Guarantor Senior Debt, as the
case may be, it being understood that the provisions of this Article Twelve are
and are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Debt or Guarantor
Senior Debt, as the case may be, on the other hand.
SECTION 12.06. Obligations of the Company Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities or Guarantees is intended to or shall impair, as
among the Company, any Guarantor, their respective creditors other than the
holders of Senior Debt or Guarantor Senior Debt, and the Holders, the
obligation of the Company and any Guarantors, which is absolute and
unconditional, to pay to the Holders the principal of and any interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company and any Guarantors other than the holders
of any Senior Debt or Guarantor Senior Debt, nor shall anything herein or
therein prevent the Holder or the Trustee on its behalf from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Twelve of the
holders of Senior Debt or Guarantor Senior Debt in respect of cash, property or
securities of the Company or any Guarantor received upon the exercise of any
such remedy.
SECTION 12.07. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities pursuant to the provisions of
this Article Twelve. Regardless of anything to the contrary contained in this
Article
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Twelve or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Debt or Guarantor Senior Debt or of any other facts which would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing from the Company, or from a
holder of Senior Debt or Guarantor Senior Debt or a Representative therefor,
and, prior to the receipt of any such written notice, the Trustee shall be
entitled to assume (in the absence of actual knowledge to the contrary) that no
such facts exist.
In the event that the Trustee determines in good faith that
any evidence is required with respect to the right of any Person as a holder of
Senior Debt or Guarantor Senior Debt to participate in any payment or
distribution pursuant to this Article Twelve, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amounts of Senior Debt or Guarantor Senior Debt held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article Twelve, and if such evidence is not furnished the Trustee may
defer any payment to such Person pending judicial determination as to the right
of such person to receive such payment.
SECTION 12.08. Reliance on Judicial Order or
Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company or
Guarantor referred to in this Article Twelve, the Trustee, subject to the
provisions of Article Seven hereof, and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending, or upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt or Guarantor Senior Debt 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 Twelve.
SECTION 12.09. Trustee's Relation to Senior Debt
or Guarantor Senior Debt.
The Trustee and any agent of the Company or the Trustee shall
be entitled to all the rights set forth in this Article Twelve with respect to
any Senior Debt or Guarantor Senior Debt which may at any time be held by it in
it individual or any
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other or Guarantor capacity to the same extent as any other holder of Senior
Debt and nothing in this Indenture shall deprive the Trustee or any such agent
of any of its rights as such holder.
With respect to the holders of Senior Debt or Guarantor Senior
Debt, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Twelve,
and no implied covenants or obligations with respect to the holders of Senior
Debt or Guarantor Senior Debt 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 Debt or Guarantor Senior Debt.
Whenever a distribution is to be made or a notice given to
holders or owners of Senior Debt or Guarantor Senior Debt, the distribution may
be made and the notice may be given to their Representative, if any.
SECTION 12.10. Subordination Rights Not Impaired
by Acts or Omissions of the Company
or a Guarantor or Holders of
Senior Debt.
No right of any present or future holders of any Senior Debt
or Guarantor Senior Debt to enforce subordination as provided herein shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or a Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company or a
Guarantor with the terms of this Indenture, regardless of any knowledge thereof
which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt or a Guarantor may, at any time and from
time to time, without the consent of or notice to the Trustee, without
incurring responsibility to the Trustee or the Holders and without impairing or
releasing the subordination provided in this Article Twelve or the obligations
hereunder of the Holders to the holders of the Senior Debt or Guarantor Senior
Debt, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, Senior
Debt or Guarantor Senior Debt, or otherwise amend or supplement in any manner
Senior Debt or Guarantor Senior Debt, or any instrument evidencing the same or
any agreement under which Senior Debt or Guarantor Senior Debt is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged otherwise securing Senior Debt or Guarantor Senior Debt; (iii)
release any Person liable in any manner for the payment or collection of Senior
Debt or Guarantor Senior Debt; and
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(iv) exercise or refrain from exercising any rights against the Company or a
Guarantor or any other Person.
SECTION 12.11. Holders Authorize Trustee To
Effectuate Subordination of
Securities.
Each Holder by its acceptance of them authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt or Guarantor
Senior Debt and the Holders, the subordination provided in this Article Twelve,
and appoints the Trustee its attorney-in-fact for such purposes, including, in
the event of any dissolution, winding-up, liquidation or reorganization of the
Company or a Guarantor (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company or a Guarantor, the filing of a claim for the unpaid balance of
its Securities and accrued interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt
in the form required in such proceeding prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of the Senior Debt
or Guarantor Senior Debt or their Representative are or is hereby authorized to
have the right to file and are or is hereby authorized to file an appropriate
claim for and on behalf of the Holders of said Securities. Nothing herein
contained shall be deemed to authorize the Trustee or the holders of Senior
Debt or Guarantor Senior Debt or their Representative to authorize or consent
to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee or the holders of Senior
Debt or Guarantor Senior Debt or their Representative to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 12.12. This Article Twelve Not To
Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Twelve
will not be construed as preventing the occurrence of an Event of Default.
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SECTION 12.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve will apply to amounts due to
the Trustee pursuant to other Sections in this Indenture.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
LDM TECHNOLOGIES, INC.
By: /SIG/
----------------------------------
Name: Joe Balous
Title: Chairman of the Board and
Secretary
LDM HOLDINGS, LLC
By: /SIG/
----------------------------------
Name: Joe Balous
Title: Chairman of the Board and
Secretary
LDM CANADA LIMITED PARTNERSHIP
By: /SIG/
----------------------------------
Name: Joe Balous
Title: Chairman of the Board and
Secretary
LDM TECHNOLOGIES COMPANY
By: /SIG/
----------------------------------
Name: Joe Balous
Title: Chairman of the Board and
Secretary
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /SIG/
----------------------------------
Name: Max Volmar
Title: Vice President
<PAGE> 109
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES
TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
<PAGE> 110
-2-
LDM TECHNOLOGIES, INC.
10 3/4% Senior Subordinated Notes
due January 15, 2007, Series A
CUSIP No.:
No. [ ] $[ ]
LDM TECHNOLOGIES, INC., a Michigan corporation (the "Company",
which term includes any successor corporation), for value received promises to
pay to [ ] or registered assigns, the principal sum of $[ ]
Dollars, on January 15, 2007.
Interest Payment Dates: January 15 and July 15, commencing July 15, 1997
Record Dates: January 1 and July 1
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Dated:
LDM TECHNOLOGIES, INC.
By:
________________________________
Name:
Title:
By:
________________________________
Name:
Title:
<PAGE> 111
-3-
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 3/4% Senior Subordinated Notes due 2007,
Series A, described in the within-mentioned Indenture.
Dated: IBJ SCHRODER BANK & TRUST
COMPANY,
as Trustee
By ______________________________________
Authorized Signatory
<PAGE> 112
-4-
(REVERSE OF SECURITY)
LDM TECHNOLOGIES, INC.
10 3/4% Senior Subordinated Notes
due January 15, 2007, Series A
1. Interest.
LDM TECHNOLOGIES, INC., a Michigan corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at the rate per annum shown above. The Company will pay interest semi-annually
on January 15 and July 15 of each year (an "Interest Payment Date"), commencing
July 15, 1997. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
January 22, 1997. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
The Company shall pay interest on overdue principal from time
to time on demand at the rate borne by the Securities plus 2% and on overdue
installments of interest (without regard to any applicable grace periods) to
the extent lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Securities are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company shall
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by wire transfer
of Federal funds, or interest by check payable in such U.S. Legal Tender. The
Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, IBJ Schroder Bank & Trust Company (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
<PAGE> 113
-5-
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of January 15, 1997 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and the TIA for a statement of them. The
Securities are limited in aggregate principal amount to $110,000,000.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after January 15, 2002
at the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the twelve-month period commencing on January 15 of
the years set forth below, plus, in each case, accrued interest thereon to the
date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . 105.375%
2003 . . . . . . . . . . . . . . . . . . . . . . . 103.583%
2004 . . . . . . . . . . . . . . . . . . . . . . . 101.792%
2005 and thereafter . . . . . . . . . . . . . . . 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offering.
At any time, or from time to time, on or prior to January 15,
2000, the Company may, at its option, use the net cash proceeds of one or more
Public Equity Offerings (as defined) to redeem up to $25,000,000 aggregate
principal amount at a redemption price equal to 110.750% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
redemption; provided that at least $75,000,000 aggregate principal amount of
Securities remains outstanding immediately after giving effect to any such
redemption. In order to effect the foregoing redemption with the net cash
proceeds of a Public Equity Offering, the Company shall send the redemption
notice not later than 90 days after the consummation of such Public Equity
Offering.
<PAGE> 114
-6-
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with and declared effective by the
SEC in accordance with the Securities Act.
7. 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 of Securities to be
redeemed at such Holder's registered address. Securities in denominations of
$1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
Redemption Date, interest will cease to accrue on Securities or portions
thereof called for redemption.
8. Change of Control Offer.
Upon the occurrence of a Change of Control, the Company will
be required to offer to purchase all of the outstanding Securities at a
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase.
9. Limitation on Disposition of Assets.
The Company is subject to certain conditions, obligated to
make an offer to purchase Securities at 100% of their principal amount plus
accrued and unpaid interest to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with
the Indenture.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar
<PAGE> 115
-7-
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption, except the unredeemed
portion of any security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the
owner of it for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Company at its request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture and the Securities except for certain provisions thereof, and may be
discharged from its obligations to comply with certain covenants contained in
the Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Securities to, among other things, cure any ambiguity, defect
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
<PAGE> 116
-8-
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other
things, limit the ability of the Company and certain of its subsidiaries to
make restricted payments, to incur indebtedness, to create liens, to issue
preferred or other capital stock of subsidiaries, to sell assets, to permit
restrictions on dividends and other payments by subsidiaries to the Company, to
consolidate, merge or sell all or substantially all of its assets, to engage in
transactions with affiliates or to engage in certain businesses. The
limitations are subject to a number of important qualifications and exceptions.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal, premium or interest, including an
accelerated payment) if it determines that withholding notice is in their
interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company, its Subsidiaries, any Guarantor and their respective
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator,
as such, of the Company shall have any liability for any obligation of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of
a Security by accepting a Security waives and releases all such liability.
The
<PAGE> 117
-9-
waiver and release are part of the consideration for the issuance of the
Securities.
19. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security 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).
21. 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 Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company
will be obligated upon the occurrence of certain events to consummate an
exchange offer pursuant to which the Holder of this Security shall have the
right to exchange this Series A Security for the Company's 10 3/4% Senior
Subordinated Notes due 2007, Series B (the "Series B Securities"), which have
been registered under the Securities Act, in like principal amount and having
terms identical in all material respects as the Series A Securities. The
Holders shall be entitled to receive certain additional interest payments in
the event such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of the
Registration Rights Agreement.
23. Subordination.
The Securities are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed.
<PAGE> 118
-10-
Each Holder by his acceptance hereof agrees to be bound by such provisions and
authorizes and expressly directs the Trustee, on his behalf, to take such
action as may be necessary or appropriate to effectuate the subordination
provided for in the Indenture and appoints the Trustee his attorney-in-fact for
such purposes.
The Company will furnish to any Holder of a Security upon
written request and without charge a copy of the Indenture. Requests may be
made to: LDM Technologies, Inc., 2500 Executive Hills Drive, Auburn Hills,
Michigan 48326, Attn: Gary E. Borushko.
<PAGE> 119
GUARANTEE
Each undersigned Guarantor (as defined in the Indenture
referred to in the Security upon which this notation is endorsed and each
referred to as the "Guarantor," which term includes any successor person under
the Indenture) unconditionally guarantees on a senior subordinated basis as set
forth in Article Twelve of the Indenture (such guarantee by the Guarantor being
referred to herein as a "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent
lawful, 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 set
forth in Article Ten of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Securities 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.
No stockholder, officer, director or incorporator, as such,
past, present or future, of the Guarantor shall have any liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
LDM HOLDINGS, LLC
By:
______________________________
Name:
Title:
By:
______________________________
Name:
Title:
<PAGE> 120
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LDM CANADA LIMITED PARTNERSHIP
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
LDM TECHNOLOGIES COMPANY
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
<PAGE> 121
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________ (Print or type
name, address and zip code of assignee or transferee)
________________________________________________________________________________
________________________________________________________________ (Insert Social
Security or other identifying number of assignee or transferee)
and irrevocably appoint
________________________________________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Dated: ______________________ Signed: __________________________
(Sign exactly as your
name appears on the
other side of this
Security)
Signature Guarantee:
____________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 122
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.12 or Section 4.24 of the Indenture, check the
appropriate box:
Section 4.12 [ ] Section 4.24 [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.12 or Section 4.24 of the
Indenture, state the amount: $_____________
Date: ___________________ Your Signature: ______________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee: __________________________________________
<PAGE> 1
EXHIBIT 4.2
[FORM OF SERIES B SECURITY]
LDM TECHNOLOGIES, INC.
10 3/4% Senior Subordinated Notes
due January 15, 2007, Series B
CUSIP No.: [ ]
No. [ ] $[ ]
LDM TECHNOLOGIES, INC., a Michigan corporation (the "Company",
which term includes any successor corporation), for value received promises to
pay to [ ] or registered assigns, the principal sum of $[ ]
Dollars, on January 15, 2007.
Interest Payment Dates: January 15 and July 15, commencing July 15, 1997
Record Dates: January 1 and July 1
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Dated:
LDM TECHNOLOGIES, INC.
By:________________________________
Name:
Title:
By:__________________________________
Name:
Title:
<PAGE> 2
-2-
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 10 3/4% Senior Subordinated Notes due 2007,
Series B, described in the within-mentioned Indenture.
Dated: IBJ SCHRODER BANK & TRUST
COMPANY,
as Trustee
By______________________________________
Authorized Signatory
<PAGE> 3
-3-
(REVERSE OF SECURITY)
LDM TECHNOLOGIES, INC.
10 3/4% Senior Subordinated Notes
due January 15, 2007, Series B
1. Interest.
LDM TECHNOLOGIES, INC., a Michigan corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at the rate per annum shown above. The Company will pay interest semi-annually
on January 15 and July 15 of each year (an "Interest Payment Date"), commencing
July 15, 1997. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
January 22, 1997. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
The Company shall pay interest on overdue principal from time
to time on demand at the rate borne by the Securities plus 2% and on overdue
installments of interest (without regard to any applicable grace periods) to
the extent lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Securities are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company shall
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by wire transfer
of Federal funds, or interest by check payable in such U.S. Legal Tender. The
Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, IBJ Schroder Bank & Trust Company (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
<PAGE> 4
-4-
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of January 15, 1997 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and the TIA for a statement of them. The
Securities are limited in aggregate principal amount to $110,000,000.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after January 15, 2002
at the following redemption prices (expressed as percentages of the principal
amount) if redeemed during the twelve-month period commencing on January 15 of
the years set forth below, plus, in each case, accrued interest thereon to the
date of redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . 105.375%
2003 . . . . . . . . . . . . . . . . . . . . . . . 103.583%
2004 . . . . . . . . . . . . . . . . . . . . . . . 101.792%
2005 and thereafter . . . . . . . . . . . . . . . 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offering.
At any time, or from time to time, on or prior to January 15,
2000, the Company may, at its option, use the net cash proceeds of one or more
Public Equity Offerings (as defined) to redeem up to $25,000,000 aggregate
principal amount, at a redemption price equal to 110.750% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
redemption; provided that at least $75,000,000 aggregate principal amount of
Securities remains outstanding immediately after giving effect to any such
redemption. In order to effect the foregoing redemption with the net cash
proceeds of a Public Equity Offering, the Company shall send the redemption
notice not later than 90 days after the consummation of such Public Equity
Offering.
<PAGE> 5
-5-
As used in the preceding paragraph, "Public Equity Offering"
means an underwritten public offering of Qualified Capital Stock of the Company
pursuant to a registration statement filed with and declared effective by the
SEC in accordance with the Securities Act.
7. 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 of Securities to be
redeemed at such Holder's registered address. Securities in denominations of
$1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
Redemption Date, interest will cease to accrue on Securities or portions
thereof called for redemption.
8. Change of Control Offer.
Upon the occurrence of a Change of Control, the Company will
be required to offer to purchase all of the outstanding Securities at a
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase.
9. Limitation on Disposition of Assets.
The Company is subject to certain conditions, obligated to
make an offer to purchase Securities at 100% of their principal amount plus
accrued and unpaid interest to the date of repurchase with certain net cash
proceeds of certain sales or other dispositions of assets in accordance with
the Indenture.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar
<PAGE> 6
-6-
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption, except the unredeemed
portion of any security being redeemed in part.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the
owner of it for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Company at its request. After that, all liability of the Trustee and
such Paying Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the
Indenture and the Securities except for certain provisions thereof, and may be
discharged from its obligations to comply with certain covenants contained in
the Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture or the Securities to, among other things, cure any ambiguity, defect
or inconsistency, provide for uncertificated Securities in addition to or in
place of certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
<PAGE> 7
-7-
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other
things, limit the ability of the Company and certain of its subsidiaries to
make restricted payments, to incur indebtedness, to create liens, to issue
preferred or other capital stock of subsidiaries, to sell assets, to permit
restrictions on dividends and other payments by subsidiaries to the Company, to
consolidate, merge or sell all or substantially all of its assets, to engage in
transactions with affiliates or to engage in certain businesses. The
limitations are subject to a number of important qualifications and exceptions.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal, premium or interest, including an
accelerated payment) if it determines that withholding notice is in their
interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company, its Subsidiaries, any Guarantor and their respective
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator,
as such, of the Company shall have any liability for any obligation of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of
a Security by accepting a Security waives and releases all such liability. The
<PAGE> 8
-8-
waiver and release are part of the consideration for the issuance of the
Securities.
19. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security 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).
21. 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 Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
22. Subordination.
The Securities are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full, in cash or Cash Equivalents of all Senior Debt of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on his
behalf, to take such action as may be necessary or appropriate to effectuate
the subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
The Company will furnish to any Holder of a Security upon
written request and without charge a copy of the Indenture. Requests may be
made to: LDM Technologies, Inc., 2500 Executive Hills Drive, Auburn Hills,
Michigan 48326, Attn: Gary E. Borushko.
<PAGE> 1
EXHIBIT 4.3
GUARANTEE
Each undersigned Guarantor (as defined in the Indenture
referred to in the Security upon which this notation is endorsed and each
referred to as the "Guarantor," which term includes any successor person under
the Indenture) unconditionally guarantees on a senior subordinated basis as set
forth in Article Twelve of the Indenture (such guarantee by the Guarantor being
referred to herein as a "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent
lawful, 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 set
forth in Article Ten of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Securities 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.
No stockholder, officer, director or incorporator, as such,
past, present or future, of the Guarantor shall have any liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
LDM HOLDINGS, LLC
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
<PAGE> 2
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LDM CANADA LIMITED PARTNERSHIP
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
LDM TECHNOLOGIES COMPANY
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
<PAGE> 3
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint________________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _____________ Signed: ___________________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ____________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 4
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.12 or Section 4.24 of the Indenture, check the
appropriate box:
Section 4.12 [ ] Section 4.24 [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.12 or Section 4.24 of the
Indenture, state the amount: $___________
Date: ___________________ Your Signature: ______________________________
(Sign exactly as
your name appears on the
other side of this Security)
Signature Guarantee: __________________________________________
<PAGE> 5
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required
in the case of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS 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.
<PAGE> 6
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 10 3/4% Senior Subordinated Notes
due 2007, Series A, and 10 3/4%
Senior Subordinated Notes due 2007,
Series B (the "Securities"), of
LDM Technologies, Inc.
This Certificate relates to $_______ principal amount of
Securities held in the form of* ___ a beneficial interest in a Global Security
or* _______ Physical Securities by ______ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Physical Security or Physical Securities in definitive, registered
form of authorized denominations and an aggregate number equal to its
beneficial interest in such Global Security (or the portion thereof indicated
above); or
[ ] has requested that the Registrar by written order to exchange
or register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 2.16 of such
Indenture, and that the transfer of this Securities does not require
registration under the Securities Act of 1933, as amended (the "Act") because*:
[ ] Such Security is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.16(a)(II)(A) or Section
2.16(d)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Act), in reliance on
Rule 144A.
<PAGE> 7
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[ ] Such Security is being transferred to an institutional
"accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or
(7) of Rule 501 under the Act.
[ ] Such Security is being transferred in reliance on Regulation
S under the Act
[ ] Such Security is being transferred in reliance on Rule 144
under the Act.
[ ] Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act
other than Rule 144A or Rule 144 or Regulation S under the Act to a person
other than an institutional "accredited investor."
__________________________________
[INSERT NAME OF TRANSFEROR]
By: ______________________________
[Authorized Signatory]
Date: _____________________
*Check applicable box.
<PAGE> 8
EXHIBIT E
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
_______________, ____
IBJ Schroder Bank & Trust
Company
One State Street Plaza
New York, New York 10004
Attention: Corporate Trust Administration
Re: LDM Technologies, Inc. (the "Company")
Indenture (the "Indenture") relating to
10 3/4% Senior Subordinated Notes due 2007,
Series A, or 10 3/4% Senior Subordinated
Notes due 2007, Series B
Ladies and Gentlemen:
In connection with our proposed purchase of 10 3/4% Senior
Subordinated Notes due 2007, Series A, or 10 3/4% Senior Subordinated Notes due
2007, Series B (the "Securities"), of LDM Technologies, Inc. (the "Company"),
we confirm that:
1. We have received such information as we deem
necessary in order to make our investment decision.
2. We understand that any subsequent transfer of the
Securities 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 Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the offer and sale of the
Securities have not been registered under the Securities Act, and that the
Securities may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons 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 any Securities, we
will do so only (A) to the Company or any subsidiary thereof, (B) inside the
United States in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) inside the United
States 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 the Trustee a signed letter substantially in the form hereof,
(D) outside the United States in accordance with
<PAGE> 9
-2-
Regulations S under the Securities Act, (E) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing Securities from us a
notice advising such purchaser that resales of the Securities are restricted as
stated herein.
4. We understand that, on any proposed resale of
Securities, we will be required to furnish to the Trustee and the Company, such
certification, legal opinions and other information as the Trustee and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
5. 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
Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for
our 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.
<PAGE> 10
-3-
You and the Company 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 proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:__________________________
[Authorized Signatory]
<PAGE> 11
EXHIBIT F
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
IBJ Schroder Bank & Trust
Company
One State Street Plaza
New York, New York 10004
Attention: Corporate Trust Administration
Re: LDM Technologies, Inc. (the "Company") 10 3/4%
Senior Subordinated Notes due 2007, Series A,
and 10 3/4% Senior Subordinated Notes due 2007,
Series B (the "Securities")
Dear Sirs:
In connection with our proposed sale of $____________
aggregate principal amount of the Securities, we confirm that such sale has
been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities
Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
<PAGE> 12
-2-
You and the Company 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. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
_______________________
[Authorized Signature]
<PAGE> 13
EXHIBIT G
[FORM OF GUARANTEE]
Each undersigned Guarantor (as defined in the Indenture
referred to in the Security upon which this notation is endorsed and each
referred to as the "Guarantor," which term includes any successor person under
the Indenture) unconditionally guarantees on a senior subordinated basis as set
forth in Article Twelve of the Indenture (such guarantee by the Guarantor being
referred to herein as a "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent
lawful, 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 set
forth in Article Ten of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Securities 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.
No stockholder, officer, director or incorporator, as such,
past, present or future, of the Guarantor shall have any liability under the
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
<PAGE> 1
EXHIBIT 5
February 13, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: LDM Technologies, Inc.
Gentlemen:
We are acting as counsel to LDM Technologies, Inc., a Michigan
corporation (the "Company") in connection with an exchange offer pursuant to
which the Company is offering to exchange up to an aggregate principal amount
of $110 million of its 10 3/4% Senior Subordinated Notes Due 2007, Series B
(the "New Notes") for up to an aggregate principal amount of $110 million of
its outstanding 10 3/4% Senior Subordinated Notes Due 2007, Series A (the "Old
Notes"). The New Notes are described in a Registration Statement on Form S-4
(the "Registration Statement") to be filed by the Company with Securities and
Exchange Commission under the Securities Act of 1933, as amended.
Based upon our examination of such corporate records and other
documents and certificates as we deemed it necessary to examine, it is our
opinion that the New Notes have been duly authorized for issuance in exchange
for the Old Notes, and when issued, authenticated and delivered, will
constitute the valid and binding obligation of the Company, enforceable
according to their terms and the terms of the Indenture dated as of January 15,
1997, between the Company and IBJ Schroder Bank & Trust Company, as Trustee.
We hereby consent to the use of this opinion as Exhibit 5 to the Registration
Statement and to the use of our firm name under the caption "Legal Matters" in
the related Prospectus.
Very truly yours,
Dickinson, Wright, Moon, Van Dusen & Freeman
<PAGE> 1
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This Agreement is made as of November 4, 1996, between Molmec, Inc., a
Michigan corporation ("Seller") and LDM Industries Inc., d/b/a LDM Technologies,
Inc., a Michigan corporation ("Buyer").
PREAMBLE
Seller is engaged in the business of manufacturing and supplying
injection molded plastic parts and systems, primarily to the automotive industry
(the "Business"). Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of Seller's assets used or useful in connection
with, or otherwise relating to, the Business, all upon the terms and subject to
the conditions set forth herein. Therefore, intending to be legally bound
hereby, the parties agree as follows:
AGREEMENT
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01. Purchase and Sale of Assets. On the closing date (defined
below), Seller shall sell to Buyer, and Buyer shall purchase from Seller, all of
Seller's rights, title and interest in and to the following assets of Seller
(collectively, the "Assets"):
(a) the real property listed on Schedule 1.01, the buildings
and other improvements constructed thereon and all other rights associated
therewith (collectively, the "Real Property");
(b) all equipment, machinery, fixtures, tools, dies, patterns,
vehicles, computer hardware and software and furniture (collectively, the
"Equipment"), and all supplies, spare parts and warranties relating to any of
the Equipment;
(c) all raw material, work-in-process and finished goods
inventory of the Business (collectively, the "Inventory");
(d) all patents, registered and unregistered trademarks,
service marks, logos, corporate and trade names and registered and common law
copyrights, and all applications therefor, used and useful in connection with
the Business (collectively, the "Intellectual Property");
(e) all inventions, discoveries, techniques, processes,
methods, formulae, designs, trade secrets, confidential information, know-how
and ideas used or useful in connection with the Business;
<PAGE> 2
(f) all accounts receivable of the Business (the
"Receivables") and all other claims, causes of action, choses in action and
rights of recovery and setoff relating to the Business or any of the Assets;
(g) all bids, offers, leases, licenses, contracts, agreements
and business arrangements relating to the Business or any of the Assets (the
"Business Agreements");
(h) all permits, licenses, franchises, certificates,
authorizations, consents and approvals obtained from or issued by any
governmental entity and which are necessary or desirable for the ownership or
operation of the Business or the ownership, operation or use of any of the
Assets (collectively, the "Business Permits");
(i) all books, records, files, ledgers, drawings,
specifications and manuals relating to the Business or any of the Assets, all
advertising materials relating to the Business and all other information
relating to the Business or any of the Assets, regardless of the form in which
such information appears;
(j) all goodwill of the Business or associated with any of
the Assets;
(k) all other assets of Seller, tangible or intangible.
1.02. Excluded Assets. Notwithstanding any other provisions hereof,
the Assets shall not include the items listed on Schedule 1.02 (the "Excluded
Assets").
1.03. Assumption of Liabilities. Seller agrees that Buyer assumes no
liabilities of Seller, whether accrued, contingent, known, unknown or otherwise
except for those liabilities listed on Schedule 1.03 and those liabilities that
arise out of or relate to the Assets or the Business as conducted in the
ordinary course of Business through the Closing Date (the "Assumed
Liabilities"). Seller shall be responsible for any liabilities from acts or
omissions which arise prior to the Closing Date and which are not specifically
assumed by Buyer. In addition, wrongful acts and product recalls relating
to any period prior to the Closing Date shall be treated as undisclosed
liabilities of Seller and shall not be assumed by Buyer. Buyer shall be
entitled to treat any such undisclosed liability as a liability subject to
indemnification by Seller, pursuant to Section 6.01 hereof. Notwithstanding
anything in this Agreement to the contrary, Buyer shall assume (a) any
executory obligations of continued performance arising in the ordinary course of
business under any employment contracts and all other employment relationships
as they currently exist, including Seller's employment policies, and (b) the
current salary bonus plan through December 31, 1996.
1.04. Purchase Price. Subject to Section 1.05 hereof, the purchase
price for the Assets (the "Purchase Price") shall be Sixty Million Dollars
($60,000,000), less the value of the Excluded Assets, plus the amount of the
Assumed Liabilities pursuant to Section 1.03 hereof, plus the amount of the
reserve accounts set forth on Schedule 1.05 (the amount of the reserve accounts
being
2
<PAGE> 3
reflected in the Sixty Million Dollar cash portion of the Purchase Price). The
Purchase Price shall be payable by Buyer as follows:
(a) One Million Dollars ($1,000,000) in immediately
available funds (the "Deposit") shall be delivered to Comerica Bank (the
"Deposit Escrow Agent"), on the date this Agreement is fully executed, as
evidence of Buyer's good faith, to be held and disbursed in accordance with the
terms of an Escrow Agreement attached hereto as Exhibit A (the "Deposit Escrow
Agreement"). The Deposit will be applied to the Purchase Price at the Closing
(as defined hereafter). If Seller terminates this Agreement pursuant to Section
7.12(a)(iii), or if Buyer shall otherwise fail or refuse to complete the Closing
as required by this Agreement, which may or may not result in Seller's
termination of this Agreement pursuant to Section 7.12(a)(iv), then Seller shall
be entitled to the Deposit and any interest thereon, in addition to any other
available legal remedies. If this Agreement is terminated pursuant to Section
7.12(a)(i) or (ii), then Buyer shall be entitled to the Deposit and any interest
thereon, or if Seller shall otherwise fail or refuse to complete the Closing as
required by this Agreement, then Buyer shall be entitled to the Deposit and any
interest thereon, in addition to any other available legal remedies.
(b) One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
in immediately available funds (the "Escrow Fund") shall be delivered on the
Closing Date to a federally insured commercial bank reasonably acceptable to
Buyer and Seller (the "Fund Escrow Agent"), to be held or disbursed in
accordance with the terms of an Escrow Agreement in substantially the form of
Exhibit B (the "Fund Escrow Agreement").
(c) Buyer shall retain from the Purchase Price an amount to
be mutually determined by Buyer and Seller prior to November 22, 1996, (the
"Hold-Back") to be held by the Buyer until it receives from Seller (i) written
confirmation from the Michigan Employment Security Commission to the effect that
all contributions, penalties and accrued interest due from Seller have been paid
in full; and (ii) a certificate from the Commissioner of Revenue of the Michigan
Department of Treasury stating that all taxes due to the State of Michigan
including, but not limited to, single business taxes, excise taxes, sales taxes
and use taxes are paid. Promptly after receipt of the items described above,
Buyer will disburse the Hold-Back by delivering Seller a cashier's or certified
check in the amount of the Hold-Back.
(d) The balance in immediately available funds shall be paid
to Seller on the Closing Date;
3
<PAGE> 4
1.05. Adjustments to Purchase Price.
(a) Closing Balance Sheet.
(i) Within sixty (60) days after the Closing Date,
Seller shall cause its independent accountants to deliver to Seller and Buyer an
audited balance sheet for the Business as of the Closing Date (the "Closing
Balance Sheet"). This Closing Balance Sheet shall reflect the net book value of
the Assets purchased by Buyer, as of the Closing Date. For purposes of this
Agreement, the term "net book value" shall mean an amount equal to the Assets
less the Assumed Liabilities, reflected on the September 29, 1996 balance sheet
or the Closing Balance Sheet, as the context indicates, with inventory being
accounted for on a first in first out basis for both balance sheets. Buyer and
Seller each shall (A) designate a representative to assist and shall cooperate
with each other and the independent accountants in preparing the Closing Balance
Sheet and (B) Buyer shall pay all costs assessed by the independent accountants
in connection with preparation and delivery of the Closing Balance Sheet.
(ii) The Closing Balance Sheet shall be accompanied
by a report of Seller's independent accountants stating that the Closing Balance
Sheet has been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior years (subject only
to such exceptions thereto as agreed to by Buyer and Seller). The Closing
Balance Sheet shall be based upon a physical inventory of the Assets taken by
Buyer and the independent accountants and observed by Seller.
(iii) The Purchase Price shall be increased or
decreased by an amount equal to the amount by which the net book value of the
Assets on the Closing Date (as reflected on the audited Closing Balance Sheet)
is greater than or less than the net book value of the Assets on September 29,
1996 (as reflected on Seller's financial statements for the period ended
September 29, 1996).
(iv) If any amount is payable by Seller to Buyer
under subsection (iii) above, Seller shall promptly pay such amount to Buyer in
immediately available funds. If any amount is payable by Buyer to Seller
pursuant to subsection (iii) above, Buyer shall promptly pay such amount to
Seller in immediately available funds.
(b) Consistent with past practice, Seller has established
numerous reserve accounts for meeting potential liabilities and claims. These
reserves are set forth on Schedule 1.05. Buyer agrees to assume all
responsibility for the liabilities covered by these reserves realized after the
Closing Date in excess of amounts reserved, and Seller agrees that Buyer shall
be entitled to the benefit of any settlement of the reserve liability after the
Closing Date in an amount less than the amounts reserved.
(c) Seller has also established an environmental reserve
account in the amount of One Hundred and Two Thousand Dollars ($102,000) for
meeting potential environmental
4
<PAGE> 5
liabilities and claims. Buyer may assert a claim or claims against the Escrow
Fund for any environmental liabilities or claims which exceed the environmental
reserve account. Amounts claimed against the environmental reserve account or
the Escrow Fund under this Paragraph shall be exempt from the $10,000 and 1%
indemnification Threshold Amount established at Section 6.06 of this Agreement.
(d) Disputes. Any dispute which may arise between Seller and
Buyer as to the Closing Balance Sheet, shall be resolved in the following
manner:
(i) The disputing party shall notify the other party in
writing within fifteen (15) days after the delivery of the disputed information
that it disputes the same and such notice shall specify in reasonable detail the
nature of the dispute;
(ii) during the fifteen (15) day period following the date
of such notice, the parties shall attempt to resolve their dispute and to
determine the appropriateness of the information; and
(iii) if at the end of the fifteen (15) day period
specified in subsection (ii) above, the parties shall have failed to reach a
written agreement with respect to such dispute, the matter shall be referred to
an independent firm of certified public accountants (or, if Buyer and Seller
cannot agree on a firm to serve in such capacity, Buyer and Seller shall each
select a firm and such firms shall, together, select a third firm)
("Arbitrator"), which shall act as an arbitrator and shall issue its report as
to the disputed information within sixty (60) days after such dispute is
referred to the Arbitrator. Each of the parties hereto shall bear all costs and
expenses incurred by it in connection with such arbitration, except that the
fees and expenses of the Arbitrator hereunder shall be borne equally by Seller
and Buyer. This provision for arbitration shall be specifically enforceable by
the parties, and the decision of the Arbitrator in accordance with the
provisions hereof shall be final and binding and there shall be no right of
appeal therefrom.
1.06. Assignment of Value. Buyer and Seller shall use their best
efforts to comply with the applicable requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), by preparing a schedule to be executed at the
Closing (defined below) reflecting the allocation of the total price paid to the
respective Assets, which allocation shall be used by them in preparing their
respective income tax returns; provided, that any failure to agree on such
allocation shall not relieve either party of its obligations hereunder. Seller
and Buyer agree that such allocation for all Real Property shall be at fair
market value, and that the total price paid by Buyer which exceeds the net book
value of the Assets will be allocated to goodwill.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller hereby represents and warrants to Buyer as follows:
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2.01. Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing in the State of Michigan.
Seller is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership of its properties or the
nature of its business makes such qualification necessary.
2.02. Authority and Authorization. Seller has the corporate power and
authority to own its properties and assets, to conduct its business as presently
conducted and to execute, deliver and perform this Agreement and the other
Transaction Documents (defined below).
2.03. Execution and Binding Effect. This Agreement has been, and on
the Closing Date the other Transaction Documents will be, duly and validly
executed and delivered by Seller and delivery will constitute legal, valid and
binding obligations of Seller enforceable against Seller in accordance with
their respective terms.
2.04. No Breach, Default, Violation or Consent. Assuming that Seller
obtains all necessary consents with respect to the assignment or transfer of
Business Agreements, Intellectual Property and Business Permits which are listed
on Schedule 5.02(c), the execution, delivery and performance by Seller of this
Agreement and the other Transaction Documents do not and will not:
(a) violate Seller's charter or by-laws;
(b) breach or result in a default (or an event which, with
the giving of notice or the passage of time, or both, would constitute a
default) under, require any consent under or give to others any rights of
termination, acceleration, suspension, revocation, cancellation or amendment of
any Business Agreement or Business Permit, or any agreement representing
indebtedness for borrowed money or any trust indenture pursuant to which Seller
has issued debt obligations;
(c) breach or otherwise violate any order, writ, judgment,
injunction or decree issued by any governmental entity (each a "Governmental
Order") which names Seller or is directed to Seller, the Business or any of the
Assets;
(d) violate any law, rule, regulation, ordinance or code of
any governmental entity (each a "Governmental Rule"); or
(e) require any consent, authorization, approval, exemption or
other action by, or any filing, registration or qualification with, any
governmental entity, to Seller's knowledge.
2.05. Financial Statements. Seller has previously delivered to Buyer
complete copies of (a) its audited balance sheets and statements of income,
retained earnings and changes in financial position as of and for its fiscal
year ended December 31, 1994, including the footnotes thereto, (b) its audited
balance sheets and statements of income, retained earnings and changes in
financial position as of and for its fiscal year ended December 31, 1995; and
(c) its unaudited monthly balance sheets and statements of income, retained
earnings and changes in financial position for the months
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of January 1996 through and including September 1996, (the "Current Financial
Statements" as to the items described in clauses (b) and (c) above, and,
together with the items described in clause (a) above, the "Financial
Statements"). The Financial Statements present fairly the financial condition
of Seller as at the end of the periods covered thereby and the results of its
operations and the changes in its financial position for the periods covered
thereby, and to the best of Seller's knowledge were prepared in accordance with
GAAP (except for LIFO adjustments for the Financial Statements after December
31, 1995) applied on a consistent basis throughout the periods covered thereby.
Except as and to the extent otherwise disclosed in the Current Financial
Statements and on Schedule 2.05, Seller has no knowledge of other material
liabilities, whether direct or indirect, fixed or contingent or otherwise.
2.06. Tax Matters. Except as otherwise disclosed on Schedule 2.06:
(a) all tax returns and reports required to be filed by
Seller have been filed;
(b) Seller has paid or has made adequate reserves on its
books for the payment of all taxes, interest, penalties, assessments and
deficiencies shown to be due on such tax returns and reports, or claimed to be
due by any governmental entity, or which Seller is required to withhold on
behalf of any other person or entity (each a "Person");
(c) Seller has no knowledge of any proposed assessment of any
additional taxes by any governmental entity or of any basis for any such
assessment (whether or not reserved against);
(d) the federal income tax liabilities of Seller have been
finally determined by the Internal Revenue Service (the "IRS"), or the time for
audit has expired, for all fiscal periods ending on or prior to December 31,
1992;
(e) Seller is not currently being audited by any
governmental entity, and no such audit is pending or, to the best of Seller's
knowledge, threatened.
2.07. Litigation. Except as otherwise disclosed on Schedule 2.07,
there is no pending or, to the best of Seller's knowledge, threatened
investigation, action or proceeding against Seller, the Business or any of the
Assets by or before any governmental entity or arbitrator, and Seller has no
knowledge of any basis for any such action or proceeding. Schedule 2.07 sets
forth each instance in which Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge, or (ii) is a party or,
to the knowledge of Seller, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. Schedule 2.07 sets forth a correct and
complete list of each such investigation, action and proceeding described in the
preceding sentences, the parties thereto, the alleged basis therefor, the relief
sought therein and the current status thereof.
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2.08. Absence of Certain Changes and Events. Except as otherwise
disclosed on Schedule 2.08, since December 31, 1995:
(a) Seller has not incurred any material obligation or
liability except for normal trade obligations incurred in the ordinary course of
business;
(b) no casualty, loss or damage has occurred with respect to
any of the Assets, whether or not the same is covered by insurance;
(c) Seller has not sold, transferred or otherwise disposed
of any of its properties or assets or any interest therein, or agreed to do any
of the foregoing, except for sales of inventory in the ordinary course of
business;
(d) no executive officer or other key employee of Seller has
left his or her employment with Seller;
(e) there has been no payment, discharge or other
satisfaction of any liabilities of Seller, whether direct or indirect, fixed or
contingent or otherwise, other than the satisfaction in the ordinary course of
business, of liabilities reflected on the Current Financial Statements or
incurred in the ordinary course of business since the Current Financial
Statement Date; and
(f) Seller has not paid any dividend or made any
distribution, whether in cash, shares, or property, with respect to its capital
stock, and has not increased the salary of or declared or paid a bonus to any
employee earning over $50,000 per year, since September 30, 1996.
2.09. Constituent Document and Governmental Rules. Seller is in
compliance with (a) its charter and by-laws and (b) all Governmental Rules
applicable to Seller, the Business or the Assets, except, in each case, for such
non-compliance as, individually or in the aggregate, has not resulted in, and is
not likely to result in, a material adverse change.
2.10. Environmental Matters. Except as otherwise disclosed on
Schedule 2.10, Seller and the Real Property are in compliance with all
Environmental Laws (as hereinafter defined). All federal, state and local
permits, licenses and authorizations required for present or past use of the
Real Property or activities of the Seller have been obtained, are presently in
effect and are listed on the attached Schedule 2.10. Seller is and has been in
full compliance with all such permits, licenses and/or authorizations. Seller
has not used Hazardous Materials (as hereinafter defined) on or affecting the
Real Property in any manner which violates federal, state or local laws,
ordinances, statutes, rules, regulations or judgments governing the use,
storage, treatment, handling, manufacture, transportation or disposal of
Hazardous Materials ("Environmental Laws") or received any notice of any
violation of Environmental Laws and, to the best of Seller's knowledge, no prior
owner of the Real Property or any current or prior occupant has used Hazardous
Materials on or affecting the Real Property in any manner which violates
Environmental Laws, except as disclosed in those certain environmental reports
prepared by ATEC Environmental Consultants, Testing
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Engineers and Consultants, McDowell & Associates, and Environmental Service &
Technologies (collectively, the "Environmental Reports"). To the best of
Seller's knowledge, there have been no actions commenced or threatened by any
party for noncompliance with any Environmental Laws except as disclosed on
Schedule 2.10. Seller is not in violation of any statute, law, regulation or
ordinance for its failure to report, commence clean-up, or clean up the
Hazardous Materials which are outlined in the Environmental Reports. To the
best of Seller's knowledge, all of the Environmental Reports prepared on the
Real Property have been provided or made available to Buyer. "Hazardous
Materials" includes, without limitation, any flammable explosives, radioactive
materials, hazardous materials, hazardous waste, hazardous or toxic substances,
petroleum, petroleum by-products, toxic materials or related materials defined
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Section 9601, et seq.), the Resource Conservation
and Recovery Act, as amended (42 U.S.C. 6901, et seq.), Part 201 of the Michigan
Natural Resources and Environmental Protection Act, as amended, the Michigan
Environmental Response Act, as amended, and the regulations adopted in
publications promulgated pursuant thereto, or any other federal, state or local
governmnental law, ordinance, rule or regulation, an object of which is to
regulate or improve health, safety or the environment.
2.11 Real Property.
(a) Schedule 2.11 sets forth a correct and complete list of
all real property currently owned or leased by the Company, together with the
current uses of such property by the company and each Person who currently
occupies property currently owned by the Company.
(b) Schedule 2.11 sets forth a correct and complete list
of all leases, subleases and other material agreements or rights pursuant to
which any Person has the right to occupy or use any real property owned by the
company, together with the names of the lessees or other obligors thereunder,
the rental or other consideration payable thereunder and the duration thereof,
including any renewal options,
(c) Schedule 2.11 sets forth a correct and complete list of
all leases, subleases and other material agreements or rights pursuant to which
the Company has the right to occupy or use any real property owned by others,
together with the names of the lessors or other grantors thereunder, the
location of the property covered thereby, the rental or other consideration
payable thereunder and the duration thereof, including any renewal options.
2.12. Personal Property. Schedule 2.12 sets forth a correct and
complete list of all leases and other agreements with annual lease payments in
excess of Five Thousand Dollars ($5,000), pursuant to which Seller leases any of
the Equipment, together with the names of the lessors thereunder, the personal
property covered thereby, the annual rental thereunder, and the duration
thereof, including any renewal options.
2.13. Intellectual Property. Schedule 2.13 sets forth a correct and
complete list of (a) all Intellectual Property, (b) all licenses or other
agreements pursuant to which any Person has the right
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to use any Intellectual Property owned by Seller, together with the names of the
licensors thereunder, the Intellectual Property covered thereby, the annual fee
or other consideration payable thereunder and the duration thereof, including
any renewal options, and (c) all licenses or other agreements pursuant to which
Seller has the right to use any Intellectual Property owned by others, together
with the names of the licensees thereunder, the Intellectual Property covered
thereby, the annual fee or other consideration payable thereunder and the
duration thereof, including any renewal options. Seller has the lawful right to
use all of the Intellectual Property, and no such use infringes upon the lawful
rights of any other Person. To the best of Seller's knowledge, no Person is
using any Intellectual Property in a manner which infringes upon the lawful
rights of Seller. The Intellectual Property is all of the Intellectual Property
necessary for the operation of the Business.
2.14. Title to Assets. Except as otherwise disclosed on Schedule
2.14, Seller has (a) good and marketable title to all Assets purported to be
owned by it and (b) good leasehold title to all Assets purported to be leased
by it, in each case free and clear of all liens, claims and encumbrances of any
nature whatsoever (collectively, "Liens"). On the Closing Date Seller will
transfer to Buyer title to the Assets free and clear of all Liens other than
those marked as "Permitted Liens" on Schedule 2.14.
2.15. Employee Benefit Plans.
(a) Schedule 2.15 sets forth a true, correct and complete
list and has attached thereto a description or an accurate copy of, each and
every Employee Benefit Plan, arrangement or practice maintained by Seller to
which Seller contributes, or is required to contribute or under which any
employee of Seller is accruing benefits whether formal or informal, legally
binding or not, and whether affecting one or more of its employees. Such
Employee Benefit Plans are referred to as "Employee Benefit Plans" as defined in
Section 3(3) of ERISA.
(b) Seller has delivered or will deliver to Buyer one copy of
each of the Employee Benefit Plans and one copy of any related annuity contract,
trust agreement, or other instrument to which the Employee Benefit Plans are
funded.
(c) Seller does not have any commitment whether formal or
informal and whether legally binding or not, to create any additional Employee
Benefit Plan, arrangement or practice, or to modify or change any such Employee
Benefit Plan, arrangement or practice, except as accurately and completely
described on Schedule 2.15.
(d) Except as disclosed in the Financial Statements and/or
Schedule 2.15, the Seller does not have any unfunded past service liability with
respect to any of the Employee Benefit Plans, and the actuarially computed value
of any vested benefits under any of the Employee Benefit Plans is in accordance
with the most recent actuarial evaluation report relating to such plan, a true
copy of which shall be delivered to Buyer.
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(e) The IRS has issued favorable determination letters to the
effect that each Pension Plan is qualified within the meaning of Section 401 of
the Code and that each related Trust is exempt under Section 501 of the Code,
and Seller has no knowledge of any fact that may adversely affect the qualified
status of any Pension Plan or related Trust.
(f) To the best of Seller's knowledge, Seller has complied in
all material respects with all applicable federal, state and local laws, rules
and regulations relating to employment and/or employment relationships,
including, without limitation, wage related laws, anti-discrimination laws.
employee safety laws, and fringe benefit coverage laws.
(g) Seller has no employees who are working under any
collective bargaining agreement, and Seller has no knowledge of any organizing
activity that is existing or planned for the immediate future.
(h) Seller has no Pension Plans that are subject to the
jurisdiction of the Pension Benefit Guarantee Corporation (PBGC). Seller does
not and has never participated in a "multi-employer plan" as defined in Section
3(37) of ERISA.
(i) Seller has filed all required annual reports with
respect to its Employee Benefit Plans on Form 5500 required to be filed with any
governmental agency for each of the Employee Benefit Plans, and if applicable,
certified financial statements and actuarial valuations. Copies of all the above
have been or will be supplied to Buyer.
(j) There are no actions, suits, investigations or other
proceedings pending, or to the best of Seller's knowledge, threatened against
any Employee Benefit Plan or trust or any fiduciary thereof, by any government
agency, employee, former employee, spouse of any employee or former employee or
beneficiary of any such Plan, and Seller has no knowledge or any basis for the
commencement of any such proceeding.
(k) There has been no "prohibited transaction", as such term
is defined in Section 4975 of the Internal Revenue Code, with respect to any
other Employee Benefit Plans.
(l) Seller has complied in all material respects with the
notice requirements of health insurance continuation (COBRA) with respect to
employees, former employees and other beneficiaries.
(m) If Seller terminates any employment relationships or
Employee Benefit Plans in connection with this Agreement, Seller will comply
with all applicable federal and state laws, rules and regulations governing the
termination of employment and/or termination of the Employee Benefit Plan. Buyer
anticipates offering employment to nearly all of Seller's employees. If certain
of Seller's employees are not offered employment by Buyer, Buyer agrees to
indemnify Seller and Seller's Shareholders for any liability arising out of the
termination of said employees, and such indemnification shall be paid directly
by Buyer, on a monthly basis, and shall not be paid from the
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Escrow Fund, and shall not be subject to any threshold amount. If a transfer
and assumption of employment agreements and/or Employee Benefit Plans is
requested by Buyer, Seller will execute any and all documents reasonably
requested by Buyer to assist in the transfer of such employment agreements and
Employee Benefits Plans.
2.16. Personnel Matters.
(a) Schedule 2.16 sets forth a correct and complete list of
(i) all directors and executive officers of Seller, (ii) all other employees of
or consultants to Seller whose annual compensation (including bonuses and
commissions) during Seller's fiscal year ended December 31, 1995 was One
Hundred Thousand Dollars ($100,000) or more, (iii) the current job title or
relationship to Seller of each such Person described in clauses (i) and (ii)
above, and (iv) any employee benefits available to any such Person that are not
generally available to employees of Seller.
(b) Schedule 2.16 is a complete list of all employment and
consulting agreements between Seller and Seller's employees and consultants.
Seller's Employee Handbook represents that each employee without a written
employment agreement is terminable at-will.
(c) Except as otherwise disclosed on Schedule 2.16, since
December 31, 1995, Seller has not paid any employee or consultant any
compensation over and above amounts paid to such employees or consultants in the
normal course of their employment with Seller.
2.17. Insurance. Schedule 2.17 sets forth a correct and complete list
of all insurance policies of which Seller is the owner, insured, loss payee or
beneficiary and which relate to the Business or any of the Assets and indicates
for each such policy the carrier, the risks insured against, the amounts of
coverage and deductibles, the annual premium, the expiration date and any
pending claims thereunder.
2.18. Purchase Orders and Contracts. Schedule 2.18 sets forth a
correct and complete list of each of the customers and suppliers of Seller whose
purchases from or sales to Seller constituted five percent (5%) or more of
Seller's net sales or One Million Dollars ($1,000,000) or more of net
purchases, respectively, during Seller's fiscal year ended December 31, 1995,
and indicates with respect to each the name, dollar volume and nature of the
relationship (including the principal categories of products bought or sold). No
such customer or supplier has since terminated its relationship with Seller.
Seller has previously delivered to Buyer a correct and complete copy of all
written purchase orders or contracts.
2.19. Other Agreements. Schedule 2.19 lists the following contracts
and other agreements to which Seller is a party:
(a) Any agreement concerning a partnership or joint
venture;
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(b) any agreement (or group of related agreements) under
which is has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money in excess of $5,000 under which it has imposed a security
interest on any of its assets, tangible or intangible;
(c) any material agreement concerning noncompetition;
(d) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(e) any collective bargaining agreement;
(f) any agreement currently in effect under which it has
advanced or loaned any amount to any of its directors, officers, or employees
outside the ordinary course of business;
(g) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $500,000.
Seller has delivered to the Buyer a correct and complete copy of each written
agreement listed in Schedule 2.19 (as amended to date) and a written summary
setting forth the material terms and conditions of each oral agreement
referred to in Schedule 2.19. With respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and effect
in all material respects; (B) no party is in material breach or default, and
no event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any
material provision of the agreement.
2.20. Status of Business Agreements. Seller has previously delivered
to Buyer correct and complete copies of each Business Agreement listed on
Schedule 2.11 through Schedule 2.19. Each Business Agreement listed on any of
Schedule 2.11 through Schedule 2.19 is in full force and effect and is
enforceable against Seller and, to the best of Seller's knowledge, the other
parties thereto, in accordance with its terms. Seller is in compliance with
each such Business Agreement. To the best of Seller's knowledge, all other
parties to such Business Agreements are in substantial compliance with the
terms thereof. Except as otherwise disclosed on Schedule 2.20, each Business
Agreement may be assigned to Buyer without the consent of any other Person.
2.21. Warranty and Product Liability. Substantially all of the
products manufactured, sold, leased, and delivered by Seller have conformed in
all material respects with all applicable contractual commitments and all
express and implied warranties, and Seller has no knowledge of any material
liability for replacement or repair thereof or other damages in connection
therewith, subject only to normal product returns and the reserve for product
warranty claims set forth on the Current Financial Statements as adjusted for
operations and transactions through the Closing Date in accordance with
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the past custom and practice of Seller. Substantially all of the products
manufactured, sold, leased and delivered by Seller are subject to standard
terms and conditions of sale or lease.
Seller has no knowledge of any material liability arising out of any
injury to individuals or property as a result of the ownership, possession, or
use of any product manufactured, sold, leased, or delivered by Seller.
2.22. No Undisclosed Liabilities. Except as otherwise disclosed on
Schedule 2.22 or in the Financial Statements, Seller does not have any
liabilities or obligations, whether accrued, absolute, contingent, or
otherwise, and to Seller's knowledge there exists no fact or circumstance that
could give rise to any such liabilities or obligations in the future.
2.23. Quality of Inventory and Equipment. The inventory of Seller
consists of raw materials and supplies, manufactured and processed parts, work
in process, and finished goods, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged, or defective, subject only to the reserve for
inventory writedown set forth on the face of the most recent balance sheet
(rather than in any notes thereto) as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and practice of
Seller. Such adjustments shall include, without limitation, any reduction
resulting from the writedown or writeoff of slow-moving, obsolete, damaged, or
defective inventory, as reflected on the Closing Balance Sheet. The buildings,
machinery, equipment, and other tangible assets being purchased by Buyer are
free from material defects (patent and latent), have been maintained in
accordance with normal industry practice, and are in good operating condition
and repair (subject to normal wear and tear).
2.24. No Union/Collective Bargaining. There are no unions or
collective bargaining agreements at any plant owned or leased by Seller or at
Seller's headquarters.
2.25. Brokers. Seller has employed W.Y. Campbell & Company as its
broker for this transaction. All compensation to Seller's broker shall be
Seller's sole responsibility. Seller has no liability or obligation to pay any
other fees or commissions to any other broker or to any finder, or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01. Organization. Buyer is a corporation duly organized, validly
existing and in good standing in the State of Michigan.
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3.02. Authority and Authorization. Buyer has the corporate power and
authority to own its properties and assets, to conduct its business as
presently conducted and to execute, deliver and perform this Agreement and the
other Transaction Documents.
3.03. Execution and Binding Effect. This Agreement has been, and on
the Closing Date the other Transaction Documents will be, duly and validly
executed and delivered by Buyer and constitute (or upon such execution and
delivery will constitute) legal, valid and binding obligations of Buyer
enforceable against Buyer in accordance with their respective terms.
3.04. No Breach, Default, Violation or Consent. The execution, delivery
and performance by Buyer of this Agreement and the other Transaction Documents
do not and will not:
(a) violate Buyer's charter or by-laws;
(b) breach or result in a default (or an event which, with
the giving of notice or the passage of time, or both, would constitute a
default) under, require any consent under or give to others any rights of
termination, acceleration, suspension, revocation, cancellation, or amendment
of any contract, agreement, instrument or document to which Buyer is a party
or by which Buyer or any of its properties or assets is bound;
(c) breach or otherwise violate any Governmental Order which
names Buyer or is directed to Buyer or any of its properties or assets;
(d) violate any Governmental Rule; or
(e) require any consent, authorization, approval, exemption
or other action by, or any filing, registration or qualification with, any
governmental entity.
3.05. Brokers. Buyer has no liability or obligation to pay any fees or
commissions to any broker or to any finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
3.06. Hart Scott Rodino Filing. Buyer will file its Hart Scott Rodino
application no later than November 8, 1996. If Buyer does not file its Hart
Scott Rodino on or before November 8, 1996, then all parties shall be relieved
of their obligations hereunder, and Seller shall be free to communicate and
negotiate with other potential buyers notwithstanding anything to the contrary
contained in this Agreement or the Letter of Intent previously signed by
Seller and Buyer. In such event, Buyer shall be entitled to a return of the
deposit paid pursuant to Section 1.04(a). If Buyer files its Hart Scott
Rodino application by November 8, 1996, but there has been no definitive
response to such filing on or before December 20, 1996, then the Closing Date
shall automatically be extended to the Friday of the first full week following
receipt of governmental approval of such Hart Scott Rodino application.
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ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING
4.01. Conduct of Business Prior to Closing. At all times prior to the
Closing Date, Seller shall:
(a) operate the Business only in the ordinary course and
consistent with past practice;
(b) maintain the Real Property and Equipment in reasonably
good repair and operating condition, ordinary wear and tear excepted;
(c) maintain in full force and effect all Business Permits and
insurance policies;
(d) not sell, transfer or otherwise dispose of any of the
Assets or any interest therein or agree to do any of the foregoing, except for
sales of inventory in the ordinary course of business;
(e) not incur, make, or assume any Lien, tenancy or other
matter affecting title to any of the Assets;
(f) not make, change or revoke any tax elections or make any
agreement or settlement with any taxing authority;
(g) not merge or consolidate Seller with or into any other
entity or agree to do any of the foregoing;
(h) comply with applicable Governmental Rules in all material
respects;
(i) take no action, and use its best efforts to prevent the
occurrence of any event or the existence of any condition, which would result
in any of Seller's representations and warranties herein not being true and
correct;
(j) not pay any dividend or make any distribution, whether
in cash, shares or property, with respect to its capital stock, other than
distributions to the Shareholders to reimburse the Shareholders for income
taxes paid or to be paid by the Shareholders on corporate taxable income;
(k) not amend its articles of incorporation or bylaws,
capital structure or accounting practices;
(l) not incur any liability for borrowed money or guaranty
the obligation of any other person for borrowed money, except for (i) the
incurrence of unsecured trade debt in the
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ordinary course of business consistent with past practice and (ii) advances
under the existing credit facility with Comerica Bank;
(m) grant to Buyer and its attorneys, employees, agents and
designees reasonable access to the books and records and appropriate executive
and managerial personnel of Seller, all during normal business hours on
reasonable notice;
(n) grant to Buyer and its attorneys, agents and designees
access to the Real Property to conduct inspections, investigations, appraisals,
tests and environmental site assessments of the Real Property including, but
not limited to, conducting soil tests of the Real Property, borings and other
tests to evaluate the environmental conditions which exist at the Real Property
(including Phase I and Phase II environmental assessments and baseline
environmental assessments ("BEAs") if necessary or desirable, as determined by
Buyer in Buyer's sole discretion) and the Real Property's compliance with all
applicable state and federal environmental laws and regulations, and
determining the availability of any governmental approvals or permits. The
cost of any and all such inspections, investigations, appraisals, tests and
determinations shall be paid by Buyer. Further, Seller agrees and acknowledges
that Buyer may submit the results of such inspections, investigations,
appraisals, tests, BEAs and determinations regarding the Real Property to the
Michigan Department of Environmental Quality; and
(o) as evidence of title to the Real Property, furnish or
cause to be furnished to Buyer at Seller's expense, not later than ten (10)
days after the date of execution of this Agreement by Seller, the following
title insurance commitments, policies and riders in preparation for the
Closing:
(i) with respect to each parcel of Real Property
that Seller owns, an ALTA Owner's Policy of Title Insurance issued by a title
insurer reasonably satisfactory to Buyer, in such amount as the Buyer
reasonably may determine to be the fair market value of such Real Property
(including all improvements located thereon), insuring title to such Real
Property to be in the Buyer as of the Closing Date; and
(ii) with respect to each parcel of Real Property that
Seller leases or subleases, an ALTA Leasehold Owner's Policy of Title Insurance
issued by a title insurer reasonably satisfactory to Buyer in such amount as
Buyer reasonably may determine, insuring title to the leasehold or subleasehold
estate to be in the Buyer as of the Closing Date. Each title insurance policy
delivered under Sections 4.01(o)(i) and (ii) above shall (a) insure title to
the Real Property and all recorded easements benefitting such Real Property, (b)
contain an "extended coverage endorsement" insuring over the general exceptions
contained customarily in such policies, and (c) if the Real Property consists
of more than one record parcel, contain a "contiguity" endorsement insuring
that all of the record parcels are contiguous to one another.
4.02. Casualty, Loss or Damage to Assets. If at any time prior to the
Closing Date any casualty, loss or damage shall occur with respect to any Asset
then Seller shall promptly inform
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Buyer of the same and shall, at Buyer's option, either (a) repair or replace
such Asset such that the Asset to be transferred to Buyer hereunder is in a
condition at least as good as it was in immediately prior to the occurrence of
such casualty, loss or damage or (b) transfer all insurance proceeds payable to
Seller on account of such casualty, loss or damage to Buyer at the Closing.
4.03. Best Efforts. The parties agree to use their reasonable best
efforts to take or cause to be taken and to do or cause to be done all such
actions and things as shall be necessary or advisable, or as shall be
reasonably requested by the other party, in order to consummate the
transactions contemplated hereby and by the other Transaction Documents.
Without limiting the generality of the foregoing, the parties agree to take all
reasonable actions necessary in order to obtain any consent or approval of any
third party, including without limitation any governmental entity, which is
required in connection with this Agreement or the other Transaction Documents
or any of the transactions contemplated hereby or thereby.
ARTICLE V
CLOSING AND CLOSING CONDITIONS
5.01. Closing. The closing of the transaction contemplated hereby (the
"Closing") shall take place on or before December 20, 1996, at the offices of
Heritier Nance, P.C., Troy, Michigan, or at such other time or place, or on
such other date as the parties may mutually agree upon. At Seller's sole
option, the Closing may be delayed to a date not later than January 3, 1997.
In any event the Closing shall take place on a Friday. The date on which the
Closing occurs is referred to herein as the "Closing Date".
5.02. Conditions Precedent to Obligations of Buyer. The obligations of
Buyer hereunder to proceed with the Closing shall be subject to the
satisfaction by Seller on or prior to the Closing Date of each of the following
conditions precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Seller set forth herein shall be true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of such date.
(b) Performance and Compliance, Seller shall have performed
or complied with each covenant and agreement to be performed or complied with
by it hereunder on or prior to the Closing Date.
(c) Consents and Approvals. Seller shall have obtained or
made each consent to assignment or transfer, authorization, approval,
exemption, filing, registration or qualification, as are necessary for the
performance of this Agreement, all of which are listed on Schedule 5.02(c).
(d) Litigation. There shall be no pending or threatened
action by or before any governmental entity or arbitrator seeking to restrain,
prohibit or invalidate any of the transactions contemplated hereby or by any of
the other Transaction Documents or seeking monetary relief
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against Buyer by reason of the consummation of such transactions, and there
shall not be in effect any Governmental Order which has such effect.
(e) Officer's Certificate. Seller shall have delivered to
Buyer a certificate of its President dated the Closing Date and certifying that
each of the conditions specified in subsections (a), (b), (c) and (d) above
have been met.
(f) Secretary's Certificate. Seller shall have
delivered to Buyer a certificate of its Secretary dated the Closing Date and
certifying (i) that correct and complete copies of its charter and by-laws are
attached thereto, (ii) that correct and complete copies of each resolution of
its board of directors and the Shareholders approving this Agreement and the
other Transaction Documents to which it is a party and authorizing the
execution hereof and thereof and the consummation of the transactions
contemplated hereby and thereby are attached thereto and (iii) the incumbency
and signatures of the officers of Seller authorized to execute and deliver
this Agreement and the other Transaction Documents to which Seller is a party
on behalf of Seller.
(g) Opinion of Counsel. Seller shall have delivered to Buyer
an opinion of Seller's counsel dated the Closing Date and in form and substance
reasonably satisfactory to Buyer and its counsel with respect to the matters in
Sections 2.01, 2.02, 2.03, 2.04 and 2.07.
(h) Other Transaction Documents. Seller and any other
parties thereto (other than Buyer) shall have executed and delivered to Buyer
the following documents and such other documents and instruments, in form and
substance satisfactory to Buyer and its counsel, as shall be necessary or
desirable in order to consummate the transactions contemplated hereby, each
dated the Closing Date (together with this Agreement and any agreements listed
in Section 5.03(h), the "Transaction Documents"):
(i) the Fund Escrow Agreement;
(ii) a Bill of Sale;
(iii) Warranty Deeds;
(iv) an Assignment of Patents;
(v) an Assignment of Trademarks;
(vi) an Assignment of Copyrights;
(vii) an Assignment of Lease for the Avon plant;
(viii) a Noncompetition Agreement with each of
Robert C. Leland, Jr. and Leonard G. Miller; and
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<PAGE> 20
(ix) any required waivers or consents of third
parties.
(i) Business Permits. To the extent that any Business
Permits are not transferable to Buyer, Buyer shall have obtained, or satisfied
itself that it will be able to obtain, Business Permits in its own name that
will permit Buyer to own, operate or use the Business and the Assets to the
same extent as Seller.
(j) Marketable Title. Seller shall hold marketable title to
all real property it purports to own.
(k) Due Diligence. Buyer shall have satisfactorily completed
its due diligence investigation by November 22, 1996. Buyer shall notify
Seller in writing on or prior to November 22, 1996, if it is not satisfied with
the results of its due diligence investigation, whereupon all parties shall be
relieved of their obligations hereunder, and Seller shall be free to
communicate and negotiate with other potential buyers notwithstanding anything
to the contrary contained in this Agreement or the Letter of Intent previously
signed by Seller and Buyer. In such event, Buyer shall be entitled to a
return of the deposit paid pursuant to Section 1.04 (a).
(l) Hart-Scott-Rodino. Any Hart-Scott-Rodino filing made in
connection with the acquisition of Assets shall have been approved by the
Federal Trade Commission. Any Hart-Scott-Rodino filing fee shall be paid by
the Buyer.
(m) Certificate of Vice President - Finance. Seller shall
have delivered to Buyer a certificate of its Vice President - Finance, Barry
A. Kempa, dated the Closing Date and certifying that the Financial Statements
and all subsequent unaudited monthly balance sheets and statements of income,
retained earnings and changes in financial position present fairly the
financial condition of Seller as at the end of the periods covered thereby and
the results of its operations and the changes in its financial position for
the periods covered thereby, and were prepared in accordance with GAAP, except
for LIFO adjustments, applied on a consistent basis throughout the periods
covered thereby.
(n) Bulk Transfer Act. Seller shall have complied with the
bulk transfer provisions of Article 6 of the Michigan Uniform Commercial Code
(UCC) as they apply to the transaction described in this Agreement. However,
such compliance shall be limited to those creditors of the Seller whose claims
will not be specifically assumed by Buyer pursuant to this Agreement.
5.03 Conditions Precedent to Obligations of Seller. The obligations
of Seller hereunder to proceed with the Closing shall be subject to the
satisfaction by Buyer on or prior to the Closing Date of each of the following
conditions precedent:
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(a) Accuracy of Representations and Warranties. The
representations and warranties of Buyer set forth herein shall be true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of such date.
(b) Performance and Compliance. Buyer shall have performed or
complied with each covenant and agreement to be performed or complied with by
it hereunder on or prior to the Closing Date.
(c) Consents and Approvals. Buyer shall have obtained or
made each consent, authorization, approval, exemption, filing, registration or
qualification, as are necessary for the performance of this Agreement, if any.
(d) Litigation. There shall be no pending or threatened
action by or before any governmental entity or arbitrator seeking to restrain,
prohibit or invalidate any of the transactions contemplated hereby or by any of
the other Transaction Documents or seeking monetary relief against Seller by
reason of the consummation of such transactions, and there shall not be in
effect any Governmental Order which has such effect.
(e) Officer's Certificate. Buyer shall have delivered to
Seller a certificate of its President dated the Closing Date and certifying
that each of the conditions specified in subsections (a), (b), (c) and (d)
above have been met.
(f) Secretary Certificate. Buyer shall have delivered to
Seller a certificate of its Secretary dated the Closing Date and certifying
(i) that correct and complete copies of its charter and by-laws are attached
thereto, (ii) that correct and complete copies of each resolution of its board
of directors approving this Agreement and the other Transaction Documents to
which it is a party and authorizing the execution hereof and thereof and the
consummation of the transactions contemplated hereby and thereby are attached
thereto and (iii) the incumbency and signatures of the officers of Buyer
authorized to execute and deliver this Agreement and the other Transaction
Documents to which Buyer is a party on behalf of Buyer.
(g) Opinion of Counsel. Buyer shall have delivered to Seller
an opinion of Buyer's counsel dated the Closing Date and in form and substance
reasonably satisfactory to Seller and its counsel with respect to the matters
in Sections 3.01, 3.02, 3.03 and 3.04.
(h) Other Transaction Documents. Buyer shall have executed
and delivered to Seller the other Transaction Documents to which Buyer is a
party and such other documents and instruments, in form and substance
satisfactory to Seller and its counsel, as shall be necessary or desirable in
order to consummate the transactions contemplated hereby, each dated the
Closing Date.
(i) Consulting Contracts. Consulting contracts with Robert
C. Leland, Jr. and Leonard G. Miller shall have been executed providing each
with no less than annual fees of $100,000, a company-supplied automobile and
fully paid dues at a local country club of their choice
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for a period of two years from the date of the Closing. There shall be no
health insurance provided under such consulting contracts.
ARTICLE VI
INDEMNIFICATION
6.01. Indemnification by Seller. Seller shall defend, indemnify and
hold harmless Buyer and it directors, officers, employees and agents
(each a "Seller Indemnitee") from and against any and all claims, damages,
losses, liabilities, costs and expenses (including without limitation
reasonable attorneys' fees and court costs) that constitute, or arise out of
or in connection with:
(a) any Excluded Assets or any liability not expressly
assumed by Buyer;
(b) any representation or warranty of Seller set forth
herein, in any other Transaction Document or in any certificate delivered in
connection herewith or therewith having been false or misleading in any
material respect as of the time when made (including by omission of material
information necessary to make such representation or warranty not misleading);
(c) any default by Seller in the performance or observance
of any of its covenants or agreement hereunder or under any other Transaction
Document; or
(d) any investigation by any governmental entity which
arises out of the conduct of the Business prior to the Closing Date.
6.02. Indemnification by Buyer. Buyer shall defend, indemnify and hold
harmless Seller and its directors, officers, employees and agents (each a
"Buyer Indemnitee") from and against any and all claims, damages, losses,
liabilities, costs and expenses (including without limitation reasonable
attorneys' fees and court costs) that constitute, or arise out of or in
connection with:
(a) any of the Assumed Liabilities;
(b) any representation or warranty of Buyer set forth herein,
in any other Transaction Document or in any certificate delivered in connection
herewith or therewith having been false or misleading in any material respect
as of the time when made (including by omission of material iinformation
necessary to make such representation or warranty not misleading);
(c) any default by Buyer in the performanance or observance
or any of its covenants or agreements hereunder or under any other Transaction
Document; or
(d) any investigation by any governmental entity which arises
out of the conduct of the Business after the Closing Date.
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6.03. Representation, Settlement and Cooperation. If any investigation
described in Section 6.01(d) or Section 6.02(d) (each a "Proceeding") is
initiated against or with respect to any Seller Indemnitee or Buyer Indemnitee
(each an "Indemnitee") and such Indemnitee intends to seek indemnification from
Seller on the one hand or Buyer on the other hand (each an "Indemnitor"), as
applicable, under this Article on account of its involvement in such
Proceeding, then such Indemnitee shall give prompt notice to the applicable
Indemnitor of such Proceeding; provided, that the failure to so notify such
Indemnitor shall not relieve such Indemnitor of its obligations under this
Article, but shall reduce such obligations by the amount of damages or
increased costs and expenses attributable to such failure to give notice. Upon
receipt of such notice, such Indemnitor shall diligently defend against such
Proceeding on behalf of such Indemnitee at its own expense using counsel
reasonably acceptable to such Indemnitee; provided, that if such Indemnitor
shall fail or refuse to conduct such defense, or such Indemnitee has been
advised by counsel that it may have defenses available to it which are
different from or in addition to those available to such Indemnitor, or that
its interests in such Proceeding are adverse to such Indemnitor's interests,
then such Indemnitee may defend against such Proceeding at such Indemnitor's
expense. Such Indemnitor or Indemnitee, as applicable, may participate in any
Proceeding being defended against by the other at its own expense, and shall
not settle any Proceeding without the prior consent of the other, which consent
shall not be unreasonably withheld. Such Indemnitor and Indemnitee shall
cooperate with each other in the conduct of any such Proceeding.
6.04. Notice and Satisfaction of Indemnification Claims. Indemnification
claims against Seller shall be satisfied out of the Escrow Fund prior to being
satisfied out of any other funds of Seller. No indemnification claim shall be
deemed to have been asserted until the applicable Indemnitor has been given
notice by the Indemnitee of the amount of such claim and the facts on which
such claim is based or, in the case of claims to be satisfied out of the Escrow
Fund, such other notice as is required by the Fund Escrow Agreement. If the
Indemnitee is not Buyer or Seller, then such notice shall be given on behalf of
such Indemnitee by Buyer or Seller, as applicable. Indemnification claims
(other than those satisfied out of the Escrow Fund) shall be paid within thirty
(30) days after the Indemnitor's receipt of such notice and such evidence of
the amount of such claim and the Indemnitor's liability therefor as the
Indemnitor may reasonably request.
6.05. Duration of Indemnification Obligations. Claims for indemnification
under this Article may only be asserted until the two-year anniversary of the
Closing Date, or sixty (60) days after the applicable statute of limitations
period, whichever is sooner.
6.06. Indemnification Threshold. Other than the exemption for
environmental liabilities and claims set forth in Paragraph 1.05(c) of this
Agreement, notwithstanding any other provision hereof, no Indemnitor shall have
any indemnification obligations under this Article unless and until a claim
asserted against such Indemnitor exceeds Ten Thousand Dollars ($10,000)
individually, and unless and until the claims asserted against such Indemnitor
which exceed Ten Thousand Dollars ($10,000), exceed one percent (1%) of the
Purchase Price in the aggregate (the "Threshold Amount"). Thereafter, such
Indemnitor shall be liable for all indemnification claims properly asserted
against it which exceed the Threshold Amount.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01. Amendments. This Agreement may be amended only by a writing signed
by each of the parties, and any such amendment shall be effective only to the
extent specifically set forth in such writing.
7.02. Assignment.
(a) On or before the Closing Date, Buyer shall have the right to
assign all of its interest in this Agreement to a subsidiary or affiliate of
Buyer or any entity in which Buyer or its shareholders owns a majority of the
ownership interests ("NEW CO"). In the event of such assignment, all of the
provisions of this Agreement shall be applicable to and binding upon NEW CO and
Seller in the same manner and to the same extent as those provisions are
applicable to and binding upon Buyer and Seller.
(b) Except as provided in Paragraph 7.02(a), neither this Agreement
nor any right, interest or obligation hereunder may be assigned, pledged or
otherwise transferred by any party, whether by operation of law or otherwise,
without the prior consent of the other party or parties.
7.03. Arbitration. Any claim or controversy arising out of or relating
to this Agreement or the other Transaction Documents shall be decided
exclusively by arbitration in accordance with the following:
(a) Any arbitration proceeding shall take place in the Detroit
Metropolitan Area and shall be conducted in accordance with the then current
rules of the American Arbitration Association, except as otherwise specifically
provided in this Section.
(b) A party which desires to initiate an arbitration proceeding shall
give notice to the other party setting forth such intention together with a
description, in reasonable detail, of the underlying claim or controversy and
the facts out of which such claim or controversy arose.
(c) The parties shall have ten (10) business days after a notice
described in paragraph (b) above is given to agree upon an arbitrator to
conduct such proceeding. If the parties fail to so agree within such ten (10)
day period then, within five (5) business days after the end of such ten (10)
day period, each party shall select an arbitrator and, within ten (10) business
days after the end of such five (5) day period, such two arbitrators shall
select a third arbitrator. Each arbitrator must either have professional
experience relating to the business or legal aspects of the subject of the
arbitration or be a retired judge. No arbitrator shall (i) have any material
interest in the result of the arbitration or (ii) be, or shall ever have been,
an affiliate, equity holder or creditor of, or an attorney, accountant, agent
or consultant for, any party to such arbitration proceeding.
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(d) The parties may obtain such discovery in connection with an
arbitration proceeding as is permitted by, and in accordance with, the then
current Federal Rules of Civil Procedure. The parties shall cooperate with
each other in connection with any proper request for discovery by furnishing to
the requesting party, within ten (10) business days after receipt of such a
request (subject only to mechanical limitations of availability and
reproduction facilities), copies of business and bookkeeping records,
statistics and correspondence reasonably related to the subject matter of the
arbitration. All duplication costs shall be borne by the party requesting the
documents.
(e) The decision of an arbitrator (or, if there are three
arbitrators, the decision of any two arbitrators) shall be final and binding
upon the parties, and judgment may be entered upon any such decision in any
court having jurisdiction.
(f) Attorneys' fees may be awarded to the prevailing party at the
discretion of the arbitrators.
(g) The obligations of the parties under this Section shall be
specifically enforceable and shall survive any termination of this Agreement.
7.04. Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts, and by each of the parties on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all of which shall constitute but one and the same instrument. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile
also shall deliver a manually executed counterpart of this Agreement, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability or binding effect of this Agreement.
7.05. Expenses. Except as otherwise specifically provided herein or in
any other Transaction Document, each party shall be responsible for such
expenses as it may incur in connection with the negotiation, preparation,
execution, delivery, performance and enforcement of this Agreement and the
other Transaction Documents. Seller shall be responsible for the cost of the
title insurance policies issued in this transaction. Buyer shall be
responsible for the cost of any baseline environmental assessments. Buyer
shall pay any and all real estate transfer taxes in connection with the
transfer of the Real Property to Buyer. The Deposit Escrow Agent's fees and
costs shall be split equally by Seller and Buyer.
7.06. Further Assurances. The parties shall from time to time do and
perform such additional acts and execute and deliver such additional documents
and instruments as may be required by applicable Governmental Rules or
reasonably requested by any party to establish, maintain or protect its rights
and remedies or to effect the intents and purposes of this Agreement and the
other Transaction Documents without limiting the generality of the foregoing,
each party agrees to endorse (if necessary) and deliver to the other, promptly
after its receipt thereof, any payment or document which it receives after the
Closing Date and which is the property of the other.
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7.07. Governing Law. This Agreement shall be a contract under the laws of
the State of Michigan and for all purposes shall be governed by and construed
and enforced in accordance with the laws of said State.
7.08. Notices. Unless otherwise specifically provided herein, all notices,
consents, requests, demands and other communications required or permitted
hereunder:
(a) shall be in writing;
(b) shall be sent by messenger, certified or registered U.S. mail,
a reliable express delivery service or telecopier (with a copy sent by one of
the foregoing means), charges prepaid as applicable, to the appropriate
address(es) or number(s) set forth below; and
(c) shall be deemed to have been given on the date of receipt by the
addressee (or, if the date of receipt is not a Business Day, on the first
Business Day after the date of receipt), as evidenced by (i) a receipt executed
by the addressee (or a responsible person in his or her office), the records of
the Person delivering such communication or a notice to the effect that such
addressee refused to claim or accept such communication, if sent by messenger,
U.S. mail or express delivery service, or (ii) a receipt generated by the
sender's telecopies showing that such communication was sent to the appropriate
number on a specified date, if sent by telecopier.
All such communications shall be sent to the following addresses or numbers, or
to such other addresses or numbers as any party may inform the others by giving
five Business Days' prior notice:
If to Seller: With a copy to:
Molmec, Inc. Heritier Nance, P.C.
2655 E. Oakley Park Road 5800 Crooks Road, Suite 180
Walled Lake, MI 48390-1640 Troy, MI 48098-2830
Attn: Barry A. Kempa Attn: Robert L. Heritier
Telecopier No.: (810) 669-6240 Telecopier No.: (810) 828-4030
If to Buyer: With a copy to:
LDM Technologies, Inc. Michael B. Lewis
2500 Executive Hills Drive Kerr, Russell & Weber, P.L.C.
Auburn Hills, MI 48326 One Detroit Center
Attn: Richard J. Nash 500 Woodward Ave., Suite 2500
Telecopier No. (810) 858-2812 Detroit, MI 48226-3406
Telecopier No. (313) 961-0388
7.09. Publicity. Neither party shall make any press release or other
public announcement regarding this Agreement or the other Transaction Documents
or any transaction contemplated
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hereby or thereby until the text of such release or announcement has been
submitted to the other party and the other party has approved the same.
7.10. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
7.11. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of each of the parties and their respective heirs,
successors and permitted assigns.
7.12. Termination.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual agreement of Buyer and Seller;
(ii) by Buyer if there has been a material misrepresentation by
Seller hereunder, a material breach by Seller of any of its warranties or
covenants set forth herein and the breach by its nature cannot be cured before
the Closing Date, or if any of the conditions specified in Section 5.02 shall
not have been fulfilled within the time required and shall not have been waived
by Buyer;
(iii) by Seller if there has been a material misrepresentation
by Buyer hereunder, a material breach by Buyer of any of its warranties or
covenants set forth herein and the breach by its nature cannot be cured before
the Closing Date, or if any of the conditions specified in Section 5.03 shall
not have been fulfilled within the time required and shall not have been waived
by Seller; or
(iv) by Seller if the Closing shall not have occurred on or
before December 20, 1996 or such other Closing Date that Seller may have
selected as permitted in Section 5.01; provided that Seller may terminate this
Agreement pursuant to this subparagraph only if the Closing shall not have
occurred on or prior to such date for a reason other than a failure to satisfy
the conditions to Closing set forth in Section 5.02(a) through (j), and 5.02(m)
through (n). In addition to such right to terminate, if the Closing shall not
have occurred on or before December 20, 1996 or such other Closing Date that
Seller may have selected as permitted in Section 5.01, for any reason other
than (a) a material breach of Seller's representations and warranties (as set
forth in Section 5.02(a)); (b) a failure to receive Hart Scott Rodino approval,
or (c) Buyer's written notification to Seller prior to November 22, 1996, that
it is not satisfied with the results of its due diligence investigation, then
the Seller shall also be entitled to the Deposit in Section 1.04(a) and in
addition Seller shall also be entitled to pursue any other available legal
remedies.
(b) If this Agreement is terminated by either Seller or Buyer as
provided above, then neither party shall have any further obligations or
liabilities hereunder except for obligations
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or liabilities arising from a breach of this Agreement prior to such
termination or which survive such termination by their own terms.
Notwithstanding anything herein to the contrary, the Confidentiality Agreement
signed by Buyer shall survive any termination, and said Confidentiality
Agreement is incorporated herein.
7.13. Waivers. The due performance or observance by the parties of their
respective obligations hereunder and under the other Transaction
Documents shall not be waived, and the rights and remedies of the parties
hereunder and under the other Transaction Documents shall not be affected, by
any course of dealing or performance or by any delay or failure of any party in
exercising any such right or remedy. The due performance or observance by a
party of any of its obligations hereunder or under any other Transaction
Document may be waived only by a writing signed by the party against whom
enforcement of such waiver is sought, and any such waiver shall be effective
only to the extent specifically set forth in such writing.
7.14. Retained Contracts. To the extent that the Excluded Assets and/or
Excluded Liabilities include any contracts or other agreements relating to the
provision of the products or services of the Business, Buyer agrees to
cooperate with Seller in performing such agreements and Seller agrees to
deliver to Buyer any monies it receives under any such agreement performed by
Buyer promptly upon its receipt thereof.
7.15. Change of Seller's Name. Seller acknowledges that from and after
the Closing Date it shall have no right to use its present corporate name or
any trade names included in the Assets. Therefore, Seller agrees that,
immediately after the Closing, it will take all such action as is necessary to
change its corporate name and to otherwise permit Buyer to have the exclusive
right to such corporate and trade names.
7.16. Entire Agreement. This Agreement and all related documents,
schedules, exhibits, or certificates represent the entire understanding and
agreement between the parties with respect to the subject matter and supersede
all prior agreements or negotiations between the parties. This Agreement may
be amended only in a writing signed by both parties.
ATTEST: MOLMEC, INC.
By: Robert L. Heritier By: Robert C. Vamos
------------------------------ -------------------------------
Title: ROBERT L. HERITIER Title: ROBERT C. VAMOS, PRESIDENT
---------------------------- -----------------------------
[Corporate Seal]
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ATTEST: LDM INDUSTRIES INC., d/b/a
LDM TECHNOLOGIES, INC.
By: Michael B. Lewis By: ???
------------------------------ -------------------------------
Title: MICHAEL B. LEWIS Title: CEO
---------------------------- -----------------------------
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FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT is made this 27th day of November, 1996, between MOLMEC,
INC., and LDM TECHNOLOGIES, INC., d/b/a and f/n/a LDM INDUSTRIES INC.
RECITALS:
A. MOLMEC, INC., and LDM TECHNOLOGIES, INC., d/b/a and f/n/a LDM
INDUSTRIES INC., wish to amend the Asset Purchase Agreement which was signed by
both parties on November 4, 1996.
B. Pursuant to Section 7.01 of the Asset Purchase Agreement and in
consideration of the mutual covenants and agreements set forth below, the Asset
Purchase Agreement is hereby amended by both parties as follows:
AMENDMENT
1. Section 1.03 is hereby amended in its entirety as follows:
1.03. Assumption of Liabilities. Seller agrees that Buyer assumes no
liabilities of Seller, whether accrued, contingent, known, unknown or
otherwise except for those liabilities listed on Schedule 1.03 and those
liabilities that arise out of or relate to the Assets or the Business as
conducted in the ordinary course of Business through the Closing Date (the
"Assumed Liabilities"). Seller shall be responsible for any liabilities from
acts or omissions which arise prior to the Closing Date and which are not
specifically assumed by Buyer. In addition, wrongful acts and product recalls
relating to any period prior to the Closing Date shall be treated as
undisclosed liabilities of Seller and shall not be assumed by Buyer. Buyer
shall be entitled to treat any such undisclosed liability as a liability
subject to indemnification by Seller, pursuant to Section 6.01 hereof.
Notwithstanding anything in this Agreement to the contrary, Buyer shall assume
any executory obligations of continued performance arising in the ordinary
course of business under any employment contracts, but excluding the employment
contracts of Robert C. Vamos and Barry A. Kempa, and excluding any employee
bonus agreements.
2. Schedule 1.03 is amended in its entirety and replaced with the
attached First Amended Schedule 1.03.
3. Section 1.04 is amended in its entirety as follows:
1.04 Purchase Price. Subject to Section 1.05 hereof, the purchase price for
the Assets (the "Purchase Price") shall be Sixty Million Dollars
($60,000,000.00), less the value of the Excluded Assets, plus the amount of the
Assumed Liabilities pursuant to Section 1.03 hereof, plus the amount
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<PAGE> 31
of the reserve accounts set forth on Schedule 1.05 (the amount of the reserve
accounts being reflected in the Sixty Million Dollar portion of the Purchase
Price). The Purchase Price shall be payable by Buyer as follows:
(a) One Million Dollars ($1,000,000) in immediately available funds
(the "Deposit") has been delivered to Comerica Bank (the "Deposit Escrow
Agent"), on the date the Asset Purchase Agreement was fully executed, as
evidence of Buyer's good faith, to be held and disbursed in accordance with
the terms of an Escrow Agreement attached to the Asset Purchase Agreement as
Exhibit A and as subsequently amended (the "Deposit Escrow Agreement"). The
Deposit will be applied to the Purchase Price at the Closing (as defined
hereafter). If Seller terminates this Agreement pursuant to Section
7.12(a)(iii), or if Buyer shall otherwise fail or refuse to complete the
Closing as required by this Agreement, which may or may not result in Seller's
termination of this Agreement pursuant to Section 7.12(a)(iv), then Seller
shall be entitled to the Deposit and the Additional Deposit, as defined below,
if any, and any interest thereon as its sole and exclusive remedy. If this
Agreement is terminated pursuant to Section 7.12(a)(i) or (ii), or if Seller
shall otherwise fail or refuse to complete the Closing as required by this
Agreement, then Buyer shall be entitled to the Deposit and the Additional
Deposit, as defined below, if any, and any interest thereon as its sole and
exclusive remedy.
If the closing shall not have occurred on or before December 20, 1996, then
Buyer shall deliver an additional One Million Dollars ($1,000,000.00) in
immediately available funds (the "Additional Deposit") to the Deposit Escrow
Agent on December 20, 1996, as evidence of Buyer's continued good faith. The
Additional Deposit will be applied to the Purchase Price at the Closing. If
the Closing does not occur by January 31, 1997, then Seller shall be entitled
to the Deposit and the Additional Deposit and any interest thereon as its sole
and exclusive remedy.
(b) One Million Dollars ($1,000,000) in immediately available funds
(the "Escrow Fund") shall be delivered on the Closing Date to a federally
insured commercial bank reasonably acceptable to Buyer and Seller (the "Fund
Escrow Agent"), to be held or disbursed in accordance with the terms of an
Escrow Agreement in substantially the form of Exhibit B (the "Escrow Fund
Agreement").
(c) Five Hundred Thousand Dollars ($500,000) in immediately
available funds (the "Environmental Escrow Fund") shall be delivered on the
Closing Date to a federally insured commercial bank reasonably acceptable to
Buyer and Seller (the "Fund Escrow Agent"), to be held or disbursed in
accordance with the terms of an Escrow Agreement in substantially the form of
Exhibit C (the "Deco-Trim Environmental Escrow Fund Agreement").
(d) Buyer shall retain from the Purchase Price an amount to be
mutually determined by Buyer and Seller prior to the Closing (the "Hold-Back")
to be held by the Buyer until it receives from Seller (i) written confirmation
from the Michigan Employment Security Commission to the effect that all
contributions, penalties and accrued interest due from Seller have been paid in
full; and (ii) a certificate from the Commissioner of Revenue of the Michigan
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<PAGE> 32
Department of Treasury stating that all taxes due to the State of Michigan
including, but not limited to, single business taxes, excise taxes, sales taxes
and use taxes are paid. Promptly after receipt of the items described above,
Buyer will disburse the Hold-Back by delivering Seller a cashier's or certified
check in the amount of the Hold-Back.
(e) The Assumed Liabilities shall be assumed by Buyer by proper
instruments executed at the Closing, and the Assumed Liabilities and the
reserve accounts shall be credited toward the Purchase Price.
(f) The balance in immediately available funds shall be paid to
Seller on the Closing Date.
(g) In the event that the Closing occurs after January 7, 1997, as
provided for in Section 5.01, then in addition to the Purchase Price, Buyer
shall pay to Seller non-refundable interest in the amount of Eight Thousand
Dollars ($8,000.00) for each day after January 7, 1997, including the day of
the Closing, payable weekly in advance beginning on January 7, 1997, but
prorated on a per diem basis for the week of the Closing.
4. Schedule 2.13 is amended in its entirety and replaced with the
attached First Amended Schedule 2.13.
5. Section 3.06 is hereby amended in its entirety as follows:
3.06 Hart Scott Rodino Filing. As of the date of this Amendment,
Buyer's Hart Scott Rodino application has been approved.
6. Section 4.01 (o)(iii) is hereby added as follows:
(iii) Within seven days of Buyer's receipt of the last of the updated
surveys from Seller for the real property referenced in Schedule 2.11, Buyer
shall determine in its sole reasonable discretion whether (a) there are any
material encroachments or encumbrances; (b) there is proper ingress and egress
to each facility and compliance with zoning, building and use restrictions; (c)
there are easements or rights-of-way which materially interfere with the normal
and reasonable use of the real property, and (d) the aggregate real property
being acquired is materially as represented by Seller to Buyer in on-site
meetings between Seller and Buyer. In the event Buyer determines in its sole
reasonable discretion that there is a material deficiency as set forth above,
Buyer shall be permitted to terminate the Asset Purchase Agreement by written
notice to Seller within said seven day period, receive a refund of its Deposit
and the Additional Deposit, if any, and all accrued interest, and this
Agreement shall be null, void and of no further effect. By entering into this
Amendment to the Asset Purchase Agreement, Buyer is relying upon Seller's
representation that the last of the updated surveys will be delivered to Buyer
by Seller on or before December 9, 1996. All updated surveys shall be
"as-built" surveys showing the location of the plastic injection molding
facilities and all structures situated on the subject real property, along with
all easements, encroachments, ingress and
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<PAGE> 33
egress, shall contain a complete legal description by metes and bounds or lot
description, shall provide a certification from a Michigan licensed land
surveyor to Buyer and the applicable title company, and shall provide such
other information as Buyer shall reasonably require to satisfy itself with
respect to items (a) through (d) above.
7. Section 5.01 is hereby amended in its entirety as follows:
5.01. Closing. The closing of the transaction contemplated
hereby (the "Closing") shall take place on or before January 7, 1997, at the
offices of Heritier Nance, P.C., Troy, Michigan, or at such other time or place,
or on such other date as the parties may mutually agree upon, or at Buyer's
option, some other time on or before January 31, 1997, subject to the payment of
interest as provided in Section 1.04(f). If the Closing has not occurred on or
before January 7, 1996, then the Closing shall occur on a Friday in the month of
January, so as to allow a Closing Balance Sheet to be prepared as of a Friday.
The date on which the Closing occurs is referred to herein as the "Closing
Date".
8. Section 5.02(k) is hereby amended in its entirety as follows:
(k) Due Diligence. Subject to the exception for survey due diligence
in Section 4.01(o)(iii), Buyer shall have satisfactorily completed its due
diligence investigation by November 27, 1996 at 5:00 p.m., subject to the
survey due diligence exceptions. Buyer shall notify Seller in writing on or
prior to November 27, 1996 at 5:00 p.m., if it is not satisfied with the
results of its due diligence investigation, whereupon all parties shall be
relieved of their obligations hereunder, and Seller shall be free to
communicate and negotiate with other potential buyers notwithstanding anything
to the contrary contained in this Agreement or the Letter of Intent previously
signed by Seller and Buyer. In such event, Buyer shall be entitled to a return
of the Deposit and any Additional Deposit paid pursuant to Section 1.04(a),
together with any interest thereon.
9. Section 5.02(l) is hereby amended in its entirety as follows:
(l) Hart Scott Rodino. Any Hart Scott Rodino filing fee shall be
paid by the Buyer. As of the date of this Amendment, Buyer's Hart Scott Rodino
application has been approved.
10. Section 5.03(i) is hereby amended in its entirety as follows:
(i) Consulting and Employment Contracts. Consulting and/or
employment contracts with Robert C. Leland, Jr. and Leonard G. Miller shall have
been executed providing each with annual fees of $10,000, a company-supplied
automobile and fully paid dues at Bloomfield Hills Country Club (for Leland) and
Orchard Lake Country Club (for Miller) for a period of two years from the date
of the Closing. There shall be no health insurance provided under such
consulting contracts. Non Competition Agreements with Robert C. Leland, Jr. and
Leonard G. Miller shall have been executed providing each with annual fees of
$90,000, for a period of two years from the date
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<PAGE> 34
of the Closing. The term of the Non Competition agreement shall be four years
from the Closing. An employment contract with Barry A. Kempa for two (2) years
shall have been executed providing for 18 months of severance pay in the event
of a voluntary termination of employment within the first six months after the
Closing or in the event of a termination of employment without cause by Buyer
during the term of the contract.
11. Section 7.12(a)(iv) is hereby amended in its entirety as follows:
(a) This Agreement may be terminated at any time prior to the
Closing:
* * *
(iv) by Seller if the Closing shall not have occurred on or
before January 31, 1997, provided that Seller may terminate this Agreement
pursuant to this subparagraph only if the Closing shall not have occurred on or
prior to such date for a reason other than a failure to satisfy the conditions
to Closing set forth in Section 5.02(a) through (k), and 5.02(m) through (n).
In addition to such right to terminate, if the Closing shall not have occurred
on or before January 31, 1997, for any reason other than (a) a material breach
of Seller's representations and warranties (as set forth in Section 5.02(a));
(b) Buyer's written notification to Seller prior to November 27, 1996 at 5:00
p.m., that it is not satisfied with the results of its due diligence
investigation; or (c) Buyer's written notification to Seller pursuant to Section
4.01 (o)(iii) that there is a material deficiency under the survey due diligence
exception, then the Seller shall also be entitled to the Deposit and the
Additional Deposit and any interest thereon as described in Section 1.04(a).
12. Section 1.05 (c) is hereby amended in its entirety as follows:
(c) Buyer may assert a claim or claims against the Deco-Trim
Environmental Escrow Fund for environmental liabilities or claims as provided in
Section 6.07, and such amounts claimed shall not be subject to the $10,000 and
1% indemnification Threshold Amount established at Section 6.06 of this
Agreement for non-environmental claims.
13. Section 7.05 is hereby amended in its entirety as follows:
7.05. Expenses. Except as otherwise specifically provided herein or
in any other Transaction Document, each party shall be responsible for such
expenses as it may incur in connection with the negotiation, preparation,
execution, delivery, performance and enforcement of this Agreement and the other
Transaction Documents. Seller shall be responsible for the cost of the title
insurance policies issued in this transaction and related surveys. Buyer shall
be responsible for the cost of any baseline environmental assessments. Buyer
shall pay any and all real estate transfer taxes in connection with the transfer
of the Real Property to Buyer. Buyer will pay direct expenses involved with the
assumption by Buyer of the Industrial Revenue Bond on the Hartland facility,
such as an opinion of bond counsel, letter of credit fee, etc..., but Seller
agrees to cooperate with the necessary parties to effect the assumption of the
Industrial Revenue Bond by Buyer. The Deposit Escrow Agent's fees and costs
shall be split equally by Seller and Buyer.
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<PAGE> 35
14. Section 1.05(a)(i) is hereby amended in its entirety as follows:
(a) Closing Balance Sheet.
(i) Within sixty (60) days after the Closing Date, Seller
shall cause its independent accountants to deliver to Seller and Buyer an
audited balance sheet for the Business as of the Closing Date (the "Closing
Balance Sheet"). This Closing Balance Sheet shall reflect the net book value
of the Assets purchased by Buyer, as of the Closing Date, but if the Closing
Date is between December 31, 1996 and January 7, 1996, the Closing Balance
Sheet shall reflect the net book value of the Assets purchased by Buyer, as of
December 31, 1996. For purposes of this Agreement, the term "net book value"
shall mean an amount equal to the Assets less the Assumed Liabilities,
reflected on the September 29, 1996 balance sheet or the Closing Balance Sheet,
as the context indicates, with inventory being accounted for on a first in
first out basis for both balance sheets. In addition, the Closing Balance
Sheet will not include any environmental reserve. Buyer and Seller each shall
designate a representative to assist and shall cooperate with each other and
the independent accountants in preparing the Closing Balance Sheet, and Buyer
shall pay all costs assessed by the independent accountants in connection with
preparation and delivery of the Closing Balance Sheet.
15. The Deposit Escrow Agreement attached as Exhibit A to the Asset
Purchase Agreement is hereby amended in its entirety and replaced with the
attached Second Amendment to Escrow Agreement (Exhibit A).
16. Section 5.02(h)(vii) is hereby amended in its entirety as follows:
(vii) an Assignment of Lease for the Avon plant, together with a
statement from Seller, certified to Buyer, that Seller is in compliance with its
obligations under Paragraph 7 of the Lease with respect to environmental
matters, such as: not contaminating the site, taking all actions necessary to
investigate, and clean up and elimination of the source of any past or present
contamination. In addition, Seller shall obtain a certificate from the Landlord
indicating that the building is in compliance with "first-class order and
repair", as required by the Lease, and that the Landlord has made no request
that Tenant perform any work or make any repairs in the preceding 60 days.
Notwithstanding the above, if the Lease is amended to the satisfaction of the
Buyer, and if appropriate acknowledgments are provided by Landlord which
eliminate the Tenant's duty to repair, maintain, and/or improve the building,
then the necessity of such Seller statement and Landlord certificate may be
waived by Buyer.
17. Section 6.06 is hereby amended in its entirety as follows:
6.06. Indemnification Threshold. Except for environmental claims
generally and separate provisions for environmental liabilities at the Deco Trim
plant set forth in Section 6.07 of this Agreement, notwithstanding any other
provision hereof, no Indemnitor shall have any indemnification obligations under
this Article unless and until a claim asserted against such
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<PAGE> 36
Indemnitor exceeds Ten Thousand Dollars ($10,000) individually, and unless and
until the claims asserted against such Indemnitor which exceed Ten Thousand
Dollars ($ 10,000), exceed one percent (1%) of the Purchase Price in the
aggregate (the "Threshold Amount"). Thereafter, such Indemnitor shall be
liable for all indemnification claims properly asserted against it which exceed
the Threshold Amount. Buyer may assert a claim or claims against the Escrow
Fund for any environmental liabilities or claims related to any of the Real
Property, with the exception of the Deco-Trim facility.
18. Section 6.07 is hereby inserted as follows:
6.07. Environmental Escrow. Seller shall defend, indemnify and hold
harmless Buyer and its shareholders, directors, officers, employees and agents
(each a "Seller Indemnitee") from and against any and all claims, damages,
losses, liabilities, costs and expenses (including without limitation reasonable
attorneys' fees and court costs) that arise out of or in connection with any
environmental matter relating to the Real Property owned or leased by Seller.
(a) An Environmental Escrow Fund is established in
Section 1.04(c) to satisfy the cost of environmental claims at the Deco-Trim
facility only. The Seller and its shareholders, directors, officers,
employees and agents shall have no personal liability to a Seller Indemnitee
for any environmental claims.
(b) Claims for indemnification under this Section may only be
asserted until the six year anniversary of the Closing Date. In the event there
are funds remaining in the Environmental Escrow Fund after the remediation of
the Deco-Trim property has been completed to the reasonable satisfaction of
Buyer and the Michigan Department of Environmental Quality ("DEQ"), such excess
shall be paid to Seller at or prior to the end of the six year anniversary of
the Closing Date, if no other environmental claims have been made and remain
outstanding. The work at the Deco-Trim plant shall be deemed completed when the
DEQ provides Seller with a "clean closure" letter, or substantial equivalent,
all wells are decommissioned and removed, the site does not require further
remediation, and Buyer has given its written approval of the remediation, which
written approval shall not be unreasonably withheld in the event the
aforementioned DEQ approval is received and all wells are decommissioned and
removed. Seller's environmental consultant shall keep Buyer's environmental
consultant apprised of the remediation process via periodic written progress
reports, provided not less than every six months.
(c) The funds in the Deco-Trim Environmental Escrow Fund shall
be released periodically and payable direct to Seller's environmental consultant
(currently Clayton Environmental) upon approval by Buyer's environmental
consultant (currently IT Corporation) after Buyer's environmental consultant
approves the request for payment and invoices. Buyer's environmental consultant
shall be reasonable and cooperative with respect to exercising its approval of
Seller's environmental consultant's request for payment of invoices. After the
Closing, all costs of Seller's and Buyer's environmental consultants shall be
paid from the Deco-Trim Environmental Escrow Fund. Seller and Buyer shall be
permitted to change their respective environmental
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<PAGE> 37
consultants with other environmental consultants, if the other party reasonably
approves of such successor environmental consultant.
(d) Seller hereby agrees to indemnify, defend and hold harmless
Buyer for any and all actions, demands, lawsuits, complaints or claims relative
to (i) Buyer's involvement in the oversight of this environmental remediation,
and (ii) the contaminated groundwater at the Deco-Trim facility, surrounding
property and contiguous property and/or the environmental condition of the site
and adjoining sites, whether known or unknown, whether brought by the DEQ, a
third party, a citizens group, or Buyer for Seller's failure to properly
implement the remediation contemplated herein.
(e) If Seller fails or refuses to direct the payment of funds
necessary to complete the remediation or satisfaction of environmental claims to
the satisfaction of Buyer, then Buyer may make claims against the Deco-Trim
Environmental Escrow Fund in the same manner as Seller, as provided in the
Deco-Trim Environmental Escrow Agreement. In such case, Seller shall receive
notice of Buyer's filed claim against the Fund, in the same manner as Buyer
would receive for claims made by Seller.
19. Section 1.06 is hereby amended in its entirety as follows:
1.06. Assignment of Value. Buyer and Seller shall use their best
efforts to comply with the applicable requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), by preparing a schedule to be executed at the
Closing (defined below) reflecting the allocation of the total price paid to the
respective Assets, which allocation shall be used by them in preparing their
respective income tax returns; provided, that any failure to agree on such
allocation shall not relieve either party of its obligations hereunder. Seller
and Buyer agree that such allocation for all Real Property shall, at Buyer's
option, be at fair market value, and that the total price paid by Buyer which
exceeds the net book value of the Assets will be allocated to goodwill.
20. Section 2.15 (m) is hereby amended in its entirety as follows:
(m) If Seller terminates any employment relationships or Employee
Benefit Plans in connection with this Agreement, Seller will comply with all
applicable federal and state laws, rules and regulations governing the
termination of employment and/or termination of the Employee Benefit Plan. Buyer
anticipates offering employment to nearly all of Seller's employees. If certain
of Seller's employees are not offered employment by Buyer, Buyer agrees to
indemnify Seller and Seller's Shareholders for any liability arising out of the
termination of said employees (excluding Robert C. Vamos and Barry A. Kempa),
and such indemnification shall be paid directly by Buyer, on a monthly basis,
and shall not be paid from the Escrow Fund, and shall not be subject to any
threshold amount. Buyer and Seller specifically agree that Buyer will not be
liable for any amounts owed currently or in the future to Vamos and Kempa under
their current employment contracts with Seller. If a transfer and assumption of
employment agreements and/or Employee Benefit Plans is
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<PAGE> 38
requested by Buyer, Seller will execute any and all documents reasonably
requested by Buyer to assist in the transfer of such employment agreements and
Employee Benefits Plans.
21. Section 6.05 is hereby amended in its entirety as follows:
6.05. Duration of Indemnification Obligations. Claims for
indemnification under this Article may only be asserted until the two-year
anniversary of the Closing Date, or sixty (60) days after the applicable statute
of limitations period, whichever is sooner, except that environmental claims
shall be subject to the limitation period set forth in Section 6.07.
Except for the above amended provisions, the parties reaffirm all of the
provisions of the Asset Purchase Agreement dated November 4, 1996 and the same
shall remain in full force and effect.
ATTEST: MOLMEC, INC.
By: ??? By: Robert C. Vamos
---------------------------- -----------------------------
Title: Title: President
------------------------- --------------------------
[Corporate Seal]
ATTEST: LDM TECHNOLOGIES, INC., d/b/a
LDM INDUSTRIES INC.
By: ??? By: Joe Balous
---------------------------- -----------------------------
Title: Title: Chairman
------------------------- --------------------------
9
<PAGE> 39
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT is made this 23 day of December, 1996, between
MOLMEC, INC., and LDM TECHNOLOGIES, INC., d/b/a and f/k/a LDM INDUSTRIES INC.
RECITALS:
A. MOLMEC, INC., and LDM TECHNOLOGIES, INC., d/b/a and f/k/a LDM
INDUSTRIES INC., wish to amend the Asset Purchase Agreement dated November 4,
1996, and amended via that certain First Amendment to Asset Purchase Agreement
dated November 27, 1996.
B. Pursuant to Section 7.01 of the Asset Purchase Agreement and in
consideration of the mutual covenants and agreements set forth below, the Asset
Purchase Agreement, as amended, is hereby further amended by both parties as
follows:
AMENDMENT
1. The fourth sentence of Section 2.10, entitled Environmental Matters,
is hereby deleted and the following sentence is inserted in its place:
Seller has not used Hazardous Materials (as hereinafter defined) on or
affecting the Real Property in any manner which violates federal, state
or local laws, ordinances, statutes, rules, regulations or judgments
governing the use, storage, treatment, handling, manufacture,
transportation or disposal of Hazardous Materials ("Environmental
Laws") or received any notice of any violation of Environmental Laws
and, to the best of Seller's knowledge, no prior owner of the Real
Property or any current or prior occupant has used Hazardous Materials
on or affecting the Real Property in any manner which violates
Environmental Laws, except as disclosed in those certain environmental
reports prepared by ATEC Environmental Consultants, Testing Engineers
and Consultants, McDowell & Associates and Clayton Environmental
(collectively, the "Environmental Reports").
2. New Section 4.04, entitled Environmental Work Prior to Closing is
hereby added which reads as follows:
4.04. Environmental Work Prior to Closing. Seller hereby agrees to
perform the surficial soil cleanup referenced in the various
International Technology Corporation Environmental Site Assessments
("IT ESAs") prior to Closing. Seller shall sign all manifests
necessary or appropriate for the transport of the contaminated soil
associated with the surficial soil removal operations.
<PAGE> 40
Seller shall be responsible for any and all testing and analysis of
the contaminated soils, and shall be solely responsible for the
selection of the landfill for disposal of the contaminated soil. The
disposal of the contaminated soil shall be done in compliance with all
applicable laws, rules and regulations.
3. New Section 7.17, entitled Environmental Work to be Begun Prior to
Closing and Completed After Closing, is hereby added which reads as follows:
7.17. Environmental Work to be Begun Prior to Closing and Completed
After Closing. Seller shall be responsible for the diligent
implementation of the Remedial Action Plan, obtaining clean closure and
decommissioning all wells at the Deco-Trim property, all at Seller's
cost, which costs shall be paid out of the Environmental Escrow Fund.
Seller shall be responsible for diligently obtaining the "clean
closure" letter, or substantial equivalent, from the Michigan
Department of Environmental Quality ("DEQ"). Seller has provided Buyer
with a copy of the proposed Remedial Action Plan submitted to the DEQ
and shall provide Buyer with the written approval of the Remedial
Action Plan provided by the DEQ upon receipt, as well as any other
correspondence to or from the DEQ concerning the approval,
implementation or amendment to the Remedial Action Plan. Seller shall
also provide Buyer with any amendments to the Remedial Action Plan and
all sampling and analytical data.
Except for the above amended provisions, the parties reaffirm and ratify
all of the terms, conditions and provisions of the Asset Purchase Agreement
dated November 4, 1996, and the First Amendment to Asset Purchase Agreement
dated November 27, 1996, and the same shall remain in full force and effect.
ATTEST: MOLMEC, INC.
By: ??? By: Leonard G. Miller
----------------------------- ------------------------------
Title: Title: Vice President Engineering
-------------------------- ---------------------------
By: Robert C. Vamos
------------------------------
Title: President
---------------------------
[Corporate Seal]
ATTEST: LDM TECHNOLOGIES, INC., d/b/a and
f/k/a LDM INDUSTRIES INC.
By: ??? By: ???
---------------------------- ------------------------------
Title: Title: Chairman/Secretary
-------------------------- ---------------------------
-2-
<PAGE> 41
THIRD AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS THIRD AMENDMENT is made this 21 day of January, 1997, between MOLMEC,
INC., and LDM TECHNOLOGIES, INC., d/b/a and f/k/a LDM INDUSTRIES INC.
RECITALS:
A. MOLMEC, INC., and LDM TECHNOLOGIES, INC., d/b/a and f/k/a LDM
INDUSTRIES INC., wish to amend the Asset Purchase Agreement which was signed by
both parties on November 4, 1996, as subsequently amended by a First Amendment
dated November 27, 1996 and a Second Amendment dated December 23, 1996.
B. Pursuant to Section 7.01 of the Asset Purchase Agreement and in
consideration of the mutual covenants and agreements set forth below, the Asset
Purchase Agreement is hereby amended by both parties as follows:
AMENDMENT
1. Section 1.01 is hereby amended in its entirety as follows:
1.01. Purchase and Sale of Assets. On the closing date (defined below),
Seller shall sell to Buyer, and Buyer shall purchase from Seller, all of
Seller's rights, title and interest in and to the following assets of Seller
(collectively, the "Assets"):
(a) the real property listed on Schedule 1.01, the buildings and
other improvements constructed thereon and all other rights associated therewith
(collectively, the "Real Property");
(b) all equipment, machinery, fixtures, tools, dies, patterns,
vehicles, computer hardware and software and furniture (collectively, the
"Equipment"), and all supplies, spare parts and warranties relating to any of
the Equipment;
(c) all raw material, work-in-process and finished goods inventory
of the Business (collectively, the "Inventory");
(d) all patents, registered and unregistered trademarks, service
marks, logos, corporate and trade names and registered and common law
copyrights, and all applications therefor, used and useful in connection with
the Business (collectively, the "Intellectual Property");
(e) all inventions, discoveries, techniques, processes, methods,
formulae, designs, trade secrets, confidential information, know-how and ideas
used or useful in connection with the Business;
(f) all accounts receivable of the Business (the "Receivables")
and all other
<PAGE> 42
claims, causes of action, choses in action and rights of recovery and setoff
relating to the Business or any of the Assets;
(g) all bids, offers, leases, licenses, contracts, agreements and
business arrangements relating to the Business or any of the Assets (the
"Business Agreements");
(h) all permits, licenses, franchises, certificates,
authorizations, consents and approvals obtained from or issued by any
governmental entity and which are necessary or desirable for the ownership or
operation of the Business or the ownership, operation or use of any of the
Assets (collectively, the "Business Permits");
(i) all books, records, files, ledgers, drawings, specifications
and manuals relating to the Business or any of the Assets, all advertising
materials relating to the Business and all other information relating to the
Business or any of the Assets, regardless of the form in which such information
appears;
(j) all goodwill of the Business or associated with any of the
Assets;
(k) all other assets of Seller, tangible or intangible.
(l) all cash, cash equivalents and amounts held on deposit in all
savings, checking, money market, investment and other similar accounts.
2. Schedule 1.02 is amended in its entirety and replaced with the
attached First Amended Schedule 1.02.
3. The first paragraph of Section 1.04 is amended in its entirety as
follows:
1.04 Purchase Price. Subject to Section 1.05 hereof, the purchase price
for the Assets (the "Purchase Price") shall be Sixty Million Dollars
($60,000,000.00), less the value of the Excluded Assets (which Buyer and Seller
stipulate to be Three Hundred Fifty Thousand Dollars ($350,000.00) for purposes
of the Closing until the actual value is determined as of the date of the
Closing per Section 1.05 (a) (iii)), plus the amount of the Assumed Liabilities
pursuant to Section 1.03 hereof, plus the amount of the reserve accounts set
forth on Schedule 1.05 (the amount of the reserve accounts being reflected in
the Sixty Million Dollar portion of the Purchase Price). The Purchase Price
shall be payable by Buyer as follows:
4. Section 1.04(d) is amended in its entirety as follows:
(d) Buyer shall retain from the Purchase Price Fifty Thousand
Dollars ($50,000.00) (the "Hold-Back") to be held by the Buyer until it receives
from Seller (i) written confirmation from the Michigan Employment Security
Commission to the effect that all contributions, penalties and accrued interest
due from Seller have been paid in full; and (ii) a certificate from the
Commissioner of Revenue of the Michigan Department of Treasury stating that all
taxes due to the State of Michigan including, but not limited to, single
business taxes,
2
<PAGE> 43
excise taxes, sales taxes and use taxes are paid. Promptly after
receipt of the items described above, Buyer will disburse the Hold-Back by
delivering Seller a cashier's or certified check in the amount of the
Hold-Back.
5. Section 1.04(h) is hereby added as follows:
(h) In the event that the Closing occurs after January 17, 1997,
as provided for in Section 5.01, but prior to January 24, 1997, then in
addition to the Purchase Price and the interest provided for in Section
1.04(g), Buyer shall pay to Seller at Closing a payment in the amount of Three
Thousand Dollars ($3,000.00) (the "Balance Sheet Adjustment Fee") for each day
after January 17, 1997, up to and including the day of the Closing. In the
event that the Closing occurs after January 24, 1997, as provided for in
Section 5.01, but prior to January 31, 1997, then in addition to the Purchase
Price and the interest provided for in Section 1.04(g), Buyer shall pay to
Seller at Closing a Balance Sheet Adjustment Fee in the amount of Three
Thousand Dollars ($3,000.00) for each day after January 24, 1997, up to and
including the day of the Closing. If the Closing occurs on January 24, 1997,
or on January 31, 1997, there shall be no Balance Sheet Adjustment Fee.
6. Section 1.05(a)(i) is hereby amended in its entirety as follows:
(a) Closing Balance Sheet.
(i) Within sixty (60) days after the Closing Date, Seller shall
cause its independent accountants to deliver to Seller and Buyer an
audited balance sheet for the Business ("Closing Balance Sheet") as of the
Closing Balance Sheet Date, which shall be determined as follows: if the
Closing occurs on or between January 17, 1997 and January 23, 1997, the Closing
Balance Sheet Date shall be January 17, 1997; if the Closing occurs on or
between January 24, 1997 and January 30, 1997, the Closing Balance Sheet Date
shall be January 24, 1997; if the Closing occurs on January 31, 1997, the
Closing Balance Sheet Date shall be January 31, 1997. The Closing Balance Sheet
shall reflect the net book value of the Assets purchased by Buyer, as of the
Closing Balance Sheet Date. For purposes of this Agreement, the term "net book
value" shall mean an amount equal to the Assets less the Assumed Liabilities,
reflected on the September 29, 1996 balance sheet or the Closing Balance Sheet,
as the context indicates, with inventory being accounted for on a first in
first out basis for both balance sheets. In addition, the Closing Balance
Sheet will not include any environmental reserve. Buyer and Seller each shall
designate a representative to assist and shall cooperate with each other and
the independent accountants in preparing the Closing Balance Sheet, and Buyer
shall pay all costs assessed by the independent accountants in connection with
preparation and delivery of the Closing Balance Sheet.
7. Section 1.05(a)(iii) is hereby amended in its entirety as follows:
(iii) The Purchase Price shall be increased or decreased by an
amount equal to the amount by which the net book value of the Assets on
the Closing Balance Sheet Date (as reflected on the audited Closing Balance
Sheet) is greater than or less than the net book
3
<PAGE> 44
value of the Assets on September 29, 1996 (as reflected on Seller's
financial statements for the period ended September 29, 1996). The Purchase
Price shall also be increased or decreased by the difference between the actual
value of the Excluded Assets and the stipulated value for purposes of the
closing of Three Hundred Fifty Thousand Dollars ($350,000.00), but only if the
difference is greater than One Thousand Dollars ($1,000.00). The actual value
of the Excluded Assets shall be determined within sixty (60) days after the
closing by the insurance companies which issued the policies.
8. The first paragraph of Section 2.04 and Section 2.04(b) are hereby
amended in their entirety as follows:
2.04 No Breach, Default, Violation or Consent. Assuming that
Seller obtains all consents with respect to the assignment or transfer
of Business Agreements, Intellectual Property and Business Permits which are
listed on Schedule 5.02(c) (except for the two (2) Seeber licenses disclosed on
Schedule 2.13 for which prior written consent has been waived by Buyer), the
execution, delivery and performance by Seller of this Agreement and the other
Transaction Documents do not and will not:
***
(b) breach or result in a default (or an event which, with the
giving of notice or the passage of time, or both, would constitute a
default) under, require any consent under or give to others any rights of
termination, acceleration, suspension, revocation, cancellation or amendment of
any Business Agreement or Business Permit, or any agreement representing
indebtedness for borrowed money or any trust indenture pursuant to which Seller
has issued debt obligations, except as previously disclosed to Buyer with
respect to the License Agreements with Seeber;
9. Section 5.01 is hereby amended in its entirety as follows:
5.01. Closing. The Closing of the transaction contemplated hereby
(the "Closing") shall take place on or before January 31, 1997, at the
offices of Heritier Nance, P.C., Troy, Michigan, or at such other time or
place, or on such other date as the parties may mutually agree upon, subject to
the payment of interest as provided in Section 1.04(f) and the Balance Sheet
Adjustment Fee as provided in Section 1.04(h). The date on which the Closing
occurs is referred to herein as the "Closing Date".
10. Section 5.02(c) is hereby amended in its entirety as follows:
(c) Consent and Approvals. Seller shall have obtained or made each
consent to assignment or transfer, authorization, approval, exemption,
filing, registration or qualification, as are listed on Schedule 5.02(c).
11. Schedule 5.02(c) is amended in its entirety and replaced with the
attached First Amended Schedule 5.02(c).
4
<PAGE> 45
Except for the above amended provisions, the parties reaffirm all of the
provisions of the Asset Purchase Agreement dated November 4, 1996 and
the Amendments thereto and the same shall remain in full force and effect.
ATTEST: MOLMEC, INC.
By: ??? By: ???
-------------------------------- -------------------------------
Title: Title: Secretary
---------------------------- ----------------------------
[Corporate Seal]
ATTEST: LDM TECHNOLOGIES, INC., d/b/a
LDM INDUSTRIES INC.
By: ??? By: ???
-------------------------------- -------------------------------
Title: ??? Title: ???
------------------------------ ----------------------------
5
<PAGE> 46
FIRST AMENDED
SCHEDULE 1.02
Excluded Assets
All life insurance policies insuring Robert C. Leland, Jr. and Leonard
G. Miller.
<PAGE> 47
FIRST AMENDED
SCHEDULE 5.02(c)
Consents and Approvals
1. Consent to Assignment of Lease by Owner of Real property leased in
Rochester Hills, Michigan, as disclosed on Schedule 2.11(c).
2. Consent to Assignment of purchase orders by the ten largest customers of
Molmec.
3. Hart Scott Rodino filing.
4. Michigan Department of Treasury Form L-2460. Property Transfer Affidavit.
<PAGE> 1
EXHIBIT 10.2
$45,000,000
LOAN AND SECURITY AGREEMENT
Dated as of January 22, 1997
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
and
LDM TECHNOLOGIES, INC.
as the Borrower
<PAGE> 2
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT .............................. -1-
1.1 Definitions .............................................. -1-
1.2 Accounting Terms ........................................ -27-
1.3 Interpretive Provisions .................................. -27-
ARTICLE 2
LOANS AND LETTERS OF CREDIT ................................... -28-
2.1 Total Facility ........................................... -28-
2.2 Revolving Loans .......................................... -29-
(a) Amounts ............................................. -29-
(b) Procedure for Borrowing ............................. -29-
(c) Reliance upon Authority ............................. -30-
(d) No Liability ........................................ -30-
(e) Notice Irrevocable ................................. -30-
(f) Agent's Election ................................... -30-
(g) Making of Revolving Loans ........................... -31-
(h) Making of BABC Loans ................................ -31-
(i) Agent Advances ..................................... -32-
(j) Settlement .......................................... -33-
(k) Notation ............................................ -34-
(l) Lenders' Failure to Perform ......................... -34-
2.4 Letters of Credit ........................................ -34-
(a) Agreement to Cause Issuance ........................ -35-
(b) Amounts; Outside Expiration Date .................... -35-
(c) Other Conditions .................................... -35-
(d) Issuance of Letters of Credit ....................... -35-
(i) Request for Issuance .......................... -35-
(ii) Responsibilities of the Agent; Issuance ....... -36-
(iii) Notice of Issuance ............................ -36-
(iv) No Extensions or Amendment .................... -36-
(e) Payments Pursuant to Letters of Credit .............. -36-
(i) Payment of Letter of Credit Obligations ....... -36-
(ii) Revolving Loans to Satisfy Reimbursement
Obligations.................................... -36-
(f) Participations ...................................... -37-
(i) Purchase of Participations .................... -37-
(ii) Sharing of Reimbursement Obligation Payments .. -37-
(iii) Documentation ................................. -37-
-i-
<PAGE> 3
(iv) Obligations Irrevocable ..................... -37-
(g) Recovery or Avoidance of Payments ................... -38-
(h) Compensation for Letters of Credit .................. -38-
(i) Letter of Credit Fee ........................ -38-
(ii) Issuer Fees and Charges ..................... -38-
(i) Indemnification; Exoneration ........................ -38-
(i) Indemnification ............................ -38-
(ii) Assumption of Risk by the Borrower .......... -39-
(iii) Exoneration ................................ -39-
(j) Supporting Letter of Credit; Cash Collateral ........ -39-
ARTICLE 3
INTEREST AND FEES ............................................. -40-
3.1 Interest ................................................. -40-
3.2 Conversion and Continuation Elections ................... -41-
3.3 Maximum Interest Rate .................................... -42-
3.4 Closing Fee .............................................. -42-
3.5 Unused Line Fee .......................................... -42-
3.6 Letter of Credit Fee ..................................... -42-
3.7 Audit Fees .............................................. -43-
ARTICLE 4
PAYMENTS AND PREPAYMENTS ...................................... -43-
4.1 Repayment of Revolving Loans ............................. -43-
4.2 Termination of Facility ................................. -43-
4.3 [INTENTIONALLY OMITTED] ................................. -44-
4.4 [INTENTIONALLY OMITTED]. ................................. -44-
4.5 [INTENTIONALLY OMITTED]. ................................. -44-
4.6 Payments by the Borrower ................................. -44-
4.7 Payments as Revolving Loans .............................. -45-
4.8 Apportionment, Application and Reversal of Payments ...... -45-
4.9 Indemnity for Returned Payments .......................... -46-
4.10 Agent's and Lenders' Books and Records; Monthly
Statements ............................................... -46-
-ii-
<PAGE> 4
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY ................................... -46-
5.1 Taxes .................................................... -46-
5.2 Illegality ............................................... -47-
5.3 Increased Costs and Reduction of Return ................. -48-
5.4 Funding Losses ........................................... -48-
5.5 Inability to Determine Rates ............................. -49-
5.6 Certificates of Lenders .................................. -49-
5.7 Survival ................................................. -49-
ARTICLE 6
COLLATERAL................................................................ -49-
6.1 Grant of Security Interest ............................... -49-
6.2 Perfection and Protection of Security Interest ........... -50-
6.3 Location of Collateral ................................... -52-
6.4 Title to, Liens on, and Sale and Use of Collateral ....... -52-
6.5 Appraisals ............................................... -53-
6.6 Access and Examination; Confidentiality ................. -53-
6.7 Collateral Reporting .................................... -54-
6.8 Accounts ................................................. -54-
6.9 Collection of Accounts; Payments ......................... -56-
6.10 Inventory; Perpetual Inventory ........................... -57-
6.11 Equipment ............................................... -57-
6.12 Assigned Contracts ....................................... -58-
6.13 Documents, Instruments, and Chattel Paper ................ -59-
6.14 Right to Cure ............................................ -59-
6.15 Power of Attorney ........................................ -59-
6.16 The Agent's and Lenders' Rights, Duties and Liabilities .. -60-
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES ............. -61-
7.1 Books and Records ....................................... -61-
7.2 Financial Information .................................... -61-
7.3 Notices to the Lenders ................................... -63-
-iii-
<PAGE> 5
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS ................................... -66-
8.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents ................... -66-
8.2 Validity and Priority of Security Interest .............. -66-
8.3 Organization and Qualification .......................... -67-
8.4 Corporate Name; Prior Transactions ...................... -67-
8.5 Subsidiaries and Affiliates ............................ -67-
8.6 Financial Statements and Projections .................... -67-
8.7 Capitalization ......................................... -68-
8.8 Solvency ................................................ -68-
8.9 Debt .................................................... -68-
8.10 Distributions ........................................... -68-
8.11 Title to Property ....................................... -68-
8.12 Real Estate; Leases ..................................... -68-
8.13 Proprietary Rights Collateral .......................... -68-
8.14 Trade Names and Terms of Sale .......................... -69-
8.15 Litigation .............................................. -69-
8.16 Restrictive Agreements .................................. -69-
8.17 Labor Disputes .......................................... -69-
8.18 Environmental Laws ...................................... -69-
8.19 No Violation of Law .................................... -71-
8.20 No Default .............................................. -71-
8.21 ERISA Compliance ....................................... -71-
8.22 Taxes ................................................... -71-
8.23 Regulated Entities ...................................... -72-
8.24 Use of Proceeds; Margin Regulations .................... -72-
8.25 Copyrights, Patents, Trademarks and Licenses, etc ...... -72-
8.26 No Material Adverse Change .............................. -72-
8.27 Full Disclosure ......................................... -72-
8.28 Material Agreements ..................................... -72-
8.29 Bank Accounts ........................................... -73-
8.30 Governmental Authorization .............................. -73-
8.31 Indenture ............................................... -73-
8.32 Subordination Provisions ................................ -73-
8.33 Acquisition Agreement ................................... -73-
-iv-
<PAGE> 6
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS ........................................ -74-
9.1 Taxes and Other Obligations ............................. -74-
9.2 Corporate Existence; Good Standing ....................... -74-
9.3 Compliance with Law and Agreements; Maintenance of
Licenses ................................................. -74-
9.4 Maintenance of Property .................................. -74-
9.5 Insurance ................................................ -75-
9.6 Condemnation ............................................. -76-
9.7 Environmental Laws ....................................... -76-
9.8 Compliance with ERISA .................................... -77-
9.9 Mergers, Consolidations or Sales ......................... -77-
9.10 Distributions; Capital Change; Restricted Investments .... -77-
9.11 Transactions Affecting Collateral or Obligations ......... -78-
9.12 Guaranties ............................................... -78-
9.13 Debt ..................................................... -78-
9.14 Prepayments; Amendments .................................. -78-
9.15 Transactions with Affiliates ............................. -78-
9.16 Investment Banking and Finder's Fees ..................... -79-
9.17 [INTENTIONALLY OMITTED] .................................. -79-
9.18 Business Conducted ...................................... -79-
9.19 Liens .................................................... -79-
9.20 Sale and Leaseback Transactions ......................... -79-
9.22 Fiscal Year .............................................. -80-
9.23 Capital Expenditures ..................................... -80-
9.24 Operating Lease Obligations ............................. -80-
9.25 Fixed Charge Coverage Ratio ............................. -81-
9.27 Use of Proceeds .......................................... -81-
9.28 Further Assurances ....................................... -81-
ARTICLE 10
CONDITIONS OF LENDING .......................................... -81-
10.1 Conditions Precedent to Making of Loans on the
Closing Date ............................................. -81-
10.2 Conditions Precedent to Each Loan ....................... -84-
ARTICLE 11
DEFAULT; REMEDIES .............................................. -85-
11.1 Events of Default ....................................... -85-
11.2 Remedies ................................................. -88-
-v-
<PAGE> 7
ARTICLE 12
TERM AND TERMINATION .......................................... -89-
12.1 Term and Termination .................................... -89-
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS;
SUCCESSORS .................................................... -90-
13.1 No Waivers Cumulative Remedies .......................... -90-
13.2 Amendments and Waivers .................................. -90-
13.3 Assignments; Participations ............................ -91-
ARTICLE 14
THE AGENT ..................................................... -92-
14.1 Appointment and Authorization .......................... -92-
14.2 Delegation of Duties .................................... -93-
14.3 Liability of Agent ..................................... -93-
14.4 Reliance by Agent ...................................... -93-
14.5 Notice of Default ...................................... -94-
14.6 Credit Decision ........................................ -94-
14.7 Indemnification ........................................ -95-
14.8 Agent in Individual Capacity ............................ -95-
14.9 Successor Agent ........................................ -95-
14.10 Withholding Tax ........................................ -96-
14.11 [INTENTIONALLY OMITTED] ................................ -97-
14.12 Collateral Matters ...................................... -97-
14.13 Restrictions on Actions by Lenders; Sharing of Payments . -98-
14.14 Agency for Perfection ................................... -99-
14.15 Payments by Agent to Lenders ............................ -99-
14.16 Concerning the Collateral and the Related Loan Documents. -99-
14.17 Field Audit and Examination Reports; Disclaimer by
Lenders ................................................. -99-
ARTICLE 15
MISCELLANEOUS.................................................. -100-
15.1 Cumulative Remedies; No Prior Recourse to Collateral .... -100-
15.2 Severability ........................................... -100-
15.3 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver ....................................... -101-
15.4 Waiver of Jury Trial .................................... -102-
15.5 Survival of Representations and Warranties .............. -103-
-vi-
<PAGE> 8
15.6 Other Security and Guaranties .......................... -103-
15.7 Fees and Expenses ...................................... -103-
15.8 Notices ................................................. -104-
15.9 Waiver of Notices ....................................... -105-
15.10 Binding Effect .......................................... -105-
15.11 Indemnity of the Agent and the Lenders by the Borrower... -105-
15.12 Final Agreement ......................................... -106-
15.13 Counterparts ........................................... -106-
15.14 Captions ................................................ -106-
15.15 Right of Setoff ......................................... -106-
SCHEDULES
Schedule 6.3 Chief Executive Office Location:
Records Locations; Collateral
Locations
Schedule 8.3 Foreign Qualification Locations
Schedule 8.4 Prior Names of Borrower
Schedule 8.5 Subsidiaries and Affiliates
Schedule 8.9 Existing Debt
Schedule 8.12 Real Estate
Schedule 8.13 Proprietary Rights
Schedule 8.14 Trade Names
Schedule 8.17 Labor Disputes
Schedule 8.18 Environmental Matters
Schedule 8.24 Sources and Uses
Schedule 8.25 Intellectual Property Disputes
Schedule 8.28 Material Agreements
Schedule 8.29 Bank Accounts
Schedule 9.19 Existing Liens
EXHIBITS
Exhibit A Form of Borrowing Base Certificate
Exhibit B Pro Forma Balance Sheet as of the Closing Date
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Conversion/Continuation Notice
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Compliance Certificate
-vii-
<PAGE> 9
LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of January 22, 1997, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), BankAmerica Business Credit, Inc., a Delaware corporation, as agent
for the Lenders (in its capacity as agent, the "Agent"), and LDM Technologies,
Inc., a Michigan corporation, with offices at 2500 Executive Hills Drive,
Aurburn Hills, Michigan 48326 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Lenders to make available to
the Borrower a revolving line of credit for loans and letters of credit in an
amount not to exceed $45,000,000 and which extensions of credit the Borrower
will use for its working capital needs and general business purposes,
acquisitions and repayment of existing indebtedness of the Borrower and its
Subsidiaries;
WHEREAS, the Lenders have agreed to make available to the Borrower a
revolving credit facility upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the Lenders, the
Agent, and the Borrower hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"Accounts" means all of the Borrower's and LDM Canada's now
owned or hereafter acquired or arising accounts, and any other rights to
payment for the sale or lease of goods or rendition of services, whether or not
they have been earned by performance.
"Acquisition" means the acquisition by the Borrower of all or
substantially all of the assets of the Seller pursuant to the Acquisition
Agreement.
-1-
<PAGE> 10
"Acquisition Agreement" means the Asset Purchase Agreement,
dated as of November 4, 1996, as amended by that First Amendment dated November
27, 1996, and a Second Amendment dated as of December 23, 1996, between the
Borrower and the Seller, in the form delivered to the Agent pursuant to Section
10.1(o).
"Adjusted Net Earnings from Operations" means, with respect to
any fiscal period of the Borrower, the Borrower's consolidated net income
(excluding Como) after provision for income taxes for such fiscal period, as
determined in accordance with GAAP and reported on the Financial Statements for
such period, less any and all of the following included in such net income:
(a) gain or loss arising from the sale of any capital assets; (b) gain arising
from any write-up in the book value of any asset; (c) earnings of any
corporation, substantially all the assets of which have been acquired by the
Borrower or any Subsidiary in any manner, to the extent realized by such other
corporation prior to the date of acquisition; (d) earnings of any business
entity in which the Borrower or any Subsidiary has an ownership interest unless
(and only to the extent) such earnings shall actually have been received by the
Borrower or any Subsidiary in the form of cash distributions; (e) earnings of
any Person to which assets of the Borrower or any Subsidiary shall have been
sold, transferred or disposed of, or into which the Borrower shall have been
merged, or which has been a party with the Borrower or any Subsidiary to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity securities
of the Borrower or any Subsidiary or from cancellation or forgiveness of Debt;
and (g) gain arising from extraordinary items, as determined in accordance with
GAAP, or from any other non-recurring transaction.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agent" means BankAmerica Business Credit, Inc., solely in its
capacity as agent for the Lenders, and shall include any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Liens" means the Liens granted to the Agent, for the
ratable benefit of the Lenders, BABC, and Agent pursuant to this Agreement and
the other Loan Documents.
"Agent-Related Persons" means the Agent and any successor
agent, together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Agreement" means this Loan and Security Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
-2-
<PAGE> 11
"Applicable Margins" shall mean on any date the applicable per
annum percentages set forth below based upon the Level as shown in the
certificate of the chief financial officer of the Borrower described in Section
7.2(d) delivered concurrently with the audited financial statements for each
Fiscal Year then most recently delivered to the Lenders:
Revolving Loans
LIBOR Reference
Level Rate Margin Rate Margin
----- ----------- ------------
I 2.50% .500%
II 2.25% .375%
III 2.00% .250%
IV 1.75% -0-
;provided, however that for the period from the date hereof to December 31,
1997, the Applicable Margins shall be Level II; provided further that, if
the Borrower shall have failed to deliver to the Lenders by the date
required hereunder any Certificate pursuant to Section 7.2(d), then from
the date such certificate was required to be delivered until the date of
such delivery the Applicable Margins shall be deemed to be Level I. Each
change in the Applicable Margins shall take effect with respect to all
outstanding Loans on the Business Day immediately succeeding the day on
which such certificate is received by the Agent. Notwithstanding the
foregoing, no reduction in the Applicable Margins shall be effected if a
Default or an Event of Default shall have occurred and be continuing on the
date when such change would otherwise occur, it being understood that on
the Business Day immediately succeeding the day on which such Default or
Event of Default is either waived or cured (assuming no other Default or
Event of Default shall be then pending), the Applicable Margin shall be
reduced (on a prospective basis) in accordance with the then most recently
delivered certificate.
"Assigned Contracts" means, collectively, all of the
Borrower's and LDM Canada's rights and remedies under, and all moneys and
claims for money due or to become due to the Borrower or LDM Canada under any
contract, and any and all amendments, supplements, extensions, and renewals
thereof including, without limitation, all rights and claims of the Borrower or
LDM Canada now or hereafter existing: (i) under any insurance (other then
key-man life insurance on which the Borrower is the beneficiary), indemnities,
warranties, and guarantees provided for or arising out of or in connection with
any of the foregoing agreements; (ii) for any damages arising out of or for
breach or default under or in connection with any of the foregoing contracts;
(iii) to all other amounts from time to time paid or payable under or in
connection with any of the foregoing agreements; or (iv) to exercise or enforce
any and all covenants, remedies, powers and privileges thereunder.
-3-
<PAGE> 12
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in
Section 13.3(a).
"Attorney Costs" means and includes all reasonable fees,
expenses and disbursements of any law firm or other external counsel engaged by
the Agent, the allocated cost of internal legal services of the Agent and all
expenses and disbursements of internal counsel of the Agent.
"BABC" means BankAmerica Business Credit, Inc.
"BABC Loan" and "BABC Loans" have the meanings specified in
Section 2.2(h).
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, or any successor entity
thereto.
"Bankruptcy Code" means Title 11 of the United States Code
(11 U.S.C. Section 101 et seq.).
"Base Rate" means, for any day, the higher of: (a) The rate
of interest in effect for such day as publicly announced from time to time by
Bank of America in San Francisco, California, as its "reference rate" (the
"reference rate" being a rate set by Bank of America based upon various factors
including Bank of America's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate), or (b)
one-half percent (0.50%) per annum above the latest Federal Funds Rate. Any
change in the reference rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted
simultaneously with any change in the Base Rate.
"Base Rate Loan" means a Revolving Loan during any period in
which it bears interest at the Base Rate.
"Borrower" has the meaning specified in the introductory
paragraph hereof.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the Borrower (or by BABC
in the case of a Borrowing funded by BABC Loans) or by the Agent in the case of
a Borrowing consisting of an Agent Advance.
"Borrowing Base" means the sum of:
(a) up to eighty-five percent (85%) of the Net Amount of
Eligible Accounts of the Borrower; plus
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(b) up to eighty-five percent (85%) of the Net Amount of
Eligible Tooling Receivables of Borrower; plus
(c) up to sixty percent (60%) of the book value of the
Borrower's Eligible Inventory (valued at the lower of
cost or market on a First-In First-Out basis);
provided that (x) no advances may be attributable to
this clause (b) until the date upon which the Agent
has informed the Borrower that it has received,
reviewed and is satisfied with the audit of the
Borrower's Inventory and (y) advances attributable to
this clause (b) shall not exceed $12,000,000; less
(i) reserves established by the Borrower for accrued
interest on outstanding Revolving Loans;
(ii) a reserve established by the Borrower for customer
deposits reflected on the Borrower's books and
records;
(iii) reserves established by the Borrower with respect to
any rebate arrangement between the Borrower or any
of its Subsidiaries and the Ford Motor Company or
any of its Affiliate; and
(iv) all other reserves which the Agent in its reasonable
credit judgment deems necessary to establish and
maintain with respect to the Borrower's account upon
at least one (1) Business Day's prior notice thereof
to the Borrower, including, without limitation, any
amounts which the Agent may need to pay for the
account of the Borrower in order to preserve the
value of the Collateral and/or the priority of the
Agent's Lien in the Collateral consistent with the
terms of this Agreement and the other Loan Documents.
"Borrowing Base Certificate" means a certificate regarding the
Borrower's Borrowing Base and the LDM Canada Borrowing Base in the form of
Exhibit A hereto.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Chicago, Illinois or San Francisco,
California, are required or permitted to be closed, and (b) with respect to all
notices, determinations, fundings and payments in connection with the LIBOR
Rate or LIBOR Rate Loans, any day that is a Business Day pursuant to clause (a)
above and that is also a day on which trading is carried on by and between
banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
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"Capital Expenditures" means, all payments due (whether or not
paid) during a Fiscal Year in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including, without limitation, those costs
arising in connection with the direct or indirect acquisition of such asset by
way of increased product or service charges or offset items or in connection
with a Capital Lease.
"Capital Lease" means any lease of property by the Borrower or
any Subsidiary which, in accordance with GAAP, is or should be capitalized on
the Borrower's consolidated balance sheet or for which the amount of the asset
and liability thereunder, as if so capitalized, should be disclosed in a
footnote to such balance sheet.
"Change of Control" means a "change of control" as defined in
the Indenture as in effect on the date hereof.
"Closing Date" means the date of this Agreement.
"Closing Date Intercompany Loan" shall mean an intercompany
loan by the Borrower to LDM Canada in the amount of $16,000,000 made with
proceeds of the Senior Subordinated Notes and used by LDM Canada to repay in
full loans from Bank of Nova Scotia and $2,000,000 of accounts payable.
"Closing Fee" has the meaning specified in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and regulations promulgated
thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
13.3, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Compliance Certificate" means a certificate in the form of
Exhibit F hereto.
"Como" means GL Industries of Indiana, Inc., d/b/a Como
Products Corporation.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated
biphenyls ("PCBs"), or any constituent of any such substance or waste.
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"Debt" means all liabilities, obligations and indebtedness of
the Borrower or any of its Subsidiaries to any Person, of any kind or nature,
now or hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, and including, without in any way limiting the generality
of the foregoing: (i) the Borrower's or any Subsidiary's liabilities and
obligations to trade creditors; (ii) all Obligations; (iii) all obligations and
liabilities of any Person secured by any Lien on the Borrower's or any
Subsidiary's property, even though the Borrower or such Subsidiary shall not
have assumed or become liable for the payment thereof; provided, however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the Borrower prepared in
accordance with GAAP; (iv) all obligations or liabilities created or arising
under any Capital Lease or conditional sale or other title retention agreement
with respect to property used or acquired by the Borrower or any of its
Subsidiaries, even if the rights and remedies of the lessor, seller or lender
thereunder are limited to repossession of such property; provided, however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the Borrower prepared in
accordance with GAAP; (v) all accrued pension fund and other employee benefit
plan obligations and liabilities; (vi) all obligations and liabilities under
Guaranties; and (vii) deferred taxes.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%). Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. In addition, with respect to
Letters of Credit, the Default Rate shall mean an increase in the Letter of
Credit Fee by two percent (2%).
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) of the same class; or (b) the redemption or other
acquisition of any capital stock (or any options or warrants for such stock) of
such corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
United States.
"EBITDA" means with respect to the Borrower, on a consolidated
basis (excluding Como), for any period, Adjusted Net Earnings from Operations,
plus the sum of (i) interest expenses, whether paid or accrued, (ii)
depreciation, (iii) amortization, (iv) income taxes paid or
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accrued with respect to such period, and (v) other non-cash expenses
(including, without limitation, amortization of goodwill, deferred financing
fees, LIFO reserve adjustments and other intangibles), each to the extent
deducted in determining the Borrower's Adjusted Net Earnings from Operations for
that period, less non-cash income included in the calculation of Adjusted Net
Earnings from Operations for that period.
"Eligible Accounts" means all Accounts which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Accounts shall not include any Account:
(a) with respect to which more than 90 days have elapsed
since the date of the original invoice therefor or it is more than 60
days past due;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section 6.8 are
not or have ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and
returned uncollected for any reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which the Borrower or LDM Canada has extended the
time for payment without the consent of the Agent; for the purposes
hereof, "progress billing" means any invoice for goods sold or leased
or services rendered under a contract or agreement pursuant to which
the Account Debtor's obligation to pay such invoice is conditioned
upon the Borrower's or LDM Canada's completion of any further
performance under the contract or agreement;
(e) as to which any one or more of the following events
has occurred with respect to the Account Debtor on such Account:
death or judicial declaration of incompetency of an Account Debtor
who is an individual; the filing by or against the Account Debtor of
a request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, winding-up, or other
relief under the bankruptcy, insolvency, or similar laws of the
United States, Canada, any state, province or territory thereof, or
any foreign jurisdiction, now or hereafter in effect; the making of
any general assignment by the Account Debtor for the benefit of
creditors; the appointment of a receiver or trustee for the Account
Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a
"custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of
insolvency proceeding (under the bankruptcy laws of the United States
or otherwise) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or
winding up of affairs of, the Account Debtor; the sale, assignment,
or transfer of all or any material part of the assets of the Account
Debtor; the
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nonpayment generally by the Account Debtor of its debts as they
become due; or the cessation of the business of the Account
Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate dollar
amount of outstanding Accounts owed at such time by the Account
Debtor thereon is classified as ineligible under the other criteria
set forth herein or otherwise established by the Agent;
(g) owed by an Account Debtor which: (i) does not maintain
its chief executive office in the United States or Canada; or (ii) is
not organized under the laws of the United States, Canada or any
state or province thereof; or (iii) is the government of any foreign
country or sovereign state, or of any state, province, municipality,
or other political subdivision thereof, or of any department, agency,
public corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or
employee of the Borrower or LDM Canada;
(i) except as provided in (k) below, as to which either
the perfection, enforceability, or validity of the Agent's Lien in
such Account, or the Agent's right or ability to obtain direct
payment to the Agent of the proceeds of such Account, is governed by
any federal, state, or local statutory requirements other than those
of the UCC or as to LDM Canada, the PPSA;
(j) which is owed by an Account Debtor to which the
Borrower or LDM Canada is indebted in any way, or which is subject to
any right of setoff or recoupment by the Account Debtor, unless the
Account Debtor has entered into an agreement acceptable to the Agent
to waive setoff rights; or if the Account Debtor thereon has disputed
liability or made any claim with respect to any other Account due
from such Account Debtor; but in each such case only to the extent of
such indebtedness, setoff, recoupment, dispute, or claim;
(k) which is owed by the government of the United States
of America, or Canada, or any department, agency, public corporation,
or other instrumentality thereof, unless in the case of an Account
owing by the United States of America the Federal Assignment of
Claims Act of 1940, as amended (31 U.S.C. Section 3727 et. seq.),
and any other steps necessary to perfect the Agent's Lien therein,
have been complied with to the Agent's satisfaction with respect to
such Account;
(l) which is owed by any province, state, municipality, or
other political subdivision of the United States of America or Canada
, or any department, agency, public corporation, or other
instrumentality thereof and as to which the Agent determines that its
Lien therein is not or cannot be perfected;
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(m) which represents a sale on a bill-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
(o) if Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired
or that the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(p) with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, West Virginia, or any other
state requiring the filing of a Business Activity Report or similar
document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial
process of such state, unless Borrower or LDM Canada, as applicable,
has qualified to do business in New Jersey, Minnesota, West
Virginia, or such other states, or has filed a Notice of Business
Activities Report with the applicable division of taxation, the
department of revenue, or with such other state offices, as
appropriate, for the then-current year, or is exempt from such filing
requirement;
(q) arises out of a sale not made in the ordinary course
of the Borrower's or LDM Canada's business;
(r) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the
Borrower or LDM Canada, and, if applicable, accepted by the Account
Debtor, or the Account Debtor revokes its acceptance of such goods or
services;
(s) is owed by an Account Debtor (other than Ford Motor
Company, General Motors Corporation and Chrysler Corporation) which
is obligated to the Borrower respecting Accounts the aggregate unpaid
balance of which exceeds fifteen percent (15%) of the aggregate
unpaid balance of all Accounts owed to the Borrower at such time by
all of the Borrower's Account Debtors, but only to the extent of such
excess;
(t) arises out of a contract or order which, by its terms,
forbids, restricts or makes void or unenforceable the granting of a
Lien by the Borrower or LDM Canada to the Agent with respect to such
Account;
(u) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the
Lenders;
(v) which arise from changes in molds that have not been
approved by the applicable Account Debtor; or
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(w) is an Eligible Tooling Receivable.
If any Account at any time ceases to be an Eligible Account by reason of any of
the foregoing exclusions or any failure to meet any other eligibility criteria
established by the Agent in the exercise of its reasonable discretion then such
Account shall promptly be excluded from the calculation of Eligible Accounts.
"Eligible Inventory" means Inventory, valued at the lower of
cost or market, that constitutes raw materials and first quality finished goods
and that:
(a) is not, in the Agent's reasonable opinion, obsolete or
unmerchantable;
(b) is located at premises owned by the Borrower or LDM Canada
or on premises otherwise reasonably acceptable to the Agent,
provided, however, that Inventory located on premises leased to the
Borrower or LDM Canada shall not be Eligible Inventory unless the
Borrower or LDM Canada, as applicable, shall have delivered to the
Agent a written waiver, duly executed on behalf of the appropriate
landlord and in form and substance acceptable to the Agent, of all
Liens which the landlord for such premises may be entitled to assert
against such Inventory;
(c) upon which the Agent for the benefit of the Lenders has a
first priority perfected security interest;
(d) is not work-in-process, spare parts, packaging and shipping
materials, supplies, bill-and-hold Inventory, returned or defective
Inventory, or Inventory delivered to the Borrower or LDM Canada on
consignment;
(e) is not slow-moving Inventory; and
(f) the Agent, in the exercise of its reasonable commercial
discretion, deems eligible as the basis for Revolving Loans based on
such collateral and credit criteria as the Agent may from time to
time establish.
If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of Eligible Inventory. For
purposes of determining Revolving Availability, Eligible Inventory shall be
valued at the lower of cost (on a first-in, first-out "FIFO" basis") or market
value.
"Eligible Tooling Receivable" means an Account arising out of
tooling used or designed by the Borrower or LDM Canada where:
(i) such tooling has been accepted by the Account Debtor
pursuant to its PPAP Program or similar program;
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(ii) the Borrower or LDM Canada, as the case may be, has
completed all filings required by the Account Debtor's PPAP Program
or similar program with respect to such tooling;
(iii) the Account Debtor has accepted parts produced by the
Borrower or LDM Canada, as the case may be, using such tooling; and
(iv) such Account meets the other criteria necessary to be
an Eligible Account.
"Environmental Compliance Reserve" means any reserves which the Agent,
after the Closing Date, establishes upon at least one (1) Business Day's prior
notice to the Borrower from time to time for amounts that are reasonably likely
to be expended by the Borrower in order for the Borrower and its operations and
property (a) to comply with any notice from a Governmental Authority asserting
material non-compliance with Environmental Laws, or (b) to correct any such
material non-compliance identified in a report delivered to the Agent and the
Lenders pursuant to Section 9.7.
"Environmental Laws" means all federal, state, provincial or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority or any other Person for (1) any liability under any Environmental
Laws, or (2) damages arising from, or costs incurred by such Governmental
Authority or any other Person in response to, a Release or threatened Release
of a Contaminant into the environment.
"Equipment" means all of the Borrower's and LDM Canada's now owned and
hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and
other tangible personal property (except Inventory), including motor vehicles
with respect to which a certificate of title has been issued, aircraft, dies,
tools, jigs, and office equipment, as well as all of such types of property
leased by the Borrower and LDM Canada and all of the Borrower's and LDM
Canada's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith,
and all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
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"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event or Termination
Event with respect to a Pension Plan; (b) a withdrawal by the Borrower, any
Subsidiary or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or employer under the PBA or a cessation of operations which is treated as such
a withdrawal; (c) a complete or partial withdrawal by the Borrower, any
Subsidiary or any ERISA Affiliate from a Multi-employer Plan or Plan regulated
or governed by the PBA or notification that a Multi-employer Plan or Plan
regulated or governed by the PBA is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination, or the commencement of proceedings by the PBGC or other applicable
Governmental Authority to terminate a Pension Plan or Multi-employer Plan; (e)
an event or condition which might reasonably be expected to constitute grounds
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan; (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, or PBA or other applicable law of any jurisdiction upon the
Borrower, any Subsidiary or any ERISA Affiliate; or (g) any failure to make or
remit any contribution when due in respect of any Plan.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities and Exchange Act of 1934,
and regulations promulgated thereunder.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Financial Statements" means, according to the context in
which it is used, the financial statements attached hereto, or any financial
statements required to be given to the Lenders pursuant to this Agreement.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
September 28, 1997.
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"Fixed Assets" means Equipment and Real Estate of the
Borrower and LDM Canada.
"Fixed Charges" means as to the Borrower on a consolidated
basis (other than Como), for any fiscal period, the sum of (i) interest
expenses paid or payable in cash, (ii) cash dividend payments, (iii) scheduled
installments of principal paid or payable with respect to Debt for borrowed
money (other than Revolving Loans) and Capital Leases; (iv) that portion of
Capital Expenditures not financed by borrowings from third parties; and (v)
income taxes paid or payable in cash.
"Fixed Charge Coverage Ratio" means as to the Borrower on a
consolidated basis (other than Como), for any fiscal period, the ratio of
EBITDA to Fixed Charges.
"Fixture" means all fixtures of the Borrower and LDM Canada as
such term is defined in the UCC including trade fixtures, building fixtures and
leasehold improvements.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of
the Closing Date.
"General Intangibles" means all of the Borrower's and LDM
Canada's now owned or hereafter acquired general intangibles, choses in action
and causes of action and all other intangible personal property of the Borrower
and LDM Canada of every kind and nature (other than Accounts), including,
without limitation, all contract rights, Proprietary Rights, corporate or other
business records, inventions, designs, blueprints, plans, specifications,
patents, patent applications, trademarks, service marks, trade names, trade
secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to the Borrower or LDM Canada in connection with the termination of
any Plan or other employee benefit plan or any rights thereto and any other
amounts payable to the Borrower or LDM Canada from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to the Borrower or LDM Canada to secure payment by an
Account Debtor of any of the Accounts, but excluding proceeds of key-man life
insurance on which the Borrower is the beneficiary.
"Governmental Authority" means any nation or government, any
state, province, municipality, region or other political subdivision thereof,
any central bank (or similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing and any
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<PAGE> 23
department, agency, board, commission, tribunal, committee or instrumentality of
any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the
"guaranteed obligations"), or assure or in effect assure the holder of the
guaranteed obligations against loss in respect thereof, including, without
limitation, any such obligations incurred through an agreement, contingent or
otherwise: (a) to purchase the guaranteed obligations or any property
constituting security therefor; (b) to advance or supply funds for the purchase
or payment of the guaranteed obligations or to maintain a working capital or
other balance sheet condition; or (c) to lease property or to purchase any debt
or equity securities or other property or services.
"Guarantor" means each of LDM Canada, LDM Holding, LDM LLC and
LDM LP, and each other Person executing a guarantee pursuant to Section 9.21
(iii).
"Guarantor Collateral" means the "Pledged Collateral" and
"Collateral" as each such term is defined in the relevant Guarantor Collateral
Document.
"Guarantor Collateral Documents" means the LDM Canada Security
Agreement, the LDM Holding Pledge and Security Agreement, the LDM LLC Pledge
and Security Agreement, the LDM LP Pledge Agreement and each other document
delivered by a Guarantor pursuant to Section 9.21 (iv).
"Guarantor Documents" means the Guarantor Guarantees and the
Guarantor Collateral Documents.
"Guarantor Guarantees" means the LDM Canada Guarantee, the LDM
Holding Guarantee, the LDM LLC Guarantee, the LDM LP Guarantee and each
guarantee executed by a Guarantor pursuant to Section 9.21 (iii).
"Indenture" means the indenture governing the Senior
Subordinated Notes.
"Intellectual Property Security Agreement" means the
Intellectual Property Security Agreement, dated as of the date hereof,
executed and delivered by the Borrower to the Agent to evidence and perfect the
Agent's security interest in the Borrower's present and future patents,
trademarks, copyrights, and related licenses and rights, for the benefit of the
Agent and the Lenders.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by the Borrower
with, any Affiliate.
"Intercompany Loans" has the meaning specified in Section
9.13.
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<PAGE> 24
"Intercompany Note" has the meaning specified in Section 9.13.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be extended to
the following Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the preceding Business
Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period for any Revolving Loan shall extend
beyond the Termination Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1.
"Inventory" means all of the Borrower's and LDM Canada's now owned and
hereafter acquired inventory, goods, merchandise, and other personal property,
wherever located, to be furnished under any contract of service or held for
sale or lease, all returned goods, raw materials, other materials and supplies
of any kind, nature or description which are or might be consumed in the
Borrower's business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise and such other
personal property, and all documents of title or other documents representing
them.
"Investment Property" means all investment property as such term is
defined in the UCC as now or hereafter in effect in those states that adopt
such definition.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Lenders receive new projections pursuant to Section 7.2(e), the
projections of the Borrower's financial condition, results of operations, and
cash flow, for the 1997, 1998 and 1999 Fiscal Year delivered to the Lenders
prior to the Closing Date; and (b) thereafter, the projections most recently
received by the Lenders pursuant to Section 7.2(e).
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<PAGE> 25
"LDM Canada" means LDM Technologies Company, a Nova Scotia unlimited
liability company.
"LDM Canada Borrowing Base" means the sum of:
(a) up to eighty-five percent (85%) of the Net Amount of
Eligible Accounts of LDM Canada; plus
(b) up to eighty-five percent (85%) of the Net Amount of
Eligible Tooling Receivables of LDM Canada; plus
(c) up to sixty percent (60%) of the book value of LDM
Canada's Eligible Inventory (valued at the lower of cost or market on
a First-In First-Out basis); less
(i) a reserve for customer deposits reflected on LDM
Canada's books and records;
(ii) reserves established by Agent for unpaid suppliers;
(iii) reserves established by Agent for goods and services,
excise and sales taxes; and
(iv) all other reserves which the Agent in its reasonable
credit judgment deems necessary to establish and
maintain with respect to LDM Canada's account upon at
least one (1) Business Day's prior notice thereof to
LDM Canada, including, without limitation, any amounts
which the Agent may need to pay for the account of LDM
Canada in order to preserve the value of the
Collateral and/or the priority of the Agent's Lien in
the Collateral consistent with the terms of this
Agreement and the other Loan Documents.
"LDM Canada Guarantee" means the LDM Canada Guarantee, dated as of the
date hereof, duly executed and delivered by LDM Canada to the Agent, for the
benefit of itself and the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"LDM Canada Security Agreement" means the $100,000,000 Cdn. fixed and
floating charge demand debenture and a pledge agreement in respect thereof,
each dated as of the date hereof, duly executed and delivered by LDM Canada in
favor of the Agent, for the benefit of itself and the Lenders, as the same may
be amended, supplemented or otherwise modified from time to time.
"LDM Holding" means LDM Holding Canada, Inc., a Michigan corporation.
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<PAGE> 26
"LDM Holding Guarantee" means the LDM Holding Guarantee, dated
as of the date hereof, duly executed and delivered by LDM Holding to the Agent,
for the benefit of itself and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"LDM Holding Pledge and Security Agreement" means the LDM
Holding Pledge and Security Agreement, dated as of the date hereof, duly
executed and delivered by LDM Holding in favor of the Agent, for the benefit of
itself and the Lenders, as the same may be amended, supplemented or otherwise
modified from time to time.
"LDM LLC" means LDM Holdings, L.L.C., a Michigan limited
liability company.
"LDM LLC Guarantee" means the LDM LLC Guarantee, dated as of
the date hereof, duly executed and delivered by LDM LLC to the Agent, for the
benefit of itself and the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"LDM LLC Pledge and Security Agreement" means the LDM LLC
Pledge and Security Agreement, dated as of the date hereof, duly executed and
delivered by LDM LLC in favor of the Agent, for the benefit of itself and the
Lenders, as the same may be amended, supplemented or otherwise modified
from time to time.
"LDM LP" means LDM Canada Limited Partnership, a Michigan
limited partnership.
"LDM LP Guarantee" means the LDM LP Guarantee, dated as of the
date hereof, duly executed and delivered by LDM LP to the Agent, for the
benefit of itself and the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"LDM LP Pledge Agreement" means the LDM LP Pledge Agreement,
dated as of the date hereof, duly executed and delivered by LDM LP in favor of
the Agent, for the benefit of itself and the Lenders, as the same may be
amended, supplemented or otherwise modified from time to time.
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof.
"Lending Office" means with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" has the meaning specified in Section
2.4(a).
"Letter of Credit Fee" has the meaning specified in Section
3.6.
"Level" means, in reference to Applicable Margins, and
includes, Level I, Level II, Level III or Level IV, whichever is in effect at
the relevant time. In determining the Level in effect for any Fiscal Year,
Fixed Charges shall have the meaning ascribed thereto herein, except that Fixed
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<PAGE> 27
Charges shall be calculated by deducting all Capital Expenditures during the
preceding Fiscal Year, regardless of the source of funding or financing
therefor.
"Level I" shall exist during any Fiscal Year after Fiscal Year 1997
when the Fixed Charge Coverage Ratio for the previous Fiscal Year is equal to
or less than 1.40:1.0.
"Level II" shall exist during Fiscal Year 1997 and any Fiscal Year
after Fiscal Year 1997 when the Fixed Charge Coverage Ratio for the previous
Fiscal Year is greater than 1.40:1.0 but equal to or less than 1.65:1.0.
"Level III" shall exist during any Fiscal Year after Fiscal Year 1997
when the Fixed Charge Coverage Ratio for the previous Fiscal Year is greater
than 1.65 to 1.0 but equal to or less than 1.80.1.
"Level IV" shall exist during any Fiscal Year after Fiscal Year 1997
when the Fixed Charge Coverage Ratio for the previous Fiscal Year is greater
than 1.80:1.0.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan,
the last day of each Interest Period applicable to such Loan.
"LIBOR Interest Rate Determination Date" means each date of calculating
the LIBOR Rate for purposes of determining the interest rate with respect to an
Interest Period. The LIBOR Interest Rate Determination Date for any LIBOR Rate
Loan shall be the second Business Day prior to the first day of the related
Interest Period for such LIBOR Rate Loan.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/16th of 1.0%) determined by the Agent as follows:
LIBOR Rate = LIBOR
-----------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1.0%) in effect on
such day (whether or not applicable to any Lender) under regulations
issued from time to time by the Federal Reserve Board for determining
the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"); and
"LIBOR" means the rate of interest per annum (rounded upward to
the next 1/16 of 1%) notified to the Agent by Bank of America as the
rate of interest at which
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<PAGE> 28
dollar deposits in the approximate amount of the Loan to be made
or continued as, or converted into, a LIBOR Rate Loan and having a
maturity comparable to such Interest Period would be offered by
Bank of America's applicable lending office to major banks in the
London eurodollar market at approximately 11:00 a.m. (London time)
two Business Days prior to the commencement of such Interest
Period.
"LIBOR Rate Loan" means a Revolving Loan during any period in
which it bears interest at the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including without limitation, a security interest, hypothecation,
charge, claim, or lien arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, agreement, security
agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes; and (b) to the extent not included under clause
(a), (i) any reservation, exception, encroachment, easement, right-of-way,
covenant, condition, restriction, lease or other title exception or encumbrance
affecting property and (ii) any other lien, charge, privilege, secured claim,
title retention, garnishment right, deemed trust, encumbrance or other right
affecting Property, choate or inchoate, whether or not crystallized or fixed,
whether or not for amounts due or accruing due, arising by any statute, act or
law of any jurisdiction, at common law, in equity or by any agreement.
"Loan Account" means the loan account of the Borrower, which
account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Intellectual
Property Security Agreement, the Pledge Agreement, the Guarantor Documents and
any other agreements, instruments, and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations,
the Collateral, or any other aspect of the transactions contemplated by this
Agreement.
"Loans" means, collectively, all loans and advances provided
for in Article 2.
"Majority Lenders" means, at any time, Lenders whose Pro Rata
shares aggregate more than 66-2/3% of the Commitments.
"Management Person has the meaning specified in Section 9.17.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrower and LDM Canada
on a consolidated basis or the Collateral, the Pledged
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<PAGE> 29
Collateral or the Guarantee Collateral on a consolidated basis; (b) a material
impairment of the ability of the Borrower or any Guarantor to perform under any
Loan Document to which such Person is a party and to avoid any Event of Default;
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower or any Guarantor of any Loan Document.
"Maximum Amount" means, at any time, an amount equal to the
Maximum Revolver Amount at such time.
"Maximum Rate" has the meaning specified in Section 3.3.
"Maximum Revolver Amount" means $45,000,000.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by the Borrower
or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, accrued rebates (including volume rebates), claims, credits and
allowance of any nature at any time issued, owing, granted, outstanding,
available or claimed in respect of such Eligible Accounts.
"Notice of Borrowing" means a notice of Borrowing in the form
of Exhibit C.
"Notice of Conversion/Continuation" means notice of conversion
or continuation in the form of Exhibit D.
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect (including, without limitation, those acquired by
assignment from others, and any participation by the Agent and/or any Lender in
the Borrower's debts owing to others), absolute or contingent, due or to become
due, primary or secondary, as principal or guarantor, and including, without
limitation, all principal, interest, charges, expenses, fees, attorneys' fees,
filing fees and any other sums chargeable to the Borrower hereunder or under
any of the other Loan Documents. "Obligations" includes, without limitation,
all debts, liabilities, and obligations now or hereafter owing from the
Borrower to the Agent and/or any Lender under or in connection with the
Letters of Credit.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
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<PAGE> 30
"Participating Lender" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by
such Lender under this Agreement, and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.
"Payment Account" means each blocked bank account established
pursuant to Section 6.9, to which the funds of the Borrower (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or the Borrower, as
the Agent may determine, on terms acceptable to the Agent.
"PBA" means the Pension Benefits Act of Ontario and all
regulations thereunder as amended from time to time, and any successor
legislation.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice(s) of Borrowing
received by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA or the applicable laws of any other jurisdictions including the
PBA) subject to Title IV of ERISA or the applicable laws of any other
jurisdictions including the PBA which the Borrower or LDM Canada sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or has made contributions at any time during the immediately
preceding five (5) plan years.
"Permitted Liens" means:
(a) 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 Borrower's books and records and a
stay of enforcement of any such Lien is in effect.
(b) the Agent's Liens;
(c) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
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<PAGE> 31
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons;
provided that the payment thereof is not at the time required by Section
9.1;
(e) reservations, exceptions, encroachments, easements,
rights of way, covenants running with the land, and other similar title
exceptions or encumbrances affecting any Real Estate; provided that they do
not in the aggregate materially detract from the value of the Real Estate
or materially interfere with its use in the ordinary conduct of the
Borrower's business;
(f) judgment and other similar Liens arising in connection
with court proceedings; provided that (A) the existence of such Liens is
being contested in good faith and by proper proceedings diligently pursued,
(B) reserves or other appropriate provision, if any, as are required by
GAAP have been made therefor, (C) a stay of enforcement of any such Liens
is in effect, (D) the priority of any such Liens is subordinate to that of
the Agent's Liens, and (E) the existence of any judgment or court
proceedings upon which such Liens are based does not otherwise constitute
an Event of Default under this Agreement; and
(g) Liens in existence on the Closing Date, after giving
effect to the initial Borrowing, and listed on Schedule 9.19, and any
extensions or renewals thereof, provided that (x) the aggregate principal
amount of the Debt, if any, secured by such Lien does not increase from
that amount outstanding at the time of any such renewal or extension and
(y) any such renewal or extension does not encumber any additional assets
or properties of the Borrower or any of its Subsidiaries.
"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, Governmental Authority, or any other entity.
"Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, duly executed and delivered by the Borrower for the benefit of the
Agent and the Lenders, as the same may be amended, supplemented or otherwise
modified from time to time.
"Pledged Collateral" has the meaning specified in the Pledge
Agreement.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA or the applicable laws of any other jurisdiction) which the
Borrower or any Subsidiary sponsors or maintains or to which the Borrower or
any Subsidiary makes, is making, or is obligated to make contributions and
includes any Pension Plan.
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<PAGE> 32
"PPSA" means the Personal Property Security Act of Ontario or
other applicable jurisdiction, and all regulations thereunder, as amended from
time to time, and any successor legislation.
"Premises" means the land identified by addresses on Schedule
8.12, together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way
appertaining thereto, and which constitutes all of the real property in which
the Borrower or LDM Canada has any interests on the Closing Date.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments.
"Proprietary Rights" means all of the Borrower's and LDM
Canada's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject matter
of copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service mark applications, and all licenses and rights related to
any of the foregoing, including, without limitation, those patents, trademarks,
service marks and copyrights set forth on Schedule 8.13 hereto, and all other
rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing,
and all rights to sue for past, present and future infringement of any of the
foregoing.
"Real Estate" means all of the present and future interests of
the Borrower and/or any Subsidiary, as owner, lessee, or otherwise, in the
Premises, including, without limitation, any interest arising from an option to
purchase or lease the Premises or any portion thereof.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rentals" has the meaning specified in Section 9.24.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Required Lenders" means, at any time Lenders whose Pro Rata
Shares aggregate more than 35% of the Commitments.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
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<PAGE> 33
"Responsible Officer" means the chief executive officer or the
president of the Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the Borrower, or any
other officer having substantially the same authority and responsibility.
"Restricted Investment" means any acquisition of property by
the Borrower or LDM Canada in exchange for cash or other property, whether in
the form of an acquisition of stock, debt, or other indebtedness or obligation,
or the purchase or acquisition of any other property, or a loan, advance,
capital contribution, or subscription, except (A) the Borrower may make
intercompany loans to LDM Canada pursuant to Section 9.13(d), and (B)
acquisitions of the following: (a) Equipment to be used in the business of the
Borrower or LDM Canada so long as the acquisition costs thereof constitute
Capital Expenditures permitted hereunder; (b) goods held for sale or lease or
to be used by the Borrower or LDM Canada in the ordinary course of business;
(c) current assets arising from the sale or lease of goods or the rendition of
services in the ordinary course of business of the Borrower or LDM Canada; (d)
direct obligations of the United States of America, or any agency thereof, or
obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof; (e)
certificates of deposit maturing within one year from the date of acquisition,
bankers' acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with a bank or trust company organized under
the laws of the United States or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) commercial paper given a rating of "A2"
or better by Standard & Poor's Corporation or "P2" or better by Moody's
Investors Service, Inc. and maturing not more than 90 days from the date of
creation thereof; (g) life insurance premiums of up to $1,500,000 per annum for
life insurance on the lives of the Borrower's principal stockholders; (h) loans
to employees outstanding as of the Closing Date; (i) loans and advances in the
ordinary of business to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses in an aggregate
principal amount not to exceed $250,000 at any time; and (j) the conversion of
all or portion of the Closing Date Intercompany Note into equity interests of a
Guarantor (other than LDM Holding).
"Revolving Loans" has the meaning specified in Section 2.2.
"Revolver Availability" means, at any time, the lesser of:
(A) the Maximum Revolving Amount at such time;
or
(B) the Borrower's Borrowing Base at such time plus the
LDM Canada Borrowing Base, less
(C) in each case, the sum of the following:
(i) the unpaid balance of Revolving Loans at such
time;
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<PAGE> 34
(ii) the aggregate undrawn face amount of all
outstanding Letters of Credit which the
Agent has caused to be issued or obtained for
the Borrower's account;
(iii) the aggregate amount of Pending Revolving
Loans;
(iv) the aggregate amount of unpaid
reimbursement obligations in respect of
Letters of Credit;
(v) reserves for accrued interest on the
Obligations; and
(vi) the Environmental Compliance Reserve.
"Seller" means Molmec, Inc., a Michigan corporation.
"Senior Subordinated Notes" means the 10-3/4% Senior
Subordinated Notes due 2007 issued by the Borrower.
"Solvent" means when used with respect to any Person that (a)
the fair value of all its assets is in excess of the total amount of its debts
(including contingent liabilities); (b) it is able to pay its debts as they
mature; (c) it does not have unreasonably small capital for the business in
which it is engaged or for any business or transaction in which it is about to
engage; and (d) it is not "insolvent" as such term is defined in Section
101(32) of the Bankruptcy Code.
"Stated Termination Date" means January 22, 2002; provided,
however, that the Borrower may request an extension of the Stated Termination
Date for an additional year by submitting a written request for such extension
to the Agent not less than 90 days prior to the annual anniversary of the
Closing Date and any subsequent anniversary, which written request will be
communicated promptly by the Agent to each Lender. Not less than 30 days prior
to the annual anniversary of the Closing Date and any subsequent anniversary,
the Agent shall notify the Borrower in writing whether all of the Lenders
elected to accept such extension. No extension of the Stated Termination Date
will become effective until the Agent delivers the notice referred to in the
immediate preceding sentence. All outstanding Loans and the unpaid accrued
interest thereon shall be due and payable in full by the Borrower on the Stated
Termination Date.
"Subsidiary" means any corporation of which more than fifty
percent (50.0%) of the outstanding securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions), is at the time, directly or indirectly through one or more
intermediaries, owned by the Borrower and/or one or more of its Subsidiaries;
provided, however, that Como shall only be a "Subsidiary" for the purposes of
this Agreement with respect to Sections 8.18, 8.21, 9.7, 9.8 and 11.1(p)
(including in each case the definitions contained therein).
"Supporting Letter of Credit" has the meaning specified in
Section 2.4(j).
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<PAGE> 35
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Agent, as the case may be,
is organized or maintains a Lending Office.
"Termination Date" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Commitment is terminated either by
the Borrower pursuant to Section 4.2 or by the Majority Lenders pursuant to
Section 11.2, and (iii) the date this Agreement is otherwise terminated for any
reason whatsoever.
"Termination Event" means: (a) the whole or partial withdrawal
of the Borrower or any Subsidiary from a Plan during a plan year; or (b) the
filing of a notice of intent to terminate in whole or in part a Plan or the
treatment of a Plan amendment as a termination or partial termination; or (c)
the institution of proceedings by any Public Authority to terminate in whole or
in part or have a trustee appointed to administer a Plan; or (d) any other
event or condition which might constitute grounds for the termination of,
winding up or partial termination or winding up or the appointment of a trustee
to administer, any Plan.
"Total Facility" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of Illinois or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"Unused Letter of Credit Subfacility" means an amount equal to
$20,000,000 minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities over the current value of that Plan's assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to
Section 412 of the Code or the PBA or other applicable laws of any jurisdiction
for the applicable plan year and includes in the case of any Plan regulated or
governed by the PBA or applicable laws of any jurisdiction, any unfunded
liability or solvency deficiency as determined under the PBA or other
applicable laws.
1.2 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
1.3 Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
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(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the
word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Borrower, each Guarantor and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Lenders or the
Agent merely because of the Agent's or Lender's involvement in their
preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions of
this Agreement, the Lenders severally agree to make available a total credit
facility of up to $45,000,000 (the "Total Facility") for the Borrower's use
from time to time during the term of this Agreement. The Total Facility shall
be comprised of a revolving line of credit consisting of revolving loans and
letters of credit up to the Maximum Revolver Amount, as described in Sections
2.2 and 2.4.
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2.2 Revolving Loans. (a) Amounts. Subject to the satisfaction
of the conditions precedent set forth in Article 10, each Lender severally
agrees, upon the Borrower's request from time to time on any Business Day
during the period from the Closing Date to the Termination Date, to make
revolving loans (the "Revolving Loans") to the Borrower, in amounts not to
exceed (except with respect to BABC Loans) such Lender's Pro Rata Share of the
Borrower's Revolver Availability. The Lenders, however, in their discretion,
may elect to make Revolving Loans or participate (as provided for in Section
2.4(f)) in the credit support or enhancement provided through the Agent to the
issuers of Letters of Credit in excess of the Revolver Availability on one or
more occasions, but if they do so, neither the Agent nor the Lenders shall be
deemed thereby to have changed the limits of the Maximum Revolver Amount or the
Revolver Availability or to be obligated to exceed such limits on any other
occasion. If the sum of outstanding Revolving Loans, the aggregate amount of
Pending Revolving Loans, the undrawn amount of outstanding Letters of Credit
and any unpaid reimbursement obligations in respect of Letters of Credit
exceeds the Revolver Availability, the Lenders may refuse to make or otherwise
restrict the making of Revolving Loans as the Lenders determine until such
excess has been eliminated.
(b) Procedure for Borrowing.
(i) Each Borrowing of Revolving Loans shall be
made upon the Borrower's irrevocable written notice delivered to the Agent in
the form of a Notice of Borrowing (which notice must be received by the Agent
prior to 11:00 a.m. (Chicago time) (x) three Business Days prior to the
requested Funding Date, in the case of LIBOR Rate Loans and (y) no later than
11:00 a.m. (Chicago time) on the requested Funding Date, in the case of Base
Rate Loans):
(A) specifying the amount of the Borrowing, which,
in the case of LIBOR Rate Loans shall be an amount
not less than $1,000,000 or in an integral multiple
of $1,000,000 in excess thereof;
(B) specifying the requested Funding Date, which
shall be a Business Day;
(C) specifying whether the Revolving Loans requested
are to be Base Rate Loans or LIBOR Rate Loans provided, however, that with
respect to the Borrowing to be made on the Closing Date, such Borrowings
will consist of Base Rate Loans only;
(D) specifying the duration of the Interest Period
if the requested Revolving Loans are to be LIBOR Rate Loans. If the Notice
of Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of LIBOR Rate Loans, such Interest Period shall be
three months; and
(E) in the event that all or a portion of the
proceeds of the Revolving Loan requested will be utilized to make an
Intercompany Loan pursuant to Section 9.13, setting forth in reasonable
detail the calculations required to establish that the aggregate amount of
such Intercompany Loan (and all prior Intercompany Loans made with proceeds
of
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Revolving Loans) does not exceed the sum of (a) the lesser of (x)
$5,000,000 and (y) the LDM Canada Borrowing Base at such time plus (b)
$5,000,000.
(ii) After giving effect to any Borrowing, there
may not be more than five (5) different Interest Periods in effect.
(iii) With respect to any request for Base Rate
Loans, in lieu of delivering the above-described Notice of Borrowing the
Borrower may give the Agent telephonic notice of such request by the required
time, with such telephonic notice to be confirmed in writing within 24 hours of
the giving of such notice but Agent shall be entitled to rely on the telephonic
notice in making such Revolving Loans.
(c) Reliance upon Authority. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following clauses (i) and (ii), the Borrower shall deliver to
the Agent a writing setting forth (i) the account of the Borrower to which the
Agent is authorized to transfer the proceeds of the Revolving Loans requested
pursuant to this Section 2.2, and (ii) the names of the officers authorized to
request Revolving Loans on behalf of the Borrower, and shall provide the Agent
with a specimen signature of each such officer. The Agent shall be entitled to
rely conclusively on such officer's authority to request Revolving Loans on
behalf of the Borrower, the proceeds of which are to be transferred to any of
the accounts specified by the Borrower pursuant to the immediately preceding
sentence, until the Agent receives written notice to the contrary. The Agent
shall have no duty to verify the identity of any individual representing him or
herself as one of the officers authorized by the Borrower to make such requests
on its behalf.
(d) No Liability. The Agent shall not incur any liability to
the Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Agent believes in good faith to have been
given by an officer duly authorized by the Borrower to request Revolving Loans
on its behalf or for otherwise acting in good faith under this Section 2.2, and
the crediting of Revolving Loans to the Borrower's deposit account, or
transmittal to such Person as the Borrower shall direct, shall conclusively
establish the obligation of the Borrower to repay such Revolving Loans as
provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or
telephonic notice in lieu thereof) made pursuant to Section 2.2(b) shall be
irrevocable and the Borrower shall be bound to borrow the funds requested
therein in accordance therewith.
(f) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b),
the Agent shall elect, in its discretion, (i) to have the terms of Section
2.2(g) apply to such requested Borrowing, or (ii) to request BABC to make a
BABC Loan pursuant to the terms of Section 2.2(h) in the amount of the
requested Borrowing; provided, however, that if BABC declines in its sole
discretion to make a BABC Loan pursuant to Section 2.2(h), the Agent shall
elect to have the terms of Section 2.2(g) apply to such requested Borrowing.
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(g) Making of Revolving Loans.
(i) In the event that the Agent shall elect to have
the terms of this Section 2.2(g) apply to a requested Borrowing as described in
Section 2.2(f), then promptly after receipt of a Notice of Borrowing or
telephonic notice pursuant to Section 2.2(b), the Agent shall notify the
Lenders by facsimile transmission, telephone or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to the Agent
in same day funds, to such account of the Agent as the Agent may designate, not
later than Noon (Chicago time) on the Funding Date applicable thereto. After
the Agent's receipt of the proceeds of such Revolving Loans, upon satisfaction
of the applicable conditions precedent set forth in Article 10, the Agent shall
make the proceeds of such Revolving Loans available to the Borrower on the
applicable Funding Date by transferring same day funds equal to the proceeds of
such Revolving Loans received by the Agent to the account of the Borrower,
designated in writing by the Borrower; provided, however, that the amount of
Revolving Loans so made on any date shall in no event exceed the Revolver
Availability of the Borrower on such date.
(ii) Unless the Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Agent for the account of the Borrower the amount of that Lender's Pro Rata
Share of the Borrowing, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds on the Funding
Date and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent any Lender shall not have made its full amount available
to the Agent in immediately available funds and the Agent in such circumstances
has made available to the Borrower such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each day during
such period. A notice of the Agent submitted to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to the Agent shall constitute
such Lender's Loan on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Agent on the Business Day following
the Funding Date, the Agent will notify the Borrower of such failure to fund
and, upon demand by the Agent, the Borrower shall pay such amount to the Agent
for the Agent's account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the interest
rate applicable at the time to the Loans comprising such Borrowing. The
failure of any Lender to make any Loan on any Funding Date shall not relieve
any other Lender of any obligation hereunder to make a Loan on such Funding
Date, but no Lender shall be responsible for the failure of any other Lender to
make the Loan to be made by such other Lender on any Funding Date.
(h) Making of BABC Loans.
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(i) In the event the Agent shall elect, with the
consent of BABC, to have the terms of this Section 2.2(h) apply to a requested
Borrowing as described in Section 2.2(f), BABC shall make a Base Rate Loan in
the amount of such Borrowing (any such Revolving Loan made solely by BABC
pursuant to this Section 2.2(h) being referred to as a "BABC Loan" and such
Revolving Loans being referred to collectively as "BABC Loans") available to
the Borrower on the Funding Date applicable thereto by transferring same day
funds to an account of the Borrower, designated in writing by the Borrower.
Each BABC Loan is a Revolving Loan hereunder and shall be subject to all the
terms and conditions applicable to other Revolving Loans except that all
payments thereon shall be payable to BABC solely for its own account (and for
the account of the holder of any participation interest with respect to such
Revolving Loan). The Agent shall not request BABC to make any BABC Loan if (i)
the Agent shall have received written notice from any Lender, or otherwise has
actual knowledge, that one or more of the applicable conditions precedent set
forth in Article 10 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the Revolver
Availability of the Borrower on such Funding Date. BABC shall not otherwise be
required to determine whether the applicable conditions precedent set forth in
Article 10 have been satisfied or the requested Borrowing would exceed the
Availability of the Borrower on the Funding Date applicable thereto prior to
making, in its sole discretion, any BABC Loan.
(ii) The BABC Loans shall be repayable on demand and
secured by the Collateral, the Pledged Collateral and the Guarantor Collateral,
shall constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to Base Rate Loans from time to time.
(i) Agent Advances. (i) Subject to the limitations set forth
in the provisos contained in this Section 2.2(i), the Agent is hereby
authorized by the Borrower and the Lenders, from time to time in the Agent's
sole discretion, (x) after the occurrence of a Default or an Event of Default,
or (y) at any time that any of the other applicable conditions precedent set
forth in Article 10 have not been satisfied, to make Revolving Loans to the
Borrower on behalf of the Lenders which the Agent, in its reasonable business
judgment, deems necessary or desirable (A) to preserve or protect the
Collateral, the Pledged Collateral and the Guarantor Collateral, or any portion
thereof, (B) to enhance the likelihood of, or maximize the amount of, repayment
of the Loans and other Obligations, or (C) to pay any other amount chargeable
to the Borrower pursuant to the terms of this Agreement, including, without
limitation, costs, fees and expenses as described in Section 15.7 (any of the
advances described in this Section 2.2(i) being hereinafter referred to as
"Agent Advances"); provided, that the Agent shall not make any Agent Advance to
the Borrower if the amount thereof would exceed the Revolver Availability of the
Borrower on the Funding Date applicable thereto; and provided, further, that the
Required Lenders may at any time revoke the Agent's authorization contained in
this Section 2.2(i) to make Agent Advances, any such revocation to be in writing
and to become effective upon the Agent's receipt thereof.
(ii) The Agent Advances shall be repayable on demand
and secured by the Collateral, the Pledged Collateral and the Guarantor
Collateral, shall constitute Revolving Loans and Obligations hereunder, and
shall bear interest at the rate applicable to the Revolving Loans from
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time to time. The Agent shall notify the Borrower and each Lender in writing of
each such Agent Advance.
(j) Settlement. It is agreed that each Lender's funded
portion of the Revolving Loan is intended by the Lenders to be equal at all
times to such Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, BABC, and the other Lenders agree
(which agreement shall not be for the benefit of or enforceable by the
Borrower) that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among them as to the Revolving Loans, the
BABC Loans and the Agent Advances shall take place on a periodic basis in
accordance with the following provisions:
(i) The Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more frequent basis
if so determined by the Agent, (x) on behalf of BABC, with respect to each
outstanding BABC Loan, (y) for itself, with respect to each Agent Advance, and
(z) with respect to collections received by notifying the Lenders by facsimile
transmission, telephone or other similar form of transmission, of such
requested Settlement, no later than Noon (Chicago time) on the date of such
requested Settlement (the "Settlement Date"). Each Lender (other than BABC, in
the case of BABC Loans) shall make the amount of such Lender's Pro Rata Share
of the outstanding principal amount of the BABC Loans and Agent Advances with
respect to which Settlement is requested available to the Agent, for itself or
for the account of BABC, in same day funds, to such account of the Agent as the
Agent may designate, not later than Noon (Chicago time), on the Settlement Date
applicable thereto, regardless of whether the applicable conditions precedent
set forth in Article 10 have then been satisfied. Such amounts made available
to the Agent shall be applied against the amounts of the applicable BABC Loan
or Agent Advance and, together with the portion of such BABC Loan or Agent
Advance representing BABC's Pro Rata Share thereof, shall constitute Revolving
Loans of such Lenders. If any such amount is not made available to the Agent by
any Lender on the Settlement Date applicable thereto, the Agent shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three (3) days from and
after the Settlement Date and thereafter at the Interest Rate then applicable to
the Revolving Loans.
(ii) Notwithstanding the foregoing, not more than
one (1) Business Day after demand is made by the Agent (whether before or after
the occurrence of a Default or an Event of Default and regardless of whether
the Agent has requested a Settlement with respect to a BABC Loan or Agent
Advance), each other Lender shall irrevocably and unconditionally purchase and
receive from BABC or the Agent, as applicable, without recourse or warranty, an
undivided interest and participation in such BABC Loan or Agent Advance to the
extent of such Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such BABC Loan or
Agent Advance. If such amount is not in fact made available to the Agent by
any Lender, the Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal Funds Rate for the
first three (3) days from and after such demand and thereafter at the Interest
Rate then applicable to the Revolving Loans.
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(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any BABC Loan or Agent
Advance pursuant to subsection (ii) above, the Agent shall promptly distribute
to such Lender at such address as such Lender may request in writing, such
Lender's Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral, Pledged Collateral and Guarantor Collateral received by
the Agent in respect of such BABC Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no
Agent Advances or BABC Loans are outstanding, may pay over to BABC any payments
received by Agent, which in accordance with the terms of the Agreement would be
applied to the reduction of the Revolving Loans, for application to BABC's Pro
Rata Share of the Revolving Loans. If, as of any Settlement Date, collections
received since the then immediately preceding Settlement Date have been applied
to BABC's Pro Rata Share of the Revolving Loans other than to BABC Loans or
Agent Advances, as provided for in the previous sentence, BABC shall pay to the
Agent for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of
the Revolving Loans. During the period between Settlement Dates, BABC with
respect to BABC Loans, the Agent with respect to Agent Advances, and each Lender
with respect to the Revolving Loans other than BABC Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under the
Agreement on the actual average daily amount of funds employed by BABC, the
Agent and the other Lenders.
(k) Notation. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including the
BABC Loans owing to BABC, and the Agent Advances owing to the Agent, from time
to time. In addition, each Lender is authorized, at such Lender's option, to
note the date and amount of each payment or prepayment of principal of such
Lender's Revolving Loans in its books and records, including computer records,
such books and records constituting rebuttably presumptive evidence, absent
manifest error, of the accuracy of the information contained therein.
(l) Lenders' Failure to Perform. All Revolving Loans (other
than BABC Loans and Agent Advances) shall be made by the Lenders simultaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, nor shall any Commitment of
any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Loans hereunder, and (ii) no
failure by any Lender to perform its obligation to make any Revolving Loans
hereunder shall excuse any other Lender from its obligation to make any
Revolving Loans hereunder.
2.3 [INTENTIONALLY OMITTED].
2.4 Letters of Credit.
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(a) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent agrees to take
reasonable steps to cause to be issued for the account of the Borrower and to
provide credit support or other enhancement in connection with one or more
stand-by or merchandise/documentary letters of credit (each such letter of
credit, a "Letter of Credit" and such letters of credit, collectively, the
"Letters of Credit") in accordance with this Section 2.4 from time to time
during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall not
have any obligation to take steps to cause to be issued any Letter of Credit at
any time: (i) if the maximum undrawn amount of the requested Letter of Credit
is greater than the Unused Letter of Credit Subfacility at such time; (ii) if
the maximum undrawn amount of the requested Letter of Credit and all
commissions, fees, and charges due from the Borrower in connection with the
opening thereof exceed the Revolving Availability of the Borrower at such time;
or (iii) which has an expiration date later than the Stated Termination Date or
more than twelve (12) months from the date of issuance (except with respect to
stand-by Letters of Credit which automatically renew each year).
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 10,
the obligation of the Agent to take reasonable steps to cause to be issued any
Letter of Credit is subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent:
(i) the Borrower shall have delivered to the
proposed issuer of such Letter of Credit, at such times and in such manner as
such proposed issuer may prescribe, an application in form and substance
satisfactory to such proposed issuer for the issuance of the Letter of Credit
and such other documents as may be required pursuant to the terms thereof, and
the form and terms of the proposed Letter of Credit shall be satisfactory to
the Agent and such proposed issuer; and
(ii) as of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing letters of credit
of the type and in the amount of the proposed Letter of Credit, and no law,
rule or regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit,
or request that the proposed issuer of such Letter of Credit refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit.
(d) Issuance of Letters of Credit.
(i) Request for Issuance. The Borrower shall
give the Agent three (3) Business Days' prior written notice, containing the
original signature of an authorized officer of the Borrower of the Borrower's
request for the issuance of a Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business Day) of issuance
of such requested Letter of Credit, whether
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such Letter of Credit may be drawn in a single or in partial draws, the date on
which such requested Letter of Credit is to expire (which date shall be a
Business Day), the purpose for which such Letter of Credit is to be issued, and
the beneficiary of the requested Letter of Credit. The Borrower shall attach to
such notice the proposed form of the Letter of Credit that the Agent is
requested to cause to be issued.
(ii) Responsibilities of the Agent; Issuance. The
Agent shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set forth in the
notice from the Borrower pursuant to Section 2.4(d)(i), (x) the amount of the
applicable Unused Letter of Credit Subfacility and (y) the Revolver
Availability of the Borrower as of such date. If (x) the undrawn amount of the
requested Letter of Credit is not greater than the applicable Unused Letter of
Credit Subfacility and (y) the issuance of such requested Letter of Credit and
all commissions, fees, and charges due from the Borrower in connection with the
opening thereof would not exceed the Revolver Availability of the Borrower, the
Agent shall take reasonable steps to cause such issuer to issue the requested
Letter of Credit on such requested effective date of issuance.
(iii) Notice of Issuance. Promptly after the
issuance of any Letter of Credit, the Agent shall give notice to each Lender of
the issuance of such Letter of Credit.
(iv) No Extensions or Amendment. The Agent shall
not be obligated to cause any Letter of Credit to be extended or amended unless
the requirements of this Section 2.4(d) are met as though a new Letter of
Credit were being requested and issued. With respect to any Letter of Credit
which contains any "evergreen" or automatic renewal provision, each Lender
shall be deemed to have consented to any such extension or renewal unless any
such Lender shall have provided to the Agent, not less than 30 days prior to
the last date on which the applicable issuer can in accordance with the terms
of the applicable Letter of Credit decline to extend or renew such Letter of
Credit, written notice that it declines to consent to any such extension or
renewal, provided, that if all of the requirements of this Section 3.4 are met
and no Default or Event of Default exists, no Lender shall decline to consent
to any such extension or renewal.
(e) Payments Pursuant to Letters of Credit.
(i) Payment of Letter of Credit Obligations. The
Borrower agrees to reimburse the issuer for any draw under any Letter of Credit
immediately upon demand, and to pay the issuer of the Letter of Credit the
amount of all other obligations and other amounts payable to such issuer under
or in connection with any Letter of Credit immediately when due, irrespective
of any claim, setoff, defense or other right which the Borrower may have at any
time against such issuer or any other Person.
(ii) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the issuer of any Letter of Credit honors a
draw under such Letter of Credit and the Borrower shall not have repaid such
amount to the issuer of such Letter of Credit pursuant to Section 2.4(e)(i),
the Agent shall, upon receiving notice of such failure, notify each Lender of
such failure, and each
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Lender shall unconditionally pay to the Agent, for the account of such issuer,
as and when provided hereinbelow, an amount equal to such Lender's Pro Rata
Share of the amount of such payment in Dollars and in same day funds. If the
Agent so notifies the Lenders prior to 11:00 a.m. (Chicago time) on any Business
Day, each Lender shall make available to the Agent the amount of such payment,
as provided in the immediately preceding sentence, on such Business Day. Such
amounts paid by the Lenders to the Agent shall constitute Revolving Loans which
shall be deemed to have been requested by the Borrower pursuant to Section 2.2
as set forth in Section 4.7.
(f) Participations.
(i) Purchase of Participations. Immediately upon
issuance of any Letter of Credit in accordance with Section 2.4(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and participation in the
credit support or enhancement provided through the Agent to such issuer in
connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit (including, without
limitation, all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from the Borrower on account of
reimbursement obligations in respect of a Letter of Credit as to which the
Agent has previously received for the account of the issuer thereof payment
from a Lender pursuant to Section 2.4(e)(ii), the Agent shall promptly pay to
such Lender such Lender's Pro Rata Share of such payment from the Borrower in
Dollars. Each such payment shall be made by the Agent on the Business Day on
which the Agent receives immediately available funds paid to such Person
pursuant to the immediately preceding sentence, if received prior to 1:00 p.m.
(Chicago time) on such Business Day and otherwise on the next succeeding
Business Day.
(iii) Documentation. Upon the request of any
Lender, the Agent shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreements executed in connection therewith, application for any
Letter of Credit and credit support or enhancement provided through the Agent
in connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably by requested by such Lender.
(iv) Obligations Irrevocable. The obligations of
each Lender to make payments to the Agent with respect to any Letter of Credit
or with respect to any credit support or enhancement provided through the Agent
with respect to a Letter of Credit, and the obligations of the Borrower to make
payments to the Agent, for the account of the Lenders, shall be irrevocable,
not subject to any qualification or exception whatsoever , including, without
limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
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(B) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), any Lender, the Agent, the
issuer of such Letter of Credit, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transactions
between the Borrower or any other Person and the beneficiary named in any
Letter of Credit);
(C) any draft, certificate or any other document presented under
the 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;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
or
(E) the occurrence of any Default or Event of Default.
(g) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrower received by the Agent with respect to
any Letter of Credit (or any guaranty by the Borrower or reimbursement
obligation of the Borrower relating thereto) and distributed by the Agent to
the Lenders on account of their respective participations therein is thereafter
set aside, avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon
demand by the Agent, pay to the Agent their respective Pro Rata Shares of such
amount set aside, avoided or recovered, together with interest at the rate
required to be paid by the Agent upon the amount required to be repaid by it.
(h) Compensation for Letters of Credit.
(i) Letter of Credit Fee. The Borrower agrees to
pay to the Agent with respect to each Letter of Credit, for the account of the
Lenders, the Letter of Credit Fee specified in, and in accordance with the
terms of, Section 3.6.
(ii) Issuer Fees and Charges. The Borrower shall
pay to the issuer of any Letter of Credit, or to the Agent, for the account of
the issuer of any such Letter of Credit, solely for such issuer's account, such
fees and other charges as are charged by such issuer for letters of credit
issued by it, including, without limitation, its standard fees for issuing,
administering, amending, renewing, paying and canceling letters of credit and
all other fees associated with issuing or servicing letters of credit, as and
when assessed.
(i) Indemnification; Exoneration.
(i) Indemnification. In addition to amounts
payable as elsewhere provided in this Section 2.4, the Borrower hereby agrees
to protect, indemnify, pay and save the Lenders and the Agent harmless from and
against any and all claims, demands, liabilities, damages,
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losses, costs, charges and expenses (including reasonable attorneys' fees) which
any Lender or the Agent may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit or the provision of any credit
support or enhancement in connection therewith.
(ii) Assumption of Risk by the Borrower. As among
the Borrower, the Lenders, and the Agent, the Borrower assumes all risks of the
acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the applications for
the issuance of Letters of Credit, the Lenders and the Agent shall not be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to any
of the Letters of Credit, even if it should prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of any Letter of
Credit to comply duly with conditions required in order to draw upon such
Letter of Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex,
facsimile transmission or otherwise, whether or not they be in cipher; (E)
errors in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order make a drawing under
any Letter of Credit or of the proceeds thereof; (G) the misapplication by the
beneficiary of any Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or (H) any consequences arising from causes beyond the control
of the Lenders or the Agent, including, without limitation, any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority. None of the foregoing shall affect, impair or prevent
the vesting of any rights or powers of the Agent or any Lender under this
Section 2.4(i).
(iii) Exoneration. In furtherance and extension,
and not in limitation, of the specific provisions set forth above, any action
taken or omitted by the Agent or any Lender under or in connection with any of
the Letters of Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put the Agent or
any Lender under any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to any such Person.
(j) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.4(b) any Letter of Credit is
outstanding upon the termination of this Agreement, then upon such termination
the Borrower shall deposit with the Agent, for the ratable benefit of the
Lenders, with respect to each Letter of Credit then outstanding, as the
Majority Lenders, in their discretion shall specify, either (x) a standby
letter of credit (a "Supporting Letter of Credit") in form and substance
satisfactory to the Agent, issued by an issuer satisfactory to the Agent in an
amount equal to the greatest amount for which such Letter of Credit may be
drawn, under which Supporting Letter of Credit the Agent is entitled to draw
amounts necessary to reimburse the Agent and the Lenders for payments made by
the Agent and the Lenders under such Letter of Credit or under any credit
support or enhancement provided through the Agent with respect thereto, or (y)
cash in
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amounts necessary to reimburse the Agent and the Lenders for payments made by
the Agent or the Lenders under such Letter of Credit or under any credit support
or enhancement provided through the Agent with respect thereto. Such Supporting
Letter of Credit or deposit of cash shall be held by the Agent, for the ratable
benefit of the Lenders, as security for, and to provide for the payment of, the
aggregate undrawn amount of such Letters of Credit remaining outstanding.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall
bear interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate
or the LIBOR Rate and Sections 3.1(a)(i) or (ii), as applicable, but not to
exceed the Maximum Rate described in Section 3.3. Subject to the provisions of
Section 3.2, any of the Loans may be converted into, or continued as, Base Rate
Loans or LIBOR Rate Loans in the manner provided in Section 3.2. If at any
time Loans are outstanding with respect to which notice has not been delivered
to the Agent in accordance with the terms of this Agreement specifying the
basis for determining the interest rate applicable thereto, then those Loans
shall be Base Rate Loans and shall bear interest at a rate determined by
reference to the Base Rate until notice to the contrary has been given to the
Agent and such notice has become effective. Except as otherwise provided
herein, the outstanding Obligations shall bear interest as follows:
(i) For all Loans and other Obligations, which
are not LIBOR Rate Loans, then at a fluctuating per annum rate equal to the
Base Rate plus the respective Applicable Margins; and
(ii) For all Loans and other Obligations, which
are LIBOR Rate Loans, then at a per annum rate equal to the LIBOR Rate plus the
respective Applicable Margins.
Each change in the Base Rate shall be reflected in the interest rate described
in (i) above as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest accrued on all Loans will be payable in arrears on
the first day of each month hereafter.
(b) Default Rate. If any Default or Event of Default
occurs and is continuing and the Majority Lenders in their discretion so elect,
then, while any such Default or Event of Default is outstanding, all of the
Obligations shall bear interest at the Default Rate applicable thereto.
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3.2 Conversion and Continuation Elections. (a) The Borrower may,
upon irrevocable written notice to the Agent in accordance with Subsection
3.2(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans to convert any such Loans (or any part thereof in an amount not less
than $1,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods expiring
on such day (or any part thereof in an amount not less than $1,000,000, or
that is in an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Borrower to continue such Loans as, and convert such Loans into,
LIBOR Rate Loans, as the case may be, shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 11:00 a.m.
(Chicago time) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to LIBOR Rate Loans, the Borrower has failed to select timely a new
Interest Period to be applicable to LIBOR Rate Loans or if any Default or Event
of Default then exists, the Borrower shall be deemed to have elected to convert
such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(e) During the existence of a Default or Event of
Default, the Borrower may not elect to have a Loan converted into or continued
as a LIBOR Rate Loan.
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(f) After giving effect to any conversion or continuation
of Loans, there may not be more than five different Interest Periods in effect.
3.3 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate permissible for corporate
borrowers under applicable law for loans of the type provided for hereunder
(the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations under this Agreement, the total amount of interest paid
or accrued under the terms of this Agreement is less than the total amount of
interest which would, but for this Section 3.3, have been paid or accrued if
the interest rates otherwise set forth in this Agreement had at all times been
in effect, then the Borrower shall, to the extent permitted by applicable law,
pay the Agent, for the account of the Lenders, an amount equal to the
difference between (a) the lesser of (i) the amount of interest which would
have been charged if the Maximum Rate had, at all times, been in effect or (ii)
the amount of interest which would have accrued had the interest rates
otherwise set forth in this Agreement, at all times, been in effect and (b) the
amount of interest actually paid or accrued under this Agreement. In the event
that a court determines that the Agent and/or any Lender has received interest
and other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce,
the Obligations other than interest, in the inverse order of maturity, and if
there are no Obligations outstanding, the Agent and/or such Lender shall refund
to the Borrower such excess.
3.4 Closing Fee. The Borrower agrees to pay the Agent the Closing
Fee and other fees in the amounts and at such times as are set forth in the Fee
Letter of even date herewith between the Agent and the Borrower (the "Fee
Letter").
3.5 Unused Line Fee. The Borrower agrees to pay, on the first day
of each month and on the Termination Date, to the Agent, for the ratable
account of the Lenders, an unused line fee equal to three-eighth's of one
percent (.375%) per annum on the average daily amount by which the Maximum
Amount exceeded the sum of the average daily outstanding amount of Loans and
the undrawn amount of all outstanding Letters of Credit, during the
immediately preceding month or shorter period if calculated on the Termination
Date. The unused line fee shall be computed on the basis of a 360-day year for
the actual number of days elapsed. All payments received by the Agent on
account of Accounts or as proceeds of other Collateral shall be deemed to be
credited to the Borrower's Loan Account immediately upon receipt for purposes of
calculating the unused line fee pursuant to this Section 3.5.
3.6 Letter of Credit Fee. The Borrower agrees to pay to the Agent,
for the ratable account of the Lenders, for each Letter of Credit, a fee (the
"Letter of Credit Fee") equal to two percent (2%) per annum of the undrawn
amount of each Letter of Credit issued for the Borrower's account at the
Borrower's request (which fee includes a "fronting fee" required to be paid by
the Agent to such
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issuer for the assumption of the settlement risk in connection with the issuance
of such Letter of Credit), plus all out-of-pocket costs, fees and expenses
incurred by the Agent in connection with the application for, issuance of, or
amendment to any Letter of Credit. The Letter of Credit Fee shall be payable in
advance monthly, on the first day of each month during which each such Letter of
Credit remains outstanding. The Letter of Credit Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
3.7 Audit Fees. The Borrower agrees to pay to the Agent, solely for
its own account, all costs and fees reasonably incurred by the Agent's internal
auditors in connection with audits of the Borrower performed by such auditors
during the term of this Agreement; provided, that so long as no Event of
Default has occurred and is continuing and so long as Revolver Availability
exceeds $15,000,000, the Agent shall not be entitled to reimbursement for any
such costs and fees incurred in connection with audits in excess of two (2) per
year, it being understood and agreed that so long as Revolver Availability is
less than $15,000,000, the Agent shall at any time be permitted to conduct, and
be reimbursed for, up to four (4) audits per year upon prior written notice
from the Agent to the Borrower and so long as an Event of Default has occurred
and is continuing no such limitation on reimbursement shall apply. Each
auditor of the Agent shall be billed at a rate of $500 per day plus reasonably
incurred out-of-pocket expenses (including travel expenses).
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Repayment of Revolving Loans. The Borrower shall repay
the outstanding principal balance of the Revolving Loans, plus all accrued but
unpaid interest thereon, on the Termination Date. The Borrower may prepay
Revolving Loans at any time, and reborrow subject to the terms of this
Agreement; provided, however, that with respect to any LIBOR Rate Loans prepaid
by the Borrower prior to the expiration date of the Interest Period applicable
thereto, the Borrower agrees to pay to the Lenders the amounts described in
Section 5.4. In addition, and without limiting the generality of the
foregoing, upon demand the Borrower shall pay to the Agent, for the account of
the Lenders, the amount, without duplication, by which the sum of outstanding
Revolving Loans, the aggregate amount of Pending Revolving Loans, the aggregate
undrawn amounts of all outstanding Letters of Credit and the amount of all
unpaid reimbursement obligations with respect to the Letters of Credit exceeds
the Revolver Availability.
4.2 Termination of Facility. The Borrower may terminate this
Agreement upon at least ten (10) Business Days' notice to the Agent and the
Lenders, upon (i) the payment in full of all outstanding Revolving Loans,
together with accrued interest thereon, and the cancellation of all outstanding
Letters of Credit, (ii) the payment of the early termination fee set forth in
the next sentence, (iii) the payment in full in cash of all other Obligations
together with accrued interest thereon, and (iv) with respect to any LIBOR Rate
Loans prepaid in connection with such termination prior to the expiration date
of the Interest Period applicable thereto, the payment of the amounts described
in Section 5.4. If this Agreement is terminated at any time prior to the
Stated Termination
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Date, whether pursuant to this Section or pursuant to Section 11.2, the Borrower
shall pay to the Agent, for the account of the Lenders, an early termination fee
determined in accordance with the following table:
PERIOD DURING WHICH
EARLY TERMINATION
OCCURS EARLY TERMINATION FEE
------------------- ---------------------
On or prior to the first 1.00% of the Commitments.
Anniversary Date
After the first Anniversary 0.50% of the Commitments.
Date but on or prior to
the second Anniversary
Date.
After the second Anniversary 0.25% of the Commitments;
Date but on or prior to the third
Anniversary Date.
;provided, however, that the Borrower shall not be required to pay any fee
pursuant to this Section 4.2, in the event that such termination is related to
the refinancing of the Obligations by BABC or any of its Affiliates.
4.3 [INTENTIONALLY OMITTED].
4.4 [INTENTIONALLY OMITTED].
4.5 [INTENTIONALLY OMITTED].
4.6 Payments by the Borrower. (a) All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower shall be made
to the Agent for the account of the Lenders at the Agent's address set forth in
Section 15.8, and shall be made in Dollars and in immediately available funds,
no later than 1:00 p.m. (Chicago time) on the date specified herein. Any
payment received by the Agent later than 1:00 p.m. (Chicago time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition
of "Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower
prior to the date on which any payment is due to the Lenders that the Borrower
will not make such payment in full as and when
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required, the Agent may assume that the Borrower has made such payment in full
to the Agent on such date in immediately available funds and the Agent may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrower has not made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to such
Lender, together with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Lender until the date repaid.
4.7 Payments as Revolving Loans. All payments of principal,
interest, reimbursement obligations in connection with Letters of Credit, fees,
premiums and other sums payable hereunder, including all reimbursement for
expenses pursuant to Section 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.7, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrower pursuant to Section 2.2 or a deemed request as provided in this
Section 4.7. The Borrower hereby irrevocably authorizes the Agent to charge
the Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans (including
BABC Loans and Agent Advances) and that all such Revolving Loans so made shall
be deemed to have been requested by Borrower pursuant to Section 2.2.
4.8 Apportionment, Application and Reversal of Payments.
Aggregate principal and interest payments shall be apportioned ratably among
the Lenders (according to the unpaid principal balance of the Loans to which
such payments relate held by each Lender) and payments of the fees shall, as
applicable, be apportioned ratably among the Lenders. All payments shall be
remitted to the Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Accounts or other Collateral, the Pledged Collateral or the
Guarantor Collateral received by the Agent, shall be applied, ratably, subject
to the provisions of this Agreement, first, to pay any fees, or expense
reimbursements then due to the Agent from the Borrower; second, to pay any fees
or expense reimbursements then due to the Lenders from the Borrower; third, to
pay interest due in respect of all Revolving Loans, including BABC Loans and
Agent Advances; fourth, to pay or prepay principal of the BABC Loans and Agent
Advances; fifth, to pay or prepay principal of the Revolving Loans (other than
BABC Loans and Agent Advances) and unpaid reimbursement obligations in respect
of Letters of Credit; and sixth, to the payment of any other Obligation due to
the Agent or any Lender by the Borrower. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by the Borrower, or
unless an Event of Default is outstanding, neither the Agent nor any Lender
shall apply any payments which it receives to any LIBOR Rate Loan except (i) on
the expiration date of the Interest Period applicable to any such LIBOR Rate
Loan, or (ii) in the event, and only to the extent, that there are no
outstanding Base Rate Loans. The Agent shall promptly distribute to each
Lender, pursuant to the applicable wire transfer instructions received from
each Lender in writing, such funds as it may be entitled to receive, subject to
a Settlement delay as provided for in Section 2.2(j). The Agent and the
Lenders shall have the continuing and exclusive right to apply and reverse and
reapply any and all such proceeds and payments to any portion of the
Obligations.
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4.9 Indemnity for Returned Payments. If, after receipt of any
payment of, or proceeds applied to the payment of, all or any part of the
Obligations, the Agent or any Lender is for any reason compelled to surrender
such payment or proceeds to any Person, because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended to
be satisfied shall be revived and continue and this Agreement shall continue in
full force as if such payment or proceeds had not been received by the Agent or
such Lender, and the Borrower shall be liable to pay to the Agent, and hereby
does indemnify the Agent and the Lenders and hold the Agent and the Lenders
harmless for, the amount of such payment or proceeds surrendered. The
provisions of this Section 4.9 shall be and remain effective notwithstanding any
contrary action which may have been taken by the Agent or any Lender in reliance
upon such payment or application of proceeds, and any such contrary action so
taken shall be without prejudice to the Agent's and the Lenders' rights under
this Agreement and shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The provisions of
this Section 4.9 shall survive the termination of this Agreement.
4.10 Agent's and Lenders' Books and Records; Monthly Statements.
The Borrower agrees that the Agent's and each Lender's books and records
showing the Obligations and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note
or other instrument. The Agent will provide to the Borrower a monthly
statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on
the Borrower and an account stated (except for reversals and reapplications of
payments made as provided in Section 4.8 and corrections of errors discovered
by the Agent), unless the Borrower notifies the Agent in writing to the
contrary within thirty (30) days after such statement is rendered. In the
event a timely written notice of objections is given by the Borrower, only the
items to which exception is expressly made will be considered to be disputed by
the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Any and all payments by the Borrower to each
Lender or the Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for any Taxes. In
addition, the Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless
each Lender and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Lender or the Agent and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with
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respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Lender or the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under this
Section) such Lender or the Agent, as the case may be, receives an amount equal
to the sum it would have received had no such deductions or withholdings been
made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or
the Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes or
Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts
to any Lender or the Agent pursuant to subsection (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
5.2 Illegality. (a) If any Lender determines that the
introduction of any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any Requirement of Law, has
made it unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable Lending Office
to make LIBOR Rate Loans, then, on notice thereof by the Lender to the Borrower
through the Agent, any obligation of that Lender to make LIBOR Rate Loans shall
be suspended until the Lender notifies the Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to
maintain any LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of
such fact and demand from such Lender (with a copy to the Agent), prepay in
full such LIBOR Rate Loans of that Lender then outstanding, together
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with interest accrued thereon and amounts required under Section 5.4, either on
the last day of the Interest Period thereof, if the Lender may lawfully
continue to maintain such LIBOR Rate Loans to such day, or immediately, if the
Lender may not lawfully continue to maintain such LIBOR Rate Loan. If the
Borrower is required to so prepay any LIBOR Rate Loan, then concurrently with
such prepayment, the Borrower shall borrow from the affected Lender, in the
amount of such repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in the
interpretation of any law or regulation or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or
maintaining any LIBOR Rate Loans, then the Borrower shall be liable for, and
shall from time to time, upon demand (with a copy of such demand to be sent to
the Agent), pay to the Agent for the account of such Lender, additional amounts
as are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender or any corporation controlling the Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Lender or any corporation
controlling the Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of its Commitments, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the Borrower through
the Agent, the Borrower shall pay to the Lender, from time to time as specified
by the Lender, additional amounts sufficient to compensate the Lender for such
increase.
5.4 Funding Losses. The Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which the Lender may sustain or
incur as a consequence of:
(i) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(ii) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(iii) the prepayment or other payment (including after acceleration
thereof) of an LIBOR Rate Loan on a day that is not the last day of the
relevant Interest Period;
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including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained.
5.5 Inability to Determine Rates. If the Agent determines that
for any reason adequate and reasonable means do not exist for determining the
LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR
Rate Loan, or that the LIBOR Rate for any requested Interest Period with
respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect
the cost to the Lenders of funding such Loan, the Agent will promptly so notify
the Borrower and each Lender. Thereafter, the obligation of the Lenders to
make or maintain LIBOR Rate Loans hereunder shall be suspended until the Agent
revokes such notice in writing. Upon receipt of such notice, the Borrower may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Borrower does not revoke such Notice, the Lenders
shall make, convert or continue the Loans, as proposed by the Borrower, in the
amount specified in the applicable notice submitted by the Borrower, but such
Loans shall be made, converted or continued as Base Rate Loans instead of LIBOR
Rate Loans.
5.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrower (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Borrower in the absence of manifest error.
5.7 Survival. The agreements and obligations of the Borrower in
this Article 5 shall survive the payment of all other Obligations. The Lender
requesting compensation pursuant to Article V shall provide notice to the
Borrower within 60 days after the date on which such Lender obtains actual
knowledge of any claim for compensation under said Article.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest. (a) As security for all present
and future Obligations, the Borrower hereby grants, and shall cause, on or
prior to the Closing Date, LDM Canada to grant, to the Agent, for the ratable
benefit of the Lenders, a continuing security interest in, lien on, and right
of set-off against, all of the following property of the Borrower and LDM
Canada, whether now owned or existing or hereafter acquired or arising,
regardless of where located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of credit, Assigned
Contracts, chattel paper, instruments, notes, documents, and
documents of title;
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(iv) all General Intangibles;
(v) all Equipment;
(vi) all Fixtures;
(vii) all Proprietary Rights;
(viii) all Investment Property;
(ix) all money, securities, financial assets and other
property of any kind of the Borrower and of LDM Canada in the possession or
under the control of the Agent or any Lender, any assignee of or
participant in the Obligations, or a bailee of any such party or such
party's affiliates;
(x) all deposit accounts, credits and balances with and
other claims against the Agent or any Lender or any of its affiliates or
any other financial institution in which the Borrower or LDM Canada
maintains deposits;
(xi) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and
other property and General Intangibles at any time evidencing or relating
to any of the foregoing; and
(xii) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but
not limited to, proceeds of any insurance policies (other than proceeds of
key-man life insurance on which the Borrower is the beneficiary), claims
against third parties, and condemnation or requisition payments with
respect to all or any of the foregoing.
All of the foregoing and all other property of the Borrower or each Guarantor
in which the Agent or any Lender may at any time be granted a Lien, is herein
collectively referred to as the "Collateral."
(b) All of the Obligations shall be secured by all of the
Collateral, the Pledged Collateral and the Guarantor Collateral. The Agent
may, subject to the provisions of Articles 13 and 14, in its sole discretion,
(i) exchange, waive, or release any of the Collateral, (ii) apply Collateral
and direct the order or manner of sale thereof as the Agent may determine, and
(iii) settle, compromise, collect, or otherwise liquidate any Collateral in any
manner, all without affecting the Obligations or the Agent's or any Lender's
right to take any other action with respect to any other Collateral.
6.2 Perfection and Protection of Security Interest. (a) The
Borrower shall, and shall cause each Guarantor to, at Borrower's expense,
perform all steps requested by the Agent at any time
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to perfect, maintain, protect, and enforce the Agent's Liens, including, without
limitation: (i) executing, delivering and/or filing and recording of the
Intellectual Property Security Agreement, the Pledge Agreement and the Guarantor
Collateral Documents and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Agent; (ii) delivering to the Agent the originals of all instruments, documents,
and chattel paper, and all other Collateral, Pledged Collateral and Guarantor
Collateral of which the Agent determines it should have physical possession in
order to perfect and protect the Agent's security interest therein, duly
pledged, endorsed or assigned to the Agent without restriction; (iii) delivering
to the Agent warehouse receipts covering any portion of the Collateral located
in warehouses and for which warehouse receipts are issued; (iv) when an Event of
Default exists, transferring Inventory to warehouses designated by the Agent;
(v) placing notations on the Borrower's and each Guarantor's books of account
to disclose the Agent's security interest; (vii) delivering to the Agent all
letters of credit on which the Borrower or LDM Canada is named beneficiary; and
(viii) taking such other steps as are deemed necessary or desirable by the
Agent to maintain and protect the Agent's Liens. To the extent permitted by
applicable law, the Agent may file, without the Borrower's or a Guarantor's
signature, one or more financing statements disclosing the Agent's Liens. The
Borrower agrees that a carbon, photographic, photostatic, or other reproduction
of this Agreement or of a financing statement is sufficient as a financing
statement.
(b) If any Collateral or Guarantor Collateral is at any
time in the possession or control of any warehouseman, bailee or any of the
Borrower's or LDM Canada's agents or processors, then the Borrower shall notify
the Agent thereof and shall notify or cause LDM Canada to notify such Person of
the Agent's security interest in such Collateral or Guarantor Collateral and,
upon the Agent's request, instruct such Person to hold all such Collateral or
Guarantor Collateral for the Agent's account subject to the Agent's
instructions. If at any time any Collateral or Guarantor Collateral is located
on any operating facility of the Borrower or each Guarantor which is not owned
by the Borrower or LDM Canada, then the Borrower shall, at the request of the
Agent, obtain or cause LDM Canada to obtain written waivers, in form and
substance satisfactory to the Agent, of all present and future Liens to which
the owner or lessor of such premises may be entitled to assert against the
Collateral.
(c) From time to time, the Borrower shall, and shall
cause each Guarantor to, upon the Agent's request, execute and deliver
confirmatory written instruments pledging to the Agent, for the ratable benefit
of the Lenders, the Collateral, Pledged Collateral or Guarantor Collateral, as
the case may be, with respect to the Borrower or such Guarantor, but the
Borrower's or such Guarantor's failure to do so shall not affect or limit the
Agent's security interest or the Agent's other rights in and to the Collateral,
Pledged Collateral or Guarantor Collateral, as the case may be, with respect to
the Borrower or such Guarantor. So long as this Agreement is in effect and
until all Obligations have been fully satisfied, the Agent's Liens shall
continue in full force and effect in all Collateral, Pledged Collateral and
Guarantor Collateral (whether or not deemed eligible for the purpose of
calculating the Revolving Availability or as the basis for any advance, loan,
extension of credit, or other financial accommodation).
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6.3 Location of Collateral. The Borrower represents and warrants
to the Agent and the Lenders that: (i) Schedule 6.3 is a correct and complete
list of the Borrower's and each Guarantor's chief executive office, the location
of its books and records, the locations of the Collateral and the Guarantor
Collateral with respect to the Borrower and such Guarantor, and the locations of
all of its other places of business; and (ii) Schedule 6.3 correctly identifies
any of such facilities and locations where Collateral and the Guarantor
Collateral is located that are not owned by the Borrower or the relevant
Guarantor and sets forth the names of the owners and lessors or sublessors of
and, to the best of the Borrower's knowledge, the holders of any mortgages on,
such facilities and locations. The Borrower covenants and agrees that it will
not and will not permit any Guarantor to (x) maintain any Collateral with
respect to the Borrower at any location other than those locations listed for
the Borrower, and with respect to any Guarantor at any location other than those
locations listed for such Guarantor, on Schedule 6.3, (y) otherwise change or
add to any of such locations, or (z) change the location of its chief executive
office from the location identified in Schedule 6.3, unless it gives the Agent
at least thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent requests in connection
therewith. Without limiting the foregoing, the Borrower represents that all of
its and LDM Canada's Inventory is, and covenants that all of its Inventory will
be, located either (A) on premises owned by the Borrower or LDM Canada, as the
case may be, (B) on premises leased by the Borrower or LDM Canada, as the case
may be, provided that the Agent has received an executed landlord waiver from
the landlord of such premises in form and substance satisfactory to the Agent,
or (C) in a public warehouse; provided that the Agent has received an executed
bailee letter from the applicable public warehouseman in form and substance
satisfactory to the Agent. As to each location, the Agent for the benefit of
Lenders shall have filed state (and, to the extent required, local) UCC-1
financing statements; as to all leased and bailment location, the Borrower shall
use and shall cause each LDM Canada to use all reasonable efforts to obtain
landlord and bailee waivers; as to all bailment locations for which bailee
waiver letters have not been obtained, the Agent shall have delivered to the
bailee a notice of lien under Article 9 of the UCC; and for all leased locations
as to which waiver letters have not been obtained within thirty (30) days after
the Closing Date, the Inventory at those leased locations shall cease to be
Eligible Inventory.
6.4 Title to, Liens on, and Sale and Use of Collateral. The
Borrower represents and warrants to the Agent and the Lenders and agrees with
the Agent and the Lenders that: (i) all of the Collateral, Pledged Collateral
and Guarantor Collateral is and will continue to be owned by the Borrower or a
Guarantor, as the case may be, free and clear of all Liens whatsoever, except
for Permitted Liens; (ii) the Agent's Liens in the Collateral, Pledged
Collateral and Guarantor Collateral will not be subject to any prior Lien; (iii)
the Borrower will and will cause each Guarantor to use, store, and maintain the
Collateral, Pledged Collateral and Guarantor Collateral with all reasonable care
and will use such Collateral, Pledged Collateral or Guarantor Collateral for
lawful purposes only; and (iv) the Borrower will not, and will not permit any
Guarantor to, without the Agent's prior written approval, sell, or dispose of or
permit the sale or disposition of any of the Collateral, Pledged Collateral or
Guarantor Collateral, except for sales of Inventory in the ordinary course of
business and sales of Equipment as permitted by Section 6.11. The inclusion of
proceeds in the Collateral, Pledged Collateral or Guarantor Collateral, shall
not be deemed to constitute the Agent's or any
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Lender's consent to any sale or other disposition of the Collateral, Pledged
Collateral or Guarantor Collateral, except as expressly permitted herein.
6.5 Appraisals. Whenever a Default or Event of Default exists,
and at such other times not more frequently than once every two years as the
Agent requests, the Borrower shall, at its expense and upon the Agent's
request, provide the Agent with appraisals or updates thereof of any or all of
the Collateral or Guarantor Collateral from an appraiser, and prepared on a
basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulation and
by the internal policies of the Lenders.
6.6 Access and Examination; Confidentiality. (a) The Agent,
accompanied by any Lender which so elects, may at all reasonable times (and at
any time when a Default or Event of Default exists) have access to, examine,
audit, make extracts from or copies of and inspect any or all of the Borrower's
and each Guarantor's records, files, and books of account and the Collateral,
Pledged Collateral and Guarantee Collateral, and discuss the Borrower's and
such Guarantor's affairs with the Borrower's and such Guarantor's officers and
management. The Borrower will deliver and will cause each Guarantor to deliver
to the Agent any instrument necessary for the Agent to obtain records from any
service bureau maintaining records for the Borrower or such Guarantor. The
Agent may, and at the direction of the Majority Lenders shall, at any time when
a Default or Event of Default exists, and at the Borrower' expense, make copies
of all of the Borrower's or any Guarantor's books and records, or require the
Borrower to deliver such copies to the Agent. The Agent may, without expense
to the Agent, use such of the Borrower's or any Guarantor's respective
personnel, supplies, and premises as may be reasonably necessary for
maintaining or enforcing the Agent's Liens. The Agent shall have the right, at
any time, in the Agent's name or in the name of a nominee of the Agent, to
verify the validity, amount or any other matter relating to the Accounts,
Inventory, or other Collateral, Pledged Collateral or Guarantor Collateral by
mail, telephone, or otherwise.
(b) The Borrower agrees that, subject to the Borrower's
prior consent, which consent shall not be unreasonably withheld or delayed, the
Agent and each Lender may use the Borrower's name in advertising and
promotional material and in conjunction therewith disclose the general terms of
this Agreement. The Agent and each Lender agree to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrower and
provided to the Agent or such Lender by or on behalf of the Borrower or any
Guarantor, under this Agreement or any other Loan Document, and neither the
Agent, nor such Lender nor any of their respective Affiliates shall use any
such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent that such
information (i) was or becomes generally available to the public other than as
a result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than the Borrower or a
Guarantor, provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Agent or such Lender; provided,
however, that the Agent and any Lender may disclose such information (1) at the
request or pursuant to any requirement of any Governmental Authority to which
the Agent or such Lender is subject or in connection with an examination of the
Agent or such Lender by any such
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Governmental Authority; (2) pursuant to subpoena or other court process; (3)
when required to do so in accordance with the provisions of any applicable
requirement of law; (4) to the extent reasonably required in connection with any
litigation or proceeding (including, but not limited to, any bankruptcy
proceeding) to which the Agent, any Lender or their respective Affiliates may be
party; (5) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (6) to the Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors; (7) to any Affiliate of the Agent or such Lender, or to
any Participating Lender or assignee under any Assignment and Acceptance, actual
or potential, provided that such affiliate, Participating Lender or assignee
agrees to keep such information confidential to the same extent required of the
Agent and the Lenders hereunder; and (8) as expressly permitted under the terms
of any other document or agreement regarding confidentiality to which the
Borrower or a Guarantor is party or is deemed party with the Agent or such
Lender.
6.7 Collateral Reporting. The Borrower shall provide the Agent
with the following documents at the following times in form satisfactory to the
Agent: (i) on a monthly basis, separate Borrowing Base Certificates with respect
to the Borrower and LDM Canada, in each case together with a schedule of credit
memos and reports, a schedule of collections of accounts receivable, a schedule
of Accounts created since the last such schedule; provided that such reporting
requirements shall be more frequent, as specified by Agent, if Revolver
Availability is less than $15,000,000; (ii) on a monthly basis, or more
frequently if requested by the Agent, a schedule of the Accounts created since
the last such schedule; (iii) on a monthly basis, an aging of the Accounts,
together with a reconciliation to the previous month's aging of the Accounts and
to the Borrower's and LDM Canada's general ledger; (iv) on a monthly basis, an
aging of the Borrower's and LDM Canada's accounts payable; (v) on a monthly
basis (or more frequently if requested by the Agent), Inventory reports by
category, with additional detail showing additions to and deletions from the
Inventory; (vi) upon request, copies of invoices in connection with the
Borrower's and LDM Canada's Accounts, customer statements, credit memos,
remittance advices and reports, deposit slips, shipping and delivery documents
in connection with the Borrower's Accounts and for Inventory and Equipment
acquired by the Borrower or LDM Canada, purchase orders and invoices; (vii) on a
monthly basis, a statement of the balance of each of the Intercompany Accounts
as of the last day of the immediately preceding calendar month; (viii) such
other reports as to the Collateral or Guarantor Collateral of the Borrower or as
to the Guarantor Collateral of LDM Canada as the Agent shall reasonably request
from time to time; and (ix) with the delivery of each of the foregoing, a
certificate of an officer of the Borrower certifying as to the accuracy and
completeness of the foregoing. If any of the Borrower's or LDM Canada's records
or reports of the Collateral or Guarantor Collateral are prepared by an
accounting service or other agent, the Borrower hereby authorizes such service
or agent to deliver such records, reports, and related documents to the Agent,
for distribution to the Lenders.
6.8 Accounts. (a) The Borrower hereby represents and warrants to
the Agent and the Lenders, with respect to the Accounts, that: (i) each
existing Account represents, and each future Account will represent, a bona
fide sale or lease and delivery of goods by the Borrower or LDM Canada, or
rendition of services by the Borrower or LDM Canada, in the ordinary course of
the
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Borrower's or LDM Canada's business; (ii) each existing Account is, and each
future Account will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Agent, without any offset, deduction, defense, or
counterclaim except those known to the Borrower and disclosed to the Agent and
the Lenders pursuant to this Agreement; (iii) no payment will be received with
respect to any Account, and no credit, discount, or extension, or agreement
therefor will be granted on any Account, except as reported to the Agent and the
Lenders in accordance with this Agreement; (iv) each copy of an invoice
delivered to the Agent by the Borrower will be a genuine copy of the original
invoice sent to the Account Debtor named therein; and (v) all goods described in
each invoice will have been delivered to the Account Debtor and all services of
the Borrower or LDM Canada described in each invoice will have been performed.
(b) Borrower shall not and shall not cause or permit LDM
Canada to re-date any invoice or sale or make sales on extended dating beyond
that customary in the Borrower's business or extend or modify any Account. If
the Borrower becomes aware of any matter adversely affecting the collectability
of any Account or Account Debtor involving an amount greater than $500,000,
including information regarding the Account Debtor's creditworthiness, the
Borrower will promptly so advise the Agent.
(c) Borrower shall not and shall not cause or permit LDM
Canada to accept any note or other instrument (except a check or other
instrument for the immediate payment of money) with respect to any Account
without the Agent's written consent. If the Agent consents to the acceptance
of any such instrument, it shall be considered as evidence of the Account and
not payment thereof and the Borrower will promptly deliver such instrument to
the Agent, endorsed by the Borrower or LDM Canada, as the case may be, to the
Agent in a manner satisfactory in form and substance to the Agent. Regardless
of the form of presentment, demand, notice of protest with respect thereto, the
Borrower or LDM Canada, as the case may be, shall remain liable thereon until
such instrument is paid in full.
(d) The Borrower shall notify the Agent promptly of all
disputes and claims in excess of $500,000, individually, or $1,500,000 in the
aggregate with any Account Debtor, and agrees to settle, contest, or adjust
such dispute or claim at no expense to the Agent or any Lender. No discount,
credit or allowance shall be granted to any Account Debtor other than normal
and customary discounts and allowances without the Agent's prior written
consent, except for discounts, credits and allowances made or given in the
ordinary course of the Borrower's or LDM Canada's, as the case may be, business
when no Event of Default exists hereunder. The Borrower shall send the Agent a
copy of each credit memorandum in excess of $500,000 as soon as issued. The
Agent may, and at the direction of the Majority Lenders shall, at all times
when an Event of Default exists hereunder, settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms which the Agent or the
Majority Lenders, as applicable, shall consider advisable and, in all cases,
the Agent will credit the Borrower's Loan Account with only the net amounts
received by the Agent in payment of any Accounts.
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(e) If an Account Debtor returns any Inventory to the
Borrower or LDM Canada when no Event of Default exists, then the Borrower shall
promptly determine or shall cause LDM Canada to promptly determine the reason
for such return and shall issue a credit memorandum to the Account Debtor in
the appropriate amount. The Borrower shall immediately report to the Agent any
return involving an amount in excess of $500,000. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to the
Borrower or LDM Canada when an Event of Default exists, the Borrower, upon
request of the Agent, shall, and shall cause LDM Canada to: (i) hold the
returned Inventory in trust for the Agent; (ii) segregate all returned
Inventory from all of its other property; (iii) dispose of the returned
Inventory solely according to the Agent's written instructions; and (iv) not
issue any credits or allowances with respect thereto without the Agent's prior
written consent. All returned Inventory shall be subject to the Agent's Liens
thereon. Whenever any Inventory is returned, the related Account shall be
deemed ineligible to the extent of the amount owing by the Account Debtor with
respect to such returned Inventory.
6.9 Collection of Accounts; Payments. (a) Until the Agent
notifies the Borrower to the contrary, the Borrower shall and shall cause LDM
Canada to make collection of all Accounts and other Collateral and Guarantor
Collateral for the Agent, shall and shall cause LDM Canada to receive all
payments as the Agent's trustee, and shall immediately deliver all payments in
their original form duly endorsed in blank into a Payment Account established
for the account of the Borrower or LDM Canada, as applicable at a bank
acceptable to Agent and subject to documentation acceptable to Agent. The
Borrower shall and shall cause LDM Canada to establish a lock-box service for
collections of Accounts at a bank acceptable to the Agent and pursuant to
documentation satisfactory to the Agent. The Borrower shall and shall cause
LDM Canada to instruct all Account Debtors to make all payments directly to the
address established for such service. If, notwithstanding such instructions,
the Borrower or LDM Canada, as applicable, receives any proceeds of Accounts,
it shall receive such payments as the Agent's trustee, and shall immediately
deliver such payments to the Agent in their original form duly endorsed in
blank or deposit them into a Payment Account, as the Agent may direct. All
collections received in any such lock-box or Payment Account or directly by the
Borrower or LDM Canada, as the case may be, or the Agent, and all funds in any
Payment Account or other account to which such collections are deposited shall
be subject to the Agent's sole control. The Agent or the Agent's designee may,
at any time, notify Account Debtors that the Accounts have been assigned to the
Agent and of the Agent's security interest therein. If an Event of Default
shall have occurred and be continuing, the Agent may collect the Accounts
directly and charge the collection costs and expenses to the Borrower's Loan
Account as a Revolving Loan. When an Event of Default exists, the Borrower, at
the Agent's request, shall execute and deliver and shall cause LDM Canada to
execute and deliver to the Agent such documents as the Agent shall require to
grant the Agent access to any post office box in which collections of Accounts
are received.
(b) If sales of Inventory are made for cash, the Borrower
shall and shall cause LDM Canada to immediately deliver to the Agent or deposit
into a Payment Account the identical checks, cash, or other forms of payment
which the Borrower receives.
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(c) All payments, including immediately available funds
received by the Agent at a bank designated by it, received by the Agent on
account of Accounts or as proceeds of other Collateral will be the Agent's sole
property for the benefit of the Lenders and will be credited to the Borrower's
Loan Account on the same Business Day as such payments are received in
immediately available funds.
6.10 Inventory; Perpetual Inventory. The Borrower represents and
warrants to the Agent and the Lenders and agrees with the Agent and the Lenders
that all of the Inventory owned by the Borrower or LDM Canada is and will be
held for sale or lease, or to be furnished in connection with the rendition of
services, in the ordinary course of the Borrower's or LDM Canada's business,
and is and will be fit for such purposes. The Borrower will keep and will
cause LDM Canada to keep its Inventory in good and marketable condition, at its
own expense. Borrower will not, and will not permit LDM Canada to, without the
prior written consent of the Agent, acquire or accept any Inventory on
consignment or approval. The Borrower agrees that all Inventory produced in
the United States will be produced in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations, and orders
thereunder. The Borrower will conduct a monthly physical count of the
Inventory (and after and during the continuation of an Event of Default, at
such other times as the Agent requests) and deliver a summary of the results
thereof to the Agent within thirty (30) days after the last day of each
calendar month until the Borrower has implemented a perpetual inventory system
for the Borrower and LDM Canada and the Agent is satisfied with the test count
results as a verification of the accuracy of those perpetual inventory systems.
The Borrower will not, and will not permit LDM Canada to, without the Agent's
written consent, sell any Inventory on a bill-and-hold, guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis.
6.11 Equipment. (a) The Borrower represents and warrants to the
Agent and the Lenders and agrees with the Agent and the Lenders that all of the
Equipment owned by the Borrower or LDM Canada is and will be used or held for
use in the Borrower's or LDM Canada's, as the case may be, business, and is and
will be fit for such purposes. The Borrower shall keep and maintain and shall
cause LDM Canada to keep and maintain its Equipment in good operating condition
and repair (ordinary wear and tear excepted) and shall make all necessary
replacements thereof.
(b) The Borrower shall promptly inform the Agent of any
material additions to or deletions from the Equipment. The Borrower shall not
permit any Equipment to become a fixture with respect to real property or to
become an accession with respect to other personal property with respect to
which real or personal property the Agent does not have a Lien. The Borrower
will not and will not permit LDM Canada, without the Agent's prior written
consent, alter or remove any identifying symbol or number on any of the
Borrower's or LDM Canada's Equipment consisting of Collateral or Guarantor
Collateral, as the case may be.
(c) The Borrower shall not, and shall not permit LDM Canada
to, without the Lender's prior written consent, sell, lease as a lessor, or
otherwise dispose of any of the Borrower's or LDM Canada's Equipment; provided,
however, that the Borrower and LDM Canada may dispose of obsolete or unusable
Equipment having an orderly liquidation value no greater than $500,000 in
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the aggregate in any Fiscal Year, without the Lender's consent, subject to the
conditions set forth in the next sentence. In the event any of such Equipment
is sold, transferred or otherwise disposed of pursuant to the proviso contained
in the immediately preceding sentence, (1) if such sale, transfer or disposition
is effected without replacement of such Equipment, or such Equipment is replaced
by Equipment leased by the Borrower or LDM Canada or by Equipment purchased by
the Borrower or LDM Canada subject to a Lien, then the Borrower shall deliver or
cause LDM Canada to deliver all of the cash proceeds of any such sale, transfer
or disposition to the Agent, which proceeds shall be applied, ratably, to the
reduction of the Obligations in the order provided for in Section 4.8, or (2) if
such sale, transfer or disposition is made in connection with the purchase by
the Borrower or LDM Canada of replacement Equipment, then the Borrower shall use
or shall cause LDM Canada to use, as the case may be, the proceeds of such sale,
transfer or disposition to purchase such replacement Equipment and shall deliver
to the Agent written evidence of the use of the proceeds for such purchase. All
replacement Equipment purchased by the Borrower or LDM Canada shall be free and
clear of all Liens except the Agent's Lien.
6.12 Assigned Contracts. The Borrower shall and shall cause LDM
Canada to fully perform all of its obligations under each of the Borrower's or
LDM Canada's Assigned Contracts, and shall enforce and shall cause LDM Canada
to enforce all of its rights and remedies thereunder as it deems appropriate in
its business judgment; provided, however, that the Borrower shall not and shall
not permit LDM Canada to take any action or fail to take any action with
respect to its Assigned Contracts which would result in a waiver or other loss
of any material right or remedy of the Borrower or LDM Canada thereunder.
Without limiting the generality of the foregoing, the Borrower shall take and
shall cause LDM Canada to take all action necessary or appropriate to permit,
and shall not take any action which would have any materially adverse effect
upon, the full enforcement of all indemnification rights under its Assigned
Contracts. The Borrower shall not and shall not permit LDM Canada to, without
the Agent's and the Majority Lender's prior written consent, modify, amend,
supplement, compromise, satisfy, release, or discharge any of its Assigned
Contracts, any collateral securing the same, any Person liable directly or
indirectly with respect thereto, or any agreement relating to any of its
Assigned Contracts or the collateral therefor. The Borrower shall notify the
Agent and the Lenders in writing, promptly after the Borrower or LDM Canada
becomes aware thereof, of any event or fact which could give rise to a claim by
it for indemnification under any of its Assigned Contracts, and shall
diligently pursue or cause LDM Canada diligently to pursue such right and
report to the Agent on all further developments with respect thereto. The
Borrower shall remit directly to the Agent for application to the Obligations
in such order as the Majority Lenders shall determine, all amounts received by
the Borrower or LDM Canada as indemnification or otherwise pursuant to its
Assigned Contracts. If the Borrower or LDM Canada shall fail after the Agent's
demand to pursue diligently any right under its Assigned Contracts, or if an
Event of Default then exists, the Agent may, and at the direction of the
Majority Lenders shall, directly enforce such right in its own or the
Borrower's or LDM Canada's name and may enter into such settlements or other
agreements with respect thereto as the Agent or the Majority Lenders, as
applicable, shall determine. In any suit, proceeding or action brought by the
Agent for the benefit of the Lenders under any Assigned Contract for any sum
owing thereunder or to enforce any provision thereof, the Borrower shall
indemnify and hold the Agent and Lenders harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff,
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counterclaims, recoupment, or reduction of liability whatsoever of the obligor
thereunder arising out of a breach by the Borrower or LDM Canada of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing from the Borrower or LDM Canada to or in favor of
such obligor or its successors. All such obligations of the Borrower or LDM
Canada shall be and remain enforceable only against the Borrower or LDM Canada,
as the case may be, and shall not be enforceable against the Agent.
Notwithstanding any provision hereof to the contrary, the Borrower or LDM
Canada, as the case may be, shall at all times remain liable to observe and
perform all of its duties and obligations under its Assigned Contracts, and the
Agent's or any Lender's exercise of any of their respective rights with respect
to the Collateral shall not release the Borrower or LDM Canada, as the case may
be, from any of such duties and obligations. Neither the Agent nor any Lender
shall be obligated to perform or fulfill any of the Borrower's or LDM Canada's
duties or obligations under its Assigned Contracts or to make any payment
thereunder, or to make any inquiry as to the nature or sufficiency of any
payment or property received by it thereunder or the sufficiency of performance
by any party thereunder, or to present or file any claim, or to take any action
to collect or enforce any performance, any payment of any amounts, or any
delivery of any property.
6.13 Documents, Instruments, and Chattel Paper. The Borrower
represents and warrants to the Agent and the Lenders that (i) all documents,
instruments, and chattel paper describing, evidencing, or constituting
Collateral, Pledged Collateral or Guarantor Collateral, as the case may be, and
all signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (ii) all goods evidenced by such documents, instruments, and
chattel paper are and will be owned by the Borrower or a Guarantor, as the case
may be, free and clear of all Liens other than Permitted Liens. The Borrower
agrees that it shall deliver and shall cause each Guarantor to deliver to the
Agent, at the Closing Date, and thereafter, promptly upon obtaining possession
thereof, the originals of all instruments and chattel paper received by the
Borrower or such Guarantor.
6.14 Right to Cure. The Agent may, in its discretion, and shall,
at the direction of the Majority Lenders, pay any amount or do any act required
of the Borrower or any Guarantor hereunder or under any other Loan Document in
order to preserve, protect, maintain or enforce the Obligations, the
Collateral, Pledge Collateral or Guarantor Collateral, or the Agent's Liens
therein, and which the Borrower or such Guarantor, as the case may be, fails to
pay or do, including, without limitation, payment of any judgment against the
Borrower or such Guarantor, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord's claim, and any other Lien upon
or with respect to the Collateral, Pledged Collateral or Guarantor Collateral.
All payments that the Agent makes under this Section 6.14 and all out-of-pocket
costs and expenses that the Agent pays or incurs in connection with any action
taken by it hereunder shall be charged to the Borrower's Loan Account as a
Revolving Loan . Any payment made or other action taken by the Agent under this
Section 6.14 shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed thereafter as herein provided.
6.15 Power of Attorney. The Borrower hereby appoints the Agent and
the Agent's designee as the Borrower's attorney, with power: (i) to endorse the
Borrower's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Agent's
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or any Lender's possession; (ii) to sign the Borrower's name on any invoice,
bill of lading, warehouse receipt or other document of title relating to any
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements and other public records; (iii) to notify
the post office authorities, when an Event of Default exists, to change the
address for delivery of the Borrower's mail to an address designated by the
Agent and to receive, open and dispose of all mail addressed to the Borrower;
(iv) to send requests for verification of Accounts to customers or Account
Debtors; (v) to clear Inventory, the purchase of which was financed with Letters
of Credit, through customs in the Borrower's name, the Agent's name or the name
of the Agent's designee, and to sign and deliver to customs officials powers of
attorney in the Borrower's name for such purpose; and (vi) to do all things
necessary to carry out this Agreement. The Borrower ratifies and approves all
acts of such attorney. None of the Lenders or the Agent nor their attorneys
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law other than as a result of such Person's gross negligence or
willful misconduct. This power, being coupled with an interest, is irrevocable
until this Agreement has been terminated and the Obligations have been fully
satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities. The
Borrower assumes all responsibility and liability arising from or relating to
the use, sale or other disposition of the Collateral, Pledged Collateral or
Guarantor Collateral. Neither the Agent, nor any Lender, nor any of their
respective officers, directors, employees or agents shall be liable or
responsible in any way for the safekeeping of any of the Collateral, Pledged
Collateral or Guarantor Collateral, or for any loss or damage thereto, or for
any diminution in the value thereof, or for any act of default of any
warehouseman, carrier, forwarding agency or other person whomsoever, all of
which shall be at the Borrower's sole risk. The Obligations shall not be
affected by any failure of the Agent or any Lender to take any steps to perfect
the Agent's Liens or to collect or realize upon the Collateral, Pledged
Collateral or Guarantor Collateral, nor shall loss of or damage to the
Collateral, Pledged Collateral or Guarantor Collateral release the Borrower from
any of the Obligations. Upon the occurrence and continuance of an Event of
Default, the Agent may (but shall not be required to), and at the direction of
the Majority Lenders shall, without notice to or consent from the Borrower, sue
upon or otherwise collect, extend the time for payment of, modify or amend the
terms of, compromise or settle for cash, credit, or otherwise upon any terms,
grant other indulgences, extensions, renewals, compositions, or releases, and
take or omit to take any other action with respect to the Collateral, Pledged
Collateral or Guarantor Collateral, any security therefor, any agreement
relating thereto, any insurance applicable thereto, or any Person liable
directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Borrower for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and the Borrower.
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ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. The Borrower shall and shall cause each
Subsidiary to maintain, at all times, correct and complete books, records
and accounts in which complete, correct and timely entries are made of
their respective transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be
delivered pursuant to Section 7.2(a). The Borrower shall and shall cause
each Subsidiary to, by means of appropriate entries, reflect in such
accounts and in all Financial Statements proper liabilities and reserves
for all taxes and proper provision for depreciation and amortization of
property and bad debts, all in accordance with GAAP. The Borrower shall
and shall cause each Subsidiary to maintain at all times books and
records pertaining to the Collateral, Pledged Collateral and Guarantor
Collateral in such detail, form and scope as the Agent or any Lender
shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect
to the Accounts; (b) the return, rejections, repossession, stoppage in
transit, loss, damage, or destruction of any Inventory; and (c) all other
dealings affecting the Collateral, Pledged Collateral and Guarantor
Collateral.
7.2 Financial Information. The Borrower shall promptly furnish to
the Agent (and the Agent shall supply each Lender with a copy of) all
such financial information as the Agent or any Lender shall reasonably
request, and notify its auditors and accountants that the Agent, on
behalf of the Lenders, is authorized to obtain such information directly
from them. Without limiting the foregoing, the Borrower will furnish to
the Agent, in sufficient copies for distribution by the Agent to each
Lender, in such detail as the Agent or the Lenders shall request, the
following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated
audited and consolidating audited balance sheets, and statements of
income and expense, cash flow and of stockholders' equity for the
Borrower and its Subsidiaries for such Fiscal Year and separate
unaudited consolidated financial statements (as described above) for
Borrower and its Subsidiaries, for such Fiscal Year prepared by the
Borrower's outside auditors, in each case, with the accompanying
notes thereto, setting forth in each case in comparative form figures
for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of
the Borrower and its consolidated Subsidiaries as at the date thereof
and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally
accepted auditing standards by and, in the case of such statements
performed on a consolidated basis, accompanied by a report thereon
unqualified as to scope of independent certified public accountants
selected by the Borrower and reasonably satisfactory to the Agent.
The Borrower, simultaneously with retaining such independent public
accountants to conduct such annual audit, shall send a letter to such
accountants, with a copy to the Agent and the Lenders, notifying such
accountants that one of the primary purposes for retaining such
accountants' services and having audited financial statements
prepared by them is for use by the Agent and the Lenders.
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(b) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated and
consolidating unaudited balance sheets of the Borrower and its
consolidated Subsidiaries (and of the Borrower and its Subsidiaries)
as at the end of such month, and consolidated and consolidating
unaudited statements of income and expense and cash flow for the
Borrower and its consolidated Subsidiaries (and of the Borrower and
its Subsidiaries) for such month and for the period from the
beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and
results of operations of the Borrower and its consolidated
Subsidiaries (and of the Borrower and its Subsidiaries) as at the
date thereof and for such periods, and prepared in accordance with
GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 7.2(a). The Borrower
shall certify by a certificate signed by its the chief financial
officer or director of finance that all such statements have been
prepared in accordance with GAAP and present fairly, subject to
normal year-end adjustments, the Borrower's financial position as at
the dates thereof and its results of operations for the periods then
ended.
(c) With each of the audited Financial Statements delivered
pursuant to Section 7.2(a), a certificate of the independent
certified public accountants that examined such statement to the
effect that they have reviewed and are familiar with this Agreement
and that, in examining such Financial Statements, they did not become
aware of any fact or condition which then constituted a Default or
Event of Default under Sections 9.23 through 9.26, inclusive, except
for those, if any, described in reasonable detail in such
certificate.
(d) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within forty-five (45) days
after the end of each fiscal quarter, a Compliance Certificate
executed by the chief financial officer or director of finance of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish that the Borrower was in compliance with the
covenants set forth in Sections 9.23 through 9.26, inclusive, during
the period covered in such Financial Statements and as at the end
thereof, and (ii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and
warranties of the Borrower contained in this Agreement and the other
Loan Documents are correct and complete in all material respects as
at the date of such certificate as if made at such time, (B) the
Borrower is, at the date of such certificate, in compliance in all
material respects with all of their respective covenants and
agreements in this Agreement and the other Loan Documents, (C) no
Default or Event of Default then exists or existed during the period
covered by such Financial Statements, (D) describing and analyzing in
reasonable detail all material trends, changes, and developments in
each and all Financial Statements; and (E) explaining the variances
of the figures in the corresponding budgets and prior Fiscal Year
financial statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a
covenant has not been complied with, or that a Default or Event of
Default existed or exists, such certificate shall set forth what
action the Borrower has taken or proposes to take with respect
thereto.
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(e) No sooner than 60 days and not less than 30 days prior
to the beginning of each Fiscal Year, annual forecasts (to include
forecasted consolidated and consolidating balance sheets, statements
of income and expenses and statements of cash flow) for the Borrower
and its Subsidiaries as at the end of and for each month of such
Fiscal Year.
(f) Promptly after filing with the PBGC and the IRS or any
other Governmental Authority, a copy of each annual report or other
filing filed with respect to each Plan of the Borrower or any
Subsidiary.
(g) Promptly upon the filing thereof, copies of all
reports, if any, to or other documents filed by the Borrower or any
of its Subsidiaries with the Securities and Exchange Commission under
the Exchange Act, and all reports, notices, or statements sent or
received by the Borrower or any of its Subsidiaries to or from the
holders of any equity interests of the Borrower (other than routine
non-material correspondence sent by shareholders of the Borrower to
the Borrower) or any such Subsidiary or of any Debt for borrowed
money of the Borrower or any of its Subsidiaries registered under the
Securities Act of 1933 or to or from the trustee under any indenture
under which the same is issued.
(h) As soon as available, but in any event not later than
15 days after the Borrower's receipt thereof, a copy of all
management reports and management letters prepared for the Borrower
by Ernst & Young LLP or any other independent certified public
accountants of the Borrower.
(i) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the
Borrower makes available to its stockholders.
(j) Promptly after filing with the IRS or Revenue Canada, a
copy of each tax return filed by the Borrower or by any of its
Subsidiaries.
(k) Such additional information as the Agent and/or any
Lender may from time to time reasonably request regarding the
financial and business affairs of the Borrower or any Subsidiary.
7.3 Notices to the Lenders. The Borrower shall notify the Agent,
in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or
Event of Default.
(b) Immediately after becoming aware of the assertion by
the holder of any capital stock of the Borrower or Subsidiary thereof
or of any Debt in an outstanding principal amount in excess of
$1,000,000 that a default exists with respect thereto or that the
Borrower is not in compliance with the terms thereof, or the threat
or commencement by such holder of any enforcement action because of
such asserted default or non-compliance.
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(c) Immediately after becoming aware of any material
adverse change in the Borrower's or any Subsidiary's property,
business, operations, or condition (financial or otherwise).
(d) Immediately after becoming aware of any pending or
threatened action, suit, proceeding, or counterclaim by any Person,
or any pending or threatened investigation by a Governmental
Authority, which action, suit, proceeding, counterclaim or
investigation seeks damages in excess of $1,000,000 (which amount
shall not be fully covered by insurance), or which may otherwise
materially and adversely affect the Collateral, Pledged Collateral or
Guarantor Collateral, the repayment of the Obligations, the Agent's
or any Lender's rights under the Loan Documents, or the Borrower's or
any Subsidiary's property, business, operations, or condition
(financial or otherwise).
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or
other labor dispute affecting the Borrower or any of its Subsidiaries
in a manner which could reasonably be expected to have a Material
Adverse Effect.
(f) Immediately after becoming aware of any violation of
any law, statute, regulation, or ordinance of a Governmental
Authority affecting the Borrower which could reasonably be expected
to have a Material Adverse Effect.
(g) Immediately after receipt of any notice of any
violation by the Borrower or any of its Subsidiaries of any
Environmental Law which could reasonably be expected to have a
Material Adverse Affect or that any Governmental Authority has
asserted that the Borrower or any Subsidiary thereof is not in
compliance with any Environmental Law.
(h) Immediately after receipt of any written notice that
the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the Release or threatened Release of any
Contaminant or that the Borrower or any Subsidiary is subject to
investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably
likely to give rise to liability in excess of $1,000,000.
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of the
Borrower or any of its Subsidiaries.
(j) Any change in the Borrower's or LDM Canada's name,
state of incorporation, or form of organization, trade names or
styles under which the Borrower or LDM Canada will sell Inventory or
create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior
thereto.
(k) Within ten (10) Business Days after the Borrower, any
Subsidiary or any ERISA Affiliate knows or has reason to know, that
an ERISA Event or a prohibited
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transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) has occurred, and, when known, any action taken or threatened
by the IRS, the DOL, the PBGC or any other Governmental Authority
with respect thereto.
(l) Upon request, or, in the event that such filing
reflects a significant change with respect to the matters covered
thereby, within three (3) Business Days after the filing thereof with
the PBGC, the DOL, the IRS, the Pension Commission of Ontario or any
other applicable Governmental Authority, as applicable, copies of the
following: (i) each annual report (form 5500 series), including
Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan and, in the case of any Plan governed by PBA,
each report, valuation, request for amendment, whole or partial
withdrawal or termination or other variation, (ii) a copy of each
funding waiver request filed with the PBGC, the DOL, the IRS, the
Pension Commission of Ontario or any other applicable Governmental
Authority with respect to any Plan and all communications received by
the Borrower or any ERISA Affiliate from the PBGC, the DOL, the IRS,
the Pension Commission of Ontario or other applicable Governmental
Authority with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL, the IRS, the
Pension Commission of Ontario or other applicable Governmental
Authority, with respect to each Plan of the Borrower, any Subsidiary
or any ERISA Affiliate.
(m) Upon request, copies of each actuarial report for any
Plan or Multi-employer Plan and annual report for any Multi-employer
Plan; and within ten (10) days after receipt thereof by the Borrower,
or any Subsidiary or any ERISA Affiliate, copies of the following:
(i) any notices of the PBGC's, the Pension Commission of Ontario's or
other applicable Government Authority's intention to terminate a Plan
or to have a trustee appointed to administer such Plan; (ii) any
favorable or unfavorable determination letter from the IRS, the
Pension Commission of Ontario or other applicable Governmental
Authority regarding the qualification of a Plan under Section 401(a)
of the Code, the PBA or other applicable laws; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal
liability.
(n) Within ten (10) days upon the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase the
Borrower's or any Subsidiary's annual costs with respect thereto by
an amount in excess of $1,000,000, or the establishment of any new
Plan or the commencement of contributions to any Plan to which the
Borrower, any Subsidiary or any ERISA Affiliate was not previously
contributing; or (ii) any failure by the Borrower, any Subsidiary or
any ERISA Affiliate to make a required installment or any other
required payment under Section 412 of the Code, the PBA or other
applicable laws on or before the due date for such installment or
payment.
(o) Within ten (10) days after the Borrower, any Subsidiary
or any ERISA Affiliate knows or has reason to know that any of the
following events has or will occur: (i) a Multi-employer Plan has
been or will be terminated; (ii) the administrator or plan sponsor of
a Multi-employer Plan intends to terminate a Multi-employer Plan; or
(iii) the PBGC has
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instituted or will institute proceedings under Section 4042 of ERISA
to terminate a Multi-employer Plan; or (iv) a Reportable Event or
Termination Event in respect of any Plan.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that the Borrower, any
Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent and the
Majority Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents. Each of the Borrower and each Guarantor has the
power and authority to execute, deliver and perform this Agreement and
the other Loan Documents to which each is a party, as applicable. The
Borrower has the power and authority to incur the Obligations, and to
grant to the Agent Liens upon and security interests in the Collateral
and the Pledged Collateral. Each Guarantor has the power and authority
to grant to the Agent liens upon and security interests in the Guarantor
Collateral. Each of the Borrower and each Guarantor has taken all
necessary action (including without limitation, obtaining approval of its
stockholders if necessary) to authorize its execution, delivery, and
performance of this Agreement and the other Loan Documents to which each
is a party, as applicable. No consent, approval, or authorization of, or
declaration or filing with, any Governmental Authority, and no consent of
any other Person, is required in connection with the Borrower's
execution, delivery and performance of this Agreement and Borrower's or
any Guarantor's execution, delivery and performance of the other Loan
Documents, except for those already duly obtained. This Agreement and
the other Loan Documents have been duly executed and delivered by the
Borrower and each Guarantor, as applicable, and constitute the legal,
valid and binding obligation of the Borrower and such Guarantor, as
applicable, enforceable against it in accordance with their respective
terms without defense, setoff or counterclaim. Neither the Borrower's
nor any Guarantor's execution, delivery, and performance of the Loan
Documents to which it is a Party do or will conflict with, or constitute
a violation or breach of, or constitute a default under, or result in the
creation or imposition of any Lien upon the property of the Borrower or
any of its Subsidiaries by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, or instrument to which the
Borrower or any of its Subsidiaries is a party or which is binding upon
it or therein, (b) any Requirement of Law applicable to the Borrower or
any of its Subsidiaries, or (c) the certificate or articles of
incorporation or by-laws, partnership agreement, or limited liability
company agreement of the Borrower or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The provisions
of this Agreement and the other Loan Documents create legal and valid
Liens on all the Collateral, Pledged Collateral and Guarantor Collateral,
in favor of the Agent, for the ratable benefit of the Lenders, and such
Liens
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constitute perfected and continuing Liens on all the Collateral, Pledged
Collateral and Guarantor Collateral, having priority over all other Liens (other
than Permitted Lien) on the Collateral, Pledged Collateral and Guarantor
Collateral, securing all the Obligations, and enforceable against the Borrower,
each Guarantor and all third parties.
8.3 Organization and Qualification. The Borrower and each
Guarantor (a) is duly organized and validly existing in good standing under the
laws of the jurisdiction of its organization, (b) is qualified to do business
as a foreign entity and is in good standing in the jurisdictions set forth on
Schedule 8.3 which are the only jurisdictions in which qualification is
necessary in order for it to own or lease its property and conduct its business
and (c) has all requisite power and authority to conduct its business and to
own its property.
8.4 Corporate Name; Prior Transactions. Neither the Borrower nor
any Guarantor has, during the past five (5) years, been known by or used any
other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property outside of the ordinary course of
business, except as set forth on Schedule 8.4.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and
complete list of the name and relationship to the Borrower of each and all of
the Borrower's Subsidiaries and other Affiliates. Each Subsidiary is (a) duly
incorporated and organized and validly existing in good standing under the laws
of its jurisdiction of incorporation set forth on Schedule 8.5, and (b)
qualified to do business as a foreign corporation and in good standing in each
jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a material adverse effect on any such
Subsidiary's business, operations, prospects, property, or condition (financial
or otherwise) and (c) has all requisite power and authority to conduct its
business and own its property.
8.6 Financial Statements and Projections. (a) The Borrower has
delivered to the Agent and the Lenders the audited balance sheet and related
statements of income, retained earnings, changes in financial position, and
changes in stockholders equity for the Borrower and its consolidated
Subsidiaries for the Fiscal Year ended as of September 24, 1995 and September
29, 1996, and for the Seller for the fiscal year ended December 31, 1994 and
December 31, 1995 and the nine-month period ended September 29, 1996,
accompanied by the report thereon of the Borrower's independent certified
public accountants, Ernst & Young LLP. All such financial statements have
been prepared in accordance with GAAP and present accurately and fairly the
financial position of the Borrower and its consolidated Subsidiaries as at the
dates thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders
as required herein represent the Borrower's best estimate of the future
financial performance of the Borrower and its consolidated Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Borrower believes are fair
and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lender.
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(c) The pro forma balance sheet of the Borrower and LDM
Canada as at the Closing Date, attached hereto as Exhibit B, presents fairly and
accurately the Borrower's and LDM Canada's financial condition as at such date
assuming the transactions contemplated by this Agreement, the Indenture and the
Molmec Acquisition Agreement occurred on such date and the Closing Date had been
such date, and has been prepared in accordance with GAAP.
8.7 Capitalization. The Borrower's authorized capital stock
consists of 100,000 shares of common stock, par value $.10 per share, of which
600 shares are validly issued and outstanding, fully paid and non-assessable.
LDM Canada's authorized capital stock consists of 100,000 shares of common
stock, no par value per share, of which 10,000 shares were validly, issued and
outstanding fully paid and non-assessable.
8.8 Solvency. Each of the Borrower and LDM Canada is Solvent
prior to and after giving effect to the making of the Revolving Loans to be
made on the Closing Date and the issuance of the Letters of Credit to be issued
on the Closing Date, and shall remain Solvent during the term of this
Agreement.
8.9 Debt. After giving effect to the making of the Revolving
Loans to be made on the Closing Date, the Borrower and its Subsidiaries have no
Debt, except (a) the Obligations, (b) the Senior Subordinated Notes, (c) Debt
described on Schedule 8.9, and (d) trade payables and other contractual
obligations arising in the ordinary course of business.
8.10 Distributions. Since October 1, 1996, no Distribution has
been declared, paid, or made upon or in respect of any capital stock or other
securities of the Borrower or any of its Subsidiaries.
8.11 Title to Property. Each of the Borrower and LDM Canada has
good and marketable title in fee simple to its real property listed in Schedule
8.12 hereto, and each of LDM Canada and the Borrower has good, indefeasible,
and merchantable title to all of its other property (including, without
limitation, the assets reflected on the Financial Statements delivered to the
Agent and the Lenders pursuant to Section 8.6(a), except as disposed of in the
ordinary course of business since the date thereof), free of all Liens except
Permitted Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth a correct and
complete list of all Real Estate owned by the Borrower or any of its
Subsidiaries, all leases and subleases of real or personal property by the
Borrower or its Subsidiaries as lessee or sublessee (other than leases of
personal property as to which the Borrower is lessee or sublessee for which the
value of such personal property is less than $500,000 individually or
$1,500,000 in the aggregate), and all leases and subleases of real or personal
property by the Borrower or its Subsidiaries as lessor, lessee, sublessor or
sublessee. Each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by
any party to any such lease or sublease exists.
8.13 Proprietary Rights Collateral. Schedule 8.13 sets forth a
correct and complete list of all of the Proprietary Rights constituting
patents, trademarks, copyrights and license agreements,
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if any, relating thereto, of the Borrower and its Subsidiaries. None of the
Collateral or Guarantor Collateral consisting of Proprietary Rights is subject
to any licensing agreement or similar arrangement. To the best of the
Borrower's knowledge, none of the Collateral or Guarantor Collateral consisting
of Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with the
Collateral or Guarantor Collateral consisting of Proprietary Rights. The
Collateral and Guarantor Collateral consisting of Proprietary Rights as
described on Schedule 8.13 constitute all of the property of such type necessary
to the current and anticipated future conduct of the Borrower's and its
Subsidiary's business.
8.14 Trade Names and Terms of Sale. All trade names or styles
under which the Borrower or any of its Subsidiaries will sell Inventory or
create Accounts, or to which instruments in payment of Accounts may be made
payable, are listed on Schedule 8.14.
8.15 Litigation. There is no pending or (to the best of the
Borrower's knowledge) threatened, action, suit, proceeding, or counterclaim by
any Person, or investigation by any Governmental Authority, or any basis for
any of the foregoing, which could reasonably be expected to cause a Material
Adverse Effect.
8.16 Restrictive Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charter
or other corporate restriction, which affects its ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which materially
and adversely affects or, insofar as the Borrower can reasonably foresee, could
materially and adversely affect, the property, business, operations, or
condition (financial or otherwise) of the Borrower or such Subsidiary, or would
in any respect cause a Material Adverse Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17
hereto: there is (a) no collective bargaining agreement or other labor contract
covering employees of the Borrower or any of its Subsidiaries, (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement, (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of the Borrower or any of its Subsidiaries or for any similar
purpose, and (d) no pending or (to the best of the Borrower's knowledge)
threatened, strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting the Borrower or its
Subsidiaries or their employees.
8.18 Environmental Laws. Except as set forth on Schedule 8.18
hereto: (a) The Borrower and its Subsidiaries have complied in all material
respects with all Environmental Laws applicable to its Premises and business,
and neither the Borrower nor any Subsidiary nor any of its present Premises or
operations, nor its past property or operations, nor any property now or
previously in its charge, management or control is subject to any enforcement
order from or liability agreement with any Governmental Authority or private
Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant;
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(b) The Borrower and its Subsidiaries have obtained all
permits necessary for their current operations under Environmental Laws, and
all such permits are in good standing and the Borrower and its Subsidiaries are
in material compliance with all terms and conditions of such permits;
(c) Neither the Borrower nor any of its Subsidiaries,
nor, to the best of the Borrower's knowledge, any of its predecessors in
interest, has stored, treated or disposed of any hazardous waste on any
Premises, as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law or any property now or previously in its charge, management
or control other than in compliance with applicable Environmental Laws;
(d) Neither the Borrower nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice that it is not
currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant;
(e) None of the present or past operations or any
property now or previously in its charge, management or control of the Borrower
and its Subsidiaries is the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
Release or threatened Release of a Contaminant;
(f) There is not now, nor to the best of the Borrower's
knowledge has there ever been on or in the Premises:
(1) any underground storage tanks or surface
impoundments,
(2) any asbestos containing material, or
(3) any polychlorinated biphenyls (PCB's) used in
hydraulic oils, electrical transformers or other equipment other than in
compliance with applicable Environmental Laws;
(g) Neither the Borrower nor any of its Subsidiaries has
filed any notice under any requirement of Environmental Law reporting a spill
or accidental and unpermitted release or discharge of a Contaminant into the
environment which has not been remediated;
(h) Neither the Borrower nor any of its Subsidiaries has
entered into any negotia tions or settlement agreements with any Person
(including, without limitation, the prior owner of its property and any
Governmental Authority) imposing material obligations or liabilities on the
Borrower or any of its Subsidiaries with respect to any remedial action in
response to the Release of a Contaminant or environmentally related claim;
(i) None of the products manufactured, distributed or
sold by the Borrower or any of its Subsidiaries contain asbestos containing
material; and
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(j) No Environmental Lien has attached to any Premises or
Property of the Borrower or any of its Subsidiaries.
8.19 No Violation of Law. Neither the Borrower nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect.
8.20 No Default. After giving effect to the initial Borrowing,
neither the Borrower nor any of its Subsidiaries is in default with respect to
any note, indenture, loan agreement, mortgage, lease, deed, or other agreement
to which the Borrower or such Subsidiary is a party or by which it is bound,
which default could reasonably be expected to have a Material Adverse
Effect.
8.21 ERISA Compliance. (a) Each Plan is in compliance in
all material respects with the applicable provisions of ERISA, the Code, the
PBA and other federal, provincial or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the best knowledge of the Borrower, nothing has
occurred which would cause the loss of such qualification. The Borrower and
each ERISA Affiliate has made all required contributions to any Plan when due,
and no application for a funding waiver or an extension of any amortization
period has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multi-employer
Plan; (v) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA, and (vi)
no Lien has arisen, choate or inchoate, in respect of the Borrower or any
Subsidiary or its or their Property in connection with any Plan (save for
contribution amounts not yet due).
8.22 Taxes. The Borrower and its Subsidiaries have filed all
federal, provincial, state and other tax returns and reports required to be
filed, and have paid all federal, provincial, state and other taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and not delinquent.
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8.23 Regulated Entities. None of the Borrower, any Person
controlling the Borrower, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. The Borrower is not subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
8.24 Use of Proceeds; Margin Regulations. (a) The proceeds of the
Loans are to be used solely for working capital purposes of the Borrower and
its Subsidiaries, for acquisitions and by the Borrower and loans to LDM Canada
in accordance with the terms and conditions of this Agreement. Neither the
Borrower nor any Subsidiary is engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.
(b) Attached hereto as Schedule 8.24 is a summary of the
sources and uses of the funds on the date of the initial Borrowing.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. Except as
described on Schedule 8.25 hereto, each of the Borrower and each Guarantor owns
or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of its businesses, without conflict with the rights of any other Person. To
the best knowledge of the Borrower, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by the Borrower or any Subsidiary infringes
upon any rights held by any other Person. No claim or litigation regarding any
of the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Borrower, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
8.26 No Material Adverse Change. No Material Adverse Effect has
occurred since September 29, 1996, with respect to the Borrower and LDM Canada
on a consolidated basis.
8.27 Full Disclosure. None of the representations or warranties
made by the Borrower or any Subsidiary in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Borrower to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth all
material agreements and contracts outside the ordinary course of business to
which the Borrower or any of its Subsidiaries is a party or is bound as of the
date hereof.
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8.29 Bank Accounts. Schedule 8.29 contains a complete and accurate
list of all bank accounts maintained by the Borrower and its Subsidiaries with
any bank or other financial institution.
8.30 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower or
any of its Subsidiaries of the Agreement or any other Loan Document.
8.31 Indenture. No default or event of default has occurred and is
continuing under the Indenture and neither the Borrower or any of its
Subsidiaries has any obligation to redeem, prepay or defease any of the Senior
Subordinated Notes issued under the Indentures.
8.32 Subordination Provisions. The subordination provisions
contained in the Senior Subordinated Notes, the Indenture and other instruments
entered into or issued in respect of the Senior Subordinated Notes are
enforceable against the issuer of the respective security and the holders
thereof, and the Loans and all other Obligations are within the definitions of
"Senior Indebtedness" included in such provisions.
8.33 Acquisition Agreement. As of the Closing Date, the Borrower
has delivered to the Agent a complete and correct copy of the Acquisition
Agreement (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto
or in connection therewith). Neither the Borrower nor any other party thereto
is in default in the performance or compliance with any provisions thereof.
The Acquisition Agreement is in compliance with applicable laws and the
Acquisition has been consummated in accordance with applicable laws and
regulations. The Acquisition Agreement is in full force and effect as of the
Closing Date, has not been terminated, rescinded or withdrawn. All requisite
approvals by Governmental Authorities having jurisdiction over the Borrower or
its Subsidiaries, and other Persons referenced therein, with respect to the
transactions contemplated by the Acquisition Agreement, have been obtained, and
no such approvals impose any conditions to the consummation of the transactions
contemplated by the Acquisition Agreement or to the conduct by the Borrower or
any Subsidiary of its business thereafter. To the best of Borrower's
knowledge, none of the Seller's representations or warranties in the
Acquisition Agreement contain any untrue statement of a material fact or omit
any fact necessary to make the facts therein not misleading. Each of the
representations and warranties given by the Borrower in the Acquisition
Agreement is true and correct in all material respects. Notwithstanding
anything contained in the Acquisition Agreement to the contrary, such
representations and warranties of the Borrower are incorporated into this
Agreement by this Section 8.33 and shall, solely for purposes of this Agreement
and the benefit of the Lenders, survive both the consummation of the
Acquisition and the termination of the Acquisition Agreement.
8.34 Bidding Status. Neither the Borrower nor any of its
Subsidiaries has received a notice, which notice has not been withdrawn within
180 days after receipt by the Borrower or such
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Subsidiary, from any of General Motors Corporation, Ford Motor Company or
Chrysler Corporation informing the Borrower or such Subsidiary that any of them
are ineligible to submit bids.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender that, so
long as any of the Obligations remain outstanding or this Agreement is in
effect:
9.1 Taxes and Other Obligations. The Borrower shall, and shall
cause each of its Subsidiaries to, (a) file when due all tax returns and other
reports which it is required to file; (b) pay, or provide for the payment, when
due, of all taxes, fees, assessments and other governmental charges against it
or upon its property, income and franchises, make all required withholding and
other tax deposits, and establish adequate reserves for the payment of all such
items, and provide to the Agent and the Lenders, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
Debt owed by it and all claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, and all other indebtedness owed
by it and perform and discharge in a timely manner all other obligations
undertaken by it; provided, however, so long as Borrower has notified Agent in
writing, neither the Borrower nor any of its Subsidiaries need pay any tax,
fee, assessment, or governmental charge, that (i) it is contesting in good
faith by appropriate proceedings diligently pursued, (ii) the Borrower or its
Subsidiary, as the case may be, has established proper reserves for as provided
in GAAP, and (iii) no Lien (other than a Permitted Lien) results from such
non-payment.
9.2 Corporate Existence; Good Standing. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain its corporate existence and
its qualification and good standing in all jurisdictions in which the failure
to maintain such qualification or good standing could reasonably be expected to
have a material adverse effect on the Borrower's or such Subsidiary's property,
business, operations, prospects, or condition (financial or otherwise).
9.3 Compliance with Law and Agreements; Maintenance of Licenses.
The Borrower shall comply, and shall cause each Subsidiary to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act). The Borrower shall, and shall cause each of its Subsidiaries
to, obtain and maintain all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date.
9.4 Maintenance of Property. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain all of their respective property
necessary and useful in the conduct of their respective businesses, in good
operating condition and repair, ordinary wear and tear excepted.
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9.5 Insurance. (a) The Borrower shall maintain, and shall cause
each of its Subsidiaries to maintain, with financially sound and reputable
insurers having a rating of at least (A-) VII or better by Best Rating Guide,
insurance against loss or damage by fire with extended coverage; theft,
burglary, pilferage and loss in transit; public liability and third party
property damage; larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage; and such other
hazards or of such other types as is customary for Persons engaged in the same
or similar business, as the Agent, in its discretion, or acting at the
direction of the Majority Lenders, shall specify, in amounts, and under
policies acceptable to the Agent and the Majority Lenders. Without limiting
the foregoing, the Borrower shall also maintain, and shall cause each of its
Subsidiaries to maintain, flood insurance, in the event of a designation of the
area in which any Real Estate is located as "flood prone" or a "flood risk
area," as defined by the Flood Disaster Protection Act of 1973, in an amount to
be reasonably determined by the Agent, and shall comply with the additional
requirements of the National Flood Insurance Program as set forth in said Act.
(b) The Borrower shall cause the Agent, for the ratable
benefit of the Lenders, to be named in each such policy (other than those
policies pertaining to Como) as secured party or mortgagee and loss payee or
additional insured, in a manner acceptable to the Agent. Each policy of
insurance shall contain a clause or endorsement requiring the insurer to give
not less than thirty (30) days' prior written notice to the Agent in the event
of cancellation of the policy for any reason whatsoever and a clause or
endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of the Borrower or any of its Subsidiaries or
the owner of any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the Borrower when due,
and certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If
the Borrower fails to procure such insurance or to pay the premiums therefor
when due, the Agent may, and at the direction of the Majority Lenders shall, do
so from the proceeds of Revolving Loans.
(c) The Borrower shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to the Collateral or Guarantor
Collateral arising from its use, whether or not covered by insurance. Upon the
occurrence and during the continuance of an Event of Default, the Agent is
authorized to collect all insurance proceeds (other than those pertaining to
Como) directly, and to apply or remit them as follows:
(i) With respect to insurance proceeds relating to property
other than Collateral or Guarantor Collateral, after deducting from
such proceeds the reasonable expenses, if any, incurred by the Agent
in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order
provided for in Section 4.8.
(ii) With respect to insurance proceeds relating to Collateral
or Guarantor Collateral other than Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by the Agent
in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order
provided for in Section 4.8.
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(iii) With respect to insurance proceeds relating to Collateral
or Guarantor Collateral consisting of Fixed Assets, after deducting
from such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Majority Lenders may
permit or require the Borrower or LDM Canada, as the case may be, to
use such money, or any part thereof, to replace, repair, restore or
rebuild the relevant Fixed Assets in a diligent and expeditious
manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction.
9.6 Condemnation. (a) The Borrower shall, immediately upon
learning of the institution of any proceeding for the condemnation or
other taking of any of its property or the property of any of its
Subsidiaries, notify the Agent of the pendency of such proceeding, and
agrees that the Agent may participate in any such proceeding, and the
Borrower from time to time will deliver to the Agent all instruments
reasonably requested by the Agent to permit such participation.
(b) Upon the occurrence and during the continuance of an
Event of Default, the Agent is authorized to collect the proceeds of any
condemnation claim or award directly, and to apply or remit them as
follows:
(i) With respect to condemnation proceeds relating to property
other than Collateral or Guarantor Collateral, after deducting from
such proceeds the reasonable expenses, if any, incurred by the Agent
in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order
provided for in Section 4.8.
(ii) With respect to condemnation proceeds relating to
Collateral or Guarantor Collateral other than Fixed Assets, after
deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the
Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(iii) With respect to condemnation proceeds relating to
Collateral or Guarantor Collateral consisting of Fixed Assets, after
deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the
Majority Lenders may permit or require the Borrower or LDM Canada, as
the case may be, to use such money, or any part thereof, to replace,
repair, restore or rebuild the relevant Fixed Assets in a diligent
and expeditious manner with materials and workmanship of
substantially the same quality as existed before the condemnation.
9.7 Environmental Laws. (a) The Borrower shall, and shall cause
each of its Subsidiaries to, conduct its business in compliance with all
Environmental Laws applicable to it, including, without limitation, those
relating to the generation, handling, use, storage, and disposal of any
Contaminant. The Borrower shall, and shall cause each of its
Subsidiaries to, take prompt and appropriate action to respond to any
non-compliance with Environmental Laws and shall regularly report to the
Agent on such response.
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(b) Without limiting the generality of the foregoing, the
Borrower shall submit to the Agent and the Lenders annually, commencing on the
first Anniversary Date, and on each Anniversary Date thereafter, an update of
the status of each environmental compliance or liability issue. The Agent or
any Lender may request copies of technical reports prepared by the Borrower or
LDM Canada and its communications with any Governmental Authority to determine
whether the Borrower or any of its Subsidiaries is proceeding reasonably to
correct, cure or contest in good faith any alleged non-compliance or
environmental liability. The Borrower shall, at the Agent's or the Majority
Lenders' request and at the Borrower's expense, (a) retain an independent
environmental engineer acceptable to the Agent to evaluate the site, including
tests if appropriate, where the non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the Agent, in
sufficient quantity for distribution by the Agent to the Lenders, a report
setting forth the results of such evaluation, a proposed plan for responding to
any environmental problems described therein, and an estimate of the costs
thereof, and (b) provide to the Agent and the Lenders a supplemental report of
such engineer whenever the scope of the environmental problems, or the response
thereto or the estimated costs thereof, shall change in any material respect.
9.8 Compliance with ERISA. The Borrower shall, and shall cause
each of its Subsidiaries and ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA,
the Code, the PBA and other federal, provincial or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) make all required contributions to any Plan subject to
Section 412 of the Code; (d) not engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan; and
(e) not engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA; and (f) not permit any Lien, choate or inchoate, to arise or
exist in connection with any Plan (save for contribution amounts not yet due).
9.9 Mergers, Consolidations or Sales. Neither the Borrower nor
any of its Subsidiaries shall enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease, or
otherwise dispose of all or any part of its property, or wind up, liquidate or
dissolve, or agree to do any of the foregoing, except (i) for sales of
Inventory in the ordinary course of its business, (ii) sales of assets in an
aggregate amount not to exceed $500,000 in any Fiscal Year and (iii) for sales
or other dispositions of Equipment in the ordinary course of business that are
obsolete or no longer useable by Borrower or LDM Canada, as the case may be,
in its business as permitted by Section 6.11.
9.10 Distributions; Capital Change; Restricted Investments.
Neither the Borrower nor any of its Subsidiaries shall (i) directly or
indirectly declare or make, or incur any liability to make, any Distribution,
except (x) Distributions to the Borrower by its Subsidiaries (y) Distributions
by Borrower at such times and in such amounts as are necessary to pay the
federal income taxes of the Borrower's stockholders attributable to their
ownership of the Borrower's common stock and the Borrower's status as a
subchapter "S" corporation under the Code at any time after such subchapter "S"
Status is obtained, and (z) Distributions relating to the repurchase of the
capital stock of the Borrower with proceeds from key-man life insurance
policies under which the Borrower is the
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beneficiary, (ii) make any change in its capital structure which could have a
Material Adverse Effect or (iii) make any Restricted Investment.
9.11 Transactions Affecting Collateral or Obligations. Neither the
Borrower nor any of its Subsidiaries shall enter into any transaction which
could have a Material Adverse Effect.
9.12 Guaranties. Neither the Borrower nor any of its Subsidiaries
shall make, issue, or become liable on any Guaranty, except Guaranties in favor
of the Agent and guaranties of the Debt of Como in an amount up to $1,000,000.
9.13 Debt. Neither the Borrower nor any of its Subsidiaries shall
incur or maintain any Debt, other than: (a) the Obligations; (b) trade payables
and contractual obligations to suppliers and customers incurred in the ordinary
course of business; (c) Debt consisting of Senior Subordinated Notes, provided
that the aggregate principal amount thereof shall not at any time exceed
$110,000,000, (d) Debt consisting of intercompany loans and advances made by
the Borrower to LDM Canada ("Intercompany Loans"), provided that (i) LDM Canada
shall have executed and delivered to the Borrower, on the Closing Date, a
demand note (the "Intercompany Note") to evidence any such Intercompany Loan,
which Intercompany Note shall be in form and substance satisfactory to Agent,
any security interests granted to the Borrower on the assets of LDM Canada to
secure the payments under the Intercompany Note shall be assigned to the Agent
pursuant to documentation in form and substance acceptable to the Agent, and
the Intercompany Note shall be pledged to the Agent pursuant to the Pledge
Agreement as additional collateral security for the Obligations, (ii) the
Borrower shall record all Intercompany Loans on its books and records in a
manner satisfactory to Agent, (iii) at the time any such Intercompany
Loan is made by the Borrower and after giving effect thereto, each of the
Borrower and LDM Canada shall be Solvent (iv) the aggregate outstanding
principal amount of Intercompany Loans shall not at any one time exceed
$17,000,000, consisting of the Closing Date Intercompany Loan and additional
loans not to exceed $1,000,000, plus an amount equal to the sum of (A) an
amount equal to the lesser of (x) $5,000,000 and (y) LDM Canada's Borrowing
Base, plus (B) $4,000,000, provided, however, that the Intercompany Loans
pursuant to clauses (A) and (B) above shall not exceed in any fiscal quarter
the amount of LDM Canada's EBITDA for the immediately preceding fiscal quarter;
and (d) other Debt existing on the Closing Date and listed on Schedule 8.9
hereof, but without giving effect to any extensions, renewals or refinancing
thereof.
9.14 Prepayments; Amendments. Neither the Borrower nor any of its
Subsidiaries shall voluntarily prepay, or amend, supplement or otherwise modify
the terms of, any Debt, except the Obligations in accordance with the terms of
this Agreement.
9.15 Transactions with Affiliates. Except as set forth below and
except for the Intercompany Loans (and repayments thereof) upon and subject to
the terms of Section 9.14 hereof, neither the Borrower nor any of its
Subsidiaries shall, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), to any
Affiliate, or lend or advance money or property to any Affiliate, or invest in
(by capital contribution or otherwise) or purchase or repur-
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chase any stock or ndebtedness, or any property, of any Affiliate, or become
liable on any Guaranty of the indebtedness, dividends, or other obligations of
any Affiliate. Notwithstanding the foregoing, the Borrower and its Subsidiaries
may engage in transactions with Affiliates in the ordinary course of business,
in amounts and upon terms fully disclosed to the Agent and the Lenders, and no
less favorable to the Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a third party who is not an Affiliate,
except consulting fees paid by the Borrower consistent with past practices.
9.16 Investment Banking and Finder's Fees. Neither the Borrower
nor any of its Subsidiaries shall pay or agree to pay, or reimburse any other
party with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. The Borrower shall defend and indemnify the Agent and the
Lenders against and hold them harmless from all claims of any Person for any
such fees, and all costs and expenses (including without limitation, attorneys'
fees) incurred by the Agent and/or any Lender in connection therewith.
9.17 [INTENTIONALLY OMITTED].
9.18 Business Conducted. The Borrower shall not and shall not
permit any of its Subsidiaries to, engage directly or indirectly, in any line
of business other than the businesses in which the Borrower or such Subsidiary
is engaged on the Closing Date and related lines of business.
9.19 Liens. Neither the Borrower nor any of its Subsidiaries
shall create, incur, assume, or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except Permitted Liens.
9.20 Sale and Leaseback Transactions. Neither the Borrower nor
any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for the Borrower or such Subsidiary to
lease or rent property that the Borrower or such Subsidiary has sold or will
sell or otherwise transfer to such Person.
9.21 Acquisitions; Investments in New Subsidiaries.
Notwithstanding any provision of Section 9.9 or 9.10 to the contrary but
subject to all other provisions of this Agreement, the Borrower may make
investments in newly formed Subsidiaries, acquire all or substantially all of
the assets of any Person or acquire all of outstanding stock of a Person,
subject to the following conditions:
(i) such Person or Subsidiary is incorporated under the
laws of a State in the United States and substantially all of its
assets are located in the United States;
(ii) no Event of Default shall have occurred and be
continuing or would result after giving pro forma effect to any such
transaction;
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(iii) if such a transaction involves a newly formed Subsidiary
of the Borrower or a Person that becomes a Subsidiary of the Borrower
upon its acquisition, it shall be a wholly-owned or majority owned
and controlled Subsidiary of Borrower and, subject to obtaining any
consents from third parties (including minority stockholders and
third party co-venturers) necessary to be obtained for the issuance
of a guarantee, (with the Borrower hereby agreeing to use all
reasonable efforts to obtain such consents), such Subsidiary shall
have issued a guarantee of the Obligations to the Agent for the
ratable benefit of the Lenders in form and substance satisfactory to
the Agent;
(iv) the newly formed or acquired Subsidiary (and in the case
of a majority owned or controlled Subsidiary, subject to obtaining
any consents from third parties (including minority stockholders and
third party co-venturers necessary to be obtained for the granting of
a security interest (with the Borrower hereby agreeing to use all
reasonable efforts to obtain such consents)) shall have granted to
the Agent or the Agent shall have received from the Borrower (in the
case of a purchase of assets by the Borrower) a first priority
security interest or lien on all of the assets of such newly formed
or acquired Subsidiary or the assets and/or equity interests acquired
directly by the Borrower, as applicable, subject only to non-material
exceptions acceptable to the Agent;
(v) the aggregate consideration paid by the Borrower in
connection with such transaction (including liabilities assumed or
reflected on a consolidated balance sheet of Borrower after giving
effect to any acquisition) shall not exceed $10,000,000;
(vi) after giving effect to any such transaction, the Borrower
would have Revolver Availability of at least $10,000,000; and
(vii) such newly formed or acquired Subsidiary shall, or such
assets shall comprise a business, engaged in substantially the same
business as the Borrower.
9.22 Fiscal Year. The Borrower shall not change its Fiscal Year
and shall not permit LDM Canada to change its Fiscal Year without the
consent of Agent and the Majority Lenders (such consents to not be
unreasonably withheld).
9.23 Capital Expenditures. Neither the Borrower nor any of its
Subsidiaries shall make or incur any Capital Expenditure if, after giving
effect thereto, the aggregate amount of all Capital Expenditures by the
Borrower and its Subsidiaries on a consolidated basis would exceed
$9,000,000, during the 1997 Fiscal Year, $15,000,000, during the 1998
Fiscal Year, and $9,000,000, during each Fiscal Year thereafter.
9.24 Operating Lease Obligations. The Borrower shall, and shall
cause each of its Subsidiaries to, promptly notify the Agent after
entering into any lease of real or personal property as lessee or
sublessee (other than a Capital Lease), if, after giving effect thereto,
the aggregate amount of Rentals (as hereinafter defined) payable by the
Borrower and its Subsidiaries on a consolidated basis in any Fiscal Year
in respect of such lease would exceed $1,000,000,
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individually, or $4,000,000 in the aggregate for all such leases. The term
"Rentals" means all payments due from the lessee or sublessee under a lease,
including, without limitation, basic rent, percentage rent, property taxes,
utility or maintenance costs, and insurance premiums.
9.25 Fixed Charge Coverage Ratio. The Borrower will maintain a
Fixed Charge Coverage Ratio of not less than 1.25:1.0 for (i) the period from
the Closing Date to March 30, 1997, (ii) the period from the Closing Date to
June 29, 1997, (iii) the period from the Closing Date to September 28, 1997,
and (iv), thereafter, for each period of four consecutive fiscal quarters
ended at the end of the most recent fiscal quarter.
9.26 Net Loss. The Borrower shall not, for each period of four
consecutive fiscal quarters ended at the end of the most recent fiscal quarter,
sustain a net loss (determined in accordance with GAAP).
9.27. Use of Proceeds. The Borrower shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Borrower or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
9.28 Further Assurances. The Borrower shall and shall cause its
Subsidiaries to, execute and deliver, or cause to be executed and delivered, to
the Agent and/or the Lenders such documents and agreements, and shall take or
cause to be taken such actions, as the Agent or any Lender may, from time to
time, request to carry out the terms and conditions of this Agreement and the
other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date.
The obligation of the Lenders to make the initial Revolving Loans on the
Closing Date, and the obligation of the Agent to cause to be issued any Letter
of Credit on the Closing Date and the obligation of the Lenders to participate
in Letters of Credit issued on the Closing Date, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the
Agent and each Lender:
(a) This Agreement and the other Loan Documents have been
executed by each party thereto and the Borrower and LDM Canada shall have
performed and complied with all covenants, agreements and conditions contained
herein and the other Loan Documents which are required to be performed or
complied with by such Person before or on such Closing Date.
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(b) After making the Revolving Loans and issuing Letters
of Credit on the Closing Date (including such Revolving Loans made to finance
the Closing Fee or otherwise pursuant to Section 4.7 as reimbursement for fees,
costs and expenses then payable under this Agreement) and with all of its and
LDM Canada's obligations paid currently on a pro forma basis, the Borrower
would have Revolver Availability in an amount no less than $5,000,000 based
solely on Eligible Accounts.
(c) All representations and warranties made hereunder and
in the other Loan Documents shall be true and correct as of the Closing Date as
if made on such date.
(d) No Default or Event of Default shall exist on the
Closing Date, or would exist after giving effect to the Loans to be made, and
Letters of Credit to be issued, on such date.
(e) The Agent and the Lenders shall have received such
opinions of counsel for the Borrower and its Subsidiaries as the Agent or any
Lender shall request, each such opinion to be in a form, scope, and substance
satisfactory to the Agent, the Lenders, and their respective counsel.
(f) [INTENTIONALLY OMITTED]
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing
statements, duly filed on or before the Closing Date under the UCC or PPSA of
all jurisdictions that the Agent may deem necessary or desirable in order to
perfect the Agent's Lien;
(ii) a copy of the LDM Canada Security Agreement,
as duly recorded in Nova Scotia, Canada; and
(iii) duly executed such UCC-3 Termination
Statements, PPSA Termination Statements, mortgage releases and other
instruments, in form and substance satisfactory to the Agent, as shall be
necessary to terminate and satisfy all Liens on the Property of the Borrower
and its Subsidiaries except Permitted Liens.
(h) The Borrower shall have paid all fees and expenses of
the Agent and the Attorney costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby.
(i) The Agent shall have received evidence, in form,
scope, and substance, reasonably satisfactory to the Agent, of all insurance
coverage as required by the Agreement.
(j) The Agent and the Lenders shall have had an
opportunity, if they so choose, to examine the books of account and other
records and files of the Borrower and to make copies thereof, and to conduct a
pre-closing audit which shall include, without limitation, verification of
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Inventory, Accounts, and Availability, and the results of such examination and
audit shall have been satisfactory to the Agent and the Lenders in all
respects.
(k) The Agent and the Lender shall have received evidence, in
form and substance satisfactory to the Agent and the Lenders in all respects,
that the Borrower and LDM Canada have, as of the Closing Date, met the
financial performance projections, dated as of December 18, 1996, previously
delivered to the Agent.
(l) No claim, action, suit, investigation, litigation or
proceeding shall be pending or threatened (i) which is reasonably likely to be
determined adversely to the Borrower or any Guarantor and which would have a
Material Adverse Effect if so determined or (ii) which, in the judgment of the
Agent on the Majority Lenders could materially and adversely effect the
transactions contemplated hereby.
(m) Copies of all filings, registrations, approvals,
orders, authorizations, licenses, certificates, permits, consents, waivers and
acknowledgments, including those of the requisite Governmental Authorities,
required with respect to the execution and delivery, of this Agreement, the
other Loan Documents and the consummation of the transactions contemplated
hereby, each in form and substance satisfactory to the Agent.
(n) Evidence satisfactory to the Agent that on or prior to the
Closing Date the Borrower has received net cash proceeds of $106,000,000 from
the issuance of the Senior Subordinated Notes, which proceeds shall be
available to fund, in part, the Acquisition, the terms and conditions of such
Senior Subordinated Notes and the Indenture shall be in form and substance
satisfactory to the Agent.
(o) Evidence satisfactory to Agent that the Borrower and the
Seller shall have consummated the transactions contemplated by the Acquisition
Agreement in accordance with the terms set forth therein (which terms and
conditions shall be satisfactory to the Agent and its counsel in all respects),
and all documents required to be delivered pursuant to the Acquisition
Agreement shall have been executed and delivered by the Persons specified
therein, and the Borrower shall have furnished to the Agent a certified copy of
the Acquisition Agreement and all exhibits and schedules thereto, as finally
amended, and a certificate signed by the chief executive officer of the
Borrower certifying that (i) the transactions contemplated by the Acquisition
Agreement have been consummated in accordance with the Acquisition Agreement
and no term or condition of the Acquisition Agreement has been amended,
modified or waived except as set forth in the certified copy of the Acquisition
Agreement provided to the Agent, (ii) any documents required to be filed to
effect the Acquisition have been filed in accordance with applicable law, and
(iii) neither the Borrower nor any of its Subsidiaries has failed to perform
any material obligation or covenant required by the Acquisition Agreement to be
performed or complied with by such Person on or before the Closing Date unless
waived by the Seller, and the substance of such certificate shall be true and
correct, and the Agent shall have received, on behalf of the Lenders, copies of
the Acquisition Agreement and the other documents required to be delivered
pursuant to the Acquisition
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Agreement and all consents, approvals or permits necessary or advisable to be
obtained in connection therewith, in form and substance satisfactory to the
Agent and its counsel.
(p) All opinions delivered in connection with the Acquisition
shall be addressed to the Agent and the Lenders or accompanied by a written
authorization from the Person delivering such opinion stating that the Agent
and the Lenders may rely on such document as though it were addressed to them.
(q) The Agent shall have received a certificate executed by
the chief financial officer of the Borrower in form and substance satisfactory
to the Agent, dated the Closing Date, with respect to the value, Solvency and
other factual information of, or relating to, as the case may be, of the
Borrower and its Subsidiaries (on a consolidated basis) and LDM Canada, after
giving effect to the Acquisition and the transactions contemplated by the
Acquisition Agreement, this Agreement and the other Loan Documents.
(r) Payoff letters, in form and substance satisfactory to the
Agent, from each financial institution to the effect that the total amount
under the Borrower's and LDM Canada's agreements with such institutions
howsoever due and owing (whether as principal, interest or premium) shall be
satisfied (and such agreement term issued) upon payment of an amount certain
together with such lien releases and such other documents as the Agent may
request.
(s) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and
the Lenders.
The acceptance by the Borrower of any Loans made on the Closing Date
shall be deemed to be a representation and warranty made by the Borrower to the
effect that all of the conditions precedent to the making of such Loans have
been satisfied, with the same effect as delivery to the Agent and the Lenders
of a certificate signed by the a Responsible Officer of the Borrower, dated the
Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart to
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this Section 10.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to execute and
deliver to the Agent an executed counterpart to this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as
to the satisfaction of any condition precedent set forth in this Section 10.1.
10.2 Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Loan, including the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to take reasonable steps to cause to be
issued any Letter of Credit and the obligation of the Lenders to participate in
Letters of Credit, shall be subject to the further conditions precedent that on
and as of the date of any such extension of credit:
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(a) the following statements shall be true, and the
acceptance by the Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clauses (i) and (ii), with the same effect
as the delivery to the Agent and the Lenders of a certificate signed by a
Responsible Officer, dated the date of such extension of credit, stating that:
(i) The representations and warranties contained
in this Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though made on
and as of such date, except to the extent the Agent and the Lenders have been
notified by the Borrower that any representation or warranty is not correct and
the Majority Lenders have explicitly waived in writing compliance with such
representation or warranty; and
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes a Default or an
Event of Default; and
(b) without limiting Section 10.1 (b), the amount of the
Revolver Availability shall be sufficient to make such Revolving Loan without
exceeding the Revolver Availability, provided, however, that the foregoing
conditions precedent are not conditions to each Lender participating in or
reimbursing BABC or the Agent for such Lenders' Pro Rata Share of any BABC
Loan or Agent Advance as provided in Sections 2.2(h), (i) and (j).
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure to pay the principal of or interest or
premium on any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made by the Borrower in
this Agreement or by the Borrower or any Guarantor in any of the other Loan
Documents, any Financial Statement, or any certificate furnished by the
Borrower or any Guarantor at any time to the Agent or any Lender shall prove to
be untrue in any material respect as of the date on which made or furnished;
(c) (i) any default shall occur in the observance or
performance of any of the covenants or agreements contained in any of Article
6, Section 7.2, 7.3, 9.4 or 9.9 through 9.28 hereof (other than a default under
Section 9.20 as a result of a Lien involuntarily incurred, which is not
otherwise an Event of Default hereunder) or (ii) any default shall occur in the
observance or performance of any of the other covenants and agreements
contained in this Agreement or under Section 9.20 hereof as a result of a Lien
involuntarily incurred, any other Loan Documents, or any other agreement
entered into at any time to which the Borrower or any Guarantor thereof and the
Agent or any Lender are party in each case referred to in this clause (ii), if
the same shall not have been cured within fifteen (15) days following notice by
the Agent to the Borrower of the breach
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thereof, or if any such agreement or document shall terminate (other than in
accordance with its terms or the terms hereof or with the written consent of
the Agent and the Majority Lenders) or become void or unenforceable, without
the written consent of the Agent and the Majority Lenders;
(d) default shall occur with respect to any Debt for
borrowed money (other than the Obligations) in an outstanding principal amount
which exceeds, in the aggregate for all such Debt with respect to which default
shall have occurred, $2,000,000, or under any agreement or instrument under or
pursuant to which any such Debt or indebtedness may have been
issued, created, assumed, or guaranteed by the Borrower or any Guarantor, and
such default shall continue for more than the period of grace, if any, therein
specified, if the effect thereof (with or without the giving of notice or
further lapse of time or both) is to accelerate, or to permit the holders of
any such Debt or indebtedness to accelerate, the maturity of any such Debt; or
any such Debt or indebtedness shall be declared due and payable or be required
to be prepaid (other than by a regularly scheduled required prepayment) prior
to the stated maturity thereof;
(e) the Borrower or any Guarantor shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
file any proposal or notice of intent to file a proposal or otherwise commence
any action or proceeding seeking reorganization, arrangement, consolidation or
readjustment of its debts or which seeks to stay or has the effect of staying
any creditor or for any other relief under the Bankruptcy Code, the Bankruptcy
and Insolvency Act or the Companies' Creditors Arrangement Act, as amended, or
under any other bankruptcy, insolvency, liquidation, winding up, corporate or
similar act or law, state, provincial or federal, now or hereafter existing, or
consent to, approve of, or acquiesce in, any such petition, proposal action or
proceeding, (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, monitor, administrator, custodian, trustee
or similar officer for it or for all or any part of its property, (iii) make an
assignment for the benefit of creditors, or (iv) be unable generally to pay its
debts as they become due;
(f) an involuntary petition or proposal shall be filed or
an action or proceeding otherwise commenced seeking reorganization,
consolidation, arrangement or readjustment of the debts of the Borrower or any
Guarantor or for any other relief under the Bankruptcy Code, the Bankruptcy and
Insolvency Act or the Companies' Creditors Arrangement Act, as amended, or
under any other bankruptcy, insolvency, liquidation, winding up, corporate or
similar act or law, state, provincial or federal, now or hereafter existing and
(i) such petition, proposal action or proceeding shall not have been stayed or
dismissed within a period of sixty (60) days after its commencement or (ii) an
order for relief against the Borrower or such Guarantor shall have been entered
in such proceeding or (iii) a Material Adverse Effect shall have occurred;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, trustee, monitor, administrator or similar officer for the Borrower
or any Guarantor or for all or any part of its property shall be appointed or a
warrant of attachment, execution, writ of seizure or seizure and sale or
similar process shall be issued against any part of the property of the
Borrower or any Guarantor or any distress or analogous process is levied
upon all or any part of Borrower's or any Guarantor's property;
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(h) the Borrower or any Guarantor shall file a
certificate of dissolution or like process under applicable state, provincial
or federal law or shall be liquidated, dissolved or wound-up or shall commence
or have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, or shall take any corporate action in furtherance
thereof;
(i) all or any material part of the property of the
Borrower or any Guarantor shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
the Borrower or such Guarantor shall be assumed by any Governmental Authority
or any court of competent jurisdiction at the instance of any Governmental
Authority or any other Person, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(j) the LDM Canada Guarantee, LDM Holding Guarantee, LDM
LLC Guarantee, LDM LP Guarantee or any other guaranty of the Obligations shall
be terminated, revoked or declared void or invalid;
(k) one or more judgments or orders for the payment of
money aggregating in excess of $2,000,000, which amount shall not be fully
covered by insurance, shall be rendered against the Borrower or any Guarantor
and any such judgments or orders shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof;
(l) any loss, theft, damage or destruction of any item or
items of Collateral, Pledged Collateral or Guarantor Collateral or other
property of the Borrower or any Guarantor occurs which (i) materially and
adversely affects the property, business, operation, prospects, or condition of
the Borrower or any Guarantor; or (ii) is material in amount and is not
adequately covered by insurance;
(m) there occurs a Material Adverse Effect;
(n) there is filed against the Borrower or any Guarantor
any civil or criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days, and (2) could result in the
confiscation or forfeiture of any material portion of the Collateral;
(o) for any reason other than the failure of the Agent
to take any action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full force
and effect or any Lien with respect to any material portion of the Collateral,
Pledged Collateral or Guarantor Collateral intended to be secured thereby
ceases to be, or is not, valid, perfected and prior to all other Liens (other
than Permitted Liens) or is terminated, revoked or declared void;
(p) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could reasonably be expected
to result in liability of the Borrower or any
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Guarantor under applicable laws in an aggregate amount in excess of $2,000,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $2,000,000; or (iii) the Borrower, any Guarantor or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $2,000,000 or (iv) any Lien (save for
contribution amounts not yet due) arises in connection with any Plan; or
(q) there occurs a Change of Control.
11.2 Remedies. (a) If a Default or an Event of Default exists,
the Agent may, in its discretion, and shall, at the direction of the Majority
Lenders, do one or more of the following at any time or times and in any order,
without notice to or demand on the Borrower or any other Person: (i) reduce
the Maximum Revolver Amount, or the advance rates against Eligible Accounts
and/or Eligible Inventory used in computing Revolver Availability, or reduce
one or more of the other elements used in computing Revolver Availability; (ii)
restrict the amount of or refuse to make Revolving Loans; and (iii) restrict or
refuse to arrange for Letters of Credit. If an Event of Default exists, the
Agent shall, at the direction of the Majority Lenders, do one or more of the
following, in addition to the actions described in the preceding sentence, at
any time or times and in any order, without notice to or demand on the Borrower
or any other Person: (a) terminate the Commitments and this Agreement; (b)
declare any or all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of any Event of Default described in Sections
11.1(e), 11.1(g), or 11.1(h), the Commitments shall automatically and
immediately expire and all Obligations shall automatically become immediately
due and payable without notice or demand of any kind; and (c) pursue its other
rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default exists: (i) the Agent shall have
for the benefit of the Lenders, in addition to all other rights of the Agent
and the Lenders, the rights and remedies of a secured party under the UCC, the
PPSA and the Mortgages Act of Ontario; (ii) the Agent may, at any time, take
possession of the Collateral and keep it on the Borrower's or LDM Canada's
premises, at no cost to the Agent or any Lender, or remove any part of it to
such other place or places as the Agent may desire, or the Borrower shall, upon
the Agent's demand, at the Borrower's cost, assemble, or cause LDM Canada to
assemble, the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and deliver
any Collateral at public or private sales, for cash, upon credit or otherwise,
at such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of sale. Without
in any way requiring notice to be given in the following manner, the Borrower
agrees that any notice by the Agent of sale, disposition or other intended
action hereunder or in connection herewith, whether required by the UCC or
otherwise, shall constitute reasonable notice to the Borrower if such notice is
mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least five (5) Business
Days prior to such action to the Borrower's address specified in or pursuant to
Section 15.8. If any Collateral is sold on terms other than payment in full
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at the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the Borrower. In the
event the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, the Borrower irrevocably waives: (a) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (b) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (c) any requirement that
the Agent retain possession and not dispose of any Collateral until after trial
or final judgment. The Borrower agrees that the Agent has no obligation to
preserve rights to the Collateral or marshal any Collateral for the benefit of
any Person. The Agent is hereby granted a license or other right to use,
without charge, the Borrower's labels, patents, copyrights, name, trade
secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and the Borrower's rights under all licenses and all franchise agreements shall
inure to the Agent's benefit. The proceeds of sale shall be applied first to
all expenses of sale, including attorneys' fees, and then to the Obligations in
whatever order the Agent elects. The Agent will return any excess to the
Borrower and the Borrower shall remain liable for any deficiency.
(c) If an Event of Default occurs, the Borrower hereby waives
all rights to notice and hearing prior to the exercise by the Agent of the
Agent's rights to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing.
(d) If the Agent, at the direction of the Majority Lenders
terminates this Agreement upon an Event of Default, the Borrower shall pay the
Agent, for the account of the Lenders, immediately upon termination, an early
termination penalty equal to the early termination fee that would have been
payable under Article 4 if this Agreement had been terminated on that date
pursuant to the Borrower's election.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on
the Stated Termination Date. The Agent upon direction from the Majority
Lenders may terminate this Agreement without notice upon the occurrence of an
Event of Default. The Agent shall provide notice to the Borrower of such
termination; provided that the failure by the Agent to provide such notice to
the Borrower shall not prohibit, restrict or otherwise affect the validity of
the actions taken by the Agent and/or the Majority Banks pursuant to this
Section 12.1. Upon the effective date of termination of this Agreement for any
reason whatsoever, all Obligations shall become immediately due and payable.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, the Borrower shall remain
bound by the terms of this Agreement and shall not be relieved of any of its
Obligations hereunder, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the
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Agent's Liens in and all rights and remedies with respect to all then existing
and after-arising Collateral).
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers Cumulative Remedies. No failure by the Agent or
any Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or
among the Borrower and the Agent and/or any Lender, or delay by the Agent or
any Lender in exercising the same, will not operate as a waiver thereof. No
waiver by the Agent or any Lender will be effective unless it is
in writing, and then only to the extent specifically stated. No waiver by the
Agent or the Lenders on any occasion shall affect or diminish the Agent's and
each Lender's rights thereafter to require strict performance by the Borrower
of any provision of this Agreement. The Agent's and each Lender's rights under
this Agreement will be cumulative and not exclusive of any other right or
remedy which the Agent or any Lender may have.
13.2 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the
Agent at the written request of the Majority Lenders) and the Borrower and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all the
Lenders and the Borrower and acknowledged by the Agent, do any of the
following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder
or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lender
or any of them to take any action hereunder;
(e) increase the advance rate with respect to Revolving
Loans;
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(f) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(g) release Collateral, Pledged Collateral or Guarantor
Collateral other than as permitted by Section 14.12;
(h) change the definitions of "Majority Lenders" or
"Required Lenders."
and, provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent,
assign and delegate to one or more assignees (provided that no written consent
of the Agent shall be required in connection with any assignment and delegation
by a Lender to an Affiliate of such Lender) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Lender hereunder, in a minimum amount of $5,000,000;
provided, however, that the Borrower and the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to the
Borrower and the Agent an Assignment and Acceptance in the form of Exhibit E
("Assignment and Acceptance") and (iii) the assignor Lender or Assignee has
paid to the Agent a processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in credit support
or other enhancement for Letters of Credit hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor Lender
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents 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 or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (1) 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
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other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto; (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, LDM Canada or any other Person or the performance or
observance by the Borrower, LDM Canada or any other Person of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (4) such Assignee will, independently and without
reliance upon the 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; (5) such Assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (6) such Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
the Borrower (a "Participant") participating interests in any Loans, the
Commitment of that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents; provided,
however, that (i) the originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Borrower and the
Agent shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Lender shall transfer or
grant any participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
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ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby designates
and appoints BankAmerica Business Credit, Inc. as its Agent under this
Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this Article 14. The provisions of this Article 14 are
solely for the benefit of the Agent and the Lenders and the Borrower shall have
no rights as a third party beneficiary of any of the provisions contained
herein. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Except as expressly otherwise provided in
this Agreement, the Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights or
taking or refraining from taking any actions which the Agent is expressly
entitled to take or assert under this Agreement and the other Loan Documents,
including, without limitation, (a) the determination of the applicability of
ineligibility criteria with respect to the calculation of the Revolver
Availability, (b) the making of Agent Advances pursuant to Section 2.2(i), and
(c) the exercise of remedies pursuant to Section 11.2, and any action so taken
or not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Borrower or
any Subsidiary or Affiliate of the Borrower, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of the Borrower
or any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the
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agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of the Borrower's Subsidiaries or Affiliates.
14.4 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Borrower), independent accountants and other experts selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 10.1, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to such
Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lender.
14.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent shall have received written notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall take such action
with respect to such Default or Event of Default as may be requested by the
Majority Lenders in accordance with Section 11; provided, however, that unless
and until the Agent has received any such request, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Borrower and the Guarantors, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the Guarantors, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this
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Agreement and to extend credit to the Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Borrower or any Guarantor. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Borrower or any Guarantor which may come into the
possession of any of the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the
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, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
14.8 Agent in Individual Capacity. BABC and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Borrower and
its Subsidiaries and Affiliates as though BABC were not the Agent hereunder and
without notice to or consent of the Lenders. The Lenders acknowledge that,
pursuant to such activities, BABC or its Affiliates may receive information
regarding the Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Borrower or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BABC shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" include BABC in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders. If the Agent resigns under this Agreement, the Majority
Lenders shall appoint from among the Lenders a successor agent for the Lenders.
If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its
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appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's appointment, powers
and duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 14 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of the Agent
hereunder until such time, if any, as the Majority Lenders appoint a successor
agent as provided for above.
14.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender,
two properly completed and executed copies of IRS Form 4224 before the payment
of any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing IRS Form 1001
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Borrower to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Lender. To
the extent of such percentage amount, the Agent will treat such Lender's IRS
Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole
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responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such forms
or other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The
obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Agent.
14.11 [INTENTIONALLY OMITTED]
14.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at
its option and in its sole discretion, to release any Agent's Lien upon any
Collateral, Pledged Collateral or Guarantor Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full by Borrower of all
Loans and reimbursement obligations in respect of Letters of Credit, and the
termination of all outstanding Letters of Credit (whether or not any of such
obligations are due) and all other Obligations; (ii) constituting property
being sold or disposed of if the Borrower certifies to the Agent that the sale
or disposition is made in compliance with Section 9.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which the Borrower or a Guarantor owned no interest at
the time the Lien was granted or at any time thereafter; or (iv) constituting
property leased to the Borrower or LDM Canada under a lease which has expired
or been terminated in a transaction permitted under this Agreement. Except as
provided above, the Agent will not release any of the Agent's Liens without the
prior written authorization of the Majority Lenders; provided that the Agent
may release the Agent's Liens on Collateral, Pledged Collateral or Guarantor
Collateral valued in the aggregate of not more than $5,000,000 without the
prior written authorization of all of the Lenders. Upon request by the Agent
or the Borrower at any time, the Lenders will confirm in writing the Agent's
authority to release any Agent's Liens upon particular types or items of
Collateral, Pledged Collateral or Guarantor Collateral pursuant to this Section
14.11.
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(b) Upon receipt by the Agent of any authorization required
pursuant to Section 14.11(a) from the Majority Lenders or Lenders, as
applicable, of the Agent's authority to release any Agent's Liens upon
particular types or items of Collateral, Pledged Collateral or Guarantor
Collateral, and upon at least five (5) Business Days' prior written request by
the Borrower, the Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the release
of the Agent's Liens upon such Collateral, Pledged Collateral or Guarantor
Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Borrower or a Guarantor in respect of) all interests retained by the
Borrower or the relevant Guarantor, including (without limitation) the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral, Pledged Collateral or Guarantor
Collateral, exists or is owned by the Borrower or a Guarantor or is cared for,
protected or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or
in any particular manner or under any duty of care, disclosure or fidelity, or
to continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, Pledged Collateral or
Guarantor Collateral, or any act, omission or event related thereto, the Agent
may act in any manner it may deem appropriate, in its sole discretion given the
Agent's own interest in the Collateral, Pledged Collateral or Guarantor
Collateral, in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments. (a)
Each of the Lenders agrees that it shall not, without the express consent of the
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of the Agent, set off against the Obligations, any amounts owing by
such Lender to the Borrower or any Guarantor or any accounts of the Borrower or
such Guarantor now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do
so by the Agent, take or cause to be taken any action, including, without
limitation, the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral, Pledged Collateral or Guarantor Collateral, the purpose of
which is, or could be, to give such Lender any preference or priority against
the other Lenders with respect to the Collateral, Pledged Collateral or
Guarantor Collateral.
(b) Subject to Section 4.8, if, at any time or times any
Lender shall receive (i) by payment, foreclosure, setoff or otherwise, any
proceeds of Collateral, Pledged Collateral or Guarantor Collateral, or any
payments with respect to the Obligations of the Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any
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such proceeds or payments received by such Lender from the Agent pursuant
to the terms of this Agreement, or (ii) payments from the Agent in excess of
such Lender's ratable portion of all such distributions by the Agent, such
Lender shall promptly (1) turn the same over to the Agent, in kind, and with
such endorsements as may be required to negotiate the same to the Agent, or in
same day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part
of such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.14 Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC or the applicable
provision of the PPSA, can be perfected only by possession. Should any Lender
(other than the Agent) obtain possession of any such Collateral, Pledged
Collateral or Guarantor Collateral, such Lender shall notify the Agent thereof,
and, promptly upon the Agent's request therefor shall deliver such Collateral,
Pledged Collateral or Guarantor Collateral, to the Agent or in accordance with
the Agent's instructions.
14.15 Payments by Agent to Lenders. All payments to be made by the
Agent to the Lenders shall be made by bank wire transfer or internal transfer
of immediately available funds to: Bank of America Illinois, Chicago,
Illinois 60697, ABA 07 1000039, Account No. 71 09539, for BankAmerica Business
Credit, Inc., or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to the Agent. Concurrently
with each such payment, the Agent shall identify whether such payment (or any
portion thereof) represents principal, premium or interest on the Revolving
Loans or otherwise.
14.16 Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, Pledged Collateral and
Guarantor Collateral, for the ratable benefit of the Lenders. Each Lender
agrees that any action taken by the Agent or Majority Lenders in accordance
with the terms of this Agreement or the other Loan Documents relating to the
Collateral, Pledged Collateral and Guarantor Collateral and the exercise by the
Agent or the Majority Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
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(a) is deemed to have requested that the Agent furnish
such Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
the Agent;
(b) expressly agrees and acknowledges that neither BABC
nor the Agent (i) makes any representation or warranty as to the accuracy of
any Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that the Agent or other party
performing any audit or examination will inspect only specific information
regarding the Borrower and the Guarantors and will rely significantly upon the
Borrower's books and records, as well as on representations of the Borrower's
personnel;
(d) agrees to keep all Reports confidential and strictly
for its internal use, and not to distribute or use any Report in any other
manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to the
Borrower, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of the Borrower; and (ii) to pay and
protect, and indemnify, defend and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses and other amounts (including, without limitation
attorney costs) incurred by the Agent and any such other Lender preparing a
Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
ARTICLE 15
MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine
which rights and remedies are to be exercised and in which order. The exercise
of one right or remedy shall not preclude the exercise of any others, all of
which shall be cumulative. The Agent and the Lenders may, without limitation,
proceed directly against the Borrower to collect the Obligations without any
prior recourse to the Collateral, the Pledged Collateral or the Guarantor
Collateral. No failure to exercise and no delay in exercising, on the part of
the Agent or any Lender, any right, remedy, power or privilege
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hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege.
15.2 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
15.3 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE
CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE
OF ILLINOIS; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE AGENT AND THE
LENDERS CONSENT, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE AGENT
AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS. NOTHING CONTAINED HEREIN SHALL
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AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER
MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT
TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL AT THE REQUEST OF EITHER PARTY HERETO BE DETERMINED BY ARBITRATION.
The arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuant to a provisional or ancillary remedy shall not constitute a waiver
of the right of either party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for
judicial relief.
(e) Notwithstanding the provisions of (d) above, no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or related to an obligation to the Lender which is secured by
real estate property collateral (exclusive of real estate space lease
assignments). If all the parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in this Section 15.3(e).
(f) At the request of either party a controversy or claim
which is not submitted to arbitration as provided and limited in Section
15.3(d) and (e) shall be determined by judicial reference. If such an election
is made, the parties shall designate to the court a referee or referees
selected under the auspices of the AAA in the same manner as arbitrators are
selected in AAA-sponsored proceedings. The presiding referee of the panel, or
the referee if there is a single referee, shall be an active attorney or
retired judge. Judgment upon the award rendered by such referee or referees
shall be entered in the court in which such proceeding was commenced.
(g) No provision of Sections (d) through (g) shall limit
the right of the Agent or the Lenders to exercise self-help remedies such as
setoff, foreclosure against or sale of any real or personal property collateral
or security, or obtaining provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding. The exercise of a remedy does not waive the right of
either party to resort to arbitration or reference. At the Agent's option,
foreclosure under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by judicial
foreclosure.
15.4 Waiver of Jury Trial. (a) SUBJECT TO THE PROVISIONS OF
SECTION 15.3(d), THE BORROWER, THE LENDERS AND THE AGENT EACH WAIVE THEIR
RESPECTIVE
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RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE
LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) THE BORROWER AGREES THAT IT WILL NOT ASSERT AGAINST
AGENT OR ANY LENDER ANY CLAIM FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR
PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
15.5 Survival of Representations and Warranties. All of the
Borrower's representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
15.6 Other Security and Guaranties. The Agent, may, without notice
or demand and without affecting the Borrower's obligations hereunder, from time
to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
15.7 Fees and Expenses. The Borrower agrees to pay to the Agent,
for its benefit, on demand, all reasonable costs and expenses that Agent pays
or incurs in connection with the negotiation, preparation, consummation,
administration, enforcement, and termination of this Agreement, including,
without limitation: (a) Attorney Costs; (b) costs and expenses (including
attorneys' and paralegals' fees and disbursements which shall include the
allocated costs of Agent's in-house counsel fees and disbursements) for any
amendment, supplement, waiver, consent, or subsequent closing in connection
with the Loan Documents and the transactions contemplated
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thereby; (c) costs and expenses of lien and title searches and title insurance;
(d) taxes, fees and other charges for recording mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Agent's Liens (including costs and expenses paid or incurred by the
Agent in connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of the Borrower under the
Loan Documents that the Borrower fails to pay or take; (f) costs of appraisals,
inspections, and verifications of the Collateral, Pledged Collateral and
Guarantor Collateral, including, without limitation, travel, lodging, and meals
for inspections of the Collateral, Pledged Collateral and Guarantor Collateral,
and the Borrower's operations by the Agent's and each of the Lenders' agents
plus the Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $500 per day (or
portion thereof) for each agent or employee of the Agent with respect to each
field examination or audit); (g) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes; (h) costs and expenses of preserving and
protecting the Collateral, Pledged Collateral and Guarantor Collateral; and (i)
costs and expenses (including attorneys' and paralegals' fees and disbursements
which shall include the allocated cost of Agent's in-house counsel fees and
disbursements) paid or incurred to obtain payment of the Obligations, enforce
the Agent's Liens, sell or otherwise realize upon the Collateral, Pledged
Collateral or Guarantor Collateral, and otherwise enforce the provisions of the
Loan Documents, or to defend any claims made or threatened against the Agent or
any Lender arising out of the transactions contemplated hereby (including
without limitation, preparations for and consultations concerning any such
matters). The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the Borrower. All
of the foregoing costs and expenses shall be charged to the Borrower's Loan
Account as Revolving Loans as described in Section 4.7.
15.8 Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) days after it shall have been mailed by United
States mail, certified or registered, with postage prepaid, or (c) in the case
of notice by such a telecommunications device, when properly transmitted, in
each case addressed to the party to be notified as follows:
If to the Agent or to BABC:
BankAmerica Business Credit, Inc.
231 South LaSalle Street
16th Floor
Chicago, Illinois 60697
Attention: Portfolio Manager, LDM
Fax No.: (312) 974-8760
If to Borrower:
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LDM Technologies, Inc.
2500 Executive Hills Drive
Auburn Hills, MI 48326
Attention: Joseph E. Blake
Fax No.: (810) 858-2812
with copies to:
LDM Technologies, Inc.
2500 Executive Hills Drive
Auburn Hills, MI 48326
Attention: Gary E. Borushko
Fax No.: (810) 858-2812
LDM Technologies, Inc.
1250 Maplelawn
Troy, MI 48084
Attention: Joseph E. Blake
Fax No.: (810) 649-4001
Kerr, Russell and Weber, p.l.c.
Detroit Center
Suite 2500
500 Woodward Avenue
Detroit, MI 48226
Attention: Michael B. Lewis
Fax No.: (313) 961-0388
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 Waiver of Notices. Unless otherwise expressly provided
herein, the Borrower waives presentment, protest and notice of demand or
dishonor and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any and
all other notices to which it might otherwise be entitled. No notice to or
demand on the Borrower which the Agent or any Lender may elect to give shall
entitle the Borrower to any or further notice or demand in the same, similar or
other circumstances.
15.10 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors,
and assigns of the parties hereto; provided,
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however, that no interest herein may be assigned by the Borrower without prior
written consent of the Agent and each Lender. The rights and benefits of the
Agent and the Lenders hereunder shall, if such Persons so agree, inure to any
party acquiring any interest in the Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by the Borrower. The
Borrower agrees to defend indemnify and hold the Agent-Related Persons, and each
Lender and each of its respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Lender) be
imposed on, incurred by or asserted against any such Person in any way relating
to or arising out of this Agreement or any document contemplated by or referred
to herein, or the transactions contemplated hereby, or any action taken or
omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or arising out of
this Agreement or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
15.12 Final Agreement. This Agreement and the other Loan Documents are
intended by the Borrower, the Agent and the Lenders to be the final, complete,
and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof. No modification, rescission, waiver, release, or amendment of
any provision of this Agreement or any other Loan Document shall be made,
except by a written agreement signed by the Borrower and a duly authorized
officer of each of the Agent and the requisite Lenders.
15.13 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and the Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
15.14 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not
be construed to modify, enlarge, or restrict any provision.
15.15 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
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time held by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of the Borrower against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.
* * *
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<PAGE> 116
IN WITNESS WHEREOF, the parties have entered into this Agreement on the date
first above written.
"BORROWER"
LDM TECHNOLOGIES, INC.
By Joe Balous
--------------------------------
Title: Secretary
"AGENT"
BankAmerica Business Credit, Inc.,
as the Agent
By Daniel L. Cusley
--------------------------------
Title: SVP
"LENDERS"
Commitment: $45,000,000 BankAmerica Business Credit,
Inc., as a Lender
By Daniel L. Cusley
--------------------------------
Title: SVP
Total Commitment: $45,000,000
-108-
<PAGE> 1
EXHIBIT 10.3
BORROWER PLEDGE AND SECURITY AGREEMENT
This BORROWER PLEDGE AND SECURITY AGREEMENT, dated as of
January 22, 1997 (together with all amendments, if any, from time to time
hereto, this "Agreement") between LDM Technologies, Inc., a Michigan
corporation (the "Pledgor") in favor of BANKAMERICA BUSINESS CREDIT, INC. in
its capacity as Agent for the Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan and Security Agreement
dated as of the date hereof by and among the Pledgor, the Agent and the Persons
signatory thereto from time to time as Lenders (as from time to time amended,
restated, supplemented or otherwise modified (the "Loan and Security
Agreement") the Lenders have agreed to make Loans to, and incur Obligations
with respect to Letter of Credit issued for the benefit of, the Pledgor;
WHEREAS, the Pledgor is the record and beneficial owner of all
the shares of stock, membership interests or partnership units of each entity
(each, a "Pledged Entity") described in Part A of Schedule I hereto and the
owner of the promissory notes and instruments listed in Part B of Schedule I
hereto;
WHEREAS, the Pledgor benefits from the credit facilities made
available to the Pledgor through the Loan and Security Agreement;
WHEREAS, it is a condition to the making of Loans and the
incurrence of Obligations relating to the issuance of Letters of Credit under
the Loan and Security Agreement that the Pledgor shall have executed and
delivered this Agreement and granted the security interest contemplated hereby
to secure the obligations of the Pledgor under the Loan and Security Agreement
and the Loan Documents;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained and to induce Lenders to make Loans and to
incur Obligations relating to the issuance of Letter of Credit under the Loan
and Security Agreement, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms
defined in the Loan and Security Agreement are used herein as therein defined,
and the following shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):
"Bankruptcy Code" means title 11, United States Code, as amended from
time to time, and any successor statute thereto.
<PAGE> 2
"General Intangibles" means all of the Pledgor's now owned or hereafter
acquired general intangibles, choses in action and causes of action and
all other intangible personal property of the Pledgor of every kind and
nature, including, without limitation, all contract rights, partnership
or membership interests, corporate or other business records, with
respect to any Pledged Entity, excluding proceeds of key-man life
insurance on which the Pledgor is the beneficiary.
"Pledged Collateral" has the meaning assigned to such term in Section
2 hereof.
"Pledged Debt" means those promissory notes and instruments listed on
Part C of Schedule I hereto;
"Pledged Shares" means those shares listed on Part A of Schedule I
hereto.
"Secured Obligations" has the meaning assigned to such term in Section
3 hereof.
"Unobligated Shares" shall be those shares in an aggregate amount not
to exceed 35% of the issued and outstanding shares of stock of an
issuer not incorporated under the laws of the United States or any
state thereof.
2. Pledge. The Pledgor hereby pledges to the Agent, and
grants to the Agent for itself and the benefit of Lenders, a first priority
security interest in all of the following (collectively, the "Pledged
Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, distributions, cash, instruments
and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares;
(ii) such portion, as determined by the Agent as provided in
Section 6(d) below, of any additional shares of stock of a Pledged
Entity from time to time acquired by the Pledgor in any manner (which
shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares;
(iii) the Pledged Debt and the promissory notes or instruments
evidencing the Pledged Debt, and all interest, cash, instruments and
other property and assets from time to time received, receivable or
otherwise distributed in respect of the Pledged Debt;
(iv) all additional Debt arising after the date hereof and
owing to the Pledgor and evidenced by promissory notes or other
instruments, together with such promissory notes and instruments, and
all interest, cash, instruments and other
2
<PAGE> 3
(iv) any change in the authorized number of shares, the
stated capital or the authorized share capital of a Pledged Entity or
the issuance of any additional shares of its Stock, units or
interests; or
(v) the alteration of the voting rights with respect to
the Stock of a Pledged Entity; and
(b)(i) The Pledgor shall be entitled, from time to time, to
collect and receive for its own use all cash dividends, principal and
interest paid in respect of the Pledged Shares, the General Intangibles
and Pledged Debt to the extent not in violation of the Loan and Security
Agreement other than any and all: (A) dividends, distributions, principal
and interest paid or payable other than in cash in respect of any Pledged
Collateral, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral; (B) dividends and other distributions paid or payable in cash
in respect of any Pledged Shares or General Intangibles in connection with
a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in capital of a Pledged
Entity; and (C) cash paid, payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange for, any Pledged
Collateral, except to the extent permitted by the Loan and Security
Agreement; provided, however, that until actually paid all rights
to such distributions shall remain subject to the Lien created by this
Agreement; and
(ii) all dividends, distributions and interest (other than
such cash dividends, distributions and interest as are permitted to be
paid to the Pledgor in accordance with clause (i) above) and all other
distributions in respect of any of the Pledged Shares, General Intangibles
or Pledged Debt, whenever paid or made, shall be delivered to the Agent
to hold as Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, be segregated from the
other property or funds of the Pledgor, and be forthwith delivered to the
Agent as Pledged Collateral in the same form as so received (with any
necessary indorsement).
8. Defaults and Remedies.
(a) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, then on or at any time after such
declaration (provided that such declaration is not rescinded by the Agent)
and concurrently with written notice to the Pledgor, the Agent (personally
or through an agent) is hereby authorized and empowered to transfer and
register in its name or in the name of its nominee the whole or any part
of the Pledged Collateral, to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the voting and
all other rights as a stockholder with respect thereto, to collect and
receive all cash dividends, interest, principal and other distributions
made thereon, to sell in one or more sales after ten (10) days' notice of
the time and place of any public sale or of the time at which a private
sale is to take place (which notice the Pledgor agrees is commercially
reasonable) the whole or any part of the Pledged Collateral and to
otherwise act with respect
7
<PAGE> 4
to the Pledged Collateral as though the Agent was the outright owner
thereof, the Pledgor hereby irrevocably constituting and appointing the
Agent as the proxy and attorney-in-fact of the Pledgor, with full power of
substitution to do so, and which appointment shall remain in effect until
the Pledge Termination Date; provided, however, that Agent shall not have
any duty to exercise any such right or to preserve the same and shall
not be liable for any failure to do so or for any delay in doing so. Any
sale shall be made at a public or private sale at the Agent's place of
business, or at any place to be named in the notice of sale, either for
cash or upon credit or for future delivery at such price as the Agent may
deem fair, and the Agent may be the purchaser of the whole or any part of
the Pledged Collateral so sold and hold the same thereafter in its own
right free from any claim of the Pledgor or any right of redemption. Each
sale shall be made to the highest bidder, but the Agent reserves the right
to reject any and all bids at such sale which, in its discretion, it shall
deem inadequate. Demands of performance, except as otherwise herein
specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale hereunder may
be conducted by an auctioneer or any officer or agent of the Agent.
(b) If, at the original time or times appointed for the
sale of the whole or any part of the Pledged Collateral, the highest bid,
if there be but one sale, shall be inadequate to discharge in full all the
Secured Obligations, or if the Pledged Collateral be offered for sale in
lots, if at any of such sales, the highest bid for the lot offered for
sale would indicate to the Agent, in its discretion, that the proceeds of
the sales of the whole of the Pledged Collateral would be unlikely to be
sufficient to discharge all the Secured Obligations, the Agent may, on one
or more occasions and in its discretion, postpone any of said sales by
public announcement at the time of sale or the time of previous
postponement of sale, and no other notice of such postponement or
postponements of sale need be given, any other notice being hereby waived;
provided, however, that any sale or sales made after such postponement
shall be after ten (10) days' notice to the Pledgor.
(c) If, at any time when the Agent in its sole discretion
determines, following the occurrence and during the continuance of an Event of
Default, that, in connection with any actual or contemplated exercise of its
rights (when permitted under this Section 8) to sell the whole or any part of
the Pledged Shares hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the
Securities Act of 1933, as amended (or any similar statute then in effect) (the
"Act"), the Pledgor shall, in an expeditious manner, cause the Pledged Entities
to:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to the
Pledged Shares and in good faith use commercially reasonable efforts to
cause such registration statement to become and remain effective;
(ii) 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 keep such
registration statement effective and to comply with the provisions of the
Act with respect to the sale or other disposition of
8
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
LDM TECHNOLOGIES, INC.
By: /s/ Joe Balous
------------------------------
Name: Joe Balous
------------------------
Title: Secretary
-----------------------
Accepted and Acknowledged by:
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Daniel T. Cushing
----------------------------------
Name: Daniel T. Cushing
-------------------------
Title: Senior Vice President
------------------------
15
<PAGE> 6
SCHEDULE I
PART A
PLEDGED SHARES
<TABLE>
<CAPTION>
Class Number
of Stock/ of Shares/
Interests/ Stock Certificate Interests/ Percentage of
Pledged Entity Units Number(s) Units Outstanding Shares
-------------- ----------- ----------------- ---------- ------------------
<S> <C> <C> <C> <C>
LDM Holdings, L.L.C. 66.67%
LDM Canada Limited 97.00%
Partnership
</TABLE>
PART B
UNOBLIGATED SHARES
<TABLE>
<CAPTION>
Class Stock Certificate Number Percentage of
Pledged Entity of Stock Number(s) of Shares Outstanding Shares
-------------- -------- ----------------- --------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
PART C
PLEDGED DEBT
<TABLE>
<CAPTION>
Initial
Issuer Principal Amount Issue Date Maturity Date Interest Rate
------- ---------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
LDM Technologies Company $27,000,000 January 22, 1997 Demand 11%, subject
to adjustment
based upon
annual review.
</TABLE>
Pledged Debt is subordinated to the Secured Obligations.
<PAGE> 7
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ________________, ___ is
delivered pursuant to Section 6(d) of the Pledge Agreement referred to below.
The undersigned hereby certifies that the representations and warranties in
Section 5 of the Pledge Agreement are and continue to be true and correct,
both as to the promissory notes, instruments and shares pledged prior to this
Pledge Amendment and as to the promissory notes, instruments and shares pledged
pursuant to this Pledge Amendment. The undersigned further agrees that this
Pledge Amendment may be attached to that certain Pledge Agreement, dated
January __, 1997, between undersigned, as the Pledgor, and BankAmerica Business
Credit, Inc., as the Agent, and that the Pledged Shares and Pledged Debt listed
on this Pledge Amendment shall be and become a part of the Pledged Collateral
referred to in said Pledge Agreement and shall secure all Secured Obligations
referred to in said Pledge Agreement. The undersigned acknowledges that any
promissory notes, instruments or shares not included in the Pledged Collateral
at the discretion of the Agent may not otherwise be pledged or otherwise used
as security by the Pledgor.
LDM TECHNOLOGIES, INC.
By:_________________________________
Name: ___________________________
Title: __________________________
<TABLE>
<CAPTION>
Name and Class Certificate Number
Address of the Pledgor Pledged Entity of Stock Number(s) of Shares
- ---------------------- -------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
<CAPTION>
Initial
Issuer Principal Amount Issue Date Maturity Date Interest Rate
-------------- ---------------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 8
SCHEDULE III
ACKNOWLEDGMENT OF SECURITY INTEREST
[NAME OF PLEDGED ENTITY] (the "Company") hereby acknowledges
receipt of a copy of the assignment by LDM Technologies, Inc., (the "Pledgor")
of its interest under the [TITLE OF AGREEMENT] (the "Agreement") pursuant to
the terms of the Pledge and Security Agreement, dated as of January __, 1997
(the "Pledge Agreement"), between the Pledgor and BankAmerica Business Credit,
Inc., as Agent.
The undersigned hereby further confirms the registration of
the Pledgor's pledge of its interest in the Company to the Agent on the
Company's books.
The Company agrees that at any time prior to the Pledge
Termination Date (as defined in the Pledge Agreement), it will not take or
approve any action in furtherance of deeming the interests of the Company to be
an uncertificated "security" within the meaning of Section 8-103(c) of the
UCC (as defined in the Pledge Agreement) and that its membership or partnership
interest shall at all times be general intangibles under the UCC.
Dated:_______________________, 1997 [NAME OF PLEDGED ENTITY]
By:____________________________
Title:______________________
<PAGE> 9
LDM HOLDING PLEDGE AND SECURITY AGREEMENT
This LDM HOLDING PLEDGE AND SECURITY AGREEMENT, dated as of
January 22, 1997 (together with all amendments, if any, from time to time
hereto, this "Agreement") between LDM Holding Canada, Inc., a Michigan
corporation (the "Pledgor") in favor of BANKAMERICA BUSINESS CREDIT, INC. in
its capacity as Agent for the Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Guarantee, dated as of
January 22 , 1997 (the "LDM Holding Guarantee"), made by the Pledgor, the
Pledgor has provided a guarantee of the payment of the Obligations under the
Loan and Security Agreement dated as of January 22, 1997, by and among the
Pledgor, the Agent and the Persons signatory thereto from time to time as
Lenders (as from time to time amended, restated, supplemented or otherwise
modified (the "Loan and Security Agreement") the Lenders have agreed to make
Loans to, and incur Obligations with respect to Letter of Credit issued for the
benefit of, the Pledgor;
WHEREAS, the Pledgor is the record and beneficial owner of all
the shares of stock and membership interests of each entity (each, a "Pledged
Entity") described in Schedule I hereto;
WHEREAS, the Pledgor benefits from the credit facilities made
available to the Borrower through the Loan and Security Agreement;
WHEREAS, it is a condition to the making of Loans and the
incurrence of Obligations relating to the issuance of Letters of Credit under
the Loan and Security Agreement that the Pledgor shall have executed and
delivered this Agreement and granted the security interest contemplated hereby
to secure the obligations of the Pledgor under the LDM Holding Guarantee;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained and to induce Lenders to make Loans and to
incur Obligations relating to the issuance of Letter of Credit under the Loan
and Security Agreement, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms
defined in the Loan and Security Agreement are used herein as therein defined,
and the following shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):
"Bankruptcy Code" means title 11, United States Code, as
amended from time to time, and any successor statute thereto.
"General Intangibles" means all of the Pledgor's now owned or
hereafter acquired general intangibles, choses in action and causes
of action and all other intangible personal
<PAGE> 10
property of the Pledgor of every kind and nature, including, without
limitation, all contract rights, membership interests, corporate or
other business records, with respect to any Pledged Entity.
"Pledged Collateral" has the meaning assigned to such term in
Section 2 hereof.
"Pledged Shares" means those shares listed on Schedule I
hereto.
"Secured Obligations" has the meaning assigned to such term
in Section 3 hereof.
2. Pledge. The Pledgor hereby pledges to the Agent, and
grants to the Agent for itself and the benefit of Lenders, a first priority
security interest in all of the following (collectively, the "Pledged
Collateral"):
(i) the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends,
distributions, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
Pledged Shares;
(ii) such portion, as determined by the Agent as
provided in Section 6(d) below, of any additional shares of
stock of a Pledged Entity from time to time acquired by the
Pledgor in any manner (which shares shall be deemed to be part
of the Pledged Shares), and the certificates representing such
additional shares, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares; and
(iii) all General Intangibles.
3. Security for Obligations. This Agreement secures,
and the Pledged Collateral is security for, the prompt payment in full when
due, whether at stated maturity, by acceleration or otherwise, and performance
of all Obligations of any kind of the Pledgor under or in connection with the
Loan and Security Agreement and the other Loan Documents and all obligations of
the Pledgor now or hereafter existing under this Agreement including, without
limitation, all fees, costs and expenses whether in connection with collection
actions hereunder or otherwise (collectively, the "Secured Obligations").
4. Delivery of Pledged Collateral. All certificates
representing or evidencing the Pledged Shares shall be delivered to and held by
or on behalf of the Agent, for itself and the benefit of Lenders, pursuant
hereto. All pledged shares shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Agent. An acknowledgment of security interest in the form of Schedule III
hereto from each Pledged Entity the ownership interests of which are
uncertificated shall have been delivered to the Agent.
2
<PAGE> 11
5. Representations and Warranties. The Pledgor
represents and warrants to the Agent that:
(a) The Pledgor is, and at the time of delivery
of the Pledged Shares to the Agent will be, the sole holder of record
and the sole beneficial owner of such Pledged Collateral pledged by
the Pledgor free and clear of any Lien thereon or affecting the title
thereto, except for any Lien created by this Agreement;
(b) All of the Pledged Shares have been duly
authorized, validly issued and are fully paid and non-assessable;
(c) The Pledgor has the right and requisite
authority to pledge, assign, transfer, deliver, deposit and set over
the Pledged Collateral pledged by the Pledgor to the Agent as
provided herein;
(d) None of the Pledged Shares has been issued or
transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance
or transfer may be subject;
(e) All of the Pledged Shares are presently owned
by the Pledgor, and are presently represented by the stock
certificates listed on Schedule I hereto. All of the General
Intangibles are presently owned by the Pledgor, and are presently
uncertificated. As of the date hereof, there are no existing options,
warrants, calls or commitments of any character whatsoever relating to
the Pledged Shares or the General Intangibles;
(f) No consent, approval, authorization or other
order of any Person and no consent, authorization, approval, or other
action by, and no notice to or filing with, any governmental authority
is required (i) for the pledge by the Pledgor of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery
or performance of this Agreement by the Pledgor, or (ii) for the
exercise by the Agent of the voting or other rights provided for in
this Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of
securities generally;
(g) The pledge, assignment and delivery of the
Pledged Collateral pursuant to this Agreement, together with the
relevant filings or recordings (which filings and recordings have been
made), will create a valid first priority Lien on and a first priority
perfected security interest in the Pledged Collateral pledged by the
Pledgor, and the proceeds thereof, securing the payment of the Secured
Obligations, subject to no other Lien or security interest;
(h) This Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes a legal, valid
and binding obligation of the Pledgor enforceable in accordance with
its terms;
3
<PAGE> 12
(i) The Pledged Shares constitute 1% of the
issued and outstanding shares of stock of the issuer thereof.
(j) The limited liability company agreement
delivered to the Agent is an original signed counterpart (or a copy
thereof) of the complete and entire agreement in effect on the date
hereof;
(k) The limited liability company agreement is
the legal, valid and binding obligation of the parties thereto,
enforceable in accordance with its terms and, together with this
Agreement, contains the entire agreement between the Pledgor relating
to the subject matter hereof. The Pledgor is not in default in the
payment of any portion of any mandatory capital contribution, if any,
required to be made under the limited liability company agreement, and
the Pledgor is not in violation of any other material provisions of
such agreement, or otherwise in default or violation thereunder. At
no time in the past has the Pledgor been in default for the payment of
any portion of a mandatory capital contribution or in violation of any
other material provisions of the limited liability company agreement,
or otherwise in default or violation thereunder other than those which
have been cured or waived prior to the date of this Agreement. No
General Intangible is subject to any defense, offset or counterclaim,
nor have any of the foregoing been asserted or alleged against the
Pledgor by any Person with respect thereto. As of the Closing Date,
there are no certificates, instruments, documents or other writings
(other than the limited liability company agreement delivered to the
Agent on the Closing Date) which evidence any General Intangible of
the Pledgor;
(l) The Pledgor shall not withdraw as a
shareholder or member of any Pledged Entity, or file or pursue to take
any action which may, directly or indirectly, cause a dissolution or
liquidation of or with respect to any Pledge Entity or seek a
partition of any property of any Pledged Entity; and
(m) An acknowledgment in the form set forth on
Schedule III attached hereto and by this reference made a part hereof
(such notice, the "Acknowledgment"), appropriately completed,
notifying each Pledged Entity, the ownership interests of which are
not uncertificated securities, of the existence of this Agreement and
a certified copy of this Agreement has been delivered by the Pledgor
to such Pledged Entity.
The representations and warranties set forth in this Section 5
shall survive the execution and delivery of this Agreement.
6. Covenants. The Pledgor covenants and agrees that
until the Pledge Termination Date (as defined in Section 11):
(a) Without the prior written consent of the
Agent, the Pledgor will not sell, assign, transfer, pledge, or
otherwise encumber any of its rights in or to the Pledged Collateral,
or any unpaid dividends or other distributions or payments with
respect to the
4
<PAGE> 13
Pledged Collateral or grant a Lien in the Pledged Collateral, unless
otherwise expressly permitted by the Loan and Security Agreement;
(b) The Pledgor will, at its expense, promptly
execute, acknowledge and deliver all such instruments and take all
such actions as the Agent from time to time may request in order to
ensure to the Agent and Lenders the benefits of the Liens in and to
the Pledged Collateral intended to be created by this Agreement,
including the filing of any necessary UCC financing statements, which
may be filed by the Agent with or (to the extent permitted by law)
without the signature of the Pledgor, and will cooperate with the
Agent, at the Pledgor's expense, in obtaining all necessary approvals
and making all necessary filings under federal or state law in
connection with such Liens or any sale or transfer of the Pledged
Collateral;
(c) The Pledgor has and will defend the title to
the Pledged Collateral and the Liens of the Agent in the Pledged
Collateral against the claim of any Person and will maintain and
preserve such Liens;
(d) The Pledgor will, upon obtaining any
additional shares of stock of a Pledged Entity, which shares are not
already Pledged Collateral, promptly (and in any event within three
(3) Business Days) deliver to the Agent a Pledge Amendment, duly
executed by the Pledgor, in substantially the form of Schedule II
hereto (a "Pledge Amendment") in respect of any such additional shares
pursuant to which the Pledgor shall pledge to the Agent all in the of
such additional shares. The Pledgor hereby authorizes the Agent to
attach each Pledge Amendment to this Agreement and agrees that all
Pledged Shares listed on any Pledge Amendment delivered to the Agent
shall for all purposes hereunder be considered Pledged Collateral; and
(e) The Pledgor shall not permit any Pledged
Entity to declare any General Intangible to be classified as an
uncertificated "security" within the meaning of Section 8-103(c) of
the UCC.
7. The Pledgor's Rights. As long as no Default or Event
of Default shall have occurred and be continuing and until written notice shall
be given to the Pledgor in accordance with Section 8(a) hereof:
(a) The Pledgor shall have the right, from time
to time, to vote and give consents with respect to the Pledged
Collateral or any part thereof for all purposes not inconsistent with
the provisions of this Agreement, the Loan and Security Agreement or
any other Loan Document; provided, however, that no vote shall be
cast, and no consent shall be given or action taken, which would have
the effect of impairing the position or interest of the Agent in
respect of the Pledged Collateral or which would authorize or effect
(unless and to the extent expressly permitted by the Loan and Security
Agreement):
(i) the dissolution or liquidation, in
whole or in part, of a Pledged Entity;
5
<PAGE> 14
(ii) the consolidation or merger of a
Pledged Entity with any other Person;
(iii) the sale, disposition or
encumbrance of all or substantially all of the assets of a
Pledged Entity, except for Liens in favor of the Agent;
(iv) any change in the authorized
number of shares, the stated capital or the authorized share
capital of a Pledged Entity or the issuance of any additional
shares of its Stock or interests; or
(v) the alteration of the voting rights
with respect to the Stock of a Pledged Entity; and
(b)(i) The Pledgor shall be entitled, from time to
time, to collect and receive for its own use all cash dividends and
distributions paid in respect of the Pledged Shares and the General
Intangibles to the extent not in violation of the Loan and Security
Agreement other than any and all: (A) dividends and distributions paid
or payable other than in cash in respect of any Pledged Collateral,
and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Shares or General Intangibles in connection
with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in capital of a
Pledged Entity; and (C) cash paid, payable or otherwise distributed or
in redemption of, or in exchange for, any Pledged Collateral;
provided, however, that until actually paid all rights to such
distributions shall remain subject to the Lien created by this
Agreement; and
(ii) all dividends and distributions (other than
such cash dividends and distributions as are permitted to be paid to
the Pledgor in accordance with clause (i) above) and all other
distributions in respect of any of the Pledged Shares or General
Intangibles, whenever paid or made, shall be delivered to the Agent to
hold as Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, be segregated from the
other property or funds of the Pledgor, and be forthwith delivered to
the Agent as Pledged Collateral in the same form as so received (with
any necessary indorsement).
8. Defaults and Remedies.
(a) Upon the occurrence of an Event of Default and
during the continuation of such Event of Default, then on or at any
time after such declaration (provided that such declaration is not
rescinded by the Agent) and concurrently with written notice to the
Pledgor, the Agent (personally or through an agent) is hereby
authorized and empowered to transfer and register in its name or in
the name of its nominee the whole or any part of the Pledged
Collateral, to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations, to exercise the voting and all other
rights as a stockholder with respect thereto, to collect and
6
<PAGE> 15
receive all cash dividends, interest, principal and other
distributions made thereon, to sell in one or more sales after ten
(10) days' notice of the time and place of any public sale or of the
time at which a private sale is to take place (which notice the
Pledgor agrees is commercially reasonable) the whole or any part of
the Pledged Collateral and to otherwise act with respect to the
Pledged Collateral as though the Agent was the outright owner thereof,
the Pledgor hereby irrevocably constituting and appointing the Agent
as the proxy and attorney-in-fact of the Pledgor, with full power of
substitution to do so, and which appointment shall remain in effect
until the Pledge Termination Date; provided, however, that Agent shall
not have any duty to exercise any such right or to preserve the same
and shall not be liable for any failure to do so or for any delay in
doing so. Any sale shall be made at a public or private sale at the
Agent's place of business, or at any place to be named in the notice
of sale, either for cash or upon credit or for future delivery at such
price as the Agent may deem fair, and the Agent may be the purchaser
of the whole or any part of the Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of the
Pledgor or any right of redemption. Each sale shall be made to the
highest bidder, but the Agent reserves the right to reject any and all
bids at such sale which, in its discretion, it shall deem inadequate.
Demands of performance, except as otherwise herein specifically
provided for, notices of sale, advertisements and the presence of
property at sale are hereby waived and any sale hereunder may be
conducted by an auctioneer or any officer or agent of the Agent.
(b) If, at the original time or times appointed
for the sale of the whole or any part of the Pledged Collateral, the
highest bid, if there be but one sale, shall be inadequate to
discharge in full all the Secured Obligations, or if the Pledged
Collateral be offered for sale in lots, if at any of such sales, the
highest bid for the lot offered for sale would indicate to the Agent,
in its discretion, that the proceeds of the sales of the whole of the
Pledged Collateral would be unlikely to be sufficient to discharge all
the Secured Obligations, the Agent may, on one or more occasions and
in its discretion, postpone any of said sales by public announcement
at the time of sale or the time of previous postponement of sale, and
no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided, however, that
any sale or sales made after such postponement shall be after ten (10)
days' notice to the Pledgor.
(c) If, at any time when the Agent in its sole
discretion determines, following the occurrence and during the
continuance of an Event of Default, that, in connection with any
actual or contemplated exercise of its rights (when permitted under
this Section 8) to sell the whole or any part of the Pledged Shares
hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the
Securities Act of 1933, as amended (or any similar statute then in
effect) (the "Act"), the Pledgor shall, in an expeditious manner,
cause the Pledged Entities to:
(i) Prepare and file with the
Securities and Exchange Commission (the " Commission") a
registration statement with respect to the Pledged Shares and
in good faith use commercially reasonable efforts to cause
such registration statement to become and remain effective;
7
<PAGE> 16
(ii) 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 keep such registration
statement effective and to comply with the provisions of the
Act with respect to the sale or other disposition of the
Pledged Shares covered by such registration statement whenever
the Agent shall desire to sell or otherwise dispose of the
Pledged Shares;
(iii) Furnish to the Agent such numbers
of copies of a prospectus and a preliminary prospectus, in
conformity with the requirements of the Act, and such other
documents as the Agent may request in order to facilitate the
public sale or other disposition of the Pledged Shares by the
Agent;
(iv) Use commercially reasonable
efforts to register or qualify the Pledged Shares covered by
such registration statement under such other securities or
blue sky laws of such jurisdictions within the United States
and Puerto Rico as the Agent shall request, and do such other
reasonable acts and things as may be required of it to enable
the Agent to consummate the public sale or other disposition
in such jurisdictions of the Pledged Shares by the Agent;
(v) Furnish, at the request of the
Agent, on the date that shares of the Pledged Collateral are
delivered to the underwriters for sale pursuant to such
registration or, if the security is not being sold through
underwriters, on the date that the registration statement with
respect to such Pledged Shares becomes effective, (A) an
opinion, dated such date, of the independent counsel
representing such registrant for the purposes of such
registration, addressed to the underwriters, if any, and in
the event the Pledged Shares are not being sold through
underwriters, then to the Agent, in customary form and
covering matters of the type customarily covered in such legal
opinions; and (B) a comfort letter, dated such date, from the
independent certified public accountants of such registrant,
addressed to the underwriters, if any, and in the event the
Pledged Shares are not being sold through underwriters, then
to the Agent, in a customary form and covering matters of the
type customarily covered by such comfort letters and as the
underwriters or the Agent shall reasonably request. The
opinion of counsel referred to above shall additionally cover
such other legal matters with respect to the registration in
respect of which such opinion is being given as the Agent may
reasonably request. The letter referred to above from the
independent certified public accountants shall additionally
cover such other financial matters (including information as
to the period ending not more than five (5) Business Days
prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as
the Agent may reasonably request; and
(vi) Otherwise use commercially
reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable but not
later than 18 months after the effective
8
<PAGE> 17
date of the registration statement, an earnings statement
covering the period of at least 12 months beginning with the
first full month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(d) All expenses incurred in complying with
Section 8(c) hereof, including, without limitation, all registration
and filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), printing expenses,
fees and disbursements of counsel for the registrant, the fees and
expenses of counsel for the Agent, expenses of the independent
certified public accountants (including any special audits incident to
or required by any such registration) and expenses of complying with
the securities or blue sky laws or any jurisdictions, shall be paid by
the Pledgor.
(e) If, at any time when the Agent shall
determine to exercise its right to sell the whole or any part of the
Pledged Collateral hereunder, such Pledged Collateral or the part
thereof to be sold shall not, for any reason whatsoever, be
effectively registered under the Act, the Agent may, in its discretion
(subject only to applicable requirements of law), sell such Pledged
Collateral or part thereof by private sale in such manner and under
such circumstances as the Agent may deem necessary or advisable, but
subject to the other requirements of this Section 8, and shall not be
required to effect such registration or to cause the same to be
effected. Without limiting the generality of the foregoing, in any
such event, the Agent in its discretion (x) may, in accordance with
applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall
have been filed under said Act (or similar statute), (y) may approach
and negotiate with a single possible purchaser to effect such sale,
and (z) may restrict such sale to a purchaser who is an accredited
investor under the Act and who will represent and agree that such
purchaser is purchasing for its own account, for investment and not
with a view to the distribution or sale of such Pledged Collateral or
any part thereof. In addition to a private sale as provided above in
this Section 8, if any of the Pledged Collateral shall not be freely
distributable to the public without registration under the Act (or
similar statute) at the time of any proposed sale pursuant to this
Section 8, then the Agent shall not be required to effect such
registration or cause the same to be effected but, in its discretion
(subject only to applicable requirements of law), may require that any
sale hereunder (including a sale at auction) be conducted subject to
restrictions:
(i) as to the financial sophistication and
ability of any Person permitted to bid or purchase at any such
sale;
(ii) as to the content of legends to be
placed upon any certificates representing the Pledged
Collateral sold in such sale, including restrictions on future
transfer thereof;
(iii) as to the representations required to
be made by each Person bidding or purchasing at such sale
relating to that Person's access to financial information
about the Pledgor and such Person's intentions as to the
holding of the
9
<PAGE> 18
Pledged Collateral so sold for investment for its own account
and not with a view to the distribution thereof; and
(iv) as to such other matters as the Agent
may, in its discretion, deem necessary or appropriate in order
that such sale (notwithstanding any failure so to register)
may be effected in compliance with the Bankruptcy Code and
other laws affecting the enforcement of creditors' rights and
the Act and all applicable state securities laws.
(f) The Pledgor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Collateral
and may be compelled to resort to one or more private sales thereof in
accordance with clause (e) above. The Pledgor also acknowledges that
any such private sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable
manner solely by virtue of such sale being private. The Agent shall
be under no obligation to delay a sale of any of the Pledged
Collateral for the period of time necessary to permit the Pledged
Entity to register such securities for public sale under the Act, or
under applicable state securities laws, even if the Pledgor and the
Pledged Entity would agree to do so.
(g) The Pledgor agrees to the maximum extent
permitted by applicable law that following the occurrence and during
the continuance of an Event of Default it will not at any time plead,
claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force in
order to prevent or delay the enforcement of this Agreement, or the
absolute sale of the whole or any part of the Pledged Collateral or
the possession thereof by any purchaser at any sale hereunder, and the
Pledgor waives the benefit of all such laws to the extent it lawfully
may do so. The Pledgor agrees that it will not interfere with any
right, power and remedy of the Agent provided for in this Agreement or
now or hereafter existing at law or in equity or by statute or
otherwise, or the exercise or beginning of the exercise by the Agent
of any one or more of such rights, powers or remedies. No failure or
delay on the part of the Agent to exercise any such right, power or
remedy and no notice or demand which may be given to or made upon the
Pledgor by the Agent with respect to any such remedies shall operate
as a waiver thereof, or limit or impair the Agent's right to take any
action or to exercise any power or remedy hereunder, without notice or
demand, or prejudice its rights as against the Pledgor in any respect.
(h) The Pledgor further agrees that a breach of
any of the covenants contained in this Section 8 will cause
irreparable injury to the Agent, that the Agent shall have no adequate
remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 8 shall be
specifically enforceable against the Pledgor, and the Pledgor hereby
waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that the
Secured Obligations are not then due and payable in accordance with
the agreements and instruments governing and evidencing such
obligations.
10
<PAGE> 19
9. Waiver. No delay on the Agent's part in exercising
any power of sale, Lien, option or other right hereunder, and no notice or
demand which may be given to or made upon the Pledgor by the Agent with respect
to any power of sale, Lien, option or other right hereunder, shall constitute a
waiver thereof, or limit or impair the Agent's right to take any action or to
exercise any power of sale, Lien, option, or any other right hereunder, without
notice or demand, or prejudice the Agent's rights as against the Pledgor in any
respect.
10. Assignment. The Agent may assign, indorse or
transfer any instrument evidencing all or any part of the Secured Obligations
as provided in, and in accordance with, the Loan and Security Agreement, and
the holder of such instrument shall be entitled to the benefits of this
Agreement.
11. Termination. Immediately following the payment in
full, in cash of all Secured Obligations on or after the Termination Date (as
defined in the Loan and Security Agreement) (the "Pledge Termination Date"),
the Agent shall deliver to the Pledgor the Pledged Collateral pledged by the
Pledgor at the time subject to this Agreement and all instruments of assignment
executed in connection therewith, free and clear of the Liens hereof and,
except as otherwise provided herein, all of the Pledgor's obligations hereunder
shall at such time terminate.
12. Lien Absolute. All rights of the Agent hereunder,
and all obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the
Loan and Security Agreement, any other Loan Document or any other
agreement or instrument governing or evidencing any Secured
Obligations;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any part of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from the Loan and Security Agreement, any other Loan
Document or any other agreement or instrument governing or evidencing
any Secured Obligations;
(c) any exchange, release or non-perfection of
any other Collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Secured
Obligations; or
(d) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor.
13. Release. Pledgor consents and agrees that the Agent
may at any time, or from time to time, in its discretion:
(a) renew, extend or change the time of payment,
and/or the manner, place or terms of payment of all or any part of the
Secured Obligations; and
11
<PAGE> 20
(b) exchange, release and/or surrender all or any of
the Collateral (including the Pledged Collateral), or any part
thereof, by whomsoever deposited, which is now or may hereafter be
held by the Agent in connection with all or any of the Secured
Obligations; all in such manner and upon such terms as the Agent may
deem proper, and without notice to or further assent from the Pledgor,
it being hereby agreed that the Pledgor shall be and remain bound upon
this Agreement, irrespective of the value or condition of any of the
Collateral, and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, renewal or extension, and
notwithstanding also that the Secured Obligations may, at any time,
exceed the aggregate principal amount thereof set forth in the Loan
and Security Agreement, or any other agreement governing any Secured
Obligations. The Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of
dishonor of any and all of the Secured Obligations, and promptness in
commencing suit against any party hereto or liable hereon, and in
giving any notice to or of making any claim or demand hereunder upon
the Pledgor. No act or omission of any kind on the Agent's part shall
in any event affect or impair this Agreement.
14. Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against the Pledgor or any Pledged Entity for liquidation or reorganization,
should the Pledgor or any Pledged Entity become insolvent or make an assignment
for the benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of the Pledgor's or a Pledged Entity's assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Secured Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference", "fraudulent conveyance", or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
15. Miscellaneous.
(a) The Agent may execute any of its duties
hereunder by or through agents or employees and shall be entitled to
advice of counsel concerning all matters pertaining to its duties
hereunder.
(b) The Pledgor agrees to promptly reimburse
Agent for actual out-of-pocket expenses, including, without
limitation, reasonable counsel fees, incurred by Agent in connection
with the administration and enforcement of this Agreement.
(c) Neither the Agent, nor any of its respective
officers, directors, employees, agents or counsel shall be liable for
any action lawfully taken or omitted to be taken by it or them
hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct.
12
<PAGE> 21
(d) THIS AGREEMENT SHALL BE BINDING UPON THE
PLEDGOR AND ITS SUCCESSORS AND ASSIGNS (INCLUDING A
DEBTOR-IN-POSSESSION ON BEHALF OF THE PLEDGOR), AND SHALL INURE TO THE
BENEFIT OF, AND BE ENFORCEABLE BY, THE AGENT AND ITS SUCCESSORS AND
ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR
PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR
AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF THE AGENT
AND THE PLEDGOR.
16. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or effect those
portions of this Agreement which are valid.
17. Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give or serve upon any other a communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and either shall be delivered in person
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by facsimile transmission and confirmed by facsimile transmission
answer back addressed (x) in the case of the Pledgor, LDM Holding Canada, Inc.,
LDM Technologies, Inc., 2500 Executive Hills Drive, Auburn Hills, Michigan
48326, Attention: Joseph E. Blake, Fax No.: (810) 858-2812, Tel. No.: (810)
858-2800, and (y) in the case of the Agent and the Lenders, as provided in
Section 15.8 of the Loan and Security Agreement, or at such other address as
may be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party entitled to
receive such notice. Every notice, demand, request, consent, approval,
declaration or other communication hereunder shall be deemed to have been duly
given or served on the date on which personally delivered, transmitted and
confirmed by facsimile transmission answerback or three (3) Business Days after
the same shall have been deposited in the United States mail. Failure or delay
in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
18. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
19. Counterparts. This Agreement may be executed in any
number of counterparts, which shall, collectively and separately, constitute
one agreement.
20. Benefit of Lenders. All security interests granted
or contemplated hereby shall be for the benefit of the Agent and Lenders, and
all proceeds or payments realized from the
13
<PAGE> 22
Pledged Collateral in accordance herewith shall be applied to the Obligations
in accordance with the terms of the Loan and Security Agreement.
* * *
14
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
LDM HOLDING CANADA, INC.
By: /s/ Joe Balous
---------------------------------
Name: Joe Balous
---------------------------
Title: Secretary
--------------------------
Accepted and Acknowledged by:
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Daniel T. Cushing
----------------------------------
Name: Daniel T. Cushing
----------------------------
Title: Senior Vice President
---------------------------
15
<PAGE> 24
SCHEDULE I
PART A
PLEDGED SHARES
<TABLE>
<CAPTION>
Class Number
of Stock/ Stock Certificate of Shares/ Percentage of
Pledged Entity Interests Number(s) Interests Outstanding Shares
- -------------- --------- ----------------- ---------- ------------------
<S> <C> <C> <C> <C>
LDM Technologies Company Common 2 100 1%
LDM Holdings, L.L.C. 33.33%
</TABLE>
<PAGE> 25
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, _____ is delivered pursuant
to Section 6(d) of the Pledge Agreement referred to below. The undersigned
hereby certifies that the representations and warranties in Section 5 of the
Pledge Agreement are and continue to be true and correct, both as to the
promissory notes, instruments and shares pledged prior to this Pledge Amendment
and as to the promissory notes, instruments and shares pledged pursuant to this
Pledge Amendment. The undersigned further agrees that this Pledge Amendment may
be attached to that certain Pledge Agreement, dated January ___, 1997, between
undersigned, as the Pledgor, and BankAmerica Business Credit, Inc., as the
Agent, and that the Pledged Shares and Pledged Debt listed on this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said Pledge Agreement and shall secure all Secured Obligations referred to in
said Pledge Agreement. The undersigned acknowledges that any promissory notes,
instruments or shares not included in the Pledged Collateral at the discretion
of the Agent may not otherwise be pledged or otherwise used as security by the
Pledgor.
LDM HOLDING CANADA, INC.
By:
---------------------------
Name:
---------------------
Title:
--------------------
<TABLE>
<CAPTION>
Name and Class Certificate Number
Address of the Pledgor Pledged Entity of Stock Number(s) of Shares
- ---------------------- -------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 26
SCHEDULE III
ACKNOWLEDGMENT OF SECURITY INTEREST
[NAME OF PLEDGED ENTITY] (the "Company") hereby acknowledges receipt of
a copy of the assignment by LDM Holding Canada, Inc., (the "Pledgor") of its
interest under the [TITLE OF AGREEMENT] (the "Agreement") pursuant to the terms
of the Pledge and Security Agreement, dated as of January __, 1997 (the "Pledge
Agreement"), between the Pledgor and BankAmerica Business Credit, Inc., as
Agent.
The undersigned hereby further confirms the registration of the
Pledgor's pledge of its interest in the Company to the Agent on the Company's
books.
The Company agrees that at any time prior to the Pledge Termination
Date (as defined in the Pledge Agreement), it will not take or approve any
action in furtherance of deeming the interests of the Company to be
uncertificated "security" within the meaning of Section 8-103(c) of the UCC (as
defined in the Pledge Agreement) and that its membership or partnership
interest shall at all times be general intangibles under the UCC.
Dated: , 1997 [NAME OF PLEDGED ENTITY]
-------------- --
By:
--------------------------
Title:
-------------------
<PAGE> 27
LDM LLC PLEDGE AND SECURITY AGREEMENT
This LDM LLC PLEDGE AND SECURITY AGREEMENT, dated as of January 22, 1997
(together with all amendments, if any, from time to time hereto, this
"Agreement") between LDM HOLDINGS, L.L.C., a Michigan limited liability company
(the "Pledgor") in favor of BANKAMERICA BUSINESS CREDIT, INC. in its capacity
as Agent for the Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Guarantee, dated as of January 22, 1997
(the "LDM LLC Guarantee"), made by the Pledgor, the Pledgor has provided a
guarantee of the payment of the Obligations under the Loan and Security
Agreement dated as of January 22, 1997, by and among the Pledgor, the Agent and
the Persons signatory thereto from time to time as Lenders (as from time to
time amended, restated, supplemented or otherwise modified (the "Loan and
Security Agreement") the Lenders have agreed to make Loans to, and incur
Obligations with respect to Letter of Credit issued for the benefit of, the
Pledgor;
WHEREAS, the Pledgor is the record and beneficial owner of all the
partnership interests of the entity (the "Pledged Entity") described in
Schedule I hereto;
WHEREAS, the Pledgor benefits from the credit facilities made available to
the Borrower through the Loan and Security Agreement;
WHEREAS, it is a condition to the making of Loans and the incurrence of
Obligations relating to the issuance of Letters of Credit under the Loan and
Security Agreement that the Pledgor shall have executed and delivered this
Agreement and granted the security interest contemplated hereby to secure the
obligations of the Pledgor under the LDM LLC Guarantee;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce Lenders to make Loans and to incur
Obligations relating to the issuance of Letter of Credit under the Loan and
Security Agreement, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the
Loan and Security Agreement are used herein as therein defined, and the
following shall have (unless otherwise provided elsewhere in this Agreement)
the following respective meanings (such meanings being equally applicable to
both the singular and plural form of the terms defined):
"Bankruptcy Code" means title 11, United States Code, as amended
from time to time, and any successor statute thereto.
"General Intangibles" means all of the Pledgor's now owned or
hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of the Pledgor of every
kind and nature, including, without limitation, all contract
<PAGE> 28
rights, partnership interests, corporate or other business records, with
respect to the Pledged Entity.
"Pledged Collateral" has the meaning assigned to such term in
Section 2 hereof.
"Secured Obligations" has the meaning assigned to such term in
Section 3 hereof.
2. Pledge. The Pledgor hereby pledges to the Agent, and grants to the
Agent for itself and the benefit of Lenders, a first priority security interest
in all of the General Intangibles (collectively, the "Pledged Collateral").
3. Security for Obligations. This Agreement secures, and the Pledged
Collateral is security for, the prompt payment in full when due, whether at
stated maturity, by acceleration or otherwise, and performance of all
Obligations of any kind of the Pledgor under or in connection with the Loan and
Security Agreement and the other Loan Documents and all obligations of the
Pledgor now or hereafter existing under this Agreement including, without
limitation, all fees, costs and expenses whether in connection with collection
actions hereunder or otherwise (collectively, the "Secured Obligations").
4. Delivery of Pledged Collateral. An acknowledgment of security interest
in the form of Schedule III hereto from the Pledged Entity the ownership
interests of which are uncertificated shall have been delivered to the Agent.
5. Representations and Warranties. The Pledgor represents and warrants to
the Agent that:
(a) The Pledgor is the sole holder of record and the sole beneficial
owner of such Pledged Collateral pledged by the Pledgor free and clear of
any Lien thereon or affecting the title thereto, except for any Lien
created by this Agreement;
(b) The Pledgor has the right and requisite authority to pledge,
assign, transfer, deliver, deposit and set over the Pledged Collateral
pledged by the Pledgor to the Agent as provided herein;
(c) All of the General Intangibles are presently owned by the
Pledgor, and are presently uncertificated. As of the date hereof, there
are no existing options, warrants, calls or commitments of any character
whatsoever relating to the General Intangibles;
(d) No consent, approval, authorization or other order of any Person
and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required (i) for
the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by the Pledgor, or (ii) for the exercise by the Agent of the voting or
other rights provided for in this Agreement or the remedies in respect of
the Pledged Collateral pursuant to this
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<PAGE> 29
Agreement, except as may be required in connection with such disposition
by laws affecting the offering and sale of securities generally;
(e) The pledge, assignment and delivery of the Pledged Collateral
pursuant to this Agreement, together with the relevant filings or
recordings (which filings and recordings have been made), will create a
valid first priority Lien on and a first priority perfected security
interest in the Pledged Collateral pledged by the Pledgor, and the
proceeds thereof, securing the payment of the Secured Obligations,
subject to no other Lien or security interest;
(f) This Agreement has been duly authorized, executed and delivered
by the Pledgor and constitutes a legal, valid and binding obligation of
the Pledgor enforceable in accordance with its terms;
(g) The limited partnership agreement delivered to the Agent is an
original signed counterpart (or a copy thereof) of the complete and
entire agreement in effect on the date hereof;
(h) The limited partnership agreement is the legal, valid and
binding obligation of the parties thereto, enforceable in accordance with
its terms and, together with this Agreement, contains the entire
agreement between the Pledgor relating to the subject matter hereof. The
Pledgor is not in default in the payment of any portion of any mandatory
capital contribution, if any, required to be made under the limited
partnership agreement, and the Pledgor is not in violation of any other
material provisions of such agreement, or otherwise in default or
violation thereunder. At no time in the past has the Pledgor been in
default for the payment of any portion of a mandatory capital
contribution or in violation of any other material provisions of the
limited partnership agreement, or otherwise in default or violation
thereunder other than those which have been cured or waived prior to the
date of this Agreement. No General Intangible is subject to any defense,
offset or counterclaim, nor have any of the foregoing been asserted or
alleged against the Pledgor by any Person with respect thereto. As of
the Closing Date, there are no certificates, instruments, documents or
other writings (other than the limited partnership agreement delivered to
the Agent on the Closing Date) which evidence any General Intangible of
the Pledgor;
(i) The Pledgor shall not withdraw as a partner of the Pledged
Entity, or file or pursue to take any action which may, directly or
indirectly, cause a dissolution or liquidation of or with respect to the
Pledge Entity or seek a partition of any property of the Pledged Entity;
and
(m) An acknowledgment in the form set forth on Schedule II attached
hereto and by this reference made a part hereof (such notice, the
"Acknowledgment"), appropriately completed, notifying the Pledged Entity
of the existence of this Agreement and a certified copy of this Agreement
has been delivered by the Pledgor to the Pledged Entity.
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<PAGE> 30
The representations and warranties set forth in this Section 5 shall
survive the execution and delivery of this Agreement.
6. Covenants. The Pledgor covenants and agrees that until the Pledge
Termination Date (as defined in Section 11):
(a) Without the prior written consent of the Agent, the Pledgor will
not sell, assign, transfer, pledge, or otherwise encumber any of its
rights in or to the Pledged Collateral, or any unpaid distributions or
payments with respect to the Pledged Collateral or grant a Lien in the
Pledged Collateral, unless otherwise expressly permitted by the Loan and
Security Agreement;
(b) The Pledgor will, at its expense, promptly execute, acknowledge
and deliver all such instruments and take all such actions as the Agent
from time to time may request in order to ensure to the Agent and Lenders
the benefits of the Liens in and to the Pledged Collateral intended to be
created by this Agreement, including the filing of any necessary UCC
financing statements, which may be filed by the Agent with or (to the
extent permitted by law) without the signature of the Pledgor, and will
cooperate with the Agent, at the Pledgor's expense, in obtaining all
necessary approvals and making all necessary filings under federal or
state law in connection with such Liens or any sale or transfer of the
Pledged Collateral;
(c) The Pledgor has and will defend the title to the Pledged
Collateral and the Liens of the Agent in the Pledged Collateral against
the claim of any Person and will maintain and preserve such Liens; and
(d) The Pledgor shall not permit the Pledged Entity to declare any
General Intangible to be classified as an uncertificated "security"
within the meaning of Section 8-103(c) of the UCC.
7. The Pledgor's Rights. As long as no Default or Event of Default shall
have occurred and be continuing and until written notice shall be given to the
Pledgor in accordance with Section 8(a) hereof:
(a) The Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral or any part thereof
for all purposes not inconsistent with the provisions of this Agreement,
the Loan and Security Agreement or any other Loan Document; provided,
however, that no vote shall be cast, and no consent shall be given or
action taken, which would have the effect of impairing the position or
interest of the Agent in respect of the Pledged Collateral or which would
authorize or effect (unless and to the extent expressly permitted by the
Loan and Security Agreement):
(i) the dissolution or liquidation, in whole or in part, of
the Pledged Entity;
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<PAGE> 31
(ii) the consolidation or merger of the Pledged Entity with
any other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of the Pledged Entity, except for
Liens in favor of the Agent; or
(iv) any change in the stated capital of the Pledged Entity or
the issuance of any additional interests; and
(b)(i) The Pledgor shall be entitled, from time to time, to collect
and receive for its own use all cash distributions paid in respect of the
General Intangibles to the extent not in violation of the Loan and
Security Agreement other than any and all: (A) distributions paid or
payable other than in cash in respect of any Pledged Collateral, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral;
(B) distributions paid or payable in cash in respect of any General
Intangible in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital of the Pledged
Entity; and (C) cash paid, payable or otherwise distributed or in
redemption of, or in exchange for, the Pledged Collateral; provided,
however, that until actually paid all rights to such distributions shall
remain subject to the Lien created by this Agreement; and
(ii) all distributions (other than such cash distributions as are
permitted to be paid to the Pledgor in accordance with clause (i) above)
and all other distributions in respect of any of the General Intangibles,
whenever paid or made, shall be delivered to the Agent to hold as Pledged
Collateral and shall, if received by the Pledgor, be received in trust
for the benefit of the Agent, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Agent as Pledged
Collateral in the same form as so received (with any necessary
indorsement).
8. Defaults and Remedies.
(a) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, then on or at any time after such
declaration (provided that such declaration is not rescinded by the
Agent) and concurrently with written notice to the Pledgor, the Agent
(personally or through an agent) is hereby authorized and empowered to
transfer and register in its name or in the name of its nominee the whole
or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations, to
exercise the voting and all other rights as a stockholder with respect
thereto, to collect and receive all cash dividends, interest, principal
and other distributions made thereon, to sell in one or more sales after
ten (10) days' notice of the time and place of any public sale or of the
time at which a private sale is to take place (which notice the Pledgor
agrees is commercially reasonable) the whole or any part of the Pledged
Collateral and to otherwise act with respect to the Pledged Collateral as
though the Agent was the outright owner thereof, the Pledgor hereby
irrevocably constituting and appointing the Agent as the proxy and
attorney-in-fact
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<PAGE> 32
of the Pledgor, with full power of substitution to do so, and which
appointment shall remain in effect until the Pledge Termination Date;
provided, however, that Agent shall not have any duty to exercise any
such right or to preserve the same and shall not be liable for any
failure to do so or for any delay in doing so. Any sale shall be made at
a public or private sale at the Agent's place of business, or at any
place to be named in the notice of sale, either for cash or upon credit
or for future delivery at such price as the Agent may deem fair, and the
Agent may be the purchaser of the whole or any part of the Pledged
Collateral so sold and hold the same thereafter in its own right free
from any claim of the Pledgor or any right of redemption. Each sale
shall be made to the highest bidder, but the Agent reserves the right to
reject any and all bids at such sale which, in its discretion, it shall
deem inadequate. Demands of performance, except as otherwise herein
specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale hereunder may
be conducted by an auctioneer or any officer or agent of the Agent.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be
but one sale, shall be inadequate to discharge in full all the Secured
Obligations, or if the Pledged Collateral be offered for sale in lots, if
at any of such sales, the highest bid for the lot offered for sale would
indicate to the Agent, in its discretion, that the proceeds of the sales
of the whole of the Pledged Collateral would be unlikely to be sufficient
to discharge all the Secured Obligations, the Agent may, on one or more
occasions and in its discretion, postpone any of said sales by public
announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale
need be given, any other notice being hereby waived; provided, however,
that any sale or sales made after such postponement shall be after ten
(10) days' notice to the Pledgor.
(c) The Pledgor agrees to the maximum extent permitted by
applicable law that following the occurrence and during the
continuance of an Event of Default it will not at any time plead,
claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force
in order to prevent or delay the enforcement of this Agreement, or
the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale
hereunder, and the Pledgor waives the benefit of all such laws to
the extent it lawfully may do so. The Pledgor agrees that it will
not interfere with any right, power and remedy of the Agent
provided for in this Agreement or now or hereafter existing at law
or in equity or by statute or otherwise, or the exercise or
beginning of the exercise by the Agent of any one or more of such
rights, powers or remedies. No failure or delay on the part of the
Agent to exercise any such right, power or remedy and no notice or
demand which may be given to or made upon the Pledgor by the Agent
with respect to any such remedies shall operate as a waiver
thereof, or limit or impair the Agent's right to take any action or
to exercise any power or remedy hereunder, without notice or
demand, or prejudice its rights as against the Pledgor in any
respect.
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<PAGE> 33
(d) The Pledgor further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the Agent,
that the Agent shall have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant
contained in this Section 8 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such obligations.
9. Waiver. No delay on the Agent's part in exercising any power of sale,
Lien, option or other right hereunder, and no notice or demand which may be
given to or made upon the Pledgor by the Agent with respect to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair the Agent's right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice the Agent's rights as against the Pledgor in any respect.
10. Assignment. The Agent may assign, indorse or transfer any instrument
evidencing all or any part of the Secured Obligations as provided in, and in
accordance with, the Loan and Security Agreement, and the holder of such
instrument shall be entitled to the benefits of this Agreement.
11. Termination. Immediately following the payment in full, in cash of
all Secured Obligations on or after the Termination Date (as defined in the
Loan and Security Agreement) (the "Pledge Termination Date"), the Agent shall
deliver to the Pledgor the Pledged Collateral pledged by the Pledgor at the
time subject to this Agreement and all instruments of assignment executed in
connection therewith, free and clear of the Liens hereof and, except as
otherwise provided herein, all of the Pledgor's obligations hereunder shall at
such time terminate.
12. Lien Absolute. All rights of the Agent hereunder, and all obligations
of the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan and Security
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan and
Security Agreement, any other Loan Document or any other agreement or
instrument governing or evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other Collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
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<PAGE> 34
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor.
13. Release. Pledgor consents and agrees that the Agent may at any time,
or from time to time, in its discretion:
(a) renew, extend or change the time of payment, and/or the manner,
place or terms of payment of all or any part of the Secured Obligations;
and
(b) exchange, release and/or surrender all or any of the Collateral
(including the Pledged Collateral), or any part thereof, by whomsoever
deposited, which is now or may hereafter be held by the Agent in
connection with all or any of the Secured Obligations; all in such manner
and upon such terms as the Agent may deem proper, and without notice to
or further assent from the Pledgor, it being hereby agreed that the
Pledgor shall be and remain bound upon this Agreement, irrespective of
the value or condition of any of the Collateral, and notwithstanding any
such change, exchange, settlement, compromise, surrender, release,
renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount
thereof set forth in the Loan and Security Agreement, or any other
agreement governing any Secured Obligations. The Pledgor hereby waives
notice of acceptance of this Agreement, and also presentment, demand,
protest and notice of dishonor of any and all of the Secured Obligations,
and promptness in commencing suit against any party hereto or liable
hereon, and in giving any notice to or of making any claim or demand
hereunder upon the Pledgor. No act or omission of any kind on the
Agent's part shall in any event affect or impair this Agreement.
14. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Pledgor or any Pledged Entity for liquidation or reorganization, should the
Pledgor or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of the Pledgor's or a Pledged Entity's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference", "fraudulent conveyance", or otherwise, all as though
such payment or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
15. Miscellaneous.
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning
all matters pertaining to its duties hereunder.
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<PAGE> 35
(b) The Pledgor agrees to promptly reimburse Agent for actual
out-of-pocket expenses, including, without limitation, reasonable counsel
fees, incurred by Agent in connection with the administration and
enforcement of this Agreement.
(c) Neither the Agent, nor any of its respective officers,
directors, employees, agents or counsel shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or
willful misconduct.
(d) THIS AGREEMENT SHALL BE BINDING UPON THE PLEDGOR AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF THE
PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, THE
AGENT AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND
NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED,
MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF
THE AGENT AND THE PLEDGOR.
16. Severability. If for any reason any provision or provisions hereof
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or effect those portions of this
Agreement which are valid.
17. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person or
sent by registered or certified mail, return receipt requested, postage
prepaid, or by facsimile transmission and confirmed by facsimile transmission
answer back addressed (x) in the case of the Pledgor, LDM Holdings, L.L.C., LDM
Technologies, Inc., 2500 Executive Hills Drive, Auburn Hills, Michigan 48326,
Attention:Joseph Blake, Fax No.: (810) 858-2812, Tel. No.: (810) 858-2800 and
(y) in the case of the Agent and the Lenders, as provided in Section 15.8 of
the Loan and Security Agreement, or at such other address as may be substituted
by notice given as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on
the date on which personally delivered, transmitted and confirmed by facsimile
transmission answerback or three (3) Business Days after the same shall have
been deposited in the United States mail. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
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<PAGE> 36
18. Section Titles. The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
19. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one
agreement.
20. Benefit of Lenders. All security interests granted or contemplated
hereby shall be for the benefit of the Agent and Lenders, and all proceeds or
payments realized from the Pledged Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Loan and
Security Agreement.
* * *
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
LDM HOLDINGS, L.L.C.
By: LDM TECHNOLOGIES, INC.,
its Member
By: /s/ Joe Balous
---------------------------------
Name: Joe Balous
---------------------------
Title: Secretary
--------------------------
Accepted and Acknowledged by:
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Daniel T. Cushing
----------------------------------
Name: Daniel T. Cushing
----------------------------
Title: Senior Vice President
---------------------------
11
<PAGE> 38
SCHEDULE I
PART A
GENERAL INTANGIBLES
<TABLE>
<CAPTION>
Class
of Number Percentage of
Pledged Entity Interests of Interests Outstanding Interest
- --------------------------------- --------- ------------ --------------------
<S> <C> <C> <C>
LDM Canada Limited Partnership 3%
</TABLE>
<PAGE> 39
SCHEDULE II
ACKNOWLEDGMENT OF SECURITY INTEREST
[NAME OF PLEDGED ENTITY] (the "Company") hereby acknowledges receipt of a
copy of the assignment by LDM Holdings, L.L.C. (the "Pledgor"), of its interest
under the [TITLE OF AGREEMENT] (the "Agreement") pursuant to the terms of the
Pledge and Security Agreement, dated as of January __, 1997 (the "Pledge
Agreement"), between the Pledgor and BankAmerica Business Credit, Inc., as
Agent.
The undersigned hereby further confirms the registration of the Pledgor's
pledge of its interest in the Company to the Agent on the Company's books.
The Company agrees that at any time prior to the Pledge Termination Date
(as defined in the Pledge Agreement), it will not take or approve any action in
furtherance of deeming the interests of the Company to be an uncertificated
"security" within the meaning of Section 8-103(c) of the UCC (as defined in
the Pledge Agreement) and that its membership or partnership interest shall at
all times be general intangibles under the UCC.
Dated:_______, 1997 [NAME OF PLEDGED ENTITY]
By:_______________________
Title:_________________
<PAGE> 40
LDM LP PLEDGE AGREEMENT
This LDM LP PLEDGE AGREEMENT, dated as of January 22, 1997 (together with
all amendments, if any, from time to time hereto, this "Agreement") between LDM
Canada Limited Partnership, a Michigan limited partnership corporation (the
"Pledgor") in favor of BANKAMERICA BUSINESS CREDIT, INC. in its capacity as
Agent for Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Guarantee, dated as of January 22, 1997
(the "LDM LP Guarantee"), made by the Pledgor, the Pledgor has provided a
guarantee of the payment of the Obligations under the Loan and Security
Agreement dated as of January 22, 1997, by and among the Pledgor, the Agent and
the Persons signatory thereto from time to time as Lenders (as from time to
time amended, restated, supplemented or otherwise modified (the "Loan and
Security Agreement");
WHEREAS, the Pledgor is the record and beneficial owner of all the shares
of stock of the entity (the "Pledged Entity") described in of Schedule I
hereto;
WHEREAS, the Pledgor benefits from the credit facilities made available to
the Borrower through the Loan and Security Agreement;
WHEREAS, it is a condition to the making of Loans and the incurrence of
Obligations relating to the issuance of Letters of Credit under the Loan and
Security Agreement that the Pledgor shall have executed and delivered this
Agreement and granted the security interest contemplated hereby to secure the
obligations of the Pledgor under the LDM LP Guarantee;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and to induce Lenders to make Loans and to incur
Obligations relating to the issuance of Letter of Credit under the Loan and
Security Agreement, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the
Loan and Security Agreement are used herein as therein defined, and the
following shall have (unless otherwise provided elsewhere in this Agreement)
the following respective meanings (such meanings being equally applicable to
both the singular and plural form of the terms defined):
"Bankruptcy Code" means title 11, United States Code, as amended
from time to time, and any successor statute thereto.
"Pledged Collateral" has the meaning assigned to such term in
Section 2 hereof.
<PAGE> 41
"Pledged Shares" means those shares listed on Part A of Schedule I
hereto.
"Secured Obligations" has the meaning assigned to such term in
Section 3 hereof.
2. Pledge. The Pledgor hereby pledges to the Agent, and grants to the
Agent for itself and the benefit of Lenders, a first priority security interest
in all of the following (collectively, the "Pledged Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, distributions, cash, instruments
and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares; and
(ii) such portion, as determined by the Agent as provided in
Section 6(d) below, of any additional shares of stock of the
Pledged Entity from time to time acquired by the Pledgor in any
manner (which shares shall be deemed to be part of the Pledged
Shares), and the certificates representing such additional shares,
and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of such shares.
3. Security for Obligations. This Agreement secures, and the Pledged
Collateral is security for, the prompt payment in full when due, whether at
stated maturity, by acceleration or otherwise, and performance of all
Obligations of any kind of the Pledgor under or in connection with the Loan and
Security Agreement and the other Loan Documents and all obligations of the
Pledgor now or hereafter existing under this Agreement including, without
limitation, all fees, costs and expenses whether in connection with collection
actions hereunder or otherwise (collectively, the "Secured Obligations").
4. Delivery of Pledged Collateral. All certificates representing or
evidencing the Pledged Shares shall be delivered to and held by or on behalf of
the Agent, for itself and the benefit of Lenders, pursuant hereto. All pledged
shares shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent.
5. Representations and Warranties. The Pledgor represents and
warrants to the Agent that:
(a) The Pledgor is, and at the time of delivery of the Pledged
Shares to the Agent will be, the sole holder of record and the sole
beneficial owner of such Pledged Collateral pledged by the Pledgor free
and clear of any Lien thereon or affecting the title thereto, except for
any Lien created by this Agreement; the Pledgor is and at the time of
delivery of the Pledged Debt to the Agent will be, the sole owner of such
Pledged Collateral free and clear of any Lien thereon or affecting title
thereto, except for any Lien created by this Agreement;
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<PAGE> 42
(b) All of the Pledged Shares have been duly authorized, validly
issued and are fully paid and non-assessable;
(c) The Pledgor has the right and requisite authority to pledge,
assign, transfer, deliver, deposit and set over the Pledged Collateral
pledged by the Pledgor to the Agent as provided herein;
(d) None of the Pledged Shares has been issued or transferred in
violation of the securities registration, securities disclosure or
similar laws of any jurisdiction to which such issuance or transfer may
be subject;
(e) All of the Pledged Shares are presently owned by the Pledgor,
and are presently represented by the stock certificates listed on
Schedule I hereto. As of the date hereof, there are no existing options,
warrants, calls or commitments of any character whatsoever relating to
the Pledged Shares;
(f) No consent, approval, authorization or other order of any Person
and no consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required (i) for
the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by the Pledgor, or (ii) for the exercise by the Agent of the voting or
other rights provided for in this Agreement or the remedies in respect of
the Pledged Collateral pursuant to this Agreement, except as may be
required in connection with such disposition by laws affecting the
offering and sale of securities generally;
(g) The pledge, assignment and delivery of the Pledged Collateral
pursuant to this Agreement will create a valid first priority Lien on and
a first priority perfected security interest in the Pledged Collateral
pledged by the Pledgor, and the proceeds thereof, securing the payment of
the Secured Obligations, subject to no other Lien or security interest;
(h) This Agreement has been duly authorized, executed and delivered
by the Pledgor and constitutes a legal, valid and binding obligation of
the Pledgor enforceable in accordance with its terms; and
(i) The Pledged Shares constitute 99% of the issued and outstanding
shares of Stock of the Pledged Entity.
The representations and warranties set forth in this Section 5 shall
survive the execution and delivery of this Agreement.
6. Covenants. The Pledgor covenants and agrees that until the Pledge
Termination Date (as defined in Section 11):
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<PAGE> 43
(a) Without the prior written consent of the Agent, the Pledgor will
not sell, assign, transfer, pledge, or otherwise encumber any of its
rights in or to the Pledged Collateral, or any unpaid dividends, interest
or other distributions or payments with respect to the Pledged Collateral
or grant a Lien in the Pledged Collateral, unless otherwise expressly
permitted by the Loan and Security Agreement;
(b) The Pledgor will, at its expense, promptly execute, acknowledge
and deliver all such instruments and take all such actions as the Agent
from time to time may request in order to ensure to the Agent and Lenders
the benefits of the Liens in and to the Pledged Collateral intended to be
created by this Agreement, including the filing of any necessary UCC or
PPSA financing statements, which may be filed by the Agent with or (to
the extent permitted by law) without the signature of the Pledgor, and
will cooperate with the Agent, at the Pledgor's expense, in obtaining all
necessary approvals and making all necessary filings under federal or
state law in connection with such Liens or any sale or transfer of the
Pledged Collateral;
(c) The Pledgor has and will defend the title to the Pledged
Collateral and the Liens of the Agent in the Pledged Collateral against
the claim of any Person and will maintain and preserve such Liens; and
(d) The Pledgor will, upon obtaining any additional shares of stock
of the Pledged Entity, which shares are not already Pledged Collateral,
promptly (and in any event within three (3) Business Days) deliver to the
Agent a Pledge Amendment, duly executed by the Pledgor, in substantially
the form of Schedule II hereto (a "Pledge Amendment") in respect of any
such additional shares, pursuant to which the Pledgor shall pledge to the
Agent all of such additional shares. The Pledgor hereby authorizes the
Agent to attach each Pledge Amendment to this Agreement and agrees that
all Pledged Shares listed on any Pledge Amendment delivered to the Agent
shall for all purposes hereunder be considered Pledged Collateral.
7. The Pledgor's Rights. As long as no Default or Event of Default shall
have occurred and be continuing and until written notice shall be given to the
Pledgor in accordance with Section 8(a) hereof:
(a) The Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral, or any part thereof
for all purposes not inconsistent with the provisions of this Agreement,
the Loan and Security Agreement or any other Loan Document; provided,
however, that no vote shall be cast, and no consent shall be given or
action taken, which would have the effect of impairing the position or
interest of the Agent in respect of the Pledged Collateral or which would
authorize or effect (unless and to the extent expressly permitted by the
Loan and Security Agreement):
(i) the dissolution or liquidation, in whole or in part, of
the Pledged Entity;
4
<PAGE> 44
(ii) the consolidation or merger of the Pledged Entity with
any other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of the Pledged Entity, except for
Liens in favor of the Agent;
(iv) any change in the authorized number of shares, the stated
capital or the authorized share capital of the Pledged Entity or
the issuance of any additional shares of its Stock; or
(v) the alteration of the voting rights with respect to the
Stock of the Pledged Entity; and
(b)(i) The Pledgor shall be entitled, from time to time, to collect
and receive for its own use all cash dividends paid in respect of the
Pledged Shares to the extent not in violation of the Loan and Security
Agreement other than any and all: (A) dividends paid or payable other
than in cash in respect of any Pledged Collateral, and instruments and
other property received, receivable or otherwise distributed in respect
of, or in exchange for, any Pledged Collateral; (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Shares in
connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in
capital of the Pledged Entity; and (C) cash paid, payable or otherwise
distributed, in respect of, or in redemption of, or in exchange for, any
Pledged Collateral; provided, however, that until actually paid all
rights to such distributions shall remain subject to the Lien created by
this Agreement; and
(ii) all dividends (other than such cash dividends as are permitted
to be paid to the Pledgor in accordance with clause (i) above) and all
other distributions in respect of any of the Pledged Shares, whenever
paid or made, shall be delivered to the Agent to hold as Pledged
Collateral and shall, if received by the Pledgor, be received in trust
for the benefit of the Agent, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Agent as Pledged
Collateral in the same form as so received (with any necessary
indorsement).
8. Defaults and Remedies.
(a) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, then on or at any time after such
declaration (provided that such declaration is not rescinded by the
Agent) and concurrently with written notice to the Pledgor, the Agent
(personally or through an agent) is hereby authorized and empowered to
transfer and register in its name or in the name of its nominee the whole
or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations, to
exercise the voting and all other rights as stockholder with respect
thereto, to collect and receive all cash dividends, interest, principal
and other distributions made thereon, to sell in
5
<PAGE> 45
one or more sales after ten (10) days' notice of the time and place of
any public sale or of the time at which a private sale is to take place
(which notice the Pledgor agrees is commercially reasonable) the whole or
any part of the Pledged Collateral and to otherwise act with respect to
the Pledged Collateral as though the Agent was the outright owner
thereof, the Pledgor hereby irrevocably constituting and appointing the
Agent as the proxy and attorney-in-fact of the Pledgor, with full power
of substitution to do so, and which appointment shall remain in effect
until the Pledge Termination Date; provided, however, that Agent shall
not have any duty to exercise any such right or to preserve the same and
shall not be liable for any failure to do so or for any delay in doing
so. Any sale shall be made at a public or private sale at the Agent's
place of business, or at any place to be named in the notice of sale,
either for cash or upon credit or for future delivery at such price as
the Agent may deem fair, and the Agent may be the purchaser of the whole
or any part of the Pledged Collateral so sold and hold the same
thereafter in its own right free from any claim of the Pledgor or any
right of redemption. Each sale shall be made to the highest bidder, but
the Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for,
notices of sale, advertisements and the presence of property at sale are
hereby waived and any sale hereunder may be conducted by an auctioneer or
any officer or agent of the Agent.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be
but one sale, shall be inadequate to discharge in full all the Secured
Obligations, or if the Pledged Collateral be offered for sale in lots, if
at any of such sales, the highest bid for the lot offered for sale would
indicate to the Agent, in its discretion, that the proceeds of the sales
of the whole of the Pledged Collateral would be unlikely to be sufficient
to discharge all the Secured Obligations, the Agent may, on one or more
occasions and in its discretion, postpone any of said sales by public
announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale
need be given, any other notice being hereby waived; provided, however,
that any sale or sales made after such postponement shall be after ten
(10) days' notice to the Pledgor.
(c) If, at any time when the Agent in its sole discretion
determines, following the occurrence and during the continuance of an
Event of Default, that, in connection with any actual or contemplated
exercise of its rights (when permitted under this Section 8) to sell the
whole or any part of the Pledged Shares hereunder, it is necessary or
advisable to effect a public registration of all or part of the Pledged
Collateral pursuant to the Securities Act of 1933, as amended (or any
similar statute then in effect) (the "Act"), the Pledgor shall, in an
expeditious manner, cause the Pledged Entities to:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect
to the Pledged Shares and in good faith use commercially reasonable
efforts to cause such registration statement to become and remain
effective;
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<PAGE> 46
(ii) 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 keep such
registration statement effective and to comply with the provisions
of the Act with respect to the sale or other disposition of the
Pledged Shares covered by such registration statement whenever the
Agent shall desire to sell or otherwise dispose of the Pledged
Shares;
(iii) Furnish to the Agent such numbers of copies of a
prospectus and a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Agent may
request in order to facilitate the public sale or other disposition
of the Pledged Shares by the Agent;
(iv) Use commercially reasonable efforts to register or
qualify the Pledged Shares covered by such registration statement
under such other securities or blue sky laws of such jurisdictions
within the United States and Puerto Rico as the Agent shall
request, and do such other reasonable acts and things as may be
required of it to enable the Agent to consummate the public sale or
other disposition in such jurisdictions of the Pledged Shares by
the Agent;
(v) Furnish, at the request of the Agent, on the date that
shares of the Pledged Collateral are delivered to the underwriters
for sale pursuant to such registration or, if the security is not
being sold through underwriters, on the date that the registration
statement with respect to such Pledged Shares becomes effective,
(A) an opinion, dated such date, of the independent counsel
representing such registrant for the purposes of such registration,
addressed to the underwriters, if any, and in the event the Pledged
Shares are not being sold through underwriters, then to the Agent,
in customary form and covering matters of the type customarily
covered in such legal opinions; and (B) a comfort letter, dated
such date, from the independent certified public accountants of
such registrant, addressed to the underwriters, if any, and in the
event the Pledged Shares are not being sold through underwriters,
then to the Agent, in a customary form and covering matters of the
type customarily covered by such comfort letters and as the
underwriters or the Agent shall reasonably request. The opinion of
counsel referred to above shall additionally cover such other legal
matters with respect to the registration in respect of which such
opinion is being given as the Agent may reasonably request. The
letter referred to above from the independent certified public
accountants shall additionally cover such other financial matters
(including information as to the period ending not more than five
(5) Business Days prior to the date of such letter) with respect to
the registration in respect of which such letter is being given as
the Agent may reasonably request; and
(vi) Otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable but not later than 18 months after the effective date
of the registration statement, an earnings statement covering the
period of at least 12 months beginning with the first full month
after the effective
7
<PAGE> 47
date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(d) All expenses incurred in complying with Section 8(c) hereof,
including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association
of Securities Dealers, Inc.), printing expenses, fees and disbursements
of counsel for the registrant, the fees and expenses of counsel for the
Agent, expenses of the independent certified public accountants
(including any special audits incident to or required by any such
registration) and expenses of complying with the securities or blue sky
laws or any jurisdictions, shall be paid by the Pledgor.
(e) If, at any time when the Agent shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral hereunder,
such Pledged Collateral or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Act, the Agent
may, in its discretion (subject only to applicable requirements of law),
sell such Pledged Collateral or part thereof by private sale in such
manner and under such circumstances as the Agent may deem necessary or
advisable, but subject to the other requirements of this Section 8, and
shall not be required to effect such registration or to cause the same to
be effected. Without limiting the generality of the foregoing, in any
such event, the Agent in its discretion (x) may, in accordance with
applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall
have been filed under said Act (or similar statute), (y) may approach and
negotiate with a single possible purchaser to effect such sale, and (z)
may restrict such sale to a purchaser who is an accredited investor under
the Act and who will represent and agree that such purchaser is
purchasing for its own account, for investment and not with a view to the
distribution or sale of such Pledged Collateral or any part thereof. In
addition to a private sale as provided above in this Section 8, if any of
the Pledged Collateral shall not be freely distributable to the public
without registration under the Act (or similar statute) at the time of
any proposed sale pursuant to this Section 8, then the Agent shall not be
required to effect such registration or cause the same to be effected
but, in its discretion (subject only to applicable requirements of law),
may require that any sale hereunder (including a sale at auction) be
conducted subject to restrictions:
(i) as to the financial sophistication and ability of any
Person permitted to bid or purchase at any such sale;
(ii) as to the content of legends to be placed upon any
certificates representing the Pledged Collateral sold in such sale,
including restrictions on future transfer thereof;
(iii) as to the representations required to be made by each
Person bidding or purchasing at such sale relating to that Person's
access to financial information about the Pledgor and such Person's
intentions as to the holding of the
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<PAGE> 48
Pledged Collateral so sold for investment for its own account and
not with a view to the distribution thereof; and
(iv) as to such other matters as the Agent may, in its
discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in
compliance with the Bankruptcy Code and other laws affecting the
enforcement of creditors' rights and the Act and all applicable
state securities laws.
(f) The Pledgor recognizes that the Agent may be unable to effect a
public sale of any or all the Pledged Collateral and may be compelled to
resort to one or more private sales thereof in accordance with clause (e)
above. The Pledgor also acknowledges that any such private sale may
result in prices and other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall not be deemed to have been made
in a commercially unreasonable manner solely by virtue of such sale being
private. The Agent shall be under no obligation to delay a sale of any
of the Pledged Collateral for the period of time necessary to permit the
Pledged Entity to register such securities for public sale under the Act,
or under applicable state securities laws, even if the Pledgor and the
Pledged Entity would agree to do so.
(g) The Pledgor agrees to the maximum extent permitted by applicable
law that following the occurrence and during the continuance of an Event
of Default it will not at any time plead, claim or take the benefit of
any appraisal, valuation, stay, extension, moratorium or redemption law
now or hereafter in force in order to prevent or delay the enforcement of
this Agreement, or the absolute sale of the whole or any part of the
Pledged Collateral or the possession thereof by any purchaser at any sale
hereunder, and the Pledgor waives the benefit of all such laws to the
extent it lawfully may do so. The Pledgor agrees that it will not
interfere with any right, power and remedy of the Agent provided for in
this Agreement or now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of the exercise by the
Agent of any one or more of such rights, powers or remedies. No failure
or delay on the part of the Agent to exercise any such right, power or
remedy and no notice or demand which may be given to or made upon the
Pledgor by the Agent with respect to any such remedies shall operate as a
waiver thereof, or limit or impair the Agent's right to take any action
or to exercise any power or remedy hereunder, without notice or demand,
or prejudice its rights as against the Pledgor in any respect.
(h) The Pledgor further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the Agent,
that the Agent shall have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant
contained in this Section 8 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such obligations.
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<PAGE> 49
9. Waiver. No delay on the Agent's part in exercising any power of sale,
Lien, option or other right hereunder, and no notice or demand which may be
given to or made upon the Pledgor by the Agent with respect to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair the Agent's right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice the Agent's rights as against the Pledgor in any respect.
10. Assignment. The Agent may assign, indorse or transfer any instrument
evidencing all or any part of the Secured Obligations as provided in, and in
accordance with, the Loan and Security Agreement, and the holder of such
instrument shall be entitled to the benefits of this Agreement.
11. Termination. Immediately following the payment in full, in cash of
all Secured Obligations on or after the Termination Date (as defined in the
Loan and Security Agreement) (the "Pledge Termination Date"), the Agent shall
deliver to the Pledgor the Pledged Collateral pledged by the Pledgor at the
time subject to this Agreement and all instruments of assignment executed in
connection therewith, free and clear of the Liens hereof and, except as
otherwise provided herein, all of the Pledgor's obligations hereunder shall at
such time terminate.
12. Lien Absolute. All rights of the Agent hereunder, and all obligations
of the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan and Security
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan and
Security Agreement, any other Loan Document or any other agreement or
instrument governing or evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other Collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor.
13. Release. Pledgor consents and agrees that the Agent may at any time,
or from time to time, in its discretion:
(a) renew, extend or change the time of payment, and/or the manner,
place or terms of payment of all or any part of the Secured Obligations;
and
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<PAGE> 50
(b) exchange, release and/or surrender all or any of the Collateral
(including the Pledged Collateral), or any part thereof, by whomsoever
deposited, which is now or may hereafter be held by the Agent in
connection with all or any of the Secured Obligations; all in such manner
and upon such terms as the Agent may deem proper, and without notice to
or further assent from the Pledgor, it being hereby agreed that the
Pledgor shall be and remain bound upon this Agreement, irrespective of
the value or condition of any of the Collateral, and notwithstanding any
such change, exchange, settlement, compromise, surrender, release,
renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount
thereof set forth in the Loan and Security Agreement, or any other
agreement governing any Secured Obligations. The Pledgor hereby waives
notice of acceptance of this Agreement, and also presentment, demand,
protest and notice of dishonor of any and all of the Secured Obligations,
and promptness in commencing suit against any party hereto or liable
hereon, and in giving any notice to or of making any claim or demand
hereunder upon the Pledgor. No act or omission of any kind on the
Agent's part shall in any event affect or impair this Agreement.
14. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Pledgor or the Pledged Entity for liquidation or reorganization, should the
Pledgor or the Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of the Pledgor's or the Pledged Entity's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference", "fraudulent conveyance", or otherwise, all as though
such payment or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
15. Miscellaneous.
(a) The Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to advice of counsel concerning
all matters pertaining to its duties hereunder.
(b) The Pledgor agrees to promptly reimburse Agent for actual
out-of-pocket expenses, including, without limitation, reasonable counsel
fees, incurred by Agent in connection with the administration and
enforcement of this Agreement.
(c) Neither the Agent, nor any of its respective officers,
directors, employees, agents or counsel shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or
willful misconduct.
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<PAGE> 51
(d) THIS AGREEMENT SHALL BE BINDING UPON THE PLEDGOR AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF THE
PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, THE
AGENT AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND
NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED,
MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF
THE AGENT AND THE PLEDGOR.
16. Severability. If for any reason any provision or provisions hereof
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or effect those portions of this
Agreement which are valid.
17. Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or
other communication shall or may be given to or served upon any of the parties
by any other party, or whenever any of the parties desires to give or serve
upon any other a communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and either shall be delivered in person or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
facsimile transmission and confirmed by facsimile transmission answer back
addressed (i) with respect to the Pledgor, LDM Canada Limited Partnership, LDM
Technologies, Inc., 2500 Executive Hills Drive, Auburn Hills, Michigan 48326,
Attention: Joseph Blake, Fax No.: (810) 858-2812, Tel. No. (810) 858-2800, and
(ii) with respect to the Agent and the Lender, as provided in Section 15.8 of
the Loan and Security Agreement, or at such other address as may be substituted
by notice given as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on
the date on which personally delivered, transmitted and confirmed by facsimile
transmission answerback or three (3) Business Days after the same shall have
been deposited in the United States mail. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
18. Section Titles. The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
19. Counterparts. This Agreement may be executed in any number of
counterparts, which shall, collectively and separately, constitute one
agreement.
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<PAGE> 52
20. Benefit of Lenders. All security interests granted or contemplated
hereby shall be for the benefit of the Agent and Lenders, and all proceeds or
payments realized from the Pledged Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Loan and
Security Agreement.
* * *
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<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
LDM CANADA LIMITED PARTNERSHIP
By: LDM HOLDINGS, L.L.C.,
its General Partner
By: LDM TECHNOLOGIES, INC.,
its Member
By: /s/ Joe Balous
---------------------------------
Name: Joe Balous
---------------------------
Title: Secretary
--------------------------
Accepted and Acknowledged by:
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Daniel T. Cushing
----------------------------------
Name: Daniel T. Cushing
----------------------------
Title: Senior Vice President
---------------------------
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<PAGE> 54
SCHEDULE I
PLEDGED SHARES
<TABLE>
<CAPTION>
Class Stock Certificate Number Percentage of
Pledged Entity of Stock Number(s) of Shares Outstanding Shares
- -------------------- -------- ----------------- --------- ------------------
<S> <C> <C> <C> <C>
LDM Technologies
Company Common 1 9,900 99%
</TABLE>
<PAGE> 55
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ________________, ___ is delivered pursuant
to Section 6(d) of the Pledge Agreement referred to below. The undersigned
hereby certifies that the representations and warranties in Section 5 of the
Pledge Agreement are and continue to be true and correct, both as to the
promissory notes, instruments and shares pledged prior to this Pledge Amendment
and as to the promissory notes, instruments and shares pledged pursuant to this
Pledge Amendment. The undersigned further agrees that this Pledge Amendment
may be attached to that certain Pledge Agreement, dated January __, 1997,
between undersigned, as the Pledgor, and BankAmerica Business Credit, Inc., as
the Agent, and that the Pledged Shares and Pledged Debt listed on this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said Pledge Agreement and shall secure all Secured Obligations referred to in
said Pledge Agreement. The undersigned acknowledges that any promissory notes,
instruments or shares not included in the Pledged Collateral at the discretion
of the Agent may not otherwise be pledged or otherwise used as security by the
Pledgor.
LDM CANADA LIMITED PARTNERSHIP
By: LDM Holdings, L.L.C.,
Its General Partner
By:_________________________________
Name: ___________________________
Title: __________________________
<TABLE>
<CAPTION>
Name and Class Certificate Number
Address of the Pledgor Pledged Entity of Stock Number(s) of Shares
- ---------------------- -------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT 10.4
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of January
22, 1997, made by LDM Technologies, Inc., a Michigan corporation (the
"Grantor") in favor of BankAmerica Business Credit, Inc., as agent for the
financial institutions party to the Loan and Security Agreement referred to
below (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Grantor has entered into a Loan and Security
Agreement, dated as of January 22, 1997, among the Grantor, the financial
institutions party thereto (the "Lenders") and the Agent (said agreement, as it
may hereafter be amended or otherwise modified from time to time, being the
"Loan and Security Agreement" and the terms defined therein and not otherwise
defined herein being used herein having the meanings therein assigned); and
WHEREAS, it is a condition precedent to the making of the
Loans and the issuance of the Letters of Credit that the Grantor shall have
entered into this Agreement;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to make the Loans and the issuers to issue the Letters of
Credit, the Grantor hereby agrees as follows:
1. Defined Terms. The following terms have the
following meanings (such meanings being equally applicable to both the singular
and the plural forms of the terms defined):
"Agreement" means this Intellectual Property Security
Agreement, as the same may from time to time be amended, modified or
supplemented, and shall refer to this Intellectual Property Security Agreement
as in effect on the date such reference becomes operative.
"Copyrights" means copyrights, registrations and applications
therefor, and any and all (i) renewals and extensions thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable or both with
respect thereto, including, without limitation, damages and payments for past
or future infringements or misappropriations thereof, (iii) rights to sue for
past, present and future infringements or misappropriations thereof, and (iv)
all other rights corresponding thereto throughout the world.
"Intellectual Property Collateral" has the meaning
assigned to such term in Section 2 of this Agreement.
"Licenses" means license agreements in which the Grantor
grants or receives a grant of any interest in Copyrights, Trademarks, Patents
and Trade Secrets (all as defined herein) and
<PAGE> 2
other intellectual property and any and all (i) renewals, extensions,
supplements, amendments and continuations thereof, (ii) income, royalties,
damages and payments now and hereafter due or payable to the Grantor with
respect thereto, including, without limitation, damages and payments for past
or future violations or infringements or misappropriations thereof, and (iii)
rights to sue for past, present and future violations or infringements thereof.
"Patent" all means patents and patent applications along with
any and all (i) inventions and improvements described and claimed therein, (ii)
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (iii) income, royalties, damages and payments
now and hereafter due and/or payable to the Grantor with respect thereto,
including, without limitation, damages and payments for past or future
infringements or misappropriations thereof, (iv) rights to sue for past,
present and future infringements or misappropriations thereof, and (v) all
other rights corresponding thereto throughout the world.
"Trademarks" means trademarks (including service marks and
trade names, whether registered or at common law), registrations and
applications therefor, and the entire product lines and goodwill of Grantor's
business symbolized thereby and sufficient to produce or procure goods
connected therewith, together with any and all (i) renewals thereof, (ii)
income, royalties, damages and payments now and hereafter due or payable or
both with respect thereto, including, without limitation, damages and payments
for past or future infringements or misappropriations thereof, (iii) rights to
sue for past, present and future infringements or misappropriations thereof,
and (iv) all other rights corresponding thereto throughout the world.
"Trade Secrets" means trade secrets, along with any and all
(i) income, royalties, damages and payments now and hereafter due and/or
payable to the Grantor with respect thereto, including, without limitation,
damages and payments for past or future infringements or misappropriations
thereof, (ii) rights to sue for past, present and future infringements or
misappropriations thereof, and (iii) all other rights corresponding thereto
throughout the world.
The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole, including the Exhibits
and schedules hereto, and not to any particular section, subsection or clause
contained in this Agreement.
2. Grant of Security Interest in Intellectual Property
Collateral. In order to secure the complete and due and punctual payment of all
of the Obligations, the Grantor hereby grants and conveys to the Agent for its
benefit and for the ratable benefit of the Lenders as collateral security, a
continuing security interest in all of the Grantor's entire right, title and
interest in and to intellectual property rights now owned or existing and
hereafter acquired or arising in the following assets, subject to the
provisions set forth below in this Section 2 (all of which being hereinafter
referred to as the "Intellectual Property Collateral"):
(a) all Trademarks of the Grantor, including, without
limitation, the Trademarks listed on Schedule A hereto;
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<PAGE> 3
(b) all Copyrights of the Grantor, including, without
limitation, the Copyrights listed on Schedule B hereto;
(c) all Licenses of the Grantor, including, without
limitation, the Licenses listed on Schedule C hereto;
(d) all Patents of the Grantor, including, without
limitation, the Patents listed on Schedule D hereto;
(e) all Trade Secrets of the Grantor; and
(f) the entire goodwill of the Grantor's business connected
with the use of and symbolized by the Trademarks;
provided, however, that nothing hereunder constitutes or shall
be deemed to constitute the grant of a security interest in favor of the Agent
with respect to any Intellectual Property Collateral to the extent prohibited
by applicable law.
3. Representations and Warranties. The Grantor
represents and warrants that:
(a) The Trademarks, Copyrights, Licenses, Patents and Trade
Secrets are subsisting and have not been adjudged invalid or
unenforceable, in whole or in part;
(b) The Grantor has not previously assigned, transferred,
conveyed or otherwise encumbered such right, title and interest
(other than pursuant to Liens permitted by Section 6.4 of the
Loan and Security Agreement);
(c) The Grantor is the sole and exclusive owner of the
Intellectual Property Collateral, all of which is free and clear
of any Liens, charges and encumbrances (other than pursuant to
Liens permitted by Section 9.19 of the Loan and Security
Agreement), and, to its knowledge, no other person or entity has
any claim with respect to the Intellectual Property Collateral
whatsoever, except pursuant to the Trademark License Agreement;
(d) Schedules A, B, C and D attached hereto list all
Trademarks, registered Copyrights, and Licenses and Patents
related to the Intellectual Property Collateral;
(e) The Intellectual Property Collateral is sufficient for
the purpose of producing or procuring goods, performing services
and otherwise carrying on the business of the Grantor;
(f) To the best of the Grantor's knowledge, the
Intellectual Property Collateral does not infringe any rights
owned or possessed by any third party;
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<PAGE> 4
(g) There are no claims, judgments or settlements to be
paid by the Grantor or pending claims or litigation relating to
the Intellectual Property Collateral, except as set forth on
Schedule E hereto;
(h) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering
all or any part of the Intellectual Property Collateral is on file or of
record in any public office, except such as may have been filed by the
Grantor in favor of the Agent for the benefit of itself and the Lenders
pursuant to this Agreement or such as relate to other Liens permitted by
Section 9.19 of the Loan and Security Agreement; and
(i) All appropriate documents have been delivered to the
Agent for filing with the United States Patent and Trademark Office and the
United States Copyright Office and any appropriate filing offices located
in foreign countries, and when filed this Agreement is effective to create
a valid and continuing first priority lien on and first priority security
interest in the Intellectual Property Collateral in favor of the Agent for
the benefit of itself and the Lenders. All action necessary or desirable
to protect and create such security interest in each item of the
Intellectual Property Collateral has been duly taken.
4. Rights and Remedies; Application of Monies.
(a) Upon the occurrence and during the continuation of a
Default or an Event of Default, the Agent may to the fullest extent permitted
by applicable law, and without advertisement, hearing or process of law in any
kind, (i) subject to section 4(f) hereof, exercise any and all rights as
beneficial and legal owner of the Intellectual Property Collateral, including,
without limitation, any and all consensual rights and powers with respect to
the Intellectual Property Collateral, and (ii) sell or assign or grant a
license or franchise to use, or cause to be sold or assigned or granted a
license or franchise to use, any or all of the Intellectual Property
Collateral, in each case free of all rights and claims of Grantor therein and
thereto (but subject, in each case, to the rights of others heretofore granted
or created by Grantor in the ordinary course of business). Upon the occurrence
and during the continuation of an Event of Default, the Agent may (i) sell or
assign the Intellectual Property Collateral, or any part thereof, for cash upon
credit as the Agent may reasonably deem appropriate or (ii) grant licenses or
franchises or both to use the Intellectual Property Collateral on such terms
and conditions as the Agent shall reasonably determine. In connection
therewith, the Agent shall have the right to impose such limitations and
restrictions on the sale or assignment of the Intellectual Property Collateral
as the Agent may deem to be necessary or appropriate to comply with any law,
rule or regulation (federal, state, local or that of a foreign country) having
applicability to any such sale and requirements for any necessary governmental
approvals.
(b) It is expressly understood that, anything herein to
the contrary notwithstanding, the Grantor shall remain liable under each of its
General Intangibles and each of its Licenses to observe and perform all the
conditions and obligations to be observed by it thereunder and the Grantor
shall perform all of its duties and obligations thereunder, all in accordance
with and pursuant to the terms and provisions of each such General Intangible
or License except for such
-4 -
<PAGE> 5
non-observance or non-performance as in the aggregate has no reasonable
likelihood of resulting in a Material Adverse Effect. Neither Agent nor any
Lender shall have any obligation or liability under any General Intangible or
License by reason of or arising out of this Agreement or the granting to Agent
and the Lenders of a security interest herein, nor shall Agent or any Lender be
required or obligated in any manner to perform or fulfill any of the
obligations of the Grantor under or pursuant to any General Intangible or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any General Intangible or License, or to present or file any
claim, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(c) Except as provided in this Section 4, Grantor hereby
expressly waives, to the fullest extent permitted by applicable law, any and
all notices, advertisements, hearings or process of law in connection with the
exercise by the Agent of any of its rights and remedies hereunder. The Agent
shall not be liable to any Person for any incorrect or improper payment made
pursuant to this Section 4, in the absence of gross negligence or willful
misconduct.
(d) Notwithstanding any provisions of this Agreement to
the contrary, if, after giving effect to any sale, transfer, assignment or
other disposition of any or all of the intellectual Collateral pursuant hereto
and after the application of the proceeds hereunder to obligations, any
Obligations remain unpaid or unsatisfied, Grantor shall remain liable for the
unpaid and unsatisfied amount of such Obligations.
(e) This Agreement is made to provide for and secure
repayment of the Obligations of the Grantor in the following order of priority
indicated:
First, to the payment of the costs and expenses of such sale,
transfer, assignment or other disposition, including, without limitation,
all expenses and liabilities (including reasonable compensation to the
agents of, and counsel to, the Agent and the Lenders) and advances made or
incurred by the Agent and the Lenders in connection therewith or pursuant
to Section 15 or 19 hereof;
Next, to the Lenders and the Agent, pro rata, for the payment
in full of the Obligations;
Finally, after payment in full of all of the Obligations, to
the payment to the Grantor, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
(f) Upon the declaration of an Event of Default,the Grantor
agrees that it will promptly (and in any event within three Business Days)
deliver to the Agent or its designee an assignment of the Intellectual Property
Collateral, duly executed by the Grantor, in substantially the
-5-
<PAGE> 6
form of Schedule F annexed hereto. The Grantor agrees that the Agent may duly
execute such an assignment as Grantor's true and lawful attorney-in-fact
pursuant to Section 16 hereof.
5. Security Interest Absolute. All rights of the Agent
and the Lenders and security interests granted herein, and all obligations of
the Grantor pursuant hereto, shall be absolute and unconditional irrespective
of:
(a) the lack of validity or enforceability of any
provisions in the Loan and Security Agreement, or any other Loan
Document or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure
from the Loan and Security Agreement, or any other Loan
Document;
(c) any exchange, release or non-perfection of any
Collateral other than the Intellectual Property Collateral, or
any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Obligations; or
(d) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Grantor or a
third-party grantor.
6. Termination of Security Interest. This Agreement, and
the security interests created or granted hereby or thereby, shall terminate
when the later of the following shall have occurred: (a) the date that the last
Obligations shall have been fully and indefeasibly paid and satisfied and (b)
the date as of which the last of the Commitments and any other obligations that
the Agent and the Lender have under any of the Loan Documents or related
documents and instruments have terminated, at which time the Agent (without
recourse upon, or any warranty whatsoever by, the Agent) shall execute and
deliver to Grantor, for filing in each office in which any security agreement,
notice or other filing, or any part thereof, shall have been filed, an
instrument releasing the Agent's security interest in the Intellectual Property
Collateral, and such other documents and instruments to terminate any security
interest of the Agent granted hereby as Grantor may reasonably request, all
without recours upon, or warranty whatsoever by, the Agent, except that the
same shall be free and clear of any claims, liens or encumbrances created by or
in respect of the Agent, and at the cost and expense of Grantor.
7. Use and Protection of Intellectual Property
Collateral. Notwithstanding anything to the contrary contained herein,
unless an Event of Default has occurred and is continuing, the Grantor may
continue to exploit, license, use, enjoy and protect (whether in the United
States of America or any foreign jurisdiction) the Intellectual Property
Collateral in the ordinary course of business and from time to time execute and
deliver, upon written request of Grantor and at Grantor's sole cost and
expense, any and all instruments, certificates or other documents, in the form
so requested, necessary or appropriate in the judgment of Grantor to enable
Grantor to do so.
-6-
<PAGE> 7
(b) In order to more fully protect the Intellectual
Property Collateral in respect of which security interests have been granted to
the Agent by the Grantor hereunder, the Grantor may hereafter transfer to the
Agent such additional rights, privileges, marks and licenses as Grantor may in
its discretion be necessary and appropriate to the continuing exploitation,
licensing, use, enjoyment and protection (whether in the United States of
America or any foreign jurisdiction) of the Intellectual Property Collateral.
8. Duties of Grantor. The Grantor shall have the duty
to preserve and maintain all rights in the Intellectual Property Collateral
(including, without limitation, the duty to use, for the duration of this
Agreement, consistent standards of quality in respect of the products sold by
it under the Trademarks) in respect of which a failure to be able to continue
to use the same would have a Material Adverse Effect in a manner substantially
consistent with its present practices. The Grantor shall take all action
reasonably requested by the Agent to register, record and/or perfect the
Agent's rights hereunder. Such duties shall include, but not be limited to,
the following:
(a) The Grantor shall take appropriate action at its
expense to halt the infringement of any of the Intellectual Property if such
infringement would have a Material Adverse Effect;
(b) The Grantor shall not amend, modify, terminate or
waive any provisions of any other contract to which the Grantor is a party in
any manner which might have a Material Adverse Effect.
9. Payment of Obligations. The Grantor will pay
promptly when due all taxes, assessments and governmental charges or levies
imposed upon the Intellectual Property Collateral or in respect of its income
or profits therefrom and all claims of any kind, except that no such charge
need be paid if (i) such non-payment does not involve any danger of forfeiture
or loss of any of the Intellectual Property Collateral or any interest therein
and (ii) such charge is adequately reserved against in accordance with and to
the extent required by GAAP.
10. The Agent's Right to Sue. Whenever an Event of
Default shall have occurred and be continuing, the Agent shall have the right,
but shall in no way be obligated, to bring suit in its own name (subject to
Section 4 (f)) to protect or enforce the Trademarks, Copyrights, Licenses,
Patents and Trade Secrets, and, if the Agent shall commence any such suit,
Grantor shall, at the request of the Agent, do any and all lawful acts and
execute any and all proper documents required by the Agent in aid of such
protection or enforcement.
11. Maintenance of Records. The Grantor will keep and
maintain as its own cost and expense satisfactory and complete records of the
Intellectual Property Collateral. For the Agent's and the Lenders' further
security, the Grantor agrees that the Agent and the Lenders shall have a
special property interest in all of the Grantor's books and records pertaining
to the Intellectual Property Collateral and, upon the occurrence and during the
continuation of any Event of Default, the Grantor shall deliver and turn over
copies of any such books and records to the Agent or its representatives at any
time on demand of the Agent. Prior to the occurrence of an Event of Default
-7-
<PAGE> 8
and upon reasonable notice from the Agent, the Grantor shall permit any
representative of the Agent to inspect such books and records as set forth in
Section 12.
12. Right of Inspection. Upon reasonable notice to the
Grantor (unless an Event of Default has occurred and is continuing, in which
case no notice is necessary), the Agent shall at all times have full and free
access during normal business hours to all the books and records and
correspondence of the Grantor, and the Agent or its representatives may examine
the same, take extracts therefrom and make photocopies thereof, and the Grantor
agrees to render to the Agent, at the Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
13. No Waiver; Cumulative Remedies. No failure on the
part of the Agent to exercise, and no delay on the part of the Agent in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Agent preclude other or further exercise of any other right,
power or remedy. All remedies hereunder are cumulative and are not exclusive
of any other remedies that may be available to the Agent whether at law, in
equity or otherwise.
14. Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give or serve upon any other a communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and either shall be delivered in person
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by facsimile transmission and confirmed by facsimile transmission
answer back addressed as provided in Section 15.8 of the Loan and Security
Agreement, or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, transmitted and confirmed by facsimile transmission answerback or
three (3) Business Days after the same shall have been deposited in the United
States mail. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.
15. Expenses of Collection. The Grantor hereby agrees to
pay all expenses of the Agent, including reasonable attorneys' fees, incurred
with respect to the collection of any of the Intellectual Property Collateral
and the enforcement of the respective rights of the Agent and the Lenders
hereunder (together with interest thereon from and after the date of payment of
such expenses by the Agent in accordance with the Base Rate then in effect for
Loans under the Loan and Security Agreement), which expenses together with
interest thereon as aforesaid shall constitute Obligations.
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<PAGE> 9
16. Agent Appointed Attorney-in-Fact. Granter hereby
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as Grantor's true and lawful
attorney-in-fact, for the purpose of taking such action and executing
agreements, instruments and other documents, in the name of Grantor or
otherwise, not inconsistent with the express provisions of this Agreement, as
the Agent may deem necessary or advisable to accomplish the purposes hereof,
which appointment is an agency coupled with an interest and is irrevocable
until payment in full of all Obligations. The Agent agrees that until the
occurrence and continuation of an Event of Default, it will forbear from
exercising the power of attorney or any rights granted to the Agent pursuant to
this Section 16.
17. Governing Law; Binding Effect; Assignment. This
Agreement shall be governed by and construed in accordance with the law of the
State of Illinois. This Agreement shall be binding upon Grantor and the Agent
and their respective successors and assigns and shall inure to the benefit of
Grantor and the Agent and their respective successors and assigns; provided,
however, that Grantor may not assign its rights or obligations hereunder or in
connection herewith or any interest herein (voluntarily, by operation of law or
otherwise) without the prior written consent of the Agent. Except as provided
in Section 2, no other Person (including, without limitation, any other
creditor of Grantor) shall have any interest herein or any right or benefit
with respect hereto and this Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and each of their respective successors and assigns.
18. Further Indemnification. The Grantor agrees to pay,
and save the Agent harmless from, any and all liabilities with respect to, or
resulting from any delay in paying (other than a delay caused by the gross
negligence or willful misconduct of the Agent), any and all excise, sales or
other similar taxes which may be payable with respect to any of the
Intellectual Property Collateral or in connection with any of the transactions
contemplated by this Agreement.
19. Agent May Perform. If the Grantor fails to perform
any agreement contained herein, the Agent may, but shall not be obligated to,
itself perform, or cause performance of, such agreement, and the expenses of
the Agent incurred in connection therewith shall be payable by the Grantor
pursuant to Section 15 hereof or, if not so paid, shall become Obligations.
20. New Intellectual Property. In the event, prior to
the time the Obligations have been paid in full, the Grantor shall (i) obtain
any rights to or interests in any new inventions, whether or not patentable,
patents, patent applications or any reissue, divisions, continuations,
renewals, extensions, or continuations-in-part of any patent or improvement of
any patent, trademarks, trade names, service marks, and registrations or
applications therefor, copyrights and registrations or applications therefor,
or licenses, or (ii) become entitled to the benefit of any patent, copyright or
trademark, or any registrations or applications therefor, license, license
renewal, trade secret, or copyright renewal, the provisions of this Agreement
shall automatically apply thereto and anything enumerated in clause (i) or (ii)
of this Section 20 shall constitute Intellectual Property Collateral. The
Grantor agrees, promptly following the written request by the Agent, to amend
this Agreement by amending any or all of Schedules A, B, C, D and E, as
applicable, to include any such future
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<PAGE> 10
trademarks, trademark registrations, trademark applications, trade names,
service marks, copyrights and licenses which would be Intellectual Property
Collateral, and to immediately prepare, execute and record with all appropriate
foreign country, federal, state and/or local offices and authorities a Security
Agreement for any such new Intellectual Property Collateral, in form and
substance similar to this Agreement, and to deliver to the Agent reasonable
proof of such recordation.
21. SERVICE OF PROCESS, WAIVER OF JURY TRIAL AND RELATED
MATTERS. THIS AGREEMENT SHALL BE SUBJECT TO ALL THE TERMS AND PROVISIONS OF
SECTIONS 15.3 AND 15.4 OF THE Loan and Security Agreement.
22. Amendments, Etc. No amendment or waiver of
any provision of this Agreement, nor consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Grantor, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
23. Further Documentation. The Grantor agrees that at
any time and from time to time, at the expense of the Grantor, the Grantor will
promptly execute and deliver such further instruments and documents, and take
such further action, as may be necessary or desirable, or as the Agent may
request, in order to perfect and protect any security interests granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
the rights and remedies pursuant hereto with respect to any of the Intellectual
Property Collateral.
24. Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
25. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not part of this Agreement..
26. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same Agreement.
* * *
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<PAGE> 11
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its duly authorized officer, on the
date first above written.
LDM TECHNOLOGIES, INC.
By: [SIG]
----------------------------
Name: Joe Balous
--------------------------
Title: Secretary
-------------------------
Accepted and Acknowledged:
BankAmerica Business Credit, Inc., as Agent
By: [SIG]
----------------------------
Name: Daniel T. Cushing
--------------------------
Title: Senior Vice President
-------------------------
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<PAGE> 12
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 22nd day of January, 1997, before me came Joe Balous,
to me known to be an officer of LDM Technologies, Inc., the company described
in and which executed the above instrument, and duly acknowledged that he
executed the same.
Melissa D. Grondin
---------------------
NOTARY PUBLIC
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 22nd day of January, 1997, before me came Daniel T.
Cushing, to me known to be an officer of BankAmerica Business Credit, Inc.,
the company described in and which executed the above instrument, and duly
acknowledged that he executed the same.
Melissa D. Grondin
-----------------------
NOTARY PUBLIC
-12 -
<PAGE> 13
SCHEDULE A
TRADEMARKS
None
-13-
<PAGE> 14
SCHEDULE B
COPYRIGHTS
None
-14-
<PAGE> 15
SCHEDULE C
LICENSES
License Agreement for CDW-27 DeGas bottle between Seeber GMBH-SRL and Molmec,
Inc. Dated May 11, 1990.
License Agreement for FN-10 DeGas bottle between Seeber GMBH-SRL and Molmec,
Inc. dated February 13, 1992.
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<PAGE> 16
SCHEDULE D
PATENTS
None
-16-
<PAGE> 17
SCHEDULE E
LITIGATION
None
-17-
<PAGE> 18
SCHEDULE F
ASSIGNMENT OF INTELLECTUAL PROPERTY COLLATERAL
AGREEMENT made this ______ day of __________, 19___, by and
between LDM Technologies, Inc. (the "Assignor") and BankAmerica Business
Credit, Inc. (the "Agent") for the benefit of itself and the Lenders (as
defined in the Loan and Security Agreement referred to below).
W I T N E S S E T H:
WHEREAS, Assignor and the Agent are parties to the Loan and
Security Agreement dates as of January __, 1997 (said Agreement, as it
hereafter may be amended or otherwise modified from time to time, being
referred to as the "Loan and Security Agreement") and the Intellectual Property
Security Agreement dated January __, 1997 (the "Security Agreement") which
provides that upon the occurrence of certain events specified therein Assignor
and the Agent shall execute this Assignment; and
WHEREAS, the aforementioned events have occurred;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. Incorporation. This Assignment is made pursuant to
and subject to the terms of the Loan and Security Agreement and the Security
Agreement, each of which is deemed incorporated herein by this reference and
shall constitute part of this Assignment as if fully set forth herein.
2. Assignment. Assignor hereby conveys, sells, assigns,
transfers and sets over to the Agent all of Assignor's entire right, title and
interest in and to the Intellectual Property Collateral (as defined in the
Security Agreement).
3. Notices. All notices hereunder to the parties hereto
shall be made in the manner and to the addresses specified in the Security
Agreement.
4. Further Instruments. The parties agree to promptly
execute and deliver all further instruments necessary or desirable to carry out
the purposes of this Agreement.
5. Schedules. The terms and conditions of the Schedules
referred to herein are incorporated herein by this reference and shall
constitute part of this Assignment as if fully set forth herein.
6. Headings. The headings in this Assignment are for
purposes of reference only and shall not in any limit or otherwise affect the
meaning or interpretation of any of the terms hereof.
-18-
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Assignment
as of the date first written above.
ASSIGNOR
By:____________________
Title:
AGENT
By:____________________
Title:
-19-
<PAGE> 1
EXHIBIT 10.5
===============================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of January 22, 1997
by and among
LDM TECHNOLOGIES, INC.,
LDM HOLDINGS, LLC,
LDM CANADA LIMITED PARTNERSHIP,
LDM TECHNOLOGIES COMPANY
and
SMITH BARNEY INC.
(as Initial Purchaser)
================================================================================
$110,000,000
10 3/4% SENIOR SUBORDINATED NOTES DUE 2007
<PAGE> 2
This Registration Rights Agreement is dated as of January 22, 1997, by
and among LDM TECHNOLOGIES, INC., a Michigan corporation (the "Company" and,
together with the Guarantors who are, or hereafter become, a party hereto, the
"Issuers"), and Smith Barney Inc. (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
January 16, 1997, among the Company, the Guarantors listed on the signature
pages hereto and the Initial Purchaser (the "Purchase Agreement"). In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
and the Guarantors have agreed to provide the registration rights provided for
in this Agreement to the Initial Purchaser and its direct and indirect
transferees and assigns. The execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: As defined in Section 4(a) hereof.
Affiliate: With respect to any specified person, "Affiliate" shall
mean any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person, For the
purposes of this definition, "control," when used with respect to any person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Business Day: Any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York generally are required or authorized
by law or other government action to be closed.
<PAGE> 3
-2-
Company: As defined in the preamble hereof.
Consummate or consummate: When used to qualify the term "Exchange
Offer", shall mean validly and lawfully to issue and deliver the Exchange Notes
pursuant to the Exchange Offer for all Notes validly tendered and not validly
withdrawn pursuant thereto in accordance with the terms of this Agreement.
Consummation Date: The date that is 20 Business Days immediately
following the date that the Exchange Registration Statement shall have been
declared effective by the SEC.
Effectiveness Period: As defined in Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC pursuant thereto.
Exchange Date: As defined in Section 2(d) hereof.
Exchange Notes: The 10 3/4% Senior Subordinated Notes due 2007 of the
Company that are identical to the Notes in all material respects, except that
the provisions regarding restrictions on transfer shall be modified, as provided
in the Indenture (or the indenture pursuant to which the Exchange Notes are
issued), and the issuance thereof pursuant to the Exchange Offer shall have been
registered pursuant to an effective Registration Statement in compliance with
the Securities Act.
Exchange Offer: An offer to issue, in exchange for any and all of the
Notes validly tendered, a like aggregate principal amount of Exchange Notes,
which offer shall be made by the Company pursuant to Section 2 hereof.
Exchange Registration Statement: As defined in Section 2(a) hereof.
Guarantor: Each Person identified as a Guarantor on the signature
pages of this Agreement and each other Person which guarantees the Notes or the
Exchange Notes in accordance with the terms of the Indenture.
Indemnified Holder: As defined in Section 7(a) hereof.
<PAGE> 4
-3-
Indemnified Person: As defined in Section 7(a) hereof.
Indenture: The Indenture, dated as of January 15, 1997, among the
Company, the Guarantors and IBJ Schroder Bank & Trust Company, as trustee
thereunder, pursuant to which the Notes are issued, as amended or supplemented
from time to time in accordance with the terms thereof.
Initial Purchaser: As defined in the preamble hereof
Issue Date: As defined in Section 2(a).
Issuer Indemnified Persons: As defined in Section 7(c) hereof.
Issuers: As defined in the preamble hereof.
Notes: The 10 3/4% Senior Subordinated Notes due 2007 of the Company
issued pursuant to the Indenture.
Participating Broker-Dealer: As defined in Section 2(e) hereof.
Private Exchange: As defined in Section 2(c) hereof.
Private Exchange Notes: As defined in Section 2(c) hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Notes, Exchange Notes or Private
Exchange Notes covered by such Registration Statement, and all other amendments
and supplements to any such prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
Registration Default: As defined in Section 4(a) hereof.
<PAGE> 5
-4-
Registration Statement: Any registration statement of the Issuers that
covers any of the Notes, Exchange Notes or Private Exchange Notes pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement.
Requesting Participating Broker-Dealer: As defined in Section 2(e)
hereof.
Rule 144(k): Rule 144(k) promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
<PAGE> 6
-5-
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Shelf Blackout Period: As defined in Section 3(a) hereof.
Shelf Filing Event: As defined in Section 3(a) hereof.
Shelf Registration: As defined in Section 3(a) hereof.
Shelf Registration Statement: As defined in Section 3(a) hereof.
Special Counsel: Cahill Gordon & Reindel, special counsel to the
holders of Transfer Restricted Notes, or such other counsel as shall be agreed
upon by the Issuers and holders of a majority in aggregate principal amount of
Transfer Restricted Notes, the reasonable expenses of which holders of Transfer
Restricted Notes will be reimbursed by the Issuers pursuant to Section 6 hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Note: Each Note, upon original issuance thereof,
and at all times subsequent thereto, each Exchange Note as to which Section
3(a)(ii) hereof is applicable upon original issuance and at all times subsequent
thereto and each Private Exchange Note upon original issuance thereof and at all
times subsequent thereto, until in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) the date
on which any such Note has been exchanged by a person other than a Participating
Broker-Dealer for an Exchange Note (other than with respect to an Exchange Note
as to which Section 3(a)(ii) hereof applies) pursuant to the Exchange Offer,
(ii) with respect to Exchange Notes received by Participating Broker-Dealers in
the Exchange Offer, the earlier of (x) the date on which such Exchange Note has
been sold by such Participating Broker-Dealer by means of the Prospectus
contained in the Exchange Registration Statement and (y) the date on which the
Exchange Registration Statement has been effective under the Securities Act for
a period of six months after the Consummation Date, (iii) a Shelf Registration
<PAGE> 7
-6-
Statement covering such Note, Exchange Note or Private Exchange Note has been
declared effective by the SEC and such Note, Exchange Note or Private Exchange
Note, as the case may be, has been disposed of in accordance with such
effective Shelf Registration Statement, (iv) the date on which such Note,
Exchange Note or Private Exchange Note, as the case may be, is eligible for
distribution to the public without volume or manner of sale restrictions
pursuant to Rule 144(k) or (v) the date on which such Note, Exchange Note or
Private Exchange Note, as the case may be, ceases to be outstanding for
purposes of the Indenture or any other indenture under which such Exchange Note
or Private Exchange Note was issued.
Trustee: The trustee under the Indenture.
underwritten registration or underwritten offering: A registration in
connection with which securities are sold to an underwriter for reoffering to
the public pursuant to an effective Registration Statement.
2. Exchange Offer
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the staff of the SEC, the Issuers shall (A) prepare
and, on or prior to 30 days after the date of original issuance of the Notes
(the "Issue Date"), file with the SEC a Registration Statement under the
Securities Act with respect to an offer by the Company to the holders of the
Notes to issue and deliver to such holders, in exchange for Notes, a like
principal amount of Exchange Notes, (B) use their best efforts to cause the
Registration Statement relating to the Exchange Offer to be declared effective
by the SEC under the Securities Act on or prior to 90 days after the Issue Date,
and (C) promptly following the declaration of the effectiveness of the Exchange
Registration Statement, commence the Exchange Offer and use their best efforts
to issue, on or prior to the Consummation Date, the Exchange Notes. The offer
and sale of the Exchange Notes pursuant to the Exchange Offer shall be
registered pursuant to the Securities Act on an appropriate form (the "Exchange
Registration Statement") and duly registered or qualified under all applicable
state securities or Blue Sky laws and will comply with all applicable tender
offer rules and regulations under the Exchange Act and state securities or Blue
Sky laws. The Exchange Offer shall not be subject to any condition, other than
that the Exchange Offer does not violate any applicable law or interpretation of
the staff of the SEC. No
<PAGE> 8
-7-
securities shall be included in the Exchange Registration Statement other than
the Exchange Notes.
(b) The Issuers may require each holder of Notes, as a condition to
its participation in the Exchange Offer, to represent to the Issuers and their
counsel in writing (which may be contained in the applicable letter of
transmittal) that at the time of the consummation of the Exchange Offer (i) any
Exchange Notes received by such holder will be acquired in the ordinary course
of its business, (ii) such holder will have no arrangement or understanding with
any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes and (iii) such holder is not an Affiliate
of an Issuer, or if it is an Affiliate of an Issuer, it will comply with the
registration and prospectus delivery requirements of the Securities Act, to the
extent applicable.
(c) If, prior to consummation of the Exchange Offer, the Initial
Purchaser holds any Notes acquired by it and having, or which are reasonably
likely to be determined to have, based on the written advice of Special Counsel,
the status of an unsold allotment in the initial distribution, or any other
holder of Notes is not entitled, as a matter of law or based on an
interpretation or position of the staff of the SEC, to participate in the
Exchange Offer, the Issuers, upon the request of the Initial Purchaser or any
such holder, shall, simultaneously with the delivery of the Exchange Notes in
the Exchange Offer, issue and deliver to the Initial Purchaser and any such
holder, in exchange (the "Private Exchange") for such Notes held by the Initial
Purchaser and any such holder, a like principal amount of debt securities of
the Issuers that are identical in all material respects to the Exchange Notes
(the "Private Exchange Notes") (and which are issued pursuant to the same
indenture as the Exchange Notes). The Private Exchange Notes shall bear the
same CUSIP number as the Exchange Notes.
(d) Unless the Exchange Offer would not be permitted by any applicable
law or interpretation thereof of the staff of the SEC, the Company shall mail
the Exchange Offer Prospectus and appropriate accompanying documents, including
appropriate letters of transmittal, to each holder of Notes providing, in
addition to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Notes validly tendered will be accepted for exchange;
<PAGE> 9
-8-
(ii) the date of acceptance for exchange (the "Exchange Date"), which
date shall in no event be later than the Consummation Date (unless
otherwise required by applicable law);
(iii) that a holder of a Note electing to have a Note exchanged
pursuant to the Exchange Offer will be required to surrender such Note,
together with the enclosed letters of transmittal, to the institution and
at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the Exchange
Date; and
(iv) that holders of Notes that do not validly tender all such
securities pursuant to the Exchange Offer may no longer have any
registration rights hereunder with respect to Notes not validly tendered.
Promptly after the Exchange Date, the Company shall:
(i) accept for exchange all Notes or portions thereof validly tendered
and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by the
Company, and issue, cause the Trustee under the Indenture (or the indenture
pursuant to which the Exchange Notes are issued) to authenticate, and mail
to each holder of Notes, Exchange Notes equal in principal amount to the
principal amount of the Notes surrendered by such holder.
(e) The Company and the Initial Purchaser acknowledge that the staff
of the SEC has taken the position that any broker-dealer that elects to exchange
Notes that were acquired by such broker-dealer for its own account as a result
of market-making or other trading activities for Exchange Notes in the Exchange
Offer (a "Participating Broker-Dealer") may be deemed to be an "underwriter"
within the meaning of the Securities Act and must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes (other than a resale of an unsold allotment resulting from the
original offering of the Notes).
The Company and the Initial Purchaser also acknowledge that it is
the SEC staff's position that if the Prospectus
<PAGE> 10
-9-
contained in the Exchange Registration Statement includes a plan of distribution
containing a statement to the above effect and the means by which Participating
Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker-Dealers or specifying the amount of Exchange Notes owned by them, such
Prospectus may be delivered by Participating Broker-Dealers to satisfy their
prospectus delivery obligations under the Securities Act in connection with
resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the Securities Act.
In light of the foregoing, if requested by a Participating
Broker-Dealer (a "Requesting Participating Broker-Dealer"), the Issuers agree
(x) to use their best efforts to keep the Exchange Registration Statement
continuously effective for a period of up to six months after the Consummation
Date or such earlier date as each Requesting Participating Broker-Dealer shall
have notified the Company in writing that such Requesting Participating
Broker-Dealer has resold all Exchange Notes acquired in the Exchange Offer and
(y) to comply with the provisions of Section 5 of this Agreement, as they relate
to the Exchange Offer and the Exchange Registration Statement.
(f) The Initial Purchaser shall have no liability to any Requesting
Participating Broker-Dealer with respect to any request made pursuant to Section
2(e).
(g) Interest on the Exchange Notes and the Private Exchange Notes will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
(h) The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that the Exchange
Notes shall not be subject to the transfer restrictions set forth in the Inden-
ture. The Indenture or such indenture shall provide that the Exchange Notes,
the Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that neither the Exchange Notes, the Private Exchange
Notes nor the Notes will have the right to vote or consent as a separate class
on any matter.
<PAGE> 11
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3. Shelf Registration
(a) If (i) the Issuers are not permitted to file the Exchange Offer
Registration Statement or to consummate the Exchange Offer because the Exchange
Offer is not permitted by any applicable law or applicable interpretation
thereof by the staff of the SEC or (ii) any holder of a Note notifies the Com-
pany on or prior to the Consummation Date that (A) due to a change in law or
applicable interpretation thereof by the Staff of the SEC it is not entitled to
participate in the Exchange Offer, (B) due to a change in law or applicable
interpretation thereof by the Staff of the SEC it may not resell Exchange Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Registration Statement
is not appropriate or available for such resales by such holder or (C) it owns
Notes (including the Initial Purchaser with respect to Notes that may be deemed
to be a part of an unsold allotment from the original offering of the Notes)
acquired directly from an Issuer or an Affiliate of an Issuer or (iii) any
holder of Private Exchange Notes so requests after the consummation of the
Private Exchange or (iv) the Company has not consummated the Exchange Offer by
the Consummation Date and holders of a majority in principal amount of Notes
outstanding so request (each such event referred to in clauses (i) through (iv),
a "Shelf Filing Event"), the Issuers shall cause to be filed with the SEC
pursuant to Rule 415 a shelf registration statement (the "Shelf Registration
Statement") prior to the later of (x) 60 days after the Issue Date or (y) 30
days after the occurrence of such Shelf Filing Event, relating to all Transfer
Restricted Notes (the "Shelf Registration") the holders of which have provided
the information required pursuant to Section 3(b) hereof, and shall use their
best efforts to have the Shelf Registration Statement declared effective by the
SEC on or prior to 90 days after such Shelf Filing Event. In such
circumstances, the Issuers shall use their best efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act, until
(A) 36 months following the Issue Date or (B) if sooner, the date immediately
following the date that all Transfer Restricted Notes covered by the Shelf
Registration Statement have been sold pursuant thereto or otherwise cease to be
Transfer Restricted Notes (the "Effectiveness Period"); provided that the
Effectiveness Period shall be extended to the extent required to permit dealers
to comply with the applicable prospectus delivery requirements of Rule 174;
provided, further, that the Issuers may suspend the effectiveness of a Shelf
Registration Statement, in the event that, and for a period not to
<PAGE> 12
-11-
exceed 45 days in any calendar year (a "Shelf Blackout Period") if, (i) an event
occurs and is continuing as a result of which the Shelf Registration Statement
would, in the Company's good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading and (ii) if the Company determines in good
faith that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Company or the
disclosure otherwise relates to a pending material business transaction which
has not yet been publicly disclosed.
(b) No holder of Transfer Restricted Notes may include any of its
Transfer Restricted Notes in any Shelf Registration Statement pursuant to
Section 3(a) of this Agreement unless and until such holder furnishes to the
Company in writing, within 7 days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary prospectus included
therein. No holder of Transfer Restricted Notes shall be entitled to Additional
Interest pursuant to Section 4 hereof unless and until such holder shall have
provided all such reasonably requested information within the time periods set
forth herein. Each holder of Transfer Restricted Notes as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
4. Additional Interest
(a) The parties hereto agree that the holders of Transfer Restricted
Notes will suffer damages if the Issuers fail to fulfill their obligations
pursuant to Section 2 or Section 3, as applicable, and that it would not be
feasible to ascertain the extent of such damages. Accordingly, in the event
that (i) the applicable Registration Statement is not filed with the SEC on or
prior to the date specified herein for such filing, (ii) the applicable
Registration Statement has not been declared effective by the SEC on or prior to
the date specified herein for such effectiveness after such obligation arises,
(iii) if the Exchange Offer is required to be Consummated hereunder, the
Company has not exchanged Exchange Notes for all Notes validly tendered and not
validly withdrawn in accordance with the terms of the Exchange Offer by the
Consummation Date or (iv) except during a Shelf Blackout Period, the
<PAGE> 13
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applicable Registration Statement is filed and declared effective but shall
thereafter cease to be effective or usable in connection with the Exchange Offer
or resales of Transfer Restricted Notes during a period in which it is required
to be effective hereunder without being succeeded immediately by any additional
Registration Statement covering the Notes, the Exchange Notes or the Private
Exchange Notes, as the case may be, which has been filed and declared effective
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), then the interest rate on Transfer Restricted Notes will increase
("Additional Interest"), with respect to the first 90-day period immediately
following the occurrence of such Registration Default, by 0.5% per annum and
will increase by an additional 0.5% per annum with respect to each subsequent
90-day period until such Registration Default has been cured, up to a maximum
amount of 2.0% per annum with respect to all Registration Defaults. Following
the cure of a Registration Default, the accrual of Additional Interest with
respect to such Registration Default will cease and upon the cure of all
Registration Defaults the interest rate will revert to the original rate.
(b) The Company shall notify the Trustee and paying agent under the
Indenture (or the trustee and paying agent under such other indenture under
which any Transfer Restricted Notes are issued) immediately upon the happening
of each and every Registration Default. The Company shall pay the Additional
Interest due on the Transfer Restricted Notes by depositing with the paying
agent (which shall not be the Company for these purposes) for the Transfer
Restricted Notes, in trust, for the benefit of the holders thereof, prior to
11:00 A.M. on the next interest payment date specified by the Indenture (or such
other indenture), sums sufficient to pay the Additional Interest then due. The
Additional Interest due shall be payable on each interest payment date
specified by the Indenture (or such other indenture) to the record holders
entitled to receive the interest payment to be made on such date. Each
obligation to pay Additional Interest shall be deemed to accrue from and
including the applicable Registration Default.
(c) The parties hereto agree that the Additional Interest provided for
in this Section 4 constitutes a reasonable estimate of the damages that will
be suffered by holders of Transfer Restricted Notes by reason of the happening
of any Registration Default.
<PAGE> 14
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5. Registration Procedures
In connection with the Issuers' registration obligations hereunder,
the Issuers shall effect such registrations on the appropriate form available
for the sale of the Notes, the Exchange Notes or Private Exchange Notes, as
applicable, to (i) in the case of the Exchange Offer, permit the exchange of
Exchange Notes for Notes in the Exchange Offer and, if applicable, resales of
Exchange Notes by Participating Broker-Dealers and (ii) in the case of a Shelf
Registration, permit the sale of the applicable Transfer Restricted Notes in
accordance with the method or methods of disposition thereof specified by the
holders of such Transfer Restricted Notes, and pursuant thereto the Issuers
shall as expeditiously as reasonably possible:
(a) Furnish to the Initial Purchaser (in the case of any Registration
Statement) and the holders of the Transferred Restricted Notes included
therein (in the case of a Shelf Registration Statement) prior to the filing
thereof with the SEC, a copy of the Registration Statement and each
amendment thereto and each supplement, if any, to the Prospectus included
therein and, in the event that the Initial Purchaser (with respect to any
portion of an unsold allotment from the original offering) is partici-
pating in the Exchange Offer or the Shelf Registration, shall use
reasonable efforts to reflect in each such document, when so filed with
the SEC, such comments as the Initial Purchaser or its Special Counsel
reasonably may propose;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective for
the applicable time period required hereunder; cause the related Prospectus
to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424; and comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of disposition
by the sellers thereof set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented;
<PAGE> 15
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(c) Notify the holders of Transfer Restricted Notes to be sold or, in
the case of an Exchange Offer, tendered for, their Special Counsel and the
managing underwriters, if any, promptly, and (if requested by any such
person), confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed,
and (B) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for
additional information, (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any
stop order or injunction suspending or enjoining the use of a Prospectus or
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Notes, Exchange Notes or Private
Exchange Notes for sale in any jurisdiction, or the initiation or, to the
actual knowledge of any Issuer, threatening of any proceeding for such
purpose, and (v) of the happening of any event or information becoming
known to any Issuer that makes any statement made in a Registration
Statement or related Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement,
Prospectus or documents so that it 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, not misleading, and
that in the case of a Prospectus, it 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 light of the
circumstances under which they were made, not misleading;
(d) Use their best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of a
Prospectus or the effectiveness of a Registration Statement or the
lifting of any suspension of the qualification (or exemption from quali-
fication) of any of the Notes, Exchange Notes or Private
<PAGE> 16
-15-
Exchange Notes for sale in any jurisdiction, at the earliest practicable
moment;
(e) If a Shelf Registration Statement is filed pursuant to Section 3
hereof and if requested by the managing underwriters, if any, or the
holders of a majority in aggregate principal amount of the Transfer
Restricted Notes being sold pursuant to such Shelf Registration Statement,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters, if any, and such
holders reasonably believe should be included therein based on written
advice of counsel to such managing underwriter, if any, and/or Special
Counsel, and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment under the Securities Act as soon as
practicable after the Company has received notification of the matters to
be incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Issuers shall not be required to take any
action pursuant to this Section 5(e) that would, in the opinion of counsel
for the Issuers, violate applicable law;
(f) Upon written request to the Company by a holder of Notes, Exchange
Notes or Private Exchange Notes to be exchanged or sold pursuant to a
Registration Statement, their Special Counsel and each managing
underwriter, if any, without charge, furnish at least one conformed copy of
such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested
(including those previously furnished or incorporated by reference) as soon
as reasonably practicable after the filing of such documents with the SEC;
(g) Deliver to each holder of Notes, Exchange Notes or Private
Exchange Notes to be exchanged or sold pursuant to a Registration
Statement, their Special Counsel, and the underwriters, if any, without
charge, as many copies of the Prospectus (including each form of
prospectus) and each amendment or supplement thereto as such persons rea-
sonably request; and the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Transfer Restricted Notes and the underwriters, if any, in
connetion with the offering and sale of the Transfer Restricted
<PAGE> 17
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Notes covered thereby in accordance with the terms thereof and with U.S.
Federal securities laws and Blue Sky laws covered by such Prospectus and
any amendment or supplement thereto;
(h) Prior to any public offering of Notes, Exchange Notes or Private
Exchange Notes, use their best efforts to register or qualify or cooperate
with the holders of Notes, Exchange Notes or Private Exchange Notes to be
sold or tendered for, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of such Notes, Exchange Notes or
Private Exchange Notes for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as any such holder or
underwriter reasonably requests in writing; keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective hereunder and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Notes, Exchange Notes or Private
Exchange Notes covered by the applicable Registration Statement; provided,
however, that the Issuers shall not be required to (i) qualify generally to
do business in any jurisdiction where they are not then so qualified or
(ii) take any action which would subject them to general service of process
or to taxation in any jurisdiction where they are not so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Notes that will result in such securities no longer being
Transfer Restricted Notes, cooperate with the holders thereof and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Notes to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company and to enable
such Transfer Restricted Notes to be in such denominations and registered
in such names as the managing underwriters, if any, or such holders may
request at least two Business Days prior to any sale of Transfer Restricted
Notes;
(j) Upon the occurrence of any event contemplated by Section 5(c)(v),
as promptly as practicable, prepare a supplement or amendment, including,
if appropriate, a
<PAGE> 18
-17-
post-effective amendment, to each Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required document
so that, as thereafter delivered, such Prospectus will not contain 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,
in light of the circumstances under which they were made, not misleading;
(k) Prior to the effective date of the Exchange Registration
Statement, to provide a CUSIP number for the Exchange Notes (and, as
promptly as practicable, the Private Exchange Notes, if applicable);
(1) In connection with a Shelf Registration Statement filed pursuant
to Section 3 hereof, use their best efforts to enter into such agreements
(including an underwriting agreement in form, scope and substance as is
customary in underwritten offerings) and take all such other reasonable
actions in connection therewith (including those reasonably requested by
the managing underwriters, if any, or the holders of a majority in
aggregate principal amount of the Transfer Restricted Notes being sold)
in order to expedite or facilitate the disposition of such Transfer
Restricted Notes, and, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the holders
of such Transfer Restricted Notes and the underwriters, if any, with
respect to the business of the Issuers and their subsidiaries (including
with respect to businesses or assets acquired or to be acquired by any of
them), and the Shelf Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, in form, substance and scope as are customarily made by issuers
to underwriters in underwritten offerings, and confirm the same if and
when customarily requested; (ii) use their best efforts to obtain
opinions of counsel to the Issuers and updates thereof relating to the
applicable Registration Statement and the Notes, Exchange Notes or Private
Exchange Notes covered thereby in customary form (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory
to the managing underwriters, if any, and Special Counsel to the holders of
the Transfer Restricted Notes being sold), addressed to each selling holder
of Transfer
<PAGE> 19
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Restricted Notes and each of the underwriters, if any, covering the
matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Special
Counsel and the managing underwriters, in any; (iii) use their best efforts
to obtain customary "cold comfort" letters and updates thereof from the
independent certified public accountants of the Issuers (and, if necessary,
any other independent certified public accountants of any subsidiary of the
Issuers or of any business acquired by an Issuer or any such subsidiary for
which financial statements and financial data is, or is required to be,
included in the Shelf Registration Statement), addressed (where reasonably
possible) to each selling holder of Transfer Restricted Notes and each of
the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings; (iv) if an underwriting agreement
is entered into, the same shall contain customary indemnification
provisions and procedures (or such other provisions and procedures
acceptable to holders of a majority in aggregate principal amount of
Transfer Restricted Notes covered by such Shelf Registration Statement
and the managing underwriters, if any); and (v) deliver such documents and
certificates as may be reasonably requested by the holders of a majority
in aggregate principal amount of the Transfer Restricted Notes being
sold, their Special Counsel and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Issuers;
(m) In the case of a Shelf Registration, make available for
inspection by a representative of the holders of Transfer Restricted Notes
being sold, any underwriter participating in any such disposition of
Transfer Restricted Notes, and any attorney, consultant or accountant
acting for the holders of a majority in aggregate principal amount of such
Transfer Restricted Notes or such underwriter, at the offices where
normally kept, during reasonable business hours, all relevant financial
and other records, pertinent corporate documents and properties of the
Issuers and their subsidiaries (including with respect to businesses and
assets acquired or to be acquired to the extent that such information is
available to the Issuers),
<PAGE> 20
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and cause the officers, directors, agents and employees of the Issuers and
their subsidiaries (including with respect to businesses and assets
acquired or to be acquired to the extent that such information is available
to the Issuers) to supply all information in each case reasonably requested
by any such representative, underwriter, attorney, consultant or
accountant in connection with such Shelf Registration; provided, however,
that such persons shall first agree in writing with the Company that any
information that is reasonably and in good faith designated by the
Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons, unless and to the
extent that (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of
regulatory authorities, (ii) disclosure of such information is required by
law (including any disclosure requirements pursuant to Federal securities
laws in connection with the filing of the Shelf Registration Statement
or the use of any Prospectus), (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure
to safeguard such information by such person or (iv) such information
becomes available to such person from a source other than the Issuers and
their subsidiaries and such source is not bound by a confidentiality
agreement;
(n) Provide an indenture trustee for the Notes and/or the Exchange
Notes and Private Exchange Notes, as the case may be, and cause an
indenture to be qualified under the TIA not later than the effective date
of the first Registration Statement relating to the Notes and/or the
Exchange Notes and Private Exchange Notes, as the case may be; and if such
indenture shall be the Indenture, in connection therewith, cooperate with
the Trustee and the holders of the Notes and/or the Exchange Notes and
Private Exchange Notes, to effect such changes to the Indenture, if any, as
may be required for the Indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable efforts to cause the
Trustee to execute, all customary documents as may be required to effect
such changes, and all other forms and documents required to be filed with
the SEC to enable the indenture to be so qualified in a timely manner;
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to their
<PAGE> 21
-20-
securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158, no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month period
if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Transfer Restricted Notes are sold to underwriters in a
firm commitment or reasonable efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter after the effective date of a Registration
Statement, which statement shall cover said period, consistent with the
requirements of Rule 158; and
(p) Cooperate with each seller of Transfer Restricted Notes covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Transfer Restricted Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.
The Issuers may require a holder of Transfer Restricted Notes to be
included in a Registration Statement to furnish to the Issuers such information
regarding the distribution of such Transfer Restricted Notes as is required by
law to be disclosed in such Registration Statement and the Issuers may exclude
from such Registration Statement the Transfer Restricted Notes of any holder who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
If any such Registration Statement refers to any holder by name or
otherwise as the holder of any securities of an Issuer, then such holder shall
have the right to (i) require the insertion therein of language, in form and
substance reasonably 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 such holder of the investment quality of the Issuers'
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Issuers, or (ii)
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act, the deletion of the reference to such holder in
any amendment or supplement to the Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.
<PAGE> 22
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In the case of a Shelf Registration pursuant to Section 3 hereof, each
holder of Transfer Restricted Notes agrees by acquisition of such Transfer
Restricted Notes that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(iv) or 5(c)(v) hereof, such holder will forthwith discontinue disposition
of such Transfer Restricted Notes covered by such Registration Statement or
Prospectus until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus
6. Registration Expenses
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
any Registration Statement is filed or becomes effective and whether or not any
Notes, Exchange Notes or Private Exchange Notes are issued or sold pursuant to
any Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.
and (B) in compliance with securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Notes,
Exchange Notes and Private Exchange Notes in a form eligible for deposit with
The Depository Trust Company and of printing Prospectuses), (iii) reasonable
fees and disbursements of counsel for the Issuers and the Special Counsel (not
to exceed one firm of counsel), (iv) fees and disbursements of all independent
certified public accountants referred to in Section 2(e) and Section 5(l)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (v) if
required, the reasonable fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by the rules and regulations of
the National Association of Securities Dealers, Inc., and (vi) fees and
expenses of all other persons retained by the Issuers. In addition, the Issuers
shall pay their internal expenses (including, without limitation, all salaries
and expenses of their respective officers and employees performing legal or
accounting duties) and the expense of
<PAGE> 23
-22-
any annual audit. Notwithstanding the foregoing or anything in this Agreement
to the contrary, each holder of Transfer Restricted Notes shall pay all
underwriting discounts and commissions of any underwriters with respect to any
Notes, Exchange Notes or Private Exchange Notes sold by or on behalf of it.
7. Indemnification
(a) The Issuers agree, jointly and severally, to indemnify and hold
harmless (i) the Initial Purchaser, each holder of Notes, Exchange Notes and
Private Exchange Notes and each Participating Broker-Dealer (each such person,
an "Indemnified Holder"), (ii) each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) any of the
foregoing (any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person"), and (iii) the respective officers,
directors, partners employees, representatives and agents of the Initial
Purchaser, each holder of Notes, Exchange Notes and Private Exchange Notes, each
Participating Broker-Dealer and any controlling person (any person referred to
in clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person"), from and against any and all losses, claims, damages, liabilities and
judgments arising out of or relating to any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or in any amendment or supplement thereto, or arising
out of or relating to any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or preliminary prospectus or supplement
thereto, in light of the circumstances under which they were made) not mis-
leading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by or arise out of any untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Indemnified Person furnished in writing to the Issuers by or on behalf of such
Indemnified Person expressly for use therein; provided that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Person from whom the person asserting such losses,
claims, damages, liabilities and judgments purchased securities if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus and a copy of
the Prospectus shall not have been
<PAGE> 24
<PAGE> 25
-23-
furnished to such person in a timely manner due to the wrongful action or
wrongful inaction of such Indemnified Person.
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or
preliminary prospectus or any amendment or supplement thereto and with respect
to which indemnity may be sought against the Issuers hereunder, such Indemnified
Person shall promptly notify the Issuers in writing and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person and payment of all fees and expenses
incurred by the Issuers in the assumption of such defense. Any Indemnified
Person 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 such Indemnified Person, unless (i) the employment
of such counsel shall have been specifically authorized in writing by the
Issuers, (ii) the Company shall have failed to assume the defense and employ
counsel or pay all such fees and expenses of the assumption of such defense or
(iii) the named parties to any such action (including any impleaded parties)
include both such Indemnified Person and an Issuer and such Indemnified Person
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to any
such Issuer (in which case the Company shall not have the right to assume the
defense of such action on behalf of such Indemnified Person, it being
understood, however, that the Issuers shall not, in connection with any one such
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 reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such Indemnified Persons,
which firm shall be designated in writing by such Indemnified Persons, and that
all such reasonable fees and expenses shall be reimbursed as they are incurred
upon presentation to the Issuers of invoices setting forth and describing
such fees and expenses in reasonable detail). The Issuers shall not be liable
for any settlement of any such action effected without their written consent but
if settled with the written consent of the Issuers, the Issuers agree, jointly
and severally, to indemnify and hold harmless each Indemnified Person from and
against any loss or liability by reason of such settlement. No Issuer shall,
without the prior written consent of each Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
<PAGE> 26
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Indemnified Person is a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
(c) In connection with any Registration Statement pursuant to which an
Indemnified Holder offers or sells Transfer Restricted Notes, such Indemnified
Holder agrees, severally and not jointly, to indemnify and hold harmless (i) the
Issuers, (ii) each of their respective directors and officers and (iii) any
person controlling an Issuer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (the persons referred to in clauses (i),
(ii) and (iii) hereinafter referred to as "Issuer Indemnified Persons") from and
against any and all losses, claims, damages, liabilities and judgments arising
out of or relating to any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or in any amendment or supplement thereto, or arising out of or
relating to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein (in the
case of any Prospectus or preliminary prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions made in a Registration Statement, Prospectus or preliminary prospectus
or in any amendment or supplement thereto in reliance on and in conformity with
written information furnished to any of the Issuers by such Indemnified Holder
expressly for use in such Registration Statement, Prospectus or preliminary
prospectus or in any amendment or supplement thereto. In any such case in which
any action shall be brought against an Issuer Indemnified Person based on such
Registration Statement, Prospectus or preliminary prospectus or in any amendment
or supplement thereto and in respect of which indemnity may be sought against an
Indemnified Holder, such Indemnified Holder shall have the rights and duties
given to the Issuers (except that if an Issuer shall have assumed the defense
thereof, such Indemnified Holder shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Holder),
and the Issuer Indemnified Persons shall have the rights and duties given to the
Indemnified Persons by Section 7(b) hereof.
<PAGE> 27
-25 -
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, 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 each indemnifying party on the one
hand and the indemnified party on the other hand from the offering of the Notes,
the Exchange Notes or the Private Exchange Notes, as the case may be (it being
expressly understood and agreed that the relative benefits received by the
Issuers from the offering of the Notes, Exchange Notes or Private Exchange
Notes, as the case may be, shall be the amount of the net proceeds received by
the Company from the sale of the Notes to the Initial Purchaser), or (ii) if the
allocation provided by clause (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 (i) above but also the relative fault of each indemnifying
party on the one hand and the indemnified party 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 each indemnifying party on the one
hand the indemnified party 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 to state a material fact relates to information
supplied by an 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 the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if all Indemnified Persons 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 reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim.
<PAGE> 28
-26-
Notwithstanding the provisions of this Section 7, no Indemnified Person shall
be required to contribute any amount in excess of the amount by which the net
proceeds received by it in connection with the sale of the Notes, Exchange Notes
or Private Exchange Notes contemplated by this Agreement (or, in the case of an
underwriter that is an Indemnified Person, the total underwriting discounts
received by such underwriter) exceeds the amount of any damages which such
Indemnified Person 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Indemnified Person's obliga-
tions to contribute pursuant to this Section 7(d) are several in proportion to
the respective amount of Notes, Exchange Notes or Private Exchange Notes
included in any such Registration Statement by each Indemnified Person and not
joint.
8. Rule 144A
Each of Issuers shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but in
the past had been required to or did file such reports, it will, upon the
request of any holder of Transfer Restricted Notes, make available other
information as required by, and so long as necessary to permit sales of Transfer
Restricted Notes pursuant to Rule 144A. Notwithstanding the foregoing, nothing
in this Section 8 shall be deemed to require an Issuer to register any of its
securities pursuant to the Exchange Act,
9. Underwritten Registrations
If any of the Transfer Restricted Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
the Transfer Restricted Notes included in such offering, subject to the consent
of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such Transfer Restricted Notes on the
basis reasonably provided in
<PAGE> 29
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any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by an Issuer or by a holder of
Notes, Exchange Notes or Private Exchange Notes of any of its obligations under
this Agreement, each holder of Notes, Exchange Notes or Private Exchange Notes
and each Issuer, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. Notwithstanding the provisions of Section 4
hereof, the Issuers and each holder of Notes, Exchange Notes and Private
Exchange Notes agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach of any of the provisions of this
Agreement and each hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not enter into any
agreement with respect to their securities that is inconsistent with the rights
granted to the holders of Notes, Exchange Notes and Private Exchange Notes and
Indemnified Persons in this Agreement or otherwise conflicts with the
provisions hereof. Without the written consent of the holders of a majority in
aggregate principal amount of the outstanding Transfer Restricted Notes, the
Issuers shall not grant to any person any rights which conflict with or are
inconsistent with the provisions of this Agreement.
(c) No Piggyback on Registrations. The Issuers shall not grant to any
of their securityholders (other than the holders of Transfer Restricted Notes in
such capacity) the right to include any of their securities in any Registration
Statement other than Transfer Restricted Notes.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the holders
of not less than a majority of the then outstanding aggregate
<PAGE> 30
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principal amount of Transfer Restricted Notes; provided, however, that, for
the purposes of this Agreement, Transfer Restricted Notes that are owned,
directly or indirectly, by the Issuers or any of their Affiliates are not deemed
outstanding. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Transfer Restricted Notes whose securities are being sold
or tendered pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other holders of Transfer Restricted Notes may
be given by holders of a majority in aggregate principal amount of the Transfer
Restricted Notes being sold or tendered by such holders pursuant to such Regis-
tration Statement; provided, however, that the provisions of this sentence may
not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence. Notwithstanding the
foregoing, no amendment, modification, supplement, waiver or consent with
respect to Section 7 shall be made or given otherwise than with the prior
written consent of each Indemnified Person affected thereby.
(e) Notices. All notices and other communications provided for herein
shall be made in writing by hand-delivery, next-day air courier, certified
first-class mail, return receipt requested, telex or telecopier:
(i) if to an Issuer, to the Company as provided in the Purchase
Agreement,
(ii) if to the Initial Purchaser, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then the registered holder of
Notes, Exchange Notes or Private Exchange Notes, to the address of such
holder as it appears in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
<PAGE> 31
<PAGE> 32
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(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each holder of Notes, Exchange Notes
and Private Exchange Notes and each Indemnified Person. The Issuers may not
assign any of their rights or obligations hereunder (other than pursuant to a
merger or consolidation) without the prior written consent of each holder of
Transfer Restricted Notes and each Indemnified Person. Notwithstanding the
foregoing, no successor or assignee of an Issuer shall have any of the rights
granted under this Agreement until such person shall acknowledge its rights
and obligations hereunder by a signed written statement of such person's
acceptance of such rights and obligations.
(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.
(h) Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
(i) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining
<PAGE> 33
-30-
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
All references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) Guarantors to Become Party Hereto. So long as any Transfer
Restricted Notes shall be outstanding, the Company shall cause each Guarantor to
become a party hereto by executing a counterpart of this Agreement and
delivering such counterpart to the Initial Purchaser.
(1) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is 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 by the Issuers with
respect to the Notes, the Exchange Notes and the Private Exchange Notes. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
<PAGE> 34
-31-
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
THE COMPANY:
LDM TECHNOLOGIES, INC.
By: Joe Balous
--------------------------------------
Name: Joe Balous
Title: Chairman of the Board
and Secretary
THE GUARANTORS:
LDM HOLDINGS, LLC
By: Joe Balous
--------------------------------------
Name: Joe Balous
Title: Chairman of the Board
and Secretary
LDM TECHNOLOGIES COMPANY
By: Joe Balous
--------------------------------------
Name: Joe Balous
Title: Chairman of the Board
and Secretary
LDM TECHNOLOGIES COMPANY
By: Joe Balous
--------------------------------------
Name: Joe Balous
Title: Chairman of the Board
and Secretary
<PAGE> 35
-32-
THE INITIAL PURCHASER:
SMITH BARNEY INC.
By: Joseph P. McGruth Jr.
---------------------------
Name: Joseph P. McGruth Jr.
Title: Vice President
<PAGE> 1
EXHIBIT 10.6
INTERIM STOCK REDEMPTION AGREEMENT
THIS AGREEMENT ("Agreement"), effective April 22, 1996, is by and among LDM
INDUSTRIES INC., a Michigan corporation ("LDM"), and RICHARD J. NASH, TRUSTEE;
MICHAEL POLSELLI, TRUSTEE; and JOE BALOUS, TRUSTEE (individually a
"Shareholder", and collectively the "Shareholders").
RECITALS:
A. The Shareholders are presently the owners of all of the issued and
outstanding stock of LDM and may acquire additional shares of such
stock in the future.
B. LDM and the Shareholders believe that it is in their best interests to
create a market for the disposition of the stock of LDM upon the death of
a Shareholder.
C. LDM and the Shareholders currently are negotiating the terms of a
comprehensive stock redemption agreement ("SRA"), to be executed in the
near future.
D. LDM has purchased, and is purchasing additional, insurance on the lives of
the individual Shareholders. All such policies are owned by LDM and name
LDM as the beneficiary. The purpose of such policies is to provide
liquidity to allow LDM to redeem the stock of LDM owned by any Shareholder
upon his death.
E. Until the comprehensive SRA is executed by LDM and the Shareholders, the
parties desire to provide a mechanism for the payment of any such
insurance proceeds to the legal representative of a Shareholder upon his
death in exchange for his LDM stock.
NOW, THEREFORE, in consideration of the mutual agreements herein recited
and for other valuable consideration, the parties agree as follows:
1. PURCHASE AND MAINTENANCE OF LIFE INSURANCE POLICIES. LDM will purchase,
maintain, and pay the premiums as they become due for the life
insurance policies listed in Schedule A, attached hereto and incorporated
herein by reference ("Insurance Policies"). LDM shall not assign, encumber,
borrow against or otherwise diminish or dispose of any of the Insurance
Policies, whether before or after the termination of this Agreement, without
the prior written consent of the insured Shareholder(s), which consent may be
withheld for any reason. However, in the event that any Shareholder ceases to
own any LDM stock during his lifetime, then LDM may borrow against or terminate
any of the Insurance Policies owned on the life of such former Shareholder;
provided, that prior to termination of any such Policies, LDM shall notify such
former Shareholder of LDM's intent to terminate such Policies. Upon receipt of
such notice, the former Shareholder shall have sixty (60) days to elect in
writing to purchase all or any of such Policies from LDM for an amount equal to
their respective cash surrender values, net of any loans outstanding to LDM.
Each Shareholder agrees that LDM may borrow against the cash values of all
currently issued Policies to help fund the first premium payments for the new
Policies to be issued by Prudential, as
<PAGE> 2
described in Schedule A. LDM shall be the sole owner and beneficiary of
all Insurance Policies, and all proceeds of the Insurance Policies shall be
payable to LDM.
2. MANDATORY SALE UPON DEATH. Each Shareholder agrees for himself, his
heirs, personal and legal representatives, to sell to LDM in the event
of his death all of the stock of LDM then owned by him, at a purchase
price as set forth in Schedule B. LDM agrees to purchase all such stock in
accordance with the terms of this Agreement.
3. CLOSING AND PAYMENT OF PURCHASE PRICE. Immediately upon receipt by
LDM of the proceeds of the Insurance Policies owned on the life of a
deceased Shareholder, the legal representative of the deceased Shareholder and
LDM shall close the sale and purchase of such stock (the "Closing"). The
Closing shall take place at the principal office of LDM as follows. The
Closing date shall be established by LDM, which shall provide written notice to
the legal representative of the deceased Shareholder at least seven (7) days
prior to the Closing. At the Closing, LDM will pay for the LDM stock by
certified or bank cashiers check, and the legal representative of the deceased
Shareholder will deliver the certificates representing such stock to be sold,
duly endorsed for transfer, free and clear of all liens, encumbrances and
claims whatsoever. If the legal representative of the deceased Shareholder
protests the Closing, does not attend the Closing, or otherwise does not
deliver the appropriate stock certificates and/or stock assignments at the
Closing, then the purchase price of the stock shall be segregated by LDM in a
separate interest-bearing account, and LDM will adjust its transfer books to
reflect that the shares of stock being sold have been canceled. Each
Shareholder hereby irrevocably appoints the Secretary, Assistant Secretary and
any other officer of LDM as his true and lawful attorney-in-fact to execute and
deliver in his place and stead all stock certificates, instruments and
documents necessary or incidental to the conveyance and transfer of the stock
sold at the Closing. This power of attorney is irrevocable and is coupled with
an interest and does not terminate on the disability or death of any
Shareholder, but continues for so long as this Agreement is in effect. If a
Shareholder's LDM stock is owned in a trust at the date of his death, then, for
purposes of this Agreement, the term "legal representative" shall mean the
trustee or successor trustee of such trust.
4. TERMINATION OF AGREEMENT. This Agreement shall terminate upon the
written agreement of all parties who have executed this Agreement. In
addition, if a comprehensive SRA is not executed by LDM and the Shareholders
within six (6) months after the effective date hereof, then, upon written
notice to the other parties hereto, any Shareholder may terminate this
Agreement, but only with respect to the shares of LDM owned by such terminating
Shareholder.
5. NOTICE. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent
by registered or certified mail, postage prepaid, and addressed to LDM at its
registered office in the State of Michigan, or to any Shareholder at his
address as reflected in LDM's records. Such notice shall be deemed to have
been given as of the date so delivered or deposited in the United States mail,
as the case may be.
6. ADVICE OF COUNSEL. The parties hereto each agree, stipulate and
acknowledge that LDM's counsel, Kerr, Russell and Weber, P.L.C., has
prepared this Agreement on behalf of and in the course of its representation of
LDM as directed by its Board of Directors; that Kerr, Russell and Weber, P.L.C.
has not represented the interests of any individual Shareholder in connection
with
-2-
<PAGE> 3
this Agreement; that each Shareholder has been advised that a conflict
of interest may exist between his or her interests and those of LDM and/or the
other Shareholders; that each Shareholder has been advised to seek the advice
of his or her own independent legal counsel, and that each Shareholder has had
the opportunity to seek the advice of his or her own independent legal counsel.
7. SUCCESSORS BOUND BY AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
personal and legal representatives, including any trustee or successor trustee.
The parties agree for themselves and their personal and legal representatives
to do all acts necessary to carry out the intents and purposes of this
Agreement.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan, notwithstanding the
fact that one or more of the parties is or may hereafter become domiciled in a
different state.
9. AMENDMENT OF AGREEMENT. This Agreement may be altered or amended only
by the mutual written agreement of all parties who have executed this
Agreement.
10. COUNTERPARTS. This Agreement may be executed in any number of separate
counterparts by the parties hereto, each of which shall be an original
but all of which taken together shall constitute one and the same instrument.
It shall not be necessary that all of the parties sign any one counterpart.
This Agreement shall bind each of the Shareholders hereto as and when they
execute this Agreement, and the failure of any Shareholder to execute this
Agreement shall not affect the binding nature of this Agreement as between LDM
and the Shareholders who have executed this Agreement.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties and supersedes any and all other agreements, negotiations
and discussions, either oral or written, between or among any of the parties
hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
the date set forth above.
LDM INDUSTRIES INC. Richard J. Nash
-------------------------------------
RICHARD J. NASH, TRUSTEE, SHAREHOLDER
By: Michael Polselli Michael Polselli
----------------------------- -------------------------------------
Treasurer MICHAEL POLSELLI, TRUSTEE, SHAREHOLDER
Joe Balous
-------------------------------------
JOE BALOUS, TRUSTEE, SHAREHOLDER
-3-
<PAGE> 4
SCHEDULE A TO
INTERIM STOCK REDEMPTION AGREEMENT
POLICIES OF INSURANCE
A. RICHARD J. NASH
1. Midland Mutual
Policy No. U72358 $ 2,000,000
2. Alexander Hamilton
Policy No. 8537038 1,000,000
3. Prudential
Policy No. 77805409 30,000,000
-----------
NASH TOTAL INSURANCE AMOUNT: $33,000,000
===========
B. JOE BALOUS
1. Alexander Hamilton
Policy No. 5854196 $ 3,000,000
2. Prudential
Policy No. 77805402 25,000,000
-----------
BALOUS TOTAL INSURANCE AMOUNT: $28,000,000
===========
C. MICHAEL POLSELLI
1. Alexander Hamilton
Policy No. 8515335 $ 1,000,000
2. Prudential
Policy No. 77805407 10,000,000
-----------
POLSELLI TOTAL INSURANCE AMOUNT: $11,000,000
===========
A-1
<PAGE> 5
SCHEDULE B TO
INTERIM STOCK REDEMPTION AGREEMENT
STOCK PURCHASE PRICE
A. Richard J. Nash, Trustee
300 Shares
Purchase Price = $33,000,000
B. Joe Balous, Trustee
300 Shares
Purchase Price = $33,000,000
C. Michael Polselli, Trustee
100 Shares
Purchase Price = $11,000,000
B-1
<PAGE> 1
EXHIBIT 10.7
STOCKHOLDER CONSENT AGREEMENT
THIS AGREEMENT is made as of June 10, 1996, by and among G L INDUSTRIES
OF INDIANA, INC., an Indiana corporation (the "Company"), LAURENCE M.
LUKE, a Michigan resident ("Luke"), LDM INDUSTRIES INC., a Michigan corporation
("LDM"), and LAURENCE M. LUKE, TRUSTEE OF REVOCABLE LIVING TRUST DATED MARCH
22, 1996 ("Trustee"). Luke and LDM are sometimes referred to herein
collectively as the "Stockholders". Company, Luke, LDM, and the Trustee are
sometimes referred to herein collectively as the "Parties".
RECITALS:
A. The Stockholders are the owners of all of the issued and outstanding
stock of the Company.
B. On April 28, 1993, Company and the Stockholders executed an agreement
("Stockholder Agreement"), which contains certain conditions
and restrictions concerning ownership of stock in the Company and
certain other matters affecting the Company, including, but not
limited to, restrictions on transfer of the stock of the Company.
C. For personal estate planning reasons, Luke has requested the
consent of the Company and of LDM to the transfer of his stock
in the Company to the Trustee, and the Company and LDM are willing to
approve such transfer, subject to the terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements set forth below, and for other valuable consideration, the
Parties agree as follows:
1. WAIVER OF RESTRICTION ON TRANSFER. The Stockholders agree that Luke
may transfer his two hundred fifty (250) shares of the common capital
stock of the Company, represented by Certificate No. 9, to the Trustee, subject
to the following conditions:
A. The Trustee shall be subject to and bound by all covenants,
conditions and requirements contained in the Stockholder Agreement;
B. The Trustee shall hold the stock of the Company under the
same terms and conditions as if it had not been transferred by Luke to
the Trustee. For example, by way of illustration and not limitation, the
Trustee shall be subject to the mandatory sale provisions of Section 3 of
the Stockholder Agreement in the event of Luke's death; and
<PAGE> 2
C. The Trustee shall execute an Addendum to Stockholder Agreement,
acknowledging receipt of copies of this Agreement and of the
Stockholder Agreement, and agreeing to be bound by all the terms and
conditions of the Stockholder Agreement and of this Agreement.
2. MISCELLANEOUS PROVISIONS. This Agreement contains the entire
understanding of the Parties with respect to the subject matter of this
Agreement. This Agreement supersedes all prior agreements and understandings
among the Parties with respect to the transactions contemplated by this
Agreement. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by all of the Parties. Except as modified
hereby, the Stockholder Agreement shall remain in full force and effect. This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective personal and legal
successors and assigns; provided, however, that neither this Agreement nor any
of the rights or obligations hereunder may be assigned by any Party without the
prior written consent of the other Parties hereto. This Agreement and all
transactions contemplated hereby shall be governed, construed and enforced in
accordance with the laws of the State of Michigan.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date set forth above.
G L INDUSTRIES OF INDIANA, INC.
By: [SIG] Laurence M. Luke
------------------------------- ---------------------------------------
LAURENCE M. LUKE
LDM INDUSTRIES INC.
By: [SIG] Laurence M. Luke
------------------------------- ---------------------------------------
LAURENCE M. LUKE, TRUSTEE OF
REVOCABLE LIVING TRUST DATED
MARCH 22, 1996
-2-
<PAGE> 3
ADDENDUM TO STOCKHOLDER AGREEMENT
Laurence M. Luke, Trustee of Revocable Living Trust dated March 22, 1996, in
anticipation of and as a condition to becoming a shareholder of G L
Industries of Indiana, Inc., an Indiana corporation (the "Company"), does
hereby adopt, accept and agree to be bound by all covenants, conditions and
requirements of a certain Stockholder Agreement dated April 28, 1993
("Stockholder Agreement"), by and among G L Industries of Indiana, Inc. and its
shareholders, and of a certain Stockholder Consent Agreement dated as of June
10, 1996 ("Consent Agreement").
Laurence M. Luke
------------------------------------------------
Laurence M. Luke, Trustee of Revocable Living
Trust Dated March 22, 1996
June 10, 1996
-3-
<PAGE> 1
EXHIBIT 10.8
AGREEMENT FOR
EXCHANGE OF STOCK
THIS AGREEMENT is made on July 25, 1996, by and among MICHAEL POLSELLI,
both individually and as Trustee of the Michael Polselli Revocable
Living Trust dated October 21, 1993, as amended (collectively "Polselli"), LDM
INDUSTRIES INC., a Michigan corporation ("LDM"), and KERR, RUSSELL AND
WEBER, P.L.C., a Michigan professional limited liability company ("KRW").
RECITALS:
A. Polselli owns 100 shares (14.29%) of the issued and outstanding common
stock of LDM, represented by LDM Certificate No. 9 (the "LDM Stock").
A difference of opinion has arisen between Polselli and the other
stockholders of LDM regarding the future direction of LDM. This difference
of opinion is interfering with the proper management and operation of LDM's
business, and therefore Polselli and LDM have agreed to consummate the
transactions described in this Agreement. All parties agree that this will
be in the best interest of LDM and its shareholders.
B. Polselli desires to sell and transfer the LDM Stock, and LDM wishes to
purchase the LDM Stock, pursuant to the terms set forth herein.
C. LDM has a number of subsidiaries and affiliates, including Industrial
Machining Corporation of Arkansas, an Arkansas corporation ("Industrial
Machining").
D. LDM owns 2,500 shares (83.33%) of the issued and outstanding common stock
of Industrial Machining, represented by Industrial Machining
Certificate No. 19 (the "Industrial Machining Stock"). LDM and Polselli
desire to exchange the Industrial Machining Stock for the LDM Stock,
pursuant to the terms set forth herein.
E. KRW is willing to serve as escrow agent to facilitate the consummation of
the transactions described herein.
F. The parties to this Agreement wish to set forth their understandings with
regard to the transactions described above.
NOW, THEREFORE, in consideration of the mutual agreements herein recited
and for other valuable consideration, the parties agree as follows:
1. Exchange of LDM Stock for Industrial Machining Stock. At the closing
as defined herein ("Closing"), Polselli will transfer and convey the
LDM stock to LDM. As consideration for the transfer of the LDM Stock, at
Closing LDM will transfer and convey the Industrial Machining Stock to
Polselli. In addition, LDM will pay Polselli the sum of Five Hundred
<PAGE> 2
Thousand Dollars ($500,000) in cash upon execution of this Agreement,
and at or prior to the Closing, LDM will cause IMCA to open a new corporate
bank account and will deposit Seven Million Dollars ($7,000,000) into such
account, to be available to IMCA immediately upon Closing. LDM and Polselli
each represent and warrant to the other that the Industrial Machining Stock and
the LDM Stock, respectively, are now and will be delivered at the Closing free
and clear of any and all security interests, liens, and other encumbrances of
any kind.
2. Escrow of Documents. Upon execution of this Agreement, the following
documents shall be placed into escrow with KRW:
A. An Assignment Separate From Certificate executed by LDM,
transferring the Industrial Machining Stock to Polselli;
B. The Industrial Machining Stock;
C. An Assignment Separate From Certificate executed by Polselli,
transferring the LDM Stock to LDM;
D. The LDM Stock;
E. The written resignations of all officers and directors of
Industrial Machining, other than Polselli; and
F. The written resignations of Polselli as an officer and/or
director of LDM and all of its subsidiaries and affiliates (other than
Industrial Machining).
ALL of the above documents shall be effective upon delivery to the designated
parties by KRW, acting in its capacity as escrow agent.
3. Closing. The Closing of the transactions described herein shall take
place at the principal office of LDM on a Closing date as follows:
A. The Closing date shall be a day on or before September 28, 1996,
selected by LDM for that purpose. Seven days notice shall be provided
to Polselli prior to the Closing.
B. At the Closing, KRW shall release to Polselli the Industrial
Machining Stock, the Assignment by LDM in favor of Polselli, and the
resignations of the officers and directors of Industrial Machining.
C. At the Closing, KRW shall release to LDM the LDM Stock, the
Assignment executed by Polselli in favor of LDM, and Polselli's written
resignations.
-2-
<PAGE> 3
D. LDM shall have created a new corporate bank account for IMCA,
funded in the amount of Seven Million Dollars ($7,000,000).
E. If Polselli protests the Closing, does not attend the Closing,
or otherwise fails to deliver any appropriate documentation at the
Closing, then (i) KRW shall retain possession of the escrowed documents to
be delivered to Polselli until subsequent demand by Polselli, (ii) LDM
shall deliver to KRW the Seven Million Dollars ($7,000,000) due to be
deposited for IMCA's account at the Closing, to be held in KRW's client
trust account without interest and to be deposited into an IMCA corporate
account upon subsequent demand by Polselli, (iii) upon receipt of such
funds from LDM, KRW shall deliver to LDM the escrowed documents to be
delivered to LDM hereunder, and (iv) LDM and Industrial Machining will
adjust their transfer books to reflect that the LDM Stock and the
Industrial Machining Stock have been cancelled and/or transferred pursuant
to this Agreement, as appropriate.
4. Contingencies. The sole contingency regarding the
transactions described herein is LDM's ability to arrange financing
reasonably satisfactory to LDM for the Seven Million Dollars ($7,000,000) to be
deposited by LDM to an account in favor of IMCA at Closing. LDM agrees to use
its best efforts to achieve satisfactory financing to close the transactions
described herein. If, in spite of its best efforts, LDM is unable to arrange
satisfactory financing on or before September 28, 1996, then (a) the Five
Hundred Thousand Dollars ($500,000) paid by LDM to Polselli upon execution
hereof shall be treated by the parties as a loan by LDM to Polselli from the
date of delivery of such funds, payable on or before March 1, 1997 together
with simple interest at six percent (6%) per annum, and (b) KRW shall return
to Polselli and LDM the documents which each party delivered to KRW to be
placed in escrow. Polselli's obligations under this Agreement are subject to
no contingencies, and LDM shall be entitled to specific performance of all of
Polselli's obligations hereunder.
5. Key-Man Insurance Policies. LDM is the owner of two (2) key-man life
insurance policies insuring the life of Polselli. At the Closing, IMCA
shall have the option to purchase and take an assignment of either or both of
such policies by paying LDM an amount equal to the cash value of the policies
to be assumed. If there are any outstanding loans on either of said policies,
they shall be paid by LDM on or before the Closing date. Polselli shall give
LDM at least fifteen (15) days prior notice of his desire to cause IMCA to
assume either or both of such policies, and LDM shall take the appropriate
steps to arrange for such assignment with the respective insurers.
6. Bank Loan Covenants and Guaranties. The parties agree to obtain
releases or modifications from LDM's and Industrial Machining's
respective banks and other credit providers as necessary to permit the
consummation of the transactions described herein. If Polselli has
guaranteed any obligation of LDM or any of its related entities (other than
IMCA), then the parties agree to use their best efforts to obtain releases from
such guaranties within a reasonable time at no cost to Polselli. Similarly, if
LDM or any of its officers, directors (other than Polselli), affiliates or
related entities have guaranteed any obligation of IMCA, then the parties agree
to use
-3-
<PAGE> 4
their best efforts to obtain releases from such guaranties within a
reasonable time at no cost to the released parties.
7. Indemnification Following Closing. Following the Closing, (a) LDM
shall indemnify, defend, and hold harmless Polselli, Industrial
Machining, and its officers, directors and employees from and against any loss,
cost, damage or expense related, directly or indirectly, to the operations of
LDM, its subsidiaries and affiliates after the Closing, and (b) Polselli shall
indemnify, defend, and hold harmless LDM, its subsidiaries and affiliates, and
their respective officers, directors and employees from and against any loss,
cost, damage or expense related, directly or indirectly, to the operations of
Industrial Machining after the Closing. The obligations set forth in this
paragraph shall continue indefinitely following the Closing.
8. Confidentiality.
A. Polselli covenants and agrees that Polselli shall not use or
disclose (i) any non-public information, knowledge or data relating in
any way to the business, financial condition, sales, customers, operations,
suppliers, products, technologies or services of LDM, its affiliates or
subsidiaries, (ii) any other proprietary or confidential information,
knowledge, data or details of the past, present or future business affairs
or practices of LDM, or LDM's affiliates or subsidiaries, or (iii) any
information or facts relating to this Agreement, any agreement referred to
herein or the sale consummated thereunder. Polselli further covenants not
to interfere with or attempt to disrupt any relationship or arrangement,
whether contractual or otherwise, between LDM, or any of LDM's affiliates
or subsidiaries, and their respective customers, suppliers, agents,
representatives, or others doing business for or with LDM, or any of LDM's
affiliates or subsidiaries.
B. LDM, on its own behalf and on behalf of its shareholders
covenants and agrees that LDM shall not use or disclose (i) any
non-public information, knowledge or data relating in any way to the
business, financial condition, sales, customers, operations, suppliers,
products, technologies or services of Industrial Machining, (ii) any other
proprietary or confidential information, knowledge, data or details of the
past, present or future business affairs or practices of Industrial
Machining, or (iii) any information or facts relating to this Agreement,
any agreement referred to herein or the sale consummated thereunder.
9. Limited Liability of Escrow Agent. Unless otherwise expressly provided
herein, KRW, its successors and substitutes shall:
A. Not be held liable for any action taken or omitted under this
Agreement so long as it shall have acted in good faith and without gross
negligence;
B. Have no responsibility to inquire into or determine the
genuineness, authenticity, or sufficiency of any items or property deposited
to the escrow account;
-4-
<PAGE> 5
C. Be entitled to deem the signatories of any documents or
instruments submitted to it hereunder as being those purported to be
authorized by and on behalf of the parties hereto, and shall further be
entitled to rely upon the genuineness of the signatures of such signatories
without inquiry and without requiring substantiating evidence of any kind;
D. Be entitled to refrain from taking any action contemplated by this
Agreement in the event it becomes aware of any disagreement between the
parties as to any material facts or as to the occurrence of any
contemplated event precedent to such action;
E. Be, and hereby is indemnified and saved harmless by the other
parties hereto from all losses, costs and expenses which may be
incurred by it as a result of KRW's involvement in any litigation or other
proceeding arising from performance of its duties hereunder, provided that
such proceeding shall not result from any action taken or omitted by KRW
and for which KRW shall have been adjudged grossly negligent.
10. Notices. All notices, waivers and consents under this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered personally or sent by certified mail, postage prepaid, return receipt
requested, addressed as follows:
A. If to LDM, to:
LDM Industries Inc.
1250 Maplelawn Avenue
Troy, Michigan 48084
Attn: Joe Balous, Chairman
B. If to Polselli, to:
Michael Polselli
2995 Pheasant Ring Drive
Rochester, Michigan 48309
C. If to KRW, to:
Michael B. Lewis, Esq.
Kerr, Russell and Weber, P.L.C.
Detroit Center, Suite 2500
500 Woodward Avenue
Detroit, Michigan 48226
-5-
<PAGE> 6
or at such other address as may be specified in writing from time to
time by the party entitled to receive such notice. Such notice, waiver or
consent shall be deemed to have been given as of the date so delivered or
deposited in the United States mail, as the case may be.
11. Successors Bound by Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective personal and legal representatives, successors and assigns. The
parties agree for themselves, their personal and legal representatives,
successors and assigns to do all acts necessary to carry out the intents and
purposes of this Agreement.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan,
notwithstanding the fact that one or more of the parties is or may hereafter
become domiciled in a different state.
13. Waiver. The waiver of a breach of any provision of this
Agreement by any party shall not operate or be construed as a waiver of
any subsequent breach. Each and every right, remedy and power granted to any
party or allowed it by law shall be cumulative and not exclusive of any other.
14. Counterparts and Facsimiles. This Agreement may be executed by the
parties hereto in any number of separate counterparts, in person or by
facsimile, each of which shall be an original but all of which taken together
shall constitute one and the same instrument. It shall not be necessary that
all of the parties sign any one counterpart.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes any and all other
agreements, negotiations and discussions, either oral or written, between or
among any of the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective on
the date set forth above.
Michale Polselli
-----------------------------------------
MICHAEL POLSELLI, Individually and as
Trustee of the Michael Polselli Revocable
Living Trust Dated October 21, 1993, as
Amended
KERR, RUSSELL AND WEBER, LDM INDUSTRIES INC.
P.L.C., Escrow Agent
By: Michael B. Lewis By: Joe Balous
-------------------------------- -------------------------------
Michael B. Lewis, Member Joe Balous, Chairman
of the Firm
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<PAGE> 7
AMENDMENT TO
AGREEMENT FOR
EXCHANGE OF STOCK
THIS AMENDMENT is made effective the 27th day of September, 1996 by and
among MICHAEL POLSELLI, both individually and as Trustee of the Michael
Polselli Revocable Living Trust dated October 21, 1993, as amended
(collectively "Polselli"), LDM INDUSTRIES INC., a Michigan corporation ("LDM"),
and KERR, RUSSELL AND WEBER, P.L.C., a Michigan professional limited liability
company ("KRW").
RECITALS:
A. Polselli, LDM and KRW previously entered into an Agreement For Exchange of
Stock on July 25, 1996 ("Exchange Agreement") in which Polselli agreed
to sell and transfer 100 shares of the issued and outstanding common stock
of LDM, represented by LDM Certificate No. 9 ("LDM Stock") in exchange for
the stock ("Industrial Machining Stock") held by LDM in Industrial
Machining Corporation of Arkansas, an Arkansas corporation ("Industrial
Machining").
B. As a condition precedent to LDM's obligations under the Exchange Agreement,
LDM had to obtain financing reasonably satisfactory to LDM for
$7,000,000 ("Transfer Amount") which was to be deposited in an account
established by Industrial Machining.
C. LDM was unable to acquire financing satisfactory to it for the Transfer
Amount.
D. In order to complete the transactions contemplated by the Exchange
Agreement, LDM, Polselli and KRW desire to amend the Exchange Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein recited
and for other valuable consideration, the parties agree as follows:
1. Amendment of Paragraph 1. Paragraph 1 of the Exchange Agreement shall
be amended to read as follows:
1. Exchange of LDM Stock for Industrial Machining Stock. At the
closing as defined herein ("Closing"), Polselli will transfer and convey
the LDM Stock to LDM. As consideration for the transfer of the LDM Stock,
at Closing LDM will transfer and convey the Industrial Machining Stock to
Polselli. In addition, LDM will pay Polselli the sum of Five Hundred
Thousand Dollars ($500,000) in cash upon execution of this Agreement, and
at or prior to the Closing, LDM will deposit the sum of Four Million
Dollars ($4,000,000) into a new corporate bank account for Industrial
Machining established by Polselli.
<PAGE> 8
Further, LDM shall deliver to Polselli a promissory note for the sum of
Three Million Dollars ($3,000,000) (the "Note"). The Note shall
provide for monthly installments of principal of Ninety Thousand Dollars
($90,000) together with accrued simple interest thereon at the rate of six
and 1/2 percent (6.5%) per annum. The entire balance of the Note shall be
paid within two years from the date the Note is issued to Polselli. The
Note shall be subordinated to LDM's obligations to The Huntington National
Bank ("HNB"), and Polselli shall execute a Debt Subordination Agreement
satisfactory to HNB prior to receipt of the Note. LDM and Polselli each
represent and warrant to the other that the Industrial Machining Stock and
the LDM Stock, respectively, are now and will be delivered at the Closing
free and clear of any and all security interests, liens and other
encumbrances of any kind.
2. Amendment of Paragraph 3D. Paragraph 3D of the Exchange Agreement
shall be amended to read as follows:
D. LDM shall have deposited the amount of Four Million Dollars
($4,000,000) into a new Industrial Machining corporate bank account
established by Polselli, or shall have delivered a check in such amount to
Polselli, payable to Industrial Machining.
3. Amendment of Paragraph 4. The first sentence only of Paragraph 4
of the Exchange Agreement shall be amended to read as follows:
The sole contingency regarding the transactions described herein is
LDM's ability to arrange financing reasonably satisfactory to LDM for the
Four Million Dollars ($4,000,000) to be deposited by LDM to an account in
favor of Industrial Machining, or paid by check delivered to Polselli, at
Closing.
4. Conflicts. The terms and conditions of this Amendment shall govern
and control the terms and provisions of the Exchange Agreement if or whenever
any term or provision of the Exchange Agreement is inconsistent or in conflict
with the terms and provisions of this Amendment.
5. Miscellaneous. Except as modified by this Amendment, the Exchange
Agreement remains in full force and effect. All defined terms contained herein
shall have the same meanings as in the Exchange Agreement. All modifications
agreed upon by the parties are contained in this Amendment, and no additional
modifications to the Exchange Agreement shall be effective unless in writing
and signed by the parties hereto.
-2-
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
Michael Polselli
-----------------------
MICHAEL POLSELLI
LDM INDUSTRIES INC., a
Michigan corporation
By:
-----------------------
Its:
-----------------------
KERR, RUSSELL AND WEBER, P.L.C.,
a Michigan professional
limited liability company
By: Michael B. Lewis
-----------------------
Its: Member
-----------------------
-3-
<PAGE> 1
EXHIBIT 10.9
PROMISSORY NOTE
$3,000,000 SEPTEMBER 28, 1996
FOR VALUE RECEIVED, the undersigned, LDM INDUSTRIES INC., a Michigan
corporation (the "Maker"), hereby promises to pay to the order of
MICHAEL POLSELLI (the "Holder"), the principal sum of Three Million and No/100
Dollars ($3,000,000), together with interest at the rate of six and one-half
percent (6-1/2%) per annum, payable in twenty-three (23) monthly installments
of principal of Ninety Thousand and No/100 Dollars ($90,000) each, together
with accrued interest, beginning on October 27, 1996 and one final payment on
or before September 27, 1998, equal to the entire outstanding balance of this
Note, together with accrued interest.
Maker shall be in default ("Default") under this Note, upon any failure of
Maker to make any payment when due under this Note or the breach of any
other term or provision of this Note. Upon the occurrence of a Default which
remains uncured for a period of thirty (30) days, the entire amount due under
this Note, together with all accrued interest, shall automatically and
immediately become due and payable without notice or demand and shall bear
interest at a rate of eight percent (8%) per annum.
The Maker waives presentment for payment, demand, notice of non-payment,
protest and notice of protest of this Note. Any forbearance by the
Holder in exercising any right or remedy hereunder or otherwise afforded by
applicable law, shall not be a waiver or preclude the exercise of any right or
remedy by the Holder. The acceptance by the Holder of any sum payable
hereunder after the due date of such payment shall not be a waiver of the right
of the Holder to require prompt payment when due of all other sums payable
hereunder or to declare a Default for failure to make prompt payment.
This Note shall be governed by and construed in accordance with the laws
of the State of Michigan notwithstanding the fact that either the Maker
or Holder is or may be domiciled in another state or country.
Whenever possible, each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if
any provision of this Note shall be prohibited by or made invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of said provision
or remaining provisions of this Note.
<PAGE> 2
THE OBLIGATIONS EVIDENCED BY THIS NOTE ARE SUBJECT TO A DEBT SUBORDINATION
AGREEMENT DATED AS OF SEPTEMBER 28, 1996, OR ANY SUBSTITUTION OR
REPLACEMENT THEREFOR GIVEN BY THE HOLDER IN FAVOR OF THE HUNTINGTON NATIONAL
BANK (THE "BANK"), UNDER WHICH THIS NOTE AND THE OBLIGATIONS OF MAKER HEREUNDER
ARE SUBORDINATED TO THE FULL PAYMENT OF ALL OF MAKER'S OBLIGATIONS TO THE BANK.
LDM INDUSTRIES INC., a Michigan
corporation
By: [SIG]
-------------------------------
Its:
-------------------------------
-2-
<PAGE> 1
EXHIBIT 10.10
DEBT
SUBORDINATION AGREEMENT
This subordination agreement (this "Agreement"), dated as of September 28,
1996, is entered into by and between The Huntington National Bank and Michael
Polselli.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, and in consideration of the loans, leases, advances, commitments
to issue letters of credit and/or bankers acceptances, discounts, renewals or
extensions now or hereafter made by The Huntington National Bank, its successors
and assigns (the "Senior Creditor"), directly or indirectly, to or for the
benefit of L D M Industries Inc. (the "Debtor"), the undersigned, Michael
Polselli on behalf of the undersigned and the undersigned's heirs, executors,
administrators, successors and assigns (the "Subordinated Creditor"), agrees
with Senior Creditor as follows:
1. Description of Subordinated Debt. Subordinated Creditor represents
and warrants to Senior Creditor that (a) Debtor is indebted to Subordinated
Creditor in the principal sum of $3,000,000.00, evidenced by a certain
promissory note from Debtor dated as of September 28, 1996, which is attached to
this Agreement as Exhibit A (the "Subordinated Note"); (b) Subordinated Creditor
holds no collateral, guarantees, assurances, or security for the Subordinated
Debt; (c) the Subordinated Debt has not been subordinated in favor of or sold,
assigned, pledged or otherwise transferred or encumbered, in whole or in part,
to any other person, entity or corporation; and (d) Subordinated Creditor has
the full right, power and authority to enter into this Agreement.
2. Subordination. Subordinated Creditor hereby subordinates all
indebtedness, obligations, and liabilities now or hereafter owing by Debtor to
Subordinated Creditor, including without limitation, all principal, interest,
fees, expenses, and other charges owed under the Subordinated Note (the
"Subordinated Debt"), to the payment of any and all indebtedness, obligations
and liabilities now or hereafter owing by Debtor to Senior Creditor, plus all
principal, interest, fees, expenses, and other charges accruing on such
principal sum (the "Senior Debt"), to the extent and in the manner set forth
below, and Subordinated Creditor agrees not to demand, accept or receive,
directly or indirectly, any payment or repayment of principal, interest or other
amount on the Subordinated Debt, or from any property of Debtor or guarantor or
any third party, in violation of the terms hereof. Nothing contained in this
Agreement shall be construed to constitute consent or acquiescence in the
granting of any security interest, lien, mortgage, assignment, pledge, chattel
mortgage, guaranty, surety, hypothecation or any other property or security for
the Subordinated Debt by Debtor.
(a) Permitted Payments. Subject to the provisions of paragraphs
2(b) and 2(c) below, the Debtor may pay to Subordinated Creditor the following
payments (the "Permitted Payments" or a "Permitted Payment"): (1) accrued
interest at a rate not to exceed 6 1/2% per annum may be paid on the
Subordinated Note, on a monthly basis; and (2) monthly payments of principal
to the extent of $90,000 per month may be paid on the Subordinated Note, (3) no
prepayment of
<PAGE> 2
interest or principal or other distribution of any kind shall be made pursuant
to the Subordinated Note.
(b) No Payments Upon Default. No amount, including, without
limitation, the Permitted Payments, shall be paid by Debtor or accepted by
Subordinated Creditor, whether in cash, property, securities or otherwise, in
respect of the Subordinated Debt, if (i) there exists, or would exist after
giving effect to such proposed payment, any "Event of Default" or default as
defined or provided in any loan and security agreement, loan agreement,
promissory note or other agreement of Debtor with Senior Creditor (a "Default")
and (ii) Subordinated Creditor shall (A) have received written notice of such
Default or (B) have knowledge of a Default under the Senior Debt. Subordinated
Creditor acknowledges and agrees that a "default" or "event of default" under
the terms of the Subordinated Debt shall automatically constitute a Default (and
Subordinated Creditor's knowledge of the same) under the Senior Debt; provided,
however, that notwithstanding the foregoing restrictions, Subordinated Creditor
may receive any payment which was suspended hereunder upon the earlier of (i)
the cure by Debtor, acknowledged by the Senior Creditor in writing or written
waiver by Senior Creditor of the then existing Defaults, or (ii) the payment in
full in cash of Senior Debt and the irrevocable termination of the loan
documents relating thereto.
(c) No Payments Upon Bankruptcy, etc. In the event of any
insolvency or bankruptcy proceedings, or any receivership, liquidation,
reorganization, sale or transfer of any material asset or interest in Debtor,
or other similar proceedings or transactions in connection therewith, relative
to Debtor, to its creditors, or to its properties, or in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of
Debtor, whether or not involving insolvency or bankruptcy, Senior Creditor
shall be entitled to receive payment in full of the Senior Debt, including,
without limitation, interest, fees, or expenses accruing subsequent to the
filing of a petition in any such insolvency or bankruptcy proceeding,
notwithstanding any law, rule or regulation that would otherwise limit Senior
Creditor's right to receive such "post-petition" interest, fees, or expenses
before subordinated creditor is entitled to receive any payment of the
Subordinated Debt, and Senior Creditor shall be entitled to receive for
application in payment thereof any payment, distribution, or dividend of any
kind or character, whether in cash or property or securities, which be
payable or deliverable in any such proceedings in respect of the Subordinated
Debt, except securities which are subordinate and junior in right of payment
to the payment of all the Senior Debt then outstanding.
3. Legend. Subordinated Creditor shall cause all promissory notes
and other instruments and agreements evidencing any Subordinated Debt to bear
an appropriate legend referring to this Agreement and reciting that the
payment of the Subordinated Debt evidenced thereby is subject to the provisions
hereof, and agrees to cause any extension of any such instrument to bear such
legend.
4. Turnover of Payments. If, prior to the satisfaction of the
Senior Debt, Subordinated Creditor receives from any source whatsoever
including, but not limited to, receipt resulting from the exercise by any court
of its legal or equitable powers, any payment (except for a Permitted
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<PAGE> 3
Payment) with respect to any of the Subordinated Debt, Subordinated Creditor
shall forthwith deliver such payment to Senior Creditor, in precisely the form
received, expect for Subordinated Creditor's indorsement when necessary, for
application on account of the Senior Debt, and until so delivered, such payment
or security shall be held in trust by Subordinated Creditor as the property of
Senior Creditor. In the event of the failure of any Subordinated Creditor to
indorse any instrument for the payment of money so received by such
Subordinated Creditor, Senior Creditor is irrevocably appointed attorney for
such Subordinated Creditor with full power to make such indorsement and with
full power of substitution.
5. Standstill. Subordinated Creditor agrees for the benefit of
the holder of the Senior Debt that, so long as any part of the Senior Debt
remains outstanding, Subordinated Creditor will not prior to the earlier of (i)
180 days after providing written notice to Senior Creditor of a payment default
under the terms of the Subordinated Debt, which is not thereafter cured or
waived by Subordinated Creditor, or (ii) the acceleration of the maturity of
the Senior Debt (a) take any action to accelerate, demand the payment of, or
recover any amount due under the Subordinated Debt or to exercise any remedies
with respect thereto; or (b) take any action or exercise any remedies against
the Debtor or any guarantor or against any property of the Debtor, such
guarantor, or third party which is subject to an security interests, liens,
mortgages, assignments, pledges, chattel mortgages, guarantees, sureties,
hypothecations, subordinations, or any other property or security, whether now
existing or acquired thereafter, held by or in favor of Senior Creditor to
secure or assure the payment of the Senior Debt (collectively the "Senior
Collateral"), or (c) delay, impede or otherwise interfere with the efforts of
Senior Creditor in connection with the realization of the Senior Collateral, or
application of the proceeds thereof.
6. Mutual Consent. Notwithstanding any provision in any
promissory notes, security agreements, mortgages, financing statements and
other instruments and agreements evidencing any Senior Debt, the Senior
Creditor hereby consents to the Debtor incurring the Subordinated Debt.
Notwithstanding any provision in any promissory notes and other instruments
and agreements evidencing any Subordinated Debt, the Subordinated Creditor
hereby consents to the Debtor incurring the Senior Debt.
7. No Waiver. No action which Senior Creditor, or Debtor with the
consent of Senior Creditor, may take or refrain from taking with respect to any
Senior Debt, or any note or notes representing the same, or any Senior
Collateral therefor, including a waiver or release thereof, or any agreement or
agreements (including guaranties) in connection therewith, shall affect this
Agreement or the obligations of Subordinated Creditor hereunder. Without
limitation, the subordination of Subordinated Creditor shall in no way be
affected or impaired by, and Subordinated Creditor hereby irrevocably consents
to: (a) any amendment, restatement, alteration, extension, renewal, waiver,
indulgence or other modification of the documents evidencing the Senior Debt;
(b) any settlement or compromise, in connection with the Senior Debt; (c) any
substitution, exchange release or other disposition of all or any part of the
Senior Debt or the Senior Collateral; (d) any failure, delay, neglect, act or
omission by the Senior Creditor to act in connection with the Senior Debt or
the Senior Collateral; or (e) any advance for the purpose of performing or
curing any term or covenant
-3-
<PAGE> 4
contained in the documents or agreements evidencing the Senior Debt to which
Debtor shall be or would otherwise be in default. The obligations and
agreements of the Subordinated Creditor shall be unconditional and continuing,
notwithstanding any defect in the genuineness, validity, regularity or
enforceability of the documents or agreements evidencing the Senior Debt or the
Senior Collateral or any other circumstances whether or not referred to herein,
which might otherwise constitute a legal or equitable discharge or a defense of
the Subordinated Creditor.
8. No Interference. In the event of forbearance or workout arrangements,
or any insolvency or bankruptcy proceedings relative to Debtor, Subordinated
Creditor agrees that it will fully cooperate with Senior Creditor and will not
take any action to delay, impede, oppose, or otherwise interfere with efforts
or actions taken by Senior Creditor with respect to any actions, proceedings,
motions, orders, agreements or other matters arising in or related to such
insolvency or bankruptcy proceedings, including but not limited to, any actions,
proceedings, motions, orders, agreements or other matters relating to relief
from any automatic stay provisions, abandonment of property, use of cash
collateral, sale of the Senior Collateral free and clear of liens, the recovery
of fees and expenses in connection with such proceedings, the voting on any
plan of reorganization either with respect to a claim in respect of the Senior
Debt or the Subordinated Debt, filing and prosecution of claims, or making any
election permitted by the Bankruptcy Code, Title 11, United States Code, 11
U.S.C. Section 101 et seq. (the "Bankruptcy Code") or otherwise.
9. Bankruptcy Claims. Subordinated Creditor waives any claim that it may
now or hereafter have against the Senior Creditor arising out of any proceeding
instituted under Chapter 11 of the Bankruptcy Code related to the Senior
Creditor's election of the application of Section 1111(b)(2) of the Bankruptcy
Code and/or Senior Creditor's right to adequate protection in connection with
any borrowing or grant of a security interest under Section 364 of the
Bankruptcy Code by Debtor as debtor in possession. To the extent that the
Senior Creditor receives payments on, or proceeds of the Senior Collateral
which are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal laws, common law or equitable
cause, then, to the extent of such payment or proceeds received, the Senior
Debt, or part thereof, intended to be satisfied shall be revived and the Senior
Creditor's security interest in the Senior Collateral shall continue in full
force and effect as if such payments or proceeds had not been received by the
Senior Creditor.
10. In Writing. No modification or waiver shall be deemed to be made by
Senior Creditor of any of its rights hereunder unless the same shall be in
writing and then only with respect to the specific instance involved, and
shall in no way impair or offset the rights of Senior Creditor or the
obligations of Subordinated Creditor in any other respect or at any other time.
11. Successors: Governing Law; Venue. This Agreement shall be binding
upon Subordinated Creditor and Debtor and their respective legal
representatives, heirs, successors and assigns and shall inure to the benefit
of Senior Creditor and its respective legal representatives, heirs, successors
and assigns (including, without limitation, any transferee of any Senior Debt).
References herein to the binding effect of this Agreement shall not be deemed
to constitute consent
-4-
<PAGE> 5
or acquiescence in the sale, assignment, pledge or other transfer or
encumbrance of the Subordinated Debt by Subordinated Creditor. This Agreement
shall be construed and enforced in accordance with and governed by the law of
the State of Ohio. For the purpose of Senior Creditor seeking any and all such
relief, or any other adjudication of the rights of the parties pursuant to this
Agreement, Subordinated Creditor hereby consents and submits to the personal
jurisdiction of the Court of Common Pleas of Franklin County, Ohio, and the
United States District Court for the Southern District of Ohio, Eastern
Division. Subordinated Creditor further irrevocably consents to the service of
process out of either of the aforementioned courts in any such action or
proceeding.
12. Jury Trial Waiver. THE PARTIES TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE: AND THE PARTIES HEREBY AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
13. Notice. Any notice or other communication required or permitted
pursuant to this Agreement shall be deemed given (a) one day after the same is
sent to the address set forth below such party's signature line below if sent by
recognized overnight delivery service, (b) upon confirmation of electronic
communication if sent by telecopier, or (c) upon delivery to such address if
personally delivered.
14. Subrogation. Subject to the prior payment in full in cash of Senior
Debt, to the extent that Senior Creditor has received any payment or
distribution which but for this Agreement, would have been applied to the
Subordinated Debt, Subordinated Creditor shall be subrogated to the rights of
Senior Creditor until the Subordinated Debt shall be paid in full, and, for the
purposes of such subrogation, no such payment or distribution shall, as
between the Debtor or its other creditors, be deemed to be a payment or
distribution on account of the Senior Debt.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute one and the same document.
-5-
<PAGE> 6
16. Headings. The headings contained in this Agreement are for ease
of reference only, and shall not be construed to modify, alter or affect this
Agreement in any way.
Each of the parties has executed this Agreement as of the date set
forth above.
SUBORDINATED CREDITOR:
Michael Polselli
---------------------------
Michael Polselli
Notice Address:
1250 Maplelawn
---------------------------
Troy, MI 48084
---------------------------
Fax: (810) 649-1788
---------------------------
SENIOR CREDITOR:
THE HUNTINGTON NATIONAL BANK
By:
------------------------
Its:
-----------------------
Notice Address:
41 South High Street
Columbus, Ohio 43215
Attn: Don W. Lambacher
Fax: (614) 480-3698
Debtor hereby acknowledges notice of the within and foregoing
Subordination Agreement and agrees to be bound by all of the terms, provisions
and conditions hereof.
DEBTOR:
L D M INDUSTRIES INC.
By: Richard J. Nash
------------------------
Its: C.E.O.
-----------------------
-6-
<PAGE> 1
EXHIBIT 10.11
PRODUCTION AND NON-COMPETITION AGREEMENT
This Production and Non-Competition Agreement (the "Agreement") is dated as
of October 31, 1996 and is an agreement by and between LDM Technologies, Inc., a
Michigan corporation ("LDM") of 2500 Executive Hills Drive, Auburn Hills,
Michigan 48326 and DDM Plastics, Inc. ("DDM") of 50 Clearview Drive,
Tillsonburg, Ontario N4G 4J1.
RECITALS
WHEREAS, LDM is a manufacturer of interior and exterior plastic trim parts
and under-the-hood and functional plastic parts (collectively "Products") for
sale primarily to certain customers located in Canada, Mexico and the United
States (collectively the "NAFTA Countries"); and
WHEREAS, DDM is a manufacturer of Products for sale primarily to certain
customers (e.g., CAMI, Honda, Mazda and Toyota) with manufacturing operations
located in the NAFTA Countries; and
WHEREAS, from time to time, the need may arise for LDM and DDM to
sub-contract certain production contracts for Products to the other as a result
of timing and capacity concerns; and
WHEREAS, LDM and DDM desire to set forth the terms of their relationship
for the production of Products for each other on a sub-contract basis; and
WHEREAS, LDM and DDM desire to avoid competition with each other with
respect to the manufacture of Products for their respective existing customers.
NOW, THEREFORE, in consideration of the covenants and undertakings
contained herein, LDM and DDM agree as follows:
1. TERM OF AGREEMENT: The term of this Agreement shall be three (3) years
from the date of this Agreement. The term of this Agreement shall be
automatically extended for successive one (1) year periods unless (a) either
party notifies the other at least three hundred fifty (350) days prior to the
end of a term (either initial or renewal term) that the party wishes to
terminate the Agreement at the end of the current term or (b) the Agreement has
been previously terminated in accordance with Section 4 below.
2. PRODUCTION: (a) During the term of this Agreement, DDM shall produce
Products as a sub-contractor to LDM for sale to the customers of LDM located in
NAFTA Countries.
This production shall occur when mutually agreed upon by LDM and DDM and
shall be based on signed production contracts and/or purchase orders issued by
LDM's customers listed on Exhibit 2.1 attached hereto, copies of which will be
delivered to DDM. All of
<PAGE> 2
the terms of the contracts and/or purchase orders between LDM's customer and
LDM shall apply to LDM and DDM as if LDM was the customer and DDM was the
manufacturer with the exception that the unit price payable by LDM to DDM shall
be the unit price under LDM's contract with its customer minus five percent
(5%); provided, however, that with respect to the GMX-130 program, if LDM is
able to achieve a price increase from General Motors Corporation ("GM") for the
GMX-130 program within six (6) months from the date of this Agreement, then the
parties agree to share the increase on a 60%-40% basis (60%-LDM and 40%-DDM).
For its part, LDM will remain responsible for program management on these
subcontracts (i.e., the provision of pre-launch sales, marketing and
engineering services).
(b) During the term of this Agreement, LDM shall produce Products, as a
sub-contractor to DDM, for sale to the customers of DDM located in NAFTA
Countries.
This production shall occur when mutually agreed upon by DDM and LDM and
shall be based on signed production contracts and/or purchase orders issued by
DDM's customers listed on Exhibit 2.2 attached hereto, copies of which will be
delivered to LDM. All of the terms of the contracts and/or purchase orders
between DDM's customers and DDM shall apply to DDM and LDM as if DDM was the
customer and LDM was the manufacturer with the exception that the unit price
payable by DDM to LDM shall be the unit price under DDM's contract with its
customer minus five percent (5%). For its part, DDM will remain responsible for
program management on these subcontracts (i.e., the provision of pre-launch
sales, marketing and engineering services) with the exception of the GMX-130 GT
Version, the sub-contract for which may be awarded by LDM to DDM on an annual
basis without automatic renewal or extension.
(c) Once production is commenced by DDM or LDM on the sub-contractor basis
referred to in subparagraphs (a) and (b) above, production shall continue by
that party for the life of the customer's program.
3. NON-COMPETITION: (a) During the term of this Agreement and for a
period of two (2) years after the termination of this Agreement, DDM shall not
be allowed to solicit or accept any purchase order or production contract from
any of the customers of LDM for which DDM has acted as a sub-contractor in
accordance with Section 2 above with respect to the manufacture and production
of Products.
(b) During the term of this Agreement and for a period of two (2) years
after the termination of this Agreement, LDM shall not be allowed to solicit or
accept any purchase order or production contract from any of the customers of
DDM for which LDM has acted as a sub-contractor in accordance with Section 2
above with respect to the manufacture and production of Products.
2
<PAGE> 3
(c) The parties hereto agree that the duration and geographic scope of the
non-competition provision set forth in this Section 3 are reasonable. In the
event that any court determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
the parties hereto agree that the provision shall remain in full force and
effect for the greatest time period and in the greatest area that would not
render it unenforceable. The parties intend that this non-competition provision
shall be deemed to be a series of separate covenants, one for each and every
county of each and every state of the United States of America and each and
every political subdivision of each and every country outside the United States
of America where this provision is intended to be effective. The parties agree
that damages are an inadequate remedy for any breach of this Section 3 and that
the non-breaching party shall, whether or not it is pursuing any potential
remedies at law, be entitled to equitable relief in the form of preliminary and
permanent injunctions without bond or other security upon any actual or
threatened breach of this non-competition provision. If either party shall
violate this Section 3, the duration of this Section 3 automatically shall be
extended as against such violating party for a period equal to the period during
which such party shall have been in violation of this Section 3 and, after such
violation, the unit price paid on all sub-contracts performed by the violating
party under this Agreement shall be reduced to the unit price under the basic
contract with the customer minus fifteen percent (15%). The covenants contained
in this Section 3 are deemed to be material and each party is entering into this
Agreement relying on such covenants.
4. TERMINATION. (a) This Agreement shall be completely terminated with
respect to all sub-contracts for the Products upon the occurrence of any one of
the following:
(i) Mutual agreement in writing by the parties.
(ii) Notice of non-renewal at the end of the initial term or any renewal
term as set forth in Section 1 above.
(b) This Agreement shall be partially terminated with respect to a
particular sub-contract upon the failure by the producing party to manufacture
Products for a particular sub-contract to a quality level and delivery level
acceptable to the other party's customers. This Agreement may be terminated
pursuant to this subsection (b) with respect to a particular sub-contract only
after the producing party has received written notice from the other party of
the production and/or delivery problems and has failed to resolve or cure such
problems within thirty (30) days from such notice; provided however, that in the
case of a catastrophic failure by the producing party to perform (i.e., a
failure which if not addressed within 24-48 hours will result in the customer
cancelling the contract and/or purchase order and shifting the
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<PAGE> 4
business to another manufacturer), then the other party may move or transfer
the production to its own production facilities or to another subcontractor
with 24 hours prior written notice to the producing party.
5. SUCCESSORS AND ASSIGNS; ASSIGNMENT: This Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of LDM and
DDM. Notwithstanding the foregoing, neither party shall assign its interest in
the Agreement to an entity which is not an affiliate or subsidiary of such party
without the written consent of the non-assigning party, which consent shall not
be unreasonably withheld or delayed.
6. ENTIRE AGREEMENT; AMENDMENT: This Agreement represents the entire
understanding and agreement of LDM and DDM with regard to the subject matter
hereof and supersedes any prior verbal or written agreements or understandings
with respect to such subject matter. This Agreement may only be amended by a
document in writing signed by both parties.
7. GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan and the United States of
America.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
31st day of October, 1996.
LDM TECHNOLOGIES, INC. ("LDM")
By: Richard J. Nash
--------------------------------
Richard J. Nash,
President
DDM PLASTICS, INC. ("DDM")
By: Hiromi Kogi
--------------------------------
Hiromi Kogi,
President
4
<PAGE> 5
EXHIBIT 2.1
LDM'S EXISTING CUSTOMERS
Chrysler Corporation
Ford Motor Company
General Motors Corporation
Volkswagen
<PAGE> 6
EXHIBIT 2.2
DDM'S EXISTING CUSTOMERS
CAMI
Honda
Mazda
Toyota
<PAGE> 1
EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 31, 1996, by and among Geiger
technic, Inc., a Michigan corporation (the "Corporation"),
Verwaltungsgesellschaft Geiger technik GmbH & Co. KG, a German limited
partnership ("GKG"), Dieter Valk, a Michigan resident ("Valk") and LDM
Technologies, Inc., a Michigan corporation ("Purchaser"). GKG and Valk are
sometimes collectively referred to as "Sellers" and GKG, Valk, the Corporation
and Purchaser are sometimes collectively referred to as the "Parties".
RECITALS:
A. GKG is the owner of 90% of the issued and outstanding common stock of
the Corporation (9,000 shares).
B. Valk is the owner of 10% of the issued and outstanding common stock of
the Corporation (1,000 shares).
C. The Corporation desires to redeem from GKG and GKG desires to sell one
thousand six hundred seventeen (1,617) shares of the stock of the Corporation
(the "Redeemed Shares").
D. GKG desires to sell and Purchaser desires to purchase from GKG five
thousand seven hundred seven (5,707) shares of the stock of the Corporation
(the "GKG Shares") and Valk desires to sell and Purchaser desires to purchase
from Valk one thousand (1,000) shares of the stock of the Corporation (the
"Valk Shares"), the GKG Shares and the Valk Shares collectively representing in
total an eighty percent (80%) equity interest in the Corporation after
consummation of the transactions contemplated by this Agreement, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. Sale of Stock. GKG agrees to sell and Purchaser agrees to purchase the
GKG Shares. Valk agrees to sell and Purchaser agrees to purchase the Valk
Shares. The Corporation agrees to purchase and GKG agrees to sell the Redeemed
Shares.
2. Purchase Price. The purchase price for the GKG Shares purchased
hereunder shall be Two Million One Hundred Thousand ($2,100,000.00) Dollars.
The total price for the purchase of the Redeemed Shares shall be paid by the
issuance of a Subordinated Promissory Note from the Corporation to GKG in the
face amount of $595,000.00 payable over five (5) years in equal semi-annual
installments of principal and interest bearing interest at the rate of five
percent (5%) per annum as set forth more fully in Exhibit 2 annexed hereto (the
"Corporation's Note").
<PAGE> 2
The total purchase price for the Valk Shares purchased hereunder shall be
Three Hundred Seventy-One Thousand Dollars ($371,000.00) plus the transfer to
Valk on the date of the Escrow Closing (as defined in the Escrow Agreement
referred to in Section 3 below) of an insurance policy (the "Policy") described
below:
<TABLE>
Insurer Policy No. Policy Face Amount
- ----------------------- -------------- ------------------
<S> <C> <C>
Prudential Insurance 77417163 $350,000.00
Company of America
("Prudential")
</TABLE>
In order to effectuate the transfer of the ownership of the Policy to
Valk, the Corporation agrees to execute and deliver any documents required for
the Corporation to become the owner of the Policy. On the date of the Escrow
Closing, the Corporation shall deliver to Valk the original Policy and such
other documents, certificates or letters issued by Prudential which are
reasonably acceptable to Valk for the purpose of transferring the complete
ownership of the Policy to Valk, and confirming that Valk is the sole owner of
the Policy and containing the acknowledgement of Prudential that Valk is the
sole owner of the Policy. The Policy shall be transferred to Valk free and
clear of all liens, claims, encumbrances, pledges, security interests, policy
loans and rights of third persons.
Acknowledgment and Confirmation of Valk. Valk hereby acknowledges and confirms
that, notwithstanding the redemption by the Corporation of the Redeemed Shares
and payment thereof under the Corporation's Note by the Corporation to GKG as
provided for in the first paragraph of this Section 2 and any treatment thereof
from a tax or corporate law standpoint, Valk is not entitled to any similar or
corresponding redemption, distribution, transfer, dividend, payment or
consideration hereunder or from the Corporation or any of the parties to this
Agreement, in any form or for any reason, other than rights to payments or
benefits he is expressly granted in this Agreement or its Exhibits.
3. Payment of Purchase Price. The purchase price for the GKG Shares shall
be paid by the Purchaser in cash or by cashier's check or confirmed bank wire
transfer to an account designated by GKG at the Escrow Closing (as defined in
an escrow agreement attached hereto as Exhibit 3 (the "Escrow Agreement")).
The purchase price for the Redeemed Shares shall be paid by the Corporation's
Note delivered in escrow on the date hereof in accordance with the Escrow
Agreement and delivered to GKG at the Escrow Closing. The purchase price for
the Valk Shares shall be paid by the Purchaser in cash or by cashier's check or
confirmed bank wire transfer to an account designated by Valk at the Escrow
Closing.
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<PAGE> 3
4. Closing. The transfer of shares and other transactions shall be
deemed to have closed and occurred with full economic effect on December 31,
1996. The Parties, no later than January 16, 1997, shall enter into the Escrow
Agreement and, in accordance with the terms of the Escrow Agreement, copies of
all documents required by the Escrow Agreement to be delivered at the Escrow
Closing will be delivered into escrow.
5. Representations and Warranties of GKG and Valk. GKG and Valk represent
and warrant to LDM as follows with the understanding that all such
representations and warranties apply to both GKG and Valk except in cases where
the representation or warranty is made by GKG alone or Valk alone:
A. Corporate Status. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Michigan and has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its
business as presently conducted. The Corporation is duly qualified
to do business as a foreign corporation in all jurisdictions where
the nature of the business conducted or the properties owned,
operated or leased by it require such qualification and failure to
so qualify would materially and adversely affect its business or
condition (financial or otherwise). Annexed hereto as Exhibit 5A
are true, complete and correct copies of the Articles of
Incorporation and By-Laws of the Corporation, as presently in
effect, and a list of the jurisdictions in which the Corporation is
qualified to do business.
B. Capitalization. The authorized capital stock of the
Corporation consists of 50,000 shares of voting common stock, of
which 10,000 shares are issued and outstanding. No share of stock
is owned by the Corporation for its own account. The Corporation is
not a party to any agreement or obligation of any nature to issue
shares of capital stock, debentures, bonds, or evidences of
indebtedness convertible, in whole or in part, into shares of
capital stock, or options, warrants, calls or rights to purchase or
receive shares of capital stock other than a Stock Option Agreement
dated November 23, 1989 between GKG and Valk (the "Stock Option
Agreement"). Each outstanding share of stock is validly issued,
fully paid and non-assessable. Except for transfer restrictions on
unregistered shares generally imposed by state and federal
securities laws and the provisions of a Shareholders Agreement among
the Corporation, GKG and Valk dated November 23, 1989 (the "Current
Shareholder Agreement"), there is no restriction on transfers of
shares of stock and there is no registration covenant with respect
thereto.
3
<PAGE> 4
C. Authority and Enforceability. The Corporation and GKG have
the full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. This Agreement and
all other documents and certificates executed by the Corporation and
GKG pursuant to and in furtherance of the purpose of this Agreement
are and shall be fully enforceable against the Corporation and GKG
in accordance with their terms except as enforceability may be
limited by bankruptcy, reorganization, moratorium, insolvency and
similar laws affecting creditor rights generally and by general
principles of equity.
This Agreement and all other documents and certificates executed by
Valk pursuant to and in furtherance of the purpose of this
Agreement are and shall be fully enforceable against Valk in
accordance with their terms except as enforceability may be limited
by bankruptcy, reorganization, moratorium, insolvency and similar
laws affecting creditor rights generally and by general principles
of equity.
D. Subsidiaries and Investments. The Corporation does not
directly or indirectly own, control, or participate in any other
corporation, association, partnership, joint venture, trust or other
business organization or similar arrangement.
E. Financial Statements.
(i) Reviewed financial statements of the Corporation for the
fiscal year ended December 31, 1995 have been delivered
to Purchaser and are annexed hereto as Exhibit 5E. The
year-end financial statements of the Corporation fairly
present (in accordance with U.S. generally accepted
accounting principles applied on a consistent basis) the
financial condition and the assets and liabilities of the
Corporation as of the date of such statements and the
results of operations and changes in financial position of
the Corporation for the respective periods reported. All
interim financial statements delivered or made available to
Purchaser for periods after December 31, 1995 were prepared
in the ordinary course and in accordance with past practice.
Except as disclosed in the year-end financial statements,
during the last three years there has been no material
change
4
<PAGE> 5
in accounting principles and practices of the Corporation as
theretofore applied, including, without limitation, the
basis upon which assets and liabilities are recorded and
earnings and profits are ascertained.
(ii) The minute books and stock register of the Corporation are,
and at the Escrow Closing will be, current, true, correct
and complete in all material respects and all signatures
contained therein are and will be the genuine signatures of
the persons purported to have signed.
F. Tax Returns and Audits. Except as disclosed in the year-end
financial statements or Exhibit 5F:
(i) All federal, state, local and foreign returns and reports
required to be filed by the Corporation with respect to
taxes have been filed, except for returns and reports for
such periods which are not yet due.
(ii) All taxes which were required to have been recorded,
collected, withheld, segregated and paid by the Corporation
(a) have been, as the case may be, recorded, collected,
withheld, segregated and paid in full when and as required,
or (b) are being contested in good faith by appropriate
proceedings and adequate measures and are disclosed in the
year-end financial statements.
(iii) The Corporation has not made any agreement with the
Internal Revenue Service or any other person extending the
period for assessment or collection of taxes payable by the
Corporation, nor has the Corporation received any notice
that a claim for assessment and collection of taxes has
been asserted against the Corporation, whether as a result
of any audit of any period ending prior to the Escrow
Closing or otherwise.
G. No Breach. The consummation of the acquisition and the other
transactions contemplated hereby:
(i) do not and will not violate, conflict with, or breach any
provision of law or the Articles of Incorporation or
By-Laws of the Corporation;
5
<PAGE> 6
(ii) do not constitute and will not constitute a breach of or
default under any provision of any contract, indenture,
mortgage, deed of trust or other agreement or instrument
to which the Corporation is a party or by which it or its
properties or assets are bound, or cause an acceleration
of payments thereunder other than the Current
Shareholders Agreement;
(iii) do not and will not violate any order, rule or
regulation of any person which is a regulatory agency
validly exercising jurisdiction over the Corporation; and
(iv) have not resulted and will not result in the creation
or imposition of any lien upon any property or asset of
the Corporation.
H. Necessary Permits and Approvals. The Corporation has all
permits, registrations, licenses, and authorizations (including
without limitation all of the same relating to production or
disposition of hazardous wastes) which are necessary to conduct its
business and the absence of which would materially and adversely
affect its business, forecasted sales as set forth in Exhibit 5H
("Sales Forecast") or condition (financial or otherwise).
I. Employee Benefit Plans. To the best of GKG's and Valk's
knowledge:
(i) Exhibit 5I contains a true, complete and correct listing
and summary description of each bonus, deferred
compensation, pension, profit-sharing or retirement plan,
arrangement or practice, and each other employee benefit
plan (as defined in Section 3(3) of ERISA), and each other
fringe benefit plan, arrangement or practice, maintained
by the Corporation, to which the Corporation contributes
or is required to contribute, or under which any employee
of the Corporation is accruing benefits, whether formal or
informal, whether legally binding or not, and whether
affecting one or more of its employees. Such employee
benefit plans are herein referred to as the "Plans". No
Plan has been completely or partially terminated. The
Corporation does not have and will not have any funding
deficiency or any additional funding requirement with
respect to any Plan for past years, and all required
contributions have
6
<PAGE> 7
been made to such Plans for the Corporation's current
fiscal year, prorated through the date of Escrow
Closing.
(ii) The Corporation has not maintained or contributed to,
or been obligated or will become obligated to
contribute to, any multi-employer plan as defined in
Section 3(37) of ERISA.
J. Title to Property, etc. Except as disclosed in the year-end
financial statements and Exhibit 5J, the Corporation has (directly
or indirectly) good and marketable title to, or valid leasehold
interests in, all real and personal property and assets, tangible
and intangible, reflected in the year-end financial statements
(other than property or assets disposed of in the ordinary course of
business), free and clear of any lien, encumbrance, security
interest, lease, mortgage, pledge, conditional sale agreement,
contract, option, charge or claims of any nature whatsoever.
K. No Adverse Communication or Event. To the best of GKG's and
Valk's actual knowledge, having made due inquiry of Valk and Sigrid
Valk (Valk and Sigrid Valk being referred to hereinafter as the
"Management Group"), neither the Corporation, GKG nor Valk has
received any communication from any of the customers or suppliers of
the Corporation regarding, or has knowledge of, any event which has
occurred or is anticipated and which would have a material and
adverse effect on the business, Sales Forecast or condition
(financial or otherwise) of the Corporation.
L. Contracts and Commitments.
(i) Exhibits 5H and 5L contain, and at the Escrow
Closing will contain, a list of each executory contract,
agreement, lease, commitment and proposal (whether oral or
written) to which the Corporation is a party, the author or
the recipient (together with a summary of the essential
terms for any such items that are oral) and which conforms
to one or more of the following descriptions (each of the
same being hereinafter referred to in this Section as a
"contract"):
(a) any contract for the purchase or sale of tooling;
7
<PAGE> 8
(b) any contract for employment or for consulting services;
(c) any contract pertaining to collective bargaining by, or
wages, benefits or conditions of employment of, employees
of the Corporation;
(d) any contract for the lease of real or personal property;
(e) any contract with any manufacturer's or sales
representative for, dealer in, or distributor of, the
services and goods of the Corporation;
(f) any resin supply contract;
(g) any contract involving the borrowing or lending of money
or extension of credit by or to any person who is an
employee of the Corporation, or by or to any other person;
and
(h) any other contract in an amount exceeding $50,000.00 to
which the Corporation is a party or by which it or its
properties or assets are bound.
(ii) The Corporation has delivered to Purchaser copies of all
written contracts, agreements, leases, commitments and
proposals and summaries of such items which are oral and are
listed on Exhibits 5H and/or 5L.
M. No Violations or Pending Litigation. Except as disclosed in
Exhibit 5M:
(i) the Corporation is not, and at the Escrow Closing will not be,
a party to any suit or other adjudicatory proceeding of a legal
nature or a party to or subject to any judgment, order, writ,
injunction, or decree which materially and adversely affects,
or might reasonably be expected to materially and adversely
affect its business, prospects, condition (financial or
otherwise), property or assets;
8
<PAGE> 9
(ii) the Corporation is not a party to any grievance or
arbitration proceeding between the Corporation and any of
its employees;
(iii) to the best of GKG's and Valk's actual knowledge, having
made due inquiry of GKG or the Management Group, neither
the Corporation nor GKG nor Valk has received written or
oral notice from any member of the Management Group or
from any outside authority, or any other written
communication, internal or otherwise, that the Corporation
is in material violation of any law (including without
limitation, the Employees Retirement Income Security Act,
the Occupational Safety and Health Act of 1970, the Export
Administration Act of 1979, the Foreign Corrupt Practices
Act, the Comprehensive Environmental Response Compensation
and Liability Act of 1980 and any other statute relating
to protection of the environment or production and
disposal of hazardous wastes), rule, regulation, ordinance
or order of any person validly exercising jurisdiction
over the Corporation or that there is any claim, action,
investigation or proceeding of any kind, involving,
without limitation, any proceeding to dissolve, limit or
impair any corporate power, right or privilege of the
Corporation pending or threatened against or relating to
the Corporation or any of its properties or assets.
Notwithstanding the foregoing, it is hereby disclosed that
the U.S. Environmental Protection Agency ("USEPA")
examined a reported possible disposal of hazardous
substance on the Corporation's real property at 6400
Sprinkle Road, Portage, Michigan which was alleged to have
taken place before the Corporation acquired the property.
Information with respect to the EPA investigation is
included in Exhibit 5M. As of the date of this Agreement,
neither GKG nor Valk is aware that the USEPA has
undertaken any enforcement action against the Corporation
in connection with this prior investigation;
9
<PAGE> 10
(iv) (a) Except as set forth in Exhibit 5M hereto, and to
the best of GKG's and Valk's actual knowledge, having
made due inquiry of GKG and the Management Group, the
Corporation's ownership, occupancy, maintenance,
operation and use of the Corporation's Real Property
are and at all times have been, in compliance with all
Environmental Laws the non-compliance with which would
or could have a material adverse effect upon the
Corporation's business;
(b) All Permits with respect to the use of the Real
Property which are required pursuant to Environmental
Laws have been obtained and the same are, and have been
at all times, in full force and effect where the
failure to have such Permit would have a material
adverse effect upon the Corporation's business. To the
best of GKG's and Valk's actual knowledge, having made
due inquiry of GKG and the Management Group, there has
been no change in any fact or circumstance reported or
assumed in any application for or grant thereof which
would have a material and adverse effect on the
validity of any such Permit or the renewal or transfer
thereof;
(c) Except as disclosed on Exhibit 5M and in Section
5M(iii) of this Agreement and to the best of GKG's and
Valk's actual knowledge, having made due inquiry of GKG
and the Management Group:
(1) Neither the Corporation, GKG, Valk nor any
previous owner or any past or present operator,
user or occupant of any of the Real Property has
received (or has actual knowledge of) any
Environmental Citations;
(2) No Environmental Citation or claim is pending or
threatened under any Environmental Law concerning
the past or present ownership, maintenance,
operation or occupancy of the Corporation's Real
Property or any portion thereof or concerning the
Corporation or which relates to Hazardous Activity
or Hazardous
10
<PAGE> 11
Materials; and
(3) No basis exists for any governmental investigation or
any such Environmental Citation to be instituted or
filed.
(d) Except as set forth in Exhibit 5M, and to the best of the
GKG's and Valk's actual knowledge, having made due inquiry
of GKG and the Management Group, neither the Corporation,
GKG, Valk nor any prior owner, occupant, operator or user of
the Real Property or any portion thereof or any other
person, has permitted, conducted or is aware of any
Hazardous Activity conducted with respect to the Real
Property or any geologically or hydrologically adjoining
property or is aware of any other operation resulting, now
or in the past, in the discharge or release of Hazardous
Materials on or from the Real Property or any portion
thereof that would or could have a material adverse effect
on the Corporation;
(e) Except as set forth in Exhibit 5M, and to the best actual
knowledge of GKG and Valk, having made due inquiry of GKG
and the Management Group, there are no Hazardous Materials
present in the surface water, groundwater or soil (either
surface or subsurface) at the Real Property or at any
geologically or hydrologically connected property including,
without limitation, any hazardous materials contained in
barrels, above or underground storage tanks, landfills, land
disposals, land treatment units, waste piles, containment
buildings, dumps, solid waste management units, equipment
(movable or fixed) or other containers, either temporary or
permanent, and deposited or located in or on land, water,
sumps, or any other part of the Real Property or such
connected property, or incorporated into any structure
thereon, in violation of, or creating any liability under,
any Environmental Law the non-compliance with which would
have a material adverse effect on the Corporation's
business;
11
<PAGE> 12
(f) to the best of GKG's and Valk's actual knowledge,
having made due inquiry of GKG or the Management Group,
and except as disclosed in subsection (iii) above and
Exhibit 5M, neither the Management Group nor GKG nor
Valk is aware of the presence of any underground
storage tanks on the Corporation's Real Property;
(g) The Corporation has delivered to the Purchaser true,
complete and correct copies and results of any reports,
studies, analyses, boring logs, tests or monitoring
possessed, under the control of the Corporation,
whether in draft or final form, pertaining to Hazardous
Materials and/or Hazardous Activities in, on, or under
the Real Property and/or concerning compliance with
Environmental Laws;
(h) The Corporation has not been accused, or found liable
under any Environmental Law or, to the best of GKG's
and Valk's actual knowledge, having made due inquiry of
GKG and the Management Group, except as set forth on
Exhibit 5M and Section 5M(iii) of this Agreement, is
not under investigation in respect thereof and no Real
Property, site or facility (as defined under CERCLA) of
the Corporation is listed or proposed for listing on
the National Priorities List or is listed on the
Comprehensive Environmental Response, Compensation,
Liability Information System List or any comparable
list maintained by any foreign, federal, state,
regional, county or local authority. There are no
proceedings pending, or to the best of the actual
knowledge of GKG and Valk, having made due inquiry of
GKG and the Management Group, threatened, under any
Environmental Law against or affecting the Corporation
or the Real Property, in any court or before any
governmental authority or arbitration board or tribunal
which, if adversely determined, would or could have a
material adverse effect on the Corporation's business.
The Corporation is not in default with respect to any
order of any court or governmental authority or
arbitration board or tribunal;
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<PAGE> 13
(i) Except as set forth on Exhibit 5M and in Section
5M(iii) of this Agreement and to the best of GKG's
and Valk's actual knowledge, having made due
inquiry of the Management Group, any and all
Hazardous Materials owned by the Corporation, or
for which the Corporation is responsible under any
Environmental Law, which have been transported,
emitted, released, removed, or which have
otherwise come to be located away from the Real
Property, have at all times been used,
transported, recycled, treated, stored or disposed
of by the Corporation in accordance with
Environmental Laws;
(j) The Real Property listed on Exhibit 5M constitutes
all of the Real Property previously or now leased,
owned or operated by the Corporation and since its
date of incorporation the Corporation has never
leased, owned or operated any other real property;
(k) All of the real property acquired by the
Corporation was acquired in a transaction which
required the transfer of title to the Corporation,
as buyer, by deeds which were duly recorded in the
real estate records for the counties in which each
such parcel of real estate is located;
(l) The following definitions shall apply under this
Section 5M(iv) and this Agreement:
(i) "Environmental Citations" means any written
notice, communication, inquiry, warning,
citation, summons, directive, injunction,
order or claim, concerning the violation of
any Environmental Law in connection with the
Real Property or any portion thereof, or any
leachate or contamination emanating
therefrom;
(ii) "Environmental Laws" means all applicable
foreign, federal, state, regional, county and
local administrative, regulatory and judicial
laws, rules, statutes, codes, ordinances,
regulations, binding interpretations, binding
policies, permits, approvals,
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<PAGE> 14
authorizations, rulings, injunctions,
decrees, orders, judgments, common law and
any similar items in effect on the date of
this Agreement and through the date of the
Escrow Closing relating to the protection
of human health, safety, or the environment
(including ambient air, surface water,
ground water, land surface or subsurface
strata); including, without limitation, the
following laws, as amended prior to the
Closing: (a) CERCLA; (b) the Hazardous
Materials Transportation Control Act of
1970 (49 U.S.C. Section Section 1802 et
seq.); (c) RCRA; (d) the Clean Water Act;
(e) the Safe Drinking Water Act (42 U.S.C.
Section Section 300h et seq.); (f) the
Clean Air Act (42 U.S.C. Section Section
1857 et seq.); (g) the Solid Waste Disposal
Act (42 U.S.C. Section Section 6901 et
seq.); (h) the Toxic Substances Control Act
(15 U.S.C. Section Section 2601 et seq.);
(i) the Emergency Planning and Community
Right-to-Know Act of 1986 (42 U.S.C.
Section Section 11001 et seq.); (j) the
Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Section Section
136 et seq.); (k) the Radon Gas and Indoor
Air Quality Research Act (42 U.S.C. Section
Section 7401 et seq.); (l) the National
Environmental Policy Act of 1975 (42 U.S.C.
Section Section 4321); (m) the Rivers and
Harbors Act of 1899 (33 U.S.C. Section
Section 401 et seq.); (n) the Oil Pollution
Act of 1990 (33 U.S.C. Section Section 1321
et seq.); (o) the Occupational Safety and
Health Act of 1970 (29 U.S.C. Section
Section 651 et seq.); (p) counterparts of
any of the foregoing federal statutes
enacted within or outside the United
States, any State of the United States or,
region, county or local government
(including any subdivisions thereof) with
jurisdiction over the Real Property, the
Corporation or in force therein including,
without limitation, any such statutes
relating to Hazardous Activity and
Hazardous Materials; and (q) any and all
laws, rules, codes, ordinances,
regulations, binding interpretations,
binding policies,
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<PAGE> 15
licenses, permits, approvals, plans,
authorizations, directives, rulings, injunctions,
decrees, orders and judgments relating to
hazardous wastes, hazardous substances, toxic
substances, pollution, polychlorinated biphenyls,
petroleum (its derivatives, by-products, or
constituents) the protection of human health,
safety, or the environment;
(iii) "Hazardous Activity" means the generation,
manufacturing, production, processing, refinement,
treatment, pumping, injection, pouring, handling,
storage, use (including any withdrawal or other
use of groundwater), management, transfer,
distribution, transportation, deposit, disposal
(including, without limitation, arrangement for
placement in any landfill, temporary or permanent
holding area, impoundment, sump or dump), dumping,
escaping, placing, dispersal, release, discharge,
spill, emission, injection, leak, leaching,
migration of Hazardous Materials in, on, under,
about or from the Real Property or any part
thereof into the indoor or outdoor environment
including, without limitation, the ambient air,
surface water, groundwater or surface or
subsurface strata and any other act or thing,
business or operation, that materially increases
the danger, or risk of danger, or poses an
unreasonable risk of harm to persons or property,
on or off the Real Property, or which may
materially adversely impact the value of the Real
Property;
(iv) "Hazardous Material" means any solid, liquid or
gaseous material, alone or in combination, mixture
or solution, which is now defined, listed or
identified as "hazardous" (including "hazardous
substances" and "hazardous wastes"), "toxic", a
"pollutant" or a "contaminant" pursuant to any
Environmental Law including, without limitation,
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<PAGE> 16
asbestos, urea formaldehyde, polychlorinated
biphenyls (PCBs), radon, fuel oil, petroleum
(including its derivatives, by-products or other
constituents) and any other dangerous, explosive,
corrosive, flammable, infectious, radioactive,
carcinogenic or mutagenic material which is
prohibited, limited, controlled or regulated under
any Environmental Law, or which poses a threat or
nuisance to the safety or health of any person on
the Real Property or any property geologically or
hydrologically adjacent to, or surrounding, the
Real Property or the environment, or the presence
of which could constitute a trespass by the
Corporation;
(v) "Permits" means all governmental or other
licenses, permits, certificates, approvals,
authorizations and orders material to the ability
of the Corporation to carry on its business as it
is presently being conducted;
(vi) "Real Property" means all real estate relating to
or used in the operation of the Corporation's
business which was previously or currently owned,
operated or leased by the Corporation;
(v) there are no warranty or product liability claims now
pending or, to the actual knowledge of GKG or Valk,
threatened against or otherwise affecting the Corporation
other than goods returned in the ordinary course of
business.
N. Occurrences Since Last Certified Financial Statements. Except as
disclosed on Exhibit 5N, since December 31, 1995, the Corporation has
not agreed to do or done any of the following:
(i) suffered any material and adverse change in
or to its business or condition (financial or otherwise) or,
to the best of the actual knowledge of the Management Group
and GKG, its prospects for future business;
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<PAGE> 17
(ii) suffered any physical damage or destruction, whether
or not covered by insurance, materially and adversely
affecting its business, financial condition, property
or assets;
(iii) been subject to any labor organizing election or
activity, any labor dispute or threat thereof;
(iv) increased wages, salary or wage rate or other forms
of material compensation except for any wage or
salary increase to an employee which did not exceed
10% of prior base salary of such employee, and which
was consistent with prior practice;
(v) made any payment of, or arrangement, agreement or
commitment for payment of, any bonus, profit sharing,
or other incentive compensation or retirement,
termination or severance benefit to or for any
salaried employee of the Corporation other than
pursuant to an Employee Benefit Plan in a manner
consistent with prior practice, or made any payment
or reimbursement to or for any salaried employee of
the Corporation for expenses other than in the
ordinary course of business;
(vi) guaranteed, endorsed or indemnified the obligation of
any person, other than the endorsement of checks,
drafts, letters of credit, and similar commercial
instruments in the ordinary course of business in a
manner consistent with prior practice or pursuant to
a contract or other item listed and/or described in
Exhibit 5L;
(vii) sold, assigned, transferred or disposed of any asset
or cancelled any debt or claim having a value in the
aggregate of more than $5,000.00, except, in each
case, in the ordinary course of business in a manner
consistent with prior practice;
(viii) issued or sold or entered into an agreement to issue
or sell any debenture, bond or other instrument of
indebtedness including, without limitation, any such
debenture, bond or other instrument convertible, in
whole or in part, into share of, or into an option,
warrant or right to purchase, authorized capital
stock or other capital stock of the Corporation;
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<PAGE> 18
(ix) issued or sold or entered into any agreement
(other than this Agreement) to issue or sell any
authorized capital stock or other capital stock of the
Corporation; granted any option, warrant or right for
the purchase of authorized capital stock or other
capital stock of the Corporation; declared or paid any
dividend, or made any distribution in respect of any
share of its authorized capital stock; or made any
direct or indirect redemption, purchase or other
acquisition of any share of its authorized capital
stock; or
(x) entered into any capital purchase transaction
with any related party of GKG and Valk.
O. Broker and Fees. GKG warrants that it has not entered into
any agreement for the payment of a broker's fee or commission in
connection with the execution, delivery or performance of this
Agreement or the consummation of the acquisition or the other
transactions contemplated by this Agreement and related documents.
Valk warrants that he and the Corporation, individually and
collectively, have not entered into any agreement for the payment of
a broker's fee or commission in connection with the execution,
delivery or performance of this Agreement or the consummation of the
acquisition or the other transactions contemplated by this Agreement
and related documents.
P. Other Liabilities. To the best of GKG's and Valk's actual
knowledge, the Corporation does not have any material liability
(fixed or contingent) or obligation which is not fully reflected or
provided for in accordance with U.S. generally accepted accounting
principles, applied on a consistent basis, in the December 31, 1995
financial statements, other than:
(i) liabilities specifically permitted by or provided for
in this Agreement;
(ii) obligations which are to be performed after the date of
this Agreement under any contract or other item listed
and/or summarized in Exhibit 5L; and
(iii) other liabilities or obligations disclosed in writing
to Purchaser.
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<PAGE> 19
Q. Dividends and Loans. Except as required by this Agreement, the
Corporation has not declared or set aside any dividends or other
distributions with respect to its capital stock. The Corporation is
not indebted to GKG or Valk or to any party related to either of them
except as set forth on Exhibit 5Q.
R. Ownership of Shares. GKG warrants that it has good and marketable
title to all of the GKG Shares and the Redeemed Shares being sold and
conveyed pursuant to this Agreement, subject to no lien, encumbrance,
security interest, restriction, contract, commitment, charge or claim
of any nature whatsoever, except for the Current Shareholder
Agreement. Valk warrants that he has good and marketable title to all
of the Valk Shares being sold and conveyed pursuant to this Agreement,
subject to no lien, encumbrance, security interest, restriction,
contract, commitment, charge or claim of any nature whatsoever, except
for the Current Shareholder Agreement. At the Escrow Closing, GKG
warrants that Purchaser shall receive good and marketable title to the
GKG Shares and the Redeemed Shares and, at the Escrow Closing, Valk
warrants that the Purchaser shall receive good and marketable title to
the Valk Shares, in each case free and clear of all liens,
encumbrances, security interest, restrictions, contracts, commitments,
charges or claims of any nature whatsoever except the New Shareholders
Agreement as defined in Section 12 below. GKG warrants that it is not
a party to any voting trust, proxy or other agreement or understanding
with respect to the voting of any of the stock of the Corporation,
including the GKG Shares, the Valk Shares and the Redeemed Shares,
except the Current Shareholder Agreement. Valk warrants that Valk is
not a party to any voting trust, proxy or other agreement or
understanding with respect to the voting of any of the stock of the
Corporation, including the GKG Shares, the Valk Shares and the
Redeemed Shares, except the Current Shareholder Agreement.
S. Customer Relationships. Exhibit 5S contains, and at the Escrow
Closing will be updated to contain, a true, complete and correct (a)
list of all customers of the Corporation within the preceding 24
months, (b) list of all current customers of the Corporation, and (c)
statement, to the best of GKG's and Valk's actual knowledge, regarding
any known or threatened significant loss of future business volume
from any customer of the Corporation.
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<PAGE> 20
T. Quality Ratings. Exhibit 5T contains, and at the Escrow Closing will
be updated to contain, a true, complete and correct list of (a) all
quality ratings assigned to the Corporation by any of its customers,
(b) any additions, deletions, or variances with respect thereto over
the past 24 months, and (c) to the best of GKG's and Valk's actual
knowledge, any known or threatened future changes with respect
thereto.
U. To the extent that each of Valk and the Corporation certifies under
penalty of perjury, and verifies as true, the representations set
forth in Exhibit 5U, as applicable to each of them, such Exhibits are
incorporated herein by reference as if such certification and
representations were made as a part of this Agreement. In the event
either Valk or the Corporation does not make such certification and
representations in the manner provided herein and under the Internal
Revenue Code and Income Tax Regulations, it is understood the
Purchaser and the Corporation shall withhold and pay over as federal
income tax ten percent (10%) of the amount provided to be paid under
this Agreement for the sale of the GKG Shares and/or the Redeemed
Shares and/or the Valk Shares, as appropriate (or such other amount as
shall be required by law to be withheld and paid over to taxing
authorities over time). GKG, Valk and the Corporation understand that
the certifications provided for herein may be disclosed to the
Internal Revenue Service by the Purchaser or the Corporation and that
any false statement could be punished by fine, imprisonment or both.
V. Warranties True as of Closing. The representations and warranties of
GKG and Valk set forth herein are true, complete and correct as of the
date of this Agreement and will be true, complete and correct as of
the date of Escrow Closing.
W. Survival of Warranties; Limitation. The representations and
warranties of GKG and Valk shall be deemed material to the Purchaser
and to have been relied upon by the Purchaser notwithstanding any
investigation made before or after the date of this Agreement and each
such representation shall continue in full force and effect until that
date which is eighteen (18) months after the date of Escrow Closing at
which time they shall terminate except (i) as to claims which are
asserted by third parties prior to such date and notice of which shall
have been given by Purchaser to GKG and Valk prior to such date; and
(ii) the representations and warranties set forth in Sections 5B and
5R above.
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<PAGE> 21
6. Representations of Purchaser. Purchaser hereby represents and
warrants to GKG and Valk as follows:
A. Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Michigan.
B. Authority and Enforceability. Purchaser has full corporate
power and lawful authority to enter into this Agreement and to carry
out the transactions contemplated hereby. This Agreement and all
other documents and certificates executed by Purchaser pursuant to
and in furtherance of the purpose of this Agreement are and shall be
fully enforceable against Purchaser in accordance with their terms,
except as enforceability may be limited by bankruptcy,
reorganization, moratorium, insolvency and similar laws affecting
creditor rights generally and by general principles of equity.
C. Default. The consummation of the acquisition and the other
transactions hereby:
(i) do not and will not violate, conflict with,
or breach any provision of law or the Articles of
Incorporation or By-Laws of Purchaser;
(ii) as of the Escrow Closing, will not constitute a
breach of or default under any provision of any contract,
indenture, mortgage, deed of trust or other agreement or
instrument to which Purchaser is a party or by which it or
its properties or assets are bound, or cause an acceleration
of payments thereunder;
(iii) do not and will not violate any order, rule or
regulation of any person which is a regulatory agency validly
exercising jurisdiction over Purchaser.
D. Securities Law Representation. Purchaser is purchasing the
Shares for its own account for investment purposes and not with a
view toward distribution or resale of any of the Shares.
E. Survival of Warranties; Limitation. The representations and
warranties of Purchaser shall be deemed material to the GKG and Valk
and to have been relied upon by the GKG and Valk notwithstanding any
investigation made before or after the date of this Agreement and
each such representation shall continue in full force and effect
until that date which is eighteen (18) months after the date of
Escrow Closing at which time they shall terminate except as to
claims which are asserted by third parties prior to such date and
notice of which shall have been
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<PAGE> 22
given by GKG and/or Valk to Purchaser prior to such date.
F. Broker and Fees. Purchaser has not entered into any
agreement for the payment of a broker's fee or commission in
connection with the execution, delivery or performance of this
Agreement or the consummation of the acquisition or the other
transactions contemplated by this Agreement and the related
documents.
7. Conditions to Purchaser's Obligations. All obligations of Purchaser
under this Agreement are subject to the fulfillment or waiver by Purchaser on
or prior to the Escrow Closing (as defined in the Escrow Agreement) of each of
the following conditions:
A. All of the representations and warranties of both GKG and
Valk shall be true at the time of Escrow Closing as though such
representations and warranties were made at such time.
B. The Corporation, GKG and Valk shall have performed and
complied with all agreements and conditions required by this
Agreement to be performed or complied with by the date of Escrow
Closing.
C. There shall not have been, prior to the Escrow Closing, any
substantial fire, accident or other casualty or any civil commotion,
riot, or act of God which would have a material adverse effect on
the business of the Corporation.
D. There shall be no material adverse change in the operation of
the Corporation's business prospects, operations, earnings or
financial position from the date of the certified year-end financial
statements to the date of Escrow Closing.
E. Purchaser shall have had an opportunity to conduct a due
diligence investigation of the Corporation and its properties, and
shall be fully satisfied with the results of such investigation.
F. The approval of all parties whose approval of or consent to
the transaction is required (including but not limited to the
respective shareholders and Boards of Directors of LDM, GKG and the
Corporation, the Corporation's lenders, any local, state or federal
governmental authorities having jurisdiction over the Corporation
and the customers of the Corporation) shall have been obtained
unless the failure to obtain such approvals or consents is solely a
result of the acts or omissions of the Purchaser.
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<PAGE> 23
G. GKG and Valk shall have waived any pre-emptive rights either
of them may have under the Corporation's Articles of Incorporation
or the Current Shareholder Agreement to purchase the Valk Shares or
the GKG Shares.
H. The Current Shareholder Agreement and the Stock Option
Agreement and the Split-Dollar Insurance Agreement dated February
25, 1991 between the Corporation and Valk shall have been terminated
on or before the date of Escrow Closing.
I. Valk shall not have exercised his rights under the Stock
Option Agreement on or before the date of the Escrow Closing.
8. Conduct of Business Pending Closing. Except as agreed to by
Purchaser, from and after the date hereof, the Corporation:
A. Shall carry on its business in substantially the same manner
presently conducted and shall not introduce any material new method
of management, operation or accounting without Purchaser's prior
written consent.
B. Shall use its best efforts to preserve its business
organization intact, retain the services of its employees and
preserve the goodwill of suppliers, customers and others having
business relations with it.
C. Shall not enter into or agree to enter into any transaction,
agreement or commitment on behalf of or affecting the Corporation
other than in the ordinary course of business.
D. Shall not amend, restate or revoke its Articles of
Incorporation or By-Laws.
E. Shall not declare any dividend or make any payment or
distribution to its stockholders or purchase or redeem any shares of
its stock.
F. Shall not make any wage or salary increase or grant or pay
any bonuses.
G. Shall perform all of its obligations under contracts and
agreements to which it is a party or by which it is bound.
H. Shall not mortgage, pledge, encumber, hypothecate or transfer
any of its properties.
I. Shall furnish Purchaser or Purchaser's representatives with
any and all such information concerning the business and financial
operations of the Corporation as Purchaser may reasonably request.
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<PAGE> 24
9. Indemnification.
A. Indemnification by GKG and Valk. Subject to the limitations
set forth elsewhere in this Agreement, GKG and Valk, severally (GKG
for 90% of any claim and Valk for 10% of any claim), hereby agree to
indemnify, defend and hold harmless Purchaser, its officers,
directors, employees, shareholders, successors and assigns
(collectively "Purchaser's Indemnified Persons"), both individually
and in their corporate capacities, from and against all demands,
suits, claims, actions or causes of action, assessments, losses,
costs, damages, liabilities, settlements, penalties and forfeitures,
and reasonable costs and expenses incident thereto (collectively the
"Indemnity Losses" and individually an "Indemnity Loss") asserted
against, suffered or incurred by any of Purchaser's Indemnified
Persons as a result of or in connection with:
(i) Any and all monetary damages or deficiency
resulting from any misrepresentation, breach of warranty
and/or nonfulfillment of any agreement or covenant on the
part of GKG or Valk, respectively, under this Agreement or
resulting from any misrepresentation or omission from any
certificate, schedule, list or other instrument to be
furnished by the Corporation, GKG or Valk to Purchaser under
this Agreement; and
(ii) Any and all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses,
including reasonable attorneys fees, incident to any of the
foregoing.
B. Indemnification by Purchaser. Purchaser hereby agrees to
indemnify, defend and hold harmless GKG and Valk and their
respective personal representatives, successors and assigns
(collectively "Sellers' Indemnified Persons"), from and against any
Indemnity Loss asserted against, suffered or incurred by any of the
Sellers' Indemnified Persons as a result of or in connection with:
(i) Any and all monetary damages or deficiency
resulting from any misrepresentation, breach of warranty
and/or nonfulfillment of any agreement or covenant on the
part of Purchaser under this Agreement or resulting from any
misrepresentation or omission from any certificate,
schedule, list or other instrument to be furnished by
Purchaser to GKG or Valk under this Agreement; and
(ii) Any and all actions, suits, proceedings,
demands, assessments, judgments, costs and
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<PAGE> 25
expenses, including reasonable attorneys fees, incident
to any of the foregoing.
C. Notice. If any person believes that he, she or it has
suffered or incurred any Indemnity Loss, that person shall so notify
the indemnifying party promptly in writing describing such loss or
expense, the amount thereof, if known, and the method of computation
of such Indemnity Loss, all with reasonable particularity. If any
action at law, suit in equity or administrative action is instituted
by or against a third party with respect to which any person intends
to claim any liability or expense as an Indemnity Loss under this
Section, such person shall promptly notify the indemnifying party of
such action. Any notice delivered in accordance with this Section
9C is hereafter referred to as an "Indemnity Claim".
D. Defense of Claim. The indemnifying party shall have twenty
(20) days after receipt of an Indemnity Claim to notify the
indemnified party that it elects to conduct and control any legal or
administrative action or suit with respect to an Indemnity Claim.
If the indemnifying party does not give such notice, the indemnified
person shall have the right to defend, contest, settle or compromise
such Indemnity Claim in the exercise of its exclusive discretion,
and the indemnifying party shall, upon request from the indemnified
person, promptly pay the indemnified person in accordance with the
other terms and conditions of this Section the amount of any
Indemnity Loss resulting from its liability to the third party
claimant. If the indemnifying party gives such notice, it shall
have the right to undertake, conduct and control, through counsel of
its own choosing and at its sole expense, the conduct and settlement
of such Indemnity Claim, and the indemnified person shall cooperate
with the indemnifying party in connection therewith; provided,
however, that:
(i) the indemnifying party shall not thereby
permit to exist any lien, encumbrance or other adverse
charge securing the claims indemnified hereunder upon any
asset of the indemnified person;
(ii) the indemnifying party shall not thereby
consent to the imposition of any injunction against the
indemnified person without the written consent of the
indemnified person;
(iii) the indemnifying party shall permit the
indemnified person to participate in such conduct or
settlement through counsel chosen by the indemnified person,
but the fees and expenses of such counsel shall be borne by
the
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<PAGE> 26
indemnified person; and
(iv) upon a final determination of such action or
suit, the indemnifying party shall agree promptly to
reimburse to the extent required under this Section the
indemnified person for the full amount of any Indemnity Loss
resulting from such action or suit and all reasonable and
related expenses incurred by the indemnified person, except
fees and expenses of counsel for the indemnified person
incurred after the assumption of the conduct and control of
such action or suit by the indemnifying party. So long as
the indemnifying party is contesting any Indemnity Claim in
good faith, the indemnified person shall not pay or settle
any such Indemnity Claim. Notwithstanding the foregoing, the
indemnified person shall have the right to pay or settle any
such Indemnity Claim, provided that in such event the
indemnified person shall waive any right to indemnity
therefor from the indemnifying party and no amount in respect
thereof shall be claimed as an Indemnity Loss under this
Section.
E. Cooperation. If requested by the indemnifying party, the
indemnified person agrees to cooperate with the indemnifying party
or its counsel in contesting any Indemnity Claim which the
indemnifying party elects to contest or, if appropriate, in making
any counterclaim against the person asserting the Indemnity Claim,
or any cross-complaint against any person, and further agrees to
take such other action as reasonably may be requested by an
indemnifying party to reduce or eliminate any loss or expense for
which the indemnifying party would have responsibility, but the
indemnifying party will reimburse the indemnified person for any
expenses which are approved in advance by the indemnifying party and
which are incurred by the indemnified party in so cooperating or
acting at the request of the indemnifying party.
F. Right to Participate. The indemnified person agrees to
afford the indemnifying party and its counsel the opportunity to be
present at, and to participate in, conferences with all persons,
including governmental authorities, asserting any claim against the
indemnified person or conferences with representatives of or counsel
for such persons.
G. Payment of Losses. The indemnifying party shall pay to the
indemnified person in cash the amount of any Indemnity Loss to which
the indemnified person may become entitled by reason of the
provisions of this Agreement, such payment to be made within fifteen
(15) business days
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<PAGE> 27
after the amount of any Indemnity Loss is finally determined either
by mutual agreement of the Parties hereto or pursuant to the final
unappealable judgment of a court of competent jurisdiction.
H. Failure to Give Notice Timely. Notwithstanding the notice
requirements provided herein, the right to indemnification under
this Agreement shall not be affected by any failure to give or any
delay in giving such notice unless, and then only to the extent
that, the rights and remedies of the Party to whom such notice was
to have been given shall have been prejudiced.
I. Minimization of Indemnities. The Parties hereto shall each
use reasonable efforts to minimize the obligation of the other to
indemnify under this Agreement by, among other reasonable things and
without limiting the generality of the foregoing, taking such
reasonable remedial action as it believes may minimize such
obligation and seeking to the maximum extent possible reimbursement
from insurance carriers under applicable insurance policies covering
any such liability.
J. Assignment of Claims. The Parties agree that upon
satisfaction of the obligation to indemnify hereunder, and in
consideration thereof, to assign to the Party making such payment or
giving such credit any and all claims, causes of action and demands
of whatever kind and nature which such indemnified party may have
against any person, firm or other entity giving rise to such
Indemnify Loss, and to reasonably cooperate in any efforts to
recover therefrom.
K. Deductible/Threshold Amount. GKG and Valk shall severally
indemnify the Purchaser in accordance with Section 10A above;
provided, however, that any indemnification by GKG and Valk pursuant
to this Section 10 shall not be required unless and until the
aggregate amount of all such claims or losses exceeds $25,000 (the
"Threshold Amount") and then only to the extent of such claims or
losses in excess of the Threshold Amount.
The Purchaser shall indemnify GKG and Valk in accordance with
Section 10B above; provided, however, that any indemnification by
the Purchaser pursuant to this Section 10 shall not be required
unless and until the aggregate amount of all such claims or losses
exceeds $25,000 (the "Threshold Amount") and then only to the
extent of such claims or losses in excess of the Threshold Amount.
L. Cap on Indemnification. The maximum amount of indemnification
by GKG and Valk under Section 9 above (including reasonable
attorney fees and reasonable costs) shall be $2,471,000, $2,100,000
for GKG and $371,000 for Valk; provided, however, that
notwithstanding the
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preceding cap on liability of GKG, in the event that Purchaser is
required to pay any amount under the revenue bond guaranty referred
to in Section 16 below, due to the insolvency of the Corporation, a
material cause of which insolvency was a misrepresentation or
breach of warranty by GKG hereunder, GKG shall reimburse Purchaser
for such guaranty payment up to a maximum of $2,500,000, but only
to the extent that the effect of such misrepresentation or breach
of warranty contributed to such insolvency and GKG shall thereupon
be subrogated to all the rights of Purchaser under such guaranty to
the extent of such reimbursement. The maximum amount of
indemnification by the Purchaser of GKG and Valk (on a combined
basis and allocated 90% to GKG and 10% to Valk) shall be
$1,000,000.00.
M. Indemnification Agreement Between GKG and Valk. On or before
the date of the Escrow Closing, GKG and Valk will enter into an
Indemnification Agreement in the form attached as Exhibit 9M.
10. Amendment of the Articles of Incorporation of the Corporation. On
the date of the Escrow Closing, the Corporation, GKG, Valk and LDM shall
undertake the actions required to amend the Articles of Incorporation of the
Corporation in the manner set forth on Exhibit 10 annexed hereto to provide that
certain corporate actions of the Corporation may only be taken by unanimous
consent of its shareholders.
11. Amendment of the By-Laws of the Corporation. On the date of the
Escrow Closing, the Corporation, GKG, Valk and LDM shall undertake the actions
required to amend and restate the By-Laws of the Corporation in the manner set
forth in Exhibit 11 annexed hereto.
12. Shareholder Agreement. On the date of the Escrow Closing, the
Corporation, LDM and GKG shall enter into a shareholders' agreement (the "New
Shareholders' Agreement") in the form set forth in Exhibit 12 annexed hereto.
13. Termination of Valk's Option Rights. On the date of the Escrow
Closing, GKG and Valk shall terminate the Stock Option Agreement, Valk shall
relinquish his rights under the Stock Option Agreement and GKG shall make a
payment of $350,000.00 to Valk pursuant to an Assignment of Stock Option Rights
and an Agreement to Extinguish Option in the form attached hereto as Exhibit 13.
14. Licensing Agreement. On the date of the Escrow Closing, the
Corporation, LDM and Geiger technik GmbH ("GTG"), an affiliate of GKG, shall
enter into a Licensing Agreement in the form annexed as Exhibit 14.
15. Management Services Agreement. On the date of the Escrow Closing,
the Corporation and LDM shall enter into a Management Services Agreement in the
form annexed as Exhibit 15.
28
<PAGE> 29
16. Assumption of Liability under Guaranty. On the date of the Escrow
Closing, LDM shall assume the obligations of GTG under a certain guaranty of a
$2,500,000.00 revenue bond financing issued in favor of the Corporation.
17. Employment Related Agreements. On the date of the Escrow Closing,
the Corporation and Valk shall enter into an Employment Agreement and a
Deferred Compensation Agreement which shall be mutually satisfactory to them.
18. Subordinated Promissory Note. On the date of the Escrow Closing, the
Subordinated Promissory Note shall be delivered to GKG in exchange for the
Redeemed Shares.
19. Observers. Prior to the Escrow Closing, Purchaser may station one or
more agents or employees as observers/advisors at the Corporation to assist
Purchaser's due diligence process and to facilitate process improvements by the
Corporation in anticipation of Closing. However, such individuals shall have
no authority to direct the operations of the Corporation and neither GKG, Valk,
the Corporation nor Purchaser shall have any liability for their acts or
omissions.
20. Termination. This Agreement may be terminated as follows:
A. Termination by Mutual Agreement. This Agreement may be
terminated by the mutual agreement in writing of the Parties at any
time prior to the Closing.
B. Termination by Purchaser. This Agreement and any obligations
of Purchaser hereunder may be terminated by Purchaser at any time
prior to or at the Escrow Closing if the conditions precedent set
forth in Section 7 above have not been fulfilled or waived by
Purchaser.
C. Termination by Seller. This Agreement and any obligations of
GKG and Valk hereunder may be terminated by GKG or Valk at any time
prior to (following two (2) days notice and Purchaser's inability or
refusal to cure) or at the Escrow Closing if (i) Purchaser shall
have materially breached or materially failed to perform any of its
covenants or obligations hereunder; (ii) any representation or
warranty of Purchaser contained herein is false or misleading in any
material respect; (iii) Purchaser shall fail to make any delivery
specified herein; or (iv) GKG or Valk shall have delivered a
certificate to the Escrow Agent (as defined in the Escrow Agreement)
to the effect that since December 31, 1996, either GKG or Valk
became aware of a fact, event or condition which would constitute a
material (i.e., a potential loss or liability of $100,000 or more)
breach of a representation or warranty of GKG or Valk contained in
Section 5 of this Agreement.
In the event of such termination by any Party, no Party shall have
29
<PAGE> 30
any further rights, obligations or liabilities under this Agreement.
21. Best Efforts. Subject to the terms and conditions of this Agreement,
each of the Parties shall use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary or
desirable to consummate the transactions provided for in this Agreement and the
Escrow Agreement; provided, however, that none of the Parties shall be
responsible for events occurring which are beyond their control, and no Party
shall be required to expend funds outside of the ordinary course of business.
22. Further Assurances. GKG and Valk, after the Closing, without further
consideration, shall execute, acknowledge, and deliver any further assignments,
conveyances and other assurances, documents and instruments of transfer
reasonably requested by Purchaser, and shall take any other action consistent
with the terms of this Agreement that may reasonably be requested by Purchaser
for the purpose of assigning, transferring granting, conveying and confirming
the GKG Shares and the Valk Shares to Purchaser, and the Parties agree to
cooperate with each other as may otherwise be appropriate to carry out the
transactions contemplated by this Agreement and the Escrow Agreement.
23. Confidential Nature of Information. Each Party agrees that it will
treat in confidence all documents, materials and other information which it
shall have obtained regarding the Parties during the course of the negotiations
leading to the consummation of the transactions contemplated by this Agreement
(whether obtained before or after the date hereof), and the preparation of this
Agreement and other related documents. The obligation of each Party to treat
such documents, materials and other information in confidence shall not apply
to any information which (i) such Party can demonstrate was already lawfully in
its possession prior to the disclosure thereof by the other Party, (ii) is
known to the public and did not become so known through any violation of a
legal obligations, (iii) became known to the public through no fault of such
Party, (iv) is later lawfully acquired by such Party from other sources, (v) is
required to be disclosed under the provisions of any state or United States
statute or regulation issued by a duly authorized agency, board or commission
thereof, or (vi) is required to be disclosed by a rule or order of any court of
competent jurisdiction.
24. Expenses. Each of the Parties shall pay all legal and accounting fees
and other costs and expenses incurred or to be incurred by it in negotiating
and preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement, except as otherwise expressly provided for
herein. The Parties expressly agree that all legal fees and other documented
costs and expenses incurred by Valk in connection with this transaction prior
to January 1, 1997 are to be paid by the Corporation and that all legal fees
and other documented costs and expenses incurred by Valk in connection with
this transaction after
30
<PAGE> 31
January 1, 1997 are to be paid in accordance with a Certain Agreement Regarding
Attorney Fees dated as of December 31, 1996 among GKG, Valk, the Corporation,
Albert Geiger and Sigrid Valk.
25. Headings. The subject headings of the Sections of this Agreement are
included for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
26. Entire Agreement. This Agreement, including the schedules and
exhibits referred to herein which form a part of this Agreement, contain the
entire understanding of the Parties with respect to the transactions
contemplated by this Agreement. There are no representations, warranties,
covenants or undertakings other than those expressly set forth or provided for
in this Agreement. Matters disclosed by GKG and Valk to Purchaser pursuant to
any Section of this Agreement (or any schedules or exhibits referenced therein)
shall be deemed disclosed pursuant to all Sections of this Agreement. This
Agreement supersedes all prior agreements and understandings between the
Parties with respect to the transactions contemplated by this Agreement.
27. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
Parties. The Party for whose benefit a warranty, representation, covenant or
condition is intended may in writing waive any inaccuracies in the warranties
and representations contained in this Agreement or waive compliance with any of
the covenants or conditions contained herein and so waive performance of any of
the obligations of the other Parties hereto, and any defaults hereunder;
provided, however, that such waiver shall not affect or impair the waiving
Party's rights with respect to any other warranty, representation or covenant
or any default hereunder, nor shall any waiver constitute a continuing waiver.
28. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
29. Schedules and Exhibits. All schedules and exhibits attached to this
Agreement are incorporated herein and made a part hereof in the same manner as
if such schedules and exhibits were set forth at length in the text of this
Agreement.
30. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the Parties and their respective successors and assigns;
provided, however, that neither this Agreement nor any of the rights or
obligations hereunder may be assigned or delegated by any party without the
prior written consent of the other Parties hereto.
31. Notices. All notices, requests, demands, and other communications to
be given under this Agreement shall be in writing
31
<PAGE> 32
and shall be deemed to have been duly given on the date of service if served
personally on the Party to whom notice is to be given, or on the third day
after mailing if mailed to the Party to whom notice is to be given by certified
mail, return receipt requested, and properly addressed as follows:
If to Purchaser:
LDM Technologies, Inc.
2500 Executive Hills Drive
Auburn Hills, Michigan 48326
Attention: Mr. Gary E. Borushko
Vice President of Finance
With a Required Copy to:
Thomas P. Martin, Esq.
Dean & Fulkerson, P.C.
801 W. Big Beaver Rd., Suite 500
Troy, Michigan 48084
If to GKG and GTG:
Verwaltungsgesellschaft Geiger technik GmbH & Co. KG
Breitenau Postfach 1354
D-82453 Garmisch-Partenkirchen, Germany
Attention: Albert Geiger
With a Required Copy to:
Richard Lutringer, Esq.
Morgan, Lewis & Bockius LLP
101 Park Ave.
New York, NY 10178
If to Valk:
Dieter Valk
Geiger technic, Inc.
6400 Sprinkle Road
Portage, MI 49002
With a Required Copy to:
Thomas H. Van Dis, Esq.
Miller, Canfield, Paddock & Stone
444 W. Michigan Ave.
Kalamazoo, MI 49007
32
<PAGE> 33
If to the Corporation:
Dieter Valk, President
Geiger technic, Inc.
6400 Sprinkle Road
Portage, MI 49002
With a Required Copy to:
Thomas H. Van Dis, Esq.
Miller, Canfield, Paddock & Stone
444 W. Michigan Ave.
Kalamazoo, MI 49007
32. Gender. Any reference to the masculine gender shall be deemed to
include the feminine and neuter genders unless the context otherwise requires.
33. Governing Law. This Agreement and all transactions contemplated
hereby shall be governed, construed and enforced in accordance with the laws of
the State of Michigan.
33. Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration before
three arbitrators appointed according to the Commercial Arbitration Rules of
the American Arbitration Association and the laws of the State of Michigan.
The arbitration shall be held in Southfield, Michigan. Judgment upon the award
rendered by a majority of the arbitrators may be entered in any court having
jurisdiction thereof. In the event of arbitration, the Parties agree as
follows:
A. Each Party shall have an absolute veto over any arbitrator,
although said veto must be utilized in good faith.
B. The arbitrators will be urged to permit discovery as long as
said discovery does not unduly delay the arbitration process.
C. The arbitrators shall complete their proceedings and render
their decision within 90 days after submission of the dispute to
them, unless the Parties shall agree to an extension.
D. There can be no award of money without an opinion of law and
a finding of facts upon which said award is based.
33
<PAGE> 34
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized officers on the date set forth above.
GEIGER TECHNIC, INC.,
a Michigan corporation
By:____________________________
Dieter Valk
Its: President
______________________________
DIETER VALK
VERWALTUNGSGESELLSCHAFT GEIGER
TECHNIK GMBH & CO. KG
By:___________________________
Albert Geiger
Its: Managing Director
LDM TECHNOLOGIES, INC.,
a Michigan corporation
By:___________________________
Richard J. Nash
Its: President
34
<PAGE> 35
LIST OF EXHIBITS
Exhibit 2 The Corporation's Note
Exhibit 3 Escrow Agreement
Exhibit 5A Articles of Incorporation and By-Laws of the Corporation
Exhibit 5E Reviewed Financial Statements of the Corporation for the Fiscal
Year Ended December 31, 1995.
Exhibit 5F List of Tax Matters
Exhibit 5H Sales Forecast
Exhibit 5I List and Summary Descriptions of Employee Benefit Plans of the
Corporation
Exhibit 5J List of Liens and Encumbrances
Exhibit 5L List of Contracts, Agreements, Leases and Commitments of the
Corporation
Exhibit 5M List of Violations and Pending Litigation
Exhibit 5N List of Occurrences since December 31, 1995 Financial Statements
Exhibit 5Q List of Loans and Debts of the Corporation
Exhibit 5S List of Customers of the Corporation
Exhibit 5T List of Quality Ratings of the Corporation
Exhibit 5U Tax Certifications
Exhibit 9M Indemnification Agreement Between GKG and Valk
Exhibit 10 Certificate of Amendment of Articles of Incorporation of the
Corporation
Exhibit 11 Amended and Restated By-Laws of the Corporation
Exhibit 12 New Shareholders Agreement
Exhibit 13 Assignment of Stock Option Rights and Agreement to Extinguish Option
Exhibit 14 Licensing Agreement
Exhibit 15 Management Services Agreement
35
<PAGE> 1
EXHIBIT 10.13
AMENDMENT TO LEASE
Amendment to Lease dated this 1st day of December, 1994. The
undersigned parties hereby stipulate, understand and agree as follows:
1. The undersigned are parties to a written Lease Agreement dated
January 7, 1986 ("the Lease") under which Arrow Molded Plastics, Inc.
("Tenant") as Tenant is leasing the following described property from C. J.
Edwards Company, Inc. ("Landlord") as Landlord:
Situated in the City of Circleville, County of Pickaway, State of Ohio
and bounded and described as follows:
Beginning at a half inch rebar set in the East line of Clinton Street
said iron pin being 81.00' South of and at right angles to the
centerline of the N and W Railroad original centerline (formerly Penn
Central Railroad); thence on a line parallel to and 81.00 feet from
railroad centerline S 86 10' 12" E 410.91 feet to a half inch rebar
set, being in the Westerly line of Lot No. 1 of Van Riper's
Subdivision; thence partly with said West line S 2 49' W 270.47 feet to
an axle found; thence N 87 44' W 512.00 feet to a half inch iron pin
found in the Easterly line of Clinton Street 163.25 feet from an iron
pin found at the Point of Intersection of said East line of Clinton
Street with the North line of Half Avenue; thence with the East line of
Clinton Street N 22 30' 15" E 300.20 feet to the Place of Beginning.
Containing 2.9307 acres, more or less, together with all
improvements and appurtenances thereon or thereto pertaining.
<PAGE> 2
2. The parties have amended said Lease by written Amendment dated
April 26, 1986 and desire further to amend certain provisions of the Lease.
3. Paragraph 2 of the Lease is deleted, and the following substituted
in the place and stead thereof:
2. TERMS AND EXTENSIONS.
The initial term of this Lease shall be for a period of ten (10)
years, commencing on January 7, 1986, and terminating on January 6,
1996, both dates inclusive (hereinafter referred to as the
"initial term"). Provided Tenant is not in default of any terms of
this Lease at the time Tenant notifies Landlord of the exercise of any
option hereunder, Tenant shall have the option to extend and renew this
Lease for five (5) successive periods of one (1) year each, the first
of said period of renewal and extension shall commence on January 7,
1996, and terminate on January 6, 1997, (hereinafter referred to as the
"first renewal term"). The second of said periods of renewal and
extension shall commence on January 7, 1997, and terminate on January
6, 1998, hereinafter referred to as the "second renewal term"). The
third of said periods of renewal and extension shall commence on
January 7, 1998, and terminate on January 6, 1999, (hereinafter
referred to as the "third renewal term"). The fourth of said periods
of renewal and extension shall commence on January 7, 1999 and
terminate on January 6, 2000, (hereinafter referred to as the "fourth
renewal term"). The fifth of said periods of renewal and extension
shall commence on January 7, 2000 and terminate on January 6, 2001,
(hereinafter referred to as the "fifth renewal term"). The options to
renew or extend herein contemplated shall be deemed exercised by Tenant
without any action required by Tenant unless Tenant advises the
Landlord, by certified mail, return receipt requested as hereinafter
provided not less than six (6) months prior to the expiration of the
term of the lease then in effect, that Tenant desires to terminate this
Lease at the expiration of the term of the lease then in effect.
- 2 -
<PAGE> 3
Each such renewal term shall be upon the same terms, covenants and
conditions, excluding rent, as provided in this Lease for the initial
term. Any termination of this Lease during any term shall terminate
any and all further rights of renewal or extension hereunder.
4. Paragraph 3C of the Lease, as amended, is hereby deleted in its
entirety effective from and after January 7, 1996, and the following shall
thereupon be substituted in the place and stead thereof:
C. (1) The rent for the first renewal term shall be TWO HUNDRED
FORTY THOUSAND ($240,000.00) DOLLARS.
(2) The rent for the second renewal term shall be TWO HUNDRED
FORTY THOUSAND ($240,000.00) DOLLARS plus the Additional Annual Rent
determined by the following formula:
The last monthly CPI
published immediately
prior to January 7, 1997
------------------------------ - 1 X 240,000
The last monthly CPI
published immediately
prior to January 7, 1996
(3) The rent for the third renewal term shall be TWO HUNDRED
FORTY THOUSAND ($240,000.00) DOLLARS plus the Additional Annual Rent
determined by the following formula:
The last monthly CPI
published immediately
prior to January 7, 1998
------------------------------ - 1 X 240,000
The last monthly CPI
published immediately
prior to January 7, 1997
(4) The rent for the fourth renewal term shall be TWO HUNDRED
FORTY THOUSAND ($240,000.00)
- 3 -
<PAGE> 4
DOLLARS plus the Additional Annual Rent determined by the following
formula:
The last monthly CPI
published immediately
prior to January 7, 1999
------------------------------ - 1 X 240,000
The last monthly CPI
published immediately
prior to January 7, 1998
(5) The rent for the fifth renewal term shall be TWO HUNDRED
FORTY THOUSAND ($240,000,00) DOLLARS plus the Additional Annual Rent
determined by the following formula:
The last monthly CPI
published immediately
prior to January 7, 2000
------------------------------ - 1 X 240,000
The last monthly CPI
published immediately
prior to January 7, 1999
(6) For the purposes of the formula above set forth, CPI is
defined as the Bureau of Labor Statistics (BLS) Consumer Price Index
for all Urban Wage Earners and Clerical Workers for the North Central
Region for all items less food, shelter and energy. The index base
shall be the index base in effect on January 7, 1996. In the event
the additional annual rent as calculated under the above formula
for any year is less than zero (0), the annual rent shall not be
reduced.
5. Paragraph 3D is deleted, and the following substituted in the
place and stead thereof:
D. The rent due for each lease year shall be payable in advance,
in twelve equal monthly installments, which shall be due and paid on
the seventh day of each month during the lease year.
If the Tenant shall default in any payment or expenditure other
than rent required to be paid or expended by the Tenant under the terms
hereof, the Landlord may at its option make such payment or
expenditure, in which event the amount thereof shall be payable as
rental to the Landlord by the Tenant on
- 4 -
<PAGE> 5
the next ensuing rent day together with interest at the prime rate
then in effect as published by the Michigan National Bank of Detroit
from the date of such payment or expenditure by the Landlord and on
default in such payment the Landlord shall have the same remedies as on
default in payment of rent.
All payments of rent or other sums to be made to the Landlord
shall be made at such place as the Landlord shall designate in writing
from time to time.
6. Except as amended herein, the Lease, as amended, is hereby
ratified and affirmed.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
WITNESSED BY: LANDLORD:
C. J. EDWARDS COMPANY, INC.
[SIG] By: [SIG]
- --------------------------- -----------------------------
Its: CFO
- --------------------------- ----------------------------
TENANT:
ARROW MOLDED PLASTICS, INC.
[SIG] By: [SIG]
- --------------------------- -----------------------------
Its: CEO
- --------------------------- ----------------------------
- 5 -
<PAGE> 6
AMENDMENT TO LEASE
AMENDMENT TO LEASE made this 8th day of September, 1986, by and between
C. J. EDWARDS COMPANY, INC., of 3905 Rochester Road, Royal Oak, Michigan 48073,
doing business as Edwards Ohio, Inc., the Lessor, hereinafter designated as the
LANDLORD, and ARROW MOLDED PLASTICS, INC., of 600 S. Clinton Street,
Circleville, Ohio 43113, the Lessee, hereinafter designated as the TENANT.
WHEREAS, LANDLORD and TENANT desire to amend certain terms and
provisions of a written Lease between them dated January 7, 1986 covering a
certain building in Circleville, Ohio, a copy of which Lease is marked Exhibit
A, annexed hereto and by reference made a part hereof (the Written Lease);
NOW, THEREFORE, IT IS MUTUALLY UNDERSTOOD AND AGREED by and between the
parties hereto, for and in consideration of their mutual covenants herein
contained, as follows:
1. Paragraphs 3B and 3C of the Written Lease are hereby deleted and
the following substituted in the place and stead thereof:
3. B. The rent for the first lease year (January 7, 1986 to
January 6, 1987) shall be: TWENTY-FOUR THOUSAND ($24,000.00) DOLLARS
per month for the period January 7, 1986 to April 6, 1986, TWENTY
THOUSAND SIX HUNDRED SIXTY-SIX and 66/100 ($20,666.66) DOLLARS per
month for the period April 7, 1986 to January 6, 1987.
C. The rent for the second lease year, and each lease year
thereafter, shall be TWO HUNDRED FORTY-EIGHT THOUSAND ($248,000.00)
DOLLARS subject to the following adjustment:
(1) In the event the prime rate of interest announced by
Michigan National Bank of Detroit as its "prime rate," on the last day
of the immediately
<PAGE> 7
preceding lease year is greater than 9 1/2%, the rent for the lease
year then beginning shall be increased by $3,800.00 for each 1/4%
increase in the prime rate in excess of 9 1/2%. For example, if the
prime rate on the last day of the third lease year is 10 1/2%, the rent
for the fourth lease year shall be $248,000.00 + ($3,800.00 x 4) =
$263,200.00.
(2) In the event the prime rate of interest announced
by the Michigan National Bank of Detroit as its prime rate on the last
day of the immediately preceding lease year is less than 9 1/2%, the
rent for the lease year then beginning shall be decreased by $3,800.00
for each 1/4% decrease in the prime rate below 9 1/2%, provided,
however, that in no event shall any such decrease reduce the rent due
under this Paragraph 3C below $240,000.00. For example, if the prime
rate on the last day of the third lease year is 9 1/4%, the rent for
the fourth lease year shall be $248,000.00 - $3,800.00 = $244,200.00.
2. That except as hereinabove amended the Written Lease is in all
respects hereby expressly ratified and affirmed.
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Lease the year and date first above written.
WITNESSED BY: LANDLORD:
C. J. EDWARDS COMPANY, INC.
Charlotte Trombley By: [SIG]
- ------------------------ --------------------------------
Kimberly Brunton Its: Sec/Treas.
- ------------------------ -------------------------------
TENANT:
ARROW MOLDED PLASTICS, INC.
[SIG] By: [SIG]
- ------------------------ -------------------------------
Its: Officer
- ------------------------ -------------------------------
- 2 -
<PAGE> 8
LEASE
THIS LEASE made this 7th day of January, 1986, by and between C. J.
EDWARDS COMPANY, INC., of 3905 Rochester Road, Royal Oak, Michigan 48073, doing
business as Edwards Ohio, Inc., the Lessor, hereinafter designated as the
LANDLORD, and ARROW MOLDED PLASTICS, INC., of 600 S. Clinton Street,
Circleville, Ohio 43113, the Lessee, hereinafter designated as the TENANT.
1. DESCRIPTION OF LEASED PROPERTY.
The Landlord, in consideration of the rents to be paid and the
covenants and agreements to be performed by the Tenant, does hereby lease unto
the Tenant the following described premises:
Situated in the City of Circleville, County of Pickaway, State of Ohio
and bounded and described as follows:
Beginning at a half inch rebar set in the East line of Clinton Street
said iron pin being 81.00' South of and at right angles to the
centerline of the N and W Railroad original centerline (formerly Penn
Central Railroad); thence on a line parallel to and 81.00 feet from
railroad centerline S 86 10' 12" E 410.91 feet to a half inch rebar
set, being in the Westerly line of Lot No. 1 of Van Riper's
Subdivision; thence partly with said West line S 2 49' W 270.47 feet to
an axle found; thence N 87 44' W 512.00 feet to a half inch iron pin
found in the Easterly line of Clinton Street 163.25 feet from an iron
pin found at the Point of Intersection of said East line of Clinton
Street with the North line of Half Avenue; thence with the East line
of Clinton Street N 22 30' 15" E 300.20 feet to the Place of Beginning.
Containing 2.9307 acres, more or less. together with the easements
described on Exhibit A and all improvements, appurtenances and attachments
thereto ("the demised premises"). Landlord makes no representations or
warranties, express or implied, with respect to the condition of the building
EXHIBIT
A
<PAGE> 9
and other improvements, appurtenances and attachments thereto. Tenant
acknowledges that said building, improvements, appurtenances and attachments
(including, without limitation, all mechanical, HVAC, plumbing and electrical
systems) have been constructed and installed under Tenant's direct supervision,
and have been approved and accepted by Tenant. Tenant assumes sole
responsibility for any latent or patent defect or nonconformity to any plan,
specification or contract, whether the same relates to the structure of the
building, or otherwise, and Tenant shall make no claim against Landlord with
respect thereto. Tenant is leasing the demised premises "as is" and accepts
the same in its current condition.
With respect to any defect in the demised premises, Landlord grants to
Tenant the nonexclusive right to enforce all warranties against the makers
thereof to the extent such warranties have been assigned to Landlord by Glad
Plastics, Inc., an Ohio corporation, are assignable by Landlord to Tenant, and
provided that any recovery by Tenant shall be fully applied to correct the
defect in the demised premises for which such enforcement was sought.
"Recovery," for the purposes of this Lease, shall include any money, property
or other consideration received from any person who is or may be liable under
any warranty described above, whether as a result of settlement, legal action,
voluntary payment, or otherwise. Landlord makes no representation with respect
to any warranty described above, whether in regard to the existence, validity
or extent thereof, or otherwise.
-2-
<PAGE> 10
In the event, in the opinion of counsel for Tenant, it becomes
necessary or desirable for Landlord to be a party to any action instituted by
Tenant for the purpose of enforcing any warranty described above, Landlord will
become a party to such action and will cooperate with Tenant in the prosecution
thereof, provided, however, that Tenant shall be responsible for all costs and
expenses incurred by Landlord in connection therewith including, without
limitation, actual reasonable attorney fees.
2. TERMS AND EXTENSIONS.
The initial term of this Lease shall be for a period of ten (10)
years, commencing on January 7, 1986, and terminating on January 6, 1996, both
dates inclusive (hereinafter referred to as the "initial term"). Provided
Tenant is not in default of any terms of this Lease at the time Tenant notifies
Landlord of the exercise of any option hereunder, Tenant shall have the option
to extend and renew this Lease for three (3) successive periods of five (5)
years each, the first of said periods of renewal and extension shall commence
on January 7, 1996, and terminate on January 6, 2001, (hereinafter referred to
as the "first renewal term"). The second of said periods of renewal and
extension shall commence on January 7, 2001, and terminate on January 6, 2006,
hereinafter referred to as the "second renewal term"). The third of said
periods of renewal and extension shall commence on January 7, 2006, and
terminate on January 6, 2011, (hereinafter referred to as the (third renewal
term"). The options to or renew extend herein contemplated shall be exercised
by Tenant by
-3-
<PAGE> 11
advising the Landlord by certified mail, return receipt requested as
hereinafter provided not less than six (6) months prior to the expiration of
the term of the lease then in effect.
Each such renewal term shall be upon the same terms, covenants and
conditions, excluding rent, as provided in this Lease for the initial term.
Any termination of this Lease during any term shall terminate any and all
further rights of renewal or extension hereunder.
3. RENT.
The rent for the initial and renewal terms shall be as follows:
A. For the purposes of this Agreement, the term "lease year" shall be
the twelve-month period commencing on each anniversary date of the first day
of the initial lease term during the period of the initial term of this Lease,
and during each renewal term.
B. The rent for the first lease year (January 7, 1986 to January 6,
1987) shall be TWO HUNDRED EIGHTY-EIGHT THOUSAND ($288,000.00) DOLLARS.
C. The rent for the second lease year, and each lease year thereafter,
shall be TW0 HUNDRED EIGHTY-EIGHT THOUSAND ($288,000.00) DOLLARS subject to the
following adjustments:
(1) In the event the prime rate of interest announced by Michigan
National Bank of Detroit as its "prime rate," on the last day of the
immediately preceding lease year is greater than 9 1/2", the rent for
the lease year then beginning shall be
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increased by $3,800.00 for each 1/4% increase in the prime rate in excess of
9 1/2%. For example, if the prime rate on the last day of the third lease
year is 10 1/2%, the rent for the fourth lease year shall be $288,000.00 +
($3,800.00 x 4) = $303,200.00.
(2) In the event the prime rate of interest announced by the
Michigan National Bank of Detroit as its prime rate on the last day of the
immediately preceding lease year is less than 9 1/2%, the rent for the lease
year then beginning shall be decreased by $3,800.00 for each 1/4% decrease in
the prime rate below 9 1/2%, provided, however, that in no event shall any such
decrease reduce the rent due under this Paragraph 3C below $250,000.00. For
example, if the prime rate on the last day of the third lease year is 9 1/4%,
the rent for the fourth lease year shall be $288,000.00 - $3,800.00 =
$284,200.00.
D. The rent due for each lease year shall be payable in advance, in
twelve equal monthly installments, which shall be due and paid on the seventh
day of each month during the lease year.
All rent shall be payable in advance, without demand, on the first day
of each month.
If the Tenant shall default in any payment or expenditure other than
rent required to be paid or expended by the Tenant under the terms hereof, the
Landlord may at its option make such payment or expenditure, in which event the
amount thereof shall be payable as rental to the Landlord by the Tenant on the
next ensuing rent day together with interest at the prime rate then in effect
as published by the Michigan National Bank of Detroit from
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the date of such payment or expenditure by the Landlord and on default in such
payment the Landlord shall have the same remedies as on default in payment of
rent.
All payments of rent or other sums to be made to the Landlord shall
be made at such place as the Landlord shall designate in writing from time to
time.
4. ASSIGNMENT.
The Tenant covenants not to assign or transfer this Lease or
hypothecate or mortgage the same or sublet said demised premises or any part
thereof without the written consent of the Landlord. Any assignment, transfer,
hypothecation, mortgage or subletting without said written consent shall give
the Landlord the right to terminate its Lease and to re-enter and repossess the
demised premises. If Tenant shall desire to assign this Lease or sublet the
demised premises, in whole or in part, Landlord will not unreasonably withhold
or delay its consent thereto provided Tenant complies with each of the
following:
A. Tenant shall give Landlord at least 30 days' prior written notice of
its desire to assign or sublet, which notice shall include reliable information
indicating that the proposed assignee or subtenant is reputable and financially
responsible, and shall describe the business of the proposed assignee or
subtenant.
B. Prior to delivery of Landlord's said consent, Tenant shall deliver
to Landlord either:
(1) A counterpart executed copy of any such assignment, which
shall include an assumption by the assignee,
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from and after the effective date of such assignment, of the performance
and observance of the covenants and conditions in this Lease contained on
Tenant's part to be performed and observed; or
(2) If a sublease be involved, a counterpart executed copy of the
proposed sublease, which sublease shall specify, in such detail as Landlord
shall reasonably request, and subject to the requirements of Paragraph 6
hereof, the use or uses to which the demised premises shall be put, that such
sublease shall not be assigned, nor the demised premises further sublet without
the prior written consent of the Landlord. No sublease shall be for a term
which shall extend beyond two days prior to the expiration of this Lease.
Whenever Tenant shall claim, under this Paragraph or any other part of
this Lease, that Landlord has unreasonably withheld or delayed its consent
to some request of Tenant, Tenant shall have no claim for damages by reason
of such alleged withholding or delay, and Tenant's sole remedies therefor
shall be a right to obtain specific performance or injunction, but in any
event without recovery of damages.
5. BANKRUPTCY AND INSOLVENCY.
The Tenant agrees that if the estate created hereby shall be taken in
execution, or by other process of law, or if the Tenant shall be adjudged
bankrupt or insolvent, according to law, or any receiver be appointed for the
business and property of the Tenant,
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or if any assignment shall be made of the Tenant's property for the benefit of
creditors, then and in such event this Lease may be cancelled at the
option of the Landlord.
6. USE AND OCCUPANCY.
It is understood and agreed between the parties hereto that said
demised premises during the continuance of this Lease shall be used and
occupied for manufacturing in accordance with local ordinances and for no other
purpose or purposes without the written consent of the Landlord, and that the
Tenant will not use the demised premises for any purpose in violation of any
law, municipal ordinance or regulation, and that on any breach of this
Agreement, the Landlord may at its option terminate this Lease forthwith and
re-enter and repossess the demised premises.
6A. USE OF EASEMENT,
Tenant hereby assumes all of the obligations imposed on Grantee
under, and accepts all of the restrictions on Grantee's use contained in, the
easement set forth in Exhibit A, attached. Without limiting the generality of
the foregoing, tenant expressly assumes the obligation of Grantee to hold
Grantor, its successors and assigns, harmless from any loss, claim, liability,
damage, or cost, in any way relating to Grantee's or Tenant's use of the
easement. Tenant's obligations hereunder shall be applicable only during the
initial or any extended term of this Lease, and upon purchase of the demised
premises by Tenant, Tenant shall be permanently bound as grantee under said
easement in the place and stead of Landlord.
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FIRE.
It is understood and agreed that if the demised premises be damaged or
destroyed in whole or in part by fire or other casualty during the term hereof,
the Landlord will repair and restore the same to good tenantable condition with
reasonable dispatch. The rent herein provided for shall not abate in any
manner or upon any condition whatsoever. In case the demised premises, or the
building of which they are a part, shall be destroyed to the extent of more
than one-half of the value thereof, the Landlord may at its option terminate
this Lease forthwith upon 30 days written notice to the Tenant.
8. TENANT TO INDEMNIFY.
The Tenant agrees to indemnify and hold harmless the Landlord from
any liability for damages to any person or property in, on or about said
demised premises from any cause whatsoever; and Tenant will procure and keep in
effect during the term hereof public liability and property damage insurance
for the benefit of the Landlord and Tenant, as their interests may appear, in
the sum of FIVE HUNDRED THOUSAND ($500,000) DOLLARS for damages resulting to
one person and TWO MILLION ($2,000,000) DOLLARS for damages resulting from one
casualty, and ONE MILLION ($1,000,000) DOLLARS property damage insurance
resulting from any one occurrence. Subject to the provisions of Paragraph 16
hereof, Tenant shall deliver said policies to the Landlord and upon Tenant's
failure
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to obtain insurance as required in this Paragraph the Landlord may at its
option obtain such insurance and the cost thereof shall be paid as additional
rent due and payable upon the next ensuing rent day.
9. REPAIRS AND ALTERATIONS.
The Tenant covenants and agrees that it will, at its own expense,
during the continuation of this Lease, keep the demised premises, including,
without limitation, the roof, outer walls, doors, door frames, windows, window
frames, fixtures, cooling towers, chillers, appliances, plumbing, heating, air
conditioning, electrical systems, parking lot, driveways and grounds, and every
part thereof in as good repair and at the expiration of the term yield and
deliver up the same in like condition as when taken, normal and reasonable wear
and tear excepted. The Tenant shall not make any alterations, additions or
improvements to said demised premises without the Landlord's written consent,
and all alterations, additions or improvements made by either of the parties
hereto upon the demised premises, except movable office furniture and trade
fixtures put in at the expense of the Tenant, shall be the property of the
Landlord, and shall remain upon and be surrendered with the demised premises at
the termination of this Lease, without molestation or injury. However,
Landlord shall not unreasonably withhold consent.
10. EMINENT DOMAIN.
In the event the whole of the demised premises, or such
portion thereof as will make the demised premises unsuitable for
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the purposes herein leased, is condemned for any public use or purpose by any
legally constituted authority, then in either of such events this Lease shall
cease from the time when possession is taken by such public authority and
rental shall be accounted for between Landlord and Tenant as of the date of the
surrender of possession. Such termination shall be without prejudice to the
rights of either Landlord or Tenant to recover compensation from the condemning
authority for any loss or damage caused by such condemnation. Neither Landlord
nor Tenant shall have any rights in or to any award made to the other by the
condemning authority.
11. RESERVATION.
The Tenant shall not erect any structure for storage or any aerial, or
use the roof for any purpose without the consent in writing of the Landlord.
12. CARE OF PREMISES.
The Tenant shall not perform any acts or carry on any practices which
may injure the building or be a nuisance or menace to other Tenants, if any, in
the building and shall keep the demised premises under its control (including
adjoining drives, streets, alleys or yards) clean and free from rubbish, dirt,
snow and ice at all times, and it is further agreed that in the event the
Tenant shall not comply with these provisions, the Landlord may enter upon
said demised premises and have rubbish, dirt and ashes removed and the
sidewalks cleaned, in which event the Tenant agrees to pay all charges that the
Landlord shall pay
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for hauling rubbish, ashes and dirt, or cleaning walks. Said charges shall be
paid to the Landlord by the Tenant as soon as the bill is presented to Tenant
and the Landlord shall have the same remedy as is provided in Paragraph 19 of
this Lease in the event of Tenant's failure to pay.
13. TAXES AND ASSESSMENTS.
Tenant shall pay all real estate taxes and assessments as the same
become due, but no later than thirty (30) days after tax bills are received by
Tenant. The Tenant shall provide copies of paid property tax receipts to
the Landlord prior to the time the same shall become due. Real estate taxes
for periods extending subsequent to any term of this Lease shall be prorated
between Landlord and Tenant based on the number of days during the period
covered by the tax that this Lease is in effect. Landlord shall notify the
Tenant of the amount of Tenant's prorated share, together with suitable
documentation showing the amount of the tax and the calculation of the prorated
share. Tenant shall pay its prorated share to Landlord not later than ten (10)
days after receiving notice of the share.
14. DENIAL OF SUBROGATION RIGHTS.
Landlord shall have no right of action against the Tenant on account
of any loss or damage to the demised premises from fire or other casualty to
the extent that such loss is covered by insurance, and the Tenant shall have
no right of action against the Landlord on account of any loss or damage to
the Tenant's property or business in the demised premises to the extent that
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such loss is covered by insurance, and each party shall see to it that
its policies of insurance contain or are endorsed with the standard waiver of
subrogation clause.
15. MORTGAGE SUBORDINATION.
Upon written request by Landlord, Tenant shall execute and deliver an
agreement subordinating this Lease to any first mortgage upon the demised
premises, provided, however, such subordination shall be upon the express
condition that the validity of this Lease shall be recognized by the
mortgagee, and that, notwithstanding any default by the mortgagor with
respect to said mortgage or any foreclosure thereof Tenant's possession and
right of use under this Lease in and to the demised premises shall not be
disturbed by such mortgagee unless and until Tenant shall breach any of the
provisions hereof, and this Lease or Tenant's right to possession hereunder
shall have been terminated in accordance with the provisions of this Lease.
16. INSURANCE.
Tenant shall keep the buildings on the demised premises insured against
loss or damage by fire with extended coverage endorsement in an amount not less
than Ninety-five (95%) percent of the full insurable value as determined from
time to time. The term "full insurable value" shall mean actual replacement
cost (exclusive of cost of excavation, foundations and footings) without
deduction for physical depreciation, subject only to any maximum policy amount
imposed by the insurer after Tenant gives
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Landlord notice of such limitation and Landlord is unable within thirty (30)
days thereafter to advise Tenant of another insurer which will extend or delete
such limitation. Such insurance shall be issued by financially responsible
insurers duly authorized to do business in the State of Ohio and satisfactory to
the Landlord. Tenant will deliver to Landlord policies of all insurance
coverages required under this Lease immediately upon issuance of same or, if
acceptable to Landlord's lender, the Michigan National Bank of Detroit, copies
of such policies issued and certified by the insurer to be true and complete
copies of the original policies.
17. TAX APPEALS.
Landlord does hereby authorize Tenant to appeal from all real estate
taxes and assessments with respect to which Tenant is obligated to pay all or
any portion thereof under the terms of this Lease. Tenant may take such
appeal either in its own name, in the name of the Landlord, or in the name of
both Tenant and Landlord. Landlord shall extend every reasonable cooperation to
assist Tenant in taking such appeal. The expenses of such appeal shall be
Tenant's responsibility.
18. WAIVER OF CLAIMS.
Tenant agrees that to the extent not prohibited by law Landlord and its
officers, agents, servants, and employees shall not be liable for any damage or
loss to person or property or loss due to the demised premises or any part
thereof or any appurtenances thereof becoming out of repair, or due to the
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happening of any accident in or about said demised premises, or due to any act
or neglect of any tenant or occupant of said demised premises or of any other
person and Tenant agrees that it will make no claim therefor. This provision
shall apply particularly (but not exclusively) to damage caused by water, snow,
frost, steam, sewage, gas, sewer gas or odors or by the bursting or leaking of
pipes, faucets and plumbing fixtures, and shall apply regardless of the person
whose act or neglect was responsible for the damage and whether the damage
was due to any of the causes specifically enumerated above or to some other
cause of an entirely different kind. Tenant further agrees that all property
in or on the demised premises shall be at the risk of Tenant only, and that
Landlord shall not be liable for any damage thereto or loss or theft thereof.
19. LANDLORD'S REMEDIES ON DEFAULT.
Upon the occurrence of any of the following (each of which shall
constitute a default hereunder):
(a) failure of Tenant to pay when due any rental due hereunder,
failure to timely pay when due any other sum of money due Landlord from Tenant
on any date upon which the same becomes due, or failure to pay when due taxes,
insurance, or other charges which are Tenant's responsibility hereunder,
provided, however, that no action shall be taken by Landlord with respect to
any such default if full payment is made within 10 days after the respective
due date;
(b) failure to keep, observe or perform any covenant, agreement, term,
provision or condition of this Lease (including,
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without limitation, the failure to repair under Paragraph 9 of this Lease)
other than payment of money which failure shall continue for more than
fifteen (15) days after notice to Tenant;
(c) the appointment of a receiver, trustee or liquidator for the
Tenant or any of the property of the Tenant;
(d) any seizure or levy against the Tenant in this Lease by
execution or other legal process;
(e) the abandonment of the demised premises, or the vacation
thereof during the term without timely payment of rent and performance of all
other obligations hereunder;
then in any such event the Landlord may at its option, without further
notice or demand of any kind to Tenant or any other persons and in addition to
all other rights and remedies to which Landlord may be entitled, re-enter into
or upon the demised premises of any part thereof, repossess the same and remove
all persons and property therefrom. Landlord may also pursue one or more of
the following remedies in addition to all other rights and remedies it may
have:
(i) Cure such default for the account of and at the expense of
Tenant and all sums so expended by Landlord shall be deemed to be Additional
Rent and shall be paid by Tenant on the day the rent shall next become due and
payable under this Lease,
(ii) Pursue its legal remedies against Tenant without
terminating this Lease, including any action for rent or any other amounts due
and unpaid,
(iii) Terminate this Lease by giving written notice of such
termination to Tenant in which case Tenant shall be liable
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to Landlord in damages in an amount equal to the value of the total rent
provided to be paid by Tenant for the balance of the term plus all damages and
costs incurred by Landlord as a result of such default including the cost of
recovering the demised premises, any damage to the demised premises and all
reasonable attorneys' fees, less the fair rental value of the demised premises
for balance of the term.
Nothing herein contained shall be construed as limiting or precluding
the recovery by the Landlord against the Tenant of any sums or damages or
remedies to which, in addition to the damages and remedies particularly provided
above, the Landlord may lawfully be entitled by reason of any default hereunder
on the part of the Tenant.
In the event of default, breach or threatened breach by Tenant of any
of the terms, covenants, conditions, limitations, provisions and agreements
hereof, Landlord shall have the right of injunction and the right to invoke
any remedy allowed at law or in equity as if re-entry, summary proceedings and
other remedies were not herein provided for.
20. SURRENDER OF POSSESSION.
Upon the termination of this Lease and the term hereby created or upon
the termination of Tenant's right of possession, whether by lapse of time or at
the option of Landlord as aforesaid, Tenant will at once surrender possession of
the demised premises to Landlord and remove all property and effects therefrom,
and if such possession is not immediately surrendered
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Landlord may forthwith re-enter the demised premises, repossess itself thereof
and remove all persons, property and effects therefrom, using such force as may
be necessary, without being deemed guilty of any manner of trespass or forcible
entry or detainer, without being liable to Tenant for damages resulting
therefrom and Tenant expressly waives any right of action therefor. Without
limiting the generality of the foregoing, Tenant agrees to remove at the
termination of the term the office furniture, equipment, personal property and
trade fixtures and such of Tenant's alterations, improvements and additions as
may be requested by Landlord, all at Tenant's expense and Tenant shall repair
all damage to the demised premises resulting from such removal. If Tenant
shall fail or refuse to remove all such property from the demised premises,
Tenant shall be conclusively presumed to have abandoned the same, and title
thereto shall thereupon pass to Landlord without any cost either by set-off,
credit allowance or otherwise, and Landlord may at its option accept the title
to such property or, at Tenant's expense may: (a) remove the same or any part
thereof in any manner that Landlord shall choose; and (b) store the same
without incurring liability to Tenant or any other person.
21. HOLDING OVER.
In the event Tenant shall retain possession of the demised premises or
any part thereof after the termination of this Lease, whether by lapse of time
or otherwise, Tenant shall be considered a trespasser and shall be liable for
liquidated damages in an
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amount equal to double the monthly rent during the last month of tenancy for
each month or portion thereof Tenant is in possession.
22. COVENANT AGAINST LIENS.
Tenant covenants and agrees not to allow or permit any lien of mechanics
or materialmen to be placed against the demised premises, or any part thereof,
and it is expressly understood and agreed that Tenant has no authority or
power to cause or permit any such lien or encumbrance of any kind whatsoever,
whether created by act of Tenant, operation of law or otherwise, to attach to
or be placed upon Landlord's title or interest in the demised premises or any
part thereof , and any and all such liens and encumbrances created by Tenant
shall attach to Tenant's interest only. If because of any act or omission of
Tenant, any mechanics, materialmen's lien, or othcr lien, charge or order for
the payment of money shall be filed against Landlord or any portion of the
demised premises, Tenant shall, at its own cost and expense, promptly cause
the same to be discharged of record and Tenant shall indemnify and save
harmless Landlord against and from any and all cost, liabilities, suits,
penalties, claims and demands, including reasonable attorneys' fees resulting
therefrom.
23. NON-WAIVER.
No waiver or modification by the Landlord of any covenant, agreement,
term, provision or condition of this Lease shall be deemed to have been made
unless expressed in writing and signed by the Landlord. The failure of the
Landord to insist in any instance upon the strict keeping, observance or
performance of
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any covenant, agreement, term, provision or condition of this Lease or to
exercise any election herein contained shall not be construed as a waiver or
relinquishment for the future of any such covenant, agreement, term,
provision, condition or election, but the same shall continue and remain in
full force and effect. No waiver by Landlord at any time of any breach of any
provision of this Lease shall be deemed a waiver or breach of any other
provision of this Lease or a consent to any subsequent breach of the same or
any other provision of this Lease. The receipt and retention by the Landlord of
any rent with knowledge of the breach of any covenant, agreement, term,
provision or condition contained in this Lease shall not be deemed a waiver of
such breach and the receipt and retention by the Landlord of rental from anyone
other than the Tenant shall not be deemed acceptance of such other person as a
tenant or a release of the Tenant from the observance and performance by the
Tenant of all the covenants, agreements, terms, provisions and conditions
herein contained. No surrender of possession of the demised premises or any
part thereof or of any remainder of the term shall release the Tenant from any
or all of its obligations hereunder unless specifically accepted by the
Landlord in writing.
24. TENANT'S OBLIGATIONS ARE UNCONDITIONAL.
Each of Tenant's obligations hereunder are unconditional and
independent covenants and obligations. Tenant hereby irrevocably and
unconditionally waives any rights it may now or hereafter have, by way of
set-off, counterclaim or otherwise, to reduce,
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diminish or offset its obligations under this Lease, including, without
limitation, rent, tax and insurance obligations, by reason of any breach or
threatened breach of any obligation, claim or debt which may now or hereafter
become owing to Tenant from Landlord, U.S. Plastics Corporation, Farathane,
Inc., Chemcast Corporation, U.S. Plastics Products Company, Edwards
Industries, Inc., or any other company, now or hereafter formed, twenty-five
(25%) percent of the capital stock of which is now or hereafter owned by any
one or more of the above, or C. J. Edwards, Jr.
25. COMPLIANCE WITH LAWS.
The Tenant shall at its own expense under penalty of forfeiture and
damages comply no later than ten (10) days after receiving notice of violation
with all lawful laws, orders, regulations or ordinances of all municipal,
County, State and Federal authorities affecting the demised premises and the
cleanliness, safety, occupation and use of same; provided, however, that unless
Landlord's interests shall be adversely affected or prejudiced Tenant may in
good faith contest the same and, in the event of contest, shall not be required
to comply until ten (10) days after the contest is terminated by judgment
(after any period for appeal has lapsed) or settlement.
26. DAMAGE OR INJURY TO TENANT.
The Landlord shall not be responsible or liable to the Tenant for any
loss or damage that may be occasioned by or through the acts or omissions of
persons occupying adjoining
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premises or any part of the premises adjacent to or connected with the demised
premises or any part thereof, for any loss or damage resulting to the Tenant or
its property from bursting, stoppage or leaking of water, gas, sewer or steam
pipes.
27. RE-RENTING.
The Tenant hereby agrees that for a period commencing six (6)
months prior to the termination of this Lease, the Landlord may show the
demised premises to prospective Tenants, and prior to the termination of
this Lease, may display in and about said demised premises and in the
windows thereof, the usual and ordinary "TO RENT" signs.
28. GAS, WATER, HEAT, ELECTRICITY.
The Tenant will pay all charges against the demised premises for gas,
water, heat and electricity during the continuance of this Lease, as the same
shall become due and will promptly obtain and thereafter maintain gas and
electricity services for the demised premises at Tenant's sole cost and
expense.
29. ADVERTISING DISPLAY.
It is further agreed that all signs and advertising displayed in and
about the demised premises shall be such only as reasonably advertise the
business carried on upon said demised premises.
30. ACCESS TO PREMISES.
The Landlord shall have the right to enter upon the demised premises at
all reasonable hours for the purpose of inspecting
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the same. If the Landlord reasonably deems any repairs necessary it may
demand that the Tenant make the same and if the Tenant refuses or neglects
forthwith to commence such repairs and complete the same with reasonable
dispatch the Landlord may make or cause to be made such repairs and shall not
be responsible to the Tenant for any loss or damage that may accrue to Tenant's
stock or business by reason thereof, and if the Landlord makes or causes to be
made such repairs the Tenant agrees that it will forthwith on demand pay to the
Landlord the cost thereof with interest at 12% per annum, and if it shall make
default in such payment the Landlord shall have the remedies provided in
Paragraph 19 hereof.
31. QUIET ENJOYMENT.
The Landlord covenants that the said Tenant, on payment of all the
aforesaid installments and performing all the covenants aforesaid, shall and
may peacefully and quietly have, hold and enjoy the said demised premises for
the term aforesaid.
32. REMEDIES NOT EXCLUSIVE.
It is agreed that each and every of the rights, remedies and benefits
provided by this Lease shall be cumulative, and shall not be exclusive of any
other of said rights, remedies and benefits, or of any other rights, remedies
and benefits allowed by law.
33. DELAY OF POSSESSION.
It is understood that if the Tenant shall be unable to enter into and
occupy the demised premises at the time above provided,
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by reason of the said demised premises not being ready for occupancy, or by
reason of the holding over of any previous occupant of said demised premises,
or as a result of any cause or reason beyond the direct control of the
Landlord, the Landlord shall not be liable in damages to the Tenant
therefor, but during the period the Tenant shall be unable to occupy said
demised premises as hereinbefore provided, the rental therefor shall be abated
and the Landlord is to be the sole judge as to when the demised premises are
ready for occupancy.
34. OPTION TO PURCHASE.
A. Tenant shall have the option to purchase the demised premises, upon
the terms and conditions described in this Paragraph 34.
B. Tenant's option to purchase shall be exercisable only during the
period commencing December 1, 1989 and ending November 30, 1991. Said option
may be exercised at any time during said period and shall be exercised by
giving written notice thereof to Landlord during said period.
C. The purchase price of the demised premises shall be TWO
MILLION FOUR HUNDRED THOUSAND ($2,400,000.00) DOLLARS plus one-half of the
difference between $2,400,000.00 and the Appraised Value of the demised
premises on the date said option is exercised. In no event shall the purchase
price be less than TWO MILLION FOUR HUNDRED THOUSAND ($2,400,000.00) DOLLARS.
The "Appraised Value" of the demised premises shall be
determined by such appraiser as the parties shall mutually select in
writing within thirty (30) days after Tenant gives notice
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exercising its option to purchase the demised premises. If the parties fail to
appoint such appraiser within said thirty-day period, the Landlord and Tenant
shall each appoint one appraiser and notify the other of such appointment within
ten (10) days after the expiration of said thirty-day period. The two
appointed appraisers shall thereafter promptly appoint a third appraiser. The
three appraisers thus appointed shall endeavor to arrive at a single Appraised
Value. If, however, they are unable to do so within ninety (90) days after
the date Tenant gives notice exercising its option to purchase the demised
premises, the Appraised Value shall be determined by aggregating the Appraised
Value submitted by each appraiser and dividing such aggregate amount by three.
Each appraiser hereunder shall be a resident of the State of Ohio,
shall have devoted the majority of his time to employment as an appraiser
during at least the three year immediately preceding his appointment, shall be
duly licensed (if applicable) as an appraiser under the laws of Ohio, and shall
be disinterested. The costs of any appraisal or appraisals made pursuant to
this Agreement shall be borne equally between Landlord and Tenant. Each
appraisal made hereunder shall be in writing, signed by the appraiser who
shall also certify that he is qualified as described above.
D. This option may not be exercised at any time while the Tenant
is in default under any covenant or obligation of Tenant, regardless of whether
the same may otherwise be deemed a material
-25-
<PAGE> 33
or substantial default, unless such default is expressly waived by Landlord in
writing.
E. The option provided under this Paragraph 34 shall automatically be
void if this Lease is terminated or cancelled for any reason prior to its being
exercised. If this option is not exercised for any reason prior to November
30, 1991, Tenant shall certify in writing, in recordable form, in such detail as
Landlord may reasonably request, that said option has expired unexercised, is
no longer in effect, and that Tenant has no rights thereunder.
F. Upon exercise of the option, the terms of said sale shall be as
follows:
(1) The Purchase price shall be fully paid in cash at
closing.
(2) Closing shall take place on the demised premises or at such
other location as the parties shall mutually agree upon in writing, within
fifteen (15) days after Landlord delivers to Tenant a commitment for title
insurance in the amount of the purchase price, certified to a date subsequent
to the notice of Tenant's exercise of its option. Tenant shall have ten (10)
days following receipt of the commitment to notify Landlord of any exceptions
in the commitment which are unacceptable to Tenant, in which case Landlord
shall, upon notice to Tenant, either:
(a) terminate the purchase agreement at no further cost, expense
or obligation on the part of either Landlord or Tenant, or
-26-
<PAGE> 34
(b) remove any unacceptable exception and proceed to close in
which case Tenant shall agree to postpone the Closing for
up to thirty (3O) days.
Landlord shall at the closing deliver to Tenant its general warranty deed
conveying all of Landlord's title to the demised premises, subject to
easements, building and use restrictions, and such other encumbrances, if any,
as may be disclosed in such title insurance commitment. Tenant shall be
entitled to credit against the purchase price the amount necessary to discharge
any mortgage against the demised premises given by Landlord. Real property
taxes and assessments shall be prorated as provided in this Lease.
G. Anything to the contrary herein contained notwithstanding, in the
event the Sales Representation Agreement between Tenant and C. J. Edwards
Company, Inc. has been terminated for any reason, prior to Tenant's exercise of
this option, or if notice of termination thereof has been given by either party
to said agreement for any reason, the purchase price under this option shall be
the greater of the following amounts:
(1) the Appraised Value, determined as above provided; or
(2) $2,400,000.00 plus an amount equal to $8,000.00
multiplied by the number of months Tenant has occupied the demised premises up
to the date of closing.
-27-
<PAGE> 35
35. RIGHT OF FIRST REFUSAL.
If at any time during the initial term of this Lease after Tenant's
option to purchase shall have expired unexercised (and, if Tenant exercises its
option to extend the term of this Lease is provided in Paragraph 2 hereof, then
also at any time during any such extended term of this Lease), Landlord shall
received a bona fide written offer from any person to purchase the demise
premises. Landlord shall send to Tenant a true copy of such written offer and
notify Tenant of Landlord's intention to accept such offer. Tenant shall have
the right within ten (10) days following receipt thereof to accept the terms of
the said written offer in its open name on the same terms and conditions as
provided in said written offer, including, without limitation, the purchase
price and terms of payment. Such acceptance shall be in writing signed by an
authorized officer of Tenant. If Tenant does not so elect to purchase the
demised premises within said period, Landlord may then sell the demised
premises to the said buyer, provided the sale is on the same terms and
conditions and for the same price as set forth in said written offer, without
any further obligation to Tenant, and all rights of Tenant under this Paragraph
35 shall terminate.
36. TENANT'S SALE OF ALL OR SUBSTANTIALLY ALL OF ITS ASSETS.
In the event Tenant decides to sell all or substantially all of its
assets to any person, firm or corporation, Tenant agrees to give Landlord at
least twenty (20) days' prior written notice
-28-
<PAGE> 36
thereof which notice shall state the name and address of each purchaser, the
terms of sale, and the date such sale will be closed. Landlord may within
twenty days after receipt of such notice, upon written notice to Tenant,
require that the purchaser of said assets expressly assume, in a writing
satisfactory to Landlord, this Lease and all of Tenant's obligations hereunder
(which assumption shall not operate as a release or discharge of any of
Tenant's obligations hereunder).
37. NOTICES.
Whenever under this Lease a provision is made for notice of any kind it
shall be deemed sufficient notice and service thereof if such notice to the
Tenant is in writing addressed to the Tenant at its last known Post Office
address or at the demised premises and deposited in the mail with postage
prepaid and if such notice to the Landlord is in writing addressed to the last
known Post Office address of the Landlord and deposited in the mail with
postage prepaid. Notice need be sent to only one Tenant or Landlord where the
Tenant or Landlord is more than one person.
38. GENERAL.
It is agreed that in this Lease the word "he" shall be used as
synonymous with the words "she," "it" and "they," and the word "his"
synonymous with the words "her," "its" and "their."
-29-
<PAGE> 37
The covenants, conditions and agreements made and entered
into by the parties hereto are declared binding on their respec-
tive successors, representatives and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals the day and year first above written.
WITNESSED BY: LANDLORD:
C. J. EDWARDS COMPANY, INC,
[SIG] By: [SIG]
- ---------------------------- ------------------------------
[SIG] Its: Sec/Treas.
- ---------------------------- ------------------------------
TENANT:
ARROW MOLDED PLASTICS, INC,
[SIG] By: William A. Brock
- ---------------------------- ------------------------------
[SIG] Its: President
- ---------------------------- ------------------------------
STATE OF OHIO )
)ss.
COUNTY OF FRANKLIN)
On this 7th day of January, in the year of our Lord One Thousand
Nine Hundred and Eighty-Six before me, a Notary Public in and for
said County, appeared William A. Brock to me personally known, who,
being by me sworn, did say that he is the President of Arrow Molded
Plastics, Inc., an Ohio corporation, the corporation named in and which
executed the within instrument, and that the seal affixed to said
instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation by authority
of its Board of Directors; and said William A. Brock acknowledges said
instrument to be the free act and deed of said corporation.
Mary Beth Moser
------------------------------------
Notary Public, Franklin County, Ohio
MARY BETH MOSER
ATTORNEY AT LAW
NOTARY PUBLIC-STATE OF OHIO
MY COMMISSION HAS NO EXPIRATION DATE
SECTION 147.03 R.C.
-30-
<PAGE> 38
STATE OF OHIO )
) ss.
COUNTY OF FRANKLIN)
On this 7th day of January, in the year of our Lord One Thousand
Nine Hundred and Eighty-Six before me, a Notary Public in and for said County,
appeared Samual J. DeMascio to me personally known, who, being by me sworn,
did say that he is the Secretary - Treasurer of C. J. Edwards Company, Inc., a
Michigan corporation, the corporation named in and which executed the within
instrument, and that the seal affixed to said instrument is the corporate seal
of said corporation, and that said instrument was signed and sealed in behalf
of said corporation by authority of its Board of Directors; and said Samuel J.
DeMascio acknowledges said instrument to be the free act and deed of said
corporation.
Mary Beth Moser
------------------------------------
Notary Public, Franklin County, Ohio
MARY BETH MOSER
ATTORNEY AT LAW
NOTARY PUBLIC-STATE OF OHIO
MY COMMISSION HAS NO EXPIRATION DATE
SECTION 147.03 R.C.
SECURITY PROVISION
The Landlord herewith acknowledges the receipt of FIFTY THOUSAND
DOLLARS ($50,000), which it is to retain as security for the faithful
performance of all of the covenants, conditions, and agreements of this
Lease, but in no event shall the Landlord be obliged to apply the same
upon the rents or other charges in arrears or upon damages for the
Tenant's failure to perform the said covenants, conditions, and
agreements; the Landlord may so apply the security at its option; and
the Landlord's right to the possession of the demised premises for
non-payment of rent or for any other reason shall not in any event be
affected by reason of the fact that the Landlord holds this security.
The said sum if not applied toward the payment of rent in arrears or
toward the
-31-
<PAGE> 39
payment of damages suffered by the Landlord by reason of the Tenant's
breach of the covenants, conditions, and agreements of this Lease is to
be returned to the Tenant when this Lease is terminated, according to
these terms, and in no event is the said security to be returned until
the Tenant has vacated the demised premises and delivered possession to
the Landlord.
In the event that the Landlord repossesses itself of the
said demised premises because of the Tenant's default or because of the
Tenant's failure to carry out the covenants, conditions, and agreements
of this Lease, the Landlord may apply the said security upon all damages
suffered to the date of said repossession and may retain the said
security to apply upon such damages as may be suffered or shall accrue
thereafter by reason of the Tenant's default or breach. The Landlord
shall not be obliged to keep the said security as a separate fund,
but may mix the said security with its own funds.
C. J. EDWARDS COMPANY INC.
By: Samuel J. DeMascio
---------------------------
Its: Sec - Treas
---------------------------
"LANDLORD"
-32-
<PAGE> 40
Exhibit A
EASEMENT
KNOW ALL MEN BY THESE PRESENTS, that Glad Plastics, Inc.,
an Ohio corporations, for good and valuable consideration to it
paid by C. J. Edwards Company, Inc., a Michigan corporation, the
Grantee herein and adjacent property owner, receipt of which is
hereby acknowledged, does grant to Grantee, its successors and
assigns a nonexclusive easement over and through the following
described real estate (the "Easement Premises"):
Situated in the State of Ohio, County of
Pickaway, and City of Circleville and being
20 feet off the entire north side of the
property more fully described in Exhibit A,
attached, with the centerline of said easement
being 10 feet south of the northern boundary
line of said property and running parallel to
said northern boundary line.
For the sole purpose of using and maintaining, in common with
Grantor, the existing railroad spur track located on said Easement
Premises.
Grantor excepts and reserves unto itself, its successors
and assigns, the right to use the Easement Premises and the
railroad spur track located thereon. Grantor and Grantee will
each pay one-half the cost of repairing and maintaining the
Easement Premises and the railroad spur track located thereon.
Neither Grantor nor Grantee shall obstruct, or otherwise prevent,
the use of the railroad spur track located on the Easement Premises
by the other.
Grantee shall indemnify Grantor, its successors and assigns,
against and hold Grantor, its successors and assigns, harmless from
any loss, claim, liability, damage, cost, or expense imposed on or
incurred by Grantor or its successors or assigns as a result of
third party claims based upon or arising out of or in any way
relating to Grantee's use of the Easement Premises.
TO HAVE AND TO HOLD said premises to the Grantee, its
successors and assigns as appurtenant to its adjacent property for
<PAGE> 41
the uses and purposes hereinbefore mentioned.
IN WITNESS WHEREOF, Grantor has caused these presents to be
subscribed this 7th day of January, 1986.
Signed and acknowledged GLAD PLASTICS, INC.,
in the presence of: an Ohio corporation
Mary Beth Moser By William A. Brock
- --------------------------- -----------------------------
William A. Brock, President
Rebecca K. Schumacher
- ---------------------------
Mary Beth Moser C. J. EDWARDS COMPANY, INC.,
- --------------------------- a Michigan corporation
Rebecca K. Schumacher By Samual J. DeMascio
-------------------------- -----------------------------
Samual J. DeMascio,
Secretary/Treasurer
STATE OF OHIO,
COUNTY OF FRANKLIN, ss:
The foregoing instrument was acknowledged before me this 7th day of
JANUARY, 1986, by William A. Brock, President of Glad Plastics, Inc., an
Ohio corporation, on behalf of the corporation.
Mary Beth Moser
------------------------------------
Notary Public
MARY BETH MOSER
ATTORNEY AT LAW
NOTARY PUBLIC-STATE OF OHIO
MY COMMISSION HAS NO EXPIRATION DATE
SECTION 147.03 R.C.
STATE OF OHIO,
COUNTY OF FRANKLIN, ss:
The foregoing instrument was acknowledged before me this 7th day of
January, 1986, by Samuel J. DeMascio, Secretary/Treasurer of C. J.
Edwards Company, Inc., a Michigan corporation, on behalf of the
corporation.
Mary Beth Moser
------------------------------------
Notary Public
MARY BETH MOSER
ATTORNEY AT LAW
NOTARY PUBLIC-STATE OF OHIO
MY COMMISSION HAS NO EXPIRATION DATE
SECTION 147.03 R.C.
This instrument prepared by:
Theodore S. Bloom, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
<PAGE> 42
EXHIBIT A
Situated and being in the County of Pickaway, State of Ohio, and in the
City of Circleville, and more particularly described as follows:
FIRST PIECE: Beginning at the intersection of the north line of Half Avenue
with the east line of Clinton Street; thence with the north line of Half Avenue
S. 87 degrees E. 321 and 25/100 feet to a stake; thence N. 3 degrees E. 144 and
25/100 feet to a stake in the line of lands of the C. & M.V. Railroad Co.;
thence with said line N. 87 degrees W. 270 and 25/100 feet to a stake in the
east line of Clinton Street; thence with said line S. 22 degrees W. 153 feet to
the place of beginning, containing 98/100 acres of land, more or less. Being
Lot Number One (1) of the Subdivision of the Shoe Factory property and being
designated as Tract Number Two (2) in the deed of John L. Krimmel and Festus
Walters, assignees to John Goellar of date August 23, 1899, and recorded in Deed
Book 70, page 371, Pickaway County Deed Records.
SECOND PIECE: Lot Number Two (2). Beginning at a stake in the north line of
Half Avenue Southeast corner of Lot Number One (1); thence with said line S. 87
degrees E. 50 feet to a stake; thence N. 3 degrees E. 144.25 feet to a stake in
the south line of lands of the C. & M.V. Railroad Co.; thence with said line N.
87 degrees W. 50 feet to a stake in the east corner of Lot Number One (1);
thence with the east line of said lot S. 3 degrees W. 144.25 feet to the place
of beginning, containing 166/1000 of an acre, more or less. Being Lot Number
Two (2) of the subdivision of the Shoe Factory property.
Lot Number Three (3): Beginning at a stake in the north line of Half Avenue
Southeast corner of Lot Number Two (2) Thence with said line S. 87 degrees E.
50 feet to a stake; thence N. 3 degrees E. 144 25/100 feet to a stake in the
south line of lands of the C. & M.V. Railroad Company; thence with said
line N. 87 degrees W. 50 feet to a stake northeast corner of Lot Number Two
(2); thence with the east line of said lot S. 3 degrees W. 144 25/100 feet to
the place of beginning, containing 166/1000 of an acre of land, more or less.
Lot Number Four (4). Beginning at a stake in the north line of Half Avenue
Southeast corner of Lot Number Three (3); thence with said line S 87 degrees E.
50 feet to a stake; thence N. 3 degrees 144 25/100 feet to a stake in the
south line of lands of the C. & M.V. Railroad Company; thence with said line N.
87 degrees W. 50 feet to a stake Northeast corner to said Lot Number Three
(3); thence with the east line of said Lot Number Three (3) South 3 degrees W.
144 25/100 to the place of beginning, containing 166/1000 of an acre of land,
more or less.
<PAGE> 43
Lot Number Five (5). Beginning at a stake in the north line of Half Avenue
southeast corner of Lot Number Four (4); thence with said line S. 87 degrees E.
50 feet to a stake, thence N. 3 degrees E. 144 25/100 feet to a stake in the
south line of the lands of the C. & M. V. Railroad Company; thence with said
line N. 87 degrees W. 50 feet to a stake northeast corner of said Lot Number
Four (4); thence with the east line of said lot South 3 degrees W. 144 25/100
feet to the place of beginning, containing 166/1000 of an acre of land, more or
less.
Lot Number Six (6). Beginning at a stake in the north line of Half Avenue
southeast corner of Lot Number Five (5); thence with said line S. 87 degrees E.
50 feet to a stake; thence N. 3 degrees E. 144 25/100 feet to a stake in the
south line of lands of E. A. VanRiper; thence N. 87 degrees W. 50 feet to a
stake northeast corner of said Lot Number Five (5); thence with the east line
of said Lot Number Five (5) S. 3 degrees W. 144 25/100 feet to the place of
beginning, containing 166/1000 of an acre of land, more or less.
Lot Number Seven (7). Beginning at a stake in the north line of Half Avenue
southeast corner of Lot Number Six (6); thence with said line S. 87 degrees E.
50 feet to a stake; thence N. 3 degrees E. 144 25/100 feet to a stake in the
south line of lands of E. A. VanRiper; thence with said line N. 87 degrees
w. 50 feet to a stake northeast corner of said Lot Number Six (6); thence with
the east line of said lot S. 3 degrees W. 144 25/100 feet to the place of
beginning, containing 166/1000 of an acre of land, more or less.
Lot Number Eight (8). Beginning at a stake in the north line of Half Avenue
southeast corner of Lot Number Seven (7); theme with said line S. 87 degrees E.
50 feet to a stake; thence N. 3 degrees E. 144 25/100 feet to a stake in the
south line of lands of E. A. VanRiper; thence with said line N. 87 degrees W.
50 feet to a stake northeast corner of said Lot Number Seven (7); thence with
east line of said lot S. 3 degrees W. 144 25/100 feet to the place of
beginning, containing 166/1000 of an acre of land, more or less.
THIRD PIECE: All that certain strip of parcel of land 15 feet wide,
bounded and described as follows:
Beginning at a point in the southeastly line of Clinton Street 66 feet
wide and at the southeasterly line of Clinton Street 66 feet wide and at
the southwesterly corner of the parcel of land containing 130,296 square
feet, more or less, which was conveyed by the Pennsylvania Ohio and
Detroit Railroad Company to Harry M. Gordon by deed dated July 27, 1927,
extending from said beginning point to the following four courses and
distances:
1. South 70 degrees E. along the southerly line of said land so conveyed to
Harry M. Gordon, S12 feet to the southeasterly corner of said land;
2. South 20 degrees 19 feet W. along the prolongation southwardly of the
easterly line of said last mentioned land, 15 feet, more or less, to a
point in the northerly line of other land of the grantor which is being
conveyed to the grantee hereby;
3. North 70 degrees W. by said last mentioned, land on a line parallel with and
distant 15 feet measured southwardly and at right angles from the said
first course herein, 517 feet and 41/100 of a foot to a point in the
said southeasterly line of Clinton Street; and thence:
4. North 39 degrres E. along the said southeasterly line of Clinton Street, 15
feet and 8/10 of a foot to the place of beginning. Containing 7,721
square feet, more or less.
FOURTH PIECE: Beginning at a nail in the concrete base of a steel post at the
northeast corner of Lot Number Eight (8) of the Shoe Factory subdivision;
thence N. 87 degrees W. a distance of 104.25 feet to a stake; thence of N.
02 degrees 51 feet E. a distance of 16 feet to an iron pin; thence S. 87
degrees E. distance of 157.72 feet to aniron pipe; thence S. 05 degrees 20
feet W. a distance of 16 feet to an iron pipe; thence N. 87 degrees W. a
distance of 52.8 feet to the place of beginning. Containing 0.06 acres, more
or less.
Subject to encroachments, if any, onto the real property above described
by adjoiners' improvements; encroachments, if any, onto adjoiner's
property by improvements located on the real property above described;
deficiencies, if any, in quantity of land; any matters which would be
disclosed by an accurate survey and/or inspection of the real property
above described; easements, rights of way and building and use
restrictions of record, if any, unrecorded utility easements and
rights, if any, zoning ordinances and other governmental limitations of
use and building; current taxes and assessments not yet due and payable
and all subsequent taxes and assessments which shall become due and
payable.
<PAGE> 1
EXHIBIT 10.14
FIRST AMENDED AND RESTATED LEASE
THIS FIRST AMENDED AND RESTATED LEASE ("Lease") is made as of the 28th day
of April, 1993 by and between CPC ASSOCIATES, INC., an Indiana corporation,
whose address is 2860 N. National Road, Columbus, Indiana 47202-0387
("Landlord") , and G L INDUSTRIES OF INDIANA, INC., an Indiana corporation,
whose address is 2860 N. National Road, Columbus, Indiana 47202-0387
("Tenant").
RECITALS:
The facts on which this Lease is based are as follows:
A. On March 31, 1990, Landlord and Tenant entered into a Lease for the
Premises described in Article 1 hereof (the "Original Lease").
B. The ownership of Tenant has been changed pursuant to a Stock Purchase
Agreement of even date herewith between LDM Industries, Inc. and Laurence M.
Luke.
C. Landlord and Tenant desire to amend and restate the Original Lease as
set forth herein.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
ARTICLE 1
LEASED PREMISES
Landlord, in consideration of the rents to be paid by Tenant and the
covenants and agreements hereinafter set forth to be performed by Tenant,
does hereby agree to lease unto Tenant all of that certain land located in the
City of Columbus, County of Bartholomew, State of Indiana, and described with
particularity in Exhibit "A" attached hereto and made a part hereof, together
with all improvements and appurtenances thereto including that certain
building containing approximately 148,225 square feet constructed thereon, and
all other items of real or personal property located on or used in connection
therewith and owned by Landlord (all such property hereinafter referred to as
the "Leased Premises").
ARTICLE 2
TERM OF LEASE
The term of this Lease shall commence on April 28, 1993, (the
"Commencement Date") and shall expire on April 19, 2003,
<PAGE> 2
unless sooner terminated as herein set forth. If permission is given to Tenant
to enter into possession of the Leased Premises prior to the date specified as
the Commencement Date of the term of this Lease, Tenant covenants and agrees
that such occupancy shall be deemed to be under all terms, covenants,
conditions and provisions of this Lease.
ARTICLE 3
RENT
Tenant covenants to pay the rent herein reserved and all other sums which
may become due hereunder, or be payable by the Tenant hereunder, at the times
and in the manner in the Lease provided.
Tenant covenants to pay to the Landlord as rent for the Leased Premises
during the term of the Lease the following rent:
<TABLE>
<CAPTION>
Rental Period No. of Months Monthly Rent
------------- ------------- ------------
<S> <C> <C>
April 28, 1993 through
October 19, 1993 6 $ 30,000.00
October 20, 1993 through
April 19, 1994 6 $ 35,000.00
April 20, 1994 through
April 19, 1995 12 $ 37,500.00
April 20, 1995 through
April 19, 2003 96 $ 40,000.00
</TABLE>
The rents listed above shall be payable in advance, in equal monthly
installments as set forth above upon the 20th day of each month or if the lease
term shall commence on a day other than the 20th day of a calendar month or
shall end on a day other than the 21st day of a calendar month, the rental for
the first or last fractional month shall be such proportion of the monthly
rentals as the number of days in such fractional month bears to the total
number of days in the calendar month.
At the beginning of and for each rental year commencing with the first
rental year of this Lease (i.e. beginning on May 1, 1993 and each May 1st
thereafter including each May 1st during any renewal term hereof until this
Lease is terminated), the basic monthly rent set forth above shall be adjusted
and changed as set forth below.
2
<PAGE> 3
During the term of this Lease (including any renewal term as set forth in
Article 23 below), the basic monthly rent shall be adjusted (either upward
or downward) by an amount equal to one-twelfth (1/12th) of the difference
between a) the actual amount of interest paid by the Landlord on its
$2,160,000 mortgage note with Irwin Union Bank & Trust Co. dated April 1, 1990
(the "Mortgage Note") during the preceding twelve (12) months (or the amount
that would have been paid by the Landlord on such Mortgage Note in accordance
with its terms if the maturity date of the Mortgage Note had been extended
beyond April 1, 1997) and b) the amount of interest that the Landlord would
have paid if the interest rate on the Mortgage Loan during the preceding twelve
(12) months had remained constant at 7.75%.
On April 15th of each rental year, commencing April 15, 1994, the Landlord
shall deliver a statement to the Tenant reflecting a) the actual amount of
interest paid by the Landlord on the Mortgage Note during the preceding twelve
(12) months (or the amount of interest that would have been paid by the Landlord
on such Mortgage Note in accordance with its terms if the maturity date of the
Mortgage Note had been extended beyond April 1, 1997) and b) the amount of
interest that the Landlord would have been paid if the interest rate on the
Mortgage Loan during the preceding twelve (12) months had remained constant at
7.75%.
If the amount of interest paid by the Landlord (or which would have been
paid if the term of the Mortgage Note had been extended beyond April 1, 1997)
is greater than the amount of interest the Landlord would have paid if the
interest rate remained constant at 7.75%, the monthly rent for the subsequent
rental year shall be increased by an amount equal to one-twelfth (1/12) of the
amount of interest paid (or which would have been paid) over 7.75%.
If the amount of the interest paid by the Landlord (or which would have
been paid if the term of the Mortgage Note had been extended beyond April 1,
1997) is less than the amount of interest the Landlord would have paid if the
interest rate had remained constant at 7.75%, the monthly rent for the
subsequent rental year shall be decreased by an amount equal to one-twelfth
(1/12) of the amount of interest paid (or which would have been paid) less
than 7.75%.
If Tenant shall fail to pay, when the same is due and payable, any rent,
such unpaid amounts shall bear interest from the due date thereof to the
date of payment at the prime interest rate per annum of Irwin Union Bank and
Trust Company of Columbus, Indiana as it may vary from time to time (the "Prime
Rate") plus three percent (3%) per annum, but in no event higher than the legal
limit, whichever is lower (the "Default Rate").
3
<PAGE> 4
If the Tenant shall fail to pay, when the same is due and payable, any
monthly installment of rent on or before fifteen (15) days after the date
such installment is due, then, in addition to the basic monthly rent and the
interest referred to in the preceding paragraph, the Tenant shall pay to the
Landlord a "late charge" equal to five percent (5%) of the amount of the
monthly installment of rent then due.
ARTICLE 4
UTILITIES
Tenant shall be solely responsible for and agrees to pay all charges made
against the Leased Premises for gas, heat, water, electricity, sewage disposal,
telephone charges, telecommunication charges and all other utilities during the
term of this Lease as the same shall become due.
ARTICLE 5
REPAIRS, MAINTENANCE AND ACCEPTANCE OF PREMISES
Landlord hereby delivers to Tenant, and Tenant hereby accepts from
Landlord, possession of the Leased Premises. Tenant represents and warrants
that it has fully examined the Leased Premises and accepts the Leased Premises
in their current condition, subject to the terms of this Lease and the plans
and specifications of the building(s) constructed thereon and agrees that it
will accept the Leased Premises in an "as is" condition without representation
or warranty, express or implied, in fact or by law, by Landlord and without
recourse to Landlord as to the physical condition, usability or suitability of
the Leased Premises for the use or uses for which the Leased Premises may be
put.
Tenant agrees, at all times during the Lease term and at its own expense,
to maintain the Leased Premises in the same condition and state of repair
existing as of the Commencement Date except for normal wear and tear. Such
repair obligation shall include any and all appurtenances to the Leased
Premises, including the roof, the foundation, the four (4) outer walls, the
exterior and interior portion of all doors, door checks, windows, plate glass,
walks, drives, parking areas, landscaping, snow removal, heating and air
conditioning systems, electrical and wiring, plumbing and all conduits.
Notwithstanding the foregoing, the Tenant's repair obligations with respect
to the roof shall be specifically limited to those activities which involve
repairs of leaks in the roof on a "spot" basis.
4
<PAGE> 5
During the term of this Lease, the Landlord and the Tenant shall cooperate
with each other to determine whether repairs to the roof or replacement of the
roof are required beyond "spot" repairs. If such repairs or replacements are
required in the mutual judgment of the Landlord and the Tenant, then the
Landlord and the Tenant shall agree upon the extent and cost of such repairs or
replacement and the allocation of financial responsibility for such repairs or
replacement.
In addition, Landlord shall not be obligated to repair or replace any
damaged trade fixtures installed or attached to the Leased Premises or
leasehold improvements made by Tenant.
Tenant agrees to permit Landlord and its authorized representative to enter
the Leased Premises at all reasonable hours and with reasonable prior notice
(except in the case of emergency when Landlord may enter the Leased Premises at
any hour without prior notice) for the purpose of inspecting same and
exhibiting same to prospective tenants, purchasers or lenders. If Landlord
reasonably deems any repairs necessary which are required to be made by Tenant,
Landlord may demand that the Tenant make the repairs forthwith, and if Tenant
refuses or neglects to promptly commence any repairs deemed necessary by
Landlord, and/or complete same with reasonable dispatch, Landlord may make or
cause to be made such repairs. Except for the negligent or wilful acts or
omissions of Landlord, its agents or contractors, Landlord shall not be
responsible to Tenant for any loss or damage that may accrue to its stock or
business as a result of Tenant's failure to protect such property during
repair. If Landlord makes or causes such repairs to be made, Tenant will pay
to Landlord the cost thereof with interest at the Default Rate from the date
Landlord invoices Tenant for such repair as so much additional rent hereunder
due from Tenant to Landlord and shall be repaid to the Landlord with the rent
next due hereunder.
ARTICLE 6
TAXES AND ASSESSMENTS
Tenant shall be responsible for and agrees to pay to Landlord as additional
rent all taxes and assessments which may be levied or assessed by any lawful
authority during each calendar year during the term of this Lease against the
land, the building(s) or the Leased Premises or any part thereof (the "Taxes")
at least ten (10) days prior to the day fixed by law for the first interest or
penalty to accrue thereon. Landlord shall promptly deliver all bills for Taxes
to Tenant. Taxes shall also include all taxes, levies and charges which may be
assessed, levied or imposed in replacement of or in addition to all or any part
of real property taxes as revenue sources, and which in
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whole or in part are measured or calculated by or based upon the Leased
Premises, the free hold estate of the Landlord, the leasehold estate of the
Tenant, or the rent and other charges payable hereunder. In no event shall
Tenant be obligated to pay any income taxes of Landlord, If any tax is imposed
by a taxing authority which is not in substitution for real estate taxes and is
based on the income from the Leased Premises, such tax shall not be deemed to
be the obligation of Tenant hereunder. In addition, all reasonable costs and
expenses incurred by Landlord during negotiations for or contests of the amount
of the Taxes shall be included within the term "Taxes"; provided, however, that
Tenant shall have the first right to contest Taxes at Tenant's expense.
Tenant shall pay the Taxes levied or assessed for or during the term hereof
on or before the last day that such taxes may be paid without interest or
penalty; provided, that in the event Landlord is required under any mortgage
covering the Leased Premises to escrow real estate taxes, Landlord shall be
obligated to use the amount required to be so escrowed as a basis for its
estimate of the monthly installments due from Tenant hereunder and the Tenant,
as long as it is not in default hereunder, shall be entitled to pay such Taxes
directly to Landlord's mortgagee in satisfaction of the Landlord's obligation
to the mortgagee. If the Tenant fails to make such payment on a timely basis,
the Landlord may pay such Taxes itself and the Tenant shall be obligated to
reimburse the Landlord immediately for any such unpaid amount plus interest at
the Default Rate. Upon the receipt of all tax bills and assessment bills
attributable to any calendar year during the term hereof, Landlord shall
furnish Tenant with a written statement of the actual amount of the Taxes for
such year. In the event no tax bill is available, Landlord will compute the
amount of the Taxes. If the total amount paid by the Tenant during the
previous year is less than the amount that should have been paid by the Tenant
for such year, as shown on such statement, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual amount due, such
deficiency to be paid within fifteen (15) days after demand therefor by
Landlord; and if the total amount paid by Tenant hereunder for any such
calendar year shall exceed such actual amount due from Tenant for such calendar
year, such excess shall be credited against the next installment of Taxes due
from Tenant to Landlord hereunder. Any interest earned on the monthly
installments paid hereunder shall belong to Landlord, All amounts due hereunder
shall be payable to Landlord at the place where the rent is payable. For the
calendar years in which this Lease commences and terminates, the provisions of
this Article 6 shall amply, and Tenant's liability for any Taxes for such years
shall be subject to a pro-rata adjustment based on the number of days of said
calendar years during which the term of this Lease is in effect. A copy of a
tax bill or assessment bill submitted by Landlord to Tenant shall, at all
times, be sufficient evidence
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of the amount of the Taxes assessed or levied against the Leased Premises to
which such bill relates. Prior to or at the commencement of the term of this
Lease and from time to time thereafter throughout the term hereof, Landlord
shall notify Tenant in writing of Landlord's estimate of Tenant's monthly
installments due hereunder. In the event a refund of Taxes is obtained, the
portion of the refund which is credited to the Tenant shall be based upon the
percentage of the original Taxes paid by Tenant from which the refund was
derived. Tenant shall pay all real and personal property taxes levied or
assessed to the Leased Premises, including taxes attributable to all
alterations, additions, or improvements made by Tenant.
ARTICLE 7
USE AND OCCUPANCY
It is understood and agreed between the parties that the Leased Premises
during the continuance of this Lease shall be used and occupied solely for the
manufacturing of plastic products and related uses or other uses allowed
by law and approved by Landlord in writing which approval shall not be
unreasonably withheld or delayed. Tenant agrees, at its own expense, to obtain
all approvals, certificates, licenses or permits relating to the business
operations to be conducted by Tenant on the Premises. Tenant agrees that it
will comply with and not use or permit any person to use the Leased Premises
or any part thereof for any use or purpose in violation of the laws of the
United States, the State of Indiana, the ordinances or other regulations of the
municipality in which the Leased Premises is located, or of any other lawful
authorities, or the building and use restrictions in effect covering the Leased
Premises. During the Lease term Tenant will keep the Leased Premises and every
part thereof in a sanitary condition and generally will comply with all lawful
health and police regulations relating to Tenant's use of the Leased Premises.
If any alteration to the Leased Premises is required by law relating to
Tenant's use of the Leased Premises, including but not limited to alterations
required by building codes, environmental statutes and police and fire
authorities, the Tenant shall promptly make such alterations at its sole cost
and expense. All signs and advertising displayed in and about the Leased
Premises shall be such only as to advertise the business carried on upon the
Leased Premises.
ARTICLE 8
LIABILITY INSURANCE AND INDEMNITY
A. At and after the Commencement Date, Tenant agrees to defend, indemnify
and hold Landlord harmless from claims: (i)
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for personal injury, death or property damage; (ii) for incidents occurring in
or about the Leased Premises; and (iii) caused by the gross negligence or
wilful misconduct of Tenant, its agents, contractors or invitees. When the
claim is caused by the joint negligence or wilful misconduct of Tenant and
Landlord or Tenant and a third party unrelated to Tenant, except Tenant's
agents, employees or invitees, Tenant's duty to defend, indemnify and hold
Landlord harmless under this subparagraph shall be in proportion to Tenant's
allocable share of the joint negligence or wilful misconduct.
B. At and after the Commencement Date, Landlord agrees to defend,
indemnify and hold Tenant harmless from claims: (i) for personal injury, death
or property damage, (ii) for incidents occurring in or about the Leased
Premises; and (iii) caused by the gross negligence or wilful misconduct of
Landlord, its agents, invitees or contractors. When the claim is caused by the
joint negligence or wilful misconduct of Landlord, except Landlord's agents,
employees, invitees or contractors, Landlord's duty to defend, indemnify and
hold Tenant harmless shall be in proportion to Landlord's allocable share of
the joint negligence or wilful misconduct.
C. Notwithstanding anything contained herein to the contrary, Landlord
and Tenant each release each other from any claims either party (the "Injured
Party") has against the other. This release is limited to the extent that the
claim is covered by the Injured Party's insurance or the insurance the Injured
Party is required to carry under this Lease, whichever is greater.
D. Tenant agrees that it will at all times during the term hereof, carry
and maintain, for the mutual benefit of Landlord and Tenant and naming the
Landlord, any other parties in interest reasonably designated by Landlord, and
Tenant as insured parties, commercial general public liability and property
damage insurance with respect to the Leased Premises and the business operated
by Tenant and any subtenants of Tenant in the Leased Premises against claims
for personal injury, sickness or disease, including death and property damage
in, on or about the Leased Premises, such insurance to afford protection to
the limit of not less than $2,000,000.00 in respect to each person, and to the
limit of not less than $2,000,000.00 in respect to any one occurrence causing
bodily injury or death, and liability for property damage (with no deductible
provisions unless a higher deductible amount is specifically agreed to in
writing by the Landlord) of not less than $2,000,000.00 in respect to any one
occurrence, and worker's disability compensation insurance required by the laws
of the State of Indiana, and will also carry, for the mutual benefit of
Landlord and of Tenant, if any is required by Landlord, steam boiler insurance
naming Landlord
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and Tenant as insured parties, on all steam boilers, pressure vessels and other
such apparatus, including piping, at any time located on the Leased Premises,
in such amounts as Landlord may from time to time require. Tenant shall
furnish Landlord with a certificate of such insurance policy or policies. All
such insurance shall be procured from a responsible insurance company
satisfactory to Landlord and authorized to do business in the State of Indiana
and may be obtained by Tenant by endorsement on its blanket insurance policies,
provided the insurance company or companies are satisfactory to Landlord. All
such policies shall provide that the same may not be canceled or materially
modified except upon thirty (30) days prior written notice to Landlord. In the
event Tenant shall fail to procure such insurance and to keep such insurance in
effect during the entire term hereof, Landlord may, at its option following ten
(10) days prior written notice to Tenant, procure the same for the account of
Tenant, and the cost thereof shall be paid to Landlord as additional rent upon
receipt by Tenant of bills therefor.
In case any action or proceeding shall be commenced against Landlord
growing out of any loss, cost, damage or expense for which Tenant is
responsible under this Article, Landlord may give written notice of the same to
Tenant and thereafter Tenant shall assume and discharge all obligations to
defend the same and save and keep Landlord harmless from all expenses, counsel
fees, costs, liabilities, judgments and executions in any manner growing out
of, pertaining to, or connected therewith.
Notwithstanding anything contained herein to the contrary, Tenant will name
as additional insureds or loss payees, as their interests may appear, any
mortgagee for which Landlord has provided Tenant with the name and address.
ARTICLE 9
FIRE INSURANCE AND EXTENDED COVERAGE; RENT LOSS INSURANCE
Tenant shall procure and keep in full force and effect throughout the term
of this Lease, insurance covering the building(s) and all other improvements on
the Leased Premises in an amount equal to one hundred (100%) percent of the
replacement cost thereof (with a $1,000.00 deductible for any one casualty
unless a higher deductible amount is specifically agreed to in writing by the
Landlord) against loss by fire, vandalism, malicious mischief, lightning,
smoke, windstorm, sprinkler leakage, elevator collision and such other perils
as are from time to time included in a standard extended coverage endorsement.
Tenant shall furnish Landlord with a certificate of such insurance policy or
policies. Such insurance shall be procured from a responsible insurance
company reasonably
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satisfactory to the Landlord licensed to do business in Indiana, and shall
insure Landlord and Landlord's mortgagee(s) and Tenant, as their interest may
appear. Each such policy shall provide for thirty (30) days' written notice
to Landlord and Tenant of any cancellation or material modification.
Tenant shall be responsible for procuring such insurance as it may desire
covering the interior and contents of the Leased Premises, including without
limitation, partitions, floor coverings, carpeting, drapes, shades, furniture,
office equipment, inventory and any machinery and equipment within and/or
affixed to the building(s).
Tenant shall cause each insurance policy procured by it covering the Leased
Premises to be written in a manner so as to provide that the insurance company
waives all right of recovery by way of subrogation against Landlord in
connection with any loss or damage covered by any such policies.
In the event that payment of premiums relative to any insurance required
under this Article 9 is to be made from an escrowed fund required to be
established by Landlord as mortgagor under the terms of any mortgage on the
Leased Premises, then Landlord shall so notify Tenant. Tenant shall be required
to directly pay premiums into such escrowed fund in an amount equal to the
amount required to be paid by Landlord under the terms of any such mortgage. If
the Tenant fails to make such payment on a timely basis, the Landlord may pay
such premiums itself and the Tenant shall be obligated to reimburse the
Landlord immediately for any such unpaid amount plus interest at the Default
Rate. If actual premiums, when due, exceed the total amounts from time to time
paid therefor by Tenant, then the Tenant shall, upon demand by Landlord, pay
any deficiency to Landlord. If such payments by Tenant over the term of the
Lease exceed the amount of premiums paid therefrom such excess shall be
refunded by the Mortgagee to Landlord, whichever first occurs, provided Tenant
is not in default.
Tenant shall procure and keep in full force and effect throughout the term
of this Lease rental loss insurance protecting the Landlord from loss of rent
(including Tenant paid expenses) for a period of three (3) years.
Notwithstanding anything contained herein to the contrary, Tenant will name
as additional insureds or loss payees to the extent required and as their
interests may appear, any mortgagee of record (provided Landlord delivers to
Tenant written notice of the name and address of such mortgagee) and the
Landlord. In addition, Tenant shall agree to cause to be included in each
insurance policy required hereunder such provisions as may be reasonably
required by any lender to Landlord.
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ARTICLE 10
DESTRUCTION AND RESTORATION
If, after the commencement of the term of the Lease, and prior to the
expiration or earlier termination hereof, the Leased Premises shall be
partially damaged (as distinguished from "substantially damaged," as that term
is hereinafter defined) by fire or casualty, Landlord shall promptly proceed
with due diligence to restore the Leased Premises to substantially the
condition in which the Leased Premises were in at the time of such damage, but
Landlord shall not be responsible for delay which may result from any cause
beyond the reasonable control of Landlord.
Subject to the terms and conditions contained in the mortgage between the
Landlord and any mortgagee of the Leased Premises, if, after the commencement
of the term of this Lease, and prior to the expiration or earlier termination
hereof, the building and improvements located on the Leased Premises shall be
substantially damaged (as that term is hereinafter defined) by fire or
casualty, the risk of which is covered by Tenant's insurance, and neither
Landlord nor Tenant elects to terminate this Lease as hereinafter set forth,
Landlord shall promptly restore (consistent, however, with zoning laws and
building codes then in existence) the Leased Premises to substantially the
condition which the Leased Premises were in at the time of such damage, except
as hereinafter provided, but Landlord shall not be responsible for delay which
may result from a cause beyond the reasonable control of Landlord. Should the
net amount of insurance proceeds available to Landlord be insufficient to cover
the cost of restoring the Leased Premises, in the reasonable estimate of the
Landlord, either Landlord or Tenant may, but shall have no obligation to,
supply the amount of such insufficiency and restore the Leased Premises with
all reasonable diligence, or Landlord or Tenant may terminate this Lease by
giving written notice to the other party not later than thirty (30) days after
Landlord has reasonably determined the estimated net amount of insurance
proceeds available to Landlord and the estimated cost of such restoration.
The term "substantially damaged", as used herein shall refer to damage of
such a character that the normal molding operations of Tenant cannot be
conducted for a period of thirty (30) consecutive days or more.
If the Leased Premises shall be damaged by fire or casualty, the basic rent
shall abate or be reduced proportionately for the period in which by reason of
such damage, there is substantial interference with the operation of the
business of Tenant, but such abatement or reduction shall end upon completion
by Landlord
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of the work which Landlord is required to do under this Article 10 in
restoration of the Leased Premises.
ARTICLE 11
ALTERATIONS
The parties agree that Tenant shall not make any alterations, additions or
improvements to the Leased Premises without the written consent of the
Landlord, which consent shall not be unreasonably withheld or delayed, and,
if required by the terms of any mortgage on the Leased Premises, the written
consent of any such mortgagee. Upon the expiration of this Lease, Tenant shall
not remove any alterations, additions or improvements, except movable office
furniture, equipment and trade fixtures put in at the expense of Tenant, and
any such alterations, additions or improvements (other than movable office
furniture and trade fixtures put in at the expense of Tenant) shall be the
property of Landlord and shall remain upon and be surrendered with the Leased
Premises at the termination of this Lease.
ARTICLE 12
MECHANIC'S LIENS
Tenant shall not suffer or permit any Statement of Intention to hold a
mechanic's lien to be filed against the Leased Premises or any part thereof by
reason of work, labor, services or materials supplied or claimed to have
been supplied to Tenant or anyone holding the Leased Premises or any part
thereof through or under Tenant. If any such mechanic's lien shall at any time
be filed against the Leased Premises, Tenant shall cause the same to be
discharged of record within thirty (30) days after the date of filing the same
obtain affirmative title insurance coverage against the enforcement of such
lien or post reasonable security with Landlord (such as a bond or cash
collateral). If Tenant shall fail to discharge, insure over or secure over
such mechanic's lien within such period, then, in addition to any other right
or remedy of Landlord, Landlord may, but shall not be obligated to, discharge
the same either by paying the amount claimed to be due or by procuring the
discharge of such lien by deposit in court or by giving security or in such
other manner as is, or may be, prescribed by law. Any amount paid by Landlord
for any of the aforesaid purposes, and all reasonable legal and other expenses
of Landlord, including reasonable counsel fees, in or about procuring the
discharge of such lien, together with all necessary disbursements in connection
therewith, and together with interest thereon at the Default Rate from the date
of payment, shall be repaid by Tenant to Landlord on demand, and if unpaid may
be treated as additional rent. Nothing herein
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contained shall imply any consent or agreement on the part of Landlord to
subject Landlord's estate to liability under any mechanic's lien law.
ARTICLE 13
WASTE
Tenant covenants not to do or suffer any waste, damage, disfigurements or
injury to the Leased Premises or any improvement now or hereafter on the Leased
Premises, or the fixtures and equipment thereof, or permit or suffer any
overloading of the floors thereof.
ARTICLE 14
CONDITION OF LEASED PREMISES
Tenant is fully familiar with the physical condition of the Leased Premises
and Landlord had made no representations of any nature in connection with the
condition of the Leased Premises.
ARTICLE 15
EMINENT DOMAIN
If the whole or a substantial portion of the Leased Premises shall be taken
by any public authority under the power of eminent domain, the Tenant may
terminate this Lease upon written notice to Landlord within thirty (30)
days following entry of a final order condemning the Leased Premises or such
substantial portion thereof or purchase by a deed in lieu of condemnation, or
continue this Lease of the Leased Premises but in such case the rent payable
hereunder shall abate pro-rata based on the square footage of the Leased
Premises taken. In the event that Tenant shall not elect to terminate this
Lease or the taking is less than a substantial portion of the Leased Premises,
Landlord shall make all necessary repairs to the Leased Premises to render and
restore the same to the complete architectural unit and Tenant shall continue
in possession of the portion of Leased Premises not taken under the power of
eminent domain under the same terms and conditions as are in direct proportion
to the amount of the Leased Premises so taken. All damages awarded for such
taking shall belong to and be the property of Landlord, whether such damages be
awarded as compensation for diminution in value of the leasehold or to the fee
of the Leased Premises provided, however, Landlord shall not be entitled to any
portion of the award made to Tenant for removal and reinstallation of fixtures,
moving expenses, loss of business or the value of Tenant's leasehold
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interest. For purposes of this Article "substantial portion" shall be
deemed to be in excess of twenty-five (25%) percent of the floor area of the
148,225 sq. ft. building constructed on the Leased Premises.
ARTICLE 16
ASSIGNMENT AND SUBLETTING
Tenant covenants not to assign or transfer this Lease or hypothecate or
mortgage the same or sublet the Leased Premises or any part thereof without the
prior written consent of Landlord, which consent shall be at Landlord's sole
discretion. In the event of any such assignment or transfer with Landlord's
consent, Tenant shall remain fully liable to perform all of the obligations
under this Lease unless the Tenant is specifically released in writing from its
obligations by Landlord. In the event of any assignment, transfer (including
transfers by operation of law or otherwise), hypothecation, mortgage or
subletting without such written consent, in addition to any other right or
remedy Landlord may have under the provisions of this Lease, Landlord shall
have the right to terminate this Lease and/or to re-enter and repossess the
Leased Premises but Landlord's rights to damages shall survive and Tenant shall
in no way be released from any of its obligations under this Lease. Consent by
Landlord to one or more assignment of this Lease or to one or more subletting
of said Leased Premises shall not be deemed to be a waiver of the requirement
for consent of Landlord to any future assignment or subletting; provided,
however, notwithstanding anything contained therein to the contrary, Landlord
and/or Tenant shall not assign or sublease this Lease without the prior written
approval of any mortgagee to the extent such written consent shall be required
of such mortgagee and any unauthorized assignment or sublease shall be void.
Landlord and Tenant hereby acknowledge that this Lease may be assigned to any
of Landlord's mortgagees and that a Memorandum of this Lease (but not the Lease
itself) may be recorded in the appropriate public records. Notwithstanding
anything contained in this Lease to the contrary, this Lease may be assigned
with the prior written consent (which shall not be unreasonably withheld) of
Landlord, to any corporation into which Tenant may be merged or consolidated or
to any corporation which shall be an affiliate, subsidiary, parent or successor
of Tenant, to a purchaser of substantially all of Tenant's assets or to a
partnership, the majority interest of which shall be the current owners of
Tenant.
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ARTICLE 17
RIGHT TO MORTGAGE, ATTORNMENT AND SET OFF
Subject to the terms and conditions of this Article, this Lease shall
be subordinate to any mortgage encumbering the Leased Premises at any time
during the term thereof and to any and all advances made thereunder,
replacements and extensions thereof. Anything herein to the contrary
notwithstanding, any mortgagee, at its election, by notice in writing
delivered to Landlord and Tenant, shall be entitled to have this Lease treated
as prior to the lien of its mortgage, whether or not this Lease is executed
prior or subsequent to the date of such mortgage. For purposes of this
Article, "mortgage" shall include both construction and permanent financing
and shall be deemed to include mortgages, leasehold mortgages, land contracts,
deeds of trust or other financing instruments. Tenant will execute any
instruments reasonably requested by Landlord to subordinate this Lease to the
lien of any mortgage. Notwithstanding anything contained in this Article to the
contrary, Tenant's obligation to subordinate this Lease to the lien of any
"mortgage" is expressly conditioned upon the agreement of the holder of any
such mortgage to enter into a subordination, non-disturbance and attornment
agreement in commercially reasonable form and substance.
If proceedings are brought for the foreclosure of any mortgage or a
deed is delivered to a mortgagee by Landlord in lieu of such foreclosure, or
if a mortgagee shall exercise a power of sale under any mortgage made by
Landlord covering the Leased Premises, Tenant shall attorn to the purchaser,
upon any such foreclosure or sale and shall recognize such purchaser as
Landlord under this Lease. Within ten (10) days after written request by
Landlord, Tenant shall execute and deliver to Landlord a statement in
recordable form certifying (i) whether or not this Lease is in full force and
effect, (ii) the Commencement Date, (iii) whether or not the rent is paid
currently without set-off or defense thereof, (iv) the amount of rent, if any,
paid in advance, and (v) whether or not there are uncured defaults by Landlord
or stating those claimed by Tenant. Tenant hereby irrevocably appoints
Landlord its attorney-in-fact with full power and authority to execute and
deliver in the name of Tenant any such instrument or instruments upon Tenant's
failure to comply with the provisions of this Section.
ARTICLE 18
BANKRUPTCY OR INSOLVENCY
Neither this Lease nor any interest therein nor any estate thereby
created shall pass to any trustee or receiver or assignee
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for the benefit of creditors or otherwise by operation of law, except
as may specifically be provided pursuant to the United States Bankruptcy Code
(the "Bankruptcy Code").
In the event the estate created hereby shall be taken in execution or
by other process of law, or if Tenant shall be adjudicated insolvent or
bankrupt pursuant to the provisions of any state insolvency or bankruptcy act
or the Bankruptcy Code, or if a receiver or trustee of the property of Tenant
shall be appointed by reason of Tenant's insolvency or inability to pay its
debts, or if any assignment shall be made of Tenant's property for the benefit
of creditors, then and in any such event, this Lease and all rights of Tenant
hereunder shall automatically cease and terminate with the same force and
effect as though the date of such event were the date set forth herein and
fixed for the expiration of the Lease term, and Tenant shall vacate and
surrender the Leased Premises but shall remain liable as herein provided.
Upon filing of a petition by or against Tenant under the Bankruptcy
Code, Tenant, as debtor and as debtor in possession, and any trustee who may be
appointed agree as follows: (1) to perform each and every obligation of Tenant
under this Lease until such time as this Lease is either rejected or assumed by
order of the United States Bankruptcy Court; and (2) to pay monthly in advance
on the first day of each month as reasonable compensation for use and occupancy
of the Leased Premises an amount equal to the rent and other charges otherwise
due pursuant to this Lease; and (3) to reject or assume this Lease within sixty
(60) days of the filing of such petition under Chapter 7 of the Bankruptcy Code
or within one hundred twenty (120) days (or such shorter term as Landlord, in
its sole discretion may deem reasonable so long as notice of such period is
given) of the filing of a petition under any other Chapter; and (4) to give
Landlord at least forty-five (45) days prior written notice of any proceeding
relating to any assumption of this Lease; and (5) to give at least thirty (30)
days prior written notice of any abandonment of the Leased Premises; and (6) to
do all other things of benefits to Landlord otherwise required under the
Bankruptcy Code; and (7) to be deemed to have rejected this Lease in the event
of the failure to comply with any of the above; and (8) to have consented to
the entry of an order by an appropriate United States Bankruptcy Court
providing all of the above, waiving notice and hearing of the entry of same.
No default of this Lease by Tenant, either prior to or subsequent to
the filing of such a petition, shall be deemed to have been waived unless
expressly done so in writing by Landlord.
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ARTICLE 19
EVENTS OF DEFAULT AND LANDLORD'S REMEDIES
Events of Default. Any of the following shall be deemed an Event of
Default:
A. The failure to pay any installment of rent and other amounts due
hereunder when they are due and the failure continues for five (5)
business days after written notice from Landlord to Tenant that such rent
and/or other amounts are overdue.
B. Tenant's failure to perform or observe any other covenant, term or
condition of this Lease to be performed or observed by Tenant and if
curable, the failure continues for fifteen (15) days after notice thereof is
given to Tenant.
C. Abandonment of the Leased Premises.
D. The filing or execution or occurrence of:
(1) An involuntary petition in bankruptcy against Tenant and the
failure of Tenant, in good faith, to have the petition dismissed within
60 days of filing.
(2) A petition against Tenant seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other relief of
the same or different kind under any provision of the Bankruptcy Act, and the
failure of Tenant in good faith to have such petition dismissed within 60 days
of filing,
(3) A general assignment for the benefit of creditors by Tenant.
(4) A voluntary petition in bankruptcy by Tenant.
(5) The taking by any party of the leasehold created hereby, or any
part thereof, upon foreclosure, levy, execution, attachment or other process
of law or equity.
(6) The adjudication of Tenant as insolvent or bankrupt pursuant to
the provisions of any state insolvency or bankruptcy act or the Bankruptcy Code.
(7) The appointment of a receiver or trustee of the property of
Tenant.
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For purposes of this Article 19, the term "Tenant" shall include any
assignee, sublessee or guarantor of Tenant. This provision, however,
shall not be construed to permit the assignment of this Lease, nor the
subletting of the Leased Premises, except as may be permitted hereby.
Landlord's Remedies. Upon the occurrence of any Event of Default, Landlord
may, at its option, in addition to any other remedy or right it has hereunder
or by law:
A. Re-enter the Leased Premises, without demand or notice, and resume
possession by an action in law or equity or otherwise and without being
liable in trespass or for any damages and without terminating this Lease.
Landlord may remove all persons and property from the Leased Premises and such
property may be removed and stored at the cost of Tenant.
B. Terminate this Lease at any time upon the date specified in a notice
to Tenant. Tenant's liability for damages shall survive such
termination. Upon termination such damages recoverable by Landlord from Tenant
shall, at Landlord's option, be either an amount equal to "Liquidated Damages"
or an amount equal to "Indemnity Payments."
"Liquidated Damages" means an amount equal to the excess of the rentals
provided for in this Lease which would have been payable hereunder by
Tenant, had this Lease not so terminated, for the period commencing with such
termination and ending with the date set for the expiration of the original
term granted (or ending with the date set for expiration of the renewal term if
the Lease has been renewed pursuant to Article 23 below) (hereinafter referred
to as "Unexpired Term"), over the reasonable rental value of the Leased
Premises for such Unexpired Term.
"Indemnity Payments" means an amount equal to the rent and other payments
provided for in this Lease which would have become due and owing
thereunder from time to time during the Unexpired Term plus the cost and
expenses paid or incurred by Landlord from time to time in connection with:
(1) Obtaining possession of the Leased Premises;
(2) Removal and storage of Tenant's or other occupant's property;
(3) Care, maintenance and repair of the Leased Premises while vacant;
(4) Reletting the whole or any part of the Leased Premises;
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(5) Repairing, altering, renovating, partitioning, enlarging, remodeling
or otherwise putting the Leased Premises, either separately or as
part of larger premises, into condition acceptable to, and
reasonably necessary to obtain new lessees.
(6) Making all repairs, alterations and improvements required to be made
by Tenant hereunder and of performing all covenants of the Tenant
relating to the condition of the Leased Premises
less the rent and other payments, if any, actually collected and
allocable to the Leased Premises or to the portions thereof relet by Landlord.
Tenant shall on demand make Indemnity Payments monthly and Landlord can sue for
all Indemnity Payments as they accrue.
C. Without terminating this Lease, relet the Leased Premises without the
same being deemed an acceptance of a surrender of this Lease nor a
waiver of Landlord's rights or remedies and Landlord shall be entitled to
Indemnity Payments, as heretofore defined, from Tenant. Any reletting by
Landlord may be for a period equal to or less than, or extending beyond the
remainder of the original term, or for the whole or any part of the Leased
Premises, separately or with other premises or for any sum or to any lessee or
for any use Landlord deems appropriate.
D. If Tenant vacates or abandons the Leased Premises in violation of
this Lease, any property or equipment or sign, interior or exterior,
that Tenant leaves on the Leased Premises shall be deemed to have been
abandoned, and may either be retained by the Landlord as the property of
Landlord, or may be disposed of at public or private sale as Landlord sees fit.
The proceeds from the sale of any property of Tenant sold at public or private
sale or the then current fair market value of such property as may be retained
by Landlord shall be applied by Landlord against (1) the expenses of Landlord
for removal, storage or sale of the personalty, (2) the arrears of rent or
future rent payable under this Lease, and (3) any other damages to which
Landlord may be entitled hereunder. The balance of such amounts, if any,
shall be given to Tenant.
Landlord shall have the option to treat as abandoned and to retain all
personal property or movable trade fixtures belonging to Tenant that Tenant
fails to remove by the expiration date of the term of this Lease specified in
Article 2 above, or Landlord may remove those items from the Leased Premises
and store the property at the expense of the Tenant.
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All rights and remedies of Landlord under this Lease shall be cumulative
and none shall be exclusive of any other rights and remedies allowed by law.
ARTICLE 20
NON-WAIVER
Waiver of any one breach of the covenants or conditions of this Lease or
the non-performance of the same for any particular time shall not be construed
as a waiver of any succeeding breaches of the same or other covenant or
condition hereof, and the consent or approval by Landlord to or of any act by
Tenant requiring Landlord's consent or approval shall not be deemed to waive or
render unnecessary Landlord's consent or approval to or of any subsequent
similar act by Tenant. Tenant shall pay all attorneys' fees and expenses of
Landlord in enforcing any of the obligations of Tenant under this Lease, or in
any litigation or negotiation in which Landlord shall, without its fault,
become involved through or on account of this Lease.
No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Landlord shall accept such check or payment
without prejudice to Landlord's right to recover the balance of such rent or
pursue any other remedy in this Lease provided.
ARTICLE 21
HOLDING OVER
It is hereby agreed that in the event of Tenant holding over after the
termination of this Lease, thereafter the tenancy shall be from month to month
in the absence of a written agreement to the contrary, and Tenant shall pay to
Landlord a daily occupancy charge equal to six percent (6%) of the monthly
rental under Article 3 (plus all other charges payable by Tenant under this
Lease) for each day from the expiration or termination of this Lease until the
date the Leased Premises are delivered to Landlord in the condition required
herein, and Landlord's right to damages for such illegal occupancy shall
survive.
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ARTICLE 22
RE-RENTING
Tenant hereby agrees that for a period commencing one hundred eighty
(180) days prior to the termination of this Lease, Landlord may show the Leased
Premises to prospective tenants, at all reasonable times, upon reasonable prior
notice, and one hundred eighty (180) days prior to the termination of this
Lease, may display in and about the Leased Premises and in the windows thereof,
the usual and ordinary "For Rent" signs.
ARTICLE 23
OPTION TO RENEW
At the expiration of the initial ten (10) year Lease term referred to
in Article 2 above, the Tenant shall have the option to renew this Lease for
two five (5) year renewal terms. The Tenant shall be entitled to exercise its
option to renew the Lease only if:
1. The Tenant is not currently in default under the terms of the lease;
and
2. The Lease is currently in full force and effect and has not been
terminated for any reason; and
3. The Tenant provides the Landlord with written notice of its intention
to exercise its option to renew at least one hundred eighty (180)
days prior to the expiration of the initial Lease term.
The provisions of the Lease during any renewal term, including the
rent, shall be identical to those of the Lease during the initial term of this
Lease with the exception that the rental during each such renewal term shall be
$40,000.00 per month adjusted by the mortgage interest rate adjustment referred
to in Article 3 above and by any change in the index now known as the United
States Bureau of Labor Statistics, Consumer Price Index for All Urban
Consumers, All Items for North Central Region (1977=100) (the "Index") provided
that the amount payable by the Tenant under this Lease as basic monthly rental
shall not be less than $40,000.00 plus or minus the mortgage interest rate
adjustment referred to in Article 3 above.
The adjustment in monthly rent for each rental year commencing with the
first rental year of the first renewal term of this Lease shall be accomplished
by multiplying the basic monthly rental for the first month of the new rental
year
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(without including any cost of living adjustments) by a fraction, the
numerator of which shall be the most recently published monthly Index preceding
the first day of the rental year for which adjustment is made and the
denominator of which shall be the monthly Index for the same month in the year
2002.
If the Index is discontinued or unavailable, the Landlord and Tenant
shall substitute another standard nationally recognized cost of living index
reasonably calculated to reflect the impact of inflation on the basic monthly
rent under this Lease.
ARTICLE 24
OBLIGATION OF TENANT TO PURCHASE LEASED PREMISES
At any time during the term of this Lease (including any renewal term)
that a sale or transfer of a majority of the assets or issued and outstanding
stock of either the Tenant or LDM Industries, Inc. ("LDM"), a Michigan
corporation, occurs, then the Tenant shall notify the Landlord in writing of
such sale or transfer within five (5) days of the date of such sale or transfer
and the Tenant shall be obligated to purchase the Leased Premises from the
Landlord for "fair market value".
Within ten (10) days of the date the Tenant notifies the Landlord of
the sale or transfer of a majority of the assets or stock of the Tenant or LDM,
the Landlord and the Tenant shall meet to determine whether they can agree on a
"fair market value" for the Leased Premises. If they do agree, then the
agreed-upon value shall be the purchase price for the Leased Premises.
If the parties cannot agree on a "fair market value", then each party
shall select a real estate appraiser familiar with industrial real estate in
Columbus, Indiana, to determine "fair market value". The two appraisers so
selected shall have fifteen (15) days in which to determine the "fair market
value" by agreement. If these two appraisers cannot agree upon a "fair market
value" within such fifteen (15) day period, the two appraisers shall, within
ten (10) days of the expiration of such fifteen (15) day period, jointly select
a third appraiser. The Landlord's and the Tenant's respective appraisers shall
each supply the third appraiser with their respective determinations of "fair
market value". Within thirty (30) days of his or her appointment, the third
appraiser shall make an independent determination of the "fair market value"
and the average of the two appraisals closest in value shall be the "fair
market value" and purchase price and shall be binding upon both Landlord and
Tenant. The cost of the third appraiser shall be borne equally by the Landlord
and the Tenant.
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All appraisers selected by either party to determine "fair market
value" shall be MAI appraisers or industrial real estate brokers, shall have a
minimum of five (5) years of general commercial/industrial real estate
experience and shall have substantial recent experience and knowledge of the
industrial real estate market in Columbus, Indiana and southeastern Indiana.
Within thirty (30) days from the date that the "fair market value" and
purchase price is determined as set forth above, the Landlord shall order and
shall provide to Tenant an owner's title insurance commitment in the full
amount of the purchase price issued by a title insurance company licensed to do
business in the State of Indiana along with copies of all of the underlying
documents referred to in the title insurance commitment. The premium for the
title insurance policy issued pursuant to this commitment shall be paid for by
the Landlord.
The Tenant shall have fifteen (15) days from the date of receipt of the
commitment within which to review or have its attorney review the title
insurance commitment. Within this fifteen (15) day period, the Tenant shall
notify the Landlord that the title is in the condition required for delivery of
a Warranty Deed in accordance with this Article 24 or shall have its attorney
deliver a written opinion that the title is not in the condition required for
delivery of a Warranty Deed in accordance with this Article 24.
If the title is in the condition required for delivery of a Warranty
Deed in accordance with this Article 24, the closing shall proceed as set forth
below.
If the title is not in the condition required for delivery of a
Warranty Deed in accordance with this Article 24, based on the written opinion
of the Tenant's attorney, the Landlord shall have the option either 1) to
fulfill the requirements in the title commitment or to remedy the title defects
set forth in the opinion of the Tenant's attorney or 2) to terminate the
obligation of the Tenant to purchase the Leased Premises under the provisions
of this Article 24.
The closing of the sale of the Leased Premises to the Tenant by the
Landlord shall be scheduled within ten (10) days after delivery by the Landlord
to the Tenant of 1) a title insurance commitment reflecting the capacity of the
Landlord to convey marketable title to the Tenant, subject only to a) easements
and building and use restrictions of record; b) liens which will be discharged
from the sale proceeds; and c) the acts and omissions of the Tenant from and
after the Commencement Date of the Lease; 2) a proposed Warranty Deed prepared
in a format for recording after proper execution; and 3) closing statement
reflecting appropriate and customary prorations of insurance, utilities, rent
and taxes and appropriate allocation of financial
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responsibility for transfer tax, title insurance premiums,
recording fees, etc.
The closing shall take place at the offices of the Landlord or the
Landlord's attorneys. At the closing, in exchange for the Warranty Deed, the
Tenant shall deliver to the Landlord the purchase price (plus or minus the
amount of any prorations) in cash or cashier's check.
ARTICLE 25
SECURITY DEPOSIT
There shall be no security deposit required of the Tenant.
ARTICLE 26
ENVIRONMENTAL MATTERS AND INDEMNIFICATION
A. LANDLORD'S OBLIGATIONS. During the term of this Lease and any
extension thereof, Landlord shall not cause or permit any Hazardous
Material (as defined herein) to be released, brought upon, stored, produced,
emitted, disposed of or used upon, about or underneath the Leased Premises by
Landlord, its agents, employees, contractors or invitees except as permitted by
and in full compliance with Governmental Regulations (as defined herein) and
with Tenant's prior approval.
During the term of this Lease and any extension thereof, Landlord shall,
at its sole cost and expense, promptly take all actions required by any
federal, state or local governmental agency or political subdivision (as a
result of a release, spill or discharge of Hazardous Materials or other
contamination about or underneath the Leased Premises by (i) Tenant or any
other party prior to April 28, 1993, or (ii) Landlord, its agents, employees,
contractors or invitees) to cleanup, remediate and restore the Leased Premises
to a lawful condition or to such lesser extent as reasonably recommended by a
qualified environmental consulting firm approved by Tenant. Notwithstanding
the preceding sentence, Landlord acknowledges that an area of contamination has
been identified, and agrees that Landlord will notify the Indiana Department of
Natural Resources (or equivalent agency) on or before December 31, 1993 of the
existence of such condition, and will remediate such condition as required by
(a) applicable law, ordinance and regulations, or (b) an approved plan of
remediation.
B. TENANT'S REPRESENTATIONS, WARRANTIES AND OBLIGATIONS. Except as
otherwise previously disclosed in writing to the
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Landlord, the Tenant represents and warrants to the Landlord as
follows:
1. The Tenant shall keep or cause the Leased Premises 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, the Tenant
shall not cause or permit the Leased Premises 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 the Tenant cause or permit,
as a result of any intentional act or omission on the part of the Tenant or
any subtenant or occupant, a release, spill, leak or emission of Hazardous
Materials onto the Leased Premises or onto any other contiguous property.
Anything herein to the contrary notwithstanding, the Tenant shall have no
obligation to remove, remediate, or cure with respect to any Hazardous
Materials or other adverse environmental condition which was in existence
at the Leased Premises prior to April 28, 1993.
2. All federal, state, and local permits, licenses and
authorizations required for present use of the Leased Premises or
activities of the Tenant have been obtained.
3. Within six (6) months prior to the end of the terms of this Lease
(or the end of any renewal term if this Lease is renewed pursuant to
Article 23 above), or within three (3) months after the occurrence of any
Event of Default which has not been cured, the Tenant shall conduct and
complete all investigations, including a Phase I environmental audit and
such further audits as reasonably recommended by a qualified environmental
consultant approved by Landlord, 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 Leased Premises as
required by all applicable Governmental Regulations, in accordance with the
orders and directives of all federal, state and local governmental
authorities or to such lesser extent as reasonably recommended by a
qualified environmental consulting firm approved by Landlord. Such
testing, remedial, removal and other actions shall include those required
by federal and state regulations governing underground storage tank
systems. The provisions of this Paragraph shall apply to all Hazardous
Materials on, under, from or affecting the Leased Premises as a result of
either intentional or unintentional acts or omissions on the part of the
Tenant or any subtenant or occupant of the Leased Premises. Notwithstanding
anything herein to the contrary, Tenant
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shall not be responsible for remedial actions, removal or cures related
to Landlord's obligations pursuant to this Article 26. If the Tenant fails
to conduct an environmental audit as required above, then the Landlord may,
at its option and at the expense of the Tenant, conduct such audit.
With the exception of any environmental audit conducted by the Landlord
prior to April 28, 1993, any environmental audit conducted by either party
shall be conducted for the mutual benefit of Landlord and Tenant. By
conducting any such audit, neither party will assume any control over the
environmental affairs or operations of the other party or assume any
obligation or liability to the other party or to any third party.
4. The Tenant shall:
a) Do all things necessary to assure that the representations,
warranties and covenants set forth herein are met and continue
to be accurate and correct.
b) Assure that all entities acting on behalf of the Tenant are
aware of and comply with the obligations of the Tenant under this
Article 26.
c) Conduct periodic reviews of the use of the Leased Premises
and the activities of the Tenant to assure compliance with the
obligations of the Tenant under this Article 26.
d) Promptly (i) notify the Landlord 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 Article 26 to be incorrect, and (ii) take steps necessary to
mitigate the effect of such noncompliance.
5. The Tenant shall not take any action or allow the Leased
Premises to be used in such a manner that any representation,
warranty or covenant set forth in this Article 26 becomes incorrect or is
not complied with.
C. LANDLORD'S INDEMNIFICATION. Landlord and its successors and assigns
agree to defend, indemnify and hold harmless Tenant, its parent, stockholders,
and their respective officers, directors, employees, agents, successors and
assigns, from and against any Environmental Damages (as defined herein) arising
out of or in any way related to (1) the presence, disposal, release or
threatened release of any Hazardous Materials on, over, under, from or
affecting the Leased Premises
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or the soil, water, vegetation, buildings, personal property, persons or
animals; (2) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to such Hazardous Materials
on the Leased Premises; (3) any lawsuit brought or threatened, settlement
reached or government order relating to such Hazardous Materials with respect
to the Leased Premises; and/or (4) any violation of laws, orders, regulations,
or requirements which are based upon or in any way related to such Hazardous
Materials used on the Leased Premises. This indemnification shall include,
without limitation, all such conditions and/or occurrences (i) existing prior
to April 28, 1993, or (ii) directly caused or created by Landlord, its agents,
employees, contractors or invitees during the term of this Lease and any
extension thereof,
D. TENANT'S INDEMNIFICATION. Subject to the limitations set forth below,
the Tenant shall defend, indemnify and hold harmless the Landlord, its
employees, agents, officers, directors, stockholders, successors and assigns,
from and against any Environmental Damages arising out of or in any way related
to (1) the presence, disposal, release or threatened release of any Hazardous
Materials on, over, under, from or affecting the Leased Premises or the soil,
water, vegetation, buildings, personal property, persons or animals; (2) any
personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials on the Leased
Premises; (3) any lawsuit brought or threatened, settlement reached or
government order relating to such Hazardous Materials with respect to the
Leased Premises; and/or (4) any violation of laws, orders, regulations,
requirements or demands of the Landlord, which are based upon or in any way
related to such Hazardous Materials used on the Leased Premises.
The indemnity obligations under this paragraph are specifically limited as
follows:
1. The Tenant shall have no indemnity obligations with respect to
Environmental Damages incurred with respect to Hazardous Materials that are
first introduced to the Leased Premises or any part of the Leased Premises
prior to April 28, 1993.
2. The Tenant shall have no indemnity obligations with respect to
Hazardous Materials that are first introduced to the Leased Premises by the
Landlord, its agents, employees, contractors, invitees, successors or
assigns,
The Tenant agrees that in the event this Lease is terminated, the Tenant
shall deliver the Leased Premises to the Landlord free of any and all Hazardous
Materials which are then required to be removed by Tenant (whether over time or
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immediately) pursuant to the terms of this Lease and to applicable Governmental
Regulations affecting the Leased Premises.
The provisions of this Article 26 shall be in addition to any and all other
obligations and liabilities the Tenant may have to the Landlord under the Lease
and in common law, and shall survive (a) the payment of all sums due to the
Landlord under the Lease for rent and expenses, or (b) the satisfaction of all
of the other obligations of the Tenant under the Lease.
E. ADJUSTMENT OF RENT. In the event that Landlord fails, refuses, or is
unable to perform any of its obligations pursuant to this Article 26, at
Tenant's option, after fifteen (15) days prior written notice to Landlord, the
monthly rent payable hereunder shall be adjusted to an amount not less than
Twenty-Five Thousand Dollars ($25,000.00) per month ("Adjusted Rent"), and the
difference between the Adjusted Rent and the monthly rent otherwise payable
hereunder may be used and expended by Tenant only to cover the cost of
obligations of Landlord as set forth in this Article 26, including Tenant's
reasonable costs and expenses incurred in making necessary arrangements for the
fulfillment of such obligations, whether performed by Tenant or by third
parties.
F. DEFINITIONS. For the purposes of this Article 26, the following
definitions apply:
1. "Environmental Damages" shall mean (i) all claims, judgments,
damages, penalties, fines, costs, liabilities and losses; (ii) all sums
paid for settlement of claims, attorney fees, consultant's fees and
expert's fees; (iii) all costs incurred in connection with any
investigation, removal, action, remedial action, excavation,
transportation, handling, treatment, storage, disposal, testing,
environmental sampling, analytical services, consulting services, or any
other type of action reasonably necessary and appropriate to identify and
characterize, correct and dispose of any adverse environmental condition
affecting the Leased Premises, such cleanup, remediation, removal or
restoration to be completed to the extent required by any federal, state or
local governmental agency or political subdivision or to such lesser extent
as reasonably recommended by a qualified environmental consulting firm
approved by the party to be indemnified hereunder, which approval will not
be unreasonably withheld or delayed.
2. "Governmental Regulations" means any law, regulation, rule,
policy, ordinance, or similar requirement of the United States, any state,
and any county,
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municipality or other agency or subdivisions of the United States or
any state.
3. "Hazardous Materials" includes, without limitation, a) any
flammable explosives, radioactive materials, pollutants, contaminants,
hazardous materials, hazardous wastes, hazardous or toxic substances or
other chemical substances or related materials defined in or regulated by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Section 1801, et seq.),
the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section
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, and b) any petroleum, crude oil or any
fraction thereof.
ARTICLE 27
ENTIRE AGREEMENT
This Lease sets forth all of the covenants, promises, agreements,
conditions and understandings between Landlord and Tenant concerning the Leased
Premises, and Landlord and Tenant respectively acknowledge that there are
no covenants, promises, agreements, representations, inducements, conditions or
understandings, either oral or written, between Landlord and Tenant other than
herein set forth. No alteration, amendment, change or addition to this Lease
shall be binding upon Landlord or Tenant unless reduced to writing and signed
by each party.
ARTICLE 28
QUIET ENJOYMENT
Landlord warrants that Tenant, upon paying the rents hereinbefore provided
and in performing each and every covenant hereof, shall peacefully and
quietly hold, occupy and enjoy the Leased Premises throughout the term hereof,
without molestation or hindrance by any person holding under or through
Landlord.
ARTICLE 29
ACKNOWLEDGEMENT BY TENANT THAT LEASE
IS IN FULL FORCE AND EFFECT
Tenant agrees at any time and from time to time upon not less than ten (10)
days' prior written request by Landlord to
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execute, acknowledge and deliver to Landlord a statement in writing certifying
that this Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and effect as modified
and stating the modifications), and the dates to which the rent and other
charges have been paid in advance, if any, it being intended that any such
statement delivered pursuant to this Article may be relied upon by any
prospective purchaser of the fee or mortgagee or assignee of any mortgage upon
the fee of the Leased Premises.
ARTICLE 30
LANDLORD'S LIABILITY
If Landlord shall fail to perform any covenant, term or condition of this
Lease upon the Landlord's part to be performed, and if as a consequence of such
default Tenant shall recover a money judgment against Landlord, such judgment
shall be satisfied only out of the proceeds of sale received upon execution of
such judgment and levied thereon against the right, title and interest of
Landlord in the Leased Premises or through voluntary cash payment by the
Landlord, and Landlord shall not be liable for execution or levy upon other
assets or for any deficiency.
ARTICLE 31
LAWS OF THE STATE OF INDIANA
This Lease shall be governed by, and construed in accordance with, the laws
of the State of Indiana. If any provision of this Lease or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby and
each provision of the Lease shall be valid and enforceable to the fullest extent
permitted by Law.
ARTICLE 32
NOTICES
All bills, notices, statements, communications to or demands (collectively,
"Notices or Demands") upon Landlord or Tenant, desired or required to be given
under any of the provisions hereof, must be in writing, Any such Notices or
Demands will be deemed to have been duly and sufficiently given if (a) a
properly addressed copy thereof has been mailed by United States certified
mail, return receipt requested, in an envelope properly stamped and addressed,
(b) by means of a reputable overnight delivery
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service guaranteeing next day delivery ("Overnight Courier"), or (c) personally
delivered at:
If to Landlord:
CPC Associates, Inc.
2860 N. National Road
Columbus, Indiana 47202-0387
With a copy to:
Laurence M. Luke, Esq.
Thomas P. Martin, Esq.
Dean & Fulkerson, P.C.
801 West Big Beaver Road
Fifth Floor
Troy, Michigan 48084
If to Tenant:
G L Industries of Indiana, Inc.
2860 N. National Road
Columbus, Indiana 47202-0387
With a copy to:
Michael B. Lewis, Esq.
Kerr, Russell & Weber
One Detroit Center
500 Woodward Avenue
Suite 2500
Detroit, Michigan 48226-3406
or at such other address as either Landlord or Tenant may have last furnished
in writing to the other for such purpose. Except where receipt of notice
is expressly required in this Lease, the effective date of such Notice or
Demand will be deemed to be the time when personally delivered or mailed
(either by United States Mail or Overnight Courier) as herein provided.
ARTICLE 33
CAPTIONS
The captions of the paragraphs in this Lease Agreement are inserted and
included solely for convenience and shall never be considered or given any
effect in construing the provisions hereof if any question of intent should
arise.
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ARTICLE 34
TERMINOLOGY
All personal pronouns used in this Lease Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural and vice versa.
ARTICLE 35
SUCCESSORS
This Lease shall inure to the benefit of and be binding upon the parties
hereto, their respective heirs, administrators, executors, representatives,
successors and assigns.
ARTICLE 36
FINANCIAL STATEMENTS
Tenant agrees to furnish the Landlord with a copy of its financial
statements as compiled by an independent certified public accountant in
accordance with generally accepted accounting principles within ninety (90)
days of the end of Tenant's fiscal year.
ARTICLE 37
TERMINATION OF PREVIOUS LEASE
Landlord and Tenant agree that, upon the execution of this Lease, the
Original Lease between Landlord and Tenant for the Leased Premises dated March
31, 1990 shall be terminated and that the provisions of this Lease shall
supersede the provisions of the Original Lease dated March 31, 1990 between
the Landlord and the Tenant.
ARTICLE 38
CONSENT OF LANDLORD
Whenever Tenant is required to obtain the consent or approval of Landlord
as to any matter, decision or request described in the Lease, Landlord agrees
not to unreasonably withhold or delay its decision beyond ten (10) days. In
the event that Landlord fails to respond to any such request within such 10-day
period, then such consent or approval shall be deemed
-32-
<PAGE> 33
denied. In the event that Landlord's discretion is required to be exercised as
to any matter other than a consent or approval described above, then Landlord
agrees to exercise such discretion in a reasonable manner unless the language
of a specific Article provides that the Landlord may withhold its consent in
its sole discretion.
ARTICLE 39
ARBITRATION
Any controversy or claim arising out of or relating to this Lease or the
breach thereof shall settled by arbitration before three arbitrators appointed
according to the Commercial Arbitration Rules of the American Arbitration
Association and the laws of the State of Michigan. The arbitration shall be
held in Southfield, Michigan, Judgment upon the award rendered by a majority of
the arbitrators may be entered in any court having jurisdiction thereof. In
the event of arbitration, the parties agree as follows:
A. Each party shall have an absolute veto over any arbitrator, although
said veto must be utilized in good faith.
B. The arbitrators will be urged to permit discovery as long as said
discovery does not unduly delay the arbitration process.
C. The arbitrators shall complete their proceedings and render their
decision within 60 days after submission of the dispute to them,
unless the parties shall agree to an extension.
D. There can be no award of money without an opinion of law and a
finding of facts upon which said award is based.
IN WITNESS WHEREOF, the parties hereto have executed or caused this Lease
Agreement to be executed as of the day and year first above written.
LANDLORD:
WITNESSES: CPC ASSOCIATES, INC.
Thomas P. Martin By: Laurence M. Luke
- --------------------------- ------------------------------
THOMAS P. MARTIN LAURENCE M. LUKE, PRES.
Daniel J. Schulte
- ---------------------------
DANIEL J. SCHULTE
TENANT:
WITNESSES: G L INDUSTRIES OF INDIANA, INC.
Thomas P. Martin By: Joseph M. Bione
- --------------------------- ------------------------------
THOMAS P. MARTIN JOSEPH M. BIONE, PRES.
Donald A. Pierce, Jr.
- ---------------------------
DONALD A. PIERCE, JR.
-33-
<PAGE> 34
STATE OF MICHIGAN)
--------
)SS
COUNTY OF OAKLAND)
-------
On this 28 day of APRIL, 1993, before me appeared LAURENCE M. LUKE, the
PRESIDENT of CPC ASSOCIATES, INC., an Indiana corporation, to me personally
known, who being by me duly sworn, did state that the foregoing instrument was
executed on behalf of said corporation as Landlord by authority of its Board of
Directors and acknowledged said instrument to the free act deed of said
corporation.
JULIET DISESSA
---------------------------
Notary Public, Oakland County
------------
My commission expires:
JULIET DISESSA
NOTARY PUBLIC, OAKLAND COUNTY, MI
MY COMMISSION EXPIRES FEB. 4, 1996
STATE OF MICHIGAN)
-------- )SS
COUNTY OF OAKLAND)
-------
On this 28 day of APRIL, 1993, before me appeared JOSEPH M. BIONE, the
PRESIDENT of G L INDUSTRIES OF INDIANA, INC., an Indiana corporation, to me
personally known, who being by me duly sworn, did state that the foregoing
instrument was executed on behalf of said corporation as Tenant by authority
of its Board of Directors and acknowledged said instrument to be the free act
and deed of said corporation.
JULIET DISESSA
---------------------------
Notary Public, County,
------
------------
My commission expires:
JULIET DISESSA
NOTARY PUBLIC, OAKLAND COUNTY, MI
MY COMMISSION EXPIRES FEB. 4, 1996
This instrument prepared by and, when recorded, return to:
Thomas P. Martin, Esq.
Dean & Fulkerson, P.C.
801 W. Big Beaver Rd., Suite 050
Troy, Michigan 48084
-34-
<PAGE> 35
EXHIBIT A
LEGAL DESCRIPTION
Land situated in the City of Columbus, County of Bartholomew and State of
Indiana, more particularly described as follows:
Lot Number Two (2) of Jackson Minor Plat in the City of Columbus, Indiana
as recorded in Plat Book "P", Page 76A in the office of the Recorder of
Bartholomew County, Indiana, subject to all easements, restrictions,
covenants and rights-of-way of record.
-35-
Final
<PAGE> 1
EXHIBIT 10.15
ASSIGNMENT OF LEASE
This Assignment of Lease is made as of JANUARY 21, 1997 by and between MOL
INVESTMENTS, a Michigan partnership ("Landlord"), MOLMEC, INC., a Michigan
corporation ("Assignor"), and LDM Technologies, Inc., d/b/a and f/k/a LDM
Industries Inc., a Michigan corporation ("Assignee").
RECITALS:
A. The Landlord as lessor and the Assignor as lessee entered into a Lease
Agreement on August 14, 1984, a copy of which is attached as Exhibit A, an
Amendment to Lease Agreement dated August 13, 1994, a copy of which is
attached as Exhibit B, and a Second Amendment to Lease Agreement dated June 1,
1996, a copy of which is attached as Exhibit C, with respect to certain
premises at 2776 Commerce, Rochester Hills, Michigan, more particularly
described in the Lease.
B. The parties desire that Assignor assign its interest in the Lease and
all of the Amendments to Assignee, and that Landlord consent to such assignment
in accordance with Paragraph 19 of the Lease Agreement, under the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Assignment. As of the Effective Date of this Assignment, as defined
in Paragraph 5, Assignor assigns to Assignee all of Assignor's right, title,
and interest in and to the Lease and all of the Amendments thereto. Assignor
further assigns to Assignee any amounts held in escrow by Landlord for payment
of taxes and insurance by Tenant under Paragraph 8 of the Lease Agreement. As
a result of this assignment, all rights to escrowed funds shall belong to the
Assignee, and the Landlord shall have no further liability or responsibility to
the Assignor with respect to the escrowed funds.
2. Acceptance by Assignee. Assignee accepts the assignment and all rights
accruing to it under the Lease and assumes and agrees to make all payments and
keep and perform all covenants and obligations of the Assignor under the Lease
from and after this Assignment's Effective Date.
3. Release of Assignor's Liability. By executing this Lease Assignment,
Landlord agrees that the Assignor is released from any and all obligations
under the terms of the Lease from and after this Lease Assignment's Effective
Date, provided Assignor is current in the payment of rent and not otherwise in
default under the Lease's terms and conditions. Landlord acknowledges that, as
of the date of this Lease Assignment, Assignor is current in the payment of
rent and not otherwise in default under the Lease's terms or conditions.
4. Acceptance and Consent of Landlord. Landlord accepts and consents to
this Lease Assignment and acknowledges that all of Assignor's rights under the
Lease shall inure to the benefit of Assignee from and after the Effective Date.
<PAGE> 2
5. Effective Date. This Lease Assignment shall not be effective unless
and until Assignor and Assignee have consummated a pending sale by Assignor to
Assignee of Assignor's principal business assets as a going concern and have
confirmed the sale's closing to Landlord in writing. The closing date of the
sale shall be the Effective Date of this Lease Assignment. If the sale's
consummation does not occur by January 31, 1997, this Assignment shall be void.
6. Amendment to Lease. This Lease Assignment shall constitute an
amendment to the Lease. If there is any conflict between this Lease Assignment
and the Lease, this Lease Assignment shall govern.
7. Counterparts. This Lease Assignment may be executed in one or more
counterparts, each of which shall be deemed an original and which together
shall constitute one document.
The parties have executed this Lease Assignment as of the date listed below
each party's signature.
WITNESSES: ASSIGNOR:
MOLMEC, INC., a Michigan corporation
Jeanne DeLorme BY: Leonard G. Miller
- ---------------------------- ------------------------------------
[SIG] ITS: Vice President
- ---------------------------- -----------------------------------
DATED: Jan 21, 1997
---------------------------------
ASSIGNEE:
LDM TECHNOLOGIES, INC., d/b/a and f/k/a
LDM INDUSTRIES INC., a Michigan corporation
Cynthia Boyd BY: Gary Borushko
- ---------------------------- ------------------------------------
[SIG] ITS: CFO
- ---------------------------- -----------------------------------
DATED: 1/21/97
---------------------------------
2
<PAGE> 3
LANDLORD:
MOL INVESTMENTS, a Michigan partnership
Jeanne DeLorme BY: Leonard G. Miller
- ---------------------------- ------------------------------------
??? ITS: General Partner
- ---------------------------- -----------------------------------
DATED: Jan 21, 1997
---------------------------------
STATE OF MICHIGAN )
) SS
OAKLAND COUNTY )
On JANUARY 21, 1997, LEONARD G. MILLER personally appeared before me, and
is known by me to be the VICE PRESIDENT of MOLMEC, INC., a Michigan
corporation, on behalf of the Corporation.
Subscribed and sworn to before me on
Jeanne DeLorme
- ----------------------------------
JEANNE DELORME
Notary Public, MACOMB County
My Commission Expires: 7-31-00
STATE OF MICHIGAN )
) SS
OAKLAND COUNTY )
On Jan 21, 1997, GARY BORUSHKO personally appeared before me, and is known
by me to be the CFO of LDM Technologies, Inc. d/b/a and f/k/a LDM Industries
Inc., a Michigan corporation, on behalf of the Corporation.
Subscribed and sworn to before me on
Cynthia Boyd
- ----------------------------------
Notary Public, MACOMB County
My Commission Expires: 8/20/00
3
<PAGE> 4
STATE OF MICHIGAN )
) SS
OAKLAND COUNTY )
On JANUARY 21, 1997, LEONARD G. MILLER personally appeared before me, and
is known by me to be the GENERAL PARTNER of MOL Investments, a Michigan
partnership, on behalf of the partnership.
Subscribed and sworn to before me on
Jeanne DeLorme
- ----------------------------------
JEANNE DELORME
Notary Public, MACOMB County
My Commission Expires: 7-31-00
INSTRUMENT DRAFTED BY
AND WHEN RECORDED RETURN TO:
Jeanne M. DeLorme, Esq.
Heritier Nance, P.C.
5800 Crooks Road, Suite 180
Troy, Michigan 48098-2830
Telephone: (810) 828-4020
4
<PAGE> 5
EXHIBIT A
LEASE AGREEMENT
THIS LEASE AGREEMENT, made this 14th day of August, 1984, between M. O. L.
INVESTMENTS, a Michigan partnership, having an office at 4205 Martin Road,
Walled Lake, Michigan 48084, hereinafter designated "Landlord", and MOLMEC,
INC., a Michigan corporation, whose address is 4205 Martin Road, Walled Lake,
Michigan 48084, hereinafter designated "Tenant";
W I T N E S S E T H:
CONVEYANCING CLAUSE
1. Landlord, in consideration of the premises and of the rents hereinafter
reserved and of the covenants, agreements and conditions herein contained to be
kept and performed on the part of Tenant, does hereby rent unto Tenant, and
Tenant does hereby hire and take, subject to and assuming those obligations
hereinafter set forth, the parcel of land with the buildings and improvements
now or hereafter erected thereon, situated and being in the Township of Avon,
State of Michigan, described on Exhibit "A" attached hereto and made a part
hereof, with the specific agreement that this is an absolutely net Lease and it
is the intent that all costs or expenses arising out of this Lease are to be
paid by the Tenant hereunder and that any and all monies expended by Landlord
are to be reimbursed to the Landlord by Tenant. Tenant takes subject to
restrictions, easements, zoning ordinances, building and use restrictions, and
all other laws, ordinances, rulings or regulations applicable to the demised
premises.
THE DEMISED PREMISES
2. The property described on Exhibit "A" and all buildings and building
equipment, structures, improvements, machinery, equipment and fixtures,
pavement, walks, fences, shrubbery and signs now or here after located on the
above described property, except furniture and trade fixtures and other
property belonging to Tenant, are herein collectively referred to as the
"demised premises".
USE OF DEMISED PREMISES
3. The Demised Premises are to be used for purposes permissible under
a Loan Agreement dated August 1, 1984, made between The Economic Development
Corporation of the Charter Township of Avon, Michigan ("EDC"), Landlord and
Tenant, the terms of which are incorporated herein by reference.
SPECIAL INDEMNITY AND GUARANTY OF M.O.L. INVESTMENTS
4. M.O.L. Investments, Landlord herein, has been induced by Tenant to enter
into this Lease and to execute the Loan Agreement and the documents referred to
therein to enable Tenant to obtain a new industrial plant without expenditure
of its own capital. Landlord has made or will shortly make, execute and
deliver a Promissory Note in the amount of $900,000, a mortgage on the demised
premises, and various and several other undertakings to the EDC and Comerica
Bank, the purchaser of the EDC's Bond. For all purposes herein, all
documents which Landlord or Tenant or both of them execute or agree to perform
pursuant to the Loan Agreement, whether or not specifically mentioned herein,
are hereinafter embodied in the term "Loan
<PAGE> 6
Agreement". Based on the inducement aforesaid, and in consideration of this
Lease, Tenant hereby agrees, for itself and its successors and assigns to
indemnify and hold Landlord harmless from any and all claims, loss, judgment,
suits, costs, expenses, attorneys' fees, (whether deemed reasonable or not),
direct liability, loss, hindrances or otherwise resulting from M.O.L.
Investment's entry into the Loan Agreement or its performance thereunder.
Tenant agrees for itself, successors and assigns to guaranty to Landlord and its
successors and assigns the full and faithful performance of each and every
obligation of either Landlord or Tenant under the Loan Agreement, including (and
not by way of limitation) the specific undertaking to do all acts and to refrain
from any acts which would constitute a breach or result in the loss of the
favorable tax treatment of the bonds to be issued pursuant to the Loan Agreement
and under Section 103 of the Internal Revenue Code, as amended. The within
guaranty is an unconditional guaranty of payment and performance and not of
collection and Tenant hereby waives any notice of default or recourse by
Landlord under the Guaranty; Tenant agrees to Landlord's full right and ability
to unilaterally settle, adjust, or compromise any obligation of Landlord under
the Loan Agreement without in any way effecting or releasing this guaranty.
Landlord may obtain full recovery of its attorneys' fees in all matters
involving the Loan Agreement. This indemnity and indemnity and guaranty shall
be a personal undertaking and agreement between the parties and shall survive
the expiration or earlier termination of this Lease Agreement; nevertheless, the
within guaranty and indemnity shall be deemed a covenant running with the land
under the Lease Agreement in addition to the personal undertaking of Tenant.
Landlord shall have no obligation as a contributor to the EDC or Comerica Bank
or their successors and assigns. All successors and assigns of Tenant
shall, upon inuring to the status of lessee or as a successor and assignor be
primarily responsible hereunder with Tenant; Landlord may look to Tenant and its
successors and assigns jointly and severally without assessing or giving first
notice or requiring first performance by any one of them as against the others.
TERM
5. Tenant shall have and hold the demised premises for a term commencing on
the date first written above and expiring on the soonest of any of the following
events:
a) The tenth (10th) anniversary of the commencement date of the
lease; or
b) The date in which the Bond which is delivered to Comerica Bank
under the Loan Agreement is paid or satisfied; or
c) The effective date in which the Bond which is delivered to
Comerica Bank under the Loan Agreement is amended (directly or indirectly)
to provide for an increase in the debt service (principal and/or interest)
under the EDC Financing referred to in the Loan Agreement; provided
however, that the foregoing shall not be deemed to apply in the event the
changes only concern the rate of interest to be paid under the Bond and so
long as such rate is calculated at 75% or less of the prime rate of
Comerica Bank.
d) The effective date in which the Promissory Note given by Landlord
under the Loan Agreement is amended (directly or indirectly) to provide for
an increase in the debt service (principal and/or interest) under the EDC
Financing referred to in the Loan Agreement; provided however, that the
foregoing
-2-
<PAGE> 7
shall not be deemed to apply in the event the changes only concern the
rate of interest to be paid under the Bond and so long as such rate is
calculated at 75% or less of the prime rate of Comerica Bank.
RENTAL AND BASE RENTAL
6. The rent to be paid by Tenant to Landlord hereunder shall be
Thirteen Thousand Three Hundred and Thirty Three Dollars and Thirty
Three Cents ($13,333.33) per month.
The foregoing amount shall constitute base monthly rental, but
shall not include additional rentals or charges or sums hereinafter
specified for repairs, taxes, insurance or otherwise. All sums due
under this agreement, whether characterized as rentals, additional
rentals, charges or other sums due from Tenant to Landlord or from
Tenant from any other party by reason of Tenant's use of the demised
premises or which become a lien upon or are charged to the demised
premises or are due to Landlord shall be and are hereinafter defined
to be rentals for which Landlord shall have all other rights and
privileges appurtenant to such term.
Rental payments should be made reasonably in advance in order
for Landlord to receive payment on the first day of each month.
Should any monthly rental payment be postmarked on or subsequent to
the first business day of each month, the parties hereby agree that
the amount of damages sustained by Landlord as a result of such
delinquency would be impractical or extremely difficult to fix, but
that five percent (5%) of the total monthly rental payment would be a
reasonable estimate of Landlord's damages and, therefore, that Tenant
shall pay to Landlord as liquidated damages for any such delinquency a
late charge equal to five percent (5%) of the total monthly rental
payment.
RENTAL PAYMENT, INDEPENDENT COVENANT
7. Tenant agrees to pay without demand the said rent in the manner
aforesaid and such other sums as are hereinafter provided to be paid
as additional rent and any and all other sums and charges hereinafter
specified by separate payment and without setoff or deduction whatsoever.
TAXES, FIRE INSURANCE, UTILITIES
8. a) Personal Property Taxes. All matters pertaining to
the assessment and taxation of Tenant's personal property shall
be Tenant's sole responsibility and shall be paid by Tenant.
b) Real Property Taxes. Landlord hereunder shall pay
all real and personal property taxes and assessments and special
assessments based on the ad valorem value or other assessment of the
demised premises and shall be reimbursed as additional rental by Tenant for
all such liability. Alternatively, Landlord may require direct
payments by Tenant to the taxing authority.
c) Fire Insurance. Landlord shall carry plate glass insurance (if
Landlord desires) and fire and extended coverage (including "all risk"
if Landlord desires) insurance on the demised premises in such amounts and
insuring such parties as Landlord shall deem desirable and shall be
reimbursed as additional rental by Tenant for all such liability. Tenant
-3-
<PAGE> 8
do any act or thing which will invalidate or be in conflict with the fire
insurance policies covering the building or buildings constituting a part
of the demised premises.
d) Monthly Escrow for Taxes and Insurance. Tenant shall, unless
Landlord shall waive such obligation from time to time (with the full right
of reinstatement), pay to Landlord monthly as additional rent the sum
specified by Landlord from time to time for the estimated real and personal
property taxes and assessments under subparagraph b) above and any fire and
extended coverage insurance related to the demised premises under
subparagraph (c) above as of the date hereof on a prorated monthly basis.
In the event of any such taxes, assessments or insurance premiums shall be
increased or decreased, Landlord shall adjust accordingly the additional
rental herein provided. Landlord shall provide Tenant with notice of any
such adjustment of additional rent, and in event of increase, Tenant shall
pay to Landlord within thirty (30) days of such notice the aggregate
increase from the effective date thereof to the date of such notice, and
shall pay the increased amount on a monthly basis thereafter until the next
adjustment due to any increase or decrease in such taxes, assessments or
insurance premiums. Without limiting the generality hereof, it is
the intention of the parties that the additional rentals herein provided
shall at all times equal Landlord's tax, assessment and insurance premium
obligation for the demised premises.
e) Special Election Regarding Assessments. In the event any special
assessment levied on the demised premises may be payable in installments
over a period greater than one (1) year (irrespective of when Landlord
shall make payment), the additional monthly rent herein provided for shall
be computed by dividing the amount of such annual installment by twelve
(12) and only such installments of assessments inuring to Tenant's period
of occupancy shall be due from Tenant.
f) When Paid. The payments provided to be made by Tenant in
this paragraph shall be made without demand in the same manner as base
monthly rental.
g) Substitute For Real Property Tax. If at any time during the term
hereof, or during any renewal or extension of this Lease, any charge or
gross receipt tax on rents (or tax or charge measured by rents), or income
tax attributable to or based Upon rental income which shall be payable by
or chargeable to Landlord under any law or future law of the United States
or the State in which the demised premises are located, or any political
subdivision thereof, or any other governmental agency or authority, upon or
with respect to the rent received by Landlord under this Lease, or against
Landlord in lieu of or as a substitute for all or any part of taxes,
levies, assessments or any other impositions upon the demised premises or
any part thereof, then Tenant shall pay same in accordance with the terms
and provisions of this Paragraph 8(b). In event any income or other tax of
any nature is imposed in lieu of all or any part of real property taxes,
and such tax or charge is not measurable or attributed to real estate
valuation, then in such event, the applicable portion of Tenant's monthly
payment shall continue in the amount then in effect and shall be and become
a part of the basic rent set forth in Paragraph 5 of this Lease.
-4-
<PAGE> 9
h) Utilities. Tenant shall use the demised premises and each and
every part thereof and the facilities, machinery and equipment therein
contained at its own cost and expense, and shall pay or cause to be paid
all charges for gas, electricity, light, heat, power, telephone,
maintenance, landscaping services, and other services used, rendered or
supplied upon or in connection with the demised premises and each and every
part thereof when due and without penalty.
INDEMNITY
9. Tenant agrees to protect, defend, indemnify and hold harmless Landlord, its
parent, subsidiary and affiliated companies and the successors and assigns of
each of them, from and against any and all losses, costs, damages, expenses,
demands or claims, whether groundless or not, arising or allegedly arising out
of Tenant's use or possession of the demised premises or out of the actual or
alleged defaults or failures of Tenant of any of the obligations which it
agreed to, covenant for, or assumed hereunder, including but not limited to
bodily or personal injury, sickness or disease (including death resulting at
any time therefrom) which may be sustained or claimed by any person or persons,
or the damage or destruction of any property, including the loss of use
thereof, and arising or allegedly arising out of Tenant's possession or use of
the premises, and based upon any sole, joint or concurrent act or omission,
negligent or otherwise of (a) Tenant or any of its employees, agents or
servants, (b) any other person or persons employed by Tenant or invited onto
the premises by Tenant or any employees, agents or servants of such other
person or persons, or (c) any other person or persons, including Landlord, its
parent, subsidiary and affiliated companies and the employees, agents or
servants of each of them, excepting only the adjudication by a court of
competent jurisdiction that Landlord, its parent, subsidiary or affiliated
companies or an employee, agent or servant of any of them is or are guilty of
active or sole negligence with regard to bodily or personal injury, sickness or
disease (including death resulting at any time therefrom) of any person or
persons. In connection with the foregoing, Tenant shall, at its own cost and
expense, defend any claim and any suit, action or proceeding which may be
commenced thereunder, and Tenant shall pay any and all judgments which may be
recovered in any suits, action or proceeding and any and all expense, including
but not limited to costs, attorneys' fees and settlement expenses that may be
incurred therein and excepting only a judgment based upon the sole and active
negligence of Landlord, its parent, subsidiary or affiliated companies or an
employee, agent or servant of any of them.
LIABILITY INSURANCE
10. Tenant, at his or its expense, shall provide liability insurance with
individual limits of not less than $1,000,000.00 for any one
person, $1,000,000.00 for any one occurrence for bodily injury or
death, and liability insurance limits of $100,000.00 for property
damage, and deliver copies of such policy or policies with all the
endorsements required in Items (a) through (f) below to Landlord prior
to the beginning of the term of this Lease.
The policy or policies providing this insurance shall be
endorsed as follows:
-5-
<PAGE> 10
a) To include Landlord and parties in interest specified
by Landlord as an additional named insured.
b) To extend the coverage of such policy or policies to
include the liability assumed by Tenant in Paragraph 11 entitled
"Indemnity".
c) To provide that no material change or cancellation of
such policy or policies shall be effected without thirty (30)
days' prior written notice to Landlord.
d) To provide that the insurance provided hereby shall
be primary and shall not be excess over or contributory with any other
insurance carried on behalf of Tenant or Landlord or their subsidiary and
affiliated companies.
e) To provide that Landlord's interest as a party insured under
such policies shall not be invalidated or otherwise adversely affected
by any acts or omissions, negligent or otherwise of the Tenant, or its
sub-tenants, agents, employees, successors or assigns.
f) To provide that Landlord will not be responsible for payment of
any premium for such policies.
OTHER INSURANCE
11. Tenant shall, from the date hereof and throughout the term of
the Lease, continuously maintain workers' compensation insurance and
other insurance required of employers under the laws of the State of
Michigan and of the United States of America. In lieu thereof, the
Tenant may maintain a program of self-insurance with Landlord's consent,
not to be unreasonably withheld, complying with the requirements of the
appropriate statutes of the State of Michigan and the United States of
America, but only so long as there is no direct or
indirect liability of or risk to Landlord or the demised premises
arising under such self-insurance program.
CONDITION OF BUILDING
12. Tenant acknowledges that it has inspected the demised premises,
including the heating, electrical, and plumbing systems in the demised
premises and accepts the demised premises in its present condition,
subject to all faults of every kind and nature whatsoever whether
latent or patent and whether nor or hereafter existing.
REPAIR
13. Except as specifically provided and set forth in Paragraphs 17
and 18 herein, relating to restoration after condemnation or casualty,
Tenant covenants and agrees that it will, at its own expense during
the continuation of this Lease, make such current repairs, maintenance,
restoration, and replacements as are required to keep or put
the demised premises in first-class order and repair, including, but
not by way of limitation, the following: landscaping, sidewalks and
blacktoping, heating and air-conditioning systems and equipment,
doors, interior walls, floors, ceilings and plate glass and windows.
Tenant shall also make and do periodic painting and general refurbishing so
as to maintain the demised premises at all times in
an attractive clean condition. In event Tenant shall fail to make
any of the repairs required hereunder within thirty (30) days
following written demand from Landlord for such repairs, Landlord
-6-
<PAGE> 11
is hereby authorized to make such repairs and charge the cost of such repairs
to Tenant as additional rental; provided, however, that upon default of this
obligation, Landlord may and notwithstanding the necessity of any written
demand or time limitation hereinbefore set forth, and in order to secure itself
as to the performance of Tenant's obligations under this paragraph, charge
Tenant as additional rental that sum which in Landlord's reasonable estimation
would be necessary to make and complete repairs to the premises which are
Tenant's obligations under this Lease. In the event actual repairs are made
by Landlord and the cost exceeds Landlord's reasonable estimate, Tenant hereby
covenants and agrees that it will forthwith pay to Landlord, as additional
rent, such additional money to fully reimburse Landlord.
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
14. Tenant shall not make any alterations, changes, additions or
improvements to the demised premises without Landlord's written
consent, and all alterations, changes, additions or improvements, whether with
or without permission and made by either of the parties hereto upon the demised
premises, (and except movable office furniture and trade fixtures put in at the
expense of Tenant), shall at Landlord's election at the end of the term shall
become the property of Landlord and shall remain upon and be surrendered with
the demised premises upon the expiration of this Lease, or any sooner
termination thereof. If Landlord shall so elect, then such alterations,
changes, additions or improvements made by Tenant upon the demised premises,
as Landlord shall select (such election may be ad hoc), shall be removed by
Tenant and Tenant shall restore the demised premises to the original condition
thereof at its own cost and expense within thirty (30) days after notice from
Landlord of such election, such notice to be given not later than twenty (20)
days following expiration of the term of this Lease. The movable furniture
and trade fixtures of Tenant, however, shall remain Tenant's property at all
times and shall be removed at the termination of this Lease, any damage to the
premises in the course of such removal to be repaired by Tenant at Tenant's own
cost and expense.
MECHANIC'S LIENS
15. Tenant shall not do or suffer anything to be done whereby the
demised premises may be encumbered by any mechanic's or other lien or order for
the payment of money, and Tenant shall at its own cost and expense, whenever
and as often as any mechanic's lien purporting to be for labor, material or
services furnished or to be furnished to Tenant, or other lien or order for
the payment of money (except such as are based on acts or omissions of
Landlord) shall be filed against the demised premises, cause the same to be
cancelled and discharged of record within thirty (30) days after the date of
filing thereof or such earlier period as may be required to protect Landlord's
title to the premises. Tenant further agrees to indemnify and save harmless
Landlord from and against any and all costs, expenses, claims, losses or
damages, resulting therefrom or by reason thereof.
LAWS, ORDINANCES, ETC.
16. Tenant will at all times during the term of this Lease, at its own
cost and expense, perform and comply with all present or future laws, rules,
order, ordinances and regulations of the United States of America, and of
state, county or city governments, and any authority, department or bureau
thereof, and of any other municipal, governmental or lawful authority having
jurisdiction of the premises whatsoever, relating to, or in any manner
affecting the demised premises, and the
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<PAGE> 12
EDC financing thereof, the adjacent sidewalks and landscaping, including
fixtures and/or equipment or any buildings thereon or the use thereof.
Without limiting the generality hereof, Tenant acknowledges and agrees to
perform and comply with the specific conditions respecting use under zoning
and other restrictions and use under the Loan Agreement. In the event Tenant
shall fail to perform any obligation required hereunder and such failure shall
continue for a period of five (5) days after written notice to Tenant from
either Landlord or a governmental agency authorized to enforce any law,
ordinance or regulation (unless sooner performance is required), Landlord may,
but shall be under no obligation to, perform on Tenant's behalf and Tenant
shall pay Landlord any costs incurred thereby or Landlord may terminate this
Lease Agreement.
CONDEMNATION
17. a) Full Taking. As to any condemnation affecting the demised
premises, the parties agree that if the entire property of which the
demised premises forms a part shall be taken by reason of the exercise of
the power of eminent domain for any public or quasi-public use or purpose,
then this Lease shall terminate on the first date that either title or
possession to the premises vests in the taking authority, and rent shall be
prorated to such date of termination.
b) Partial Taking. If a part of said property be so taken and the
part not so taken is, in the opinion of Landlord and Tenant, reasonably
exercised, insufficient for the reasonable operation of Tenant's
business, then either party may cancel or terminate this Lease at any time
within thirty (30) days after such opinion is given, by giving the other
party written notice of cancellation of this Lease, and rent shall be
prorated to the effective date of cancellation and the Lease shall
terminate. If no cancellation of the Lease is effected (either because
of no option arising to the parties, or no exercise of an option), then
this Lease shall continue under the provisions of subparagraph (d).
c) Awards. In any case, damages awarded for any taking, except
damages awarded for trade fixtures and/or furniture of Tenant, shall
belong to and be the property of Landlord, whether such damages shall be
awarded as compensation for diminution in value to the leasehold or to the
fee of the premises herein leased or for improvements to the demised
premises made by Tenant.
d) Continuation in Partial Takings: Abatement and Restoration. In
the event of a partial taking where the parties have not elected
to terminate the Lease, this Lease shall continue in full force and
effect as to that portion of the premises not so taken under the same
terms and conditions herein contained, except that monthly rental
payable thereafter shall be abated and reduced by the following amount:
The award, less i) Landlord's costs incurred in the condemnation
proceedings and ii) Landlord's cost of restoration hereafter provided,
multiplied by .11, and dividing the result by 12. Landlord shall promptly
perform all work and furnish all materials necessary to restore and create
as a whole architectural unit that portion of the building and
improvements (and of the machinery and Landlord's equipment which
are an integral part thereof) on that part of the demised premises not
so taken.
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<PAGE> 13
CASUALTY
18. If and whenever during the term of this Lease the building or
buildings erected on the demised premises shall be destroyed or
damaged by fire or explosion or perils insured against by Landlord's
fire and extended coverage insurance policy, then and in every such
event:
a) Option to Terminate. If the damage or destruction
is such that in the opinion of Landlord, to be given to Tenant not
later than thirty (30) days after notice to Landlord by Tenant of the
happening of such damage or destruction, it cannot be repaired with
reasonable diligence within two hundred and seventy (270) days from the
date of such opinion, then either Landlord or Tenant may, within ten (10)
days next succeeding the giving of Landlord's opinion as aforesaid,
terminate this Lease by giving to the other notice in writing of such
termination, in which event this Lease and the term hereby demised shall
thereupon cease and be at an end and the rent and all other payments for
which Tenant is liable under the terms of this Lease shall be apportioned
and paid in full to the date of such destruction or damage.
b) Restoration. In the event that neither Landlord nor Tenant so
terminate this Lease under subparagraph (a), although having the right
to do so, or in the event there is no option to terminate, then Landlord
shall repair the said building or buildings with all reasonable speed.
c) No Liability for Delayed Construction. Notwithstanding
Landlord's opinion as to the time needed for repair, Landlord shall not be
liable to Tenant if Landlord shall not actually repair such damage within
said two hundred and seventy (270) day period if Landlord shall proceed
diligently with such repair work.
d) No Rent Abatement. In situations where the lease continues after
an insured casualty, the rent shall continue and shall not abate.
e) Fire Claim Waiver. To the extent permissible under Landlord's
fire insurance policies, Landlord hereby waives all claims against
Tenant for loss or damages to the building or buildings erected on the
demised premises caused by fire or explosion or perils insured against by
Landlord's fire and extended coverage insurance policies, regardless of the
cause of such damage, including damage resulting from the negligence of
Tenant, its agents, servants or employees.
f) Uninsured Events. If a casualty or act of god destroys all or
any part of the demised premises and such event is not covered under
the policy Landlord carries, then this Lease shall continue, rental
unabated, and Tenant shall fully restore the demised premises at Tenant's
sole cost.
ASSIGNMENTS, SUBLETTING, BANKRUPTCY
19. Tenant shall not hypothecate this Lease or assign this Lease in
whole or in part or sublet the premises in whole or in part, without the prior
written consent of the Landlord, and any assignment or hypothecation or
subletting in violation of this paragraph shall entitle Landlord to terminate
this Lease and shall constitute a default giving Landlord the remedies for
default set forth
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<PAGE> 14
hereinafter. Landlord may elect to waive such default. All consents
hereunder must be in writing and are limited to the specific event or
transfer then in question and Landlord's consent to any assignment or
subletting shall not be deemed a waiver of the right to require such
consent to any future assignments or subletting and any such consent
shall not relieve Tenant of his responsibilities hereunder. The
following events shall be deemed to be a default and a prohibited
assignment of Tenant's interest in this Lease.
a) The sale or transfer, in the aggregate over the term of the Lease,
of more than five percent (5%) of Tenant's outstanding stock, whether
such sale or transfer be direct or indirect, involve the actual or
beneficial ownership of such shares; or
b) The merger or consolidation or combination of Tenant with any
other corporation or entity; or
c) The dissolution of Tenant and transfer of its property to
creditors or shareholders.
In addition to the foregoing, Tenant agrees that it shall give thirty (30)
days prior written notice to Tenant of any election on Tenant's part to
file a bankruptcy petition, whether under Chapter 7 or Chapter 11 or otherwise
and upon giving of such notice, Landlord shall have the option to terminate
this Lease.
RIGHT TO MORTGAGE
20. This Lease is and shall be subject and subordinate to the Loan
Agreement and to all mortgages which may now or hereafter affect the real
property demised hereunder, and to all renewals, modifications, consolidations
replacements and extensions thereof. In confirmation of such subordination,
Tenant covenants and agree to execute and deliver upon demand such further
instrument or instruments subordinating this Lease to the lien of any such
mortgage or mortgages as shall be desired by Landlord, any mortgagees or
proposed mortgagees. Tenant hereby irrevocably appoints Landlord the
attorney-in-fact of Tenant to execute and deliver any such instrument or
instruments for and in the name of Tenant if Tenant shall fail, after ten (10)
days written notice, to execute any instrument of subordination forwarded to
Tenant. Tenant further covenants and agrees to execute upon demand such
further instrument or instruments (including cancellation and reexecution of
this Lease as a sublease) necessary to create a sublease of the demised
premises to Tenant upon the same terms and conditions as are provided herein in
the event that Landlord effects a sale and leaseback of the demised premises.
Tenant is hereby authorized to pay to Landlord's mortgagee or conditional
assignee, upon demand, all rents, additional rentals, and other sums due
hereunder, without looking to such mortgagee or assignee for any performance
hereunder, Landlord at all times remaining liable hereunder until the
reversionary interest is vested in another party.
SURRENDER
21. Tenant covenants and agrees that on the last day of the term hereby
granted or the sooner termination hereof, hereinafter referred to as the
"Surrender Date" in either case, Tenant shall:
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<PAGE> 15
a) Remove each and every of its personal property or trade fixtures
to which it shall retain title (and after restoring any portion of the
premises damaged by such removal), and
b) Peaceably and promptly deliver and surrender up possession of the
demised premises in as good a condition as delivered, reasonable wear and
tear and insured casualty damage excepted.
In addition, Tenant shall complete each and every item of repair,
maintenance, and restoration required hereunder no later than the
Surrender Date and deliver the demised premises in first class order and
condition, broom clean and free of any waste and debris, excepting only damage
by insured casualty. Any holding over by Tenant shall constitute a trespass
and Tenant shall be liable for the full measure of damages caused Landlord by
such holding over. In no event shall any holding over be deemed to give rise
to any tenancy greater than a month to month tenancy.
EVENTS OF DEFAULT
22. a) Events of Default. In addition to any other events of default
specified in this Lease any one or more of the following events shall be deemed
an event of default:
i) The demised premises shall be used by any person or entity other
than Tenant and its employees.
ii) Tenant's estate or interests, whether the whole or partially,
shall be transferred by or under any execution, process or operation of
law, assignment (as defined above), or otherwise, such transfers to include
but not necessarily be limited to any collateral security device.
iii) Failure of Tenant to maintain in good standing its corporate
charter or other permits required to conduct its business.
iv) Tenant shall file a voluntary petition in bankruptcy
in federal or state court or shall be adjudicated a bankrupt therein or
an involuntary petition in bankruptcy in federal or state court shall have
been filed against Tenant and such petition shall not have been withdrawn
or dismissed within thirty (30) days or Tenant shall enter into any
arrangement or plan for general creditors under statute or the jurisdiction
of any court or Tenant shall be declared bankrupt or insolvent according
to law or equity by the rule of any court of record and of competent
jurisdiction or any receiver, trustee or other court appointed official
shall manage or control the business and property of Tenant or any
assignment shall be made of Tenant's property for the benefit of creditors.
v) Tenant shall fail to pay any installment of rent or any
additional rent or other charge due Landlord hereunder or in connection
with the Loan Agreement when the same are required to be paid hereunder.
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<PAGE> 16
vi) Tenant shall default in its obligation to make repairs to the
demised premises required under Paragraph 13 herein.
vii) Tenant shall default in the performance of any of the other
terms, covenants and conditions of the Lease or the Loan Agreement and
except as otherwise provided in this Lease, such default shall continue
for a period of fifteen (15) days after Landlord's written notice to
Tenant, unless a shorter period is specified in such notice due to
emergency conditions.
b) Default Remedies. If any of the foregoing events occurs, or if any
other event constituting Tenant's breach of a promise, guaranty or
undertaking under this Lease or the Loan Agreement, THEN Landlord shall,
without prejudice to any other remedies available to Landlord, have the option
to terminate this Lease and declare this Lease forfeited and cancelled upon
written notice to Tenant and such termination and cancellation shall be
effective and this Lease term shall end upon the postmarking of such notice.
In the event this Lease Agreement is terminated and cancelled
by Landlord pursuant to the terms of this paragraph, Landlord shall
have the right to re-enter and repossess itself of the premises, with
or without process of law, using such force as may be necessary to
remove all persons or chattels therefrom without being liable to any
prosecution or for any damages by reason of such re-entry. Tenant
hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant being evicted
or dispossessed for any cause, or in the event of Landlord obtaining
possession of the demised premises, by reason of the violation of
Tenant of any of the covenants and conditions of this Lease, or otherwise.
The word "re-enter" as used herein is not restricted to its
technical legal meaning, but is used in its broadest sense, and
re-entry by Landlord for purposes of repair inspection or securing the demised
premises in any manner shall not be deemed to be acceptance of a surrender by
Tenant or a termination of this Lease. Landlord specifically reserves unto
itself all remedies granted to it in law or equity in any situation arising
under this Lease and no specified remedy granted herein shall preclude Landlord
from any such other remedy. In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions of this Lease, Landlord shall have
the right of injunction and the right to invoke any penalty allowed at law or
in equity as if re-entry, summary proceedings and other remedies were not
herein provided for.
In the event that this Lease shall be terminated as hereinbefore
provided, or by summary proceedings or otherwise, or if the demised
premises, or any part thereof, shall be abandoned by the Tenant, Landlord may,
in its own name, but as agent for the Tenant if the Lease be not terminated or,
if the Lease be terminated, in its own behalf, relet the whole or any portion
of said premises, for any period equal to or greater or less than the remainder
of the original term of this Lease for any sum which it may deem reasonable, to
any tenant which it may deem suitable and satisfactory, and for any use and
purpose which it may deem appropriate. In no event, however, shall the
Landlord be under any obligation to relet the premises for any purpose other
than the previous, authorized use under the Loan Agreement, which other uses
Landlord may regard as injurious to the demised premises, or to any tenant
which the Landlord, in the exercise of reasonable discretion, shall deem to be
objectionable. The
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<PAGE> 17
Landlord shall not in any event be required to pay the Tenant any surplus of
any sums received by the Landlord on a reletting of said premises in excess of
the rent reserved in this Lease. In the event that this Lease be terminated
by summary proceeding, or otherwise, or if the premises are abandoned or become
vacant, and whether or not the premises be relet, the Landlord shall be
entitled to recover from the Tenant, and the Tenant shall pay to the Landlord,
in addition to any damages caused to Landlord by breach or default in the terms
and conditions of the surrender and repair clauses, as well as any
consequential damages in any way arising by breach of this Lease, the
following:
(i) An amount equal to all expenses, if any, including
reasonable counsel fees, incurred by the Landlord in recovering
possession of the demised premises, and all reasonable costs and
charges for the care of said premises while vacant, which damages
shall be due and payable by the Tenant to the Landlord at such time
or times as such expenses are incurred by the Landlord; and
(ii) An amount equal to the amount of all rent and additional
rent reserved under this Lease, less the net rent, if any,
collected by the Landlord on reletting the demised premises. Landlord
may, at its option, accelerate the total amount rental and
additional rentals due during the entire term of this Lease and upon
written notice of such acceleration, all such rentals and additional
rentals shall become immediately due and payable. If Landlord shall
accelerate rent, then Landlord shall semi-annually thereafter pay to
Tenant the amount of net rental actually received in the six (6) months
prior to each such payment. If rental and additional rental hereunder
shall not be accelerated, then Landlord reserves the right to collect
and such rental and additional rental, less net rental, if any, shall
be collected, on the several days on which the rent and additional
rent reserved in the Lease would have been due and payable. Such net
rent collected on reletting by the Landlord and referred to above
shall be computed by deducting from the gross rents collected all
expenses incurred by the Landlord in connection with the reletting of
the premises or any part thereof, including brokers' commissions and
the cost of repairing, renovating or remodeling said premises and all
sums which the Tenant has agreed to pay by way of taxes, sewer rent,
water rents or water meter charges, insurance premiums and other
similar items becoming due from time to time under the terms of this
Lease shall be deemed additional rent reserved in this Lease, within
the meaning of this paragraph.
Landlord's entry into the Demised Premises to effect emergency
repairs shall not be or deemed to be an acceptance of Tenant's unjustifiable
surrender of the demised premises. Tenant shall have, after posting of
Landlord's written notice, fifteen (15) days in which to cure any monetary
default of Tenant and fifteen (15) days to cure any other default of Tenant
hereunder not requiring immediate performance or not resulting in an emergency
situation in which further damage, injury or deterioration is eminent.
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<PAGE> 18
NO MERGER
23. It is the intention of the parties hereto that the doctrine of
merger shall not apply and that the rights of the parties shall remain
as herein stated.
SUCCESSORS BOUND
24. This Lease Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
QUIET ENJOYMENT
25. Upon paying the rent, additional rent and other sum or sums of
money and charges as herein provided and upon performing all of the
covenants, conditions and agreements herein, on Tenant's part to be
paid, observed and performed, Tenant shall and may peaceably an
quietly have, hold and enjoy the demised premises for the term aforesaid,
subject however, to the terms of this Lease.
MISCELLANEOUS
26. a) Integrated Lease Document. This Lease contains the
entire agreement of the parties respecting the leasing of the demised
premises and shall not be modified, changed or terminated in whole or in
part orally or in any manner other than an agreement in writing and signed
by the Landlord and Tenant. Tenant acknowledges and warrants to Landlord
that Tenant has not relied and will not rely upon any representations or
statements not contained herein and concerning the subject or nature of the
demised premises or the terms, covenants and conditions contained herein
and has not relied and will not rely on the failure to make any such
representation or statement, and whether the representations or
statements or alleged representations or statements or lack thereof be made
or allegedly made by Landlord or Landlord's agents or employees or any
person, persons, or entitled acting or purportedly acting on behalf of
Landlord.
b) No Waiver. The failure of Landlord to insist in any one or more
instances upon the strict performance of any of the terms, covenants,
conditions and agreements of this Lease, or to exercise any option herein
conferred, shall not be considered as waiving or relinquishing for the
future any such terms, covenants or conditions, agreements or options, but
the same shall continue and shall remain in full force and effect. Neither
acceptance of the keys nor repairs made by Landlord nor any other act or
thing done by Landlord or any agent or employee during the term hereof
shall be deemed an acceptance of a surrender of premises excepting only a
written election signed by Landlord. The receipt of any rent or any part
thereof, whether the rent be that specifically reserved or that which may
become payable under any of the covenants herein contained, or whether the
same be received from Tenant or from anyone claiming under or through it or
otherwise, shall not be deemed to separate as a waiver of the rights of
Landlord to enforce the payment of rent or charges of any kind previously
due or which may thereafter become due, or the right to terminate this
Lease and to recover possession of the demised premises by summary
proceedings or otherwise, as Landlord may deem proper, or to exercise any
of the rights or remedies
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<PAGE> 19
reserved to Landlord hereunder or which Landlord may have at law, in equity or
otherwise.
c) Severability. Should any covenant, term, or provision of this Lease
be declared illegal, invalid, or unenforceable by any court or political body
or entity having competent jurisdiction, such declaration, whether in the form
of a statute, decree, judgment, ruling, or order shall not affect the validity
of this Lease as a whole nor any part hereof not specifically declared to be
illegal, invalid, or unenforceable. Should the particular application of any
covenant, term or provision of this Lease be declared illegal, invalid, or
unenforceable by any court or political body or entity having competent
jurisdiction, such declaration, whether in the form of a statute, decree,
judgment, ruling, or order, concerning such illegal, invalid or unenforceable
application shall not affect the validity of this Lease as a whole nor that
covenant, term, or provision in any other of its possible valid applications.
Upon determination of any illegality, invalidity or unenforceability, the
parties shall meet to arrive at a legal, valid and enforceable alternative
provision which most closely embodies the tenor and spirit of the former.
d) Notices. Any notice, election, bill, statement or communication which
Landlord may desire or be required to give to Tenant, or vice versa, shall be
deemed sufficiently given or rendered if in writing, delivered to the other by
registered or certified mail addressed as first written or at the last known
business address of the other and the time of the retention of such bill,
notice election, statement notice or communication shall be deemed to be the
time when the same is posted by U.S. Mail, as aforesaid.
e) Headings and Marginal Notes. The headings and marginal notes are
inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope or intent of this Lease nor in any way
affect this Lease. Words of any gender in this Lease shall be held to include
any other gender and words in the singular number shall be held to include the
plural when the sense requires.
f) "For Sale" and "To Let" Signs. Landlord may, during the term of this
Lease, at reasonable times and during usual business hours, enter the premises
to view them, and except in case of renewal or extension, may, at any time
within two (2) months next preceding the expiration of the specified term, show
the premises to others for the purpose of rental or sale, and may affix to any
suitable parts of the premises a notice for lease or sale thereof.
IN WITNESS WHEREOF, the parties hereto have executed this agreement by a
duly authorized officer or officers on the day and year stated in the
commencement.
LANDLORD:
M.O.L. INVESTMENTS
(a Michigan partnership)
By: JAMES N. OWENS
----------------------------------
Authorized Partner
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<PAGE> 20
TENANT:
MOLMEC, INC.
(a Michigan corporation)
By: ROBERT C. LELAND
----------------------------------
Its President
Attest: LEONARD G. MILLER
-----------------------------
Its Secretary
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<PAGE> 21
EXHIBIT "A"
TO
LEASE BETWEEN M.O.L. INVESTMENTS AND
MOLMEC, INC.
LEGAL DESCRIPTION OF DEMISED PREMISES-REAL ESTATE
Land in the Township of Avon, Oakland County, Michigan described as: Lots 23 and
24, Northfield Industrial Park Subdivision, as recorded in liber 167, pages 28,
29 and 30 of plats, Oakland County Records, and subject to taxes which may be a
lien but are not delinquent, matters which an accurate personal inspection and
architectural survey of the demised premises would disclose, easements and
restrictions of record, including but not limited to:
1. Terms and conditions and Restrictions of a Declaration and Grant of
Easements as more fully set forth under document recorded in liber 7575, page
549, Oakland County Records.
2. Terms, conditions and restrictions of a Storm Sewer Maintenance
Agreement as more fully set forth under document recorded in liber 7575, page
562, Oakland County Records.
3. Ten (10) foot easement for public utilities over the north ten feet of
Lot 23 and over the rear and the front lot lines and an easement for sanitary
sewer over the west portion of both lots, as shown on the recorded plat.
4. Building and use restrictions contained in instrument recorded in liber
7575, page 539, Oakland County Records.
<PAGE> 22
EXHIBIT B
AMENDMENT TO LEASE AGREEMENT
This Amendment is made as of August 13, 1994 between M.O.L. INVESTMENTS,
a Michigan partnership ("Landlord") and MOLMEC, INC., a Michigan corporation
("Tenant").
WITNESSETH:
The parties hereto entered into a Lease Agreement, dated August 14, 1984
(the "Lease"), for certain improved property located in Avon Township, Oakland
County, Michigan, as defined in the Lease (the "demised premises"); and
The parties desire to extend the term and amend certain aspects of the
Lease;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. TERM. The term of the Lease, as provided in Section 5 of the Lease,
is hereby extended for a period of three (3) years so as to expire on August 13,
1997. Effective August 14, 1994, Sub-sections 5(a), (b), (c) & (d) are
deleted in their entirety.
2. RENEWAL OF TERM. The term of the Lease shall be automatically renewed
for one (1) year periods, commencing on August 14, 1997, unless either party
serves written notice of termination upon the other, at least one (1) year prior
to the beginning of the then extended term. If neither party serves such
notice, the lease term shall be extended for a one (1) year period. The rent
during the extended term(s) shall be that set forth in Section 3 of this First
Amendment to Lease Agreement.
3. RENTAL AND BASE RENTAL. The first paragraph of Section 6 of the Lease
is hereby deleted in full and replaced with the following paragraph:
The rent to be paid by Tenant to Landlord hereunder shall be Thirteen
Thousand Five Hundred Dollars ($13,500.00) per month. Tenant's rent
payments shall be made to such persons and at such locations as the
Landlord may direct, in writing, from time to time.
4. OPTION TO PURCHASE.
4.1 Landlord grants to Tenant an option to purchase the demised premises,
which shall not be severable from the remaining terms and conditions of the
Lease and shall not survive the expiration or earlier termination of the
Lease. The option to purchase shall be exercisable by written notice from
Tenant to Landlord given at any time during the lease term or any extended
term(s) so long as the Tenant is not in default. The purchase price shall be
one Mil-
<PAGE> 23
lion Five Hundred Thousand ($1,500,000) Dollars, payable by wire transfer or
immediately available funds at the closing.
4.2 At closing, Landlord shall convey to Tenant good and marketable
record title to the demised premises by Warranty Deed, subject only to such
easements and restrictions as were of record on the date of Tenant's notice,
special assessments, if any, and applicable laws, ordinances and zoning
regulations. As evidence that its title is as aforesaid, Landlord shall, at its
own expense, provide to Tenant a commitment, issued by a title insurer licensed
to do business in the State of Michigan, for a standard form owner's policy
of title insurance in the full purchase price amount, to be issued with
standard exceptions.
4.3 The closing shall take place within five (5) days after all the
necessary papers have been prepared, and all conditions precedent hereunder met,
but no later than sixty (60) days after the delivery of the notice by Tenant
that it has elected to exercise its option to purchase the demised premises.
The closing shall occur at such time and place as the parties hereto shall
mutually agree.
4.3.1 At closing, Landlord shall deliver the following documents to
Tenant: (a) Warranty Deed for the demised premises subject to the
items set forth in section 4.2; (b) Bill of Sale for personal property
sold; (c) Title Insurance Commitment, as provided above; (d)
Certified Resolution of Authority to sell the demised premises; and
(e) Closing Statement reflecting the transaction.
4.3.2 At closing, Tenant shall deliver the funds in the amount of the
purchase price and deliver the following documents to Landlord: (a)
Certified Resolution of Authority to purchase the demised premises;
and (b) Closing Statement reflecting the transaction.
4.3.3 Tenant shall pay all recording fees and all of its other closing
costs. Landlord shall pay the Michigan real estate transfer tax
applicable to the transaction.
4.3.4 Each party shall execute and deliver such other documents as
may be reasonably necessary or convenient to fully consummate the
transfer of all of Landlord's right, title and interest in and to the
demised premises to Tenant.
4.4 Tenant shall have possession of the demised premises at closing,
subject to the rights of existing tenants, if any.
4.5 All rent, taxes and insurance shall be prorated as of the closing.
Tenant shall, without adjustment to the purchase price, assume all special
assessments, if any, which apply to the demised premises.
2
<PAGE> 24
4.6 The Landlord shall, out of the proceeds of the foregoing sum, if
required by the Tenant, discharge at the closing any of the Landlord's
mortgages, liens or encumbrances upon the demised premises.
5. TAXES, FIRE INSURANCE, UTILITIES. The last sentence in Subsection 8(b) of
the Lease is hereby deleted and replaced with the following sentence:
Alternatively, Landlord may require direct payments by Tenant to the taxing
authority.
6. NET LEASE. This Lease is an absolute net lease and Tenant hereby assumes
and agrees to pay and perform all payments, expenses, duties and obligations
with respect to the demised premises and the improvements thereon and the use,
maintenance and operation thereof, whether such duties and obligations would
otherwise be construed to be those of Landlord or Tenant, so that no matter from
what source arising, if anything shall be required to be done in, upon or about
the demised premises or the improvements thereon the same shall be done and
fulfilled at the sole expense and responsibility of the Tenant without any
expense, liability or obligation whatsoever to or on Landlord.
7. ENVIRONMENTAL WARRANTIES AND AGREEMENTS.
7.1 Tenant warrants and represents to, and agrees with, Landlord as
follows:
7.2 The demised premises, and Tenant's operations and activities
thereon, are and shall continue to be in compliance with all environmental laws;
and the demised premises are not and shall not become (i) contaminated by, or
the site of the disposal or release of, any hazardous substance, (ii) the
source of any contamination, by any hazardous substance, of any adjacent
property or of any groundwater or surface water, or (iii) the source of any air
emissions in excess of any legal limit now or hereafter in effect; and, except
as expressly disclosed by Tenant to Landlord in writing, no asbestos or
polychlorinated biphenyls are present or contained in or on the demised
premises.
7.3 Tenant shall take all actions necessary to investigate, clean up,
and eliminate the source of, any past, present or future contamination of the
demised premises by any hazardous substance and to prevent any additional
contamination of the demised premises. The taking of action by Tenant under this
subparagraph shall not limit any other right or remedy available to Landlord
by reason of any such contamination.
7.4 For purposes of this Lease, (i) "environmental law" means any present
or future federal, state or local law, ordinance, rule or regulation that
regulates or is intended to protect the environment or that establishes
liability for the removal or cleanup of, or
3
<PAGE> 25
damage caused by, any environmental contamination; (ii) "hazardous substance"
means any product that is now or hereafter regulated by any environmental law
and any other hazardous substance, pollutant, contaminant or waste, including,
without limitation, asbestos and polychlorinated biphenyls; and (iii) the
demised premises shall be considered to be "contaminated" by a hazardous
substance if a hazardous substance is present on or in the demised premises in
any amount or level.
Except as amended herein, the Lease is hereby ratified and confirmed.
WITNESSETH: LANDLORD
M.O.L. INVESTMENTS
[SIG] By: James N. Owens
- ------------------ --------------------------
James N. Owens, Partner
Date: August 30, 1994
TENANT
MOLMEC, INC.
Denise McGurisk By: Robert C. Vamos
- ------------------- ----------------------------
Robert C. Vamos, President
Date: August 30, 1994
4
<PAGE> 26
EXHIBIT C
SECOND AMENDMENT TO LEASE
AGREEMENT DATED AUGUST 14, 1984
AS AMENDED ON AUGUST 13, 1994
This Amendment is made as of June 1, 1996 between M.O.L. INVESTMENTS, a
Michigan partnership ("Landlord"), and MOLMEC, INC., a Michigan corporation
("Tenant").
WITNESSETH:
The parties hereto entered into a Lease Agreement, dated August 14, 1984
(the "Lease"), for certain improved property located in Avon Township, Oakland
County, Michigan, as defined in the Lease; and
The parties hereto entered into an Amendment to Lease Agreement, dated
August 13, 1994 (the "Amendment") amending certain aspects of the Lease and
extending the Lease; and
The parties desire to extend the term of the Lease;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Term. The Term of the Lease, as provided in Section 5 of the Lease and
in Section 1 of the Amendment is hereby extended for a period of two (2) years
from the expiration date set forth in the Amendment, so as to expire on August
13, 1999.
2. Renewal of Term. The term of the Lease shall be automatically renewed
for one (1) year periods, commencing on August 14, 1999, unless either party
serves written notice of termination upon the other, at least one (1) year prior
to the beginning of the then extended term
<PAGE> 27
If neither party serves such notice, the lease term shall be extended for a one
(1) year period. The rent during the extended term(s) shall be that set forth
in Section 3 of the Amendment.
Except as amended herein, the Lease and Amendment are hereby ratified and
confirmed.
LANDLORD:
M.O.L. INVESTMENTS
By: Leonard G. Miller
--------------------------
Partner
Date: June 1, 1996
------------------------
TENANT:
MOLMEC, INC.
By: Robert C. Vamos
--------------------------
Robert C. Vamos, President
Date: June 1, 1996
------------------------
2
<PAGE> 1
EXHIBIT 10.16
DETROIT REAL ESTATE BOARD FORM - BUSINESS PROPERTY Form 113-A
LEASE
NOTICE: MICHIGAN LAW ESTABLISHES RIGHTS AND OBLIGATIONS FOR
PARTIES TO RENTAL AGREEMENTS. THIS AGREEMENT IS REQUIRED
TO COMPLY WITH THE TRUTH IN RENTING ACT. IF YOU HAVE A QUESTION
ABOUT THE INTERPRETATION OR THE LEGALITY OF A PROVISION OF THIS
AGREEMENT, YOU MAY WANT TO SEEK ASSISTANCE FROM A LAWYER OR
OTHER QUALIFIED PERSON.
(1) THIS LEASE MADE THIS first day of
September 1996 BY AND BETWEEN Richard J. Nash and Susanna
Nash, his wife, whose address is 2500 Executive Hills
Drive, Auburn Hills, Michigan 48326, and Joe Balous, Trustee of
the Joe Balous Revocable Living Trust, whose address is 1110
Crystal Drive, Palm Beach Gardens, Florida 33418, THE LESSOR,
HEREINAFTER DESIGNATED AS THE LANDLORD, AND LDM Industries
Inc., a Michigan corporation, 2500 Executive Hills Drive
Auburn Hills, Michigan 48326
THE LESSEE, HEREINAFTER DESIGNATED AS THE TENANT.
DESCRIPTION (2) WITNESSETH: THE LANDLORD, IN CONSIDERATION OF
THE RENTS TO BE PAID AND THE COVENANTS AND AGREEMENTS TO BE
PERFORMED BY THE TENANT, DOES HEREBY LEASE UNTO THE
TENANT THE FOLLOWING DESCRIBED PREMISES SITUATED IN THE City of
Troy, Oakland County, Michigan
TO WIT: the 19,330 square foot building located at Lot 3, and
the West 90 feet of Lot 4, Kirts Industrial Park
Subdivision, as recorded in Liber 179, Pages 9, 10 and 11 of
Plats, Oakland County Records (more commonly known as 1250
Maplelawn)
TERM (3) For the term of five (5) years
from and after the first day of September,
1996, fully to be completed and ended, the Tenant yielding and
paying during the continuance of this lease unto the
Landlord
RENT for rent of said premises for said term, the
sum of Nine Hundred Thousand and 00/100
Dollars----------------------------- ($900,000)
In lawful money of the United States payable on monthly
installments in advance, upon the first day of each and
every month as follows: --
The first month's rent shall be due on September 1, 1996.
Thereafter, each month's rent shall be due and payable in
advance on the first day of each month. One-half of each
month's rent ($7,500) shall be paid to Lessors Richard J. Nash
and Susanna Nash at the address set forth above, and the
remaining one-half of each month's rent ($7,500) shall be paid
to Lessor Joe Balous, Trustee, at the address set forth above.
RENT (4) The Tenant hereby hires the said premises for
the said term as above mentioned and covenants well and truly
to pay, or cause to be paid unto the Landlord at the
dates and times above mentioned, the rent above reserved.
INSURANCE
*SEE
RIDER
(6) If the Tenant shall default in any payment or
expenditure other than rent required to be paid or expended by
the Tenant under the terms hereof, the Landlord may at his
option make such payment or expenditure, in which event the
amount thereof shall be payable as rental to the Landlord by
the Tenant on the next ensuing rent day together with interest
at 9% per annum from the date of such payment or expenditure
by the Landlord and on default in such payment the Landlord
shall have the same remedies as on default in payment of rent.
(7) All payments of rent or other sums to be made
to the Landlord shall be made at such place as the Landlord
shall designate in writing from time to time.
ASSIGNMENT (8) The Tenant covenants not to assign or transfer
this lease or hypothecate or mortgage the same or sublet said
premises or any part thereof without the written consent of the
Landlord. Any assignment, transfer, hypothecation, mortgage or
subletting without said written consent shall give the Landlord
the right to terminate this lease and to re-enter and repossess
the leased premises.
BANKRUPTCY (9) The Tenant agrees that if the estate created
AND hereby shall be taken in execution, or by other process of law,
INSOLVENCY or if the Tenant shall be declared bankrupt or insolvent,
according to law, or any receiver be appointed for the business
and property of the Tenant, or if any assignment shall be made
of the Tenant's property for the benefit of creditors then and
in such event this lease may be cancelled at the option of the
Landlord.
RIGHT TO (10) The Landlord reserves the right to subject and
MORTGAGE subordinate this lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon the Landlord's
interest in the said premises and on the land and buildings of
which the said premises are a part or upon any buildings
hereafter placed upon the land of which the leased premises form
a part. And the Tenant covenants and agrees to execute and
deliver upon demand such further instrument or instruments
subordinating this lease to the lien of any such mortgage or
mortgages as shall be desired by the Landlord and any mortgagees
or proposed mortgagees and hereby irrevocably appoints the
Landlord the attorney-in-fact of the Tenant to execute and
deliver any such instrument or instruments for and in the name
of the Tenant.
<PAGE> 2
USE AND (11) It is understood and agreed between the parties hereto
OCCUPANCY that said premises during the continuance of this lease shall be
used and occupied room for general office and engineering, with
light industrial in back room and for no other purpose or
purposes without the written consent of the Landlord, and that
the Tenant will not use the premises for any purpose in
violation of any law, municipal ordinance or regulation, and
that on any breach of this agreement the Landlord may at his
option terminate this lease forthwith and re-enter and
repossess the leased premises.
FIRE (12) It is understood and agreed that if the premises
hereby leased be damaged or destroyed in whole or in part by fire
or other casualty during the term hereof, the Landlord will
repair and restore the same to good tenantable condition with
reasonable dispatch, and that the rent herein provided for shall
abate entirely in case the entire premises are untenantable and
pro rata for the portion rendered untenantable, in case a part
only is untenantable, until the same shall be restored to a
tenantable condition; provided, however, that if the Tenant
shall fail to adjust his own insurance or to remove his damaged
goods, wares, equipment or property within a reasonable time,
and as a result thereof the repairing and restoration is
delayed, there shall be no abatement of rental during the period
of such resulting delay, and provided further that there shall
be no abatement of rental if such fire or other cause damaging
or destroying the leased premises shall result from the
negligence or willful act of the Tenant, his agents or
employees, and provided further that if the Tenant shall use any
part of the leased premises for storage during the period of
repair a reasonable charge shall be made therefor against the
Tenant, and provided further that in case the leased premises, or
the building of which they are a part, shall be destroyed to the
extent of more than one-half of the value thereof, the Landlord
may at his option terminate this lease forthwith by a written
notice to the Tenant.
REPAIRS
*(13) SEE
RIDER
INSURANCE Tenant agrees to keep the plate glass insured with a
responsible Insurance Company in the name of the Landlord and to
deliver the policy or policies to the Landlord and upon his
failure to do so the Landlord may place such insurance and charge
the same to the Tenant as so much additional rent as provided in
Paragraph 6; but the failure on the part of the Landlord to place
such insurance does not release the Tenant of the liability.
TENANT TO (14) The Tenant agrees to indemnify and hold harmless the
INDEMNIFY Landlord from any liability for damages to any person or
property in, on or about said leased premises from any cause
whatsoever; and Tenant will procure and keep in effect during the
term hereof public liability and property damage insurance for
the benefit of the Landlord in the sum of Five Hundred Thousand
Dollars ($500,000) ---------------- for damages resulting to one
person and One Million Dollars ($1,000,000)-------------- for
damages resulting from one casualty, and Two Hundred Fifty
Thousand Dollars ($250,000)-------------- property damage
insurance resulting from any one occurrence. Tenant shall deliver
said policies to the Landlord and upon Tenant's failure so to do
the Landlord may at his option obtain such insurance and the cost
thereof shall be paid as additional rent due and payable upon the
next ensuing rent day.
REPAIRS AND (15) Tenant further covenants and agrees that he will, at
ALTERATIONS his own expense, during the continuation of this lease, keep the
said premises and every part thereof in as good repair and at the
expiration of the term yield and deliver up the same in like
condition as when taken, reasonable use and wear thereof and
damage by the elements excepted. The Tenant shall not make any
alterations, additions or improvements to said premises without
the Landlord's written consent, and all alterations, additions
or improvements made by either of the parties hereto upon the
premises, except movable office furniture and trade fixtures put
in at the expense of the Tenant, shall be the property of the
Landlord, and shall remain upon and be surrendered with the
premises at the termination of this lease, without molestation or
injury.
The Tenant covenants and agrees that if the demised premises
consists of only a part of a structure owned or controlled by the
Landlord, the Landlord may enter the demised premises at
reasonable times and install or repair pipes, wires and other
appliances or make any repairs deemed by the Landlord essential
to the use and occupancy of other parts of the Landlord's
building.
EMINENT (16) If the whole or any part of the premises hereby leased
DOMAIN shall be taken by any public authority under the power of eminent
domain, then the term of this Lease shall cease on the part so
taken from the day the possession of that part shall be required
for any public purpose and from and after that day the annual
rental received hereunder shall be reduced pro rata for the
portion which shall be so taken. If, however, the portion of the
property so taken shall materially interfere with the use by the
Tenant of the remainder of the property, said Tenant shall have
the right to cancel and declare same null and void by written
notice to the Landlord within sixty (60) days after the
possession shall be taken for such public purpose. All damages
awarded for such taking shall belong to and be the property of
the Landlord, whether such damages shall be awarded as
compensation for diminution in value to the leasehold or to the
fee of the premises herein leased, provided, however, that the
Landlord shall not be entitled to any portion of the award made
to the Tenant for moving expenses or loss of business.
RESERVATION (17) The Landlord reserves the right of free access at all
times to the roof of said leased premises and reserves the right
to rent said roof for advertising purposes. The Tenant shall not
erect any structures for storage or any aerial, or use the roof
for any purpose without the consent in writing of the Landlord.
CARE OF (18) The Tenant shall not perform any acts or carry on any
PREMISES practices which may injure the building or be a nuisance or
menace to other Tenants in the building and shall keep premises
under his control (including adjoining drives, streets, alleys or
yards) clean and free from rubbish, dirt, snow and ice at all
times, and it is further agreed that in the event the Tenant
shall not comply with these provisions, the Landlord may enter
upon said premises and have rubbish, dirt and ashes removed and
the side walks cleaned, in which event the Tenant agrees to pay
all charges that the Landlord shall pay for hauling rubbish,
ashes and dirt or cleaning walks. Said charges shall be paid
to the Landlord by the Tenant as soon as bill is presented to him
and the Landlord shall have the same remedy as is provided in
Paragraph 6 of this lease in the event of Tenant's failure to
pay.
(19) The Tenant shall at his own expense under penalty of
forfeiture and damages promptly comply with all lawful laws,
orders, regulations or ordinances of all municipal, County and
State authorities affecting the premises hereby leased and the
cleanliness, safety, occupation and use of same.
CONDITION (20) The Tenant further acknowledges that he has examined
OF PREMISES the said leased premises prior to the making of this lease, and
AT TIME OF knows the condition thereof, and that no representations as to
LEASE the condition or state of repairs thereof have been made by the
Landlord, or his agent, which are not herein expressed, and the
Tenant hereby accepts the leased premises in their present
condition at the date of the execution of this lease.
(21) The Landlord shall not be responsible or liable to the
Tenant for any loss or damage that may be occasioned by or
through the acts or omissions of persons occupying adjoining
premises ? any part of the premises adjacent to or connected
with the premises hereby leased or any part of the building of
? the leased premises are a part or for any loss or damage
resulting to the Tenant or his property from bursting, ? or
leaking of water, gas, sewer or steam pipes.
<PAGE> 3
IN CONSIDERATION of the letting of the premises in the foregoing instrument
described, and for the sum of one dollar, to paid do
hereby become surety for the punctual payment of the rent and performance of
the covenants in said instrument mentioned, to be paid and performed by the
second part therein named; and if any default shall at any time be made
therein do hereby promise and agree to pay unto the part
of the first part named in said instrument, the said rent and arrears thereof
that may be due, and fully satisfy the condition of said instrument, and all
damages that may occur by reason of the non-fulfillment thereof, without
requiring notice or proof of the demand being made. The Landlord shall not be
held to strict construction adopted in cases of principal and surety. The
surety shall not have the right to claim discharge, or plead by way of defense
any extension of time given by the Landlord, failure of the Landlord to give
notice of default, receipt by the Landlord of securities from the Tenant,
failure of the Landlord to pursue the Tenant and his property with due
diligence or to apply other remedies and other securities which may possibly
be available to the Landlord and any direct release, unless it be in writing
duly authorized and executed.
WITNESS hand and seal this day of
19 (L.S.)
------------------------------
STATE OF MICHIGAN
COUNTY OF ss.
On this day of , in the year of our Lord One
Thousand Nine Hundred and before me, a
in and for said County, appeared to me personally known,
who, being by me sworn, did (1) say that (2)
the of
the corporation named in and which executed the within instrument, and that the
seal affixed to said instrument is the corporate seal of said corporation, and
that said instrument was signed and sealed in behalf of said corporation by
authority of its Board of Directors; and said
acknowledges said instrument to be the free act and deed of said
corporation.
----------------------------------------------------------------
Notary Public County, Michigan
My Commission Expires
Note: If more than one officer acknowledges, insert at (1) "each for
himself," and (2) "they are respectively."
SECURITY PROVISION
Paragraph 37 (REFER TO PARAGRAPH 36 OF LEASE)
The Landlord herewith acknowledges the receipt of Fifteen Thousand
Dollars ($15,000-----------------), which he is to retain as security for the
faithful performance of all of the covenants, conditions, and agreements of
this lease, but in no event shall the Landlord be obliged to apply the same
upon rents or other charges in arrears or upon damages for the Tenants' failure
to perform the said covenants, conditions, and agreements; the Landlord may
so apply the security at his option; and the Landlord's right to the possession
of the premises for non-payment of rent or for any other reason shall not in
any event be affected by reason of the fact that the Landlord holds this
security. The said sum if not applied toward the payment of rent in arrears or
toward the payment of damages suffered by the Landlord by reason of the
Tenant's breach of the covenants, conditions, and agreements of this lease is
to be returned to the Tenant when this lease is terminated, according to these
terms, and in no event is the said security to be returned until the Tenant has
vacated the premises and delivered possession to the Landlord.
In the event that the Landlord repossesses himself of the said premises
because of the Tenant's default or because of the Tenant's failure to carry out
the covenants, conditions, and agreements of this lease, the Landlord may
apply the said security upon all damages suffered to the date of said
repossession and may retain the said security to apply upon such damages as may
be suffered or shall accrue thereafter by reason of the Tenant's default or
breach. The Landlord shall not be obliged to keep the said security as a
separate fund, but may mix the said security with his own funds.
Joe Balous Richard J. Nash
- ---------------------------- --------------------------(L.S.)
Joe Balous, Trustee, Lessor Richard J. Nash, Lessor
Susanna Nash
--------------------------
Susanna Nash, Lessor
DETROIT REAL ESTATE BOARD
BUSINESS PROPERTY LEASE
Landlord
-------------------------------------
Tenant
-------------------------------------
Premises
-------------------------------------
From
------------------------------------
To
------------------------------------
==============================================
==============================================
THE RIEGLE PRESS, INC., FLINT, MICHIGAN
<PAGE> 4
RE-RENTING (22) The Tenant hereby agrees that for a period
commencing 90 days prior to the termination of this lease, the
Landlord may show the premises to prospective Tenants, and 60
days prior to the termination of this lease, may display in and
about said premises and in the windows thereof, the usual and
ordinary "TO RENT" signs.
HOLDING (23) It is hereby agreed that in the event of the
OVER Tenant herein holding over after the termination of this lease,
thereafter the tenancy shall be from month to month in the
absence of a written agreement to the contrary.
GAS, WATER, (24) The Tenant will pay all charges made against
HEAT, said leased premises for gas, water, heat and electricity
ELECTRICITY during the continuance of this lease, as the same shall become
due.
ADVERTISING (25) It is further agreed that all signs and
DISPLAY advertising displayed in and about the premises shall be such
only as advertise the business carried on upon said premises,
and that the Landlord shall control the character and size
thereof, and that no sign shall be displayed excepting such as
shall be approved in writing by the Landlord, and that no
awning shall be installed or used on the exterior of said
building unless approved in writing by the Landlord.
ACCESS TO (26) The Landlord shall have the right to enter upon
PREMISES the leased premises at all reasonable hours for the purpose of
inspecting the same. If the Landlord deems any repairs
necessary he may demand that the Tenant make the same and if
the Tenant refuses or neglects forthwith to commence such
repairs and complete the same with reasonable dispatch the
Landlord may make or cause to be made such repairs and shall
not be responsible to the Tenant for any loss or damage that
may accrue to his stock or business by reason thereof, and if
the Landlord makes or causes to be made such repairs the
Tenant agrees that he will forthwith on demand pay to the
Landlord the cost thereof with interest at 9% per annum, and
if he shall make default in such payment the Landlord shall
have the remedies provided in Paragraph 6 hereof.
RE-ENTRY (27) In case any rent shall be due and unpaid or if
default be made in any of the covenants herein contained, or if
said leased premises shall be deserted or vacated, then it
shall be lawful for the Landlord, his certain attorney, heirs,
representatives and assigns, to re-enter into, re-possess the
said premises and the Tenant and each and every occupant to
remove and put out.
QUIET (28) The Landlord covenants that the said Tenant, on
ENJOYMENT payment of all the aforesaid installments and performing all
the covenants aforesaid, shall and may peacefully and quietly
have, hold and enjoy the said demised premises for the term
aforesaid.
EXPENSES-- (29) In the event that the Landlord shall, during the
DAMAGES period covered by this lease, obtain possession of said
RE-ENTRY premises by re-entry, summary proceedings, or otherwise, the
Tenant hereby agrees to pay the Landlord the expense incurred
in obtaining possession of said premises, and also all
expenses and commissions which may be paid in and about the
letting of the same, and all other damages.
REMEDIES (30) It is agreed that each and every of the rights,
NOT remedies and benefits provided by this lease shall be
EXCLUSIVE cumulative, and shall not be exclusive of any other of said
rights, remedies and benefits, or of any other rights, remedies
and benefits allowed by law.
WAIVER (31) One or more waivers of any covenant or condition
by the Landlord shall not be construed as a waiver of a further
breach of the same covenant or condition.
DELAY OF (32) It is understood that if the Tenant shall be
POSSESSION unable to enter into and occupy the premises hereby leased at
the time above provided, by reason of the said premises not
being ready for occupancy, or by reason of the holding over of
any previous occupant of said premises, or as a result of any
cause or reason beyond the direct control of the Landlord, the
Landlord shall not be liable in damages to the Tenant therefor,
but during the period the Tenant shall be unable to occupy said
premises as hereinbefore provided, the rental therefor shall be
abated and the Landlord is to be the sole judge as to when the
premises are ready for occupancy.
NOTICES (33) Whenever under this lease a provision is made for
notice of any kind it shall be deemed sufficient notice and
service thereof if such notice to the Tenant is in writing
addressed to the Tenant at his last known Post Office address
or at the leased premises and deposited in the mail with postage
prepaid and if such notice to the Landlord is in writing
addressed to the last known Post Office address of the
Landlord and deposited in the mail with postage prepaid.
Notice need be sent to only one Tenant or Landlord where the
Tenant or Landlord is more than one person.
(34) It is agreed that in this lease the word "he"
shall be used as synonymous with the words "she," "it" and
"they," and the word "his" synonymous with the words, "her,"
"its" and "their."
(35) The covenants, conditions and agreements made and
entered into by the parties hereto are declared binding on
their respective heirs, successors, representatives and
assigns.
(36) In the event security is given, Paragraph 37 on
the last page shall be deemed a part of this lease.
See Rider attached hereto and incorporated herein by reference.
TRUTH IN RENTING ACT PROVISIONS: Landlord and Tenant
specifically agree that this lease shall not, is not intended,
nor shall it be construed, to violate any of the provisions of
the Truth in Renting Act. If, however, any provision of this
lease does in fact reach any such result, then such provision
shall be null and void, but the other provisions of this lease
shall continue to remain in full force and effect.
The address of the landlord for purposes of notice
under the Truth in Renting Act and for all other purposes
is 2500 Executive Hills Drive, Auburn Hills, Michigan 48326
IN WITNESS WHEREOF, The parties have hereunto set their
hands and scale the day and year first above written.
WITNESSED BY:
Richard J. Nash
------------------------- ----------------------------(L.S.)
Richard J. Nash, Lessor
Susanna Nash
------------------------- ----------------------------(L.S.)
Susanna Nash, Lessor
Joe Balous
------------------------- ----------------------------(L.S.)
Joe Balous, Trustee, Lessor
LDM Industries Inc., Lessee
------------------------- ----------------------------(L.S.)
By: Joe Balous, Chairman
----------------------------(L.S.)
<PAGE> 5
RIDER TO LEASE DATED SEPTEMBER 1, 1996,
BETWEEN RICHARD J. NASH, SUSANNA NASH, AND
JOE BALOUS, TRUSTEE, AS LANDLORD, AND
LDM INDUSTRIES, INC., AS TENANT
(5) INSURANCE. In addition to the rentals hereinbefore specified, the
Tenant agrees to pay as additional rent all premiums for insurance
against loss by fire on the premises and on the improvements situated
on said premises. The Tenant, at its own cost and expense, shall, at
all times during the term of this Lease, maintain insurance against
fire, vandalism, malicious mischief, and such other perils as are from
time to time included in a standard extended coverage endorsement,
covering the premises, and any improvements thereon, in an amount not
less than 100% of the appraised value thereof as appraised by the
insurance company underwriters. All such policies of insurance shall
contain replacement cost riders and shall be made payable to the
Tenant, the Landlord, and any mortgagee, as their respective interests
may appear. In the event Tenant fails to obtain such insurance, the
Landlord shall have the right to obtain said insurance and to bill the
Tenant for the full amount paid therefor, which amount shall then
become additional rent due on the first day of the following month.
(13) REPAIRS. The Tenant shall, at all times during the term of this
Lease, at its own expense, put and maintain in thorough repair and in
good and safe condition, all portions of the leased premises,
including, without limitation, all equipment and appurtenances
thereto, the roof and outer walls, all plumbing and sewage facilities,
fixtures, and the heating, air conditioning, sprinkler and electrical
systems, both inside and outside, structural and non-structural,
extraordinary and ordinary and whether or not necessitated by wear,
tear, obsolescence, or defects, latent or otherwise. In the event
Tenant fails to promptly make repairs to the premises, the Landlord
shall have the right to make such repairs and to bill the Tenant for
the full amount of said repairs, which amount shall then become
additional rent due on the first day of the following month.
(38) TAXES AND ASSESSMENTS. The Tenant, in addition to the fixed rent
provided for herein, shall pay on a prorated due date basis all taxes
and assessments on the leased property, and on the buildings and
improvements thereon, which are assessed during the lease term. All
taxes assessed prior to but payable after the effective date of the
lease term, and all taxes assessed during the term but payable after
the lease term, shall be paid on a prorated due date basis, so that
the Landlord shall pay its prorated share for the period prior to and
for the period subsequent to the lease term. Special assessments shall
be deemed to be payable in equal monthly installments in the amount,
including principal and interest, necessary to amortize the amount of
the assessment over the term thereof, with interest.
<PAGE> 6
(39) SUBROGATION. Each of Landlord and Tenant hereby releases the other
from any and all liability or responsibility (to the other or anyone
claiming through or under them by way of subrogation or otherwise) for
any loss or damage to the property caused by fire or any of the
extended coverage perils, even if such fire or other casualty shall
have been caused by the fault or negligence of the other party or
anyone for whom such party may be responsible; provided, however, that
this clause shall be applicable and in force and effect only with
respect to loss or damage occurring during such time as the Landlord's
and Tenant's policies shall contain a clause or endorsement to the
effect that any such release shall not adversely affect or impair said
policies or prejudice the right of the releasor to recover thereunder.
Each of the Landlord and Tenant agrees that its policies will include
this clause or endorsement.
(40) NET LEASE. The parties acknowledge that this Lease Agreement is
intended to be a full net lease, the rent to be paid to Landlord by
Tenant to be net to Landlord after payment of all taxes, maintenance,
repair, utility, and other operational expenses, all of which are to
be paid by Tenant in addition to the rent required herein, whether or
not all such expenses are specifically listed or described in this
Lease Agreement.
(41) ENTIRE AGREEMENT. This Lease constitutes the entire understanding and
agreement among the parties with respect to the subject matter hereof
and supersedes all prior leases and other agreements among the
parties.
Richard J. Nash
-------------------------------
Richard J. Nash, Lessor
Susanna Nash
-------------------------------
Susanna Nash, Lessor
Joe Balous
-------------------------------
Joe Balous, Trustee, Lessor
-------------------------------
LDM INDUSTRIES INC., Lessee
Joe Balous
By: ---------------------------
JOE BALOUS, Chairman
-2-
<PAGE> 1
EXHIBIT 10.17
LOAN AGREEMENT Execution Copy
Between
MICHIGAN STRATEGIC FUND
(the "Issuer")
and
MOLMEC, INC.
(the "Obligor")
Relating to the
Issuance of
$5,000,000
Michigan Strategic Fund
Variable Rate Demand
Limited Obligation Revenue Bonds, Series 1994
(Molmec, Inc. Project)
Dated as of December 1, 1994
The interest (subject to certain specified exclusions) of the
Issuer in this Loan Agreement has been assigned to Society Bank,
Michigan, in its capacity as Trustee (the "Trustee") under a
Trust Indenture dated as of December 1, 1994, between the Issuer
and the Trustee.
<PAGE> 2
LOAN AGREEMENT
TABLE OF CONTENTS
PAGE
----
DEFINITIONS ........................................................... 1
PREMISES .............................................................. 3
ARTICLE I REPRESENTATIONS ........................ 4
Section 1.1 Obligor Representations and Covenants Regarding the
Internal Revenue Code ................................... 4
Section 1.2 Additional Covenants .................................... 8
Section 1.3 Issuer Findings and Representations ..................... 9
Section 1.4 Additional Bonds ........................................ 9
ARTICLE II THE BONDS AND THE PROCEEDS THEREOF ............... 10
Section 2.1 The Bonds ............................................... 10
Section 2.2 Issuer Action on Redemption ............................. 10
Section 2.3 Investment of Bond Fund and Project Fund; Non-Arbitrage
Covenant ................................................ 10
Section 2.4 Credit Facility ......................................... 11
Section 2.5 Tender .................................................. 11
Section 2.6 Remarketing Agent ....................................... 11
Section 2.7 Right to Exercise Conversion Option ..................... 11
Section 2.8 Rebate Account .......................................... 12
ARTICLE III THE LOAN AND LOAN REPAYMENTS ................... 12
Section 3.1 The Loan ................................................ 12
Section 3.2 Loan Repayments; Credit Facility ........................ 12
ARTICLE IV INSTALLATION OF THE PROJECT .................... 13
Section 4.1 Project Fund Disbursements .............................. 13
Section 4.2 Obligation of the Obligor to Complete the Project ....... 14
Section 4.3 Completion Certificate .................................. 14
Section 4.4 Use of Surplus Bond Proceeds ............................ 14
ARTICLE V OTHER PECUNIARY OBLIGATIONS OF THE OBLIGOR ............ 15
Section 5.1 Taxes and Other Costs ................................... 15
Section 5.2 Issuer Fees and Expenses ................................ 15
Section 5.3 Fees and Expenses of the Trustee and Remarketing Agent .. 15
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<PAGE> 3
Section 5.4 Indemnification of the Issuer ........................... 16
Section 5.5 Indemnification of the Trustee .......................... 17
Section 5.6 Insurance ............................................... 17
ARTICLE VI PROJECT MAINTENANCE ....................... 17
Section 6.1 Maintenance and Operation ............................... 17
Section 6.2 Remodeling and Modifications ............................ 17
ARTICLE VII DAMAGE TO PROJECT AND CONDEMNATION ............... 18
ARTICLE VIII ACTIONS AFFECTING OBLIGOR AND ISSUER
INTERESTS IN THE AGREEMENT AND THE PROJECT ........... 18
Section 8.1 Assignment of the Agreement ............................. 18
Section 8.2 Obligor's Interest in the Agreement ..................... 19
Section 8.3 Liens by the Obligor .................................... 19
Section 8.4 Security Interest in the Project Fund ................... 19
ARTICLE IX FURTHER OBLIGATIONS OF THE OBLIGOR ................ 19
Section 9.1 Compliance with Laws .................................... 19
Section 9.2 Maintenance of Assets; Ownership of Project ............. 19
Section 9.3 General Limitations with Respect to Non-Impairment of
Tax-Exempt Status of the Bonds ....................... 20
Section 9.4 Access to Project and Records ........................... 20
Section 9.5 Requirements of Tenants ................................. 20
ARTICLE X EVENTS OF DEFAULT AND REMEDIES .................. 21
Section 10.1 Events of Default ....................................... 21
Section 10.2 Remedies upon Event of Default .......................... 22
Section 10.3 Payment of Attorneys' Fees and Other Expenses ........... 23
Section 10.4 Waivers and Limitation on Waivers ...................... 23
ARTICLE XI OBLIGATIONS OF OBLIGOR UNCONDITIONAL ................ 24
Section 11.1 Obligor Obligations ..................................... 24
ARTICLE XII MISCELLANEOUS ............................ 24
Section 12.1 Amounts Remaining in Funds .............................. 24
Section 12.2 Obligor Bound by Indenture .............................. 25
Section 12.3 Consents Under the Agreement ............................ 25
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<PAGE> 4
Section 12.4 Notices ................................................. 25
Section 12.5 Amendment ............................................... 25
Section 12.6 Binding Effect .......................................... 25
Section 12.7 Severability ............................................ 25
Section 12.8 Execution in Counterparts ............................... 25
Section 12.9 Captions and Table of Contents .......................... 26
Section 12.10 Applicable Law .......................................... 26
Exhibits
EXHIBIT A - Description of Project A-1
EXHIBIT B - Requisition Certificate B-1
EXHIBIT C - Completion Certificate C-1
EXHIBIT D - No Act of Bankruptcy Certificate D-1
iii
<PAGE> 5
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made and entered into as of
December 1, 1994 by and between the Michigan Strategic Fund (the "Issuer") and
Molmec, Inc., a Michigan corporation (the "Obligor").
DEFINITIONS
Except as provided herein, all capitalized terms shall have the
meanings ascribed to them in the Indenture (defined below). In addition to the
words and terms elsewhere defined in the Agreement, each of the following words
and terms as used in the Agreement shall have the following meaning unless the
context or use indicates another or different meaning or intent and shall refer
to all or part of the defined subject.
"Additional Bonds" means the Additional Bonds which are authorized to
be issued in accordance with Section 112 of the Indenture in one or more series
from time to time to provide funds for the purposes contemplated by the
Agreement.
"Completion Certificate" means the certificate provided for in Section
4.3 hereof, in the form of Exhibit C hereto.
"Completion Date" means the date of completion of the Project as such
date shall be certified in the Completion Certificate.
"Engineer" means any licensed professional architect/engineer or
architectural/engineering firm (who may be in the employ of the Obligor or
chosen by the Obligor).
"Event of Default" means those events of default specified and defined
in Section 10.1.
"General Limitations" means those general limitations on the Obligor
action or failure to act specified in Section 9.3 hereof, sometimes referenced
as a condition to a particular Obligor action, but applicable to any action by
the Obligor under the Agreement.
"Indemnified Persons" means the Issuer and its members, officers,
agents, employees and any other person acting for or on behalf of the Issuer.
"Improvements to the Project" means such additions, improvements,
modifications or relocations as the Obligor may deem necessary or desirable in,
on or to the Project, all of which shall be included in the Plans and shall
become part of the Project.
"Indenture" means the Trust Indenture between the Issuer and the
Trustee, dated as of December 1, 1994, as the same may be amended or
supplemented in accordance with its terms.
<PAGE> 6
"Inducement Date" means July 27, 1994, on which date a resolution of intent
or inducement to assist in the financing of the Project was adopted by Michigan
Strategic Fund.
"Issuance Costs" means items of expense payable or reimbursable directly or
indirectly by the Issuer and related to the authorization, sale and issuance of
the Bonds and authorization and execution of the Agreement, which items of
expense shall include, but not be limited to, application fees and expenses,
publication costs, printing costs, costs of reproducing documents, filing and
recording fees, Bond Counsel and Counsel fees, initial Trustee's fees,
placement agents' fees, costs of credit ratings, Credit Facility issuance fees
and charges for execution, transportation and safekeeping of the Bonds and
related documents, and other costs, charges and fees in connection with the
foregoing.
"Municipality" means the Township of Hartland, County of Livingston,
Michigan.
"Non-Arbitrage and Tax Compliance Certificate" means the Non-Arbitrage and
Tax Compliance Certificate described in Section 1.1 hereof.
"Permitted Encumbrances" means and includes (a) the rights of the Issuer,
the Trustee and the Bank and the liens created under the Agreement; (b) the
rights of the Issuer, the Trustee and Bank created under the Indenture and
assignment of the Agreement; (c) any lien, encumbrance or charge, which is
subordinate in all respects to the interest of the Issuer, the Trustee and the
Bank; (d) any liens granted to the Bank; and (e) liens permitted by the
Reimbursement Agreement or consented to by the Bank in writing.
"Plans" means the Obligor's plans and budget specifications for the
Project, in such reasonable detail as to satisfy the requirements of Section
9-110 of Act 174, Public Acts of Michigan, 1962, as amended, as the same may be
revised from time to time in accordance with Article IV hereof, which plans are
on file at the principal office of the Obligor.
"Project Costs" means (a) obligations of the Issuer or the Obligor
incurred for labor and to contractors, builders and materialmen in
connection with the acquisition, construction and installation of the Project;
(b) the cost of contract bonds and of insurance of all kinds that may be
required or necessary during the course of construction of the Project which is
not paid by the contractor or contractors or otherwise provided for; (c) all
costs of engineering services, including test borings, surveys, estimates,
plans and specifications and preliminary investigations, and supervising
construction, as well as for the performance of all other duties required by or
consequent upon the proper construction of the Project; (d) Issuance Costs; (e)
all other costs which the Obligor shall be required to pay, under the terms of
any contract or contracts, for the acquisition, construction and installation
of the Project; (f) other costs of a nature comparable to those described in
clauses (a) through (e) above which the Obligor shall be required to pay as a
result of the damage, destruction, condemnation or taking of the Project or any
portion thereof; (g) fees and expenses incurred in connection with the issuance
of the Credit Facility; (h) interest on the Bonds or any interim obligation
during the period of
2
<PAGE> 7
construction of the Project; or (i) any other costs incurred by the Obligor
which are properly chargeable to the Project and which may be financed by the
Bonds under the Act.
"Project Purposes" means use of the Project for manufacturing purposes
during a period of usefulness of the Project of at least 25 years in the
estimate of the Obligor.
The terms "redemption", "redeem", and "redeemed" when used with reference
to the principal of the Bonds, means, when appropriate, prepayment, prepay and
prepaid, respectively.
"Requisition Certificate" means the certificate required by Section 4.1
hereof, in the form of Exhibit B hereto.
PREMISES
The Issuer is empowered under the Act to assist any person, firm or
corporation in the financing of certain projects and facilities, through the
issuance of its limited obligation revenue bonds. The Obligor has proposed the
acquisition, construction, equipping and installation of the Project and as an
inducement therefor has requested the Issuer to assist in the financing of the
Project and certain other expenses incidental thereto, as provided in the Act.
The Issuer has determined that making the Loan to the Obligor will promote
and serve the intended purposes of, and in all respects will conform to the
provisions and requirements of the Act. In order to grant the Loan and thereby
assist in the financing of the Project, the Issuer is issuing the Bonds. The
Issuer, the Trustee and the Obligor understand and intend that the financing of
the Project through issuance of the Bonds and the making of the Loan will be
structured in the following general manner, as detailed in the Indenture and in
the Agreement: The Issuer will issue the Bonds under the Act and use the
principal amount thereof to make the Loan to the Obligor. The Loan shall be
repaid by the Obligor in Loan Repayments sufficient to pay the principal,
premium, if any, and interest on the Bonds as the same become due. From the
proceeds of the Loan, the Obligor will acquire and construct the Project. Under
the terms of the Agreement, the Obligor will make Loan Repayments, and will be
responsible for paying any costs of the Project which exceed the principal
amount of the Bonds, for maintaining and insuring the Project, and for paying
all taxes and expenses relating to the Project. The Issuer's obligation with
respect to the Bonds is subject to the limitations therein contained, viz., that
the principal, premium, if any, and interest on the Bonds and any other costs or
pecuniary liability relating to the Bonds, the Loan, acquisition, construction
and installation of the Project or any proceeding, document, or certification
incidental to the foregoing, shall never be payable from tax revenues or public
funds of the State or any agency thereof or general funds or assets of the
Issuer, but shall be payable with Available Moneys solely and only from the
Security. The Bonds shall not be secured by any interest in the Project or other
assets of the Obligor.
In addition, as part of the Security for the Loan Repayments, the Obligor
will cause to be delivered to the Trustee the Credit Facility of the Bank. The
Trustee is instructed in the
3
<PAGE> 8
Indenture to draw under the Credit Facility up to (a) the principal amount of
the Bonds (i) to enable the Trustee to pay the principal amount of the Bonds
when due at maturity, by acceleration of maturity or otherwise or upon
redemption or (ii) to enable the Trustee to pay the portion of the Purchase
Price of Bonds delivered to the Trustee and not remarketed by the Remarketing
Agent equal to the principal amount of such Bonds, plus (b) an amount equal to
60 days' (or, if required pursuant to Section 208 of the Indenture, 210 days')
interest on the Bonds calculated at the Maximum Rate to enable the Trustee to
pay interest on the Bonds plus (c) if the Credit Facility is so amended, any
premium on the Bonds.
The Issuer's participation in the financing of the Project is intended to
enable the Obligor to utilize certain provisions of the Code. Section 103 of
the Code encourages the construction of certain types of facilities and the
public financing thereof through issuance of limited obligation revenue bonds
by providing that the interest on such bonds, as contrasted with any bonds
which might be issued by the Obligor itself, will be excluded from gross income
for federal income tax purposes. This tax exclusion enables the purchasers of
the Bonds to accept a lower rate of interest than they would otherwise require,
and thereby further reduces the interest cost to the Obligor of financing the
Project.
ARTICLE I
REPRESENTATIONS
Section 1.1 Obligor Representations and Covenants Regarding the Internal
Revenue Code. The Obligor makes the following representations and warranties for
the benefit and reliance of the Issuer, the Trustee and the Bank:
(a) The Obligor is a Michigan corporation duly organized, validly
existing and in good standing under the laws of the State. The Obligor
(i) has full power and authority to own and lease the properties and assets
associated with the Project and to acquire, construct and install the
Project, and (ii) has full power and authority to execute and deliver the
Agreement and the Reimbursement Agreement, and to perform the obligations
as contemplated thereunder.
(b) Neither the execution and delivery of the Reimbursement Agreement
or the Agreement, nor the consummation of the transactions contemplated
thereby, nor the fulfillment of or compliance with the terms and conditions
of the Reimbursement Agreement or the Agreement, will, to the best
knowledge of the Obligor, violate the Articles of Incorporation or By-Laws
of the Obligor, any provision of law, any order of any court or other
agency of government, or any indenture, agreement or other instrument to
which the Obligor is now a party or by which it or any of its properties or
assets is bound, or will be in conflict with, result in a breach of, or
constitute a default (with due notice or the passage of time or both)
under, any such indenture, agreement, or other instrument.
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<PAGE> 9
(c) The Agreement and the Reimbursement Agreement have been duly
authorized, executed and delivered and are each valid and binding
obligations of the Obligor enforceable in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws in effect from
time to time affecting the enforceability of creditors' rights generally or
by general principles of equity.
(d) The Obligor intends to occupy the Project or cause the Project to
be occupied and to operate or cause it to be operated at all times during
the term of the Agreement for Project Purposes and does not know of any
reason why the Project will not be so used by it in the absence of
supervening circumstances not now anticipated by it or beyond its control.
(e) The Project will be constructed and installed in such manner as
to conform with all applicable zoning, planning, building and other
regulations of governmental authorities having jurisdiction of the Project,
all necessary utilities are or will be available to the Project, and
the Obligor has obtained or will obtain all requisite zoning, planning,
building, environmental or other permits necessary for the construction of
the Project for Project Purposes, and additional permits necessary for the
use of the Project are expected to be obtained upon application at the
appropriate times.
(f) The Obligor's estimates of Project Costs, the Completion Date and
period of usefulness of the Project which were supplied to the Issuer have
been made in good faith and are fair, reasonable and realistic.
(g) No litigation or governmental proceeding is pending or, to the
best knowledge of the Obligor threatened against the Obligor which could
have a material adverse effect on its financial condition or business,
or its power to borrow or repay the Loan.
(h) The Obligor does not have any material contingent obligations
which are not disclosed in writing to the Bank.
(i) All representations and warranties in the Reimbursement Agreement
are incorporated herein as set forth therein.
(j) The Project qualifies as a "project" under the Act.
(k) The financing of the Project will result in the creation of
approximately 80 new jobs and will not result in the transference of
employment of more than 20 full-time employees from another municipality
to the Municipality without the Obligor first obtaining the prior written
consent of any municipality from which such employment is to be
transferred.
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<PAGE> 10
(l) All the net Bond proceeds from the sale of the Bonds will be
expended on the Project to be owned by the Obligor, except for proceeds
used for the payment of costs of issuing the Bonds. Substantially
all (at least 95%) of the costs of the Project are for the acquisition or
construction of land or property of a character subject to the allowance
for depreciation. No costs of the Project to be financed from the proceeds
of the Bonds were paid for or incurred prior to official action being taken
by the Issuer on the Inducement Date. As of the date hereof, no portion of
the Project has been placed in service by the Obligor.
(m) There are no other bond issues, which together with the Bonds,
are to be used with respect to a single building, an enclosed shopping mall
or strip of offices, stores or warehouses using substantial common
facilities.
(n) No portion of the Board proceeds will be used to provide any
airplane, skybox or other private luxury box, any health club facility, any
facility primarily used for gambling or any store the principal business of
which is the sale of alcoholic beverages for consumption off premises.
(o) Less than 25% of the Bond proceeds are to be used directly or
indirectly for the acquisition of land used for other than farming
purposes, and no portion of the Bond proceeds is to be used, directly
or indirectly for the acquisition of land used for farming purposes.
(p) None of the Bond proceeds is to be used for the acquisition of
any property (or an interest therein) the first use of which property is
not pursuant to such acquisition.
(q) Substantially all (at least 95%) of the net proceeds of the
Bonds (face amount, less qualified credit enhancement fees, plus earnings
on Bond proceeds deposited in the Project Fund) will be used to provide
manufacturing facilities within the meaning of Code Section 144(a)(12)(C).
For this purpose, the term "manufacturing facility" means any facility
which is used in the manufacturing or production of tangible personal
property (including the processing resulting in a change in the condition
of such property). The term "manufacturing facility" includes facilities
which are directly related and ancillary to a manufacturing facility
(determined without regard to this sentence) if a) such facilities are
located on the same site as the manufacturing facility and b) not more than
25% of the net proceeds of the Bonds are used to provide such facilities.
The Obligor, for purposes of this representation, is able to meet all of
the criteria below regarding manufacturing facilities. Office space is
directly related and ancillary to a manufacturing facility where such
office is located on the premises of the manufacturing facility and not
more than a de minimis (5%) portion of the functions to be performed at
such office is directly related to the day-to-day operations at such
manufacturing facility. Facilities for the short-term warehousing of raw
materials incidental to production, or the temporary warehousing of
finished product constitutes facilities directly related and
6
<PAGE> 11
ancillary to a manufacturing facility. An on-site laboratory whose purpose
is to test the manufactured product for quality or to experiment with
different materials which might be used as raw materials for the product
may be directly related and ancillary to a manufacturing facility.
Loading docks or rail spurs to unload raw materials or load finished
products may be directly related and ancillary. Forklifts or similar
equipment are directly related and ancillary to a manufacturing facility,
but trucks or vans to deliver the final product are not. A showroom
staffed with full-time sales personnel is outside the scope of a
manufacturing facility.
(r) The Obligor expects to cause the Project to be utilized for
manufacturing activities for the term the Bonds will be outstanding.
(s) Except as is permitted by Code Section 149(b), the Bonds are
not federally guaranteed within these provisions; specifically the payment
of principal or interest with respect to the Bonds is not guaranteed in
whole or in part by the United States or any agency or instrumentality
thereof; the Bonds are not issued as part of an issue a significant
portion of the proceeds of which is to be used in making loans the payment
of principal or interest with respect to which is to be guaranteed in
whole or in part by the United States or any agency or instrumentality
thereof, or invested directly or indirectly in federally insured deposits
or accounts; and the payment of principal or interest on the Bonds is not
otherwise indirectly guaranteed in whole or in part by the United States
or an agency or instrumentality thereof.
(t) The sum of the authorized face amount of the Bonds allocable to
each test-period beneficiary (as defined in Code Section 144(a)(10)) plus
the respective aggregate face amount of all tax-exempt facility related
bonds presently outstanding (not including any obligations which are to be
redeemed from the proceeds of the Bonds) which are allocable to each
test-period beneficiary does not exceed $40,000,000. The Obligor will not
sell, lease or enter any other arrangement having the effect of causing
another person to become a beneficiary of the Bond financed facility the
test-period which would have the effect of making interest on the Bonds
includible in the gross income for Federal income tax purposes of the
holder thereof.
(u) No more than 2% of the "issue price" of the Bonds will be used
for any costs of insurance of the Bonds.
(v) The weighted average maturity of the Bonds does not exceed 120%
of the weighted average reasonably expected economic life of the Project
financed with the net proceeds of the Bonds pursuant to Code Section
147(b).
(w) No more than 25% of the net proceeds of the Bonds will be used
to provide a facility the primary purpose of which is one of the following:
retail food and beverage service, automobile sales or service, or the
provision of recreation or entertainment pursuant to Code Section
144(a)(8)(A).
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<PAGE> 12
(x) No portion of the proceeds of the Bonds will be used to provide
any of the following: any private or commercial golf course, country club,
massage parlor, tennis club, skating facility (including roller skating,
skateboard, and ice skating), racquet sports facility (including any
handball or racquetball court), hot tub facility, suntan facility, or
racetrack pursuant to Code Section 144(a)(8)(B).
(y) There are no "private activity bonds" as defined in Section 103
of the Code, either (i) outstanding on the Effective Date, the proceeds of
which have been or shall be used with respect to any facility located in
the Municipality of which the Obligor or a related person to the Obligor is
a principal user or (ii) delivered or to be delivered within 30 days of the
Effective Date, which are or have been marketed pursuant to a common plan
of marketing with the Bonds, with respect to any facility of which the
Obligor or a related person to the Obligor is a principal user.
(z) The face amount of the Bonds, plus the aggregate amount of
capital expenditures (excluding capital expenditures paid for with proceeds
of the Bonds) by the Obligor, any related person thereto, any principal
user of the Project, and any person related thereto (all within the meaning
ascribed in Code Section 144(a)(4)) in the Municipality and areas
contiguous thereto or attributed to the Municipality beginning three years
before the Effective Date and ending three years after the Effective Date
do not and will not exceed $10,000,000. In addition, the Obligor will not
violate any other provisions of the Code relating to the foregoing.
(aa) No expenditures for the Project were made prior to 60 days
before the Issuer adopted its official intent resolution for the Project on
the Inducement Date.
(bb) The Project has not been "placed in service" more than 18 months
prior to the date of issuance of the Bonds and no expenditure to be
reimbursed with proceeds of the Bonds was made more than three years prior
to the date of issuance of the Bonds.
(cc) Other than the Bonds there are no other tax exempt obligations
issued for the benefit of the Obligor or any "related person" which were or
are to be sold (a) within 15 days of the date of issuance of the Bonds, (b)
pursuant to the same plan of financing as the Bonds, and (c) payable from
the same source of funds as the Bonds.
(dd) All representations and warranties of the Obligor set forth in
the Non-Arbitrage and Tax Compliance Certificate of the Obligor dated the
Effective Date (including exhibits thereto) are true and correct as of
that date.
Section 1.2 Additional Covenants. The Obligor hereby convenants that
unless notified otherwise by Bond Counsel, the Obligor will comply with the
following:
(a) Any proceeds received upon the sale of any of the property which
is included in the Project (i) will be invested at a yield not in excess of
the yield on the
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<PAGE> 13
Bonds and used for the purpose of redeeming the Bonds at the first
subsequent call date, or (ii) will be used for the purpose of acquiring
property performing the same function as the disposed Project property.
(b) If part or all of the Project wears out or becomes obsolete so
that it is no longer functional to the Obligor and the Obligor deems it
appropriate to dispose of such portion of the Project and, only if, the
Obligor or any related party thereto receives no economic benefit from the
disposal thereof, then the Obligor may dispose of such property other than
as provided in (a) above.
Section 1.3 Issuer Findings and Representations.
(a) The Issuer has found that the Project and the financing thereof
through issuance of the Bonds will promote the public purposes of the Act and
the public welfare by encouraging and assisting the location, purchase,
construction, reconstruction, modernization, improvement, maintenance, repair,
furnishing, equipping and expansion by industrial and commercial enterprises of
their facilities within the State and the alleviation and prevention of
conditions of unemployment and be otherwise strengthening the economy of the
State and its municipalities.
(b) Based upon the advice of Bond Counsel, the Issuer has the necessary
power under the Act, and has duly taken all action on its part required to
authorize, execute and deliver the Agreement and to issue the Bonds. The
execution and performance by the Issuer of its obligations under this Agreement
will not violate or conflict with any instrument by which the Issuer or its
properties are bound.
(c) All of the proceedings approving the Agreement and the Indenture
relating to the Bonds were conducted by the Issuer at meetings which complied
with Act 267, Michigan Public Acts, 1976, as amended.
(d) Any member of the Board of Directors of the Issuer who is directly or
indirectly a party to or in any manner whatsoever interested in the Agreement,
the Indenture, the Bonds or the proceedings related thereto abstained from
participating in and voting in any proceedings relating to issuance of the
Bonds.
Section 1.4 Additional Bonds. At the request of the Obligor the Issuer
may, but shall not be required to, authorize the issuance of the Additional
Bonds in accordance with Section 112 of the Indenture. Additional Bonds shall
not be issued without the prior written consent of the Bank. The terms of any
Additional Bonds shall be approved in writing by the Obligor. Additional Bonds
may be issued only to finance any one or more of the following: (i) the costs
of making Improvements to the Project; (ii) the refunding of all or any part of
the Bonds; and (iii) the Issuance Costs relating to the Additional Bonds and
other costs reasonably related to the financing as shall be agreed upon by the
Obligor and the Issuer. Any Improvements to the Project acquired with the
proceeds of the Additional Bonds shall become a part of the Project
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and shall be included under the Agreement. Refusal for any reason by the
Issuer to issue Additional Bonds shall not release the Obligor from any
provisions of the Agreement.
ARTICLE II
THE BONDS AND THE PROCEEDS THEREOF
Section 2.1 The Bonds. The Issuer has authorized the issuance and sale
of the Bonds. Upon issuance and delivery, the proceeds of the sale of the
Bonds derived by the Issuer shall be deposited with the Trustee as follows:
(a) in the Bond Fund, a sum equal to the accrued interest, if any, on the Bonds
and (b) in the Project Fund the balance of the proceeds of the Bonds. The
obligations of the Issuer and the Obligor under the Agreement are expressly
conditioned upon delivery of the Bonds and receipt of the proceeds thereof.
Section 2.2 Issuer Action on Redemption. The Issuer shall, at the
request of the Obligor in the case of an optional redemption or at the request
of the Trustee in the case of a mandatory redemption on expiration of the
Credit Facility, a mandatory redemption on Determination of Taxability or
mandatory redemption from Surplus Bond Proceeds, forthwith take all steps as
may be necessary under the Indenture to effect the earliest practicable
redemption, as provided under the Indenture, of any or all of the Bonds or
portions thereof as may be specified by the Obligor or Trustee, as the case
may be.
In the event of an optional redemption, mandatory redemption on
Determination of Taxability or mandatory redemption on expiration of the Credit
Facility, unless such redemption is effected in connection with a refunding,
the Obligor will pay or cause to be paid pursuant to a draw on the Credit
Facility an amount equal to the applicable redemption price as a prepayment of
the principal amount of the Loan corresponding to such Bonds or portions
thereof, together with premium, if any, and interest accrued to the redemption
date.
In the case of an Extraordinary Optional Redemption, the Obligor's
direction to the Issuer to redeem shall be given, if at all, within six months
following the occurrence of the event giving rise to such redemption.
In the event the Obligor receives notice under the provisions in the
Bond Form Appendix entitled Mandatory Redemption on Determination of Taxability
that a proceeding has been instituted which could lead to a determination that
interest on the Bonds is includable in gross income for federal income tax
purposes and the resultant Mandatory Redemption on Determination of Taxability,
the Obligor shall promptly notify the Trustee, the Bank and the Issuer of
such proceeding.
Section 2.3 Investment of Bond Fund and Project Fund; Non-Arbitrage
Covenant. Any moneys held as part of the Bond Fund or Project Fund shall be
invested, reinvested or applied by the Trustee in accordance with and subject
to the conditions of Article VII of the Indenture.
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The Obligor and the Issuer shall make no use of the proceeds of the Bonds, or
any funds which may be deemed to be proceeds of the Bonds pursuant to Section
148 of the Code and the applicable regulations thereunder, which, if such use
had been reasonably expected on the date of issuance of the Bonds, would have
caused the Bonds to be "arbitrage bonds" within the meaning of such Section and
such regulations, and the Obligor shall comply with the requirements of such
Section and such regulations throughout the term of the Bonds as provided by
and required in the Non-Arbitrage and Tax Compliance Certificate, the terms of
which are incorporated herein and made a part hereof by this reference. The
Obligor shall comply, for itself and on behalf of the Issuer, with all
requirements of the Code. In particular, the Obligor will compute rebate due,
if any, under Section 148 of the Code, pay any rebate due under the Code and
retain records as required by the Code.
Section 2.4 Credit Facility. The Obligor shall cause the Credit Facility to
be delivered to the Trustee on or before the Effective Date. The Credit Facility
shall (a) be in an amount equal to the aggregate principal amount of the Bonds
outstanding from time to time plus 60 days' interest thereon calculated at the
Maximum Rate; (b) provide for payment to the extent of the amount specified in
the preceding clause (a) in immediately available funds to the Trustee (upon
receipt of the Trustee's request for payment of the principal of, premium, if
any, and/or interest on the Bonds then outstanding on any Bond Payment Date,
Mandatory Repurchase Date, Purchase Date or redemption date pursuant to the
Indenture); and (c) provide an expiration date no earlier than the earliest of
(i) the payment in full by the Bank of funds authorized to be drawn thereunder
so that there are no Outstanding Bonds, (ii) the honoring by the Bank of a draft
on the Credit Facility for all Outstanding Bonds, (iii) a stated expiration
date, (iv) the day after any Fixed Rate Conversion Date if the Obligor so
elects, or (v) the sixteenth day following an Event of Default pursuant to
Section 801(d) of the Indenture. The Obligor will cause any extension of the
Credit Facility to be deposited by the Bank with the Trustee on or before the
extension date. Each extension of the Credit Facility shall be satisfactory in
form and substance to the Trustee. On each extension date the Obligor will
deliver the items required by Section 210 of the Indenture. The Obligor shall
have the right to provide a Substitute Credit Facility in accordance with
Section 210 of the Indenture at least 60 days prior to the last Interest Payment
Date prior to the expiration of the Credit Facility or Substitute Credit
Facility then in effect.
Section 2.5 Tender. The Issuer agrees to cause the Trustee in the Indenture
to act as tender agent for the Obligor in connection with certain tenders of
Variable Rate Bonds and as tender agent for the Bank in connection with certain
other tenders of Variable Rate Bonds, all as provided in Article II of the
Indenture.
Section 2.6 Remarketing Agent. The Obligor hereby approves of the
appointment of McDonald & Company Securities, Inc., as the initial Remarketing
Agent and further covenants and agrees that without prior written notice to the
Trustee, and without approval by the Bank which approval shall not be
unreasonably withheld, it will not change the Remarketing Agent.
Section 2.7 Right to Exercise Conversion Option. Subject to the ability of
the Obligor to satisfy certain conditions described in the Indenture, the right
is reserved to the Obligor, upon
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receipt of prior approval from the Bank, to exercise the conversion option in
accordance with the Indenture.
Section 2.8 Rebate Account. The Obligor covenants and agrees that it will
maintain on its books and records a "Rebate Account" detailing, in writing,
compliance with Section 2.3 hereof. Any moneys deposited into the Rebate Account
shall be disbursed in accordance with Section 2.3 hereof.
ARTICLE III
THE LOAN AND LOAN REPAYMENTS
Section 3.1 The Loan. Concurrently with the delivery of the Bonds, the
Issuer will, upon the terms and conditions of the Agreement, lend to the
Obligor, by deposit of the proceeds thereof with the Trustee in the Project
Fund, an amount equal to the principal amount of the Bonds for application to
Project Costs. The accrued interest, if any, received by the Issuer upon the
sale of the Bonds shall be deposited into the Bond Fund and shall be applied to
the first interest due on such Bonds.
Section 3.2 Loan Repayments; Credit Facility. Except as hereinafter
provided, the Obligor shall pay or cause to be paid, in immediately available
funds, to the Trustee, for the account of the Issuer, loan repayments
corresponding to the principal, premium, if any, and interest payments on the
Bonds (the "Loan Repayments"); in lieu of such payments, the Trustee shall draw
on the Credit Facility, pursuant to Section 209 of the Indenture, amounts equal
to such Loan Repayments. So long as the Credit Facility is in effect, the Loan
Repayments representing principal of, premium, if any, and interest payments on
the Bonds shall be made by deposits of the proceeds of drawings under the Credit
Facility and the Obligor shall reimburse the Bank in accordance with the
Reimbursement Agreement. In addition, the Obligor shall pay or cause to be paid
Loan Repayments in installments equal to (a) the principal of the Bonds maturing
or subject to redemption on any Bond Payment Date, (b) the interest on the Bonds
at the interest rate then in effect, due on each Bond Payment Date and (c) any
premium required to be paid on the Bonds.
Payments of the principal of, premium, if any, or interest on the Bonds
shall be made solely from the Security, including draws under the Credit
Facility (except with respect to premium, unless the Credit Facility has been
amended to cover premium on the Bonds). The Obligor's obligation to make Loan
Repayments is and shall remain unconditional regardless of the sufficiency and
availability of Available Moneys to make such payments.
With the prior written approval of the Bank and written notice to the
Issuer and the Trustee, the Obligor may prepay in whole or in part amounts due
on account of the Loan Repayments or for the redemption of Bonds prior to
maturity or purchase, but such prepayment shall not in any way alter or suspend
any of the obligations of the Obligor under the terms of
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the Agreement and the Obligor shall continue to perform and be responsible for
the performance of all other terms and provisions. Such notice shall be given
at least 10 Business Days before the Trustee is to give notice of any related
redemption pursuant to Article IV of the Indenture. The Issuer agrees that the
Trustee may accept such prepayments when the same are tendered by the Obligor
and that such prepayments may be directed by the Obligor to be used for credit
on Loan Repayments or for the redemption or purchase of Bonds in the manner and
to the extent provided herein and in the Indenture.
In the event the Obligor prepays Loan Repayments in the following manner
and in accordance with the provisions of the Indenture: (a) in Available Moneys,
after delivering the No Act of Bankruptcy Certificate attached hereto as
Exhibit D to the Trustee or (b) by causing the Trustee to draw on the Credit
Facility, for deposit in the Bond Fund in an amount of money (or in any
other manner satisfactory to the Trustee) which, together with amounts then on
deposit in the Bond Fund and available therefor, shall be sufficient (i) to
retire and redeem at the earliest date(s) permitted under the Indenture all of
the then outstanding Bonds and (ii) to pay any interest accruing on the Bonds
to maturity or redemption, and shall also make provision satisfactory to the
Issuer and the Trustee for all fees, costs and expenses specified in Article V
hereof accruing through the final payment of the Bonds, then the Loan shall be
deemed fully repaid and canceled, and the lien of the Indenture shall be
discharged, except for the provisions providing for payment of principal of,
premium, if any, and interest to the Bondholders.
ARTICLE IV
INSTALLATION OF THE PROJECT
Section 4.1 Project Fund Disbursements. There is established with the
Trustee under the Indenture the Project Fund, the moneys in which, subject to
the terms hereof and of the Indenture, and subject to the security interest
therein granted by the Obligor to the Issuer, shall be the property of the
Obligor. Unless an Event of Default has occurred and is continuing which the
Trustee is required to take notice of or is deemed to have notice of pursuant to
Section 901(h) of the Indenture, the Trustee, as authorized by the Bank pursuant
to the Indenture, shall disburse to or for the benefit of the Obligor out of the
Project Fund the lesser of (a) the Project Costs, or (b) the proceeds of the
Bonds deposited in the Project Fund and investment income in the Project Fund.
Such disbursements shall be made from time to time to pay Project Costs, so long
as there are moneys in the Project Fund, upon presentation of Requisition
Certificate(s) executed by the Obligor and approved for payment by the Bank. The
Trustee may also disburse moneys out of the Project Fund to or for the benefit
of the Issuer upon the Obligor's failure to pay the fees, costs and expenses of
the Trustee or Issuance Costs as required by Section 5.2 hereof upon
presentation of a Requisition Certificate executed by the Issuer for such
purpose.
Disbursements from the Project Fund shall be made no more often than
monthly upon the Trustee's receipt of an executed and approved Requisition
Certificate.
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The Obligor shall also deliver or cause to be delivered to the Trustee with
a Requisition Certificate such documents and certificates as may be required by
the Bank, it being understood that the Trustee shall have no duty to review such
documents and certificates nor shall it be required to approve same.
Upon the occurrence of an Event of Default under the Indenture, any moneys
in the Project Fund shall be transferred by the Trustee to the Bond Fund.
Upon request and with reasonable notice, the Obligor shall permit the
Trustee or the Issuer or its authorized agents to audit the records of the
Obligor relating to Project Costs during normal business hours.
Section 4.2 Obligation of the Obligor to Complete the Project. The Obligor
shall proceed with reasonable dispatch to complete the Project substantially in
accordance with the Plans. The Obligor may revise the Plans, subject to the
General Limitations and under the conditions contained in this section.
The Issuer makes no warranty, either express or implied, and offers no
assurance as to the condition of the Project or that the Project is or will be
suitable for the Obligor's purposes, or that the proceeds derived from the sale
of the Bonds will be sufficient to pay all Project Costs, and the Issuer shall
not be liable to the Obligor if for any reason the Project is not completed. In
the event moneys in the Project Fund are insufficient to pay all Project Costs,
the Obligor will complete the Project and pay the Project Costs in excess of the
sum of moneys available in the Project Fund. By reason of the payment of any
such portion of the Project Costs, the Obligor shall not be entitled to any
reimbursement from the Issuer, the Trustee or the holders of the Bonds in
respect thereof or to any diminution or abatement in the Loan Repayments payable
under the Agreement.
Section 4.3 Completion Certificate. The Obligor shall as promptly as
practicable file with the Trustee, the Issuer and the Bank a certificate
substantially in the form of Exhibit C attached hereto when the Project is
complete. All moneys deposited in the Project Fund and not needed, as of the
Completion Date, to pay or reimburse Project Costs (which money shall be used
for such purposes if needed), shall, upon receipt of such certificate, and in
any event on the third anniversary hereof be deemed Surplus Bond Proceeds and
shall be immediately transferred to the Bond Fund to be applied by the Trustee
in the manner provided in Section 4.4 of this Agreement.
Section 4.4 Use of Surplus Bond Proceeds. All moneys transferred to the
Bond Fund pursuant to the provisions of Section 4.3, Section 6.1 and Article VII
hereof ("Surplus Bond Proceeds") shall be applied by the Trustee for redemption
of the Bonds pursuant to Mandatory Redemption from Surplus Bond Proceeds as
provided in the Bond Form Appendix to the Indenture or reimbursement of the Bank
for honoring a drawing under the Credit Facility for such purpose, or may be
used for any other purpose approved in writing by the Bank which is permitted by
the Act and which, in the opinion of Bond Counsel, will not affect the exclusion
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from gross income for federal income taxation purposes of interest on the
Bonds. Prior to such use, such Surplus Bond Proceeds shall not be invested at a
yield in excess of the yield on the Bonds, unless, in the opinion of Bond
Counsel, the investment of Surplus Bond Proceeds at a yield in excess of the
yield on the Bonds will not affect the exclusion from gross income for Federal
income tax purposes of the interest on the Bonds.
In no event shall Surplus Bond Proceeds so transferred to the Bond Fund
or the investment income thereon be used to pay interest on the Bonds.
ARTICLE V
OTHER PECUNIARY OBLIGATIONS OF THE OBLIGOR
Section 5.1 Taxes and Other Costs. The Obligor shall promptly pay, as
the same become due, all lawful taxes and governmental charges of any kind
whatsoever, including without limitation income, profits, receipts, business,
property and excise taxes, with respect to any estate, interest, documentation
or transfer in or of the Project, the Agreement, the Loan or any payments with
respect to the foregoing, the costs of all building and other permits to be
procured, and all utility and other charges and costs incurred in the operation,
maintenance, use, occupancy and upkeep of the Project. The Obligor shall
furnish the Issuer upon request proof of payment of any such taxes, charges or
costs. The Obligor may in good faith contest, and during such contest not pay,
any such taxes, charges and costs, as provided in the Reimbursement Agreement.
Section 5.2 Issuer Fees and Expenses. The Obligor shall pay all
Issuance Costs and other reasonable out-of-pocket costs and expenses of the
Issuer incidental to the performance of its obligations under the Agreement,
the Indenture and with respect to its authorization, sale and delivery of the
Bonds, or reasonably incurred by the Issuer in enforcing the provisions of the
Agreement or the Indenture.
Section 5.3 Fees and Expenses of the Trustee and Remarketing Agent.
The Obligor shall pay the reasonable fees, costs and expenses and advances of
the Trustee, and the Remarketing Agent under the Indenture for services
rendered in connection with the Bonds, the duties and services of such Trustee
being set out in the Indenture, and it shall pay the Trustee, in addition, all
reasonable out-of-pocket counsel fees, taxes and other fees, costs and expenses
reasonably incurred by the Trustee in performing its duties as Trustee and in
entering into the Indenture. All such payments shall be made as statements are
rendered and shall be made by the Obligor directly to the Trustee except to the
extent fees and expenses of the Trustee incurred in connection with the
issuance of the Bonds are paid from proceeds of sale of the Bonds.
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Section 5.4 Indemnification of the Issuer.
(a) The Issuer and its members, officers, agents, employees and any other
Person acting for or on behalf of the Issuer (hereinafter, the "Indemnified
Persons") shall not be liable to the Obligor for any reason. The Obligor shall
indemnify and hold the Issuer and the Indemnified Persons harmless from any
loss, expense (including reasonable counsel fees), or liability of any nature
due to any and all suits, actions, legal or administrative proceedings, or
claims arising or resulting from, or in any way connected with:
(i) the financing, installation, operation, use, or maintenance of
the Project,
(ii) any act, failure to act, or misrepresentation by any person,
firm, corporation or governmental agency, including the Issuer, in
connection with the issuance, sale, remarketing or delivery of the Bonds,
or
(iii) any act, failure to act, or misrepresentation by the Issuer in
connection with this Agreement or any other document involving the Issuer
in this matter.
If any suit, action or proceeding is brought against the Issuer or any
Indemnified Person, that action or proceeding shall be defended by counsel to
the Issuer or the Obligor, as the Issuer shall determine. If the defense is by
counsel to the Issuer which is the Attorney General of the State, or may in
some instances be private, retained counsel, the Obligor shall indemnify the
Issuer and Indemnified Persons for the reasonable cost of that defense
including reasonable counsel fees. If the Issuer determines that the Obligor
shall defend the Issuer or Indemnified Person, the Obligor shall immediately
assume the defense at its own cost. The Obligor shall not be liable for any
settlement of any proceedings made without its consent (which consent shall not
be unreasonably withheld).
(b) The Obligor shall also indemnify the Issuer for all reasonable costs
and expenses, including reasonable counsel fees, incurred in:
(i) enforcing any obligation of the Obligor under this Agreement or
any related agreement,
(ii) taking any action requested by the Obligor,
(iii) taking action required by this Agreement or any related
agreement, or
(iv) taking any action considered necessary by the Issuer and which
is authorized by this Agreement or any related agreement.
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(c) The obligations of the Obligor under this section shall survive any
assignment or termination of this Agreement.
(d) The Obligor shall not be obligated to indemnify the Issuer or any
Indemnified Person under subsection (a), if a court with competent jurisdiction
finds that the liability in question was caused by the willful misconduct or
sole gross negligence of the Issuer or the involved Indemnified Person(s),
unless the court determines that, despite the adjudication of liability but in
view of all circumstances of the case, the Issuer or the Indemnified Person(s)
is (are) fairly and reasonably entitled to indemnity for the expenses which the
court considers proper.
Section 5.5 Indemnification of the Trustee. The Obligor shall indemnify
and hold the Trustee harmless against any loss, liability or expense, including
reasonable attorneys' fees, or settlement costs incurred without breach of the
required standard of care set forth in the Indenture arising out of or in
connection with claims or actions taken under or pursuant to the Indenture,
including the costs and expenses of defense including counsel selected by the
Trustee against any such claim or action or liability. Notwithstanding anything
to the contrary in this Agreement, the Obligor expressly acknowledges and
agrees that the obligations and liabilities of the Obligor as set forth in this
Section 5.5 shall survive the resignation or removal of the Trustee.
Section 5.6 Insurance. The Obligor shall continuously insure against such
risks and in such amounts as are required under the Reimbursement Agreement.
ARTICLE VI
PROJECT MAINTENANCE
Section 6.1 Maintenance and Operation. The Obligor, at its expense, shall
maintain the Project in good condition, repair and working order, and shall
make or cause to be made from time to time all necessary repairs, renewals and
replacements, ordinary wear and tear and obsolescence excepted. Any machinery
and equipment comprising a portion of the Project and purchased with Bond
proceeds may not be removed from the site of the Project unless (i) other
machinery and equipment of equivalent or greater value and utility is
substituted therefor or (ii) the proceeds of the sale of such machinery and
equipment are used in accordance with Section 1.2(a) hereof subject to the
provision of Section 1.2(b) hereof; provided that the Obligor receives an
opinion of Bond Counsel that noncompliance with (i) or (ii) above will not
affect the exclusion of interest on the Bonds for federal income tax purposes
under the Code and the Act.
Section 6.2 Remodeling and Modifications. The Obligor may remodel or
modify the Project as it, in its discretion, may deem to be desirable for its
uses and purposes or that of its tenant; provided that such remodeling or
modifications shall not violate the General Limitations. The cost of such
remodeling, modifications or improvements shall be paid by the Obligor.
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ARTICLE VII
DAMAGE TO PROJECT AND CONDEMNATION
In the event (i) the Project is damaged or destroyed, or (ii) failure of
title to all or part of the Project occurs or title to or temporary use
of the Project is taken in condemnation or by the exercise of the power of
eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, the Obligor shall promptly give written
notice thereof to the Issuer, the Trustee and, if the Credit Facility is in
effect at the time, the Bank. As soon as practicable the Obligor shall elect
in writing to the Issuer, the Bank and the Trustee, and with the consent of the
Bank as required by the Reimbursement Agreement, whether to deposit insurance
or condemnation proceeds in the Project Fund or in the Bond Fund. If the
Obligor shall elect to deposit such proceeds in the Project Fund, it shall
proceed to restore the Project with reasonable dispatch, and such moneys shall
be disbursed in accordance with Section 4.1 of this Agreement. If the Obligor
shall elect to deposit such proceeds in the Surplus Bond Proceeds Account in
the Bond Fund, such proceeds shall be used to redeem the Bonds to the extent of
such proceeds in the manner provided in the Indenture for Mandatory Redemption
from Surplus Bond Proceeds. As long as any of the Bonds are outstanding,
absent an approving opinion of Bond Counsel, all such funds shall not be
invested at a yield in excess of the yield on the Bonds prior to its
expenditure.
ARTICLE VIII
ACTIONS AFFECTING OBLIGOR AND ISSUER
INTERESTS IN THE AGREEMENT AND THE PROJECT
Section 8.1 Assignment of the Agreement. The Issuer shall assign its
rights under and interest in the Agreement (except Reserved Rights) and
in all moneys deposited in the various Funds under the Agreement and the
Indenture to the Trustee pursuant to the Indenture as security for payment of
the principal of and interest on the Bonds, and such assignment shall entitle
the Trustee to enforce any obligation of the Obligor under the Agreement. The
Obligor hereby consents to any and all assignments described in the preceding
sentence or set forth in the Indenture. The Issuer shall not amend the
Indenture without the written consent of the Obligor, the Trustee and the Bank,
as provided in the Indenture.
Pursuant to the Act, the assignment of the Issuer's rights and interests
pursuant to this Section 8.1 shall be valid and binding from the time this
assignment is made. The money or property pledged and thereafter received by
the Issuer immediately shall be subject to a lien in favor of the Trustee
without a physical delivery, filing, or any further act. The lien of the
Trustee shall be valid or binding as against parties having claims of any kind
in tort, contract, or otherwise, against the Issuer irrespective of whether the
parties have notice. Neither this
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Agreement, the Indenture, nor any other instrument by which the assignment is
made need be filed or recorded.
Section 8.2 Obligor's Interest in the Agreement. The Obligor shall not
assign or transfer its rights or obligations under the Agreement, except as
permitted in the Agreement or consented to by the Bank and the Trustee and as
long as the General Limitations are complied with.
Section 8.3 Liens by the Obligor. The Obligor shall not create or permit
the creation of any lien, encumbrance or charge upon the Project except
Permitted Encumbrances.
Section 8.4 Security Interest in the Project Fund. To better secure its
obligations hereunder, including the obligation to pay Loan Repayments, as
and when they are due, the Obligor hereby grants a security interest in the
moneys at any time held in the Project Fund, and any proceeds thereof, to the
Issuer and the Bank (to the extent the Trustee is directed to disburse such
moneys to the Bank pursuant to the Indenture) to be perfected by possession of
such moneys in the Project Fund by the Trustee and held therein for the benefit
of the Bondholders and Bank as provided in the Indenture.
ARTICLE IX
FURTHER OBLIGATIONS OF THE OBLIGOR
Section 9.1 Compliance with Laws. The Obligor shall, throughout the term
of the Agreement and at no expense to the Issuer, promptly comply or cause
compliance with all legal requirements of duly constituted public authorities
which are applicable to the Project or to the repair and alteration thereof, or
to the use or manner of use of the Project. Notwithstanding the foregoing, but
subject to the General Limitations, the Obligor may exercise its rights to
contest the legality of any such legal requirement as applied to the Project
provided that in the opinion of Counsel such contest shall not in any way
materially adversely affect or impair the obligations of the Obligor under the
Agreement or the exclusion of interest on the Bonds from gross income for
Federal income tax purposes.
Section 9.2 Maintenance of Assets; Ownership of Project.
(a) The Obligor, unless and until the Project shall be sold and
transferred to a new owner under paragraph (b) or (c) of this Section 9.2, will
do or cause to be done all things necessary to perform its obligations under
this Agreement and the other documents contemplated hereby and by the
Reimbursement Agreement. Except as provided in paragraph (b), the Obligor
shall not cause or permit the Project or any interest therein to be sold,
assigned or transferred.
(b) So long as no Event of Default shall have occurred and be continuing
hereunder, the Project may be conveyed and transferred and this Agreement
assigned in whole or in part to a new owner which assignment must be in
compliance with the General Limitations and
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(i) without the consent of the Bank, the Trustee or any Bondholder in
accordance with the Reimbursement Agreement, so long as the new owner is a
partnership or other legal entity owned or controlled by the shareholders of
the Obligor, or (ii) with respect to an unrelated new owner, in whole with the
consent of the Bank, and without the consent of the Trustee or any Bondholder;
provided that in each case (I) the new owner shall be a partnership or other
legal entity duly organized and validly existing in good standing under the
laws of any state and is qualified to do business in Michigan and shall assume
in writing the obligations of the Obligor under this Agreement and the other
documents contemplated hereby and (II) the Obligor shall, at least 30 days
prior to any such assignment or transfer, provide the Issuer and the Trustee
with written notice of such transfer accompanied by a copy of the assumption
agreement and an opinion of nationally recognized bond counsel that such
transfer will not cause or result in interest on the Bonds to be included in
gross income for federal income tax purposes.
(c) The Obligor shall at all times operate or cause to be operated the
Project in strict compliance with the terms of this Agreement so that it
fulfills the public purposes of the Act.
Section 9.3 General Limitations with Respect to Non-Impairment of
Tax-Exempt Status of the Bonds. Notwithstanding any other provisions of
the Agreement or any rights of the Obligor under the Agreement, the Obligor
shall not take or permit to be taken by its agents or assigns any action which,
or fail to take any reasonable action the omission of which, would
(i) impair the exclusion of interest on the Bonds from gross income
for Federal income tax purposes; or
(ii) affect the validity of the Bonds under the Act; or
(iii) materially alter the scope, character, value, operation or
utility of the Project.
The Issuer and the Trustee, upon notification of action to be taken by the
Obligor or prior to taking any action requested by the Obligor under the
Agreement, which action in the reasonable judgment of the Trustee or the Issuer
violates the foregoing General Limitations, may require, at the expense of the
Obligor, an opinion of Counsel or an Engineer or both, as may be appropriate,
in writing with respect to compliance with the foregoing General Limitations.
Section 9.4 Access to Project and Records. Subject to reasonable security
and safety regulations and reasonable requirements as to notice, the Trustee,
the Bank and their duly authorized agents shall have the right at all
reasonable times to enter and inspect the Project. The Trustee and the Bank
shall also have the right to inspect the books and records of the Obligor
pertaining to the Project and the Security (as defined in the Indenture),
subject to reasonable requirements as to notice and during regular business
hours.
Section 9.5 Requirements of Tenants. The Obligor shall use its best
efforts to require each of its tenants occupying space in the Project within
three years from the Completion Date
20
<PAGE> 25
as provisions of its lease or by means of a written certificate (a) to warrant
and represent that its occupancy of the Project shall not result in the
transfer of jobs employing more than 20 full-time employees previously located
within another municipality of the State, without first complying with the Act,
and (b) to warrant and represent that it will not take or permit to be taken by
its agents or assigns any action which, or fail to take any action the omission
of which would impair the exclusion of interest on the Bonds from gross income
for Federal income tax purposes, including a violation of the capital
expenditure limitation of Section 144(a) of the Code and (c) to warrant and
represent that it will for a period of three years after the date of original
issuance of the Bonds in the case of any tenant who occupies a sufficient
portion of the Project to be a principal user of the Project under Section
144(a) of the Code, require each tenant to file with the Obligor an annual
report of its applicable capital expenditures, (d) to attach to the lease or
certificate, a certificate of applicable capital expenditures within the
Municipality for the period of three years prior to the issuance of the Bonds
and any contemplated capital expenditures for a period of three years after the
issuance of the Bonds, and (e) to attach to the lease or certificate a Prior
Issue Certificate in the form attached to the Non-Arbitrage and Tax Compliance
Certificate as Schedule C-1.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default. The term "Event of Default" shall mean,
whenever used in the Agreement, any one or more of the following events:
(a) Failure by the Obligor to pay any Loan Repayments in the amounts
and at the times provided in the Agreement, but if and only if the Bank
has, after demand under the Credit Facility, failed to pay the amount of
such Loan Repayment as and when due;
(b) Failure by the Obligor to observe and perform any other
obligations in this Agreement on its part to be observed or performed for a
period of 30 days after written notice specifying such failure and
requesting that it be remedied, given to the Obligor by the Issuer, the
Bank or the Trustee; provided, however, that if such Default shall be such
that it cannot be corrected within such period, it shall not constitute an
Event of Default if the Default is correctable without material adverse
effect on the Bonds and if corrective action is instituted by the Obligor
within such period and is diligently pursued until the Default is
corrected.
(c) Any representation or warranty made by the Obligor in any document
delivered by the Obligor to the initial purchasers, the Trustee, the Bank
or the Issuer in connection with the issuance, sale and delivery of the
Bonds is untrue in any material adverse respect.
21
<PAGE> 26
(d) The occurrence of an Event of Default under the Indenture.
(e) The occurrence of an Event of Default under the Reimbursement
Agreement.
The Events of Default described in subsection (b) above are also subject
to the following limitation: If the Obligor by reason of force majeure is
unable to carry out or observe the obligations described in such subsection
(b), the Obligor shall not be deemed to be in breach or violation of
this Agreement or in default during the continuance of such inability. The
term "force majeure" as used herein shall include, without limitation, acts of
public enemies; insurrections; riots; epidemics; landslides; lightning;
earthquake; fire; hurricanes; tornadoes; storms; floods; washouts; droughts;
arrests; civil disturbances; labor disturbances or strikes; explosions;
breakage or accident to machinery, transmission pipes or canals; partial or
entire failure of utilities; or any other cause or event other than financial
inability not reasonably within the control of the Obligor. The Obligor
agrees, however, insofar as possible to remedy with all reasonable dispatch the
causes preventing it from carrying out its agreement; provided, however, that
the settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the exercise of the reasonable discretion of the Obligor.
Section 10.2 Remedies upon Event of Default. Whenever any Event of Default
shall have occurred and be continuing, the Issuer, with the consent of the
Trustee, or the Trustee acting alone, shall have and may exercise any one or
more of the following remedial powers:
(a) If the principal of and interest accrued on the Bonds shall have
been declared immediately due and payable pursuant to the Indenture, to
declare all Loan Repayments payable under Section 3.2 for the remainder
of the term of the Agreement to be immediately due and payable, whereupon
the same shall become immediately due and payable; provided, however, that
if the Trustee shall annul any such declaration pursuant to the Indenture,
the declaration provided for in this clause (a) shall be deemed annulled;
(b) If the principal of and interest accrued on the Bonds shall have
been declared immediately due and payable pursuant to the Indenture,
to institute any actions or proceedings at law or in equity for the
collection of Loan Repayments or other sums due and unpaid under the
Agreement, to prosecute any such action or proceeding to judgment or final
decree, and to enforce any such judgment or final decree and collect in the
manner provided by law any moneys adjudged or decreed to be payable;
(c) In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Obligor under the Federal bankruptcy laws
or any other applicable law, or in case a receiver or trustee shall have
been appointed for the property of the Obligor, to file and prove a claim
or claims for the whole amount owing under the Agreement plus interest
owing and unpaid in respect thereof and, in case of any judicial
22
<PAGE> 27
proceedings, 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
allowed in such judicial proceedings relative to the Obligor, its
creditors, or its property, and to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses.
In case the Trustee or the Issuer shall have proceeded to exercise or
enforce any right or remedy under the Agreement and such proceeding shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely, then and in every such case, the Obligor, the Issuer and the Trustee
shall be restored to its respective rights and positions hereunder and all
rights and remedies of the Obligor, the Issuer and the Trustee shall continue
as though no such proceeding had been taken, but subject to the limitations of
any such adverse determination.
Any amounts collected pursuant to action taken under this Section shall be
paid into the Bond Fund and applied in accordance with the Indenture, except
amounts collected pursuant to Article V for the benefit of the Issuer or the
Issuer's Agents, which shall be paid to and retained by the Issuer.
Section 10.3 Payment of Attorneys' Fees and Other Expenses. In the event
the Obligor should default under any of the provisions of the Agreement and the
Issuer and/or the Trustee should employ attorneys or incur other expenses for
the collection of the Loan or for the enforcement of performance or observance
of any obligation of the Obligor in the Agreement or any other document related
to the issuance of and security for the Bonds, the Obligor shall on demand
therefor pay to the Issuer or the Trustee, or both, as the case may be, the
reasonable fees of such attorneys and such other reasonable expenses so
incurred.
Section 10.4 Waivers and Limitation on Waivers. By reason of the assignment
of the Issuer's rights and interest in the Agreement to the Trustee, the
Trustee shall have the power with the consent of the Bank to, and shall if
requested by the Bank, waive or release the Obligor from any Event of Default
or the performance or observance of any obligation or condition of the Obligor
under the Agreement, provided such waiver or release is not prohibited by the
Indenture and the Trustee and the Issuer receive an opinion of Counsel that
such action will not impose any pecuniary obligation or liability or adverse
consequence upon the Issuer or the Trustee and the Issuer and the Trustee shall
have each been provided such indemnification from the Obligor as the Issuer or
the Trustee shall deem necessary, and provided that, with respect to a waiver
of an Event of Default such waiver shall be limited to the particular Event of
Default so waived and shall not be deemed to waive any other Event of Default
hereunder nor a waiver of a similar Event of Default on a future occasion.
No delay or omission to exercise any right occurring upon any Event of
Default shall impair any such right or shall be construed to be a waiver
thereof, but any such right may be exercised from time to time and as often as
may be deemed expedient. In order to exercise any remedy reserved to the
Issuer or the Trustee in this Agreement, it shall not be necessary to give
23
<PAGE> 28
any notice other than such notice as may be herein expressly required.
Notwithstanding anything to the contrary contained herein, the Obligor does not
waive any statute of limitations under applicable law.
ARTICLE XI
OBLIGATIONS OF OBLIGOR UNCONDITIONAL
Section 11.1 Obligor Obligations. The obligation of the Obligor to make
Loan Repayments and the payments required by Article V hereof and to perform its
other covenants hereunder shall be absolute and unconditional and shall not be
subject to any diminution by right of set-off, counterclaim, recoupment or
otherwise. During the term hereof, the Obligor (i) shall not suspend or
discontinue its Loan Repayments, (ii) shall perform and observe all of its other
obligations contained herein and (iii) except as explicitly permitted herein,
shall not terminate the Agreement for any cause including, without limiting the
generality of the foregoing, defect in title to the Project, failure to complete
the Project, any acts or circumstances that may constitute failure of
consideration, eviction or constructive eviction, destruction or damage to or
condemnation of the Project, commercial frustration of purpose, any change in
the tax or other law by the United States of America or the State or any
political subdivision of either, or any failure of the Issuer to perform and
observe any obligation or condition arising out of or connected with the
Agreement. This shall not be construed to release the Issuer from the
performance of any of its obligations under the Agreement; and in the event the
Issuer shall fail to perform any such obligation, the Obligor may institute such
action against the Issuer as the Obligor may deem necessary to compel
performance; provided, however, that no such action shall violate this Section
or diminish Loan Repayments. The Obligor may at its own cost and expense and in
its own name or in the name of the Issuer, prosecute or defend any action or
proceedings or take any other action involving third persons which the Obligor
deems reasonably necessary in order to secure or protect its rights under the
Agreement, and in such event the Issuer shall cooperate fully with the Obligor.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Amounts Remaining in Funds. Any amounts remaining in the Bond
Fund, the Purchase Fund or the Project Fund upon expiration or sooner
termination of the Agreement as herein provided, after payment in full of the
Bonds (or provision therefor) in accordance with the Indenture, and all other
costs and expenses of the Obligor specified under Article V, and all amounts
owing the Issuer, the Trustee, the Bank, and the Remarketing Agent under the
Agreement and the Indenture, shall be paid to the Obligor.
24
<PAGE> 29
Section 12.2 Obligor Bound by Indenture. The Indenture has been submitted
to the Obligor for examination, and the Obligor, by execution of this Agreement,
acknowledges and agrees that it has participated in the drafting of the
Indenture and agrees that it has approved the Indenture and agrees that it is
bound by and shall have the rights set forth by the terms and conditions thereof
and covenants and agrees to perform all obligations required of the Obligor
pursuant to the terms of the Indenture.
Section 12.3 Consents Under the Agreement. All consents permitted or
required to be given under the Agreement shall be reasonable and, unless
otherwise expressly provided, shall not be unreasonably withheld.
Section 12.4 Notices. AR notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given on the date
shown as delivered when mailed by registered or certified mail, postage prepaid,
return receipt requested, addressed to the Issuer, the Obligor, the Bank, or the
Trustee, as the case may be, at the Issuer's Address, the Company's Address, the
Bank's Address, or the Trustee's Address, respectively, or hand delivered to the
above at its respective addresses. A duplicate copy of each such notice,
certificate or other communication given hereunder to the Issuer, the Obligor,
the Bank, or the Trustee shall also be given to the others.
The Issuer, the Obligor, the Bank, and the Trustee may by written notice to
the other parties, designate any further or different addresses to which
subsequent notices, certificates or communications shall be sent.
Section 12.5 Amendment. The Agreement may be amended only as provided in
the Indenture, and no amendment to the Agreement shall be binding upon either
party hereto until such amendment is reduced to writing and executed by the
parties hereto.
Section 12.6 Binding Effect. The Agreement shall be binding upon the
parties hereto and upon its respective successors and assigns, and the words
"Issuer" and "Obligor" shall include the parties hereto and its respective
successors and assigns and include any gender, singular and plural, any
individuals, partnerships or corporations.
Section 12.7 Severability. If any clause, provision or section of the
Agreement be ruled invalid or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision or
section shall not affect any of the remaining clauses, provisions or sections.
Section 12.8 Execution in Counterparts. The Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
25
<PAGE> 30
Section 12.9 Captions and Table of Contents. The captions or headings and
the Table of Contents in the Agreement are for convenience only and in no way
define, limit or describe the scope or intent of any provisions of the
Agreement.
Section 12.10 Applicable Law. The Agreement shall be governed in all
respects, whether as to validity, construction, performance or otherwise, by the
laws of the State.
26
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be duly
executed as of the day and year first above written.
MICHIGAN STRATEGIC FUND
By ???
------------------------------
Its Authorized Officer
MOLMEC, INC.
By ???
-------------------------------
Its Treasurer
---------------------
27
<PAGE> 32
EXHIBIT A
The Project, located on the Site described below, consists of the
acquisition, construction, and equipping of a manufacturing facility and the
purchase of machinery and equipment located in the Township of Hartland, County
of Livingston, Michigan for use by Molmec, Inc., in the production of prototype
molds.
A legal description of the Site, being the real property on which the
Project is located:
[SEE ATTACHED SCHEDULE "A"]
A-1
<PAGE> 33
Exhibit "A"
PARCEL NO. D
Part of the Northwest 1/4 of Section 28, T3N-R6E, Hartland Township, Livingston
County, Michigan, more particularly described as follows: Commencing at the
North 1/4 corner of said Section 28, thence along the North line of said Section
28, as monumented, N 86 degrees 42 feet 08 inches W, 1326.61 feet; thence along
the West line of the East 1/2 of the Northwest 1/4 of said Section 28 as
monumented, S 02 degrees 01 feet 21 inches W, 2111.56 feet; thence 587 degrees
14 feet 18 inches E, 420.65 feet; thence S 02 degrees 45 feet 42 inches W, 75
degrees feet to the POINT OF BEGINNING of the Parcel to be described, thence N
80 degrees 41 feet 26 inches E, 75.00 feet; thence S 25 degrees 49 feet 41
inches E, 375.10 feet; thence S 04 degrees 10 feet 15 inches W, 521.50 feet;
thence N 87 degrees 15 feet 03 inches W, along the East-West 1/4 line of said
Section, as monumented, 460.00 feet; thence N 04 degrees 10 feet 19 inches S,
441.38 feet; thence N 13 degrees 14 feet 36 inches E, 75.00 feet, to the POINT
OF BEGINNING; Containing 5.54 acres, more or less, and subject to and including
use of the 66 foot wide Private Easement for Ingress, Egress and Public
Utilities as described below. Also subject to the 20 foot wide Easement for
Sanitary Sewer and Public Utilities as described below. Also subject to
Drainage Easement No. 1 as described below. Also subject to any other easements
or restrictions of record.
DESCRIPTION OF A 66 FOOT WIDE PRIVATE EASEMENT FOR INGRESS, EGRESS, PUBLIC
UTILITIES AND STORM DRAINAGE
Part of the Northwest 1/4 of Section 28, T3N-R6E, Hartland Township, Livingston
County, Michigan, more particularly described as follows: Commencing at the
North 1/4 Corner of said Section 28; thence along the North line of said
Section 28, as monumented, N 86 degrees 42 feet 08 inches W, 1326.61 feet;
thence along the West line of the East 1/2 of the Northwest 1/4 of said Section
28 as monumented, S 02 degrees 01 feet 21 inches W, 2111.56 feet; thence 587
degrees 14 feet 18 inches E, 420.65 feet; thence S 02 degrees 45 feet 42 inches
W, 75.00 feet, to the POINT OF BEGINNING of the 66 foot wide Private Easement
for Ingress, Egress, Public Utilities and Storm Drainage to be described,
thence S 87 degrees 14 feet 18 inches x. 420.65 feet; thence Southeasterly on
an arc right, having a length of 328.36 feet, a radius of 75.00 feet, a central
angle of 250 degrees 51 feet 08 inches and a long chord which bears S 38
degrees 11 feet 16 inches W, 122.23 feet; thence Northwesterly on an arc left,
having a length of 61.83 feet, a radius of 50.00 feet, a central angle of 70
degrees 51 feet 09 inches, and a long chord which bears N 51 degrees 48 feet 44
inches W, 57.97 feet; thence N 87 degrees 14 feet 18 inches W, 301.72 feet;
thence N 02 degrees 01 feet 31 inches E, 66.00 feet, to the POINT OF BEGINNING.
DRAINAGE EASEMENT NO. 1
Part of the Northwest 1/4 of Section 28, T3N-R6E, Hartland Township, Livingston
County, Michigan, more particularly described as follows: Commencing at the
North 1/4 Corner of said Section 28; thence along the North line of said
Section 28, as monumented, N 86 degrees 42 feet 08 inches W, 1326.61 feet;
thence along the West line of the East 1/2 of the Northwest 1/4 of said Section
28 as monumented, S 02 degrees 01 feet 21 inches W, 2111.56 feet; thence S 87
degrees 14 feet 18 inches E, 420.65 feet; thence S 02 degrees 45 feet 42 inches
W, 75.00 feet; thence N 80 degrees 41 feet 28 inches E, 75.00 feet, to the POINT
OF BEGINNING of the Drainage Easement to be described; thence S 85 degrees 49
feet 41 inches E, 375.10 feet; thence S 04 degrees 10 feet 19 inches W, 145.77
feet; thence N 85 degrees 49 feet 41 inches W, 40.00 feet; thence N 40 degrees
49 feet 41 inches N, 163.72 feet; thence N 04 degrees 10 feet 19 inches E,
20.00 feet; thence N 85 degrees 49 feet 41 inches W, 217.64 feet; thence North
on an arc left, having a length of 10.14 feet, a radius of 75.00 feet, a
central angle of 07 degrees 45 feet 14 inches and a long chord which bears N 05
degrees 25 feet 49 inches W, 10.14 feet to the POINT OF BEGINNING.
Page 1 of 2
<PAGE> 34
Exhibit "A"
Together with easements over the following described property as set forth in
Declaration of Easements for Planned Development District dated October 7, 1994,
as recorded in liber , Page , Livingston County Records:
DESCRIPTION OF THE CENTERLINE A 20 FOOT WIDE EASEMENT FOR SANITARY SEWER AND
PUBLIC UTILITIES
Part of the Northwest 1/4 of Section 28, T3N-R6B, Hartland Township,
Livingston County, Michigan, more particularly described as follows: Commencing
at the North 1/4 Corner of said Section 28; thence along the North line of
said Section 28, as monumented. N 86 degrees 42 feet 08 inches W, 1326.61 feet;
thence along the West line of the East 1/2 of the Northwest 1/4 of said Section
28 as monumented, S 02 degrees 01 feet 21 inches W, 2187.56 feet; thence S 87
degrees 14 feet 18 inches E, 76.33 feet, to the POINT OF BEGINNING of the
centerline of the 20 foot wide Easement for Sanitary Sewer and Public Utilities
to be described; thence S 87 degrees 14 feet 18 inches E, 365.00 feet, to the
POINT OF TERMINUS.
DRAINAGE EASEMENT NO. 2
Part of the Northwest 1/4 of Section 28, T3N-R6B, Hartland Township, Livingston
County, Michigan, more particularly described as follows: Commencing at the
North 1/4 Corner of said Section 28; thence along the North line of said
Section 28, as monumented, N 26 degrees 42 feet 08 inches W, 1326.61 feet;
thence along the West line of the East 1/2 of the Northwest 1/4 of said Section
28 as monumented, S 02 degrees 01 feet 21 inches W, 2111.56 feet; thence S 87
degrees 14 feet 18 inches E, 420.65 feet; thence S 02 degrees 45 feet 42 inches
W, 75.00 feet; thence N 80 degrees 41 feet 26 inches E, 75.00 feet, to the
POINT OF BEGINNING of the Drainage Easement to be described; thence North on an
arc left, having a length of 10.49 feet, a radius of 75.00 feet, a central
angle of 08 degrees 00 feet 59 inches and a long chord which bears N 13 degrees
19 feet 11 inches W, 10.48 feet; thence S 85 degrees 49 feet 41 inches E.
222.48 feet; thence N 04 degrees 10 feet 19 inches E, 20.00 feet; thence N 49
degrees 10 feet 19 inches E, 169.39 feet; thence S 85 degrees 49 feet 41 inches
E, 36.00 feet; thence S 04 degrees 10 feet 19 inches W, 149.78 feet; thence N
85 degrees 49 feet 41 inches W, 375.10 feet, to the POINT OF BEGINNING.
Page 2 of 2
<PAGE> 35
EXHIBIT B
REQUISITION CERTIFICATE
TO: Society Bank, Michigan, Trustee
FROM: Molmec, Inc. (the "Obligor")
SUBJECT: $5,000,000 Michigan Strategic Fund Variable Rate Demand
Limited Obligation Revenue Bonds, Series 1994 (Molmec,
Inc. Project)
This represents Requisition Certificate No. _________ in the total amount
of $_________ to pay those costs of the Project detailed in the schedule
attached.
The undersigned does certify that:
1. The expenditures for which moneys are requisitioned hereby
represent proper charges against the Project Fund of the subject bond
issue, have not been included in a previous requisition and have been
properly recorded on the Obligor's books.
2. The moneys requisitioned hereby are not greater than those
necessary to meet obligations due and payable or to reimburse the
Obligor for its funds actually advanced for costs of the Project and
do not represent a reimbursement to the Obligor for working capital.
3. The Obligor are not in default under the Agreement and nothing has
occurred to the knowledge of the Obligor that would prevent the
performance of its obligations under the Agreement.
4. In the event moneys in the Project Fund after payment of moneys
herein requested are insufficient to pay Project Costs, the Obligor
will pay such additional Project Costs as are incurred from such other
funds which are available for such purpose.
5. All of the property acquired with the moneys hereby requested will
be owned by the Obligor.
6. The sum of (A) moneys requisitioned hereby to pay (or reimburse the
Obligor of its prior payment of) issuance costs of the Bonds (within
the meaning of Section 147(g) of the Internal Revenue Code of 1986, as
amended) plus (B) the total moneys previously disbursed from the
Project Fund and similarly applied, does not exceed $100,000 (which is
2% of the face amount of the Bonds).
B-1
<PAGE> 36
7. Delivered herewith are the following requested certificates, sworn
statements, waivers of lien, surveys, invoices, architect's
certificates and other documents:
-------------------------------------------------
Executed this day of , 199 .
---- ---------- -
MOLMEC, INC.
By
-----------------------------
Its Authorized Obligor
Representative
Approved By:
COMERICA BANK, Issuer of
the Credit Facility
By
-------------------------------
Its
-------------------------
B-2
<PAGE> 37
SCHEDULE TO REQUISITION CERTIFICATE NO. _____________
Description of Property
Payee and Address or Services Provided Amount
----------------- ----------------------- ------
B-3
<PAGE> 38
EXHIBIT C
COMPLETION CERTIFICATE
TO: Michigan Strategic Fund (the "Issuer"), Comerica Bank (the "Bank")
and Society Bank, Michigan, (the "Trustee")
FROM: Molmec, Inc. (the "Obligor")
SUBJECT: $5,000,000 Michigan Strategic Fund Variable Rate Demand Limited
Obligation Revenue Bonds, Series 1994 (Molmec, Inc. Project)
The undersigned does hereby certify:
1. The acquisition, construction and equipping of the Project have been
completed in accordance with the Plans and in such manner as to
conform with all applicable zoning, planning and building regulations
of the governmental authorities having jurisdiction of the Project,
as of the date of this Certificate (the "Completion Date").
2. The Costs of the Project have been paid in full except for those not
yet due and payable, which are described below and for which moneys
for payment thereof are being held in the Project Fund:
(a) Cost of the Project not yet due and payable:
Description Amount
$____________
TOTAL $____________
(b) Payments being contested:
Description Amount
$____________
TOTAL $____________
C-1
<PAGE> 39
3. The moneys in the Project Fund in excess of the totals set forth in
2(a) and (b) above represent Surplus Bond Proceeds and the Trustee is
hereby authorized and directed to apply such moneys pursuant to
Section 4.4 of the Agreement.
4. No event of default has occurred under the Agreement or the
Reimbursement Agreement nor has any event occurred which with the
giving of notice or lapse of time or both shall become such an event
of default. Nothing has occurred to the knowledge of the Obligor
that would prevent the performance of its obligations under the
Agreement or the Reimbursement Agreement.
This certificate is given without prejudice to any rights against third
parties which exist at the date hereof or which may subsequently come into
being.
Capitalized terms used herein have the meanings given them in the Trust
Indenture for the Bonds.
Executed this ___ day of __________, 19__.
MOLMEC, INC.
By _______________________________
Its Authorized Obligor
Representative
C-2
<PAGE> 40
EXHIBIT D
NO ACT OF BANKRUPTCY CERTIFICATE
TO: Comerica Bank, as issuer of the Credit Facility and
Society Bank, Michigan, as Trustee
FROM: Molmec, Inc. (the "Obligor")
SUBJECT: $5,000,000 Michigan Strategic Fund Variable Rate Demand
Limited Obligation Revenue Bonds, Series 1994 (Molmec,
Inc. Project)
The undersigned does hereby certify to the Trustee that, during and prior
to the period beginning ______________ and continuing until the date hereof, no
Act of Bankruptcy (as defined in that certain Loan Agreement, dated as of
December 1, 1994, between the undersigned and Michigan Strategic Fund) shall
have occurred.
The Obligor acknowledges that the Trustee and the Bank may conclusively
rely on this Certificate.
Under penalties of perjury, this certificate has been executed this ___
day of __________, 19_, by the Obligor.
MOLMEC, INC.
By _________________________
Its Authorized Obligor
Representative
D-1
<PAGE> 1
EXHIBIT 10.18
AMENDED AND RESTATED
CREDIT FACILITY AND SECURITY AGREEMENT
ACCOUNTS RECEIVABLE, INVENTORY AND EQUIPMENT
THIS AGREEMENT is made by and between G. L. INDUSTRIES OF INDIANA,
INC., an Indiana corporation ("Borrower") and KEYBANK NATIONAL ASSOCIATION, a
national banking association with its main office at 127 Public Square,
Cleveland, Ohio 44114-1306 ("Bank").
WITNESSETH:
WHEREAS, Borrower entered into a certain Loan Agreement with Ameritrust
Company National Association ("Ameritrust") dated February 27, 1989, as amended
(the "Original Agreement");
WHEREAS, Bank is successor by merger to Ameritrust;
WHEREAS, Bank and Borrower have agreed to amend and restate the
Original Agreement to reflect the changes agreed to by the parties.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the Borrower and Bank hereby mutually agree that
the Original Agreement shall be amended and restated in its entirety as
follows:
As of the 1st day of March, 1996, Borrower and Bank, in consideration
of the premises, and the covenants and agreements contained herein, hereby
mutually agree as follows:
1. DEFINITIONS
"ACCOUNT" means (a) any account, and (b) any right to payment for Goods sold or
leased or for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by performance.
"ACCOUNT DEBTOR" means the Person who is obligated on an Account Receivable.
"ACCOUNT RECEIVABLE" means:
(a) any account receivable, Account, Chattel Paper, Contract Right,
General Intangible, Document, or Instrument owned, acquired, or
received by a Person;
(b) any other indebtedness owed to or receivable owned, acquired, or
received by a Person of whatever kind and however evidenced; and
(c) any right, title, and interest in a Person's Goods which were
sold, leased, or furnished by that Person and gave rise to either
(a) or (b) above, or both of them. This includes, without
limitation:
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Instrument or a series of Instruments, the group of writings taken together
constitutes Chattel Paper.
"COLLATERAL" means:
(a) all of Borrower's Accounts Receivable, whether now owned or hereafter
acquired or received by Borrower;
(b) all of Borrower's Inventory, whether now owned or hereafter acquired
by Borrower;
(c) all of Borrower's Equipment, whether now owned or hereafter acquired
by Borrower;
(d) all funds on deposit in the Cash Collateral Account;
(e) all of Borrower's Cash Security; and
(f) all of the Proceeds, products, profits, and rents of Borrower's
Accounts Receivable, Inventory, Equipment, Cash Security, and Cash
Collateral Account.
"CONTRACT RIGHT" means (a) any contract right, and (b) any right to payment
under a contract not yet earned by performance and not evidence by an Instrument
or Chattel paper.
"DEPOSIT ACCOUNT" means (a) any deposit account, and (b) any
demand, time, savings, passbook, or a similar account maintained with a bank,
savings and loan association, credit union, or similar organization, other than
an account evidenced by a certificate of deposit.
"DOCUMENT" means (a) any document, (b) any document of title, including
a bill of lading, dock warrant, dock receipt, warehouse receipt or order for
the delivery of Goods, and any other document which in the regular course of
business or financing is treated as adequately evidencing that the Person in
possession of it is entitled to receive, hold, and dispose of the document and
the Goods it covers, and (c) any receipt covering Goods stored under a statute
requiring a bond against withdrawal or a license for the issuance of receipts
in the nature of warehouse receipts even though issued by a Person who is the
owner of the Goods and is not a warehouseman.
"ENVIRONMENTAL LAW" means any federal, state, or local statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to, or imposing
liability upon a Person in connection with the use, release or disposal of any
hazardous, toxic or dangerous substance, waste or material.
"EQUIPMENT" means:
(a) any equipment, including without limitation, machinery, office
furniture and furnishings, tools, dies, jigs, and molds;
(b) all Goods that are used or bought for use primarily in a Person's
business;
(c) all Goods that are not Consumer Goods, Farm Products, or Inventory;
and
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(d) all substitutes or replacements for, and all parts, accessories,
additions, attachments, or accessions to (a) to (c) above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA AFFILIATE" means each Person (whether or not incorporated) which
together with Borrower or any Affiliate would be treated as a single employer
under ERISA.
"EVENT OF DEFAULT" means the occurrence of any of the events set forth in
Section 9 of this Agreement.
"FINANCIAL IMPAIRMENT" means the distressed economic condition of a Person
manifested by any one or more of the following events:
(a) adjudicated bankruptcy or insolvency or death or discontinuation of
the business of the Person;
(b) the Person ceases, is unable, or admits in writing its inability, to
make timely payment upon the Person's debts, obligations, or
liabilities as they mature or come due;
(c) assignment by the Person for the benefit of creditors;
(d) voluntary institution by the Person or consent granted by the Person
to the involuntary institution [whether by petition, complaint,
application, default, answer (including, without limitation, an answer
or any other permissible or required responsive pleading admitting (1)
the jurisdiction of the forum or (2) any material allegations of the
petition, complaint, application, or other writing to which such
answer serves as a responsive pleading thereto), or otherwise] of any
bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation, receivership, trusteeship, or similar
proceeding pursuant to or purporting to be pursuant to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation, receivership, trusteeship, or similar law of
any jurisdiction;
(e) voluntary application by the Person for or consent granted by the
Person to the involuntary appointment of any receiver, trustee, or
similar officer (1) for the Person or (2) of or for all or any
substantial part of the Person's property;
(f) entry, without the Person's application, approval, or consent, of any
order that is not dismissed, stayed, or discharged within sixty (60)
days from its entry, which is pursuant to or purporting to be pursuant
to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, receivership,
trusteeship or similar law of any jurisdiction (1) approving an
involuntary petition seeking an arrangement of the Person's creditors,
(2) approving an involuntary petition seeking reorganization of the
Person, or (3) appointing any receiver, trustee, or similar officer
(i) for the Person, or (ii) of or for all or any substantial part of
the Person's property;
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(g) any judgment, writ, warrant of attachment, execution, or similar
process is issued or levied against all or any substantial part of the
Person's property aggregating in excess of $60,000 and such judgment,
writ, warrant of attachment, execution, or similar process is not
released, vacated, stayed or fully bonded within thirty (30) days
after its issue or levy.
"FOREIGN ACCOUNT RECEIVABLE" means any Account Receivable which arises out of
contracts with or orders from an Account Debtor which is not a resident of the
United States or Canada.
"GENERAL INTANGIBLE" means (a) any general intangible, and (b) any personal
property (including things in action) other than Goods, Accounts, Contract
Rights, Chattel Paper, Documents, Instruments, and money.
"GOODS" means (a) any goods, and (b) all things which are movable at the time
the security interest granted Bank under this Agreement attaches or which are
fixtures but does not include money, Instruments, Documents, Accounts, Chattel
Paper, General Intangibles, and Contract Rights.
"GOVERNMENT ACCOUNT RECEIVABLE" means any Account Receivable which arises out
of contracts with or orders from the United States or any of its departments
agencies, or instrumentalities.
"INSTRUMENT" means:
(a) any instrument;
(b) any negotiable or nonnegotiable instrument (including, without
limitation, drafts, checks, acceptances, certificates of deposit, and
notes);
(c) any security; and
(d) any other writing which:
(1) evidences a right to the payment of money,
(2) is not itself a security agreement or lease, and
(3) is of a type which in the ordinary course of business is
transferred by delivery with any necessary endorsement or
assignment.
"INVENTORY" means:
(a) any inventory;
(b) all Goods that are raw materials;
(c) all Goods that are work in process;
(d) all Goods that are materials used or consumed in the ordinary course
of a Person's business;
(e) all Goods that are, in the ordinary course of a Person's business,
held for sale or lease or furnished or to be furnished under contracts
of service; and
(f) all substitutes and replacements for, and parts, accessories,
additions, attachments, or accessions to (a) to (e) above.
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"LOAN ACCOUNT" means an account maintained by Bank on its books, which will
evidence all Advances, accrued interest thereon, other amounts due Bank with
respect to such Advances, and all payments thereof by Borrower.
"MULTIEMPLOYER PLAN" means a plan described in ERISA which covers employees of
the Borrower, any Affiliate, or any ERISA Affiliate.
"OBLIGATIONS" means any of the following obligations, whether direct or
indirect, absolute or contingent, secured or unsecured, matured or unmatured,
originally contracted with Bank or another Person and now owing to or hereafter
acquired in any manner partially or totally by Bank or in which Bank may have
acquired a participation, contracted by Borrower alone or jointly or severally
with another Person:
(a) any and all indebtedness, obligations, liabilities, contracts,
indentures, agreements, warranties, covenants, guaranties,
representations, provisions, terms, and conditions of whatever kind,
now existing or hereafter arising, and however evidenced, that are now
or hereafter owed, incurred, or executed by Borrower to, in favor of,
or with Bank (including, without limitation, those as are set forth or
contained in, referred to, evidenced by, or executed with reference to
this Agreement, the Loan Account, any promissory notes, letter of
credit agreements, advance agreements, indemnity agreements,
guaranties, lines of credit, mortgage deeds, security agreements,
assignments, pledge agreements, hypothecation agreements, Instruments,
and acceptance financing agreements), and including any partial or
total extension, restatement, renewal, amendment, and substitution
thereof or therefor;
(b) any and all claims of whatever kind of Bank against Borrower, now
existing or hereafter arising including, without limitation, any
arising out of or in any way connected with warranties made by
Borrower to Bank in connection with any Instrument deposited with or
purchased by Bank;
(c) any and all of Bank's Related Expenses.
"ORGANIZATION" means a corporation, government or government subdivision or
agency, business trust, estate, trust, limited liability company, partnership,
association, two or more Persons having a joint or common interest, and any
other legal or commercial entity.
"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to
Title IV of ERISA.
"PERSON" means an individual or an Organization.
"PLAN" means any plan (other than a Multiemployer Plan) defined in ERISA in
which the Borrower or any Affiliate is, or has been at any time during the
preceding two (2) years, an "employer" or a "substantial employer" as such
terms are defined in ERISA.
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"PRIME RATE" means that interest rate established from time to time by Bank as
Bank's Prime Rate, whether or not publicly announced; the Prime Rate may not be
the lowest interest rate charged by Bank for commercial or other extensions of
credit.
"PROCEEDS" means (a) any proceeds, and (b) whatever is received upon the sale,
exchange, collection, or other disposition of Collateral or Proceeds, whether
cash or non-cash. Cash Proceeds includes, without limitation, moneys, checks,
and Deposit Accounts. Proceeds includes, without limitation, any Account
arising when the right to payment is earned under a Contract Right, any
insurance payable by reason of loss or damage to the Collateral, and any return
or unearned premium upon any cancellation of insurance. Except as expressly
authorized in this Agreement, Bank's right to Proceeds specifically set forth
herein or indicated in any financing statement shall never constitute an
express or implied authorization on the part of Bank to Borrower's sale,
exchange, collection, or other disposition of any or all of the Collateral.
"PROHIBITED TRANSACTION" means any prohibited transaction as that term is
defined for purposes of ERISA.
"QUALIFIED ACCOUNT RECEIVABLE" means an Account Receivable of Borrower which, at
all times until it is collected in full, continuously meets the following
requirements:
(a) is not subject to any claim for credit, allowance, or adjustment by
the Account Debtor or any set off or counter claim;
(b) arose in the ordinary course of Borrower's business from the
performance (fully completed) of services or bona fide sale of Goods
which have been shipped to the Account Debtor, and not more than
ninety (90) days have elapsed since the performance (fully completed)
of services or the sale of Goods for or to the Account Debtor;
(c) no notice of the Financial Impairment of the Account Debtor has been
received by Borrower;
(d) is not subject to an assignment, pledge, claim, mortgage, lien, or
security interest of any type except that granted to or in favor of
Bank;
(e) Account Debtor has not rejected, returned, revoked acceptance of, or
refused to accept any of the Goods which are the subject of the
Account Receivable,
(f) Borrower has not received any Instrument or Chattel Paper with respect
to or in payment of the Account Receivable;
(g) Bank has not determined in good faith that the Account Receivable is
unsatisfactory in any respect;
(h) is not a Government Account Receivable, unless Bank's security
interest in such Government Account Receivable is perfected according
to the Federal Assignment of Claims Act;
(i) is not an Account Receivable due from any Affiliate, shareholder or
employee of Borrower;
(j) is not a Foreign Account Receivable;
(k) is not evidenced by a promissory note or any other negotiable
instrument;
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(l) is not a tooling Account Receivable except upon completion and
acceptance of the tooling by the Account Debtor; and
(m) is not an Account Receivable owed to Borrower by an Account Debtor
which has failed to pay more than 40% of its currently outstanding
Accounts Receivable within 90 days of service or sale of goods.
"QUALIFIED INVENTORY" means all Inventory EXCEPT Inventory which is:
(a) located outside the United States;
(b) in the possession of a bailee or a third party;
(c) work in process;
(d) damaged, defective, obsolete or reserved for;
(e) held by Borrower or a third party on consignment;
(f) cartons; or
(g) Bank has determined in good faith that the Inventory is
unsatisfactory in any respect.
"RELATED EXPENSES" means any and all costs, liabilities, and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
reasonable attorney's fees, legal expenses, judgments, suits, and disbursements)
incurred by, imposed upon, or asserted against, Bank in any attempt by Bank:
(a) to obtain, preserve, perfect, or enforce any security interest
evidenced by (i) this Agreement, or (ii) any other pledge agreement,
mortgage deed, hypothecation agreement, guaranty, security agreement,
assignment, or security instrument executed or given by Borrower to or
in favor of Bank;
(b) to obtain payment, performance, and observance of any and all of the
Obligations;
(c) to maintain, insure, audit, collect, preserve, repossess, and dispose
of any of the Collateral, including, without limitation, costs and
expenses for appraisals, assessments, and audits of Borrower or the
Collateral; or
(d) incidental or related to (a) through (c) above, including, without
limitation, interest thereupon from the date incurred, imposed, or
asserted until paid at the rate payable as set forth in Section 2 of
this Agreement, but in no event greater than the highest rate
permitted by law.
"REPORTABLE EVENT" means any reportable event as that term is defined for
purposes of ERISA.
"SUBORDINATED DEBT" means Indebtedness of a Person which is subordinated, in a
manner satisfactory to the Bank, to all indebtedness owing to the Bank.
"SUBSIDIARY" means any Person of which more than fifty percent (50%) of (i) the
voting stock entitling the holders thereof to elect a majority of the Board of
Directors, manager, or
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trustee thereof, or (ii) the interest in the capital or profits of such
Person, which at the time is owned or controlled, directly or
indirectly, by the Borrower or one or more other Affiliate.
"TANGIBLE NET WORTH" means the total assets of Borrower less the sum
of Borrower's (i) total liabilities excluding Subordinated Debt plus
(ii) the aggregate amount of all intangible assets, and Accounts
Receivable due from any Affiliate, shareholder or employee of Borrower.
"TERMINATION DATE" means January 31, 1997, or such earlier date on
which the commitment of the Bank to make Advances pursuant to Section
2(a) hereof shall have been terminated pursuant to Section 9 of this
Agreement.
The foregoing definitions shall be applicable to the singulars and
plurals of the foregoing defined terms.
2. STATEMENT OF TERMS
(a) (i) Bank will, subject to the terms and conditions of
this Agreement, up to and including the Termination
Date, make Advances to or for the account of
Borrower up to but not exceeding an aggregate
unpaid principal amount outstanding at any one time
on Advances equal to the lesser of (a) the line of
credit approved for Borrower, which is currently
Three Million Five Hundred Thousand Dollars
($3,500,000) or (b) the Borrowing Base. The
Borrower may borrow, repay and reborrow such
maximum amount of credit. On the basis of any
reasonable credit or collateral considerations, the
dollar amounts of the line of credit and the
Borrowing Base, and any one or more of the
percentages of the Borrowing Base, may be changed
by Bank at any time upon written notice to
Borrower, to be effective on the day such notice is
mailed to Borrower. The Bank shall debit to the
Loan Account the amount of each Advance made under
this Agreement and all interest, other
compensation, or other fees payable on all Advances
and shall credit to the Loan Agreement each payment
of (a) principal and interest on account of each
Advance and (b) other amounts payable under this
Agreement by the appropriate entries. The Loan
Account shall constitute prima facie evidence of
all Advances made by Bank pursuant to this
Agreement absent manifest error. In the event of
any discrepancy between the records of Bank and
Borrower with regard to the Loan Account, the
records of Bank shall prevail unless the Borrower
notifies Bank of an error within five (5) business
days after having discovered any such error or
unless Borrower and Bank mutually agree with regard
to an appropriate change in such records. Borrower
shall execute and deliver to Bank a master
promissory note, substantially in the form of
attached Exhibit B, to evidence all Advances under
this Agreement. The Bank's Advances pursuant to
this Section 2(a) shall be evidence by a properly
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executed master promissory note in the form of Exhibit B ("Master
Promissory Note") with all blanks appropriately filled in.
(ii) As compensation for the Advances made by Bank, Borrower
undertakes and agrees to pay to Bank on the first day of each
calendar month interest, at a rate equal to the Applicable
Interest Rate, upon the actual daily balances in Borrower's Loan
Account during the preceding month (using a day rate based upon a
year of 360 days and charged for actual number of days elapsed).
The rate will increase or decrease on the day of, and by an
amount equal to, each increase or decrease in the Prime Rate.
The rate charged to Borrower under this Agreement shall change
when and as the Prime Rate is changed.
(iii) After maturity (whether by acceleration or otherwise), the unpaid
principal and accrued interest evidenced by the Loan Account shall
bear interest at a rate per annum equal to three percent (30%) in
excess of the interest rate set forth in Section 2(a)(ii) above,
which rate shall be immediately and correspondingly adjusted with
each change in the Prime Rate. Prior to maturity, if any payment
of principal or interest is not paid when due, Borrower shall pay
a late fee of an amount equal to the greater of ten percent (10%)
of such payment or one hundred dollars ($100). Notwithstanding
the Bank's remedies as set forth in Section 10 hereof, prior to
maturity hereof, upon the occurrence of any Event of Default under
this Agreement and until such Event of Default is cured by
Borrower, at Bank's option and upon written notice to Borrower,
the unpaid principal and accrued interest evidenced by the Loan
Account shall bear interest at a rate per annum equal to three
percent (3%) in excess of the interest rate set forth in Section
2(a)(ii) above, which rate shall be immediately and
correspondingly adjusted with each change in the Prime Rate.
(vi) Borrower shall repay to the Bank on the Termination Date the net
balance in the Borrower's Loan Account.
(b) (i) Bank has made a term loan to Borrower in the original principal
amount of Three Million Seven Hundred Eighty Thousand Dollars
($3,780,000). The current outstanding principal balance of the
aforesaid term loan is Four Hundred Seventy-Two Thousand Five
Hundred Dollars ($472,500) and shall be evidenced by a properly
executed amended and restated term note in the form of Exhibit C
("Term Note"), with all blanks appropriately filled in.
(ii) The Borrower shall repay the aggregate amount of principal of the
Term Note to the Bank in twenty-four (24) consecutive and
equal monthly installments of Nineteen Thousand Six Hundred
Eighty-Seven and
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50/100 Dollars ($19,687.50) each beginning March 1, 1996 and
continuing on the first day of each consecutive month
thereafter, until February 1, 1998, when any remaining
principal balance shall be due and payable.
(iii) The Term Note shall bear interest at a rate per annum equal to
the Applicable Interest Rate. In the event of any change in the
Prime Rate, the rate of interest upon the Term Note shall be
immediately correspondingly adjusted, except the interest rate
thereon shall not exceed the highest rate permitted by law. The
Bank will notify the Borrower of the effective date of such
adjustment by written notice through the U.S. mail. Interest on
the Term Note shall be calculated on the basis of a year of 360
days for the actual number of days elapsed and shall be due and
payable starting on March 1, 1996 and continuing on the first
day of each consecutive month thereafter.
(iv) After maturity (whether by acceleration or otherwise), the
unpaid principal and accrued interest evidenced by the Term
Note shall bear interest at a rate per annum equal to three
percent (3%) in excess of the interest rate set forth in
Section 2(b)(iii) above, which rate shall be immediately and
correspondingly adjusted with each change in the Prime Rate.
Prior to maturity, if any payment of principal or interest is
not paid when due, Borrower shall pay a late fee of an amount
equal to the greater of ten percent (10%) of such payment or
one hundred dollars ($100). Notwithstanding the Bank's
remedies as set forth in Section 10 hereof, prior to maturity
hereof, upon the occurrence of any Event of Default under this
Agreement and until such Event of Default is cured by Borrower,
at Bank's option and upon written notice to Borrower, the
unpaid principal and accrued interest evidenced by the Term
Note shall bear interest at a rate per annum equal to three
percent (3%) in excess of the interest rate set forth in
Section 2(b)(iii) above, which rate shall be immediately and
correspondingly adjusted with each change in the Prime Rate.
(c) In order to compensate Bank for its service in preparing and reviewing
this Agreement, the Master Promissory Note, the Term Note and the
documentation relating thereto, Borrower shall pay to Bank on the date
hereof a documentation fee of $2,500.
Borrower agrees to pay Bank a commitment fee on the actual daily
unborrowed portion of Borrower's revolving line of credit hereunder on
and from the date hereof to and including the Termination Date at the
rate of one-quarter of one percent (1/4%) per annum (using a day rate
based upon a year of 360 days and charged for the actual number of
days elapsed), payable on the last day of each
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calendar quarter commencing June 30, 1996, and upon termination or
reduction of such line of credit.
Borrower agrees to pay Bank a collateral monitoring fee of Five
Hundred Dollars ($500) per month, payable on each interest payment
date determined in accordance with Section 2(a) hereof.
(d) If (1) there shall be introduced or changed any treaty, statute,
regulation, or other law, or there shall be any change in the
interpretation or administration thereof, or there shall be made any
request from any central bank or other lawful governmental authority,
which introduction, change, or compliance shall (a) impose, modify, or
deem applicable any reserve or special deposit requirements against
assets held by or deposits in or loans by Bank or (b) subject Bank to
any tax, duty, fee, deduction, or withholding or (c) change the basis
of taxation of the overall net income (otherwise than by a change in
taxation of the overall net income of Bank) or (d) impose, modify, or
deem applicable any capital adequacy or similar requirement
(including, without limitation, any request or requirement which
affects the manner in which Bank allocates capital resources to is
commitments generally or those under this Agreement) and (2) in Bank's
reasonable opinion any such evert (A) reduces the amount of any
payment to be made to Bank under this Agreement or (B) reduces the
rate of return on the capital of Bank that is reasonably allocable to
Bank's commitments under this Agreement to a level below that which
Bank would have achieved but for that event, then, upon Bank's demand,
Borrower shall pay Bank from time to time such additional amounts as
will compensate Bank for and indemnify it against such increased costs
or reduced payment or reduced rate of return. Each demand shall be
accompanied by a certificate setting forth the amount to be paid and
the computations used in determining the amount, which certificate
shall be presumed to be correct as to the matters set forth therein in
the absence of manifest error. In determining any such amount, Bank
may use any reasonable averaging and attribution methods.
3. SECURITY INTEREST IN COLLATERAL
In consideration of and as security for the full and complete payment,
performance, and observance of all Obligations, Borrower does hereby (a) grant
to Bank a security interest in the Collateral, whether now owned or hereafter
acquired or received by Borrower, and (b) assign to Bank all of its right,
title, and interest (including, without limitation, all rights to payment)
arising under or with respect to all of Borrower's Accounts Receivable, whether
now owned or hereafter acquired or received by Borrower, but not including any
duty, obligation, or liability of Borrower with respect thereto.
4. WARRANTIES
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Borrower represents and warrants to Bank (which representations and
warranties shall survive the execution of this Agreement and all Demand
Advances) that:
(a) Borrower is a duly organized and existing corporation under the
laws of the state of its incorporation and is duly qualified and
in good standing in every state in which it is doing business;
(b) The execution, delivery, and performance hereof are within
Borrower's corporate powers, have been duly authorized, and are
not in contravention of law or the terms of Borrower's charter,
by-laws, or regulations or of any indenture, agreement, or
undertaking to which Borrower is a party or by which it is bound;
(c) This Agreement and the other documents executed pursuant hereto
have been duly executed and are valid and binding obligations of
Borrower fully enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to the rights of
creditors generally and subject to the availability of equitable
remedies and the application of equitable principles;
(d) Except for any security interest granted to or in favor of Bank,
Borrower is, and as to Collateral to be acquired after the date
hereof will be, the owner of the Collateral free from any claim,
lien, encumbrance, or security interest of any type, and Borrower
agrees that it will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any
interest therein;
(e) The office where Borrower keeps all of its records pertaining to
its Accounts and Contract Rights is located at: 2860 North
National Road, Columbus, Indiana 47202-0387;
(f) Subject to any limitation stated herein or in connection
herewith, all information furnished to Bank concerning Borrower
or the Collateral is, or will be at the time such information is
furnished, accurate and correct in all material respects and
complete insofar as is necessary to give Bank true and accurate
knowledge of the subject matter;
(g) Borrower is the lawful owner of and has full and unqualified
right to transfer a security interest in all of the Collateral to
Bank. Such Collateral is not and will not, so long as Borrower
has any Obligations to Bank, be subject to any adverse financing
statement, encumbrance, claim, lien, or security interest of any
type except any granted to or in favor of Bank;
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(h) Each Qualified Account Receivable included with the aggregate amount
of Qualified Accounts Receivable set forth on each Borrower's
Certificate now or hereafter furnished to Bank shall meet, as of the
date stated thereon, all eligibility requirements specified in the
Section 1 definition of Qualified Account Receivable;
(i) There is no pending or threatened action, suit or proceeding affecting
either Borrower or any of its Affiliates before any court or other
governmental authority or any arbitrator which may materially
adversely affect the condition or operations, financial or otherwise,
of Borrower or the ability of Borrower to perform its obligations
under this Agreement;
(j) The Borrower and each of its Affiliates is in compliance with all
Environmental Laws and all applicable federal, state, and local health
and safety and other laws, regulations, ordinances or rules, except to
the extent that any non-compliance will not, in the aggregate, have a
materially adverse effect on the Borrower and its Affiliates or the
ability of the Borrower to fulfill its obligations under this
Agreement or any of the notes delivered pursuant hereto;
(k) The financial statements of Borrower dated September 30, 1995, copies
of which have been delivered to Bank, fairly present the financial
condition of such Persons as at the respective dates thereof and their
results of operations for the fiscal periods ended on the respective
dates thereof, all in accordance with generally accepted accounting
principles consistently applied, subject, in the case of unaudited
financial statements, to normal recurring year-end adjustments, and
since the respective dates of such financial statements, there has
been no material adverse change in Borrower's condition or operations;
(l) Borrower has filed, or caused to be filed, all federal, state, local
and foreign tax returns required to be filed by it, and has paid, or
caused to be paid, all taxes as are shown on such returns, or on any
assessment received by it, to the extent that such taxes have become
due, except as otherwise contested in good faith. Borrower has set
aside proper amounts on its books, determined in accordance with
generally accepted accounting principles, for the payment of all taxes
for the years that have not been audited by the respective tax
authorities and for taxes being contested by it.
(m) Borrower has received consideration which is the reasonable equivalent
value of the obligations and liabilities that the Borrower has
incurred to Bank. The Borrower is not insolvent as defined in any
applicable state or federal statute, nor will the Borrower be rendered
insolvent by the execution and delivery of this Agreement or the notes
delivered to Bank pursuant hereto. The Borrower is not engaged or
about to engage in any business or transaction for which the assets
retained by it shall be an unreasonably small capital, taking into
consideration the obligations to Bank incurred hereunder. The Borrower
does
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<PAGE> 14
not intend to, nor does it believe that it will, incur debts beyond
its ability to pay them as they mature;
(n) Neither the Borrower nor any Affiliate is in default in the
performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument to
which it is a party, which default materially adversely affects the
business, properties, assets, or financial condition of the Borrower
or such Affiliates;
(o) No Reportable Event or Prohibited Transaction has occurred and is
continuing with respect to any Plan, and the Borrower has incurred no
"accumulated funding deficiency" (as that term is defined by ERISA)
since the effective date of ERISA;
(p) Borrower has places of business or maintains its Inventory and
Equipment at the following locations: 2860 North National Road,
Columbus, Indiana 47202; 820 North National Road, Columbus, Indiana
47202;
(q) Borrower's Location is 2860 North National Road, Columbus, Indiana
47202;
(r) Borrower is not a party to any agreement or other instrument or
subject to any other restriction which materially and adversely
affects or could reasonably be expected to materially and adversely
affect its business, properties, assets, operations or condition,
financial or otherwise.
5. COVENANTS
Borrower undertakes, covenants, and agrees that, until the full and complete
payment, performance, and observance of all Obligations, Borrower:
(a) shall deliver to Bank within thirty (30) days after the close of each
month, a statement of condition and statement of cash flows of
Borrower for such period, certified as complete and correct by a duly
authorized officer of Borrower, as well as a certificate showing
Borrower's compliance with all financial covenants herein;
(b) shall deliver to Bank, not later than ninety (90) days after the end
of each fiscal year of Borrower, financial statements of Borrower
covering such fiscal year and containing an unqualified opinion by a
certified public accountant acceptable to Bank;
(c) shall deliver to Bank within sixty (60) days after the close of each
fiscal year of Borrower, an annual projection of Borrower's financial
statements for the next fiscal year;
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<PAGE> 15
(d) shall promptly provide Bank with prior written notification of:
(1) any change in any location where Borrower's Inventory is
maintained, and any new locations where Borrower's Inventory is
to be maintained,
(2) any change in the location of the office where Borrower's records
pertaining to its Accounts and Contract Rights are kept,
(3) the location of any new places of business and the changing or
closing of any of its existing places of business,
(4) any change in Borrower's name, and
(5) any change in Borrower's Location;
(e) shall promptly notify, and shall cause each Affiliate to promptly
notify, the Bank in writing of (a) any future event which, if it had
existed on the date of this Agreement, would have required
qualification of the representations and warranties set forth in
Article 4 hereof and (b) any material adverse change in the condition,
business, or prospects, financial or otherwise, of the Borrower or
such Affiliate;
(f) shall promptly and in any event within ten (10) days after the
occurrence of a Reportable Event with respect to a Plan, provide to
Bank a copy of any materials required to be filed with the PBGC with
respect to such Reportable Event or those that would have been
required to be filed if the thirty (30) day notice requirement to the
PBGC had not been waived;
(g) shall promptly upon receipt, and in no event more than three (3) days
after receipt, of a notice by the Borrower or any Affiliate, ERISA
Affiliate, or any administrator of any Plan or Multiemployer Plan that
the PBGC has instituted proceedings to terminate such Plan or to
appoint a trustee to administer such Plan, provide to Bank a copy of
such notice;
(h) shall not permit its aggregate Obligations to Bank pursuant to
Paragraph 2(a) hereof at any time to exceed the lesser of (1) the
Borrower Base or (2) Borrower's currently approved line of credit;
(i) shall deliver to Bank within twenty (20) days after the close of each
month, in form and substance acceptable to Bank (1) reports designated
as "Aging Report of Accounts Receivable" and "Aging Report of Accounts
Payable", each substantiated by detailed supporting schedules, (2) a
schedule of Borrower's Inventory showing the cost or market value
thereof, whichever is lower, and (3) such other reports as Bank may
reasonably request;
(j) shall, at the time of each borrowing under this Agreement, and at any
other times required by Bank, deliver to Bank a Borrower's
Certificate fully completed as to all figures and information called
for therein and certified as complete and correct by a duly authorized
officer of Borrower;
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<PAGE> 16
(k) shall promptly pay and discharge when due, all taxes, assessments, and
governmental charges of every kind and nature that have been lawfully
levied, assessed, or imposed upon Borrower, its properties including
the use thereof, or any of the Obligations, which, if unpaid, would
become liens against its assets including, without limitation, all
sums due and owing to any taxing authority for income and other taxes
withheld from the wages and salaries of its employees, except to the
extent Borrower is reasonably contesting in good faith any such tax,
assessment, or charge with an adequate reserve provided therefor;
(l) shall at all reasonable times allow Bank by or through any of its
officers, agents, employees, attorneys, or accountants to (1) examine,
inspect, and make extracts from Borrower's books and other records,
including, without limitation, the tax returns of Borrower and any of
Borrower's Affiliates, (2) arrange for verification of Borrower's
Accounts Receivable, under reasonable procedures, directly with
Account Debtors or by other methods, and (3) examine and inspect
Borrower's Inventory wherever located;
(m) shall promptly furnish to Bank upon request (1) additional statements
and information with respect to the Collateral, and all writings and
information relating to or evidencing any of Borrower's Accounts
Receivable (including, without limitation, computer printouts or
typewritten reports listing the mailing addresses of all present
Account Debtors), and (2) any other writings and information as Bank
may request;
(n) shall upon request of Bank promptly take such action and promptly
make, execute, and deliver all such additional and further items,
deeds, assurances, and instruments as Bank may require, including,
without limitation, financing statements, so as to completely vest in
and ensure to Bank its rights hereunder and in or to the Collateral.
If certificates of title are issued or outstanding with respect to any
of Borrower's Inventory, Borrower will cause the interest of Bank to
be properly noted thereon at Borrower's expense;
(o) hereby authorizes, upon prior notice unless Borrower is in default,
Bank or Bank's designated agent (but without obligation by Bank to do
so) to incur Related Expenses (whether prior to, upon, or subsequent
to any Event of Default), and Borrower shall promptly repay,
reimburse, and indemnify Bank for any and all Related Expenses. Bank
may, at its option, debit Related Expenses directly to the Loan
Account;
(p) shall not, without the prior written consent of Bank, borrow any money
or, directly or indirectly, create, incur, assume, guarantee, or
otherwise become or remain liable with respect to any indebtedness for
borrowed money or advances other than (1) Borrower's Obligations, (2)
any indebtedness of Borrower
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<PAGE> 17
existing on the date hereof and not required by Bank to be prepaid as
a condition to execution of this Agreement, and (3) Subordinated Debt;
(q) shall not, without the prior written consent of Bank, loan any money
to or guarantee or assume any obligation of any other Person, or
purchase (1) any evidence of indebtedness or securities (including
stock) other than direct obligations of the United States of America
or any agency thereof, banker's acceptances, and certificates of
deposit issued by any commercial bank in the United States of America,
or (2) the business or substantially all of the property of any other
Person other than Borrower's Subsidiaries, or hereafter make
prepayments or advances to others, provided Borrower may make loans or
advances to others not exceeding Fifty Thousand Dollars ($50,000) at
any one time outstanding, and Borrower may endorse checks, drafts, and
similar instruments for deposit or collection in the ordinary course
of business;
(r) shall not, without the prior written consent of Bank, enter into any
sale and leaseback transaction or arrangement with any other Person
with respect to any of the assets of Borrower or its subsidiaries
(however, this shall not limit performance under any lease contract
existing on the date hereof and disclosed in writing by Borrower to
Bank);
(s) shall keep its Equipment in good working order and repair without
wasting or destroying such Equipment, and shall not without the prior
written consent of Bank:
(i) sell, lease, transfer, assign, encumber, or otherwise dispose of
Equipment having an aggregate book value in excess of One
Hundred Thousand Dollars ($100,000) during any fiscal year of
Borrower, or make any attempt to do so, or
(ii) permit any of its Equipment to be removed from the location(s)
set forth in Section 4(p) hereof, except as provided in said
Section 4(p);
(t) shall not, without the prior written consent of Bank, mortgage,
pledge, grant a security interest, or otherwise voluntarily place or
permit to be placed any lien upon any assets of the Borrower except
any security interest granted to or in favor of Bank;
(u) shall not, without the prior written consent of Bank, (1) merge,
acquire or consolidate with or into, or enter into any merger
agreement with any other Person, or (2) lease, sell, or transfer all
or substantially all its property, assets, and business, including the
stock of any Subsidiary, to any other Person;
(v) shall not, without the prior written consent of Bank, engage in any
transaction with any Affiliate, unless:
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<PAGE> 18
(i) such transaction is at arms length and on terms that are at
least as favorable to Borrower as those prevailing at the time
for comparable transactions which nonaffiliated Persons,
(ii) such transaction does not require Borrower to make payments,
advances or loans to any Affiliate in an amount exceeding Fifty
Thousand Dollars ($50,000) excluding the corporate charge
payable to LDM Technologies, Inc., and
(iii) Borrower will receive no less than fair market value for any
assets transferred;
(w) shall not, without the prior written consent of Bank, make any change
in any location where Borrower's Inventory or Equipment is maintained
or any change in the location of the office where Borrower's records
pertaining to its Accounts and Contract Rights are kept;
(x) shall not use any Collateral in violation of any applicable statute,
ordinance, or regulation;
(y) shall have a Cash Flow Coverage Ratio of at least 1.0 to 1.0 at all
times. The Cash Flow Coverage Ratio shall be tested monthly commencing
June 30, 1996 and calculated on a rolling 12-month basis;
(z) shall not permit the aggregate of its Tangible New Worth plus
Subordinated Debt to be less than One Million Four Hundred
Seventy-Five Thousand Dollars ($1,475,000) at any time during its
fiscal year ending at September 30, 1996 and at each fiscal year end
thereafter;
(aa) shall not, and will not permit any Affiliate to, make any payment
upon its outstanding Subordinated Debt, except in such manner and
amounts as may be expressly authorized in any subordination agreement
presently or hereafter held by the Bank;
(bb) shall not permit the ratio of its Adjusted Debt to its Adjusted
Tangible New Worth, calculated at the same point in time, to be at any
time more than 5.00 to 1.00 during its fiscal year ending September
30, 1996, and (ii) 4.50 to 1.00 during its fiscal year ending
September 30, 1997 and at all times thereafter;
6. COLLECTIONS AND RECEIPT OF PROCEEDS BY BORROWER
(a) Prior to exercise by Bank of its rights under Section 7 of this
Agreement, and except as provided in Subsection 6(b) of this
Agreement, both (1) the lawful collection and enforcement of all of
Borrower's Accounts Receivable, and (2)
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<PAGE> 19
the lawful receipt and retention by Borrower of all Proceeds of all of
Borrower's Accounts Receivable and Inventory shall be as Bank's agent. All
such lawful collections of Borrower's Accounts Receivable and such Proceeds
of Borrower's Accounts Receivable and Inventory shall be remitted daily by
Borrower to Bank in the form in which they are received by Borrower, either
by mailing or by delivering such collections and Proceeds to Bank,
appropriately endorsed for deposit in the Cash Collateral Account. Borrower
will not commingle such collections or Proceeds with any of Borrower's
other funds or property, but will hold such collections and Proceeds
separate and apart therefrom upon an express trust for Bank. Bank may, in
its sole discretion, at any time and from time to time, apply all or any
portion of the account balance in the Cash Collateral Account (allowing two
(2) days for collection and clearance of remittances, however, in the event
Bank applies any proceeds from the Cash Collateral Account as a credit to
any obligations due Bank and such payment includes uncollected funds, the
Borrower will incur a charge for those uncollected funds at the floating
rate payable on Advances) as a credit against (1) the Loan Account,
including the outstanding principal or interest of any Advance, or (2) any
other Obligation. If any remittance shall be dishonored, or if, upon final
payment, any claim with respect thereto shall be made against Bank on its
warranties of collection, Bank may charge the amount of such item against
the Cash Collateral Account or any other Deposit Account maintained by
Borrower with Bank, and, in any event, retain same and Borrower's interest
therein as additional security for the Obligations. The Bank may, in its
sole discretion, at any time and from time to time, release funds from the
Cash Collateral Account to Borrower for use in Borrower's business. The
balance in the Cash Collateral Account may be withdrawn by Borrower
upon termination of this Agreement in accordance with Subsection 12(e) of
this Agreement. At Bank's request, Borrower will cause all remittances
representing collections and Proceeds of Collateral to be mailed to a lock
box in Cleveland, Ohio, to which Bank shall have access for the processing
of such items in accordance with the provisions, terms, and conditions of
Bank's customary lock box agreement.
(b) With respect to Borrower's Instruments, Chattel Paper, and Documents:
(1) Borrower shall daily deliver, or cause to be delivered, to Bank all of
Borrower's Instruments, Chattel Paper, and Documents, appropriately
endorsed either, at Bank's option, (i) to Bank's order, without
limitation or qualification, or (ii) for deposit in the Cash
Collateral Account. Bank, or Bank's designated agent, is hereby
constituted and appointed Borrower's attorney-in-fact with authority
and power to endorse any and all Instruments, Documents, and Chattel
Paper upon Borrower's failure to do so. Such authority and power,
being coupled with an interest, shall be (i) irrevocable until all
Obligations are paid, performed, and observed in full, (ii)
exercisable by Bank at any time and without any
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<PAGE> 20
request upon Borrower by Bank to so endorse, and (iii)
exercisable in Bank's name or Borrower's name;
(2) Borrower hereby waives presentment, demand, notice of
dishonor, protest, notice of protest, and any and all other
similar notices with respect thereto, regardless of the form
of any endorsement thereof;
(3) Bank shall not be bound or obligated to take any action to
preserve any rights therein against prior parties thereto.
7. COLLECTIONS AND RECEIPT OF PROCEEDS BY BANK
Borrower hereby constitutes and appoints Bank, or Bank's designated agent,
as Borrower's attorney-in-fact to exercise, at any time, all or any of the
following powers which, being coupled with an interest, shall be
irrevocable until the complete and full payment, performance, and
observance of all Obligations;
(a) to receive, retain, acquire, take, endorse, assign, deliver,
accept, and deposit, in the Bank's name or Borrower's name, any
and all of Borrower's cash, Instruments, Chattel Paper,
Documents, Proceeds of Accounts Receivable, Proceeds of
Inventory, collection of Accounts Receivable, and any other
writings relating to any of the Collateral;
(b) upon the occurrence and continuation of an Event of Default to
transmit to Account Debtors, on any or all of Borrower's Accounts
Receivable, notice of assignment to Bank thereof and Bank's
security interest therein; and to request from such Persons at
any time, in the Bank's name or in the Borrower's name,
information concerning Borrower's Accounts Receivable and the
amounts owing thereon;
(c) upon the occurrence and continuation of an Event of Default, to
notify and require Account Debtors on Borrower's Accounts
Receivable and purchasers of Borrower's Inventory to make payment
of their indebtedness directly to Bank;
(d) to take or bring, in Bank's name or Borrower's name, all steps,
actions, suits, or proceedings deemed by Bank necessary or
desirable to effect the receipt, enforcement, and collection of
the Collateral;
(e) to accept all collections in any form relating to the Collateral,
including remittances which may reflect deductions, and to
deposit the same, into Borrower's Cash Collateral Account or, at
the option of Bank, to apply them as a payment against the Loan
Account.
8. INSURANCE AND USE OF INVENTORY AND EQUIPMENT
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<PAGE> 21
(a) Until any Event of Default:
(1) Borrower may retain possession of and use its Inventory and
Equipment in any lawful manner not inconsistent with this
Agreement or with the terms, conditions, or provisions of any
policy of insurance thereon.
(2) Borrower may sell or lease its Inventory or Equipment in the
ordinary course of business; provided, however, that a sale or
lease in the ordinary course of business does not include a
transfer in partial or total satisfaction of a debt, except for
transfers in satisfaction or partial or total purchase money
prepayments by a buyer in the ordinary course of Borrower's
business. Until any Event of Default, Borrower may also use and
consume any raw materials or supplies, the use and consumption of
which are necessary in order to carry on Borrower's business.
(b) Borrower shall obtain, and at all times maintain, insurance upon its
Inventory and Equipment in such form, written by such companies, in
such amounts, for such period, and against such risks as may be
reasonably acceptable to Bank, with provisions satisfactory to Bank
for payment of all losses thereunder to Bank and Borrower as their
interests may appear (loss payable endorsement in favor of Bank), and,
if required by Bank, Borrower will deposit the policies with Bank. Any
such policies of insurance shall provide for no less than ten (10)
days prior written cancellation notice to Bank. Any sums received by
Bank in payment of insurance losses, returns, or in the case of an
Event of Default, also unearned premiums under the policies may, at
the option of Bank, be applied upon any Obligation whether or not the
same is then due and payable, or may be delivered to Borrower for the
purpose of replacing, repairing, or restoring its Inventory and
Equipment. Borrower hereby assigns to Bank any return or in the case
of an Event of Default, also unearned premiums, which may be due upon
cancellation of any such policies for any reason and directs the
insurers to pay Bank any amount so due. Bank or Bank's designated
agent is hereby constituted and appointed Borrower's attorney-in-fact
to (either in the name of Borrower or in the name of the Bank), make
adjustments of all insurance losses, sign all applications, receipts,
releases, and other papers necessary for the collection of any such
loss, and any return or unearned premium, execute proof of loss, make
settlements, and endorse and collect all Instruments payable to
Borrower or issued in connection therewith; provided, however, that
prior to an Event of Default, the Borrower's consent, which shall not
be unreasonably withheld or delayed, shall be required.
Notwithstanding any action by Bank hereunder, any and all risk of loss
or damage to Borrower's Inventory and Equipment to the extent of any
and all deficiencies in the effective insurance coverage thereof is
hereby expressly assumed by Borrower.
9. EVENTS OF DEFAULT
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<PAGE> 22
The occurrence of any one or more of the following shall constitute an Event of
Default under this Agreement:
(a) Failure of Borrower to promptly pay, perform, or observe when due,
whether upon demand, at maturity, by acceleration, or otherwise, any
of the Obligations;
(b) Failure of Borrower to promptly pay, perform, or observe when due,
whether upon demand, at maturity, by acceleration, or otherwise, or
any event which either results in or would result in (but for waiver
by the holder(s) or trustee(s) thereof) the acceleration of the
maturity of, any or all of the indebtedness, obligations, liabilities,
contracts, indentures, and agreements aggregating in excess of $50,000
(including, without limitation, any and all warranties, covenants,
guaranties, provisions, terms, and conditions set forth or contained
therein) of whatever kind and however evidenced, owed, incurred, or
executed by Borrower, to, in favor of, or with any and all other
Persons, and including any partial or total extension, renewal,
amendment, restatement, and substitution thereof or therefor;
(c) Any warranty, representation, or statement made or furnished to Bank
in connection with this Agreement or any other writing evidencing or
given as security for any of the Obligations by or on behalf of the
Borrower proves to have been false in any material respect when made,
furnished, or at any time thereafter;
(d) Any uninsured loss, damage, theft, of destruction of the Collateral,
or any levy, seizure, or attachment to, of, or upon any of the
Collateral;
(e) Sale, lease, transfer, assignment, encumbrance, or other disposition
of any of the Collateral in violation of this Agreement, without
Bank's prior written authorization therefor, including any attempt to
accomplish the foregoing;
(f) Any tax lien shall have been filed against Borrower or any of its
property by any federal, state, or municipal authority;
(g) If the Borrower or any Affiliate at anytime hereafter sponsors or
establishes any Plan, and the Borrower or any Affiliate (a) fails to
notify the Bank in writing of such occurrence within ten (10) days
after such Plan is authorized by the Board of Directors or otherwise
by the Borrower or any Affiliate or (b) fails to agree within a
reasonable time to such amendments to this Agreement regarding
provisions with respect to ERISA as the Bank customarily uses at that
time in loan agreements with other borrowers;
(h) Financial Impairment of Borrower;
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<PAGE> 23
(i) Financial Impairment of any endorser, guarantor, or surety upon or for
any of the Obligations.
If there shall occur any Event of Default set forth in (a) through (h) above,
Bank, by written notice to Borrower, may (1) declare the unpaid principal of
and accrued interest on all Obligations to be immediately due and payable and
(2) immediately terminate Bank's commitment to make further Advances under this
Agreement, whereupon Obligations shall become and be forthwith due and payable,
and such commitment shall be terminated, without any further notice,
presentment, or demand of any kind, all of which are hereby expressly waived by
Borrower. If there shall occur any Event of Default set forth in (i) or (j)
above, all Obligations shall automatically become and be immediately due and
payable, and Bank's commitment to make further advances shall automatically be
terminated, without notice, presentment, or demand of any kind, all of which
are hereby expressly waived by Borrower.
10. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of any such Event of Default and at all times thereafter,
Bank shall have the rights and remedies of a secured party under the Ohio
Uniform Commercial Code in addition to the rights and remedies of a secured
party provided elsewhere within this Agreement or in any other writing executed
by Borrower. Bank may require Borrower to assemble the Collateral and make it
available to Bank at a reasonably convenient place to be designated by Bank.
Unless the Collateral is perishable, threatens to decline speedily in value,
or is of a type customarily sold on a recognized market, Bank will give Borrower
reasonable notice of the time and place of any public sale of the Collateral or
of the time after which any private sale or other intended disposition thereof
is to be made. The requirement of reasonable notice shall be met if such notice
is mailed (deposited for delivery, postage prepaid, by U.S. mail) to either, at
Bank's option (1) Borrower's Location set forth in Subsection 12(c) of this
Agreement (as modified by any change therein which Borrower has supplied in
writing to Bank), or (2) Borrower's address at which Bank customarily
communicates with Borrower, at least ten (10) days before the time of the
public sale or the time after which any private sale or other intended
disposition thereof is to be made. At any such public or private sale, Bank may
purchase the Collateral. After deduction for Bank's Related Expenses, the
residue of any such sale or other disposition shall be applied in satisfaction
of the Obligations in such order of preference as Bank may determine. Any
excess, to the extent permitted by law, shall be paid to Borrower, and Borrower
shall remain liable for any deficiency.
In addition, upon the occurrence of any such Event of Default and at any time
thereafter, Bank shall have the right to obtain new appraisals of Borrower or
the Collateral, the cost of which shall be paid by Borrower.
11. CONDITIONS PRECEDENT TO FUTURE ADVANCES
The obligation of Bank to make any Advance to Borrower after the date of this
Agreement shall be subject to the conditions precedent that on or before the
date of such Advance:
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<PAGE> 24
(a) Borrower shall have paid all fees, costs, expenses, and taxes then
payable by Borrower pursuant to Section 2(c) of this Agreement;
(b) The representations and warranties contained in Section 4 of this
Agreement and in each document, instrument, agreement, and certificate
delivered to Bank by Borrower pursuant to this Agreement shall be true
and correct on and as of such date as if made on and as of such date;
no Event of Default or event or condition that, with the serving of
notice or the lapse of time or both, would constitute an Event of
Default shall have occurred and be continuing or would result from the
making of such Advance; and Bank shall have received, if requested by
Bank, a certificate of the chief executive officer or the chief
financial officer of Borrower, dated as of the date of such Advance,
to such effect (in the absence of Bank's request for such a
certificate, Borrower's borrowing of the Advance shall itself
constitute a representation to Bank to such effect);
(c) The making of such Advance shall not contravene any law, rule or
regulation applicable to Bank;
(d) Not later than 2:00 p.m., Cleveland time, on such date, Bank shall
have received, in writing or by telephone to be promptly confirmed in
writing, a request by Borrower to Bank for an Advance in the requested
amount, and a Borrower's Certificate;
(e) Borrower shall have delivered to Bank an opinion of counsel
substantially in the form attached hereto as Exhibit D.
(f) Bank shall have received such other approvals, opinions, appraisals,
or documents as it may reasonably request.
12. GENERAL
(a) If any provision, term, or portion, of this Agreement, (including,
without limitation, (1) any indebtedness, obligation, liability,
contract, agreement, indenture, warranty, covenant, guaranty,
representation, or condition of this Agreement made, assumed, or
entered into, (2) any act of action taken under this Agreement, or (3)
any application of this Agreement) is for any reason held to be
illegal or invalid, such illegality or invalidity shall not affect any
other such provision, term, or portion of this Agreement, each of
which shall be construed and enforced as if such illegal or invalid
provision, term, or portion were not contained in this Agreement. Any
illegality or invalidity of any application of this Agreement shall
not affect any legal and valid application of this Agreement, and each
provision, term, and portion of this Agreement shall be deemed to be
effective, operative, made, entered into, or taken in the manner and
to the full extent permitted by law.
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<PAGE> 25
(b) Bank shall not be deemed to have waived any of Bank's rights of
this Agreement or under any other agreement, instrument, or
document executed by Borrower, unless such waiver be in writing
and signed by Bank. No delay or omission on part of Bank in
exercising any right shall operate as a waiver of such right or
any other right. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any
future occasion. All Bank's rights and remedies, whether
evidenced by this Agreement or by any other agreement,
instrument, or document shall be cumulative and may be exercised
singularly or concurrently. Any written demands, written
requests, or written notices to Borrower that Bank may elect to
give shall be effective when deposited for delivery, postage
prepaid, by U.S. mail, and addressed either, at Bank's option, to
(1) Borrower's Location set forth in Subsection 12(c) of this
Agreement (as modified by any change therein which Borrower has
supplied in writing to Bank) or, (2) Borrower's address at which
Bank customarily communicates with Borrower. If at any time or
times, by assignment or otherwise, Bank transfers any of the
Obligations or any part of the Collateral to another person, such
transfer shall carry with it Bank's powers and rights under this
Agreement with respect to the Obligation or Collateral so
transferred and the transferee shall have said powers and rights,
whether or not they are specifically referred to in the transfer.
To the extent that Bank retains any other of the Obligations or
any part of the Collateral, Bank will continue to have the rights
and powers with respect to the Obligations and the Collateral as
set forth in this Agreement.
(c) All written notices, requests, or other communications herein
provided for must be addressed:
to Borrower as follows:
G.L. Industries of Indiana
2860 North National Road
Columbus, Indiana 47202
Attn: Carl Busart
cc: LDM Technologies, Inc.
1250 Maplelawn
Troy, Michigan 48084
Attn: Joe Balous, President
to the Bank as follows:
KEYBANK NATIONAL ASSOCIATION
127 Public Square
Cleveland, Ohio 44114-1306
-27-
<PAGE> 26
Attn: Manager, Structured Finance
or at such other address as either party may designate to the
other in writing. Such communication will be effective (i) if by
telex, when such telex is transmitted and the appropriate answer
back is received, (ii) if given by mail, seventy-two (72) hours
after such communication is deposited in the U.S. mail certified
mail return receipt requested, or (iii) if given by other means,
when delivered at the address specified in this Section 12(c).
(d) The laws of the State of Ohio shall govern the construction of
this Agreement (including, without limitation, any terms not
specifically defined in this Agreement that may be so
specifically defined pursuant to Ohio Revised Code Section
1309.01-1309.50 inclusive, and including any amendments thereof
or any substitution therefor) and the rights and duties of
Borrower and Bank. This agreement shall be binding upon and inure
to the benefit of Borrower and Bank and their respective
successors and assigns. The rights and powers given in this
Agreement to the Bank are in addition to those otherwise created
or existing in the same Collateral by virtue of other agreements
or writings.
(e) Borrower may terminate this Agreement by giving Bank not less
than ten (10) days prior written notice of termination and by
paying, performing, and observing in full all Obligations, on or
before such termination date. Notwithstanding the termination of
the line of credit hereunder, this Agreement and the security
interest in the Collateral shall continue in full force and
effect after such termination until all Obligations of Borrower
to Bank have been paid, performed, and observed in full.
(f) In this Agreement unless the context otherwise requires, words in
the singular number include the plural, and in the plural number
include the singular.
(g) Borrower hereby releases Bank from and agrees to indemnify and
hold harmless Bank, and its officers, agents, and employees for
any and all claims of Borrower or any other Person for damage or
loss caused by any act or acts under this Agreement or in
furtherance of this Agreement whether by omission or commission,
and whether based upon any error of judgment or mistake of law or
fact (except willful misconduct or gross negligence) on the part
of Bank, or its officers, agents, and employees.
(h) Bank has the right, in addition to all other rights and remedies
available to it, to set off at any time the unpaid balance of the
Loan Account and any other Obligations against any indebtedness
or obligations owing Borrower by Bank including, without
limitation, all Cash Security.
-28-
<PAGE> 27
(i) Bank is hereby authorized to fill in all blank spaces in this
Agreement, to correct patent errors in this Agreement, to
complete or correct the description of the Collateral, and to
date this Agreement.
(j) This Agreement is assignable by Bank upon notice to Borrower and
shall be binding on Bank's respective successors, assigns, and
nominees;
(k) This Agreement and any promissory notes or other writing executed
and delivered by any Person to Bank in connection herewith
integrate all the terms and conditions mentioned herein or
incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject
matter hereof.
13. JURY TRIAL WAIVER
BORROWER AND BANK EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN BANK AND
BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO ANY
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
BORROWER: G.L. INDUSTRIES OF INDIANA, INC.
By: Michael Polselli
-------------------------------------
Title: Secretary
----------------------------
By: Joe Balous
-------------------------------------
Title: President
----------------------------
BANK: KEYBANK NATIONAL ASSOCIATION
By: Michele T. Oltman
-------------------------------------
Title: Vice President
---------------------------
-29-
<PAGE> 28
EXHIBIT A
BORROWER'S CERTIFICATE
Certificate No. 1755
Computed as of: March 1, 1996
I, the undersigned, the President of G.L. INDUSTRIES OF
INDIANA, INC. (the "Borrower"), do hereby certify pursuant to
the Amended and Restated Credit Facility and Security Agreement
between the Borrower and KEYBANK NATIONAL ASSOCIATION, dated
March 1, 1996 (the "Agreement"), that the following
computations have been made in accordance with the provisions
of the Agreement and without duplication or overlap:
<TABLE>
<CAPTION>
<S> <C> <C>
1. Qualified Accounts Receivable, as defined
in Section 1 of the Agreement.
Total Accounts Receivable $ 2,363,157.55
Less Accounts Receivable Not Qualified $ 520,832.26
Total Qualified Accounts Receivable $ 1,842,325.29
80% of Qualified Accounts Receivable $ 1,473,860.24
2. Qualified Inventory, as defined in Section 1
of the Agreement (cost or market value, whichever
is lower).
Total Qualified Inventory $ 1,814,880.08
50% of Qualified Inventory but no more than
$1,000,000 $ 907,440.04
3. Lesser of Borrowing Base (Total of Nos. 1 and 2)
$ 2,381,300.28 or Borrower's Line of Credit Limit
$3,500,000 $ 2,381,300.28
Advances Outstanding $1,819,287.17
</TABLE>
-30-
<PAGE> 29
Borrowing Base Over/Under $562,013.11
I further certify that as of the date of this Borrower's Certificate:
(a) No Event of Default, as set forth in Section 9 of the Agreement,
and no event which, but for a requirement of giving of notice or
passage of time, or both, would constitute such an Event of
Default has occurred or is continuing;
(b) Borrower has places of business or maintains Inventory and
Equipment only at the following locations: 2860 North National
Road, Columbus, Indiana 47202; 820 North National Road, Columbus,
Indiana 47202
(c) Borrower keeps all of its records pertaining to Accounts and
Contract Rights, as those terms are defined in Section 1 of the
Agreement, at Borrower's office located at: 2860 North National
Road, Columbus, Indiana 47202.
(d) Borrower's Location, as defined in Section 1 of the Agreement,
is 2860 North National Road, Columbus, Indiana 47202.
(e) Each representation and warranty made by Borrower to Bank in the
Agreement is true and correct as if made on the date of this
Borrower's Certificate.
Dated this 3rd day of March, 1996.
BORROWER: G.L. INDUSTRIES OF INDIANA, INC.
By: Joe Balous
-----------------------------
Title: President
--------------------------
-31-
<PAGE> 30
EXHIBIT B
AMENDED AND RESTATED
MASTER PROMISSORY NOTE
$3,500,000.00 ___________,________, March 1, 1996
On March 31, 1998, the undersigned (herein called "Borrower") promises to pay
to the order of KEYBANK NATIONAL ASSOCIATION, Cleveland, Ohio (herein called
"Bank"), the sum of Three Million Five Hundred Thousand Dollars ($3,500,000) or
such lesser amount of Advances as shall have actually been borrowed by Borrower
from Bank and not previously repaid, pursuant to the terms of a certain Amended
and Restated Credit Facility and Security Agreement by and between Borrower and
Bank dated March 1, 1996, including any partial or total extension,
restatement, renewal, amendment, and substitution thereof or therefor (herein
called "Agreement") with interest payable monthly on the first day of each
month, starting on the first day of the month following the month in which this
Note is signed, according to the provisions set forth in Section 2(a) of the
Agreement.
This note is being executed and delivered as an amendment to and restatement of
an existing Master Promissory Note executed by Borrower and dated _________,
19___, and the execution and delivery of this Note shall not constitute a
novation and shall not terminate or otherwise affect the first lien and
security interest of the Bank in Borrower's property.
Borrower has assigned to Bank all of Borrower's "Accounts Receivable" and has
granted to Bank a security interest in all of Borrower's Accounts Receivable",
"Inventory", "Equipment", "Cash Security", funds on deposit in the "Cash
Collateral Account", certain other assets, and all "Proceeds", products,
profits, and rents thereof, as security for the payment of this Note and all
other "Obligations", as those terms are defined in Section 1 of the Agreement
(all herein called "Obligations").
Upon the occurrence of any one or more "Events of Default", any and all
Obligations shall, at the option of Bank, immediately become due and payable
without demand, presentment, protest, or notice of any kind, all as provided in
the Agreement.
Borrower expressly waives presentment, demand, notice, protest, and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of collateral, and to the addition or release of any other person
primarily or secondarily liable. Borrower understands and agrees that this
Note is subject to and shall be construed according to the laws of the State of
Ohio.
-32-
<PAGE> 31
Reference is made to the Agreement for certain provisions concerning prepayment
of this Note, rights of Bank and its successors and assigns with respect to
this Note, and related matters. This Note is the "Master Promissory Note"
referred to in the Agreement.
Borrower acknowledges that this Note was signed in Oakland County, in the State
of Michigan.
G.L. INDUSTRIES OF INDIANA, INC.
By: Michael Polselli
------------------------------
Title: Secretary
---------------------------
By: Joe Balous
------------------------------
Title: President
---------------------------
-33-
<PAGE> 32
EXHIBIT C
AMENDED AND RESTATED
TERM NOTE
$472,500.00 March 1 , Michigan ,1996
------- -------
For the value received, the undersigned (herein called
"Borrower") promises to pay to the order of KEYBANK NATIONAL
ASSOCIATION, Cleveland, Ohio, (the "Bank"), its successor and
assigns, at its main office, the principal sum of Four Hundred
Seventy-Two Thousand Five Hundred Dollars ($472,500) in twenty-
four (24) consecutive and equal monthly installments of Nineteen
Thousand Six Hundred Eighty-Seven and 50/100 Dollars
($19,687.50) each beginning on March 1, 1996 and continuing on
the first day of each consecutive month thereafter until
February 1, 1998, when any remaining principal balance shall be
due and payable.
Borrower promises to pay interest on the unpaid principal
amount of this Note from the date hereof until such principal
amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Agreement (hereinafter
defined).
This Noted is the Term Note referred to in, and is entitled to
the benefits of the Amended and Restated Credit Facility and
Security Agreement by and between the Bank and Borrower dated
as of March 1, 1996, (the "Agreement"). This Note may be
declared forthwith due and payable in the manner and with the
effect provided in the Agreement, which contains provisions for
acceleration of the maturity hereof upon the happening of
certain stated events, and also for prepayments on account of
principal hereof prior to the maturity hereof upon
the terms and conditions therein specified.
This Note is being executed and delivered as an amendment to
and restatement of an existing Replacement Term Note executed
by Borrower and dated November 1, 1990, and the execution and
delivery of this Note shall not constitute a novation and shall
not terminate or otherwise affect the first lien and security
interest of the Bank in Borrower's property.
Borrower expressly waives presentment, demand, protest, and
notice of dishonor.
Borrower acknowledges that this Note was signed in Oakland
County, in the State of Michigan.
BORROWER: G.L. INDUSTRIES OF INDIANA, INC.
By: Michael Polselli
-------------------------
Title: Secretary
----------------------
By: Joe Balous
-------------------------
Title: President
----------------------
-34-
<PAGE> 1
EXHIBIT 10.19
January 21, 1997
Mr. Barry A. Kempa
1026 Andover
Northville, MI 48167
Dear Barry:
In view of our recent conversations concerning your employment with LDM, we
have outlined below the terms and conditions of your employment with LDM which
will completely amend and supersede your previous employment agreement with
Molmec in its entirety, as follows:
1. Compensation. Your base compensation is $152,800 per year (as of today
and subject to merit increases). You are entitled to participate in the benefit
plans made available to LDM employees.
2. Term. This Agreement is effective today and will continue for a period
of two (2) years, unless your employment is terminated by you or by LDM for
cause.
3. Termination by You. In the event you terminate your employment
voluntarily, for any reason, within the first six (6) months after the date of
this Agreement, upon two (2) weeks prior written notice, LDM will pay you a lump
sum (less applicable withholding and payroll taxes), equal to eighteen (18)
months' base compensation (a minimum of $229,200) ("Severance Pay") as of that
date, payable on or before the actual date of termination. In addition, LDM will
provide you with Medical Insurance coverage for twelve (12) months after the
date of termination.
4. Termination for Cause. LDM may terminate your employment at any time
for Cause. The term "Cause" means a termination of your employment by LDM due to
dishonesty, embezzlement, conviction of a felony, or a breach by you of your
fiduciary duty to LDM. Upon a termination of your employment for Cause, LDM
shall have no further obligation to you.
5. Entire Agreement. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter and
supersedes all prior agreements or negotiations between the parties. This
Agreement may be amended only in a writing signed by both parties.
<PAGE> 2
Mr. Barry A. Kempa
January __, 1997
Page 2
If you agree with the terms of this letter, please sign and return a copy
of this letter (initialing the first page) to us for our files.
Dated: 1-21-97 LDM TECHNOLOGIES, INC.
Accepted and Agreed to: By:
-----------------------
Barry A. Kempa
- --------------------------- -----------------------
Barry A. Kempa
Dated: 1/21/97
- --------------------------- -----------------------
<PAGE> 1
EXHIBIT 12
LDM Technologies, Inc.
Computation of Ratio of Earnings to Fixed Charges
(thousands of dollars, except ratios)
<TABLE>
<CAPTION>
Years ended September
-------------------------------------------------------
1992 1993 1994 1995 1996
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings available for fixed charges:
Income from continuing operations before income
taxes, minority interest and extraordinary item $1,141 $4,490 $6,559 $11,537 $5,108
Interest,including amortization of debt
issuance costs 339 779 2,144 3,340 4,060
Less, interest capitalized during the year (162) (780)
Amortization of capitalized interest 16
Portion of operating lease rentals deemed to be
interest 250 275 450 650 600
-------------------------------------------------------
Total earnings available for fixed charges $1,730 $5,544 $9,153 $15,365 $9,004
=======================================================
Fixed charges:
Interest, including amortization of debt
issuance costs $ 339 $ 779 $2,144 $ 3,340 $4,060
Portion of operating lease rentals deemed to be
interest 250 275 450 650 600
-------------------------------------------------------
Total fixed charges $ 589 $1,054 $2,594 $ 3,990 $4,660
=======================================================
Ratio of earnings to fixed charges 2.9 5.3 3.5 3.9 1.9
</TABLE>
<PAGE> 1
EXHIBIT 12.1
LDM TECHNOLOGIES, INC.
PRO FORMA COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
Years ended September 29, 1996
------------------------------
Supplemental
Pro Forma (a) Pro Forma (b)
------------- -------------
<S> <C> <C>
Earnings available for fixed charges:
Income (loss) from continuing
operations before income taxes, minority
interest and extraordinary item $3,492 $ (1)
Interest, including amortization
of debt issuance costs 5,676 14,047
Less, interest capitalized during the year (780) (780)
Amortization of capitalized interest 16 16
Portion of operating lease rentals deemed to
be interest 600 600
-----------------------------
Total earnings available for fixed charges $9,004 $13,882
=============================
Fixed charges:
Interest, including amortization of
debt issuance costs $5,676 $14,047
Portion of operating lease rentals deemed to
be interest 600 600
-----------------------------
$6,276 $14,647
Total fixed charges =============================
Ratio of earnings to fixed charges 1.4
Deficiency of earnings available for fixed
charges $ 765
</TABLE>
(a) Gives effect only to the change in interest expense to the extent of the
repayment of previously existing debt from proceeds of the Initial
Offering.
(b) Gives effect to both the Initial Offering, in entirety, and the Molmec
Acquisition.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES AND AFFILIATES
<TABLE>
<CAPTION>
JURISDICTION OF
OWNED BY AND INCORPORATION/
NAME PERCENTAGE OWNED ORGANIZATION
---- ---------------- --------------
<S> <C> <C>
SUBSIDIARIES
LDM Technologies S. de R.L. LDM Holding Mexico, Inc. (1%) Mexican corporation
and LDM Technologies, Inc.
(99%)
GL Industries of Indiana, Inc., LDM Technologies, Inc. (75%) Indiana corporation
d/b/a Como Products
LDM Holdings, L.L.C. LDM Holding Canada, Inc. Michigan limited
(33%) and LDM Technologies, liability company
Inc. (67%)
LDM Canada Limited Partnership LDM Holdings, L.L.C. (3%) and Michigan limited
LDM Technologies, Inc. (97%) partnership
LDM Technologies Company LDM Canada Limited Partnership Nova Scotia unlimited
(99%) and LDM Holding Canada, liability company
Inc. (1%)
AFFILIATES
LDM Holding Mexico, Inc. Owned 50% each by Richard Michigan corporation
Nash and Joe Balous
LDM Holding Canada, Inc. Owned 50% each by Richard Michigan corporation
Nash and Joe Balous
</TABLE>
<PAGE> 1
Exhibit 23.2 - Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated November 22, 1996 (except Note 11, as to which the date
is January 22, 1997) in the Registration Statement (Form S-4) and related
Prospectus of LDM Technologies, Inc. for the registration of $110,000,000 of
its 10 3/4% Senior Subordinated Notes due 2007, Series B.
ERNST & YOUNG LLP
Detroit, Michigan
February 11, 1997
<PAGE> 1
EXHIBIT 23.3
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
Registration Statement of LDM Technologies, Inc. on Form S-4 of our report
dated April 2, 1996, except as to the information presented in Note 12 for
which the date is January 22, 1997 on the financial statements of Molmec, Inc.
as of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995 and the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 12, 1997.
<PAGE> 1
EXHIBIT 25
-----------------------------------------
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)
-----------------
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
JAMES P. FREEMAN
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
LDM TECHNOLOGIES, INC.
(Exact names of obligor as specified in its charter)
LDM HOLDINGS, L.L.C.
LDM CANADA LIMITED PARTNERSHIP
LDM TECHNOLOGIES COMPANY
(Exact names of guarantors as specified in their charters)
Michigan 38-269-0171
Michigan Pending
Michigan 38-331-1998
Nova Scotia N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2500 Executive Hills Drive
Auburn Hills, Michigan 48326
(Address of principal executive offices) (Zip code)
10 3/4% Senior Subordinated Notes due 2007, Series B
---------------
(Title of indenture securities)
<PAGE> 2
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.
New York State Banking Department,
Two Rector Street,New York, New York
Federal Deposit Insurance Corporation,
Washington, D.C.
Federal Reserve Bank of New York Second District,
33 Liberty Street, New York, New York
(b) Whether it is authorized to exercise corporate
trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The obligor is not an affiliate of the trustee.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture. Explain
the nature of any such default.
None
2
<PAGE> 3
(b) If the trustee is a trustee under another
indenture under which any other securities, or
certificates of interest or participation in any other
securities, of the obligors are outstanding, or is trustee
for more than one outstanding series of securities under
the indenture, state whether there has been a default
under any such indenture or series, identify the
indenture or series affected, and explain the nature of
any such default.
None
List of exhibits.
List below all exhibits filed as part of this statement
of eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust
Company as amended to date. (See Exhibit 1A to Form T-1,
Securities and Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the trustee to
Commence Business (Included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise
corporate trust powers, as amended to date (See Exhibit
4 to Form T-1, Securities and Exchange Commission File
No. 22-19146).
*4. A copy of the existing By-Laws of the trustee, as
amended to date (See Exhibit 4 to Form T-1, Securities
and Exchange Commission File No. 22-19146).
5. Not Applicable
6. The consent of United States institutional
trustee required by Section 321(b) of the Act.
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.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the Securities
and Exchange Commission, to which there have been no amendments or
changes.
3
<PAGE> 4
NOTE
In answering any item in this Statement of Eligibility which
relates to matters peculiarly within the knowledge of the obligor
and its directors or officers, the trustee has relied upon
information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by
the trustee of all facts on which to base responsive answers to
Item 2, the answer to said Item is based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to
Items 1, 2 and 16 of this form since to the best knowledge of the
trustee as indicated in Item 13, the obligor is not in default
under any indenture under which the applicant is trustee.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 5th day of February, 1997.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ James P. Freeman
----------------------
James P. Freeman
Assistant Vice President
<PAGE> 6
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the issue by LDM Technologies, Inc. of
its 10 3/4% Senior Subordinated Notes due 2007,we hereby consent that reports
of examinations by Federal, State, Territorial, or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/James P. Freeman
---------------------
James P. Freeman
Assistant Vice President
Dated: February 5, 1997
<PAGE> 7
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF SEPTEMBER 30, 1996
<TABLE>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
ASSETS
<S> <C>
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin ......................................................... $ 34,228
Interest-bearing balances .................................................................................. $ 229,175
Securities: Held-to-maturity securities .................................................................. $ 174,707
Available-for-sale securities ....................................................................... $ 36,168
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold ......................................................................................... $ 15,062
Securities purchased under agreements to resell ............................................................ $ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income $ 1,780,278
LESS: Allowance for loan and lease losses $ 56,976
LESS: Allocated transfer risk reserve $ -0-
Loans and leases, net of unearned income, allowance, and reserve ........................................... $ 1,723,302
Trading assets held in trading accounts ..................................................................... $ 622
Premises and fixed assets (including capitalized leases) .................................................... $ 4,264
Other real estate owned ..................................................................................... $ 397
Investments in unconsolidated subsidiaries and associated companies ......................................... $ -0-
Customers' liability to this bank on acceptances outstanding ................................................ $ 105
Intangible assets ........................................................................................... $ -0-
Other assets ................................................................................................ $ 153,290
TOTAL ASSETS ................................................................................................ $ 2,371,320
</TABLE>
<PAGE> 8
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices ............................................................................................$ 671,747
Noninterest-bearing ...............................................................$224,231
Interest-bearing ..................................................................$447,516
In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................................................$ 856,540
Noninterest-bearing ...............................................................$ 17,313
Interest-bearing ..................................................................$839,227
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased ......................................................................................$ 430,500
Securities sold under agreements to repurchase ...............................................................$ -0-
Demand notes issued to the U.S. Treasury .......................................................................$ 50,000
Trading Liabilities ............................................................................................$ 539
Other borrowed money:
a) With a remaining maturity of one year or less .............................................................$ 61,090
b) With a remaining maturity of more than one year ...........................................................$ 7,647
Mortgage indebtedness and obligations under capitalized leases .................................................$ -0-
Bank's liability on acceptances executed and outstanding .......................................................$ 105
Subordinated notes and debentures ..............................................................................$ -0-
Other liabilities ..............................................................................................$ 77,289
TOTAL LIABILITIES ..............................................................................................$ 2,155,457
Limited-life preferred stock and related surplus ...............................................................$ -0-
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus ................................................................. $ -0-
Common stock .................................................................................................. $ 29,649
Surplus (exclude all surplus related to preferred stock) ...................................................... $ 217,008
Undivided profits and capital reserves ........................................................................ $ (30,795)
Net unrealized gains (losses) on available-for-sale securities ................................................ $ 1
Cumulative foreign currency translation adjustments ........................................................... $ -0-
TOTAL EQUITY CAPITAL .......................................................................................... $ 215,863
TOTAL LIABILITIES AND EQUITY CAPITAL .......................................................................... $2,371,320
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
TENDER OF 10 3/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
IN EXCHANGE FOR
10 3/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
LDM TECHNOLOGIES, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
DELIVER TO THE EXCHANGE AGENT:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<CAPTION>
By Mail: Telephone Number: By Hand or Overnight Delivery:
<C> <C> <C>
P.O. Box 84 (212) 858-2103 One State Street
Bowling Green Station New York, N.Y. 10004
New York, N.Y. 10274-0084 Facsimile Number: Attention: Reorganization
Attention: Reorganization Operations Department,
Operations Department (212) 858-2611 Securities Processing Window,
Attention: Reorganization Subcellar One (SC-1)
Operations Department
Telex: 177754
</TABLE>
------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE 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 and review of the Prospectus
dated , 1997 (the "Prospectus") of LDM Technologies, Inc. (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together describe the Company's offer (the "Exchange Offer") to exchange its
10 3/4% Senior Subordinated Notes due January 15, 2007, Series B (the "New
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 a like principal amount of its issued and outstanding
10 3/4% Senior Subordinated Notes due January 15, 2007, Series A (the "Old
Notes"). Capitalized terms used but not defined herein have the respective
meaning given to them in the Prospectus.
The Company reserves the right, at any time or from time to time, to extend
the Exchange Offer at its discretion, in which event the term "Expiration Date"
shall mean the latest time and date in which the Exchange Offer is extended. The
Company shall notify the holders of the Old Notes of any extension by oral
<PAGE> 2
or written notice prior to 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date.
This Letter of Transmittal is to be used by a Holder of Old Notes either if
original Old Notes are to be forwarded herewith or if delivery of Old Notes, if
available, is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in the Prospectus under the
caption "The Exchange Offer-Book-Entry Transfer." Holders of Old Notes whose Old
Notes are not immediately available, or who are unable to deliver their Old
Notes and all other documents required by this Letter of Transmittal to the
Exchange Agent on or prior to the Expiration Date, or who are unable to complete
the procedure for book-entry transfer on a timely basis, must tender their Old
Notes according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer-Guaranteed Delivery
Procedures." See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
Holder. 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 Old Notes must complete
this Letter of Transmittal in its entirety.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
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.
List below the Old Notes to which this Letter of Transmittal relates. If
the space below is inadequate, list the registered numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of Transmittal.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- ---------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S), AMOUNT PRINCIPAL
EXACTLY AS NAMES(S) APPEAR(S) ON OLD NOTES REGISTERED REPRESENTED AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* BY NOTE(S) TENDERED**
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
----------------
----------------
----------------
----------------
----------------
TOTAL
- ------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, any tendering Holder of Old Notes will be deemed to have tendered the entire
aggregate principal amount represented by such Old Notes. All tenders must be in integral multiples of
$1,000.
- ------------------------------------------------------------
</TABLE>
<PAGE> 3
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE
INSTITUTIONS ONLY):
Name of Tendering Institution:
- --------------------------------------------------------------------------------
Account Number:
- --------------------------------------------------------------------------------
Transaction Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR
USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Holder(s) of Old Notes:
- ------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------------
Window Ticket Number (if available):
- -----------------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
- ------------------------------------------------------
Account Number (if delivered by book-entry transfer):
- ------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes, it acknowledges that the Old Notes were
acquired as a result of market-making activities or other trading activities and
that it will deliver a prospectus in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned hereby exchanges, assigns and transfers to the
Company all right, title and interest in and to the Old Notes tendered for
exchange hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent, the agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company in
connection with the Exchange Offer) with respect to the tendered Old Notes with
full power of substitution to (i) deliver such Old Notes, or transfer ownership
of such Old Notes on the account books maintained by the Book-Entry Transfer
Facility, to the Company and deliver all accompanying evidences of transfer and
authenticity, and (ii) present such Old Notes for transfer on the books of the
Company and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Exchange
Offer. The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
<PAGE> 4
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire the New Notes issuable upon the exchange of such
tendered Old Notes, and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are accepted
for exchange by the Company.
The undersigned acknowledge(s) that this Exchange Offer is being made in
reliance upon interpretations contained in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the
"Commission") that the New Notes issued in exchange for the Old Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by Holders thereof (other than any such Holder that is an
"affiliate" of the Company 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 New Notes are acquired in
the ordinary course of such Holders' business and such Holders are not engaging
in and do not intend to engage in a distribution of the New Notes and have no
arrangement or understanding with any person to participate in a distribution of
such New Notes. The undersigned hereby further represent(s) to the Company that
(i) any New Notes acquired in exchange for Old Notes tendered hereby are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not the undersigned, (ii) neither the undersigned not any such
other person is engaging in or intends to engage in a distribution of the New
Notes, (iii) neither the undersigned not any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, and (iv) neither the Holder not any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company or,
if it is an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable.
If the undersigned or the person receiving the New Notes is a broker-dealer
that is receiving New Notes for its own account in exchange for Old 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 in connection with any resale of such New Notes; however,
by so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that the undersigned or such other person is an "underwriter"
within the meaning of the Securities Act. The undersigned acknowledges that if
the undersigned is participating in the Exchange Offer for the purpose of
distributing the New Notes (i) the undersigned cannot rely on the position of
the staff of the Commission in certain 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 a secondary
resale transaction of the New Notes, in which case the registration statement
must contain the selling security holder information required by Item 507 or
Item 508, as applicable, of Regulation S-K of the Commission, and (ii) failure
to comply with such requirements in such instance could result in the
undersigned incurring liability under the Securities Act for which the
undersigned is not indemnified by the Company.
If the undersigned or the person receiving the New Notes is an "affiliate"
(as defined in Rule 405 under the Securities Act), the undersigned represents to
the Company that the undersigned understands and acknowledges that the New 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 will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Old Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Old
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicated herein under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
<PAGE> 5
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer--Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the New Notes issued in exchange for the Old Notes accepted for exchange
and return any Old Notes not tendered or not exchanged, in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail or deliver the New Notes issued in exchange for the
Old Notes accepted for exchange and any Old Notes not tendered or not exchanges
(and accompanying documents, as appropriate) to the undersigned at the address
shown below the undersigned's signature(s). In the event that both "Special
Issuance Instructions" and "Special Delivery Instructions" are completed, please
issue the New Notes issued in exchange for the Old Notes accepted for exchange
in the name(s) of, and return any Old Notes not tendered or not exchanged to,
the person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered holer(s)
thereof if the Company does not accept for exchange any of the Old Notes so
tendered for exchange.
<PAGE> 6
- ----------------------------------------------------------
- ----------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Old
Notes in a principal amount not
tendered, or New Notes issued in
exchange for Old Notes accepted for
exchange, are to be issued in the
name of someone other than the
undersigned, or (ii) if Old Notes
tendered by book-entry transfer which
are not exchanged are to be returned
by credit to an account maintained by
at the Book-Entry Transfer Facility.
Issue New Notes and/or Old Notes to:
Name(s):
-----------------------------
-------------------------------------
(Please Type or Print)
Address:
-----------------------------
-------------------------------------
(Include Zip Code)
-------------------------------------
(Tax Identification or Social
Security No.)
(Complete Substitute Form W-9)
[ ] Credit unexchanged Old Notes
delivered by book-entry transfer
to the Book-Entry Transfer
Facility set forth below:
-------------------------------------
(Book-Entry Transfer Facility Account
Number, if applicable)
- ----------------------------------------------------------
- ----------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY if Old Notes
in a principal amount not tendered, or
New Notes issued in exchange for Old
Notes accepted for exchange, are to
be mailed or delivered to someone
other than the undersigned, or to the
undersigned at an address other than
that shown below the undersigned's
signature.
Mail or deliver New Notes and/or Old
Notes to:
Name:
--------------------------------
-------------------------------------
(Please Type or Print)
Address:
-----------------------------
-------------------------------------
(Include Zip Code)
-------------------------------------
(Tax Identification or Social
Security No.)
- --------------------------------------------------------------------------------
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 on Reverse Side)
<TABLE>
<S> <C> <C>
X
------------------------------------------------------------ ------------------------
Date
X
------------------------------------------------------------ ------------------------
Date
</TABLE>
Area Code and Telephone Number:
----------------------------------------------
The above lines must be signed by the registered Holder(s) of Old Notes
as name(s) appear(s) on the Old Notes or on a security position listing, or by
person(s) authorized to become registered Holder(s) by a properly completed
bond power from the registered Holder(s), a copy of which must be transmitted
with this Letter of Transmittal. If Old Notes to which this Letter of
Transmittal relate are held of record by two or more joint Holders, then all
such Holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
then such person must (i) set forth his or her full title below and (ii)
unless waived by the Company, submit evidence satisfactory to the Company of
such person's authority so to act. See Instruction 5 regarding the completion
of this Letter of Transmittal, printed below.
Name(s):
----------------------------------------------------------------------
------------------------------------------------------------------------------
(Please Type or Print)
Capacity:
---------------------------------------------------------------------
Address:
---------------------------------------------------------------------
------------------------------------------------------------------------------
(Include Zip Code)
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be Guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an Eligible Institution:
---------------------------
(Authorized Signature)
------------------------------------------------------------------------------
(Title)
------------------------------------------------------------------------------
(Name of Firm)
------------------------------------------------------------------------------
(Address, Include Zip Code)
------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated: , 1995
----------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Old Notes or Book-Entry
Confirmations. All physically delivered Old Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer
Facility of Old Notes tendered by book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Old Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent 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 or confirmed by the
Exchange Agent. Instead of delivery by mail, it is recommended that the Holder
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 Old Notes should be sent to the Company.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Old
Notes and (a) whose Old Notes are not immediately available, or (b) who cannot
deliver their Old Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent prior to the Expiration Date or (iii) who
are unable to complete the procedure for book-entry transfer on a timely basis,
must tender their Old Notes according to the guaranteed delivery procedures set
forth in the Prospectus. Pursuant to such procedures: (i) such tender must be
made by or through a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers Inc. or a
commercial bank or a trust company having an office or correspondent in the
United States (an "Eligible Institution"); (ii) prior to the Expiration Date,
the Exchange Agent must have received from the 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 of the Old Notes, the registration number(s) of such Old Notes and the
principal amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within three (3) New York Stock Exchange, Inc.
("NYSE") trading days after the Expiration Date, this Letter of Transmittal (or
facsimile hereof) together with the Old Notes (or a Book-Entry Confirmation) in
proper form for transfer, must be received by the Exchange Agent within three
(3) NYSE trading days after the Expiration Date; and (iii) the certificates for
all physically tendered shares of Old Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required by
this Letter are received by the Exchange Agent within three (3) NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
Any Holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice
of Guaranteed Delivery will be sent to Holders who wish to tender their Old
Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus.
3. Tender by Holder. Only a Holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial Holder of Old Notes who is not the
registered Holder and who wishes to tender should arrange with the registered
Holder to execute and deliver this Letter of Transmittal on his behalf or must,
prior to completing and executing this Letter of Transmittal and delivering his
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in such Holder's name or obtain a properly completed bond power from the
registered Holder.
4. Partial Tenders. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering Holder should fill in the principal amount tendered
in the third column of the box entitled "Description of Old Notes" above. The
entire principal amount of Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless
<PAGE> 8
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, then Old Notes for the principal amount of Old Notes not tendered and
New Notes issued in exchange for any Old Notes accepted will be sent to the
Holder at his or her registered address, unless a different address is provided
in the appropriate box on this Letter of Transmittal, promptly after the Old
Notes are accepted for exchange.
5. Signatures on This Letter of Transmittal; Bond Powers and Endorsements;
Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile
hereof) is signed by the record Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever. If this Letter
of Transmittal is signed by a participant in the Book-Entry Transfer Facility,
the signature must correspond with the name as it appears on the security
position listing as the Holder of the Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Old Notes listed and tendered hereby and the New
Notes issued in exchange therefor is to be issued (or any untendered principal
amount of Old Notes is to be reissued) to the registered Holder, the said Holder
need not and should not endorse any tendered Old Notes, nor provide a separate
bond power. In any other case, such Holder must either properly endorse the Old
Notes tendered or transmit a properly completed separate bond power with this
Letter of Transmittal, with the signatures on the endorsement or bond power
guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Old Notes listed, such Old
Notes must be endorsed or accompanied by appropriate bond powers, in each case
signed as the name of the registered Holder or Holders appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered holder(s) of the Old Notes tendered herewith (or by a
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of the tendered Old Notes) and the issuance of New
Notes (and any Old Notes not tendered or not accepted) are to be issued directly
to such registered holder(s) (or, if signed by a participant in the Book-Entry
Transfer Facility, any New Notes or Old Notes not tendered or not accepted are
to be deposited to such participant's account at such Book-Entry Transfer
Facility) and neither the box entitled "Special Delivery Instructions" nor the
box entitled "Special Registration Instructions" has been completed, or (ii)
such Old Notes are tendered for the account of an Eligible Institution. In all
other cases, all signatures on this Letter of Transmittal must be guaranteed by
an Eligible Institution.
6. Special Registration and Delivery Instructions. Tendering holders should
indicate, in the applicable box or boxes, the name and address (or account at
the Book-Entry Transfer Facility) to which New Notes or substitute Old Notes for
principal amounts not tendered or not accepted for exchange are to be issued or
sent, if different from the name and address of the person signing this Letter
of Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, New Notes or Old Notes for principal amounts not tendered or accepted
for exchange are to be delivered to, or are to be registered or issued in the
name of, any person other than the registered Holder of the Old Notes tendered
hereby, or if tendered Old Notes are registered in the name of any person other
than the person signing this Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other persons) will be
<PAGE> 9
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES LISTED IN THIS LETTER OF
TRANSMITTAL.
8. Tax Identification Number. Federal income tax law required that a holder
of any Old Notes which are accepted for exchange must provide the Company (as
payor) with its correct taxpayer identification number ("TIN"), which, in the
case of a holder who is an individual in his or her social security number. If
the Company is not provided with the correct TIN, the Holder may be subject to a
$50 penalty imposed by Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Old Notes are registered in more than one name or are not in the name of
the actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number of Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered Old Notes will be
determined by the Company, in its sole discretion, which determination will be
final and binding. The Company reserves the right to reject any and all Old
Notes not validly tendered or any Old Notes, the Company's acceptance of which
would, in the opinion of the Company or its counsel, be unlawful. The Company
also reserves the right to waive any conditions of the Exchange Offer or defects
or irregularities in tenders of Old Notes as to any ineligibility of any holder
who seeks to tender Old Notes in the Exchange Offer. The interpretation of the
terms and conditions of the Exchange Offer (includes this Letter of Transmittal
and the instructions hereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine. The
Company will use reasonable efforts to give notification of defects or
irregularities with respect to tenders of Old Notes, but shall not incur any
liability for failure to give such notification.
10. Waiver of Conditions. The Company reserves the absolute right to waive,
in whole or part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
11. No Conditional Tender. No alternative, conditional, irregular or
contingent tender of Old Notes on transmittal of this Letter of Transmittal will
be accepted.
12. Mutilated, Lost, Stolen or Destroyed Old Notes. Any Holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
13. Requests for Assistance or Additional Copies. Requests for assistance
or for additional copies of the Prospectus or this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this Letter of Transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
<PAGE> 10
14. Acceptance of Tendered Old Notes and Issuance of New Notes; Return of
Old Notes. Subject to the terms and conditions of the Exchange Offer, the
Company will accept for exchange all validly tendered Old Notes as soon as
practicable after the Exchange Date and will issue New Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted tendered Old Notes when, as and if the Company has given
written and oral notice thereof to the Exchange Agent. If any tendered Old Notes
are not exchanged pursuant to the Exchange Offer for any reason, such
unexchanged Old Notes will be returned, without expense, to the undersigned at
the address shown above (or credited to the undersigned's account at the
Book-Entry Transfer Facility designated above) or at a different address as may
be indicated under the box entitled "Special Delivery Instructions."
15. Withdrawal. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE OLD NOTES) WHICH MUST BE DELIVERED BY BOOK-ENTRY TRANSFER OR
IN ORIGINAL HARD COPY FROM) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
<PAGE> 11
(TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5))
PAYER'S NAME: LDM TECHNOLOGIES, INC.
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <S> <C>
SUBSTITUTE PART I--Taxpayer Identification
FORM W-9 No.--For all accounts, enter
DEPARTMENT OF THE TREASURY your taxpayer identification
INTERNAL REVENUE SERVICE number in the appropriate box. Social Security Number
For most individuals and sole
proprietors, this is your OR
social security number. For
other entities, it is your
Employer Identification Number.
If you do not have a number,
see How to Obtain a TIN in the
enclosed Guidelines. Note: If
the account is in more than one
name, see Employer identifica-
tion number the chart on page 2
of the enclosed Guidelines to
determine what number to enter.
- -----------------------------------------------------------------------------------------------------
Payer's Request for Taxpayer PART II--For Payees Exempt From Backup Withholding (see enclosed
Identification Number Guidelines)
- -----------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be 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 Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide
a number;
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
- --------------------------------------------------------------------------------
SIGNATURE DATE , 1997
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE NEW NOTES. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 12
Tender of 10 3/4% Senior Subordinated Notes Due 2007, Series A
in Exchange for
10 3/4% Senior Subordinated Notes Due 2007, Series B
LDM TECHNOLOGIES, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1997, of LDM
Technologies, Inc. (the "Company"), a Michigan corporation, and a related Letter
of Transmittal (which together constitute the "Exchange Offer") relating to the
offer by the Company, to exchange its 10 3/4% Senior Subordinated Notes Due
2007, Series B (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act") for a like principal
amount of its issued and outstanding 10 3/4% Senior Subordinated Notes Due 2007,
Series A (the "Old Notes"), upon the terms and subject to the conditions set
forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
We are the holder of record of Old Notes held by us for your own account. A
tender of such Old Notes can be made only by us as the record holder and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Old Notes held by us
for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
within the meaning of the Securities Act of such New Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
New Notes for its own account in exchange for Old Notes, neither the undersigned
nor any such other person is engaged in or intends to participate in the
distribution of such New Notes and (iv) neither the undersigned nor any such
other person is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act or, if the undersigned is an "affiliate," that the
undersigned will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. If the undersigned
is a
<PAGE> 13
broker-dealer (whether or not it is also an "affiliate) that will receive New
Notes for its own account in exchange for Old Notes, it represents that such Old
Notes were acquired as a result of market-making activities or other trading
activities, and it acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes. By acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes, the undersigned is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Very truly yours,
2
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
for
Tender of 10 3/4% Senior Subordinated Notes due 2007, Series A
in Exchange for
10 3/4% Senior Subordinated Notes due 2007, Series B
LDM TECHNOLOGIES, INC.
This form or one substantially equivalent hereto must be used by a holder
to accept the Exchange Offer of LDM Technologies, Inc., a Michigan corporation
(the "Company"), who wishes to tender 10 3/4% Senior Subordinated Notes due
2007, Series A (the "Old Notes") to the Exchange Agent pursuant to the
guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed
Delivery Procedures" of the Company's Prospectus, dated , 1997 (the
"Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Old Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date (as defined below) of the
Exchange Offer. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus or the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN
THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<CAPTION>
By Mail: Telephone Number: By Hand or Overnight Delivery:
<C> <C> <C>
P.O. Box 84 (212) 858-2103 One State Street
Bowling Green Station New York, N.Y. 10004
New York, N.Y. 10274-0084 Facsimile Number: Attention: Reorganization
Attention: Reorganization Operations Department,
Operations Department (212) 858-2611 Securities Processing Window,
Attention: Reorganization Subcellar One (SC-1)
Operations Department
Telex: 177754
</TABLE>
------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY 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.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED BOX ON THE
LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
1
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S) (IF KNOWN) OF OLD NOTES OR AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED AMOUNT TENDERED
- ------------------------------------------------ ------------------- -------------------
<S> <C> <C>
</TABLE>
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signatures of Registered Holder(s) or Date:
-----------------------------------------------
Authorized Signatory:
--------------------------------
Address:
---------------------------------------------
- -----------------------------------------------------
-----------------------------------------------------
- -----------------------------------------------------
Name(s) of Registered Holder(s): Area Code and Telephone No.
--------------- --------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
Holder(s) by endorsements 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 provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Names(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof), together with the Old Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility described in
the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in the Letter of Transmittal and any other required documents,
all by 5:00 p.m., New York City time, within five New York Stock Exchange
trading day following the Expiration Date.
<TABLE>
<S> <C>
Name of Firm: ---------------------------------------------
-------------------------- (AUTHORIZED SIGNATURE)
Address: Name:
------------------------------- ---------------------------------------
(INCLUDE ZIP CODE) Title:
---------------------------------------
Area Code and Tel. Number: (PLEASE TYPE OR PRINT)
- ---------------------------------------- Date: , 1997
------------------------------
</TABLE>
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY A PROPERLY COMPLETED AND DULY EXECUTED LETTER
OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
3
<PAGE> 4
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Old Notes, the signature must correspond with the
name shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Old Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the
registered holder(s) appears on the Old Notes or signed as the name of the
participant shown on the Book-Entry Transfer Facility's security position
listing.
If this Notice of Guaranteed Delivery is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and submit with the
Letter of Transmittal evidence satisfactory to the Company of such person's
authority to so act.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company, or other
nominee for assistance concerning the Exchange Offer.
4
<PAGE> 5
Instruction to Registered Holder and/or Book
Entry Transfer Participant from Beneficial Owner
for
Tender of 10 3/4% Senior Subordinated Notes Due 2007, Series A
in Exchange for
10 3/4% Senior Subordinated Notes Due 2007, Series B
LDM TECHNOLOGIES, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1997 (the "Prospectus") of LDM Technologies, Inc., a Michigan
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its 10 3/4% Senior Subordinated Notes Due 2007,
Series B (the "New Notes") for all of its outstanding 10 3/4% Senior
Subordinated Notes Due 2007, Series A (the "Old Notes"). 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 book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (FILL IN AMOUNT):
$________ of the 10 3/4% Senior Subordinated Notes Due 2007, Series A.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] To TENDER the following Old Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED (IF
ANY): $________
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of
<PAGE> 6
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 New Notes
acquired pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the undersigned, (ii) neither the undersigned nor any such
other person has an arrangement or understanding with any person to participate
in the distribution within the meaning of the Securities Act of 1933, as amended
(the "Securities Act") of such New Notes, (iii) if the undersigned is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the undersigned nor any such other
person is engaged in or intends to participate in the distribution of such New
Notes and (iv) neither the undersigned nor any such other person is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or, if the undersigned is an "affiliate," that the undersigned will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable. If the undersigned is a broker-dealer (whether or not
it is also an "affiliate") that will receive New Notes for its own account in
exchange for Old Notes, it represents that such Old Notes were acquired as a
result of market-making activities or other trading activities, and it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. By acknowledging
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s):
---------------------------------------------------
Signature(s):
------------------------------------------------------------------
Name(s) (please print):
--------------------------------------------------------
Address:
-----------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Taxpayer Identification or Social Security Number:
----------------------------
Date:
-------------------------------------------------------------------------
2
<PAGE> 7
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF--
- --------------------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals account or, if combined
(joint account) funds, any one of the
individuals1
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person1
4. Custodian account of a The minor2
minor (Uniform Gift to
Minors Act)
5. Adult and minor The adult or, if the minor
(joint account) is the only contributor,
the minor1
6. Account in the name of The ward, minor, or
guardian or committee incompetent person3
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee1
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner1
account that is not
a legal or valid
trust under state
law
8. Sole proprietorship The owner4
account
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF--
- --------------------------------------------------------
<S> <C>
9. A valid trust, The legal entity (Do not
estate, or pension furnish the identification
trust number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title.)5
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------------------------------
- ------------------------------------------------------------
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
4 Show the name of the owner.
5 List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 8
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 9
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PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
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SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN PART III--Social Security
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY Number OR
DEPARTMENT OF THE TREASURY BY SIGNING AND DATING BELOW. Employer Identification Number
INTERNAL REVENUE SERVICE
(If awaiting TIN write "Applied
For")
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PART II--For Payees Exempt From Backup Withholding, see the
enclosed
Guidelines for Certification of Taxpayer Identification Number on
Payer's Request for Taxpayer
Identification Number (TIN) Sub-
stitute Form W-9 and complete as instructed therein.
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CERTIFICATION--Under penalties of perjury, I certify that:
(1) The Number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends,
or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding, you
received another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
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NAME ________________________________________________________________
(Please Print)
SIGNATURE DATE _____________________________________________________
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NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
payments of the Offer Price made to me thereafter will be withheld until I
provide a number.
SIGNATURE DATE ________________
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Tender of 10 3/4% Senior Subordinated Notes Due 2007, Series A
in Exchange for
10 3/4% Senior Subordinated Notes Due 2007, Series B
LDM TECHNOLOGIES, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED (THE "EXPIRATION DATE").
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by LDM Technologies, Inc. (the "Company"), a Michigan corporation, to exchange
its 10 3/4% Senior Subordinated Notes Due 2007, Series B (the "New Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of its issued and outstanding
10 3/4 Senior Subordinated Notes Due 2007, Series A (the "Old Notes") upon the
terms and subject to the conditions set forth in the Company's Prospectus, dated
, 1997, and the related Letter of Transmittal (which together
constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1997;
2. Letter of Transmittal (together with accompanying Substitute Form
W-9 Guidelines);
3. Notice of Guaranteed Delivery; and
4. Letter which may be sent to your clients for whose account you hold
Old Notes in your name or in the name of your nominee, with space provided
for obtaining such client's instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the Exchange
Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
within the meaning of the Securities Act of such New Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
New Notes for its own account in exchange for Old Notes, neither the undersigned
nor any such other person is engaged in or intends to participate in the
distribution of such New Notes and (iv) neither the undersigned nor any such
other person is an "affiliate" of the Company within the meaning of Rule 405
under the
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Securities Act or, if the undersigned is an "affiliate," that the undersigned
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable. If the undersigned is a broker-dealer
(whether or not it is also an "affiliate") that will receive New Notes for its
own account in exchange for Old Notes, it represents that such Old Notes were
acquired as a result of market-making activities or other trading activities,
and it acknowledges that it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such New Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes, the undersigned is not deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
IBJ SCHRODER
BANK & TRUST COMPANY
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