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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 6, 1998
LDM Technologies, Inc.
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(Exact name of registrant as specified in it charter)
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Michigan 333-21819 38-269-0171
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
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2500 Executive Hills Drive, Auburn Hills, Michigan 48326
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 858-2800
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Item 2. Acquisition or Disposition of Assets
On February 6, 1998 LDM Technologies, Inc., a Michigan corporation
("Registrant") acquired all of the capital stock of Huron Plastics Group, Inc.
and substantially all of the assets of Tadim, Inc. (collectively referred to
herein as "HPG".) The assets of Tadim, Inc. acquired consisted of plant,
equipment and inventory.
The aggregate purchase price paid for HPG was $65.1 million cash, and
the assumption of certain liabilities in the approximate amount of $13.4
million. The funds required for the purchase price were acquired by the
Registrant under a term loan with BankAmerica Business Credit, Inc., as agent
for itself and a group of banks.
There was no material relationship between HPG and the Registrant or
any of its affiliates, any director or officer of the Registrant, or any
associate of any such director or officer.
HPG is engaged in the business of manufacturing and distributing a wide
variety of interior trim, underhood and functional components for many
automotive customers, including Ford Motor Company, Chrysler Corporation,
General Motors Corporation, Bundy North American, TRW, Inc. and Johnson
Controls, Inc. The business and operations of HPG will be continued by the
Registrant substantially as they were conducted prior to the acquisition.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired: It is
impracticable to file the required financial statements for the
acquired businesses at the time this report on Form 8-K is filed.
The Registrant will file such financial statements by an amendment
on or before April 22, 1998.
(b) Pro forma financial information: It is impracticable to
file the required pro forma financial information at the time this
report on Form 8-K is filed. The Registrant will file such pro
forma financial information by an amendment on or before April 22,
1998.
(c) Exhibits
1. Stock and Asset Purchase Agreement by and among
LDM Technologies, Inc., Tadim, Inc., Huron Plastics Group,
Inc. and certain "Selling Shareholders" dated December 23,
1997, First Amendment thereto dated January 23, 1998, Second
Amendment thereto dated January 30, 1998, Third Amendment
thereto dated February 2, 1998 and Fourth Amendment thereto
dated February 6, 1998.
2. Term Loan and Security Agreement dated as of February 6,
1998 among the financial institutions named therein, as the
Lenders, BankAmerica Business Credit, Inc., as Agent, and
LDM Technologies, Inc., as the Borrower.
3. Amendment No. 5 and Affirmation of Guaranties to
Loan Agreement dated as of February 6, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
LDM TECHNOLOGIES, INC.
By: /s/ Gary E. Borushko
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Gary E. Borushko
Chief Financial Officer
Dated: February 20, 1998
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INDEX TO EXHIBITS
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EXHIBIT NO. DESCRIPTION
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1. Stock and Asset Purchase Agreement by and among LDM
Technologies, Inc., Tadim, Inc., Huron Plastics Group, Inc. and
certain "Selling Shareholders" dated December 23, 1997, First
Amendment thereto dated January 23, 1998, Second Amendment thereto
dated January 30, 1998, Third Amendment thereto dated February 2, 1998
and Fourth Amendment thereto dated February 6, 1998.
2. Term Loan and Security Agreement dated as of February 6, 1998 among
the financial institutions named therein, as the
Lenders, BankAmerica Business Credit, Inc., as Agent, and LDM
Technologies, Inc., as the Borrower.
3. Amendment No. 5 and Affirmation of Guaranties to Loan Agreement dated
as of February 6, 1998.
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EXHIBIT 1
STOCK AND ASSET PURCHASE AGREEMENT
BY AND AMONG
LDM TECHNOLOGIES, INC.,
TADIM, INC.,
HURON PLASTICS GROUP, INC.,
AND
CERTAIN "SELLING SHAREHOLDERS"
DECEMBER 23, 1997
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STOCK AND ASSET PURCHASE AGREEMENT
This Stock and Asset Purchase Agreement (the "Agreement") is made and
entered into as of December 23, 1997, by and between LDM TECHNOLOGIES, INC., a
Michigan corporation (the "Purchaser"), TADIM, INC., a Michigan corporation
("Tadim"), HURON PLASTICS GROUP, INC., a Michigan corporation ("HPG"), and
certain "Selling Shareholders" of HPG, as designated on the signature page to
this Agreement (collectively, the "Selling Shareholders," and individually, a
"Selling Shareholder"). For the purposes of this Agreement, Purchaser, Tadim,
HPG and the Selling Shareholders are referred to sometimes collectively as the
"Parties" and individually as a "Party". Further, for purposes of this
Agreement, Lakeport Plastics, Inc., HPG Body Systems, Inc. and HPG Chassis
Systems, Inc., all wholly-owned subsidiaries of HPG (the "Subsidiaries"),
together with Tadim and HPG, are collectively referred to as the "Company."
RECITALS
A. The Company is engaged in the business (the "Business") of
manufacturing, finishing and selling plastic products to
original equipment manufacturers and tier one suppliers
primarily in the automobile manufacturing industry.
B. Tadim desires to sell to Purchaser, and Purchaser desires to
purchase all of Tadim's operating assets used or usable in
connection with the Business, on the terms and subject to the
conditions set forth in this Agreement.
C. The Selling Shareholders are those shareholders of HPG whose
shares are not subject to redemption by HPG. Prior to the
consummation of the transactions contemplated in this
Agreement, HPG will redeem all of the issued and outstanding
shares of its capital stock, other than those shares owned by
the Selling Shareholders.
D. The Selling Shareholders desire to sell to Purchaser, and
Purchaser desires to purchase, all of the issued and
outstanding shares of the capital stock of HPG which are owned
by the Selling Shareholders, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of the Tadim Assets. On the Closing Date
(defined in Section 10.1 below), Tadim shall transfer, sell and assign to
Purchaser, and Purchaser shall purchase from Tadim,
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on the terms and subject to the conditions set forth in this Agreement, all of
the assets and properties used in connection with or related to the Business,
whether known or unknown, tangible or intangible, real or personal, wherever
situated, owned by Tadim or in which Tadim has any right, title or interest (all
such assets and properties, other than the Excluded Assets (defined in Section
1.2 below), are referred to in this Agreement as the "Tadim Assets"), free and
clear of all Liens (defined in Section 5.14 below) other than the Permitted
Liens (defined in Section 5.14 below). The Tadim Assets include, without
limitation, the following:
(a) All cash and cash equivalents;
(b) All furniture, fixtures and other fixed assets used in
connection with or related to the Business;
(c) The goodwill and all other intangible assets related
to the Business;
(d) All patents, patent applications, trademarks, trademark
applications and registrations, trade names, service marks, service names,
copyrights, copyright applications and registrations, commercial and technical
trade secrets, engineering, production and other designs, drawings,
specifications, formulae, technology, computer and electronic data processing
programs and software, inventions, processes, know-how, confidential information
and other proprietary property rights and interests used in connection with the
operation of or related to the Business (the "Intellectual Property"),
including, without limitation, the name "Tadim" and any and all derivations of
such name;
(e) All sales and business records, personnel records of
Tadim's employees (other than medical records, which will be transferred only
upon the consent of the employee), credit records of Tadim's customers, customer
lists, advertising and promotional materials, employee notes, computer files,
electronic data, disks and tapes, and all other books and records of every kind
and nature used in connection with or related to the Business;
(f) All equipment, machinery, tools, dies, jigs, patterns,
molds, engineering and office equipment and vehicles used in connection with or
related to the Business;
(g) All written contracts and agreements, including personal
property leases (collectively, the "Contracts"), entered into by Tadim in
connection with the Business as reflected on Schedule 1.1 (the "Assumed
Contracts");
(h) All transferable governmental franchises, licenses,
permits and other authorizations (collectively the "Licenses"), held by Tadim in
connection with the Business;
(i) All inventories related to the Business, regardless
of nature or kind;
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(j) All third party warranties and claims for warranties
relating to the Business, including those relating to Leased Personal Property
(defined in Section 5.9) leased by Tadim;
(k) All leases and subleases for all land, buildings and
improvements leased by Tadim and used in connection with the operation of or
related to the Business;
(l) All of the notes and accounts receivable;
(m) All claims and rights concerning any litigation in which,
in connection with or with respect to the Business, Tadim is a claimant.
1.2. Excluded Assets. Any provision of this Agreement to the contrary
notwithstanding, the following shall not be included in the Tadim Assets and
shall not be sold by Tadim to Purchaser pursuant to this Agreement:
(a) Any written or oral contracts or agreements other than the
Assumed Contracts;
(b) The minute books, stock books, corporate seals and other
corporate records of Tadim relating to its organization and existence; provided,
however, that after execution of this Agreement, Tadim shall, on request, make
such books, records and other materials and information available to Purchaser
for inspection and copying at all times during normal business hours;
(c) All Tax Returns (defined in Section 5.24(c) below); and
(d) Any other items listed on the attached Schedule 1.2(d).
1.3. Nonassignable Properties, Permits, Licenses and Contracts.
(a) Agreement Not an Assignment. This Agreement shall not
constitute an assignment or transfer, or an attempted assignment or transfer, of
any permit, approval, license, contract, agreement or similar item which, but
for this Section 1.3(a), would constitute a Tadim Asset, if and to the extent
that the assignment or transfer of such asset:
(i) would require the consent or waiver of a third party,
including any government or governmental unit;
(ii) would constitute a breach of the terms of such asset;
(iii) would constitute a violation of any law, decree,
order, regulation or other governmental edict; or
(iv) would not be immediately practicable.
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(b) Cooperation. Purchaser and Tadim shall use their best
efforts to obtain such consents and waivers and to resolve the impracticalities
of assignment referred to in Section 1.3(a) and in the meantime Purchaser and
Tadim shall use their best efforts to obtain for the Purchaser the benefit of
such rights, properties, and assets, subject to the corresponding liabilities
and obligations.
(c) Provision of Benefits. To the extent that any consent or
waiver referred to in Section 1.3(a) is not obtained by Tadim and until the
impracticalities of assignment referred to in Section 1.3(a) are resolved, Tadim
shall use its reasonable best efforts to (i) provide to Purchaser the benefits
of any permit, approval or the like and of any contract, license or other
agreement, all as referred to in Section 1.3(a), (ii) cooperate in any
reasonable and lawful arrangement designed to provide such benefits to
Purchaser, and (iii) at the request of Purchaser, enforce for the account of the
Purchaser any right of Tadim arising from any permit, approval, or the like and
of any contract, license and other agreement described in Section 1.3(a) against
such issuer or the other party or parties referred to in Section 1.3(a)
(including the right to elect to terminate in accordance with the terms of such
asset on the advice of Purchaser).
(d) Performance of Obligations. To the extent that Purchaser
is provided the benefits pursuant to this Section 1.3 of any permit or approval
or the like or any contract, license or other agreement, Purchaser will perform
the obligations of Tadim under or in connection with such permit or approval or
the like or any contract, license or other agreement.
2. LIABILITIES ASSUMED
2.1. Assumed Liabilities. In connection with its acquisition of the
Tadim Assets, Purchaser shall assume (i) all liabilities to the extent reflected
on the Most Recent Balance Sheet of Tadim (defined in Section 5.21 below), as
adjusted to the Closing Date and reflected on the Closing Date Balance Sheet for
changes of such liabilities in the ordinary course of business, (ii) all
liabilities not required to be listed on such balance sheet in accordance with
generally accepted accounting principles ("GAAP") but which are disclosed to
Purchaser in the Schedules to this Agreement; (iii) all accounts payable and
deferred tax obligations which have arisen after the date of the Most Recent
Balance Sheet of Tadim and which have been incurred by Tadim in the ordinary
course of its Business; (iv) those liabilities first arising from and after the
Closing Date in connection with the Business; (v) those liabilities to employees
of Tadim as provided in Article 8 of this Agreement, (vi) the litigation
disclosed on Schedule 5.16 relating to the Business as conducted by Tadim; (vii)
any amounts owed by Tadim to HPG as listed on the financial statements of either
company (collectively, the "Assumed Liabilities").
2.2. Excluded Liabilities. Other than the Assumed Liabilities,
Purchaser shall not assume and shall not be liable for any debts, liabilities or
obligations of Tadim, regardless of the type or nature of such debts,
liabilities and obligations (collectively, the "Excluded Liabilities"). Such
Excluded Liabilities shall include, without limitation: (i) any liability or
obligation of Tadim under the Environmental Laws (defined in Section 5.25(a)(i)
below) with respect to solid waste or Hazardous
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Materials (defined in Section 5.25(a)(ii) below) which have been transported by
or on behalf of Tadim for offsite disposal; (ii) any liability or obligation of
Tadim for any violation of the Environmental Laws arising wholly from the
operation of the Business by Tadim prior to the Closing Date, including, without
limitation, any fine or penalty arising from any such permit violations; (iii)
any liability or obligation relating to a Release (defined in Section
5.25(a)(iv) below) in the ground water, surface water or surface or subsurface
soil of any real property owned or leased by Tadim on or at anytime before the
Closing Date; (iv) any liability or obligation relating, in any way, to any
action, suit, investigation or proceeding pending or threatened against Tadim,
the Business, the Tadim Assets, the Leased Personal Property of Tadim or the
Real Property of Tadim, at law or in equity, before any federal, state,
municipal or other governmental department, commission, board, agency, court or
instrumentality; and (v) all written or oral contracts or agreements other than
the Assumed Contracts.
3. PURCHASE AND SALE OF STOCK
3.1. Redemption. Prior to or contemporaneously with the Closing, HPG
shall redeem, or cause to be redeemed, all issued and outstanding shares of
Stock (defined in Section 5.4 below), other than the Shares (defined in Section
3.2 below).
3.2. Sale of Shares. At the Closing, the Selling Shareholders shall
transfer their entire right, title and interest in and to all issued and
outstanding shares (the "Shares") of Stock to Purchaser, free and clear of all
Liens and rights of redemption.
3.3. Sale of Marysville, Michigan Property; Exclusion of Liability.
Prior to or contemporaneously with the Closing, HPG shall transfer the property
owned by HPG in Marysville, Michigan (the "Marysville Property") to some or all
of the Selling Shareholders or, at the direction of the Representative
Shareholder, to an entity owned by some or all of the Selling Shareholders, for
a purchase price of $1.00. All liabilities relating to the Marysville Property
shall be transferred to and assumed by, or retained by, such Selling
Shareholders.
4. PURCHASE PRICE
4.1. Purchase Price for Assets. For and in consideration of the Tadim
Assets, Purchaser shall assume the Assumed Liabilities and shall pay Tadim
Eighteen Million Dollars ($18,000,000.00) (the "Asset Purchase Price") subject
to adjustments pursuant to Section 4.5 below.
4.2. Purchase Price for Shares. For and in consideration of the Shares,
Purchaser shall pay the Selling Shareholders, in the aggregate, Forty-Two
Million Dollars ($42,000,000.00), subject to the adjustments pursuant to Section
4.5 and further subject to adjustment to the extent that financing debt payable
from HPG to Comerica Bank (the "Comerica Debt") net of the cash on hand for
Tadim and for HPG is, as of the Closing Date,
(a) less than $18,506,201, the purchase price for the Shares shall
be reduced by such amount; or
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(b) greater than $18,506,201, the purchase price for the Shares
shall be increased by such amount.
The purchase price for the Shares as adjusted pursuant to subsections
4.2(a) or (b) shall be referred to in this Agreement as the "Stock Purchase
Price." The Asset Purchase Price and the Stock Purchase Price are referred to
herein in the aggregate as the "Purchase Price".
4.3. Payment of Deposit, Asset Purchase Price and Stock Purchase
Price.
(a) One Million Dollars ($1,000,000) in immediately available
funds (the "Initial Deposit") shall be delivered to First Trust National
Association (the "Escrow Agent"), on the date this Agreement is fully executed,
as evidence of Purchaser'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"). If Purchaser terminates this Agreement pursuant to Section
12.1(d), then Purchaser shall be entitled to the Initial Deposit. If Purchaser
does not terminate this Agreement pursuant to Section 12.1(d) hereof, then on
January 23, 1998, Purchaser shall deliver to the Escrow Agent an additional One
Million Dollars ($1,000,000) in immediately available funds (the "Second
Deposit"), to be held and disbursed in accordance with the terms of the Deposit
Escrow Agreement. In the aggregate, the Initial Deposit and the Second Deposit
(if any) are referred to in this subsection as the "Deposit". Upon Closing of
the transactions contemplated by this Agreement, the Deposit shall be applied to
payment of the Stock Purchase Price. If Tadim and HPG terminate this Agreement
pursuant to Section 12.1(b), or if Purchaser shall otherwise fail or refuse to
complete the Closing as required by this Agreement, then at their option Tadim
and HPG shall be entitled to the Deposit and any interest thereon, in addition
to any other available legal and equitable remedies. If this Agreement is
terminated pursuant to Section 12.1(a) or 12.1(c) (by virtue of the failure of
the condition in Section 9.1(a), (c) or (i)), or if Tadim, HPG & Selling
Shareholders shall otherwise fail or refuse to complete the Closing as required
by this Agreement, then at its option Purchaser shall be entitled to the Deposit
and any interest thereon, in addition to any other available legal and equitable
remedies.
(b) The Asset Purchase Price shall be paid to Tadim by wire
transfer of immediately available funds at the Closing.
(c) The Stock Purchase Price shall be paid at the Closing as
follows:
(i) The sum of $2,000,000 shall be placed in an
interest bearing escrow account pursuant to an escrow
agreement (the "Escrow Agreement") among the Parties in the
form attached as Exhibit B to be entered into at the Closing,
which escrowed funds shall remain in escrow and shall be used
to secure the obligations and liabilities of the Selling
Shareholders pursuant to Section 11.1(f) below;
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(ii) An amount to be reasonably and mutually
determined by the Parties prior to January 23, 1998 (the
"Hold-Back") in an amount sufficient to satisfy the
obligations described in subsections (x), (y) and (z) of this
Section 4.3(c)(ii) will be retained by the Purchaser from the
Purchase Price until it receives from Tadim and HPG (x)
written confirmation from the Michigan Employment Security
Commission to the effect that all contributions, penalties and
accrued interest due from Tadim have been paid in full, (y) a
certificate from the Commissioner of Revenue of the Michigan
Department of Treasury stating that all taxes due to the State
of Michigan by Tadim and HPG including, but not limited to,
single business taxes, excise taxes, sales taxes and use taxes
are paid, and (z) similar assurances from the appropriate
agencies or authorities in Texas with regard to the Tadim
Assets and/or the operations of Tadim prior to the Closing
Date. Promptly after receipt of the items described above,
Purchaser will disburse the Hold-Back to the Representative
Shareholder; and
(iii) The balance of the Stock Purchase Price shall
be paid by wire transfer of immediately available funds at the
Closing. Such wire transfer and all disbursements of funds to
the Selling Shareholders pursuant to the Escrow Agreement
shall be made to an account (the "Shareholders' Account")
established by Arthur J. Goodsel (the "Representative
Shareholder") for the benefit of all of the Selling
Shareholders and all of the shareholders of Tadim, and the
Representative Shareholder thereafter shall be responsible for
seeing that each Selling Shareholder receives his or her pro
rata share of the Stock Purchase Price.
4.4. Additional Payments.
(a) Repayment of Credit Card Debt. Contemporaneously with the
payment of the Asset Purchase Price and the Stock Purchase Price, Purchaser
shall, and/or shall cause HPG to, wire transfer to Comerica Bank an amount equal
to the then outstanding balance of principal and interest on the Tadim (and, at
Purchaser's option, HPG) employee corporate credit card accounts with Comerica
Bank. The individuals possessing such cards, together with the corresponding
account numbers are set forth on Schedule 4.4(a). All such corporate credit
cards and any corporate debit cards will be delivered to Purchaser at Closing.
4.5. Price Adjustments and Preparation of Closing Date Balance
Sheet.
(a) The Purchase Price shall be adjusted (the "Price
Adjustment") downward to the extent that the sum of the net worth (total assets
less total liabilities) of HPG and the Subsidiaries (the "HPG Net Worth") and
the book value of the Tadim Assets less the amount of the Assumed Liabilities
(the "Tadim Net Book Value") is, as of the Closing Date, less than the sum of
the HPG
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Net Worth set forth on the Most Recent Balance Sheet of HPG and the Tadim Net
Book Value, as of the date of the Most Recent Balance Sheet of Tadim.
(b) At Purchaser's sole expense, the Company shall prepare and
deliver to the Representative Shareholder, within ninety (90) days following the
Closing Date, a balance sheet as of the Closing Date (the "Closing Date Balance
Sheet") setting forth the HPG Net Worth and the Tadim Net Book Value, which
shall have been audited by Ernst & Young. The Closing Date Balance Sheet shall
be prepared in accordance with generally accepted accounting principles
consistently applied with the principles used in preparation of the Most Recent
Balance Sheet of HPG and the Most Recent Balance Sheet of Tadim, as more
specifically described in Schedule 4.5(b). The parties agree that (i) any
changes in accounting principles determined to be necessary as a result of the
review contemplated by this Section 4.5 that would apply for similar reasons to
the Most Recent Balance Sheets of Tadim and HPG shall require consistent
treatment with respect to such Balance Sheets, and (ii) in the event of any such
adjustment, except as otherwise provided in this Agreement, the reference to the
Most Recent Balance Sheets of Tadim and HPG shall mean such Balance Sheets as so
adjusted.
(c) The Representative Shareholder, on behalf of the Selling
Shareholders and Tadim, may object to the Price Adjustment or to any of the
information contained in the Closing Date Balance Sheet which could affect the
Price Adjustment if such objection is based on a claim that the Closing Date
Balance Sheet was not prepared in accordance with subsections 4.5(a) or (b). Any
such objection must be made by delivery of a written statement of objections
(stating the basis of the objections with reasonable specificity) to Purchaser
within 30 days following delivery of the Closing Date Balance Sheet. If the
Representative Shareholder makes such objection, Purchaser and the
Representative Shareholder shall seek in good faith to resolve such differences
within 20 days following the delivery of such objections. During such time, if
Purchaser disagrees with the objections of the Representative Shareholder, it
shall state the basis of such disagreement with reasonable specificity. If the
Representative Shareholder does not so object to the Closing Date Balance Sheet
within such 30-day period, the Closing Date Balance Sheet shall be considered
final and binding upon the parties. If the Representative Shareholder and
Purchaser are unable to mutually resolve any disputes with respect to any aspect
of the price differential within the periods described above, the parties shall,
within ten (10) days following the expiration of such periods, engage the
Detroit, Michigan office of Arthur Andersen (the "Mediator") to act as a
Mediator and determine, in accordance with the provisions of this Section 4.5,
the appropriate Price Adjustment. In connection with the review of the Closing
Date Balance Sheet by the Representative Shareholder, the Representative
Shareholder and his accountants shall have reasonable access to the records of
the Business and any work papers prepared by Ernst & Young in the preparation of
the Closing Date Balance Sheet; provided, however, that the Selling Shareholders
and Tadim shall have executed such confidentiality and indemnification
agreements as are reasonably requested by Price Waterhouse.
4.6. Submission to Mediator. If the Mediator is engaged pursuant to
Section 4.5(c), then, within ten (10) days of the engagement, the Mediator shall
be furnished with a copy of this Agreement, a letter from the Representative
Shareholder describing the position of the Selling
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Shareholders and/or Tadim on the disputed amount and a letter from Purchaser
describing Purchaser's position on the disputed amount. Neither Party shall make
any additional submission except pursuant to the Mediator's written request. The
Mediator shall have thirty (30) days to review such documents and such other
information as the Mediator deems appropriate. Within such thirty-day period,
the Mediator will furnish both Parties with its written determination with
respect to each of the unresolved price differentials in dispute. In arriving at
its determination, the Mediator may select either the adjustment as proposed by
the position of the Representative Shareholder and by the position of Purchaser,
or its own determination (provided such determination, applying GAAP, is between
the Representative Shareholder's or Purchaser's position) with respect to such
differential. The determination of the Mediator with respect to each such
adjustment will be final and binding upon the parties and a judgment, based on
the Mediator's determination, may be entered into a court of competent
jurisdiction in accordance with, and pursuant to, the United States Arbitration
Act, 9 U.S.C., Section 1 et. seq. or the Michigan Uniform Arbitration Act, MCL,
Section 600.5001 et. seq. The fee of the Mediator shall be borne by the Parties
in the same proportion that the dollar amount of the disputed items lost by a
party bears to the total dollar amount in dispute in the mediation. In the
process of preparing and reviewing the price differential and conducting of
review by either party or the Mediator, each party will grant the other party
all reasonable access to the records of the Business and any workpapers,
including auditor's workpapers, prepared with respect to the price differential;
provided, however, that each party shall create such confidentiality and
indemnification agreements as are reasonably requested by such other party's
auditors.
4.7. Allocation of Asset Purchase Price. The Purchaser and Tadim
acknowledge and agree that the purchase and sale of the Tadim Assets is an
"applicable asset acquisition" within the meaning of Section 1060(c) of the
Internal Revenue Code of 1986 as amended (the "Code"). The Asset Purchase Price
shall be allocated among the Tadim Assets as set forth in Schedule 4.7, which
allocation shall be supportable and shall reflect fair market value, and the
Purchaser and Tadim agree to be bound by and shall file tax returns consistent
with such allocations. If there is a Price Adjustment, such allocation shall be
revised to reflect such adjustment.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Tadim, HPG and the
Selling Shareholders hereby jointly and severally represent, warrant and
covenant the following to Purchaser:
5.1. Good Standing and Authority of Tadim. Tadim is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan. Tadim is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which it is required to be so qualified
except where the failure to be so qualified will not have a material adverse
effect on the BusineSection. All such jurisdictions are listed on the attached
Schedule 5.1. Tadim has the corporate power and authority to enter into this
Agreement, to enter into any and all documents contemplated in this Agreement
(the "Attendant Documents") to which it is a party and to consummate the
transactions contemplated in this Agreement. This Agreement and all of the
Attendant Documents to which Tadim is a party, and the consummation of the
transactions
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contemplated in this Agreement, have been or will be, on or prior to the Closing
Date, duly authorized and approved by all necessary and proper corporate action
on the part of Tadim. This Agreement, and all of the Attendant Documents to
which Tadim is a party, when executed and delivered, will constitute legal,
valid and binding obligations of Tadim, enforceable against Tadim in accordance
with their respective terms except to the extent enforcement may be restricted
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors rights of general applicability and general principles of equity.
5.2. Good Standing and Authority of HPG and the Subsidiaries. HPG and
each Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan. HPG and each Subsidiary is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which it is required to be so qualified except where the
failure to be so qualified will not have a material adverse effect on the
BusineSection. All such jurisdictions are listed on the attached Schedule 5.2.
HPG has the corporate power and authority to enter into this Agreement, to enter
into any and all documents contemplated in this Agreement (the "Attendant
Documents") to which it is a party and to consummate the transactions
contemplated in this Agreement. This Agreement and all of the Attendant
Documents to which HPG is a party, and the consummation of the transactions
contemplated in this Agreement, have been or will be, on or prior to the Closing
Date, duly authorized and approved by all necessary and proper corporate action
on the part of such corporation. This Agreement, and all of the Attendant
Documents to which HPG is a party, when executed and delivered, will constitute
legal, valid and binding obligations of HPG, enforceable against HPG in
accordance with their respective terms except to the extent enforcement may be
restricted by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors rights of general applicability and general principles of
equity.
5.3. Assets. The Tadim Assets, the assets located at the real property
leased or owned by HPG or the Subsidiaries, together with the Leased Personal
Property (defined in Section 5.9) and Real Property (defined in Section 5.12)
(collectively, the "Assets"), constitute all of the assets which are used in
connection with the operation of, or which are related to, the Business, other
than the Excluded Assets. All of the Assets and all of the Leased Personal
Property are located at the Real Property. The attached Schedule 5.3 contains a
true and complete list of all material furniture, fixtures and fixed assets used
in connection with or related to the Business, other than the Leased Personal
Property.
5.4. HPG Capitalization; Ownership of Shares. HPG has only one (1)
class of capital stock, common stock, $0.10 par value (the "Stock"). The
attached Schedule 5.4 sets forth the number of authorized and the number of
issued and outstanding shares of the Stock, and identifies all of HPG's
shareholders, and with respect to each such shareholder, the number of issued
and outstanding shares of the Stock which stand in the name of such shareholder
on HPG's books and records. All issued shares of the Stock have been duly
authorized and validly issued, are fully paid and non-assessable and were issued
by HPG without violating any applicable laws, rules, orders, judgments, decrees
or other requirements imposed by any governmental authority. Except as set
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forth on the attached Schedule 5.4, there are no preemptive or first refusal
rights to purchase or otherwise acquire shares of the Stock or any shares of
stock of any Subsidiary pursuant to HPG's governing documents or agreement or
otherwise. Except as set forth on the attached Schedule 5.4, there are not
outstanding agreements, commitments, rights, options, warrants or claims of any
nature whatsoever for the issuance, sale, purchase or redemption of any shares
of the Stock or any shares of stock of any Subsidiary or any other securities
convertible into or exchangeable for such shares. Neither HPG nor any of the
Selling Shareholders is a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any of the Stock and/or the
Shares. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to HPG. HPG has the
right to redeem all issued and outstanding shares of its Stock, other than the
Shares. On consummation of the transactions contemplated in this Agreement,
Purchaser will be the sole shareholder of HPG, and will acquire valid and
marketable title to all issued and outstanding shares of HPG's capital stock,
free and clear of all Liens and rights of redemption.
5.5. Subsidiaries. In addition to the Subsidiaries, HPG owns a 30%
interest in Sunningdale Plastics, a Singapore corporation ("Sunningdale"). Other
than the Subsidiaries and Sunningdale, HPG does not have any subsidiaries, or
any equity interest in, or any right to acquire any equity interest in, any
other entity. Tadim does not have any subsidiaries or any equity interest in, or
any right to acquire any equity interest in, any other entity.
5.6. Discharge of HPG Debts. Prior to or contemporaneously with the
Closing, HPG and the Subsidiaries, shall pay off and discharge, and the Selling
Shareholders shall cause HPG and the Subsidiaries to pay off and discharge, (i)
all of their respective liabilities and obligations which are treated as
interest-bearing debt on the Financial Statements of HPG (including the Comerica
Debt), and (ii) all obligations of HPG and the Subsidiaries to the Selling
Shareholders, Ernest T. Oskin or any of its other shareholders).
5.7. Intellectual Property. The attached Schedule 5.7 contains a true
and complete list of all patents, patent applications, registered trademarks,
applications for registered trademarks, registered service marks, applications
for registered service marks, trade names, logos, registered copyrights and
applications for registered copyrights used in the Business and any and all
corporate and assumed names under which the Company has in the past conducted or
is currently conducting the BusineSection. Except as set forth on the attached
Schedule 5.7, the Company is the owner of or licensee under a valid license for
the Intellectual Property material to the Business taken as a whole, has good
and marketable title to or is a licensee under a valid license of and has the
exclusive right to assign its entire right, title and interest in and to all of
the Intellectual Property (as defined in Section 1.1(d)) relating to the
BusineSection. The items comprising such Intellectual Property are the only
proprietary property used or necessary in connection with the BusineSection. The
Company has not infringed, misappropriated or misused any Intellectual Property
of another. Except as set forth on the attached Schedule 5.7, to the Company's
Knowledge, no third party has infringed, misappropriated or misused any of the
Intellectual Property or other proprietary information related to the
Business.
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5.8. Contracts. The attached Schedule 5.8 identifies all material
Contracts, true and complete copies of all of which have been delivered to
Purchaser. Except as set forth on the attached Schedule 5.8, all of such
Contracts were entered into in the ordinary course of busineSection. Except as
set forth on the attached Schedule 5.8, the Company has complied in all material
respects with the provisions of each such Contract, is not in default under any
such Contract, and to the Company's Knowledge no other party to any such
Contract has failed to comply in any material respect with, or is in default
under, the provisions of such Contract.
5.9. Leased Assets. The attached Schedule 5.9 contains a true and
complete list of the personal property used in connection with, or related to,
the operation of the Business and covered under personal property leases entered
into by the Company which is material to the Business (collectively, the "Leased
Personal Property"). The Company is the exclusive user of all of the Leased
Personal Property and all of the Leased Personal Property is located at the Real
Property (defined in Section 5.12).
5.10. Permits and Licenses. The attached Schedule 5.10 lists all
Licenses, true and complete copies of all of which have been delivered to
Purchaser. Except as set forth on the attached Schedule 5.10, all of the
Licenses are in full force and effect and are assignable or transferable to
Purchaser in connection with the consummation of the transactions contemplated
in this Agreement. Except as set forth on the attached Schedule 5.10, (a) the
Company has obtained all permits, licenses, franchises and other authorizations
necessary or desirable with respect to the operation of the Business, the
ownership of the Assets or the lease of the Leased Personal Property or Leased
Real Property (defined in Section 5.11), except where the failure to obtain such
permits, licenses, franchises and other authorization will not have a material
adverse effect on the Business, (b) all such permits, licenses, franchises and
authorizations may be transferred to Purchaser upon consummation of the
transactions contemplated in this Agreement, and (c) the Company has not engaged
in any activity which would cause revocation or suspension of any such permits,
licenses, franchises or authorizations. Except as set forth on the attached
Schedule 5.10, no action or proceeding looking to or contemplating the
revocation or suspension of any such permits, licenses, franchises or
authorizations is pending or, to the Company's Knowledge, threatened.
5.11. Leased Real Property. The attached Schedule 5.11 lists and
briefly describes all real properties leased or subleased to the Company for use
in connection with the operation of the Business (the "Leased Real Property").
Except as set forth on the attached Schedule 5.11, and except for the Leased
Real Property and the properties identified in the attached Schedule 5.12, the
Company has not, in the ten years prior to the Closing Date owned, leased,
subleased or otherwise used any real property in connection with the operation
of the BusineSection. The Company has delivered to Purchaser true, correct and
complete copies of the leases and subleases listed on the attached Schedule
5.11. Except as set forth on the attached Schedule 5.11, with respect to each
such lease or sublease:
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(a) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect;
(b) the lease or sublease will continue to be a legal, valid,
binding, and enforceable obligation of the Company;
(c) neither the Company nor, to the Company's Knowledge, any
other party to the lease or sublease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute such a breach or
default or permit termination, modification or acceleration under the lease or
sublease by the Company or, to the Company's Knowledge, any other party to the
lease or sublease;
(d) to the Company's Knowledge, no party to the lease or
sublease has repudiated any of its provisions;
(e) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(f) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered all or any portion of its interest in
the leasehold or subleasehold;
(g) all facilities leased or subleased under the lease or
sublease have been operated and maintained in accordance with applicable laws,
rules and regulations, except where the failure to comply with such laws, rules
and regulations would not have a material adverse effect on the Business;
(h) all facilities leased or subleased under the lease or
sublease are supplied with utilities necessary for the operation of such
facilities; and
(i) all facilities leased or subleased under the lease or
sublease are in good operating condition, ordinary wear and tear excepted.
5.12. Owned Real Property. The attached Schedule 5.12 identifies the
address and the owner of, and sets forth the true, correct and complete legal
description for, each parcel of real property owned by the Company (the "Owned
Real Property"). The Leased Real Property (defined in Section 5.11) and the
Owned Real Property are collectively referred to in this Agreement as the "Real
Property." Also set forth on the attached Schedule 5.12 is a list of all real
property, other than the Real Property, in which the Company has any other
right, title or interest. The Company holds marketable title to the Owned Real
Property, free and clear of all Liens other than the Permitted Liens. The
Company has never owned or leased any real property other than the Real
Property. None of the facilities or other improvements on any parcel of Owned
Real Property violates any applicable zoning laws or ordinances, except where
the failure to comply with such laws or
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ordinances would not have a material adverse affect on the BusineSection. To the
Company's Knowledge, none of the facilities or other improvements on any parcel
of Owned Real Property are subject to "permitted non-conforming use" or
"permitted non-conforming structure" classifications, and none are located
within any flood plain or subject to any similar type restriction for which any
permits or licenses necessary to its use have not been obtained. Each parcel of
Owned Real Property abuts on and has direct vehicular access to a public road or
has access to a public road through a permanent, irrevocable, appurtenant
easement benefiting such parcel. Except as set forth on Schedule 5.12, each
building and other improvement located on each parcel of Owned Real Property is
located solely on such parcel and does not encroach onto adjoining land or onto
any portion of property burdened by any easement, and there are no improvements
located on adjoining land which encroach onto such parcel. There is no pending
or, to the Company's Knowledge, threatened condemnation, eminent domain or
similar proceeding or assessment affecting any parcel of Owned Real Property
and, to the Company's Knowledge, no such proceeding or assessment is
contemplated by any governmental agency or other authority. The structural
beams, footings, columns, bearing members, foundations and other structural
components of each of the buildings situated on each parcel of Owned Real
Property, roofs of such buildings, and the underground or otherwise concealed
sewage, plumbing, electrical and other utility systems placed on or under the
land or the improvements, are in good condition and repair. There have been no
certiorari or other judicial or administrative proceedings for review,
adjustment or otherwise concerning the real estate tax assessment on any parcel
of Owned Real Property nor has there been any reduction of the real estate taxes
payable with respect to any parcel of Owned Real Property by reason of any
proceeding or complaint filed in connection with such parcel nor are there any
real estate tax abatements or credits affecting any parcel of Owned Real
Property. The Company has no knowledge of any pending or contemplated valuation
proceedings affecting any parcel of Owned Real Property; and no improvements
have been installed by or on behalf of any governmental agency or other
authority the costs of which may be assessed, in whole or in part, against any
parcel of Owned Real Property.
(i) With respect to each parcel of Real Property, the Company
shall provide Purchaser a title insurance commitment ("Commitment") issued by a
title insurer reasonably satisfactory to Purchaser, in an amount reasonably
acceptable to Purchaser with respect to each Commitment, which will show that
the owner of each parcel of the Real Property has good, marketable and insurable
title to each parcel of the Real Property, subject only to building and use
restrictions and easements of record which Purchaser has indicated are
acceptable to it, and showing that at the Closing Date the record title,
leasehold or subleasehold estate will be in the Company.
(ii) With respect to each parcel of Real Property, the Company
shall provide the Purchaser a boundary survey (the "Survey") of such parcel,
prepared by a licensed surveyor or engineer, that is certified to Purchaser
using a form which will be reasonably acceptable to Purchaser. Such Survey shall
show (i) the legal description of such parcel of Real Property together with the
square footage and acreage of such parcel and all public roads and rights of
way, (ii) all boundaries, courses and dimensions, easements and rights of way
(including any recording references), located on or pertaining to such parcel,
(iii) the location of all footings and utilities lines installed at such
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parcel, (iv) any encroachments on such parcel or by such parcel on any adjoining
land, and (v) whether such parcel or any portion thereof is located within a
flood hazard area as identified by the Federal Insurance Administration
Department of Housing and Urban Development.
5.13. Notes and Accounts Receivable. The attached Schedule 5.13 contains a
true and complete list of all notes and accounts receivable of the Company as of
two (2) business days preceding the date of this Agreement. At the Closing, the
Company shall deliver to Purchaser a true and complete list of all notes and
accounts receivable of the Company which are related to the Business as of two
(2) business days prior to the Closing Date. Except as set forth on the attached
Schedule 5.13, all notes and accounts receivable of the Company which are
related to the Business are reflected properly on its books and records
represent bona fide claims for sales or other charges arising in the ordinary
course of business in accordance with the Company's normal credit policies, and
are subject to no contractual setoffs or counterclaims. All non-tooling
receivables will be collected within 120 days of Closing and all tooling
receivables will be collected within 240 days of Closing and each will be
collected in substantial accordance with their terms and at their recorded
amounts, subject only to the reserve for bad debts set forth on the face of the
Most Recent Balance Sheet of Tadim or the Most Recent Balance Sheet of HPG as
adjusted for the passage of time through the Closing Date in accordance with
GAAP consistently applied.
5.14. Liens. Except as set forth on the attached Schedule 5.14, the Company
owns and has good, marketable and unencumbered title to, or an unencumbered
interest in, each item comprising the Assets (other than the Leased Personal
Property or Leased Real Property), free and clear of any and all title defects,
judgments, objections, security interests, liens, charges, liabilities,
mortgages, easements, restrictions, reservations, tenancies, agreements or other
obligations or encumbrances of any nature whatsoever (collectively, the
"Liens"). Except for the Liens identified on the attached Schedule 5.14 as
"Permitted Liens" (the "Permitted Liens"), all of the Liens identified on the
attached Schedule 5.14 will be released at the Closing.
5.15. Good Condition. Except as set forth in the attached Schedule 5.15, the
Company has properly maintained all of the Assets, all of the Assets are
currently operating for their respective intended uses and, to the Company's
Knowledge, need no major repairs, ordinary wear and tear excepted.
5.16. Litigation. Except as set forth on the attached Schedule 5.16, there
are no actions, suits, investigations or proceedings pending or to the Company's
Knowledge, threatened against the Company, the Business, the Assets, the Leased
Personal Property or the Real Property, at law or in equity, before any federal,
state, municipal or other governmental department, commission, board, agency,
court or instrumentality which could affect, in any material way, the Business,
the Assets, the Leased Personal Property or the Real Property. Except as set
forth on the attached Schedule 5.16, the Company is not in default with respect
to nor is it in violation of any order, writ, injunction or decree of any court
or other governmental department, commission, board, agency or instrumentality
which relates or could relate to, or the default with respect to which or the
violation of which could
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have a material adverse effect on the Business, the Assets, the Leased Personal
Property or the Real Property in any way. The provisions of this Section 5.16
shall not apply to environmental matters which are discussed in Section 5.25.
5.17. Compliance with Applicable Laws and Regulations. Except as set forth
on the attached Schedule 5.17, the Company has complied with all laws,
regulations, rules, orders, judgments, decrees and other requirements imposed by
any governmental authority applicable to it in connection with the operation of
the Business, the ownership of the Assets or the lease of the Leased Personal
Property or Leased Real Property except where the failure to comply would not
have a material adverse effect on the BusineSection. The provisions of this
Section 5.17 shall not apply to environmental matters which are discussed in
Section 5.25.
5.18. Employees. The attached Schedule 5.18 contains a complete and accurate
list of current employees of the Company (the "Employees") and, with respect to
each Employee, his or her salary or hourly rate currently in effect or promised
as a future raise (orally or in writing), bonuses last paid to officers of the
Company, if any, and a listing of those Employee Benefit Plans as defined in
Section 5.20 in which each such Employee participates. Except as set forth on
the attached Schedule 5.18 or Schedule 5.20, there are no fringe benefits or
incentives paid or payable to any Employee. No Employee Benefit Plan obligates
the Company to pay separation, severance, termination or similar-type benefits
solely as the result of the sale of stock contemplated by this Agreement or
solely as the result of change in ownership or "effective control" as such term
is defined in Section 280G of the Code and the regulations thereunder. No
Employee Benefit Plan obligates the Company to pay separation, severance,
termination or similar-type benefits to Tadim employees as the result of the
sale of assets contemplated by this Agreement. Except as set forth on the
attached Schedule 5.18, all Employees are actively at work, and no Employee is
currently on leave of absence, layoff, military leave, suspension, sick leave,
workers' compensation, salary continuance or short or long term disability or
otherwise not actively performing his or her work during all normally scheduled
business hours.
5.19. Employee Relations. Except as set forth on the attached Schedule 5.19,
there are no written or oral collective bargaining or other employment
agreements or understandings with or affecting any Employee. Expenses incurred
for medical services provided before the Closing Date under the Company's
Welfare Plans (as defined in Section 5.20) or workers compensation plan will
have been paid prior to the Closing Date, or will be accrued in the Closing Date
Balance Sheet. Except with respect to those Employee Benefit Plans which by
their terms are self-funded or unfunded and are appropriately accounted for on
the Closing Date Balance Sheet in accordance with GAAP, no Employee Benefit Plan
has any material unfunded liabilities as of the Closing Date. There are no
vacation moneys which have been earned by any Employee under any agreement,
whether oral or written, that have not been paid or accrued for on the Closing
Date Balance Sheet, nor are there any severance payments which could become
payable by Purchaser under the terms of any oral or written agreement or
commitment. A proportionate share (based on the number of elapsed months in the
current plan year to 12 months) of the projected annual 401(k) matching
contribution (to the
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extent not paid) and the projected 401(k) profit sharing contribution to the
Pension Plan (as defined in Section 5.20) disclosed in Schedule 5.20(c) will be
accrued on the Closing Date Balance Sheet. Such projections shall be based on
the same percentage rate as the preceding year but based on current participant
compensation and participation. Except as disclosed pursuant to Section 5.20
below, the Company has no Pension Plan or other Employee Benefit Plan as defined
in Section 5.20 in effect. Except as set forth on the attached Schedule 5.19,
(i) there is no unfair labor practice charge or complaint concerning the
Business or any present or former Employee pending before any governmental
agency in any jurisdiction in which the Company conducts business; (ii) there is
no labor strike or material slowdown, work stoppage, lockout or other collective
labor action actually pending or threatened against or affecting the Business,
and the Company has not experienced any strike or material slowdown, work
stoppage, lockout or other collective labor action in connection with the
Business by or with respect to any Employees; (iii) there is no known organizing
drive or campaign in progress and there is no representation claim or petition
concerning the Business or any Employee pending before any governmental agency
in any jurisdiction in which the Company conducts business, and no question
concerning representation exists relating to the Employees; (iv) there are no
charges or civil actions with respect to or relating to the Business pending
before or brought by the Equal Employment Opportunity Commission or any agency
in any jurisdiction in which the Company conducts business responsible for the
prevention of unlawful employment practices; (v) the Company has not received
formal notice from any governmental agency responsible for the enforcement of
labor or employment laws of an intention to conduct an investigation of the
Business and no such investigation is currently in progress; and (vi) to the
Company's Knowledge, no Employee who is entering into an employment agreement
pursuant to Section 10.2(f) of this Agreement has any plans to terminate
employment with the Company prior to Closing or to refuse employment with
Purchaser after Closing.
5.20. Employee Benefits.
(a) Definitions: For purposes of this Agreement, the following words
and phrases shall have the meanings set forth below:
(i) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(ii) "Code" shall mean the Internal Revenue Code of 1986, as
amended;
(iii) "Controlled Group" shall mean a group of corporations, trades
or businesses, or a combination thereof, described in (b) below;
(iv) "Controlled Group Member" shall mean a corporation, trade or
business that is a part of the same Controlled Group as any of the
entities constituting the Company;
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(v) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(vi) "Employee Benefit Plan" shall mean any plan as defined in
ERISA Section 3(3) and shall include any Pension Plan, Welfare Plan
and any bonus, severance, deferred compensation, annuity, retirement,
stock option, stock purchase, executive compensation, incentive
compensation, educational assistance, insurance or other plan or
arrangement providing benefits to employees of the Company or
Controlled Group Member, including, if the Company or any Controlled
Group Member is organized under foreign law, any similar plan allowed
by any foreign law;
(vii) "Pension Plan" means any employee pension benefit plan as
defined in Section 3(2) of ERISA; and
(viii) "Welfare Plan" means any employee welfare benefit plan as
defined in Section 3(1) of ERISA.
(b) Controlled Group: Except as disclosed in Schedule 5.20(b), none of
the entities constituting the Company is now, has ever been and will not be at
any time prior to the Closing Date, a member of: (i) a controlled group of
corporations as defined in Section 414(b) of the Code; (ii) a group of trades or
businesses under common control as defined in Section 414(c) of the Code; (iii)
an affiliated service group as defined in Section 414(m) of the Code; (iv) a
group of businesses referred to in Section 414(o) of the Code; (v) a group of
trades or businesses under common control as defined in Section 4001(b) of
ERISA; or (vi) any other group under the law, rules or regulations of a foreign
country similar to (i) through (v).
(c) Company Employee Benefit Plans and Documents: Except as disclosed
in Schedule 5.20(c), neither the Company nor any Controlled Group Member now,
nor will at any time prior to the Closing Date, maintains, sponsors,
participates in or contributes to, nor has the Company or any Controlled Group
Member ever maintained, sponsored, participated in or made contributions to, any
Employee Benefit Plan, nor is the Company or any Controlled Group Member a party
to any collective bargaining or union contract. The Company has provided to
Purchaser true and correct copies of all current and prior material documents
relating to the Employee Benefit Plans listed in Schedule 5.20(c), including,
but not limited to: (i) plan documents; (ii) trust documents; (iii) plan and
trust amendments; (iv) summary plan descriptions, amendments thereto, and all
other communication material provided to employees; (v) summaries of material
modifications; (vi) insurance or annuity contracts; (vii) collective bargaining
agreements or contracts and all amendments thereto; (viii) the most recent
financial statements; (ix) with regard to self-funded Welfare Plans, experience
data for the prior three (3) plan years as well as documentation and
calculations demonstrating the value of accrued obligations under such plans as
of the Closing Date; (x) if the Company provides, or has any commitment or
obligation to provide, any Welfare or other Employee Benefits to retirees,
copies of all documentation and calculations demonstrating the present value of
such obligation or commitment
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as of the Closing Date; (xi) if the Company or any Controlled Group Member
maintains a defined benefit pension plan, as defined in Section 3(35) of ERISA,
the most recent actuarial valuation for each such plan and copies of any funding
waivers and applications therefor, and all related correspondence and
documentation; (xii) the five (5) most recent annual reports (including all
schedules); (xiii) agreements with respect to leased or temporary employees;
(xiv) all Internal Revenue Service rulings, if any; and (xv) the most recent
Internal Revenue Service determination letters.
(d) Representations: Except as specifically set forth in Schedule
5.20:
(i) Qualification: all the Pension Plans required to be listed
in Schedule 5.20, and the related trusts, if any, now meet, and since
their inception have met, and as of the Closing Date shall meet, the
requirements for qualification under Section 401(a) of the Code and are
now, and since their inception have been, exempt from taxation under
Section 501(a) of the Code;
(ii) Determination Letters: the Internal Revenue Service has
issued a favorable determination letter which addresses the Tax Reform
Act of 1986 with respect to the qualified status of each such Pension
Plan and trust, and has not taken any action to revoke such letter;
(iii) Satisfaction of Obligation: the Company and each
Controlled Group Member have performed, and through the Closing Date
shall perform, all obligations required to be performed by them under
the Employee Benefit Plans (including, but not limited to, the making
of all contributions), are not in default under, or in violation of,
and have no knowledge of any such default or violation of any other
party to, any and all of the Employee Benefit Plans;
(iv) Compliance With Laws: each Employee Benefit Plan is, by
its terms and in the manner in which it has been and will be
administered, has been, and through the Closing Date shall be, in
compliance with ERISA, the Code, the Age Discrimination in Employment
Act, COBRA, the Health Insurance Portability and Accountability Act of
1996, and any other applicable federal, state or local laws, and, if
applicable, any foreign laws, except where the failure to comply would
not have a material adverse affect on the Business, and each Employee
Benefit Plan is valid and binding, in full force and effect, and there
are no defaults on the part of the Company thereunder;
(v) No Prohibited Transactions: none of the Employee Benefit
Plans maintained by the Company or any Controlled Group Member, nor any
trust created thereunder, any trustee or administrator thereof, nor the
Company or any Controlled Group Member has engaged in any transaction,
which would violate Section 4975 of the Code, or Part 4 of Title I of
ERISA, or, if applicable, any similar provision under foreign law and
for which no individual or class exemption exists;
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(vi) No Claims Pending or Threatened: there are not presently,
nor shall there be prior to the Closing Date, any actions, suits or
claims pending (other than routine claims for benefits) or, to the best
Knowledge of the Company and its Controlled Group Members, threatened
against, any Employee Benefit Plan, against the assets of any Employee
Benefit Plan, or against the Company or any Controlled Group Member for
benefits arising under or pursuant to any Employee Benefit Plan;
(vii) No Funding Deficiency: the Company does not have, and on
the Closing Date will not have, a "funding deficiency", as that term is
used in Section 412 of the Code, whether or not waived, with regard to
any Employee Benefit Plan;
(viii) Bonding: each "plan official", within the meaning of
Section 412 of ERISA, of each Pension Plan is, and through the Closing
Date shall be, bonded to the extent required by said Section 412;
(ix) No Reportable Event: no proceeding has been initiated,
nor shall any proceeding be initiated prior to the Closing Date, to
terminate any Employee Benefit Plan and no "reportable event", within
the meanings of Section 4043 or 4063 of ERISA, has occurred, nor shall
any occur prior to the Closing Date, with respect to any Employee
Benefit Plan;
(x) No Multiple Employer Plan: with the exception of the Huron
Plastics Group, Inc. Employees' 401(k) Profit Sharing Plan, neither the
Company nor any Controlled Group Member presently, nor will it prior to
the Closing Date, nor did it previously, participate in, contribute to,
or employ any persons covered by any "multiple employer plan" as
discussed in Section 413(c) of the Code;
(xi) No Multiemployer Plan: neither the Company nor any
Controlled Group Member presently, nor will it prior to the Closing
Date, nor did it previously, participate in, contribute to, nor employ
any persons covered by a "multiemployer plan" as defined in Section
3(37) of ERISA;
(xii) No Withdrawal Liability: neither the Company nor any
Controlled Group Member has incurred, nor will it incur, any withdrawal
liability, as defined in Title IV of ERISA, to a multiemployer plan
which the Company or any Controlled Group Member participated in or
contributed to prior to the Closing Date;
(xiii) No Retiree Benefits: no retiree benefits are payable,
either now or in the future, pursuant to any Welfare Plan, nor shall an
obligation to provide such benefits be incurred prior to the Closing
Date;
(xiv) Reporting and Disclosure: with regard to each Employee
Benefit Plan, the Company and each Controlled Group Member has complied
with, and will through the
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Closing Date continue to comply with, all reporting and disclosure
requirements of ERISA and the Code;
(xv) Sufficient Assets: as of the Closing Date: (i) with
regard to funded plans, the assets of each such Employee Benefit Plan
listed in Schedule 5.20 will be equal to or greater than the accrued
benefits and benefit liabilities as described in ERISA Section 4001 of
the participants and beneficiaries of such plans determined, if they
are defined benefit plans, pursuant to the actuarial methods and
assumptions utilized by the Pension Benefit Guaranty Corporation in
the event of plan termination and any applicable foreign law and/or
agency; (ii) with regard to Employee Benefit Plans that are funded by
the general assets of the Company or any Controlled Group Member, a
sufficient reserve has been established on the books of the Company in
accordance with GAAP to pay all benefits of participants and
beneficiaries; and (iii) with regard to insured Employee Benefit
Plans, all insurance premiums to provide benefits under such plans
through the Closing Date are paid;
(xvi) Defined Contribution Plan: with respect to each plan
that is a defined contribution plan within the meaning of Section 3(34)
of ERISA, the Company has paid all contributions on behalf of prior
plan years, and any salary deferrals and employer contributions,
including matching contributions, that have accrued for the current
plan year; and
(xvii) Termination and Amendment: each Employee Benefit Plan
listed in Schedule 5.20 is, and shall be through the Closing Date,
terminable, and/or subject to amendment by the Company, at the
discretion of the Company, with no liability for benefits incurred
after such termination or inconsistent with the terms of any amendment
after its effective date.
5.21. Tadim Financial Information. The attached Schedule 5.21 consists
of: (a) the unaudited balance sheet of Tadim as of June 30, 1997 (the "Most
Recent Balance Sheet of Tadim"), and the related, unaudited statements of income
and cash flows for the three-month period then ended; and (b) the audited
balance sheets of Tadim as of March 31, 1995, 1996 and 1997, and the related
statements of income and cash flows for the fiscal periods then ended. All such
financial statements (the "Financial Statements of Tadim") were prepared from
Tadim's books of account in accordance with generally accepted accounting
principles consistently applied, and fairly present in all material respects the
financial position, results of operations and cash flows of the Business as of
the dates and for the periods indicated (with respect to the unaudited balance
sheets subject to necessary audit adjustments).
5.22. HPG Financial Information. The attached Schedule 5.22 consists
of: (a) the unaudited balance sheet of HPG and the Subsidiaries on a
consolidated basis as of June 30, 1997 (the "Most Recent Balance Sheet of HPG"),
and the related, unaudited statements of income and cash flows for the
three-month period then ended; and (b) the audited balance sheets of HPG and the
Subsidiaries on a consolidated basis as of March 31, 1995, 1996 and 1997, and
the related statements of income
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<PAGE> 23
and cash flows for the fiscal periods then ended. All such financial statements
(the "Financial Statements of HPG") were prepared from HPG's books of account in
accordance with generally accepted accounting principles consistently applied,
and fairly present in all material respects the financial position, results of
operations and cash flows of the Business as of the dates and for the periods
indicated (with respect to the unaudited balance sheets subject to necessary
audit adjustments).
5.23. No Undisclosed Liabilities. Except (a) as and to the extent set
forth on the attached Schedule 5.23 or reflected in the Financial Statements of
Tadim or the Financial Statements of HPG, (b) for liabilities incurred by the
Company in connection with or with respect to the Business in the ordinary
course since the date of the Most Recent Balance Sheet of Tadim and the Most
Recent Balance Sheet of HPG (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law), (c) the Assumed Liabilities,
and (d) liabilities disclosed in this Agreement or the Schedules hereto or not
required to be disclosed because of the applicable threshold in this Agreement,
the Company has no debts, liabilities or obligations of any nature or kind
(whether absolute, accrued, contingent, unliquidated or otherwise, whether or
not known to the Company, whether due or to become due and regardless of when
asserted) arising out of transactions entered into, at or prior to the Closing,
or any action or inaction at or prior to the Closing or any state of facts
existing at or prior to the Closing. Except as set forth on the attached
Schedule 5.23, the Company does not have Knowledge of any existing, proposed or
threatened change which could have a material adverse impact on the Business or
the future prospects of the BusineSection.
5.24. Tax Matters.
(a) Except as set forth on the attached Schedule 5.24:
(i) the Company, and each of the entities identified on the
attached Schedule 5.24 pursuant to Section 5.24(a)(ii) below (the
"Predecessors") have filed all Tax Returns which they are required to
file under applicable laws and regulations, and all such Tax Returns
are complete and correct and have been prepared in compliance with all
applicable laws and regulations;
(ii) the Company, each of its affiliated groups and each of
its Predecessors have paid all Taxes due and owing by them (whether or
not such Taxes are required to be shown on a Tax Return) and have
withheld and paid over to the appropriate taxing authority all Taxes
which they are required to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third party;
(iii) neither the Company nor any of its affiliated groups or
Predecessors have waived any statute of limitations with respect to any
Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency;
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<PAGE> 24
(iv) the accrual for Taxes on the Most Recent Balance Sheet of
Tadim and the Most Recent Balance Sheet of HPG would be adequate to pay
all Taxes of the Company if its current tax year were treated as ending
on the date of the Most Recent Balance Sheet of Tadim and the Most
Recent Balance Sheet of HPG (excluding any amount recorded which is
attributable solely to timing differences between book and Tax income);
(v) since the date of the Most Recent Balance Sheet of Tadim,
Tadim has not incurred any liability for Taxes with respect to the
Business other than in the ordinary course;
(vi) since the date of the Most Recent Balance Sheet of HPG,
neither HPG nor any Subsidiary has incurred any liability for Taxes
with respect to the Business other than in the ordinary course;
(vii) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted
with respect to the Company, any of its affiliated groups or any of its
Predecessors;
(viii) neither the Company nor any of its affiliated groups or
Predecessors have received from any foreign, federal, state or local
taxing authority any (a) written notice indicating an intent to open an
audit or other review or (b) request for information related to tax
matters; and
(ix) there are no material unresolved questions or claims
concerning any Tax liability of the Company or any subsidiary,
affiliated group or any Predecessor of the Company.
(b) Except as set forth on the attached Schedule 5.24, the
Company (i) has not made an election under Section 341(f) of the Code, (ii) is
not liable for the Taxes of another person (1) under Treasury Regulation Section
1.1502-6 (or comparable provisions of state, local or foreign law), (2) as a
transferee or successor, (3) by contract or indemnity or (4) otherwise, (iii) is
not a party to any tax sharing agreement, and (iv) has not made any payments,
are obligated to make any payments or are parties to an agreement that could
obligate them to make any payments that would not be deductible under Section
280G of the Code.
(c) For purposes of this Agreement, the term "Tax" means any
federal, state, province, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
For purposes of this Agreement, the term "Tax Return" means any return,
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<PAGE> 25
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
5.25. Environmental, Health and Safety Matters.
(a) Definitions. As used in this Agreement, the following
terms have the following meanings:
(i) "Environmental Laws" means any and all applicable
international, federal, state, and local statutes, laws, regulations,
ordinances, orders, common law, and similar provisions having the force
or effect of law, concerning public health or safety, worker health or
safety or pollution or protection of the environment, including but not
limited to, the Clean Air Act, 42 U.S.C. 7401 et seq., the Clean Water
Act, 33 U.S.C. 1251 et seq., the Resource Conservation Recovery Act
("RCRA"), 42 U.S.C. 6901 et seq., the Toxic Substances Control Act, 15
U.S.C. 2601 et seq., and the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq. or
which govern: 1) the existence, cleanup, removal, reporting and/or
remedy of contamination or threat of contamination on or about owned or
leased real property; 2) the emission or discharge of Hazardous
Materials into the environment; 3) the control of Hazardous Materials;
or 4) the use, generation, transport, treatment, storage, disposal,
removal, recycling, handling or recovery of Hazardous Materials,
including building materials.
(ii) "Hazardous Materials" means any material or
substance: (i) which is or becomes defined as a "hazardous substance",
"pollutant" or "contaminant" pursuant to CERCLA and amendments thereto
and regulations promulgated thereunder; (ii) containing gasoline, oil,
diesel fuel or other petroleum products, or fractions thereof; (iii)
which is or becomes defined as a "hazardous waste" pursuant to RCRA and
amendments thereto and regulations promulgated thereunder; (iv)
containing polychlorinated biphenyls (PCBs); (v) containing asbestos;
(vi) which is radioactive; (vii) which is biologically hazardous;
(viii) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance or
policy; (ix) which is or becomes defined as a "hazardous waste",
"hazardous substance", "pollutant" or "contaminant" or other such terms
used to define a substance having an adverse effect on the environment
under any federal, state or local statute, regulation or ordinance; (x)
any toxic, explosive, dangerous, corrosive or otherwise hazardous
substance, material or waste which is or becomes regulated by any
federal, state or local governmental authority; or (xi) which causes a
nuisance upon or waste to real property.
(iii) "Environmental Reports" means any and all
environmental review and assessment reports in the Company's possession
or control with respect to the Real Property.
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<PAGE> 26
(iv) "Release" includes any and all migration (which
originates at any of the Real Property), releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping of any Hazardous Materials.
(b) The Company has provided Purchaser with true,
correct and complete copies of all Environmental Reports.
(c) Except as set forth in the Environmental Reports or
on the attached Schedule 5.25:
(i) During the past ten (10) years, the Company has
not received notice, and the Company has no information which indicates
that the Company will be receiving notice, of proceedings, claims or
losses relating to alleged violations by the Company of any
Environmental Laws relating to the Business or relating to the
presence, discharge, release or disposal of Hazardous Materials on the
Real Property;
(ii) The Company has not received notice as a
potentially responsible party for any facility, site or location
pursuant to CERCLA or any other Environmental Law relating to the
Business, except for such notices as have been finally resolved;
(iii) The Company is and has been in compliance with
all applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations established under the
requirements of Environmental Laws relating to the Business and the
lease and operation of the Real Property;
(iv) The Company has timely filed all notices,
reports and other submissions required under all Environmental Laws;
(v) [Intentionally Omitted];
(vi) The Company has been issued all permits,
certificates, approvals, licenses and other authorizations required
under all Environmental Laws for the operation of the Business as it
has been previously and is currently conducted and has timely applied
therefore and is and continues to be in compliance therewith;
(vii) The Company has never caused or suffered any
Hazardous Materials to be disposed onto or into soils of the Real
Property that would give rise to liability under Environmental Laws;
(viii) There is no contamination in soils or
groundwater of or beneath the Real Property which requires any
reporting or any other actions under the Environmental Laws;
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<PAGE> 27
(ix) There have not been and there are no underground
storage tanks, active or abandoned, on or under the Real Property which
have not been removed together with any associated contaminated media
in accordance with Environmental Laws in effect at the time of removal;
(x) No conditions exist at or on or under the Real
Property which with the giving of notice required under the
Environmental Laws would give rise to liability under any Environmental
Law;
(xi) The Company has not arranged for the
transportation, treatment or disposal of any waste that was disposed of
or treated at any site listed on any federal CERCLA or state list or
other lists of hazardous substances sites;
(xii) There are no Liens under Environmental Laws on
any of the Company, the Assets or any of the Leased Property, and no
government actions have been taken which could subject any of such
properties or assets to such liens; and
(xiii) There have been no environmental
investigations, audits, reviews or assessments of the Real Property by
the Company, or in the possession or control of the Company, which have
not been provided to Purchaser.
5.26. Consents, Approvals and Authorizations. Except as set forth on
the attached Schedule 5.26, no consent, approval or authorization of, or
designation, declaration or filing with, or notice to, any governmental
authority, or any lenders, lessors, creditors, shareholders or others, is
required on the part of the Company in connection with the valid execution and
delivery of this Agreement and the Attendant Documents to which the Company is a
party or the consummation of the transactions contemplated in this Agreement
without breach or violation of any agreement, lease, indenture or other
instrument, or any judgment, decree, order, award, law, rule or regulation
applicable to or affecting the Company, the Business, the Assets or the Leased
Property, other than any consent, approval, authorization, designation,
declaration, filing or notification which, if not obtained or made would not
have a material adverse effect on the Business, the Assets or the Leased
Property. Prior to the Closing, the Company shall properly obtain, perform or
give all of the consents, approvals, authorizations, designations, declarations,
filings and notices set forth on the attached Schedule 5.26, and as of the
Closing, The Company shall have given Purchaser's counsel copies or adequate
evidence of all such consents, approvals, authorizations, designations,
declarations, filings and notices.
5.27. Insurance. Except as set forth on the attached Schedule 5.27, the
Company has maintained and now maintains insurance with respect to the Assets,
the Leased Property and the Business, covering property damage by fire or other
casualty, and against such liabilities, claims and risks, including, without
limitation, product liability and workers compensation, and in such amounts as
is customary or appropriate in the industry. The attached Schedule 5.27 contains
a true and
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<PAGE> 28
correct summary of all such insurance policies now maintained by the Company
setting forth the names of the insured and the insurer, policy numbers, the
types of coverage, premium payments or basis of payment, deductible amounts and
limits of coverage. Except as set forth on the attached Schedule 5.27, no such
policy of insurance is subject to any deductible, self-insured retention,
retrospective rating agreement, indemnification agreement or any other method or
device by which the insured person is subject to all or any part of the
liability for any or all claims. Concurrently with or prior to the execution of
this Agreement, the Company has delivered to Purchaser or Purchaser's counsel
true, correct and complete copies of all such insurance policies. Except as set
forth on the attached Schedule 5.27, all such insurance policies will be in full
force and effect through the Closing Date. Except as set forth on the attached
Schedule 5.27, the Company has no Knowledge of any event that has occurred
forming the basis for any present property, casualty or fidelity claim against
the Company which is not fully covered by insurance. The attached Schedule 5.27
contains loss runs for the last five (5) years setting forth all property,
general and products liability and workers compensation claim activity against
the Business, including the date and place of the occurrence, the claimant's
name, reserves, amounts paid, a brief description of the incident and whether
the claim is open or closed. Except as set forth on the attached Schedule 5.27,
the Company does not have Knowledge of any occurrence, circumstance, or event
which could reasonably be expected to result in any such claim.
5.28. Recent Conduct of Business; Interim Operations. Except as set
forth on the attached Schedule 5.28, since the date of the Most Recent Balance
Sheet of Tadim and the Most Recent Balance Sheet of HPG, there has not been any
material adverse change in the Business, in the operations or condition
(financial or otherwise) of the Business or in the Assets. Except as set forth
on the attached Schedule 5.28, since the date of the Most Recent Balance Sheet
of Tadim and the Most Recent Balance Sheet of HPG, the Company has caused the
Business to be conducted only in the ordinary course. Except as set forth on the
attached Schedule 5.28, since the date of the Most Recent Balance Sheet of Tadim
and the Most Recent Balance Sheet of HPG, the Company has not, without the prior
written consent of Purchaser, which may be granted or withheld in Purchaser's
reasonable discretion:
(a) except in accordance with consistent prior practice and in
the ordinary course, made any change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable or to become payable to
any Employee, officer or agent of the Company, or agreed or orally promised to
pay, conditionally or otherwise, any bonus, extra compensation, pension or
severance or vacation pay to any Employee, officer or agent of the Company;
(b) sold or transferred any of the Assets, other than in the
ordinary course of business;
(c) terminated or materially amended any material Contract,
except that (i) the key man life insurance policy on the life of Ernest Oskin
has been terminated and the cash surrender value together with the prepaid
premium has been or will be distributed to the Selling Shareholders and (ii)
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the Huron Plastics Group, Inc. Employees' 401(k) Profit Sharing Plan may be
amended prior to the Closing Date to provide for the vesting of all participants
as of the Closing Date;
(d) subjected any of the Assets to, or permitted any of the
Assets to become subject to, any mortgage, pledge, lien or other encumbrance
other than in the ordinary course;
(e) paid out any cash generated by earnings of HPG or any
Subsidiary from and after the date of the Most Recent Balance Sheet of HPG,
except to pay ordinary and routine expenses incurred in the ordinary course of
business of HPG or the Subsidiaries, except to pay bonuses to its executives in
accordance with past practices, or except to make capital expenditures in
accordance with existing programs and as required in the ordinary course of its
business or as required pursuant to Section 5.6 of this Agreement or in
connection with redemption of shares required by this Agreement; or
(f) entered into any agreement or commitment (other than this
Agreement or any arrangement provided for or contemplated in this Agreement) to
take any of the types of action described in subsection (a) through (e) of this
Section 5.28.
Until the Closing, the Company and the Selling Shareholders shall keep
Purchaser fully informed with respect to the operation and condition of the
BusineSection. Specifically, the Company and the Selling Shareholders will
immediately notify the Purchaser of any actual or, to the Knowledge of the
Company and/or the Selling Shareholders, threatened, material adverse change in
the Business of the Company. Notwithstanding the foregoing, Tadim may pay
bonuses to its executives and, as an "S corporation", may make tax distributions
to its shareholders, all in accordance with past practices.
5.29. Condition of Inventory. The Company's inventory is, and the
Company's work-in-process, when completed, will be, merchantable, fit for the
purpose for which it was procured or manufactured, useable and saleable in the
ordinary course of busineSection. The Company's inventory is not, and the
Company's work-in-process, when completed, will not be, obsolete or surplus.
The Company's inventory and work-in-process are carried on the Most Recent
Balance Sheet of Tadim or the Most Recent Balance Sheet of HPG at amounts not
in excess of the lower of cost or net realizable value. As used in the
foregoing sentences, "obsolete" refers to inventory which is not, or
work-in-process which, when completed, will not be, useable or saleable because
of legal restrictions, failure to meet specifications, loss of market, damage,
physical deterioration or any other cause whatsoever, and "surplus" refers to
inventory which does not, or work-in-process which, when completed, will not,
exceed known or anticipated requirements in the reasonable business judgment of
the Company. In addition, any inventory which, in the opinion of Ernst & Young,
will not be useable and/or saleable within one year after the Closing Date will
be deemed to be obsolete, and shall be written down to zero value for purposes
of computation of the Price Adjustment.
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5.30. Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which Tadim or HPG is a party nor
the consummation of the transactions contemplated in this Agreement will
conflict with, result in the breach or violation of or constitute a default
under the terms, conditions or provisions of the Articles of Incorporation,
Bylaws or any other agreement or instrument to which Tadim, HPG or the
Subsidiaries is a party, or by which such entity may be bound or to which such
entity may be subject.
5.31. Brokerage or Finder's Fee. No broker, finder, agent or similar
intermediary has acted for or on behalf of the Company in connection with this
Agreement or the transactions contemplated hereby and no broker, finder, agent
or similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any agreement, arrangement or
understanding with the Company or any action taken by the Company.
5.32. Product Warranty. Each product that has been or will be
manufactured, sold, leased, or delivered by Tadim and/or HPG prior to the
Closing Date has been and will be manufactured by Tadim and/or HPG in conformity
in all material respects with all applicable contractual commitments and all
express and implied warranties, and neither Tadim nor HPG has or will have any
material liability for replacement or repair thereof or other damages in
connection therewith, other than in accordance with Tadim's and/or HPG's
standard terms and conditions and subject only to the reserve for product
warranty claims set forth on the face of the Most Recent Balance Sheet of HPG
and/.or the Most Recent Balance Sheet of Tadim (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Tadim and/or HPG. No product
that has been or will be manufactured, sold, leased, or delivered by Tadim
and/or HPG prior to the Closing Date is subject to any guaranty, warranty, or
other indemnity from Tadim and/or HPG beyond the applicable standard terms and
conditions of sale or lease. There are no standard terms and conditions of sale
or lease for Tadim and/or HPG other than those set forth in the purchase orders
of the customers of Tadim and/or HPG.
5.33. Product Liability. Neither Tadim nor HPG has or will have 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 Tadim and/or HPG prior to the Closing Date.
5.34. Schedules. Each schedule prepared by the Company and/or the
Selling Shareholders pursuant to this Agreement shall identify the entity with
respect to which the information contained on such schedule applies.
5.35. Disclaimer of Other Representations and Warranties;
Projections.
(a) Neither the Company nor the Selling Shareholders has
authorized any person to make any representation or warranty relating to the
Company or otherwise in connection with transactions contemplated by this
Agreement other than as specifically provided for in this Agreement
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and, if made, such representation or warranty must not be relied upon as having
been authorized by the Company.
(b) Except as expressly set forth in the Agreement, the Company
is, and is understood by the Purchaser to have been sold on an "AS IS, WHERE IS"
BASIS AND, EXCEPT AS TO THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT
WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, IN LAW OR IN FACT, WITH RESPECT TO
THE ASSETS, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
5.36. Disclosure. Notwithstanding anything to the contrary contained in
this Agreement or in any of the Schedules, any information disclosed in one
Schedule shall be deemed to be disclosed on all Schedules. Certain information
set forth in the Schedules are included solely for information purposes and may
not be required to be disclosed pursuant to this Agreement. The disclosure of
any information shall not be deemed to constitute an acknowledgment that such
information is required to be disclosed in connection with the representations
and warranties made by the Company or the Selling Shareholders in this Agreement
or that it is material, nor shall such information be deemed to establish a
standard of materiality.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents, warrants and covenants the following to Tadim, HPG and the Selling
Shareholders:
6.1. Good Standing and Authority. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan. Purchaser has the corporate power and authority to enter into this
Agreement, to enter into the Attendant Documents to which it is a party and to
consummate the transactions contemplated in this Agreement. This Agreement and
all of the Attendant Documents to which Purchaser is a party, and the
consummation of the transactions contemplated in this Agreement, have been or
will be, on or prior to the Closing Date, duly authorized and approved by all
necessary and proper corporate action on the part of Purchaser. This Agreement,
and all of the Attendant Documents to which Purchaser is a party, when executed
and delivered, will constitute legal, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their respective terms.
6.2. Non-Violative Agreement. Neither the execution and delivery of
this Agreement and the Attendant Documents to which Purchaser is a party nor the
consummation of the transactions contemplated in this Agreement will conflict
with, result in the breach or violation of or constitute a default under the
terms, conditions or provisions of Purchaser's Articles of Incorporation or
Bylaws or any other agreement or instrument to which Purchaser is a party, or by
which Purchaser may be bound or to which it may be subject.
6.3. Brokerage or Finder's Fee. No broker, finder, agent or similar
intermediary has acted for or on behalf of Purchaser in connection with this
Agreement or the transactions contemplated
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hereby and no broker, finder, agent or similar intermediary is entitled to any
broker's, finder's or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with Purchaser or any
action taken by Purchaser.
6.4 Due Diligence. Purchaser does not have actual knowledge of any
inaccuracy or breach of any representation or warranty made by the Company or
the Selling Shareholders in this Agreement or the Schedules to this Agreement
which may give rise to a claim for indemnification.
6.5. Indemnification of Directors and Officers. Purchaser agrees that
all rights to indemnification, including provisions relating to advances of
expenses incurred in defense of any action or suit, existing in favor of the
present or former directors, officers, employees, fiduciaries and agents of HPG
as provided in HPG's Articles of Incorporation or Bylaws as in effect as of the
date hereof and with respect to actions occurring prior to the Closing Date,
shall continue in full force and effect until the earlier of the date upon which
HPG and the Subsidiaries are merged with and into Purchaser or for a period of
three years from the Closing Date (provided, however, that all rights to
indemnification in respect of any claim asserted or made within such period
shall continue until the disposition of such claim). In the event of the merger
of HPG and the Subsidiaries into the Company before the expiration of three
years from the Closing Date, Purchaser shall maintain the similar indemnities
contained in its Certificate of Incorporation or Bylaws for the remainder of
such five year period.
7. FUTURE DEVELOPMENTS; SURVIVAL.
7.1. Notice of Material Developments. Each Party shall give prompt
written notice to the other Party of any (i) representations or warranties
contained in this Agreement which was true as of the date of this Agreement, but
which has subsequently become untrue, (ii) breach of any covenant under this
Agreement by such Party, and (iii) any other material development affecting the
ability of such Party to consummate the transactions contemplated in this
Agreement.
7.2 Survival. The representations and warranties set forth in Sections
5 and 6 of this Agreement shall survive for a period of two (2) years after the
Closing Date; provided, however, that the representations and warranties
contained in Sections 5.1, 5.2, 5.4, 5.14, 6.1 and 6.3 shall survive
indefinitely, the representations and warranties contained in Section 5.24 shall
survive for the period of the applicable statute of limitations, and the
representations and warranties contained in Section 5.25 shall survive for a
period of three (3) years.
8. EMPLOYEE MATTERS
8.1. Salaried And Hourly Employees.
(a) Termination. As used in this Section 8.1, the term "Tadim
Employees" means those salaried or hourly employees of Tadim (the "Tadim
Employees") who are employed as of the
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Closing Date (i.e., including those who, as of the date immediately preceding
the Closing Date, are on leave of absence, layoff, military leave, suspension,
sick leave, workers' compensation, salary continuance or long-term or short-term
disability or otherwise not actively performing his or her work during all
normally scheduled business hours; provided such individuals are included on
Schedule 8.1(a) attached to this Agreement). Tadim shall terminate all of the
Tadim Employees on or as of the Closing Date and shall pay all such terminated
employees any amounts due through the date prior to the Closing Date for accrued
wages and benefits except that Purchaser shall pay all earned but unpaid
vacation pay attributable to the period prior to the Closing Date. Purchaser
shall not assume any liability for (except for the litigation disclosed in
Schedule 5.16 pursuant to Section 2.1), inherit or succeed to any employment
relationship or any pending labor or employee relations case, or any employment
or collective bargaining agreements.
(b) Obligation to Hire. Subject to Section 8.1(e) below,
effective as of the Closing Date, Purchaser shall offer employment, or shall
cause one of its subsidiaries or Affiliates to offer employment, to all of the
Tadim Employees (other than those identified on the attached Schedule 8.1(b) as
such Schedule 8.1(b) shall be revised as of the Closing Date) on terms and
conditions which are substantially similar to those under which Purchaser
employs persons of similar skill, experience and training as other employees of
Purchaser. For the purposes of this Section 8.1, the term "Continued Employees"
means those Tadim Employees accepting such offers of employment. The Company
shall be responsible for any liability arising under the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN") on or before the Closing Date and
the Purchaser shall be responsible for any liability arising under WARN after
the Closing Date.
(c) No Right to Continued Employment. After the Closing,
Purchaser may evaluate its employment needs with respect to the Business, and no
provision of this Agreement is intended to or shall confer on any Continued
Employee any right to continued employment after the Closing Date.
(d) Employee Benefit Plans for Continued Employees. Effective
as of a Continued Employee's date of employment with Purchaser, a Continued
Employee shall be entitled to the benefits afforded under, and subject to the
terms and conditions of, the Employee Benefit Plans listed in Schedule 5.20
which are assumed by Purchaser in Section 8.1(e). The Continued Employee's
service credit for purposes of eligibility and vesting shall include service
credited under each such Employee Benefit Plan as of the Closing Date if the
Continued Employee's date of employment with Purchaser is within fourteen days
of the Closing Date. The Continued Employee's service credit, for purposes of
eligibility, vesting and allocation of employer contributions, under the Huron
Plastics Group, Inc. Employees' 401(k) Profit Sharing Plan shall include service
credited under such Plan as of the Closing Date subject to the service crediting
rules in such Plan.
(e) Assumption of the Company's Employee Benefit Plans.
Effective for all duties, acts or omissions arising on and after the Closing
Date, Purchaser shall assume all liabilities and obligation including those as
plan sponsor arising under or pursuant to the Employee Benefit
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Plans (as defined in Section 5.20); provided, however, the Selling Shareholders
shall retain all liability for duties, acts or omissions of the Company and its
officers arising before the Closing Date except to the extent accrued on the
Closing Balance Sheet or disclosed in this Agreement or the Schedules hereto.
Notwithstanding the foregoing, at any time following the Closing Date, Purchaser
shall have the right to terminate, amend or otherwise modify the terms of, any
such Employee Benefit Plan.
8.2. Insurance and Workers' Compensation Claims. Except as provided in
this Section 8.2, the Purchaser shall be solely liable for and shall indemnify
and hold the Selling Shareholders and Tadim harmless against all health and
welfare insurance claims or workers' compensation claims with respect to every
Employee which are pending on the Closing Date or which are asserted or
reactivated after the Closing Date, regardless of the date of injury or medical
condition giving rise to the claim, the date on which the claim is asserted or
reactivated or the period(s) for which the benefits are owed, other than with
respect to workers compensation claims made for injuries incurred during the
1992-1993 and 1993-1994 workers' compensation insurance policy years.
Notwithstanding the foregoing, Tadim and the Selling Shareholders shall solely
be liable for expenses incurred for medical services provided to Employees
before the Closing Date or for indemnity pay which would, in the ordinary course
of business, have been paid to any such Employee prior to the Closing Date to
the extent not reflected on the Most Recent Balance Sheet of Tadim, the Most
Recent Balance Sheet of HPG or the Closing Date Balance Sheet. Purchaser shall
be responsible for the administration of any workers compensation claims which
are pending as of the Closing Date or which arise thereafter and Tadim and the
Selling Shareholders shall reimburse Purchaser for all amounts paid by Purchaser
for which Tadim and the Selling Shareholders have financial responsibility under
this Section 8.2. Purchaser will make satisfactory arrangements to release the
Comerica letters of credit securing the obligations under the Company's workers'
compensation policies.
8.3. COBRA. With respect to any Employee who, prior to the Closing
Date, has elected COBRA benefits and is disclosed on Schedule 8.3, Purchaser
shall (a) continue to administer such benefits on behalf of the Company for all
such COBRA participants at no cost to the Company and the Selling Shareholders;
and (b) retain all liability for payment of claims by such COBRA participants.
9. CONDITIONS TO CLOSING
9.1. Conditions Precedent to Purchaser's Obligation. The obligation of
Purchaser to consummate the transactions contemplated in this Agreement at the
Closing is subject to the satisfaction of all of the following conditions, any
of which may be waived (but only in writing) by Purchaser:
(a) Representations and Warranties. Subject to subsection (k), all
representations, warranties and covenants made by Tadim, HPG and the Selling
Shareholders in this Agreement shall have been true and correct on the date of
this Agreement and shall be true and correct in all respects as of the Closing
Date with the same force and effect as if they had been made on and as of such
date.
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(b) Performance of Agreement. Tadim, HPG and the Selling
Shareholders shall have performed and complied with all of their obligations
under this Agreement which are to have been performed or complied with on or
prior to the Closing Date.
(c) Approvals. All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall
have expired or otherwise been terminated. Tadim, HPG and the Selling
Shareholders shall have obtained all approvals, authorizations, consents or
waivers necessary for the consummation of the transactions contemplated in this
Agreement. The Boards of Directors of Tadim and HPG shall have approved the
transactions contemplated in this Agreement in accordance with their respective
governing documents and applicable law. If required pursuant to applicable law,
the shareholders of Tadim and HPG shall have approved the transactions
contemplated in this Agreement by the requisite vote at a meeting called
pursuant to applicable law.
(d) Litigation. There shall not be any litigation, action, suit,
claim, proceeding, order, investigation or inquiry pending or threatened before
any court or quasi-judicial or administrative agency to, or pursuant to which a
judgment, order, decree, stipulation, injunction or charge could be entered
which would: (i) enjoin or prevent the consummation of the transactions
contemplated in this Agreement, (ii) cause any of the transactions contemplated
in this Agreement to be rescinded following consummation, (iii) have a material
adverse effect on the right of Purchaser to own, operate or control the
Business, the Assets, or the Shares, or (iv) otherwise have a material adverse
effect on the operations or financial condition of the Business, the Assets, or
the Shares. In addition, no such litigation, action, suit, claim, proceeding,
order, investigation or inquiry shall have been initiated between the date of
this Agreement and the Closing Date.
(e) Estoppel Certificates. Tadim and HPG shall have obtained and
delivered to Purchaser estoppel certificates and consents to assignment, dated
no earlier than fifteen (15) days prior to the Closing Date, from each of the
lessors under the Personal Property Leases (if required pursuant to the terms of
such leases) the leases covering all Leased Real Property and any other lease or
sublease entered into with respect to the Assets or the Business, identifying
the applicable lease and all amendments thereto and stating, among other things,
that (i) such lease is in full force and effect, (ii) there are no uncured
defaults thereunder, (iii) the date through which rent or any other applicable
payments thereunder has been paid, and (iv) the amount of any security deposit
held thereunder. The form of the estoppel certificates and consents to
assignment which the Company shall present to such lessors, and the content of
such estoppel certificates and consents to assignment, as completed by the
lessors, shall be satisfactory to Purchaser in its reasonable discretion.
(f) UCC Searches. Purchaser shall have received, not less than ten
(10) business days prior to the Closing Date, Uniform Commercial Code financing
statement searches (the "UCC Searches") dated no earlier than thirty (30) days
prior to the Closing Date:
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(i) with respect to Tadim, (A) from the State of
Michigan and any and all counties in the State of Michigan in
which Tadim owns or leases any property, and (B) any other
state in which Tadim is qualified to do business and any and
all counties in such other states in which Tadim owns or
leases any property, showing no Liens (including, but not
necessarily limited to, so-called "ERISA liens" under ERISA
Section.4068) on or affecting the Business or any part of the
Tadim Assets or the Leased Property, except for Permitted
Liens and Liens of a definite or ascertainable amount which
may be removed by the payment of money at Closing and which
Tadim has the right to remove, and shall remove, at Closing;
(ii) with respect to HPG, (A) from the State of
Michigan and any and all counties in the State of Michigan in
which HPG or any Subsidiary owns or leases any property, and
(B) any other state in which HPG or any Subsidiary is
qualified to do business and any and all counties in such
other states in which HPG or any Subsidiary owns or leases
any property, showing no Liens (including, but not
necessarily limited to, so-called "ERISA liens" under ERISA
Section 4068) on or affecting the Business or any part of the
HPG Assets or HPG Leased Personal Property or HPG Real
Property, except for Liens which are acceptable to Purchaser
and Liens of a definite or ascertainable amount which may be
removed by the payment of money at Closing and which HPG has
the right to remove, and shall remove, at Closing.
The UCC searches referenced in subparagraphs (i) and (ii) above shall
be conducted under the corporate names of Tadim, HPG and each of the
Subsidiaries and any assumed names under which Tadim, HPG or the Subsidiaries
has in the past conducted, or is currently conducting, busineSection.
(g) Tax Lien Searches. Purchaser shall have received, not less
than ten (10) business days prior to the Closing Date, certified searches dated
no earlier than thirty (30) days prior to the Closing Date of the tax records of
each taxing authority to which the Company pays taxes or files taxes or
information returns demonstrating that no tax liens have been filed against the
Business or any of the Assets (the "Tax Lien Searches"). Such Tax Lien Searches
shall be conducted under the corporate names of Tadim, HPG and each of the
Subsidiaries and any assumed names under which Tadim, HPG and any of the
Subsidiaries has in the past conducted, or is currently conducting
busineSection.
(h) Litigation Searches. Purchaser shall have received, not
less than ten (10) business days prior to the Closing Date, certified litigation
searches dated no earlier than thirty (30) days prior to the Closing Date of the
litigation records from each of the jurisdictions (both federal and state) in
which the Company conducts business showing that, other than the litigation
disclosed on the attached Schedule 5.16, no litigation has been instituted which
could affect, in any way, the Business or the Assets.
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(i) Environmental Reports. With respect to the Real Property,
Purchaser shall have received, not less than ten (10) business days prior to the
Closing Date, at the Purchaser's cost and expense, a "Phase I" environmental
review and assessment report, a compliance audit and an analysis of potential
offsite liability for such parcel prepared by an environmental consultant of
Purchaser's choosing, and all such reports shall be satisfactory to Purchaser in
all respects. Purchaser shall perform all environmental due diligence at
reasonable times and in a reasonable manner and shall indemnify, defend and hold
the Company harmless from damages resulting therefrom except for those damages
that are due to the Company's negligence or acts or omissions. In the event that
Purchaser is not satisfied in its sole discretion with the results of the Phase
I environmental review and assessment reports, Purchaser may, by one or more
written notices to Tadim, HPG and the Selling Shareholders prior to the end of
the due diligence period provided in Section 9.1(u) hereof, extend the
environmental due diligence period for two additional consecutive thirty (30)
day periods during which Purchaser may conduct such additional investigations of
the environmental conditions of the Real Property as Purchaser deems
appropriate; provided, that at the expiration of the initial thirty (30) day
period, the Sellers shall have the option of closing the transactions
contemplated hereby (in which event the Purchaser shall agree that the condition
provided herein is satisfied) provided that the Selling Shareholders remediate
any contamination on the Real Property specifically identified during
Purchaser's environmental due diligence which would result in liability under
the Environmental Laws at the sole cost and expense of the Selling Shareholders
and that a mutually agreed upon cost of such remediation shall be withheld from
the Purchase Price and placed in escrow pursuant to an escrow agreement
reasonably satisfactory to the Parties. In connection with the foregoing, the
Company and the Selling Shareholders hereby covenant and agree that, as
reasonably requested by Purchaser, the Company and the Selling Shareholders
shall use their best efforts to obtain, and will cooperate fully with
Purchaser's efforts to obtain, any additional environmental inspections,
assessments, reports or other information with respect to environmental
contamination or compliance or non-compliance with any Environmental Laws
relating to the Business, the Assets or the Real Property.
(j) Lease Amendments and Assignment and Assumption of Leases.
Purchaser and the lessor of each lease for each parcel of real property
currently leased and used by the Company (other than the warehouse located on
Cedar Street, Port Huron, Michigan, the condominium located on South Padre
Island, Texas, and the SPAN warehouses identified on Schedule 5.11 as numbers 7,
9 and 10, which will be assigned to, and assumed by, Purchaser pursuant to
Assignment and Assumption Agreements described below) shall have entered into
amendments to such leases (the "Lease Amendments"), each of which shall provide
for an initial three (3) year term with termination upon 18-months' notice
exercisable during the initial three (3) year term only, together with five (5)
three-year options to renew exercisable not later than six-months prior to the
expiration of the preceding term. In addition, Purchaser and the appropriate
entity comprising the Company and/or the lessor shall have entered into
Assignment and Assumptions of Leases (the "Assignment and Assumption
Agreements") to the extent that any such lease requires such assignment and
assumption.
(k) Updating of Disclosure Schedules. From the date of this
Agreement until the Closing, the Company and the Selling Shareholders shall have
used their best efforts to update all of
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the Schedules to this Agreement and shall have promptly notified Purchaser of
any material changes or additions or events which may cause any change or
addition to any such Schedules or in any representation or warranty made
pursuant to Section 5 above. If the Company or the Selling Shareholders so
update any Schedule and such update corrects a material breach of a
representation or warranty of the Company or the Selling Shareholders or if the
update reflects an event occurring after the date of this Agreement that would
have a material adverse effect on the business, the Purchaser shall have the
right to terminate this Agreement, provided, however, that if the Purchaser does
not terminate this Agreement, the updated Schedule(s) shall be deemed updated as
of the date of this Agreement. Except as specifically provided for in the
preceding sentence, the provisions of this Section 9.1(k) and any notice by
Tadim or HPG pursuant to this Section 9.1(k) shall not be deemed in any way to
constitute a waiver by Purchaser of the condition set forth in Section 9.1(a)
above which provides in part that the representations and warranties set forth
in Section 5 above shall be true and correct on the date of this Agreement and
on the date of the Closing.
(l) [RESERVED]
(m) Delivery of Closing Documents. Tadim, HPG and the Selling
Shareholders shall have executed and delivered, or caused to be executed and
delivered, all of the documents described in Section 10.2 below. All documents
relating to the transactions contemplated in this Agreement shall be
satisfactory in form and content to Purchaser's legal counsel.
(n) No Encumbrances; Redemption of Stock. All of the Assets
other than the Leased Personal Property and the Leased Real Property shall be
owned free and clear of all Liens other than the Permitted Liens. All of the
Shares shall be owned free and clear of all Liens, and HPG shall have redeemed
(or shall concurrently with the Closing redeem) all issued and outstanding
shares of Stock, other than the Shares. In order to make the payments
necessitated by such redemptions, HPG shall be entitled to use that amount of
cash existing in its accounts as of the date of the Most Recent Balance Sheet of
HPG, as reflected in the Most Recent Balance Sheet of HPG.
(o) Customer Visits. Purchaser shall be satisfied with the
results of customer visits conducted jointly with Tadim or HPG as the case may
be, prior to the Closing Date; provided that no such visit shall be made until
the Purchaser has delivered to Tadim, HPG and the Selling Shareholders a copy of
a binding commitment and approval by its lending group participants for
financing of the transactions contemplated in this Agreement.
(p) Vehicles. Tadim shall have properly transferred title to
the vehicles, if any, listed on the attached Schedule 5.3 to Purchaser.
(q) [Intentionally Omitted]
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(r) Shareholder Agreements. HPG shall have exercised or
terminated and discharged its obligations under all existing agreements with the
shareholders, including, without limitation, those agreements with respect to
the redemption of the outstanding stock of HPG.
(s) Guarantees. HPG shall have terminated and discharged all
of its obligations under all guarantees in favor of financial institutions
(other than that certain guarantee entered into by HPG in favor of Comerica Bank
in connection with construction financing for the Croswell, Michigan property).
(t) Resignations. Purchaser shall have received the
resignations, effective as of the Closing, of each director and officer of the
Company.
(u) Due Diligence. Purchaser shall have satisfactorily
completed its due diligence investigation by January 23, 1998. Purchaser shall
notify Tadim, HPG and the Selling Shareholders in writing on or prior to January
23, 1998 if it is not satisfied with the results of its due diligence
investigation, whereupon this Agreement shall be deemed terminated, all parties
shall be relieved of their obligations hereunder, and Tadim, HPG and the Selling
Shareholders shall be free to communicate and negotiate with other potential
buyers notwithstanding anything to the contrary contained in this Agreement. In
such event, Purchaser shall be entitled to a return of the Deposit paid pursuant
to Section 4.3(a) hereof.
(v) Business Permits. To the extent that any business permits
are not transferable to Purchaser, Purchaser shall have obtained, or satisfied
itself that it will be able to obtain, business permits in its own name that
will permit Purchaser to own, operate or use the Business and the Tadim Assets
of Tadim and of the Company to the same extent as the Company and Tadim.
9.2. Conditions Precedent to Tadim's, HPG's and the Selling
Shareholders' Obligation. The obligation of Tadim, HPG and the Selling
Shareholders to consummate the transactions contemplated in this Agreement at
the Closing is subject to the satisfaction of all of the following conditions,
any of which may be waived (but only in writing) by such Parties:
(a) Representations and Warranties. All representations and
warranties made by Purchaser in this Agreement shall have been true and correct
on the date of this Agreement and shall be true and correct in all respects as
of the Closing Date with the same force and effect as if they had been made on
and as of such date.
(b) Performance of Agreement. Purchaser shall have performed
and complied with all of its obligations under this Agreement which are to have
been performed or complied with on or prior to the Closing Date.
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(c) Approvals. Purchaser's Board of Directors shall have approved
the transactions contemplated in this Agreement in accordance with Purchaser's
governing documents and applicable law.
(d) [RESERVED]
(e) Delivery of Closing Documents. Purchaser shall have executed
and delivered, or caused to be executed and delivered, all of the documents
described in Section 10.3 below. All documents relating to the transactions
contemplated in this Agreement shall be satisfactory in form and content to the
Company's legal counsel.
10. CLOSING
10.1. Closing. The closing (the "Closing") of the transactions
contemplated in this Agreement shall be held at the offices of Dean & Fulkerson
on or before January 30, 1998 or at Purchaser's option such later date as is
required to satisfy the conditions set forth in Sections 9.1(c) or 9.1(i) (the
"Closing Date") or at such other location and time as Tadim, HPG and Purchaser
may mutually agree.
10.2. Documents to Be Delivered at Closing by HPG, Tadim and the
Selling Shareholders. At the Closing, Tadim, HPG and the Selling Shareholders
shall properly execute (if necessary) and deliver to Purchaser, or cause to be
executed and delivered to Purchaser, the following:
(a) A Warranty Bill of Sale and Assignment and Assumption
Agreement (the "Bill of Sale"), the form of which shall be reasonably
satisfactory to counsel to Purchaser.
(b) Certificates of title to the vehicles listed on the attached
Schedule 5.3, if any.
(c) [RESERVED]
(d) Escrow Agreement.
(e) Covenant Not to Compete (the "Covenant"), the form of which
is attached to this Agreement as Exhibit C, executed by the persons set forth on
the attached Schedule 10.2 (e).
(f) Employment Agreements (the "Employment Agreements"), the
forms of which are attached to this Agreement as Exhibits D-1 to D-11, executed
by Purchaser and the persons set forth on the attached Schedule 10.2(e).
(g) An opinion of Dykema Gossett, counsel to Tadim, HPG and the
Selling Shareholders, addressed to Purchaser, the form of which shall be
reasonably satisfactory to counsel to Purchaser.
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(h) The consent and estoppel certificates described in Section
9.1(e) above.
(i) The Lease Amendments and the Assignment and Assumption
Agreements.
(j) A copy of Tadim's Articles of Incorporation, certified by the
Michigan Department of Consumer and Industry Services, and a Certificate of Good
Standing (or analogous document) for Tadim issued by the Michigan Department of
Consumer and Industry Services and each and every other state in which Tadim is
authorized to do busineSection. All such documents shall be dated not earlier
then ten (10) days prior to the Closing Date.
(k) A copy of Articles of Incorporation of HPG and each of the
Subsidiaries, certified by the Michigan Department of Consumer and Industry
Services, and a Certificate of Good Standing (or analogous document) for HPG and
each of the Subsidiaries issued by the Michigan Department of Consumer and
Industry Services and each and every other state in which such entity is
authorized to do busineSection. All such documents shall be dated not earlier
then ten (10) days prior to the Closing Date.
(l) A certificate, executed by an authorized officer of Tadim, to
the effect that (i) all of the representations, warranties and covenants made by
Tadim in this Agreement are true and correct on the Closing Date with the same
effect as though made on and as of the Closing Date, and (ii) all covenants and
agreements undertaken to be performed by Tadim under this Agreement have been
taken or performed. Attached to such certificate shall be a copy of Tadim's
bylaws and a copy of the minutes or resolutions approving the transactions
contemplated in this Agreement (as required by Section 9.1(c) above), and the
officer of Tadim executing such certificate shall certify that, as of the
Closing Date, such bylaws and minutes or resolutions are true, complete and
correct, have not be altered or repealed and are in full force and effect.
(m) A certificate, executed by an authorized officer of HPG, to
the effect that (i) all of the representations, warranties and covenants made by
HPG in this Agreement are true and correct on the Closing Date with the same
effect as though made on and as of the Closing Date, and (ii) all covenants and
agreements undertaken to be performed by HPG under this Agreement have been
taken or performed. Attached to such certificate shall be a copy of HPG's bylaws
and a copy of the minutes or resolutions approving the transactions contemplated
in this Agreement (as required by Section 9.1(c) above), and the officer of HPG
executing such certificate shall certify that, as of the Closing Date, such
bylaws and minutes or resolutions are true, complete and correct, have not be
altered or repealed and are in full force and effect.
(n) A certificate, executed by each of the Selling Shareholders,
to the effect that (i) all of the representations, warranties and covenants made
by him or her in this Agreement are true and correct on the Closing Date with
the same effect as though made on and as of the Closing Date, and (ii) all
covenants and agreements undertaken to be performed by him or her under this
Agreement have been taken or performed.
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(o) The Shares, and assignments separate from certificate in
respect of the Shares, all of which shall be mutually acceptable to the Selling
Shareholders and Purchaser.
(p) The corporate credit and debit cards described in Section
4.4(d).
(q) Such other documents and instruments as are contemplated in
this Agreement or as Purchaser or Purchaser's counsel may reasonably request in
order to evidence or consummate the transactions contemplated in this Agreement
or to effectuate the purpose or intent of this Agreement.
10.3. Documents to be Delivered at Closing by Purchaser. At the
Closing, Purchaser shall properly execute (if necessary) and deliver to Tadim or
the Selling Shareholders, or cause to be executed and delivered to Tadim or the
Selling Shareholders, as the case may be, the following:
(a) The Asset Purchase Price and the Stock Purchase Price.
(b) The Bill of Sale.
(c) The Covenants.
(d) The Employment Agreements.
(e) The Escrow Agreement.
(f) The Lease Amendments and the Assignment and Assumption
Agreements.
(g) An opinion of Dean & Fulkerson, Professional Corporation,
counsel to Purchaser, addressed to Tadim, HPG and the Selling Shareholders, the
form of which shall be reasonably satisfactory to counsel to Tadim, HPG and the
Selling Shareholders.
(h) A copy of Purchaser's Certificate of Incorporation, certified
by the Delaware Secretary of State, and a Certificate of Good Standing for
Purchaser issued by the Delaware Secretary of State. All such documents shall be
dated not earlier then ten (10) days prior to the Closing Date.
(i) A certificate, executed by an authorized officer of
Purchaser, to the effect that (i) all of the representations, warranties and
covenants made by Purchaser in this Agreement are true and correct on the
Closing Date with the same effect as though made on and as of the Closing Date,
and (ii) all covenants and agreements undertaken to be performed by Purchaser
under this Agreement have been taken or performed. Attached to such certificate
shall be a copy of Purchaser's bylaws and a copy of the minutes or resolutions
approving the transactions contemplated in this Agreement (as required by
Section 9.2(c) above), and the officer of Purchaser executing such certificate
shall certify
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that, as of the Closing Date, such bylaws and minutes or resolutions are true,
complete and correct, have not be altered or repealed and are in full force and
effect.
(j) Such other documents and instruments as are contemplated in
this Agreement or as Tadim, HPG, the Selling Shareholders or their counsel may
reasonably request in order to evidence or consummate the transactions
contemplated in this Agreement or to effectuate the purpose or intent of this
Agreement.
(k) Amendment to Leases as contemplated in Section 9.1(j).
11. INDEMNIFICATION
11.1. Indemnification of Purchaser. Tadim and the Selling Shareholders
hereby agree to jointly and severally indemnify, defend and hold harmless
Purchaser and its officers, directors, shareholders, employees, independent
contractors, agents, successors and assigns (collectively, the "Purchaser
Parties") from and against any and all liabilities, losses, costs or expenses,
demands, assessments, judgments, including reasonable attorneys' and consultant
fees ("Losses") which any of the Purchaser Parties may suffer or for which any
of the Purchaser Parties may become liable and which are based on, the result
of, arise out of or are otherwise related to any of the following:
(a) Any breach of any representation or warranty of Tadim, HPG or
the Selling Shareholders contained in this Agreement, any of the Attendant
Documents or any certificate, schedule, list or other instrument to be furnished
by Tadim, HPG or the Selling Shareholders to Purchaser pursuant to this
Agreement or any of the Attendant Documents;
(b) Any breach or failure of Tadim, HPG or the Selling
Shareholders to perform any covenant or agreement required to be performed by
Tadim, HPG or the Selling Shareholders pursuant to this Agreement or any of the
Attendant Documents;
(c) Tadim's non-compliance with the provisions of any bulk
transfer law applicable to the transactions contemplated in this Agreement;
(d) Any failure on the part of the Representative Shareholder to
distribute to the appropriate persons, in the appropriate amounts, the funds to
be deposited into the Shareholder's Account by Purchaser by wire transfer;
(e) Any claim, demand, suit, action or legal, administrative or
other proceeding by any person (other than a Party) or any federal, state or
local department, agency or other governmental body (a "Third Party Claim")
against any of the Purchaser Parties resulting from, arising out of or in any
way related to (i) the failure of Tadim to perform, pay or discharge any
Excluded Liability, (ii) the failure of HPG to discharge any liability, as and
to the extent contemplated in Section 5.6 above, (iii) any actual or alleged
defect in any product manufactured by the Company
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prior to the Closing, and (iv) the Marysville Property, including but not
limited any action by the City of Marysville, Michigan, the State of Michigan,
or any agency thereof, with respect to repayment of the Community Development
Block Grant provided HPG or its Subsidiary in connection with the improvement of
the real property located in Marysville Property.
(f) Any Loss arising out of HPG's guaranty of the $2.0 million
construction loan from Comerica Bank to D & A Realty, Inc.
(g) Any Loss arising out of the litigation generally captioned
Pyramid Mold, Inc. v. Huron Plastics Group, Inc. If an indemnity payment is made
with regard to any such Loss, and there subsequently is a recovery under the
litigation in favor of HPG, then such recovery shall inure to the benefit of the
Selling Shareholders to the extent of such indemnity payment (after recovery by
HPG of all such Loss amounts related to the litigation).
(h) Any Loss arising out of or relating to (i) any Hazardous
Materials existing on or Released from the Real Property owned or leased by
Tadim or the Company as of or prior to the Closing Date, to the extent that the
amount thereof or the conditions created thereby are in excess of the least
stringent cleanup standard which is applicable to the Real Property under the
Environmental Laws as of the Closing Date, and (ii) Hazardous Materials
generated by Tadim or the Company but disposed of outside the Real Property
owned or leased by Tadim or the Company prior to the Closing Date.
(i) Any costs or expenses arising from Purchaser's enforcement of
the indemnification rights set forth in this Section 11.1.
11.2. Indemnification of Tadim and the Selling Shareholders. Purchaser
hereby agrees to indemnify, defend and hold harmless Tadim, its officers,
directors, shareholders, employees, independent contractors, agents, successors
and assigns, and the Selling Shareholders (collectively, the "Selling Parties")
from and against any and all Losses which any of the Selling Parties may suffer
or for which any of the Tadim Parties may become liable and which are based on,
the result of, arise out of or are otherwise related to any of the following:
(a) any inaccuracy or misrepresentation in, or breach of any
representation or warranty of Purchaser contained in, this Agreement, any of the
Attendant Documents or any certificate, schedule, list or other instrument to be
furnished by Purchaser to Tadim, HPG or the Selling Shareholders pursuant to
this Agreement or any of the Attendant Documents;
(b) any breach or failure of Purchaser to perform any covenant or
agreement required to be performed by Purchaser pursuant to this Agreement or
any of the Attendant Documents, including without limitation, those set forth in
Article 8;
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(c) any Third Party Claim against any of the Tadim Parties
resulting from, arising out of or in any way related to (i) the failure of
Purchaser to perform, pay or discharge any Assumed Liability, (ii) the operation
of the Business after the Closing, or (iii) any actual or alleged defect in any
product manufactured by Purchaser or HPG after the Closing.
(d) Any costs or expenses arising from Tadim's and/or the Selling
Shareholders' enforcement of the indemnification rights set forth in this
Section 11.2.
11.3. Minimization of Indemnities. Each Party shall use reasonable
efforts to minimize the indemnification obligations of the other Parties under
this Section 11 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.
11.4. Assignment of Claims. Each Party agrees that on satisfaction of
the obligation to indemnify under this Section 11, and in consideration of such
obligation, it will assign to the Party or Parties 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 indemnified loss, and to reasonably cooperate
in any efforts to recover therefrom.
11.5 Third Party Claims.
(a) If any third party shall notify any party to this
Agreement (the "Indemnified Party") with respect to any Third Party Claim which
may give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Article 11, then the Indemnified
Party shall within sixty (60) days after learning of the assertion of the Third
Party Claim notify the Indemnifying Party thereof in writing. The notice shall
specify in reasonable detail, to the extent available, the nature and any
particulars of the event, occasion or occurrence giving rise to a right of
indemnification and the Losses owing prior to such notice.
(b) Any Indemnifying Party will have the right to assume the
defense of the Third Party Claim with counsel of its choice at any time within
fifteen (15) days after the Indemnified Party has given notice of the Third
Party Claim; provided that the Indemnified Party may retain separate co-counsel
at its sole cost and expense and participate in the defense of the Third Party
Claim. The assumption of the defense of any Third Party Claim shall not be
deemed an admission by the Indemnifying Party that it is liable for any such
Third Party Claim. After written notice by the Indemnifying Party to the
Indemnified Party of its election to assume control of the defense of any such
action, the Indemnifying Party shall not be liable for any costs or expenses
incurred by such Indemnified Party in connection with the defense thereof.
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(c) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third Party Claim in accordance with Section 11.5
(b) above (i) the Indemnifying Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves only the
payment of money damages by the Indemnifying Party and does not impose an
injunction or other equitable relief upon the Indemnified Party, and (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be unreasonably withheld).
(d) In the event that the Indemnifying Party does not assume
or conduct the defense of the Third Party Claim in accordance with Section
11.5(b) above, the Indemnified Party may defend against the Third Party Claim in
any manner it reasonably may deem appropriate.
(e) In the event that the Indemnifying Party shall be
obligated to indemnify the Indemnified Party pursuant to this Section 11.5, the
Indemnifying Party shall, upon payment of such indemnify in full, be subrogated
to all rights of the Indemnified Party with respect to the Losses to which such
indemnification directly relates.
(f) So long as the Indemnifying Party is defending in good
faith any Third Party Claim, the Indemnified Party shall at all times cooperate,
at its own expense, in all reasonable ways with, make its relevant files and
records available for inspection and copying by, and make its employees
available or otherwise render reasonable assistance to the Indemnifying Party.
11.6. Exclusive Remedy. The indemnification provided under Sections
11.1 shall be the sole and exclusive remedy of Purchaser against Tadim, HPG and
the Selling Shareholders, on the one hand and of Tadim and the Selling
Shareholders against Purchaser, on the other hand, for any Losses.
Notwithstanding anything to the contrary contained in this Agreement, none of
Tadim, HPG or any Selling Shareholders shall have any liability whatsoever to
Purchaser under this Agreement after the Closing Date, regardless of whether
such liabilities shall be in contract, tort, equity or otherwise, except for
such liabilities as are provided for in Section 11.1. Notwithstanding anything
in this Agreement to the contrary, Loss shall not include punitive, special,
exemplary, contingent, incidental or speculative damages, or for any other
damages other than actual damages.
11.7. Offset for Tax or Insurance Proceeds. The Selling Shareholders
shall be entitled to reimbursement by the Purchaser for any indemnification
payment for Losses to the extent of any actual cash savings realized by
Purchaser as a result of (x) a net tax benefit as determined by Purchaser's
independent accountants, or (y) an insurance reimbursement or third party
contribution or indemnity payment. In the event that any claim for
indemnification asserted under this Agreement is, or may be, the subject of any
insurance coverage or other right to indemnification or contribution from any
third person, the Indemnified Parties expressly agree that they shall promptly
notify the applicable insurance carrier of any such claim or loss and tender
defense thereof to such carrier, and
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shall also promptly notify any third party indemnitor or contributor which may
be liable for any portion of such losses or claims. The Indemnified Parties
agree to pursue, at the cost and expense of the Indemnifying Party, such claims
diligently and to reasonably cooperate, at the cost and expense of the
Indemnifying Party, with each applicable insurance carrier and third party
indemnitor or contributor.
11.8. Limitation on Indemnities.
(a) Any provision of this Agreement to the contrary
notwithstanding, no party shall be entitled to make a claim against any other
Party unless and until the aggregate amount of Losses incurred by such Party in
respect of any individual event or occurrence giving rise to such Losses exceeds
$5,000, in which event, subject to the Basket set forth below, such Party may
assert its right to indemnification hereunder to the full extent of its
indemnifiable Losses in respect thereof.
(b) Any provisions of this Agreement to the contrary
notwithstanding, no claim for indemnification by any Party against another Party
shall be valid and assertible unless the aggregate amount of all Losses exceeds
the sum of Two Hundred Fifty Thousand Dollars ($250,000) plus fifty percent
(50%) of the difference determined from the sum of the HPG Net Worth plus the
Tadim Net Book Value as of the Closing Date as reflected on the Closing Date
Balance Sheet minus the sum of the HPG Net Worth as set forth on the Most Recent
Balance Sheet of HPG plus the Tadim Net Book Value as of the date of the Most
Recent Balance Sheet of Tadim (the "Basket Amount"), but then such Party may
seek indemnification for the full amount of such claims; provided, that any
provision of this Agreement to the contrary notwithstanding, the dollar
limitations set forth in this Section 11.8 shall not apply to Losses arising out
of any (i) Third Party Claim as they may relate to the matters described in
Section 11.1(e), (f) or (g) above, (ii) claim relating to Tadim's non-compliance
with the provisions of any bulk transfer law, (iii) claim relating to the
Company's or the Selling Shareholders' obligations with respect to tax matters
pursuant to Section 13.10 below, or (iv) claims relating to the Selling
Shareholders' obligations to repurchase the Company's accounts receivable
pursuant to Section 11.9 below but only to the extent that such claims exceed
the amount of any reserves for bad debts set forth on the face of the Closing
Date Balance Sheet.
(c) Notwithstanding the provisions of subsection (b) above, at
such time as Purchaser receives that certain tax refund from the State of
Michigan (anticipated to be in the amount of $339,000) or any other tax refund
received as a result of audit adjustments of Tax Returns for the periods ended
on or before the Closing Date (the "Tax Refund"), no claim for indemnification
by Purchaser with respect to a breach of the representation and warranty set
forth in Section 5.24 or with respect to the matters set forth in Section 13.10
(collectively, "Tax Matters Indemnities"), shall be valid and assertible unless
the aggregate amount of all Losses relating to such matters exceeds the amount
of the Tax Refund (the "Tax Basket"). Until such time as Purchaser receives the
Tax Refund, Purchaser may apply the amount of any claims relating to Tax Matters
Indemnities to the Basket pursuant to subsection (b) above. At such time as
Purchaser receives the Tax Refund, all claims relating to Tax Matters
Indemnities, whether made before or after Purchaser's receipt of the Tax
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Refund, shall apply to the Tax Basket (and, to the extent already applied to the
Basket, may be deducted from the Basket).
(d) To the extent Purchaser asserts that the thresholds set
forth in Sections 11.8(b) or 11.8(c) have been exceeded, Purchaser will provide
the Representative Shareholder access to Purchaser's books and records and with
such other information as the Representative Shareholder may reasonably request
in order to verify whether the threshold has been properly exceeded. After the
threshold set forth in Section 11.8(b) or 11.8(c) is exceeded, the aggregate
amount of Losses recoverable pursuant to the provisions of Article 11 by
Purchaser shall be limited to $6,000,000 in the aggregate.
(e) Except as to environmental conditions related to the Real
Property, Purchaser shall not be entitled to indemnification for any Losses
which arise out of facts, circumstances or conditions of which Purchaser has
actual knowledge prior to the Closing Date nor to the extent of any reserve
account specifically set up for the matter underlying or causing said Loss set
forth on the Closing Balance Sheet.
11.9. Receivables.
(a) Tooling. During the 240-day period immediately following
the Closing Date, Purchaser shall exercise all reasonable efforts to collect
the tooling receivables of the Company existing as of the Closing Date (the
"Tooling Receivables") consistent with the Company's past practices. As of the
end of each monthly accounting period during such 240-day period, Purchaser
shall furnish to the Representative Shareholder a list of the Tooling
Receivables which remain unpaid. If the Company has not received on or prior to
the Closing Date and Purchaser has not received within 240 days after the
Closing Date payment of any Tooling Receivables existing as of the Closing
Date, Purchaser shall furnish to the Representative Shareholder a detailed list
of such outstanding Tooling Receivable that remain unpaid (the "Redeemable
Tooling Receivable") showing (i) the name and last known address of the account
debtor or customer; (ii) the amount owing and aging of the Tooling Receivable;
(iii) the aggregate outstanding dollar amount of all such Tooling Receivable;
and (iv) as to each item of Tooling Receivable, a general notation by Purchaser
as to why Purchaser believes that the account is unpaid or is disputed, if any
dispute exists with respect to an account. Within 15 days after the
Representative Shareholder's receipt of the foregoing list of Redeemable
Tooling Receivable, the Selling Shareholders shall purchase the Redeemable
Tooling Receivable from Purchaser as follows: (i) Purchaser shall assign to the
Representative Shareholder all of Purchaser's right, title and interest in the
Redeemable Tooling Receivable by instrument acceptable to counsel for the
Selling Shareholders and Purchaser; (ii) Purchaser shall, to the extent
reasonably available, deliver to the Representative Shareholder all
instruments, documents and agreements evidencing Purchaser's right and interest
in the Redeemable Tooling Receivable; and (iii) the Selling Shareholders shall
pay to Purchaser an amount equal to the aggregate amount outstanding in respect
of the Redeemable Tooling Receivable. If Purchaser receives any payment of cash
or property in respect of the
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Redeemable Tooling Receivable after the same have been transferred to the
Representative Shareholder, Purchaser shall promptly remit such payment to
Seller.
(b) Other Receivables. In accordance with the procedures set
forth in subsection (a) above, the Selling Shareholders shall buy back any
accounts and notes receivable of the Business (other than Tooling Receivables)
existing as of the Closing Date and uncollected by Purchaser within 120 days
following the Closing Date.
11.10. Bulk Transfer Laws. Purchaser hereby waives compliance by Tadim
with the provisions of any so-called "bulk transfer law" of any jurisdiction in
connection with the sale of the Tadim Assets to Purchaser. Tadim, the Company
and the Selling Shareholders shall jointly and severally indemnify and hold
harmless Purchaser against any and all liabilities that may be asserted by third
parties against Purchaser as a result of noncompliance with any such bulk
transfer law; provided, however, that nothing herein shall prevent Tadim, the
Company and the Selling Shareholders from contesting any such liabilities in
good faith.
12. TERMINATION
12.1. Termination. This Agreement may be terminated at any time before
the Closing by written notice by the terminating Party to the other Parties:
(a) by the mutual consent of the Boards of Directors of Tadim,
HPG and Purchaser; or
(b) by Tadim and HPG if any of the conditions set forth in
Section 9.2 above have not been fulfilled, satisfied or waived by the Closing
Date, or Purchaser has made a material misrepresentation or has breached any
covenant or agreement set forth in this Agreement and the breach by its nature
cannot be cured before the Closing Date; or
(c) by Purchaser if any of the conditions set forth in Section
9.1 above have not been fulfilled, satisfied or waived by the Closing Date, or
Tadim, HPG or any of the Selling Shareholders has made a material
misrepresentation or has materially breached any covenant or agreement set forth
in this Agreement and the breach by its nature cannot be cured before the
Closing Date; or
(d) by Purchaser at any time prior to January 23, 1998.
12.2 Effect of Termination. Except as provided in Section 4.3., upon
termination, this Agreement shall be null and void and have no further force or
effect.
13. MISCELLANEOUS
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13.1. Dividends - S Corp. Immediately following the resolution of the
Closing Date Balance Sheet, Purchaser shall cause to be paid to the Selling
Shareholders on behalf of the shareholders of Tadim an amount equal to the
accrued dividends reflected on Closing Date Balance Sheet to the extent not so
paid prior to the Closing Date.
13.2. Exclusivity. From the date of this Agreement through the Closing
Date (unless this Agreement is sooner terminated) (i) the Selling Shareholders
shall not offer their shares of the Stock, or carry on negotiations with respect
to the sale of such shares with, any party other than Purchaser during such
period, and HPG shall not offer its business or assets to, or carry on
negotiations with respect to the sale of its business assets with any party
other than Purchaser during such period; and (ii) Tadim shall not offer the
Business or the Tadim Assets to, or carry on negotiations with respect to the
sale of the Business or Tadim Assets with, any party other than Purchaser during
such period, and the shareholders of Tadim shall not offer their shares of
Tadim's capital stock to, or carry on negotiations with respect to the sale of
their shares, with any party other than Purchaser during such period. Tadim, HPG
and Selling Shareholders agree to notify the parties who have expressed interest
in acquiring the Business, the Tadim Assets or the Shares that Tadim, HPG and
the Selling Shareholders have entered into negotiations for the sale of the
Business, the Tadim Assets and the Shares and, as such, any offers from such
parties are thereby rejected. Such notification shall not reveal Purchaser's
identity.
13.3. Expenses. Tadim, the Selling Shareholders and Purchaser shall
each bear the expenses incurred by them (including legal fees and expenses) in
connection with the preparation and negotiation of this Agreement and the
Attendant Documents and the consummation of the transactions contemplated in
this Agreement; provided, however, that HPG shall bear the Selling Shareholders'
expenses if the transactions contemplated in this Agreement are not consummated.
The Selling Shareholders agree that except as provided in the preceding
sentence, the Company has not borne and will not bear any of their costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
13.4. Dispute Resolution. Except for the procedures set forth in
Section 4.5 with respect to the agreement as to the Price Adjustment, any and
all disputes between the Parties arising out of any provision of this Agreement
shall be resolved in accordance with the alternative "Dispute Resolution
Procedures" set forth in the attached Exhibit G; provided, however, that a Party
may seek a preliminary injunction or other provisional judicial relief if, in
its judgment, such action is necessary to avoid irreparable damage or to
preserve the status quo. Despite any such action, the Parties will continue to
participate in good faith in the procedures set forth in the attached Exhibit G.
13.5. Notices. Any and all notices, requests, demands and other
communications permitted under or required pursuant to this Agreement shall be
in writing and shall be deemed given if personally delivered or if mailed,
postage prepaid, certified or registered mail, return receipt requested, to the
Parties at the addresses set forth below, or at such other addresses as they may
indicate by written notice given as provided in this Section 13.5:
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If to Tadim, HPG or With a required copy to:
the Selling Shareholders: Dykema Gossett PLLC
c/o Arthur J. Goodsel 400 Renaissance Center
1599 North River Road Detroit, Michigan 48243-1504
St. Clair, Michigan 48079 Attn: Barbara A. Kaye
If to Purchaser: With a required copy to:
LDM Technologies, Inc. Dean & Fulkerson
2500 Executive Hills Drive Professional Corporation
Auburn Hills, Michigan 48326 801 West Big Beaver Road, Suite 500
Attn: Richard J. Nash Troy, Michigan 48084
Attn: Michael B. Lewis
13.6. Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.7. Construction. This Agreement has been executed in, and shall be
construed and enforced in accordance with the laws of, the State of Michigan
without regard to the conflicts of law principles thereof.
13.8. No Assignment; Benefit. No Party may assign its rights and
obligations under this Agreement without the prior written consent of the other
Parties. This Agreement shall be binding on and inure to the benefit of the
Parties and their respective successors and assigns.
13.9. Entire Agreement. This Agreement, including the Exhibits and
the Schedules attached or to be attached to it, is and shall be deemed to be the
complete and final expression of the agreement between the Parties as to the
matters contained in and related to this Agreement and supersedes any previous
agreements between the Parties pertaining to such matters.
13.10. Tax Matters.
(a) Tadim shall be responsible for the preparation and filing
of all Tax Returns for Tadim (including the consolidated, unitary and combined
Tax Returns for Tadim and HPG which include the operations of the Business for
any period ending on or before the Closing Date). Tadim shall make all payments
required for Tadim Taxes with respect to any such Tax Returns.
(b) Purchaser shall be responsible for the preparation and
filing of all Tax Returns for HPG for all periods as to which Tax Returns are
due ending on or after the Closing Date (other than for Taxes with respect to
periods for which the consolidated, unitary, and combined Tax Returns
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of Tadim or HPG will include the operations of the Business). Purchaser will
make all payments required with respect to any such Tax Returns.
(c) At least thirty (30) business days prior to the due date
for filing of any HPG Tax Return, the Purchaser shall provide the Representative
Shareholder with a substantially final draft of such Tax Returns and a notice
setting forth in reasonable detail the calculations regarding the Selling
Shareholders' share of Taxes for the period ending on or before the Closing Date
(which shall be the excess of the full amount of Taxes for such period over the
amounts paid therefore prior to the Closing Date or provided for in the HPG
Financial Statements) and shall make available for review the workpapers used to
prepare such Tax Returns. The Representative Shareholder shall have the right to
review such Tax Returns, the workpapers and such notice. The Representative
Shareholder shall notify Purchaser of any objections he may have to any items
set forth in any such Tax Return and to Purchaser's calculations regarding the
Selling Shareholders' share of Taxes, and the Representative Shareholder and
Purchaser agree to consult and resolve in good faith any such objection. The
Selling Shareholders shall pay their share of Taxes calculated as set forth in
this Section 13.10.
(d) The Representative Shareholder shall have the right and
responsibility to handle, at his sole expense, any Tax audit or administrative
or court proceeding ("Contest") relating to any taxable period of the Company
ending on or before the Closing Date, provided that the Representative
Shareholder keeps Purchaser fully informed of all developments in connection
with such Contest. Purchaser, the Representative Shareholder and their
respective counsel will cooperate with each other in the defense against or
compromise of any claim in any proceeding relating to Taxes. In the event there
is a change to a Tax Return of the Company for a period ending on or prior to
the Closing Date as the result of a Contest or if an amended return is filed for
any such period(s) at the request of the Representative Shareholder and such
change results in additional Taxes due which are paid by Purchaser or HPG,
indemnification for such Taxes shall be limited to the payment for such Taxes
offset by the actual tax benefit realized in future periods (if any) as a result
of such changes. In the event such changes result in additional taxes due which
are paid by the Selling Shareholders, the Selling Shareholders shall be
reimbursed for the actual benefit realized in future periods by HPG (if any).
(e) Purchaser shall promptly notify the Representative
Shareholder in writing upon receipt by Purchaser or any affiliate of Purchaser
of notice of (i) any pending or threatened federal, state, local or foreign Tax
audits or assessments of HPG for the periods ending on or prior to the Closing
Date so long the statute of limitations for such periods remain open, and (ii)
any pending or threatened federal, state, local or foreign Tax audits or
assessments of Purchaser or any affiliate of Purchaser which may affect the
Taxes of HPG for which the Selling Shareholders may be liable under this
Agreement. The Representative Shareholder shall promptly notify Purchaser in
writing upon receipt by him of notice of any pending or threatened federal,
state, local or foreign Tax audits or assessments. If Purchaser or HPG (i) pays
all or any part of a proposed or actual assessment of a Tax without complying
with the requirements of this Section and (ii) waives the Company's right to
seek
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a refund of such payment without the Representative Shareholder's consent, then
neither of them shall be entitled to any indemnification for such a payment.
(f) After the Closing Date, Purchaser and the Representative
Shareholder shall provide each other with such cooperation and information
relating to the Company as either party reasonably may request in filing any Tax
Return (or amended Return) or refund claim, determining any Tax liability or a
right to a refund, conducting or defending any audit or other proceeding in
respect of Taxes or effectuating the terms of this Agreement. The Company shall
deliver to Purchaser all Returns, schedules, work papers and other material
documents relating thereto, and Purchaser shall retain all of the foregoing
until the later of expiration of any relevant statute of limitations (and, to
the extent notified by any party, any extensions thereof) and the final
determination of any Tax in respect of such periods. Any information obtained
under this Section 13.9 shall be kept confidential, except as may be otherwise
necessary in connection with filing any Tax Return (or amended Return) or refund
claim, determining any Tax liability or a right to a refund, conducting or
defending any audit or other proceeding in respect of Taxes or otherwise
effectuating the terms of this Agreement. Upon the written request of the
Representative Shareholders, Purchaser shall cause the Company to furnish copies
of the documents relating to Taxes delivered to Purchaser pursuant to this
Section at no cost to the Selling Shareholder. Notwithstanding the foregoing,
neither the Representative Shareholder nor Purchaser, nor any of their
affiliates, shall be required unreasonably to prepare any document, or determine
any information not then in its possession, in response to a request under this
Section; provided, however, no request shall be deemed unreasonable if made in
response to the request of a taxing authority for information on documents not
in the possession of the requested party nor otherwise reasonably available to
it.
(g) Tadim shall pay all sales, use and transfer taxes
(including taxes, if any, imposed on the transfer of real and personal property)
and filing, recording and registration fees payable in connection with the
transactions contemplated in this Agreement related to Tadim.
13.11. Post-Closing Covenants. The Parties agree as follows with
respect to the period following the Closing:
(a) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement, or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of the Parties, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor pursuant
to this Agreement).
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<PAGE> 54
(b) Transition. Neither Tadim nor any of the Selling
Shareholders will take any action that is designed or intended to have the
effect of discouraging any lessor, licensor, customer, supplier, or other
business associate of Tadim or the Company from maintaining the same business
relationships with Tadim or the Company after the Closing as it maintained with
Tadim or the Company prior to the Closing. Each of Tadim and the Selling
Shareholders will refer all customer inquiries relating to the businesses of
Tadim or the Company to the Purchaser or its representative from and after the
Closing.
(c) Confidentiality. For purposes of this Section 13.11(c),
the term "Confidential Information" means any information concerning the
Businesses and the affairs of Tadim and of the Company that is not already
generally available to the public. Each of Tadim and the Selling Shareholders
will treat and hold as such all of the Confidential Information, refrain from
using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to the Purchaser or destroy, at the request and
option of the Purchaser, all tangible embodiments (and all copies) of the
Confidential Information which are in his or its possession. In the event that
any of Tadim and the Selling Shareholders is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Party will notify the Purchaser
promptly of the request or requirement so that the Purchaser may seek an
appropriate protective order or waive compliance with the provisions of this
Section 13.11(c). If, in the absence of a protective order or the receipt of a
waiver hereunder, any of Tadim and the Selling Shareholders is, on the advice of
counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, that Party may disclose the Confidential
Information to the tribunal; provided, however, that the disclosing Party shall
use his or its best efforts, reasonable under the circumstances, to obtain, at
the request and at the sole expense of the Purchaser, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Purchaser shall
designate.
(d) Change of Tadim's Name. Tadim 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 Tadim Assets. Therefore, Tadim agrees that,
immediately after the Closing, it will take all such action as is necessary to
change its corporate name and to otherwise permit Purchaser to have the
exclusive right to such corporate and trade names.
13.12. 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
54
<PAGE> 55
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.
13.13. Waiver. The waiver by any Party of any breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent or similar breach.
13.14. Amendment. This Agreement may only be amended by written
agreement executed by all of the Parties.
13.15. Further Assurances. From time to time after the Closing Date, at
Purchaser's request and without further consideration, Tadim and the Selling
Shareholders shall execute and deliver or cause to be executed and delivered
such further instruments of conveyance, assignment and transfer and shall take
such other action as Purchaser may reasonably request in order more effectively
to convey, transfer, reduce to possession or record title to any of the Assets
or the Shares purchased pursuant to this Agreement. On Purchaser's request,
Tadim and the Selling Shareholders shall cooperate and use their best efforts to
have Tadim's officers, directors, employees and agents cooperate with Purchaser
on or after the Closing Date by furnishing information, evidence, testimony and
other assistance in connection with any actions, proceedings, arrangements or
disputes involving Purchaser and which are based on contracts, leases,
arrangements or acts of the Company which were in effect or occurred on or prior
to the Closing Date.
13.16. Certain Terms. With respect to the Company or the Selling
Shareholders, "Knowledge" shall mean the actual knowledge of the persons
identified on Schedule 13.16 after reasonable investigation.
13.17. Appointment of Representative Shareholder.
(a) The Selling Shareholders hereby irrevocably constitute and
appoint Arthur Goodsel as the Representative Shareholder who shall act as their
agent and attorney-in-fact to modify, amend or otherwise change this Agreement
or any of its terms or provisions (including modifications, amendments or
changes subsequent to the Closing Date except that after approval by Selling
Shareholders, changes cannot be made which adversely impact the Purchase Price
to be paid to the Selling Shareholders), to take all actions and to execute all
documents necessary or desirable to consummate the transactions contemplated by
this Agreement, and to take all actions and to execute all documents which may
be necessary or desirable in connection therewith, to give and receive consents
and all notices under this Agreement, and to perform any other act arising under
or pertaining to this Agreement and the transactions contemplated by this
Agreement. The Selling Shareholders agree that service of process upon the
Representative Shareholder in any action or proceeding arising under or
pertaining to this Agreement shall be deemed to be a valid service of process
upon the Selling Shareholders and any claim by the Purchaser against the Selling
Shareholders with respect to this Agreement may be asserted against, and settled
with, the
55
<PAGE> 56
Representative Shareholders. The Representative Shareholders shall be deemed to
have accepted the appointment as the Representative Shareholder upon his
execution of this Agreement.
(b) Nothing contained in this Agreement shall be deemed to
make the Representative Shareholder personally liable to the Selling
Shareholders or the Purchaser because of service in his capacity as agent and
attorney-in-fact. In performing any of its duties under this Agreement, the
Representative Shareholder shall not incur any liability to the Selling
Shareholders or the Purchaser for losses, damages, liabilities or expenses,
except for his own willful default.
(c) It is expressly understood and agreed that this power of
attorney and the agency created hereby is coupled with an interest of the
Selling Shareholders and shall be binding and enforceable on and against the
respective heirs, personal representatives, successors and assigns of the
Selling Shareholders and this power of attorney shall not be revoked or
terminated by the bankruptcy or dissolution of the Selling Shareholders, but
shall continue to be binding and enforceable by the Representative Shareholder,
the Purchaser and their respective successors and on and against the successors
and assigns of the Selling Shareholders in the manner provided in this
Agreement.
56
<PAGE> 57
(d) In the event that Mr. Goodsel is unable or unwilling to
serve as the Representative Shareholder, the Selling Shareholders, including Mr.
Goodsel, shall select on of the other Selling Shareholders to act as the
Representative Shareholder. If the Selling Shareholders are not able to agree on
a replacement Representative Shareholder, the Selling Shareholders shall elect
such a replacement on the basis of one-share, one-vote.
(e) Anything herein to the contrary notwithstanding, Purchaser
shall have no liability, responsibility or obligation with respect to the
performance or nonperformance by the Representative Shareholder of his duties
pursuant to this Agreement and/or any other written or oral agreement or
understanding with or with regard to the Selling Shareholders.
13.18. Press Releases and Public Announcements. No party shall issue
any press release or make any public announcement relating to the subject
matter, terms, conditions or other facts with respect to this Agreement prior to
the Closing without the prior written approval of the other parties, which
consent shall not be unreasonably withheld.
13.19 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event of any Party's
failure or refusal to consummate the transactions contemplated in this Agreement
other than for reasons specifically permitted by the terms hereof. Accordingly,
each of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically those portions of this Agreement requiring
consummation of the Closing by any Party hereto, and the terms and provisions
hereof requiring such Closing, in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled hereunder,
at law or in equity.
The Parties have caused this Asset Purchase Agreement to be executed as
of December _____, 1997.
"PURCHASER":
LDM TECHNOLOGIES, INC.,
A MICHIGAN CORPORATION
By: _____________________________
Name:_____________________________
Title:____________________________
57
<PAGE> 58
"TADIM"
TADIM, INC.,
A MICHIGAN CORPORATION
By: _____________________________
Name: _____________________________
Title: _____________________________
"COMPANY":
HURON PLASTICS GROUP, INC.,
A MICHIGAN CORPORATION
By: _____________________________
Name: _____________________________
Title: _____________________________
THE SELLING SHAREHOLDERS
____________________________
ARTHUR J. GOODSEL
____________________________
CHARLES R. ANDERSON
____________________________
STANLEY C. LINIARSKI
[Continuation of Signature Page to Stock and Asset Purchase Agreement dated
58
<PAGE> 59
December ___, 1997, among LDM Technologies, Inc., Tadim, Inc., Huron
Plastics Group, Inc. and the Shareholders of Huron Plastics Group, Inc.]
____________________________
WILLIAM O. MATTICK
____________________________
MARTIN J. O'BRIEN
____________________________
FREDERICK H. SMITH
____________________________
KELLY J. GOODSEL
____________________________
KARL M. STEINMANN
____________________________
ROBERT J. LAGRUTH
59
<PAGE> 60
LIST OF SCHEDULES
1.1 - Assumed Contracts
1.2(d) - Other Excluded Assets
4.4(a) - Repayment of Credit Card Debt
4.5(b) - Accounting Principles
4.7 - Allocation of Purchase Price
5.1 - Good Standing and Authority of Tadim
5.2 - Good Standing and Authority of HPG and the Subsidiaries
5.3 - Fixed Assets and Third Party Warranties
5.4 - HPG Stock
5.7 - Intellectual Property
5.8 - Material Contracts
5.9 - Leased Personal Property
5.10 - Licenses
5.11 - Leased Real Property
5.12 - Owned Real Property
5.13 - Notes and Accounts Receivable
5.14 - Liens/Permitted Liens
5.15 - Condition of Assets
5.16 - Litigation
5.17 - Compliance with Applicable Laws and Regulations
5.18 - Employees
5.19 - Employee Relations
5.20(b) - Controlled Group
5.20(c) - Employee Benefit Plans
5.21 - Tadim Financial Statements
5.22 - HPG Financial Statements
5.23 - Undisclosed Liabilities
5.24 - Tax Matters
5.25 - Environmental Matters
5.26 - Consents, Approvals and Authorizations
5.27 - Insurance
5.28 - Conduct of Business
8.1(a) - Inactive Tadim Employees
8.1(b) - Excluded Employees
8.3 - COBRA Participants
10.2(e) - Persons Executing Covenant Not to Compete
10.2(f) - Persons Executing Employment Agreements
11.8 - Existing Environmental Conditions
13.16 - Company's "Knowledge"
60
<PAGE> 61
LIST OF EXHIBITS
Exhibit A Form of Escrow Agreement for Deposit
Exhibit B Form of Escrow Agreement for HPG Guaranty
Exhibit C Form of Covenant Not to Compete
Exhibits D-1 to D-11 Forms of Employment Agreements
Exhibit E Form of Lease
Exhibit F [RESERVED]
Exhibit G Dispute Resolution Procedures
61
<PAGE> 62
FIRST AMENDMENT TO
STOCK AND ASSET PURCHASE AGREEMENT
This First Amendment to Stock and Asset Purchase Agreement ("First
Amendment") is made and entered into as of January 23, 1998, by and among LDM
TECHNOLOGIES, INC., a Michigan corporation (the "Purchaser"), TADIM, INC., a
Michigan corporation ("Tadim"), HURON PLASTICS GROUP, INC., a Michigan
corporation ("HPG") and certain "Selling Shareholders" of HPG, as designated on
the signature page to this Agreement (collectively, the "Selling Shareholders"
and individually a "Selling Shareholder") and is the First Amendment to a Stock
and Asset Purchase Agreement dated as of December 23, 1997 (the "Agreement") by
and among the Purchaser, Tadim, HPG and the Selling Shareholders. For the
purposes of this Agreement, Purchaser, Tadim, HPG and the Selling Shareholders
are referred to sometimes collectively as the "Parties" and individually as a
"Party". Further, for purposes of this First Amendment, Lakeport Plastics, Inc.,
HPG Body Systems, Inc. and HPG Chassis Systems, Inc., all wholly-owned
subsidiaries of HPG (the "Subsidiaries"), together with Tadim and HPG, are
collectively referred to as the "Company".
RECITALS
A. The Parties executed the Agreement on December 23, 1997.
B. The Parties desire to amend certain provisions of the Agreement.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
1. The date "January 23, 1998" in Section 4.3(a) shall be deleted and
replaced with the date "January 30, 1998".
2. Subsection 4.3(c)(ii) of the Agreement shall be deleted in its
entirety and replaced with a new Subsection 4.3(c)(ii) which states
"Intentionally Omitted".
3. Subsection 5.11(b) of the Agreement shall be amended by adding the
words "until terminated in accordance with Section 9.1(j) below and replaced by
a new lease between the current landlord and HPG or LDM, as tenant, in the form
attached as Exhibit E."
4. Subsection 5.20(d)(x) shall be deleted in its entirety and replaced
by the following new Subsection 5.20(d)(x):
"No Multiple Employer Plan: Neither the Company nor any
Controlled Group Member presently, nor will it prior to the Closing
Date, nor did it previously, participate in, contribute to, or employ
any persons covered by any "multiple employer plan" as discussed in
Section 413(c) of the Code."
<PAGE> 63
5. Section 5.25 of the Agreement shall be amended by adding a new
Subsection 5.25(d) which reads as follows:
"(d) All statements attributed in the Environmental Reports to
the Company or its employees, agents and representatives were true and
complete to the knowledge of the Company, when made based on the
knowledge of the person making the statement."
6. Section 9.1(j) of the Agreement shall be deleted in its entirety and
replaced by the following new Section 9.1(j):
"(j) Lease Terminations, New Leases and Assignment and
Assumption of Leases. Purchaser or HPG and the lessor of each lease for
each parcel of real property currently leased and used by the Company
(other than the leases for the warehouse located on Cedar Street, Port
Huron, Michigan, the condominium located on South Padre Island, Texas
and the SPAN warehouses identified on Schedule 5.11 as numbers 7, 9 and
10, which will be assigned to, and assumed by, Purchaser pursuant to
Assignment and Assumption Agreements described below) shall have
entered into terminations to such leases (the "Lease Terminations") and
new leases for such parcels (the "New Leases") in the form attached as
Exhibit "E", each of which shall provide for an initial three (3) year
term, together with five (5) three-year options to renew exercisable
not later than eighteen (18) months prior to the expiration of the
initial term (in the case of the first option exercised) and not later
than six (6) months prior to the expiration of the preceding renewal
term (in the case of any subsequent options exercised).
7. The phrases "by January 23, 1998" and "on or prior to January 23,
1998" in the first two sentences of Section 9.1(u) shall be deleted and replaced
with the phrase "on or prior to January 30, 1998".
8. The date "January 30, 1998" in Section 10.1 shall be deleted and
replaced with the date "February 6, 1998".
9. Section 10.2(i) shall be deleted in its entirety and replaced with
the following new Section 10.2(i):
"(i) The Lease Terminations, New Leases and the Assignment and
Assumption Agreements."
10. Section 10.3 of the Agreement shall be amended by deleting
Sub-Section 10.3(f) in its entirety and replacing it with the following new
Subsection 10.3(f):
"(f) The Lease Terminations, New Leases and the Assignment and
Assumption Agreements."
2
<PAGE> 64
11. Section 10.3 of the Agreement shall be amended by deleting
Subsection 10.3(k) in its entirety and replacing it with a new Section 10.3(k)
which states "[RESERVED]".
12. Section 11.1 of the Agreement shall be amended by adding a new
Subsection (i) as follows and by re-numbering the existing Subsection (i) as
Subsection (j):
"(i) Any Loss arising out of or relating to (i) a discrepancy
of twenty feet along the western boundary of the Petit Street property
between the legal description of the property leased to Purchaser or
HPG after the Closing and the legal description of the property
actually owned by the landlord of the Petit Street property, Lakeport
Realty, (ii) any claims arising out of a breach or violation by the
Company of the terms of a Limited License and Purchase and Sale
Agreement for Hy-Mold Systems and Materials between Three Bond U.S.A.,
Inc. and Huron Engineering Services, Inc. dated May 30, 1990 (the
"Three Bond Agreement"), (iii) any tax liability relating to real or
personal property taxes owing to governmental authorities by Tadim,
Inc. and (iv) any claims or requirements arising under the Investment
and Technology Agreement among Sunningdale Plastic Industries Pte.
Ltd., Ng Boon Hoo, Lim Juak Hwa and HPG and any subsequent agreements
contemplated by the Appendices thereto."
13. Section 11.8(e) of the Agreement shall be deleted in its entirety
and replaced with the following new Section 11.8(e):
"Except as to environmental conditions related to the Real
Property and the enumerated Losses in Section 11.1 (b) - (i) of the
Agreement (but only with respect to post-closing covenants for
Subsection 11.1(b)), Purchaser shall not be entitled to indemnification
for any Losses which arise out of facts, circumstances or conditions of
which Purchaser has actual knowledge prior to the Closing Date nor to
the extent of any reserve account specifically set up for the matter
underlying or causing said Loss set forth on the Closing Balance
Sheet."
17. Subsection 12.1(d) of the Agreement shall be deleted in its
entirety and replaced with the following new Subsection 12.1(d):
"by Purchaser at any time on or before January 30, 1998."
18. Section 13.11 of the Agreement shall be amended by adding a new
Subsection 13.11(e) as follows:
"The Selling Shareholders and Tadim will use their best
efforts to obtain subordination, non-disturbance and attornment
agreements on reasonable terms and conditions among mortgagees of the
properties covered by the New Leases and the landlord and the tenant
(HPG or LDM) of the New Leases."
3
<PAGE> 65
19. The existing Schedules 1.1, 4.7, 5.2, 5.14, 5.20(b), 5.25 and 5.26
of the Agreement shall be amended (either by supplementation or deletion) by the
attached new Schedules 1.1, 4.7, 5.2, 5.14, 5.20(b), 5.25 and 5.26.
20. Exhibits D-5, D-7, D-9 and D-11 of the Agreement shall be modified
in the manner attached as "Exhibits D-1 to D-11, Forms of Employment
Agreements".
21. A new Exhibit E shall be incorporated into the Purchase Agreement
"Exhibit E-Form of Lease" in the form attached hereto.
22. Other than as set forth herein, the Agreement shall remain in full
force and effect and unamended.
23. This First Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed an original but all of which
shall constitute one and the same instrument.
LDM TECHNOLOGIES, INC.
By:
______________________________
TADIM, INC.
By:
______________________________
HURON PLASTICS GROUP, INC.
By:
______________________________
SELLING SHAREHOLDERS:
_________________________________
Arthur J. Goodsel
Authorized Representative
4
<PAGE> 66
SECOND AMENDMENT TO
STOCK AND ASSET PURCHASE AGREEMENT
This Second Amendment to Stock and Asset Purchase Agreement ("Second
Amendment") is made and entered into as of January 30, 1998, by and among LDM
TECHNOLOGIES, INC., a Michigan corporation (the "Purchaser"), TADIM, INC., a
Michigan corporation ("Tadim"), HURON PLASTICS GROUP, INC., a Michigan
corporation ("HPG") and certain "Selling Shareholders" of HPG, as designated on
the signature page to this Agreement (collectively, the "Selling Shareholders"
and individually a "Selling Shareholder") and is the Second Amendment to a Stock
and Asset Purchase Agreement dated as of December 23, 1997 (the "Agreement") by
and among the Purchaser, Tadim, HPG and the Selling Shareholders. For the
purposes of this Agreement, Purchaser, Tadim, HPG and the Selling Shareholders
are referred to sometimes collectively as the "Parties" and individually as a
"Party". Further, for purposes of this Second Amendment, Lakeport Plastics,
Inc., HPG Body Systems, Inc. and HPG Chassis Systems, Inc., all wholly-owned
subsidiaries of HPG (the "Subsidiaries"), together with Tadim and HPG, are
collectively referred to as the "Company".
RECITALS
A. The Parties executed the Agreement on December 23, 1997.
B. The Parties executed a First Amendment to the Agreement on
January 23, 1998.
C. The Parties desire once again to amend certain provisions of
the Agreement.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
1. The date "January 30, 1998" in Section 4.3(a) shall be deleted and
replaced with the date "February 2, 1998".
2. The phrase "on or prior to January 30, 1998" in the first two
sentences of Section 9.1(u) shall be deleted and replaced with the phrase "on or
prior to February 2, 1998".
3. Subsection 12.1(d) of the Agreement shall be deleted in its entirety
and replaced with the following new Subsection 12.1(d):
"by Purchaser at any time on or before February 2, 1998."
4. Other than as set forth herein, the Agreement shall remain in full
force and effect and unamended.
<PAGE> 67
5. This Second Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed an original but all of which
shall constitute one and the same instrument.
LDM TECHNOLOGIES, INC.
By:
______________________________
TADIM, INC.
By:
______________________________
HURON PLASTICS GROUP, INC.
By:
______________________________
SELLING SHAREHOLDERS:
_________________________________
Arthur J. Goodsel
Authorized Representative
2
<PAGE> 68
THIRD AMENDMENT TO
STOCK AND ASSET PURCHASE AGREEMENT
This Third Amendment to Stock and Asset Purchase Agreement ("Second
Amendment") is made and entered into as of February 2, 1998, by and among LDM
TECHNOLOGIES, INC., a Michigan corporation (the "Purchaser"), TADIM, INC., a
Michigan corporation ("Tadim"), HURON PLASTICS GROUP, INC., a Michigan
corporation ("HPG") and certain "Selling Shareholders" of HPG, as designated on
the signature page to this Agreement (collectively, the "Selling Shareholders"
and individually a "Selling Shareholder") and is the Third Amendment to a Stock
and Asset Purchase Agreement dated as of December 23, 1997 (the "Agreement") by
and among the Purchaser, Tadim, HPG and the Selling Shareholders. For the
purposes of this Agreement, Purchaser, Tadim, HPG and the Selling Shareholders
are referred to sometimes collectively as the "Parties" and individually as a
"Party". Further, for purposes of this Third Amendment, Lakeport Plastics, Inc.,
HPG Body Systems, Inc. and HPG Chassis Systems, Inc., all wholly-owned
subsidiaries of HPG (the "Subsidiaries"), together with Tadim and HPG, are
collectively referred to as the "Company".
RECITALS
A. The Parties executed the Agreement on December 23, 1997.
B. The Parties amended the Agreement by a First Amendment dated
as of January 23, 1998.
C. The parties amended the Agreement by a Second Amendment dated
as of January 30, 1998.
D. The Parties desire once again to amend certain provisions of
the Agreement.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
1. Section 3.1 of the Purchase Agreement shall be deleted in its
entirety and replaced by the following new Section 3.1:
"3.1 Redemption. Prior to or contemporaneously with the
Closing, HPG shall redeem, or cause to be redeemed, all issued and
outstanding shares of Stock (defined in Section 5.4 below), other than
the Shares (defined in Section 3.2 below). This redemption shall be
effectuated in accordance with the provisions of Section
4.3(c)(iii) below."
2. Section 4.1 of the Agreement shall be deleted in its entirety and
replaced with the following new Section 4.1:
<PAGE> 69
"4.1. Purchase Price for Assets. For and in consideration of
the Tadim Assets, Purchaser shall assume the Assumed Liabilities and
shall pay Tadim Twenty-One Million Five Hundred Seventy-Five Thousand
Dollars ($21,575,000.00) (the "Asset Purchase Price") subject to
adjustments pursuant to Section 4.5 below."
3. The first paragraph of Section 4.2 of the Agreement shall be deleted
in its entirety and replaced with the following new first paragraph of Section
4.2:
"4.2 Purchase Price for Shares. For and in consideration of
the Shares, Purchaser shall pay the Selling Shareholders, in the
aggregate, Forty-Seven Million One Hundred Thirty-One Thousand Dollars
($47,131,000.00), subject to the adjustments pursuant to Section 4.5,
and further subject to the following adjustment: to the extent that
financing debt payable from HPG to Comerica Bank (the "Comerica Debt")
net of the cash on hand for Tadim and for HPG is, as of the Closing
Date,
(a) less than $18,506,201, the purchase price for the
Shares shall be reduced by such amount; or
(b) greater than $18,506,201, the purchase price for the
Shares shall be increased by such amount."
4. Section 4.3(a) of the Agreement shall be deleted in its entirety and
replaced with the following new Section 4.3(a):
"4.3 Payment of Deposit, Asset Purchase Price and Stock Purchase Price.
"(a) One Million Dollars ($1,000,000.00) in immediately
available funds (the "Initial Deposit") shall be delivered to First
Trust National Association (the "Escrow Agent"), on the date this
Agreement is fully executed, as evidence of Purchaser'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"). If Purchaser terminates this Agreement pursuant to
Section 12.1(d), then Purchaser shall be entitled to the Initial
Deposit. If Purchaser does not terminate this Agreement pursuant to
Section 12.1(d) or 12.1(e) hereof, then on February 6, 1998 (but only
if the Closing, as defined in Section 10.1 below, has not occurred on
or before February 6, 1998), Purchaser shall deliver to the Escrow
Agent an additional One Million Dollars ($1,000,000.00) in
immediately available funds (the "Second Deposit"), to be held and
disbursed in accordance with the terms of the Deposit Escrow
Agreement. In the aggregate, the Initial Deposit and the Second
Deposit (if any) are referred to in this subsection as the "Deposit".
Upon Closing of the transactions contemplated by this Agreement, the
Deposit shall be applied to payment of the Stock Purchase Price. If
Tadim and HPG terminate this Agreement pursuant to Section 12.1(b) or
12.1(g), or if Purchaser shall otherwise fail or refuse to complete
the Closing as required by this Agreement, or if Purchaser terminates
the Agreement in accordance with Section 12.1(e), or if Purchaser
2
<PAGE> 70
extends the Closing to a date later than February 6, 1998 in
accordance with Subsection 10.1(e)(ii), then at their option Tadim and
HPG shall be entitled to the Deposit and any interest thereon. If this
Agreement is terminated pursuant to Section 12.1(a) or 12.1(c) or
virtue of the failure of the condition precedent in Section 9.1(o), or
if Tadim, HPG and Selling Shareholders shall otherwise fail or refuse
to complete the Closing as required by this Agreement, then at its
option Purchaser shall be entitled to the Deposit and any interest
thereon, in addition to any other available legal and equitable
remedies."
5. Section 4.3(b) of the Agreement shall be deleted in its
entirety and replaced with the following:
"4.3(b)[RESERVED]
6. Section 4.3(c)(iii) of the Agreement shall be deleted in its
entirety and replaced by the following new Section 4.3(c)(iii):
"4.3 Payment of Deposit, Asset Purchase Price and Stock Purchase
Price.
"(c)(iii) The Asset Purchase Price and the balance of the
Stock Purchase Price shall be paid by wire transfer by Purchaser of
immediately available funds at the Closing. Such wire transfers and all
disbursements of funds, including disbursements made pursuant to the
Escrow Agreement, shall be made to satisfy payoff letters presented to
Purchaser on or before the Closing for the obligations, debts or
discharges referred to in Sections 3.1, 5.6, 9.1(n), 9.1(r) and 9.1(s)
of the Agreement. Disbursements made to the Selling Shareholders shall
be made by wire transfer to an account ("Shareholders' and Tadim's
Account") established by Arthur J. Goodsel (the "Representative
Shareholder") for the benefit of all of the Selling Shareholders, Tadim
and all of the shareholders of Tadim, and the Representative
Shareholder thereafter shall be responsible for seeing that Tadim
receives the Asset Purchase Price and that each Selling Shareholder
receives his pro rata share of the Stock Purchase Price after all
debts, obligations and adjustments under this Agreement are satisfied."
7. The third sentence of Section 4.4(a) shall be deleted in its
entirety and replaced by the following new sentence of Section 4.4(a):
"At Purchaser's option, any or all such corporate credit cards
and any or all corporate debit cards will be cancelled by Tadim and HPG
on or before the Closing Date and all such cancelled cards shall be
delivered to Purchaser at Closing or within two weeks after Closing."
8. Section 4.5(b) of the Agreement shall be deleted in its entirety and
replaced by the following new Section 4.5(b):
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<PAGE> 71
"4.5 Price Adjustments and Preparation of Closing Date Balance Sheet.
"(b) The Selling Shareholders and Tadim shall prepare and
deliver to the Representative Shareholder and Purchaser, within ninety
(90) days following the Closing Date at Purchaser's expense, a balance
sheet as of the last day of January, 1998 (the "Closing Date Balance
Sheet") setting forth the HPG Net Worth and the Tadim Net Book Value,
which shall have been audited by Ernst & Young. The Closing Date
Balance Sheet shall be prepared in accordance with generally accepted
accounting principles consistently applied with the principles used in
preparation of the Most Recent Balance Sheet of HPG and the Most Recent
Balance Sheet of Tadim, as more specifically described in Schedule
4.5(b) except that the Closing Date Balance Sheet shall include an
accrual for dividends to be paid to the Tadim Shareholders in an amount
equal to the tax liability of the Tadim Shareholders for the period
from January 1, 1998 through and including the Closing Date. The
parties agree that (i) any changes in accounting principles determined
to be necessary as a result of the review contemplated by this Section
4.5 that would apply for similar reasons to the Most Recent Balance
Sheets of Tadim and HPG shall require consistent treatment with respect
to such Balance Sheets, and (ii) in the event of any such adjustment,
except as otherwise provided in this Agreement, the reference to the
Most Recent Balance Sheets of Tadim and HPG shall mean such Balance
Sheets as so adjusted."
9. Section 4.5(c) of the Agreement shall be deleted in
its entirety and replaced with the following new Section 4.5(c):
(c) The Purchaser may object to the Price Adjustment or to any
of the information contained in the Closing Date Balance Sheet which
could affect the Price Adjustment if such objection is based on a claim
that the Closing Date Balance Sheet was not prepared in accordance with
subsections 4.5(a) or (b). Any such objection must be made by delivery
of a written statement of objections (stating the basis of the
objections with reasonable specificity) to HPG, Tadim and the Selling
Shareholders within 30 days following delivery of the Closing Date
Balance Sheet. If the Purchaser makes such objection, Purchaser and the
Representative Shareholder shall seek in good faith to resolve such
differences within 20 days following the delivery of such objections.
During such time, if the Representative Shareholder disagrees with the
objections of the Purchaser, he shall state the basis of such
disagreement with reasonable specificity. If the Purchaser does not so
object to the Closing Date Balance Sheet within such 30-day period, the
Closing Date Balance Sheet shall be considered final and binding upon
the parties. If the Representative Shareholder and Purchaser are unable
to mutually resolve any disputes with respect to any aspect of the
price differential within the periods described above, the parties
shall, within ten (10) days following the expiration of such periods,
engage the Detroit, Michigan office of Arthur Andersen (the "Mediator")
to act as a Mediator and determine, in accordance with the provisions
of this Section 4.5, the appropriate Price Adjustment. In connection
with the review of the Closing Date Balance Sheet by the Purchaser,
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<PAGE> 72
the Purchaser and its accountants shall have reasonable access to the
records of the Business and any work papers prepared by Ernst & Young
in the preparation of the Closing Date Balance Sheet; provided,
however, that the Purchaser shall have executed such confidentiality
and indemnification agreements as are reasonably requested by Ernst &
Young.
10. Section 5.6 of the Agreement shall be deleted in its entirety and
replaced with the following new Section 5.6:
"5.6. Discharge of HPG Debts. Prior to or contemporaneously
with the Closing and in accordance with Section 4.3(c)(iii) above, HPG
and the Subsidiaries shall pay off and discharge, and the Selling
Shareholders shall cause HPG and the Subsidiaries to pay off and
discharge, (i) all of their respective liabilities and obligations
which are treated as interest-bearing debt on the Financial Statements
of HPG (including the Comerica Debt), and (ii) all obligations of HPG
and the Subsidiaries to the Selling Shareholders, Ernest T. Oskin or
any of its other shareholders).
11. Section 5 of the Agreement shall be amended by adding a new
Subsection 5.34 which reads as follows and re-numbering the existing Subsections
5.34, 5.35 and 5.36 as Subsections 5.35, 5.36 and 5.37:
"5.34 Computer Systems. On the basis of a comprehensive review
and assessment undertaken by HPG, Tadim and the Selling Shareholders of
the computer applications used by HPG and Tadim in connection with the
Business and upon inquiry made by HPG, Tadim and the Selling
Shareholders of each of HPG's and Tadim's material suppliers, vendors
and customers, HPG, Tadim and the Selling Shareholders reasonably
believe that the "Year 2000 problem" (i.e., the risk that computer
applications used by any person may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999) will not have a material adverse
effect on the BusineSection."
12. Section 7.2 of the Agreement shall be amended by inserting the
words "or any extension thereof" after the words "... the applicable statute of
limitations, ..." in the proviso.
13. Subsection 9.1(n) of the Agreement shall be amended by deleting the
third sentence thereof in its entirety, and by amending the second sentence
thereof to read as follows:
"All of the Shares shall be owned free and clear of all Liens,
and HPG shall have redeemed (or shall concurrently with the closing in
accordance with Section 4.3(c) (iii) redeem) all issued and outstanding
shares of Stock, other than the Shares."
14. Section 9.1(o) of the Agreement shall be deleted in its entirety
and replaced by the following new Section 9.1(o):
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<PAGE> 73
"Purchaser shall be satisfied in its sole discretion with the
results of a customer visit to Johnson Controls, Inc. ("JCI") conducted
jointly with Tadim or HPG, as the case may be, prior to the Closing
Date; provided that such visit shall be scheduled and conducted as
expeditiously as possible by mutual agreement of Purchaser, JCI, and
Tadim or HPG."
15. Subsection 9.1(r) of the Agreement shall be deleted in its
entirety and replaced by the following new Subsection 9.1(r):
"9.1 Conditions Precedent to Purchaser's Obligation:
"(r) Shareholder Agreements: HPG shall have exercised (or
terminated) and discharged in accordance with Subsection 4.3(c)(iii)
above, its obligations under all existing agreements with the
Shareholders, including, without limitation, those agreements with
respect to the redemption of the outstanding Stock of HPG."
16. Section 9 of the Agreement shall be amended by adding the
following new Subsection 9.1(w):
"9.1 Conditions Precedent to Purchaser's Obligation:
"(w) Election Not to Terminate. Purchaser shall not have
terminated this Agreement in accordance with Subsection 12.1(e) or
12.1(f) below."
17. Section 9.1 of the Agreement shall be amended by adding the
following new Subsection 9.1(x).
"(x) Landlord's Consents. The landlords of all of the Leased
Real Property listed on Schedule 5.11 shall have delivered to Purchaser
consents to the lease (or assignment of lease) of their respective
properties to Purchaser in the form reasonably acceptable to Landlord's
lender."
18. Section 10.1 of the Agreement shall be deleted in its entirety and
replaced by the following new Section 10.1:
"10.1 Closing. The closing (the "Closing") of the transaction
contemplated in this Agreement shall be held (a) at the offices of Dean
& Fulkerson, or (b) at Purchaser's option, at such location as required
by Purchaser's lender, or (c) at such other location as the Parties may
agree. The Closing shall take place (d) on February 6, 1998, or (e) at
Purchaser's option, (i) on February 5, 1998, or (ii) on such later date
after February 6, 1998 through March 31, 1998 as Purchaser may
designate in writing to HPG, Tadim and the Selling Shareholders, or (f)
at such other time as Tadim, HPG and Purchaser may mutually agree (the
"Closing Date"); provided that if the Closing does not occur on or
before February 6, 1998, then Purchaser shall have the option to either
(g) deposit the Second Deposit with the Escrow Agent on February 6,
1998 pursuant to the Deposit Escrow Agreement in which case the
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<PAGE> 74
Closing Date shall be extended to a date on or before February 13,
1998; or (h) deliver a termination notice to Tadim, HPG and the Selling
Shareholders in accordance with Section 12.1(e), and provided further,
that if the Closing does not occur on or before February 13, 1998,
Purchaser shall have the option to either (m) extend the Closing Date
to a date no later than March 31, 1998 as long as Purchaser provides
written notice to Sellers on or before February 13, 1998 which (1) sets
forth Purchaser's intention to extend the Closing Date and (2) sets
forth the specific reason(s) for seeking the extension, or (n) deliver
a termination notice to Tadim, HPG and the Selling Shareholders in
accordance with Section 12.1(f). If the Closing Date is extended by
Purchaser to a date after February 13, 1998, in addition to the
Purchase Price, Purchaser shall pay to Tadim and/or the Selling
Shareholders the sum of Thirteen Thousand Dollars ($13,000.00) per day
for each day that the Closing has been extended past February 13, 1998
("Deferred Closing Interest"). This Deferred Closing Interest shall be
payable to Tadim and/or the Selling Shareholders on the Closing Date or
on the date (no later than March 31, 1998) that Purchaser sends a
termination notice to HPG, Tadim and the Selling Shareholders pursuant
to Subsection 12.1(f) below or that Tadim and/or the Selling
Shareholders send a termination notice to Purchaser pursuant to Section
12.1(g) below. During the period from February 6, 1998, Purchaser shall
exercise its reasonable commercial efforts to consummate the
transactions contemplated by this Agreement at the earliest date on or
before March 31, 1998 and shall allow HPG, Tadim and the Selling
Shareholders to participate in the matters delaying the Closing."
19. Section 10.2 of the Agreement shall be amended by deleting
Subsections 10.2(g) and (h) in their entirety and replacing them with the
following new Subsections 10.2(g) and 10.2(h):
"10.2 Documents to be Delivered at Closing by HPG, Tadim and the
Selling Shareholders.
"(g) An opinion of Dykema Gossett, counsel to Tadim, HPG and
the Selling Shareholders, addressed to Purchaser and Purchaser's
lenders, the form of which shall be reasonably satisfactory to counsel
to Purchaser.
"(h) The consent and estoppel certificates described in
Section 9.1(e) above and the landlord consents described in Section
9.1(x) above."
20. Section 10.2 of the Agreement shall be amended by adding the
following new Subsections:
"10.2 Documents to be Delivered at Closing by HPG, Tadim and the
Selling Shareholders.
"(r) A Redemption Agreement among HPG, LDM, the HPG
shareholders, the Tadim Shareholders and Ernest T. Oskin, the form of
which shall be reasonably satisfactory to counsel to Purchaser.
(s) Resignations of the Officers of HPG.
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<PAGE> 75
(t) Resignations of the Directors of HPG."
21. Section 11.1(a) of the Agreement shall be deleted in its
entirety and replaced by the following new Section 11.1(a):
"11.1 Indemnification of Purchaser.
"(a) Any breach of any representation or warranty of Tadim,
HPG or the Selling Shareholders contained in this Agreement, any of the
Attendant Documents or any certificate, schedule, list or other
instrument to be furnished by Tadim, HPG or the Selling Shareholders to
Purchaser pursuant to this Agreement or any of the Attendant Documents,
or any breach of the representations and warranties in Article 26 of
the New Leases by any of the landlords thereof."
22. Section 11.8(b) of the Agreement shall be amended by adding the
following new Subsections 11.8(b)(v) and (vi):
"11.8 Limitations on Indemnities.
"(b)(v) Losses arising from any one or more of the matters
described in Schedule 11.8, or
(vi) Losses arising under Section 5.6(ii)."
23. Subsection 11.8(c) of the Agreement shall be amended by
deleting the first sentence of Section 11.8(c) in its entirety and replacing it
with the following new first sentence of Section 11.8(c):
11.8 Limitation on Indemnities
"(c) Notwithstanding the provisions of subsection (b) above,
at such time as Purchaser receives that certain tax refund from the
State of Michigan (anticipated to be in the amount of $339,000) or any
other tax refund received as a result of audit adjustments of tax
returns for the periods ended on or before the Closing Date (the "Tax
Refund"), no claim of indemnification by Purchaser with respect to a
breach of the representation and warranty set forth in Section 5.24 or
with respect to the matters set forth in Section 13.10 or with respect
to the real or personal property taxes owing to governmental
authorities by Tadim, Inc. referred to in Section 11.1(i)(iii)
(collectively, "Tax Matters Indemnities"), shall be valid and
assertible unless the aggregate amount of all losses relating to such
matters exceeds the amount of the Tax Refund (the "Tax Basket")."
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<PAGE> 76
24. Subsection 11.8(d) of the Agreement shall be amended by deleting
the second sentence thereof in its entirety and replacing it with the following
new second sentence:
"11.8 Limitations on Indemnities.
"(d) After the threshold set forth in Section 11.8(b) or
11.8(c) is exceeded, the aggregate amount of Losses recoverable
pursuant to the provisions of this Article 11 by Purchaser together
with the amount of damages claimed by Purchaser or HPG as tenant
pursuant to Article 26 of the New Leases shall be limited to
$6,000,000.00 in the aggregate."
25. Section 12.1(b) shall be deleted in its entirety and replaced
with the following new Section 12.1(b):
12.1 Termination.
"(b) by Tadim and HPG if Purchaser has made a material
misrepresentation or has materially breached any covenant or agreement set forth
in this Agreement and the breach by its nature cannot be cured before the
Closing Date."
26. Section 12.1(c) shall be deleted in its entirety and replaced
with the following new Section 12.1(c):
12.1 Termination.
"(c) by Purchaser if Tadim, HPG or any of the Selling
Shareholders has made a material misrepresentation or has materially breached
any covenant or agreement set forth in this Agreement and the breach by its
nature cannot be cured before the Closing Date; or "
27. Section 12 of the Agreement shall be amended by adding the
following new Subsections 12.1(e), 12.1(f) and (g):
"12.1 Termination.
"(e) by Purchaser on February 6, 1998, in which event the
Initial Deposit shall be forfeited by Purchaser to Tadim, HPG and the
Selling Shareholders and paid by the Escrow Agent to Tadim, HPG and the
Selling Shareholders, whereupon this Agreement shall be deemed
terminated and all parties shall be relieved of their obligations
hereunder, including but not limited to any claims for breach, damages
or specific performance; or
(f) by Purchaser during the period from February 6, 1998 to
March 31, 1998 (if the Closing Date has been extended to a date after
February 6, 1998), in which event the Initial Deposit and the Second
Deposit shall be forfeited by Purchaser to the Sellers and paid by the
Escrow Agent to the Sellers and the Deferred Closing Interest (if any)
shall be payable to
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<PAGE> 77
Tadim and/or the Selling Shareholders on the date of termination under
this Section 12.1(f), whereupon this Agreement shall be deemed
terminated and all parties shall be relieved of their obligations
hereunder, including but not limited to any claims for breach, damages
or specific performance."
(g) by Tadim, HPG and the Selling Shareholders if the Closing
has not occurred on or before March 31, 1998 for a reason other than
Purchaser's termination of the Agreement in accordance with Section
12.1(c), in which event the Initial Deposit and the Second Deposit
shall be forfeited by Purchaser to Tadim, HPG and the Selling
Shareholders and paid by the Escrow Agent to Tadim, HPG and the Selling
Shareholders, and the Deferred Closing Interest shall be payable to
Tadim, HPG and/or the Selling Shareholders on the date of termination
under this Section 12.1(g), whereupon this Agreement shall be deemed
terminated and all parties shall be relieved of their obligations
hereunder, including but not limited to any claims for breach, damages
or specific performance.
28. Section 13.19 of the Agreement shall be deleted in its
entirety and replaced by the following new Section 13.19:
"13.19 Remedies. HPG, Tadim and the Selling Shareholders
acknowledge and agree that Purchaser would be damaged irreparably in
the event of the failure or refusal by HPG, Tadim or the Selling
Shareholders to consummate the transactions contemplated in this
Agreement other than for reasons specifically permitted by the terms
hereof. Accordingly, HPG, Tadim and the Selling Shareholders agree that
in any arbitration proceeding or any action instituted in any court of
the United States or any state thereof having jurisdiction over HPG,
Tadim and/or the Selling Shareholders and the matter, in addition to
any remedy to which Purchaser may be entitled hereunder at law or in
equity, Purchaser shall be entitled to an injunction or injunctions to
enforce specifically the consummation of the transactions contemplated
in this Agreement if termination is not otherwise permitted to the
Sellers by the terms hereof.
Purchaser acknowledges and agrees that HPG, Tadim and/or the
Selling Shareholders would be damaged in the event of the failure or
refusal by Purchaser to consummate the transactions contemplated in
this Agreement other than for the reasons specifically permitted by the
terms hereof. Accordingly, Purchaser agrees that, in the event of such
failure or refusal by Purchaser occurring on or before February 6, 1998
or termination of the Agreement by Purchaser in accordance with Section
12.1(e), HPG, Tadim and the Selling Shareholders shall be entitled to
receive the Initial Deposit from the Escrow Agent as their sole remedy.
Purchaser further agrees that, in the event of such failure or refusal
by Purchaser occurring after February 6, 1998 or the failure of LDM to
use its reasonable commercial efforts to close the transaction after
February 13, 1998, or termination of the Agreement by Purchaser in
accordance with Section 12.1(f), HPG, Tadim and the Selling
Shareholders shall be entitled to receive the Initial Deposit and
Second Deposit from the Escrow Agent and shall be entitled
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<PAGE> 78
to immediate payment by Purchaser to them of Deferred Closing
Interest, if any, as their sole and exclusive remedy."
29. The List of Schedules to the Agreement shall be amended by adding a
reference to a new Schedule 11.8 entitled "Existing Environmental Conditions",
which Schedule 11.8 shall be incorporated into the Agreement in the form
attached hereto.
30. Exhibit B of the Agreement shall be modified in the manner attached
as "Exhibit B - Form of Escrow Agreement for HPG Guaranty."
31. Exhibit C of the Agreement shall be modified in the manner attached
as "Exhibit C - Form of Covenant Not to Compete."
32. Exhibits D-1 to D-11 of the Agreement shall be modified in the
manner attached as "Exhibits D-1 to D-11 Forms of Employment Agreements."
33. Exhibit E of the Agreement shall be modified in the manner attached
as "Exhibit E - Form of Lease."
34. Purchaser represents that, as of the time and date of the execution
of the Third Amendment, Purchaser does not have actual knowledge of any basis
for terminating the Agreement pursuant to Section 12.1(c). If, after the time
and date of this Agreement, Purchaser obtains actual knowledge of any basis for
terminating this Agreement pursuant to Section 12.1(c), Purchaser will notify
HPG, Tadim and the Selling Shareholders within one business day of Purchaser's
receipt of such knowledge. Purchaser represents that, as of the time and date of
execution of the Third Amendment and based solely upon the actual knowledge of
Purchaser's President and Chief Financial Officer, Purchaser does not have any
reason to believe that the transactions contemplated by this Agreement cannot be
consummated on or before February 6, 1998, subject to satisfactory completion of
all documentation required by Purchaser's lender.
35. As of the date of the execution of this Third Amendment, Purchaser
waives the conditions precedent set forth in Section 9.1(c), 9.1(i) and 9.1(u).
36. Other than as set forth herein, the Agreement (as amended by the
First Amendment and the Second Amendment) shall remain in full force and effect
and unamended.
37. This Third Amendment may be executed in any number of counterparts,
each of which, when so executed, shall be deemed an original, but all of which
shall constitute but one and the same document. Delivery of an executed
counterpart of this Third Amendment by facsimile shall be equally as effective
as delivery of a manually executed counterpart of this Third Amendment but the
failure to deliver such manually executed counterpart shall not affect the
validity, enforceability or binding effect of this Agreement.
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<PAGE> 79
LDM TECHNOLOGIES, INC.
By:______________________________
TADIM, INC.
By:______________________________
HURON PLASTICS GROUP, INC.
By:______________________________
SELLING SHAREHOLDERS:
_________________________________
Arthur J. Goodsel
Representative Shareholder
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<PAGE> 80
FOURTH AMENDMENT TO
STOCK AND ASSET PURCHASE AGREEMENT
This Fourth Amendment to Stock and Asset Purchase Agreement ("Fourth
Amendment") is made and entered into as of February 6, 1998, by and among LDM
TECHNOLOGIES, INC., a Michigan corporation (the "Purchaser"), TADIM, INC., a
Michigan corporation ("Tadim"), HURON PLASTICS GROUP, INC., a Michigan
corporation ("HPG") and certain "Selling Shareholders" of HPG, as designated on
the signature page to this Agreement (collectively, the "Selling Shareholders"
and individually a "Selling Shareholder") and is the Fourth Amendment to a Stock
and Asset Purchase Agreement dated as of December 23, 1997, as amended (the
"Agreement") by and among the Purchaser, Tadim, HPG and the Selling
Shareholders. For the purposes of this Agreement, Purchaser, Tadim, HPG and the
Selling Shareholders are referred to sometimes collectively as the "Parties" and
individually as a "Party". Further, for purposes of this Fourth Amendment,
Lakeport Plastics, Inc., HPG Body Systems, Inc. and HPG Chassis Systems, Inc.,
all wholly-owned subsidiaries of HPG (the "Subsidiaries"), together with Tadim
and HPG, are collectively referred to as the "Company".
RECITALS
A. The Parties executed the Agreement on December 23, 1997.
B. The Parties amended the Agreement by a First Amendment dated
as of January 23, 1998.
C. The Parties amended the Agreement by a Second Amendment dated
as of January 30, 1998.
D. The Parties amended the Agreement by a Third Amendment dated
as of February 2, 1998.
E. The Parties desire once again to amend certain provisions of the
Agreement.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual covenants and undertakings set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the Parties
hereby agree as follows:
1. The third and last sentence of the Preamble shall be deleted in its
entirety and replaced with the following third and last sentence of the
Preamble:
"Further, for purposes of this Agreement, Lakeport Plastics, Inc.,
HPG Body Systems, Inc., HPG Chassis Systems, Inc. and HPG Foreign
Sales, Inc., all
<PAGE> 81
wholly-owned subsidiaries of HPG (the "Subsidiaries"),
together with Tadim and HPG, are collectively referred to as
the "Company".
2. The first sentence of Section 5.2 of the Agreement shall be deleted
in its entirety and shall be replaced by the following new first sentence of
Section 5.2:
"HPG and each Subsidiary (other than HPG Foreign Sales, Inc.)
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan and HPG
Foreign Sales, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of Barbados."
3. The last sentence of Section 6.5 of the Agreement shall be deleted
in its entirety and replaced with the following new, last sentence of Section
6.5:
6.5 Indemnification of Directors and Officers.
In the event of the merger of HPG and the Subsidiaries into
the Purchaser before the expiration of three years from the
Closing Date, Purchaser shall maintain the similar indemnities
contained in the Purchaser's Bylaws as of the date of this
Agreement for the remainder of such three year period.
4. Section 9.1(s) of the Agreement shall be deleted in its entirety
and replaced with the following new Section 9.1(s):
9.1 Conditions Precedent to Purchaser's Obligations.
(s) Guaranties. HPG shall have terminated and discharged all
of its obligations under all guaranties in favor of financial institutions
(other than that certain guaranty entered into by HPG in favor of Comerica Bank
in connection with construction financing for the Croswell, Michigan property
and that guaranty of payment by HPG of a $320,000 Promissory Note of Tadim
Realty, dated May 31, 1993 in favor of the Development Corporation of Harlingen,
Inc.)
5. Section 11.1(e) of the Agreement shall be amended by adding the
following new Subsection 11.1(e)(v) as follows:
11.1 Indemnification of Purchaser.
(v) any liability relating to lost Huron Plastics Group, Inc.
stock certificate No. 19
6. Subsection 11.1(f) shall be deleted in its entirety and replaced by
the following new Subsection 11.1(f) as follows:
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<PAGE> 82
11.1 Indemnification of Purchaser.
(f) Any Loss arising out of (i) HPG's guaranty of the
$2.0 million construction loan from Comerica Bank to
D & A Realty, Inc. or (ii) HPG's guaranty of payment
of a $320,000 Promissory Note of Tadim Realty, dated
May 31, 1993 in favor of the Development Corporation
of Harlingen, Inc. or (iii) HPG's ownership and
investment in HPG Foreign Sales, Inc., a Barbados
corporation.
7. Subsection 11.8(b)(i) shall be deleted in its entirety and
replaced with the following new Subsection 11.8(b)(i):
11.8 Limitation on Indemnities.
(b)(i) Third Party Claim as they may relate to the matters
described in Section 11.1(e), (f), (g) or (i)(i)
above.
8. Subsection 11.8(c) of the Agreement shall be amended by
deleting the first sentence of Section 11.8(c) in its entirety and replacing it
with the following new first sentence of Section 11.8(c):
11.8 Limitation on Indemnities.
(c) Notwithstanding the provisions of subsection (b)
above, at such time as Purchaser receives that
certain tax refund from the State of Michigan
(anticipated to be in the amount of $339,000) or any
other tax refund received as a result of audit
adjustments of tax returns for the periods ended on
or before the Closing Date (the "Tax Refund"), no
claim of indemnification by Purchaser with respect to
(i) a breach of the representation and warranty set
forth in Section 5.24, (ii) with respect to the
matters set forth in Section 13.10, (iii) with
respect to the real or personal property taxes owing
to governmental authorities by Tadim, Inc. referred
to in Section 11.1(i)(iii), or (iv) tax liabilities
related to HPG Foreign Sales, Inc. (collectively,
"Tax Matters Indemnities"), shall be valid and
assertible unless the aggregate amount of all losses
relating to such matters exceeds the amount of the
Tax Refund (the "Tax Basket").
A new Subsection 13.11(e) shall be added to the Agreement to
read in its entirety as follows:
13.11 Post-Closing Covenants.
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<PAGE> 83
(f) Within ten (10) business days following the Closing
Date, the Representative Shareholder shall deliver to
the Purchaser evidence of the release of that certain
Guaranty of Payment of HPG in favor of the
Development Corporation of Harlingen, Inc., a Texas
corporation, dated May 31, 1993.
10. Exhibit B of the Agreement shall be deleted in its entirety and
replaced with the attached new Exhibit B.
11. Other than as set forth herein, the Agreement (as amended by the
First Amendment, Second Amendment and Third Amendment) shall remain in full
force and effect and unamended.
12. This Fourth Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
of which shall constitute one and the same instrument. Delivery of an executed
counterpart of this Fourth Amendment by facsimile shall be equally as effective
as delivery of a manually executed counterpart of this Fourth Amendment but the
failure to deliver such manually executed counterpart shall not affect the
validity, enforceability or binding affect of this Agreement.
LDM TECHNOLOGIES, INC.
By:______________________________
TADIM, INC.
By:______________________________
HURON PLASTICS GROUP, INC.
By:______________________________
SELLING SHAREHOLDERS:
_________________________________
Arthur J. Goodsel
Representative Shareholder
4
<PAGE> 1
EXHIBIT 2
$76,000,000
TERM LOAN AND SECURITY AGREEMENT
Dated as of February 6, 1998
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......................................................21
1.3 Interpretive Provisions...............................................21
ARTICLE 2 LOANS ........................................................... 22
2.1 Total Facility........................................................22
2.2 CAPEX Loans...........................................................22
(a) Amounts..........................................................22
(b) Procedure for Borrowing..........................................23
(c) Reliance upon Authority..........................................23
(d) No Liability.....................................................24
(e) Notice Irrevocable...............................................24
(f) Making of CAPEX Loans............................................24
(g) Lenders' Failure to Perform......................................25
(i) Notation.........................................................25
2.3 Term Loans............................................................26
(a) Amount of Term Loans.............................................26
(b) Making of Term Loans.............................................26
(c) Term Loan Notes..................................................26
(d) Notation and Endorsement.........................................26
ARTICLE 3 INTEREST AND FEES.................................................27
3.1 Interest..............................................................27
3.2 Conversion and Continuation Elections.................................27
3.3 Maximum Interest Rate.................................................29
3.4 Closing Fee...........................................................29
3.5 Unused Line Fee.......................................................29
3.6 [RESERVED]............................................................29
3.7 [RESERVED]............................................................29
ARTICLE 4 PAYMENTS AND PREPAYMENTS .........................................29
4.1 [RESERVED]............................................................29
4.2 Termination of Facility...............................................30
4.3 [RESERVED]............................................................30
4.4 Voluntary Prepayments of the Loans....................................30
4.5 Mandatory Prepayments of the Term Loans...............................30
4.6 Payments by the Borrower..............................................31
4.7 [RESERVED]............................................................31
4.8 Apportionment, Application and Reversal of Payments...................31
4.9 Indemnity for Returned Payments.......................................32
4.10 Agent's and Lenders' Books and Records; Monthly Statements............32
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY............................33
5.1 Taxes.................................................................33
5.2 Illegality............................................................34
5.3 Increased Costs and Reduction of Return...............................34
5.4 Funding Losses........................................................35
5.5 Inability to Determine Rates..........................................35
5.6 Certificates of Lenders...............................................35
5.7 Survival..............................................................35
ARTICLE 6 COLLATERAL........................................................36
6.1 Grant of Security Interest............................................36
6.2 Perfection and Protection of Security Interest........................37
6.3 Location of Collateral................................................38
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6.4 Title to, Liens on, and Sale and Use of Collateral....................39
6.5 Appraisals............................................................39
6.6 Access and Examination; Confidentiality...............................39
6.7 Collateral Reporting..................................................40
6.8 Accounts..............................................................40
6.9 Collection of Accounts; Payments......................................42
6.10 Inventory; Perpetual Inventory........................................43
6.11 Equipment.............................................................43
6.12 Assigned Contracts....................................................44
6.13 Documents, Instruments, and Chattel Paper.............................45
6.14 Right to Cure.........................................................45
6.15 Power of Attorney.....................................................45
6.16 The Agent's and Lenders' Rights, Duties and Liabilities...............46
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES ................47
7.1 Books and Records.....................................................47
7.2 Financial Information.................................................47
7.3 Notices to the Lenders................................................49
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS............................52
8.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents................................................52
8.2 Validity and Priority of Security Interest............................52
8.3 Organization and Qualification........................................53
8.4 Corporate Name; Prior Transactions....................................53
8.5 Subsidiaries and Affiliates...........................................53
8.6 Financial Statements and Projections..................................53
8.7 Capitalization........................................................54
8.8 Solvency..............................................................54
8.9 Debt..................................................................54
8.10 Distributions.........................................................54
8.11 Title to Property.....................................................54
8.12 Real Estate; Leases...................................................54
8.13 Proprietary Rights Collateral.........................................54
8.14 Trade Names and Terms of Sale.........................................55
8.15 Litigation............................................................55
8.16 Restrictive Agreements................................................55
8.17 Labor Disputes........................................................55
8.18 Environmental Laws....................................................55
8.19 No Violation of Law...................................................57
8.20 No Default............................................................57
8.21 ERISA Compliance......................................................57
8.22 Taxes.................................................................57
8.23 Regulated Entities....................................................57
8.24 Use of Proceeds; Margin Regulations...................................58
8.25 Copyrights, Patents, Trademarks and Licenses, etc.....................58
8.26 No Material Adverse Change............................................58
8.27 Full Disclosure.......................................................58
8.28 Material Agreements...................................................58
8.29 Bank Accounts.........................................................59
8.30 Governmental Authorization............................................59
8.31 Indenture.............................................................59
8.32 Subordination Provisions..............................................59
8.33 Acquisition Agreement.................................................59
8.34 Bidding Status........................................................59
8.35 Merger................................................................60
8.36 Computer Systems......................................................60
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ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS................................60
9.1 Taxes and Other Obligations...........................................60
9.2 Corporate Existence; Good Standing....................................60
9.3 Compliance with Law and Agreements; Maintenance of Licenses...........61
9.4 Maintenance of Property...............................................61
9.5 Insurance.............................................................61
9.6 Condemnation..........................................................62
9.7 Environmental Laws....................................................63
9.8 Compliance with ERISA.................................................63
9.9 Mergers, Consolidations or Sales......................................63
9.10 Distributions; Capital Change; Restricted Investments.................64
9.11 Transactions Affecting Collateral or Obligations......................64
9.12 Guaranties............................................................64
9.13 Debt..................................................................64
9.14 Prepayments; Amendments...............................................65
9.15 Transactions with Affiliates..........................................65
9.16 Investment Banking and Finder's Fees..................................66
9.17 Computer Systems......................................................66
9.18 Business Conducted....................................................66
9.19 Liens.................................................................66
9.20 Sale and Leaseback Transactions.......................................66
9.22 Fiscal Year...........................................................67
9.23 Capital Expenditures..................................................67
9.24 Operating Lease Obligations...........................................68
9.25 Fixed Charge Coverage Ratio...........................................68
9.26 Net LoSection.........................................................68
9.27 Use of Proceeds.......................................................68
9.28 Further Assurances....................................................68
9.29 Canadian Tax Matters..................................................68
ARTICLE 10 CONDITIONS OF LENDING ...........................................69
10.1 Conditions Precedent to Making of Loans on the Closing Date...........69
10.2 Conditions Precedent to Each Loan.....................................72
ARTICLE 11 DEFAULT; REMEDIES................................................73
11.1 Events of Default.....................................................73
11.2 Remedies..............................................................75
ARTICLE 12 TERM AND TERMINATION.............................................77
12.1 Term and Termination..................................................77
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..... 77
13.1 No Waivers Cumulative Remedies........................................77
13.2 Amendments and Waivers................................................77
13.3 Assignments; Participations...........................................78
ARTICLE 14 THE AGENT .......................................................80
14.1 Appointment and Authorization.........................................80
14.2 Delegation of Duties..................................................81
14.3 Liability of Agent....................................................81
14.4 Reliance by Agent.....................................................81
14.5 Notice of Default.....................................................82
14.6 Credit Decision.......................................................82
14.7 Indemnification.......................................................82
14.8 Agent in Individual Capacity..........................................83
14.9 Successor Agent.......................................................83
14.10 Withholding Tax......................................................83
14.11 [RESERVED]...........................................................85
14.12 Collateral Matters...................................................85
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14.13 Restrictions on Actions by Lenders; Sharing of Payments..............86
14.14 Agency for Perfection................................................86
14.15 Payments by Agent to Lenders.........................................87
14.16 Concerning the Collateral and the Related Loan Documents.............87
14.17 Field Audit and Examination Reports; Disclaimer by Lenders...........87
ARTICLE 15 MISCELLANEOUS ...................................................88
15.1 Cumulative Remedies; No Prior Recourse to Collateral.................88
15.2 Severability.........................................................88
15.3 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver.........................................................88
15.4 Waiver of Jury Trial.................................................90
15.5 Survival of Representations and Warranties...........................91
15.6 Other Security and Guaranties........................................91
15.7 Fees and Expenses....................................................91
15.8 Notices..............................................................92
15.9 Waiver of Notices....................................................93
15.10 Binding Effect.......................................................93
15.11 Indemnity of the Agent and the Lenders by the Borrower...............93
15.12 Final Agreement......................................................94
15.13 Counterparts.........................................................94
15.14 Captions.............................................................94
15.15 Right of Setoff......................................................94
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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 8.15 Litigation
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-1 Form of Term Loan Note
Exhibit A-2 Form of CAPEX Loan Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Conversion/Continuation
Exhibit D Pro Forma Balance Sheet
as of the Closing Date
Exhibit E Form of Compliance Certificate
Exhibit F Form of Assignment and Acceptance
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TERM LOAN AND SECURITY AGREEMENT
Term Loan and Security Agreement, dated as of February 6, 1998, 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 capital expenditure line of credit for loans in an amount not to
exceed $10,000,000 and a term line of credit in an amount not to exceed
$66,000,000 and which extensions of credit the Borrower will use to finance, in
part, the Acquisition, for its general business purposes and to finance, in
part, capital expenditures;
WHEREAS, the Lenders have agreed to make available to the Borrower a
capital expenditure credit facility and a term loan 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 of
the capital stock of Huron and substantially all of the assets of Tadim pursuant
to the Acquisition Agreement.
"Acquisition Agreement" means that certain Stock and Asset
Purchase
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Agreement, dated as of December 23, 1997 among the Borrower and the Sellers, as
the same has been amended by (i) that certain First Amendment to Stock and Asset
Purchase Agreement, dated as of January 23, 1998, (ii) that certain Second
Amendment to Stock and Asset Purchase Agreement, dated as of January 30, 1998,
(iii) that certain Third Amendment to Stock and Asset Purchase Agreement, dated
as of February 2, 1998, and (iv) that certain Fourth Amendment to Stock and
Asset Purchase Agreement, dated as of February 6, 1998, in each case among the
Borrower and the Sellers.
"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'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 Term Loan and Security Agreement.
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"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margins" shall mean (i) .50% per annum with
respect to Base Rate Loans and (ii) 2.25% per annum with respect to LIBOR Rate
Loans.
"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.
"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.
"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.
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"Base Rate Loans" means, collectively, the Base Rate CAPEX
Loans and the Base Rate Term Loans.
"Base Rate CAPEX Loan" means a CAPEX Loan during any period in
which it bears interest at the Base Rate.
"Base Rate Term Loan" means any portion of a Term Loan during
any period in which such portion bears interest at the Base Rate.
"Borrower" has the meaning specified in the introductory
paragraph hereof.
"Borrowing" means a borrowing hereunder consisting of CAPEX
Loans or Term Loans made on the same day by the Lenders to the Borrower.
"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.
"CAPEX Loan Availability" shall mean an amount equal to the
Maximum CAPEX Amount less the aggregate principal amount of CAPEX Loans made on
or prior to the date of determination.
"CAPEX Loan Note" has the meaning specified in Section 2.2.
"CAPEX Loans" has the meaning specified in Section 2.2.
"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.
"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.
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"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 Note" means the intercompany note
issued by LDM Canada to the Borrower, dated January 22, 1997, in the aggregate
principal amount of $16,000,000.
"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 E 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.
"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 any 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
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<PAGE> 12
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.
"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 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.
"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
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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.
"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.
"Excess Cash Flow" means for any period the Borrower's
Adjusted Net Earnings from Operations for such period, plus the sum of
depreciation, amortization and other non-cash charges deducted in the
determination of net income for that period, and less the sum of scheduled
principal payments with respect to Debt for borrowed money and Capital Leases
during that period and the unfinanced portion of Capital Expenditures during
that period.
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<PAGE> 14
"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.
"Fee Letter" means that certain letter, dated as of the
Closing Date, between the Agent and the Borrower.
"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 27, 1998.
"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 or with the
proceeds of CAPEX Loans; 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
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<PAGE> 15
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 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 "guar-
anteed 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 and LDM Holding, 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.
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<PAGE> 16
"Guarantor Collateral Documents" means the LDM Canada Security
Agreement, the LDM Canada Mortgage, the LDM Holding Pledge and Security
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 and the
LDM Holding Guarantee and each guarantee executed by a Guarantor pursuant to
Section 9.21 (iii).
"Huron" means Huron Plastics Group, Inc., a Michigan
corporation.
"Indenture" means the indenture governing the Senior
Subordinated Notes.
"Intellectual Property Security Agreement" means the
Intellectual Property Security Agreement, dated as of January 22, 1997, 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, as the same may be amended, supplemented or otherwise modified from
time to time.
"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.
"Intercompany Note" shall mean a demand note evidencing an
Intercompany Loan made by Borrower pursuant to Section 9.13(d), such demand note
to be in form and substance satisfactory to Agent.
"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
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<PAGE> 17
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 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.
"Kenco Companies" means, collectively, Kenco Plastics, Inc., a
Kentucky corporation, and Kenco Plastics, Inc., a Michigan corporation.
"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 results of operations for the period
commencing on October 1, 1997 and ending on September 30, 1998 and 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).
"LDM Canada" means LDM Technologies Company, a Nova Scotia
unlimited liability company.
"LDM Canada Guarantee" means collectively, (i) the LDM Canada
Guarantee, dated as of January 22, 1997, duly executed and delivered by LDM
Canada to the Revolving Loan Lender Agent for the benefit of itself and the
Revolving Loan Lenders and (ii) the LDM Canada Guarantee, dated as of February
6, 1998, duly executed and delivered by LDM Canada to the Agent, for the benefit
of itself and the Lenders, as each may be amended, supplemented or otherwise
modified from time to time.
"LDM Canada Security Agreement" means, collectively, (i) the
$100,000,000 Cdn. fixed and floating charge demand debenture and related pledge
agreement in respect thereof, each dated as of January 22, 1997, duly executed
and delivered by LDM Canada to the
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<PAGE> 18
Revolving Loan Lender Agent for the benefit of itself and the Revolving Loan
Lenders and (ii) the $100,000,000 Cdn. fixed and floating charge demand
debenture and related pledge agreement in respect thereof, each dated as of
February 6, 1998, duly executed and delivered by LDM Canada in favor of the
Agent, for the benefit of itself and the Lenders, as each may be amended,
supplemented or otherwise modified from time to time.
"LDM Germany" means LDM Technologies GmbH, a German
Corporation.
"LDM Holding" means LDM Holding Canada, Inc., a Michigan
corporation.
"LDM Holding Guarantee" means the LDM Holding Guarantee, dated
as of January 22, 1997, 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 January 22, 1997, 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.
"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.
"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
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<PAGE> 19
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 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 Loans" means, collectively, the LIBOR CAPEX Loans
and the LIBOR Term Loans.
"LIBOR CAPEX Loan" means a CAPEX Loan during any period in
which it bears interest at the LIBOR Rate.
"LIBOR Term Loan" means any portion of a Term Loan during any
period in which such portion 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 and Security Agreement" means the Loan and Security
Agreement, dated as of January 22, 1997, among the Borrower, the Revolving Loan
Lenders and the Revolving Loan Lender Agent, as the same may be supplemented,
amended or otherwise modified from time to time.
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<PAGE> 20
"Loan and Security Agreement Obligations" means the
Obligations under, and as defined in, the Loan and Security Agreement.
"Loan Documents" means this Agreement, the Term Loan Notes,
the CAPEX Loan Notes, the Intellectual Property Security Agreement, the
Mortgages, 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-__% of the Commitments, plus, Revolving Loan
Lenders whose Pro Rata Shares (as defined in the Loan and Security Agreement)
aggregate more than 66-__% of the Commitments under, and as defined in, the
Loan and Security Agreement.
"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 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 Rate" has the meaning specified in Section 3.3.
"Maximum CAPEX Amount" means an amount equal to $10,000,000
less the aggregate amount of CAPEX Loans made on or prior to the date of
determination.
"Merger" means the merger of Huron, Lakeport Plastics, Inc.,
HPG Body Systems, Inc. and HPG Chassis Systems, Inc. with, and into, the
Borrower, with the Borrower as the surviving corporation thereof, pursuant to
the Merger Documents.
"Merger Documents" means the Agreement and Plan of Merger,
dated as of February 6, 1998, among Huron, Lakeport Plastics, Inc., HPG Body
Systems, Inc. and HPG Chassis Systems, Inc. and the Borrower, and all other
documents entered into or delivered in connection with the Merger.
"Mortgages" means: (a) each Mortgage, Charge/Mortgage of Land,
Security Agreement, and Assignments of Leases and Rents dated the date hereof
between the Borrower
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<PAGE> 21
and/or LDM Canada and the Agent and delivered to the Agent; and (b) all other
real property mortgages, leasehold mortgages, assignments of leases, mortgage
deeds, deeds of trust, deeds to secure debt, security agreements, and other
similar instruments hereafter entered into which provide the Agent a lien on or
other interest in any portion of the Premises or the Real Estate or which relate
to any such Lien or interest.
"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.
"Notes" means, collectively, the CAPEX Loan Notes and the Term
Loan Notes.
"Notice of Borrowing" means a notice of Borrowing in the form
of Exhibit B.
"Notice of Conversion/Continuation" means notice of conversion
or continuation in the form of Exhibit C.
"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.
"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.
"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
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<PAGE> 22
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.
"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;
(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
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<PAGE> 23
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;
(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;
(h) Liens securing Intercompany Notes in accordance
with Section 9.13;
(i) Liens securing the Loan and Security Agreement
Obligations; and
(j) Lien arising under the Escrow Agreement (as
defined in the Acquisition Agreement).
"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
January 22, 1997, 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.
"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
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<PAGE> 24
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 fore going, 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.
"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.
"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 (x) LDM Canada pursuant to Section 9.13(d)(I), and (y) LDM
Germany pursuant to Section 9.13(d)(II), (B) the Sunningdale Investment, and (C)
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
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<PAGE> 25
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 course 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 Loan Lender Agent" means the Agent under, and as
defined in, the Loan and Security Agreement.
"Revolving Loan Lender" means a Lender under, and as defined
in, the Loan and Security Agreement.
"Revolving Loans" means Loans under, and as defined in, the
Loan and Security Agreement.
"Sellers" means Huron, Tadim and the parties indicated in the
Acquisition
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Agreement as "selling shareholders" signatory thereto.
"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.
"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 purpose of
this Agreement with respect to Section 8.18, 8.21, 9.7, 9.8 and 11.1(p)
(including in each case the definitions contained therein).
"Sunningdale Investment" means the equity investment of the
Borrower in Sunningdale Plastic Industries, Pte. Ltd., a Singapore company,
whereby the Borrower owns a thirty percent (30%) equity interest in such Person,
in the form held by the Borrower on the Closing Date.
"Tadim" means Tadim, Inc., a Michigan corporation.
"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 and the single business tax in the
State of Michigan) 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.
"Term Loan" and "Term Loans" have the meanings specified in
Section 2.3(a).
"Term Loan Note" and "Term Loan Notes" have the meanings
specified in Section 2.3(c).
"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.
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"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.
"Transaction" means, collectively, (i) the Acquisition, (ii)
the Merger, (iii) the Term Loans to be made on the Closing Date and (iv) the
Fifth Amendment to the Loan and Security Agreement.
"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.
"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.
(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
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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
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 $76,000,000 (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) a capital expenditure line of credit consisting of capital expenditure
loans up to the Maximum CAPEX Amount, as described in Section 2.2; and (b) a
term line of credit consisting of term loans as described in Section 2.3.
2.2 CAPEX 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 capital expenditure loans
(the "CAPEX Loans") to the Borrower, in amounts not to exceed such Lender's Pro
Rata Share of the Borrower's CAPEX Loan Availability. Each advance under the
CAPEX Loan shall be used by the Borrower solely for the purpose of purchasing
new Equipment; provided that (i) all such Equipment shall be free and clear of
all Liens except Liens in favor of the Agent, (ii) such CAPEX Loan shall be in
an amount not to
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exceed eighty percent (80%) of the actual invoice cost of the Equipment
(excluding therefrom any other costs, fees and expenses relating to, without
limitation, installation, services, maintenance, processing or insurance) for
which such particular advance is requested and (iii) such CAPEX Loan shall be in
the minimum amount of Two Hundred Fifty Thousand Dollars ($250,000), and in
integral multiples of Five Thousand Dollars ($5,000) if in excess of such
amount.
(b) Procedure for Borrowing.
(i) Each Borrowing of CAPEX 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
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;
(B) specifying the requested Funding Date, which
shall be a Business Day;
(C) specifying whether the CAPEX Loans requested are
to be Base Rate CAPEX Loans or LIBOR CAPEX Loans;
(D) specifying the duration of the Interest Period if
the requested CAPEX Loans are to be LIBOR CAPEX Loans. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of LIBOR CAPEX Loans, such Interest Period shall be
three months;
(E) specifying the Equipment to be purchased by the
Borrower with the proceeds of such CAPEX Loan; and
(F) attaching a true and complete copy of the invoice
relating to the Equipment to be purchased by the Borrower with the
proceeds of such CAPEX Loan.
(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 CAPEX
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 CAPEX 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
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(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 CAPEX Loans requested pursuant to this Section 2.2, and (ii) the
names of the officers authorized to request CAPEX 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 CAPEX 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 CAPEX Loans on its
behalf or for otherwise acting in good faith under this Section 2.2, and the
crediting of CAPEX 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 CAPEX 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) Making of CAPEX Loans.
(i) 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 CAPEX Loans, upon satisfaction of
the applicable conditions precedent set forth in Article 10, the Agent shall
make the proceeds of such CAPEX Loans available to the Borrower on the
applicable Funding Date by transferring same day funds equal to the proceeds of
such CAPEX Loans received by the Agent to the account of the Borrower,
designated in writing by the Borrower; provided, however, that the amount of
CAPEX Loans so made on any date shall in no event exceed the CAPEX Loan
Availability of the Borrower on such date.
(ii) Unless the Agent receives notice from a Lender
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
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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.
(g) Lenders' Failure to Perform. All CAPEX Loans 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 CAPEX 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 CAPEX Loans
hereunder, and (ii) no failure by any Lender to perform its obligation to make
any CAPEX Loans hereunder shall excuse any other Lender from its obligation to
make any CAPEX Loans hereunder.
(h) CAPEX Loan Notes. The Borrower shall execute and deliver
to the Agent on behalf of each Lender, on the relevant Funding Date, a
promissory note, substantially in the form of Exhibit A-2 attached hereto and
made a part hereof (such promissory notes, together with any new notes issued
pursuant to Section 13.3(c) upon the assignment of any portion of any Lender's
CAPEX Loan, being hereinafter referred to collectively as the "CAPEX Loan Notes"
and each of such promissory notes being hereinafter referred to individually as
a "CAPEX Loan Note"), to evidence such Lender's CAPEX Loan, in an original
principal amount equal to the amount of such Lender's CAPEX Loan made on such
Funding Date. The principal amount of the CAPEX Loan Notes delivered to the
Agent on behalf of each Lender shall be dated the date of the making of such
CAPEX Loan and stated to mature on the Termination Date.
(i) Notation. The Agent shall record on its books the
principal amount of the CAPEX Loans owing to each Lender. 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 CAPEX 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. Prior to the transfer of a CAPEX
Loan Note, the applicable Lender shall endorse on the reverse side thereof the
outstanding principal balance of the CAPEX
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Loan evidenced thereby. Failure by such Lender to make such notation or
endorsement shall not affect the obligations of the Borrower under such CAPEX
Loan Note or any of the other Loan Documents.
2.3 Term Loans.
(a) Amount of Term Loans. Each Lender severally agrees to
make a term loan (any such term loan being referred to as a "Term Loan"
and such term loans being referred to collectively as the "Term Loans")
to the Borrower on the Closing Date, upon the satisfaction of the conditions
precedent set forth in Article 10, in an amount equal to such Lender's Pro Rata
Share of an amount equal to the lesser of (i) $66,000,000 or (ii) the sum of
(A) one hundred percent (100%) of the appraised orderly liquidation value of
Equipment of the Borrower and LDM Canada; plus (B) eighty percent (80%) of the
fair market value of all owned Real Estate of the Borrower and LDM Canada. The
Term Loans shall initially be Base Rate Term Loans.
(b) Making of Term Loans. Each Lender shall make the amount of
such Lender's Term Loan available to the Agent in same day funds, to such
account of the Agent as the Agent may designate, not later than 12:00 (noon)
(Chicago time) on the Closing Date. After the Agent's receipt of the proceeds of
such Term Loans, upon satisfaction of the conditions precedent set forth in
Article 10, the Agent shall make the proceeds of such Term Loans available to
the Borrower on such Funding Date by transferring same day funds equal to the
proceeds of such Term Loans received by the Agent to an account of the Borrower
designated in writing by the Borrower or as the Borrower shall otherwise
instruct in writing.
(c) Term Loan Notes. The Borrower shall execute and deliver to
the Agent on behalf of each Lender, on the Closing Date, a promissory note,
substantially in the form of Exhibit A-1 attached hereto and made a part hereof
(such promissory notes, together with any new notes issued pursuant to Section
13.3(c) upon the assignment of any portion of any Lender's Term Loan, being
hereinafter referred to collectively as the "Term Loan Notes" and each of such
promissory notes being hereinafter referred to individually as a "Term Loan
Note"), to evidence such Lender's Term Loan, in an original principal amount
equal to the amount of such Lender's Pro Rata Share of $66,000,000 and with
other appropriate insertions. The principal amount of the Term Loan Notes
delivered to the Agent on behalf of each Lender shall be dated the Closing Date
and stated to mature on the Termination Date.
(d) Notation and Endorsement. The Agent shall record on its
books the principal amount of the Term Loans owing to each Lender 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
Term Loans in its books and records, such books and records constituting
rebuttably presumptive evidence, absent manifest error, of the accuracy of the
information contained therein. Prior to the transfer of a Term Loan Note, the
applicable Lender shall endorse on the reverse side thereof the outstanding
principal balance of the Term Loan evidenced thereby. Failure by such Lender to
make such notation or endorsement shall not affect the obligations of the
Borrower under such Term Loan Note or any of the other Loan Documents.
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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.
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
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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, provided,
however, the Borrower may not select an Interest Period with respect to
any portion of the Loans which extends beyond an installment payment
date for the Loans unless, after giving effect to such election, the
portion of the Loans not subject to Interest Periods ending after such
installment payment date is equal to or greater than the principal due
on such installment payment date.
(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
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not elect to have a Loan converted into or continued as a LIBOR Rate Loan.
(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 exceSection.
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.
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 Maximum CAPEX Amount 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 [RESERVED].
3.7 [RESERVED].
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ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 [RESERVED].
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 Loans, together with accrued interest
thereon, (ii) the payment in full in cash of all other Obligations together with
accrued interest thereon, and (iii) 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.
4.3 [RESERVED].
4.4 Voluntary Prepayments of the Loans. The Borrower may prepay the
principal of the Loans in whole or in part, at any time and from time to time on
and after the Termination Date upon (i) at least five (5) Business Days' prior
written notice to the Agent and the Lenders, and (ii) payment of, with respect
to any LIBOR Rate Loans to be prepaid prior to the expiration date of the
Interest Period applicable thereto, the amounts described in Section 5.4. All
voluntary prepayments of the principal of the Loans pursuant to this Section 4.4
shall be accompanied by the payment of all accrued but unpaid interest on the
Loans to the date of prepayment. Any voluntary prepayment under this Section 4.4
of less than all of the outstanding principal of the Loans shall be applied to
the installments of principal of the Loans in the inverse order of maturity.
4.5 Mandatory Prepayments of the Term Loans. (a) On the first day of
the fourth month after the end of each Fiscal Year, the Borrower shall make a
prepayment of the principal of the Loans in an amount equal to 50% of Excess
Cash Flow for such Fiscal Year. Such prepayment shall be applied first, to the
outstanding principal amount of the Term Loan, in inverse order of maturity,
until paid in full, and second, pro rata to the outstanding principal amount of
the CAPEX Loans, in inverse order of maturity, until paid in full.
(b) On the first Business Day of each calendar month occurring
prior to the Termination Date, the Borrower shall make a payment of the
principal of the CAPEX Loan in an amount equal to the amount provided in each
CAPEX Loan Note.
(c) On the first Business Day of each calendar month occurring on
and after May 1, 1998 and prior to the Termination Date, the Borrower shall make
a payment of the principal of the Term Loan in an amount equal to $786,000.
(d) The Borrower shall pay the entire unpaid principal balance of
the Loans upon the Termination Date.
(e) The Borrower shall pay the entire unpaid principal balance of
the Loans upon the Termination Date under, and as defined in, the Loan and
Security Agreement.
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(f) Any payment under this Section 4.5 shall be accompanied by the
payment of all accrued but unpaid interest thereon. Any payment under this
Section 4.5 of less than all of the outstanding principal amount of the Loans
shall be applied, based upon the Pro Rata Shares of the Lenders, to the
installments of principal of the Loans in the inverse order of maturity. In
connection with any such payment, if any LIBOR Rate Loans are prepaid prior to
the expiration date of the Interest Period applicable thereto, the Borrower
shall pay to the Lenders the amounts described in Section 5.4.
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 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 [RESERVED].
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, pro rata, any fees, or expense reimbursements
then due to the Agent and the Revolving Loan Lender Agent from the Borrower
under this Agreement and the Loan and Security Agreement; second, to pay, pro
rata, any fees
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or expense reimbursements then due to the Lenders and the Revolving Loan Lenders
from the Borrower under this Agreement and the Loan and Security Agreement;
third, to pay, pro rata, interest due in respect of all Revolving Loans,
including BABC Loans and Agent Advances (as each such term is defined in the
Loan and Security Agreement), Term Loans and CAPEX Loans; fourth, to pay or
prepay, pro rata, principal of the BABC Loans and the Agent Advances, Revolving
Loans, unpaid reimbursement obligations in respect of Letters of Credit (as each
such term is defined in the Loan and Security Agreement), Term Loans and CAPEX
Loans; and fifth, to the payment, pro rata, of any other Obligation or Loan and
Security Agreement Obligation due to the Agent, the Revolving Loan Lender Agent,
any Lender or any Revolving Loan 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. 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
or Loan and Security Agreement Obligations, as the case may be.
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, absent
manifest error, be deemed correct, accurate, and binding on the Borrower and an
account stated (except for
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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 forty-five (45) 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 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.
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(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 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
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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;
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.
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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;
(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
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respect to all or any of the foregoing.
All of the foregoing, together with the Real Estate covered by the Mortgages,
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) As security for all Obligations, the Borrower shall and
shall cause LDM Canada, on or prior to the Closing Date, to execute and deliver
to the Agent the Mortgages to grant to the Agent, for the ratable benefit of the
Lenders, a continuing mortgage lien on the Borrower's and each Guarantor's Real
Estate.
(c) 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 to perfect, maintain, protect, and
enforce the Agent's Liens, including, without limitation: (i) executing,
delivering and/or filing and recording of the Mortgages, 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
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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 as the basis for any advance, loan, extension of credit,
or other financial accommodation).
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
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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.
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 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
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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 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
such 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, together with a certificate of an officer of the Borrower
certifying as to the accuracy and completeness of the foregoing.
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 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
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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.
(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
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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.
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.
(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.
(d) Notwithstanding anything to the contrary herein and in
particular Section 4.8, all proceeds and collections of LDM Canada's Accounts
and other Collateral and payments received by the Agent and/or Lenders from LDM
Canada shall be applied to fees and expense
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reimbursements not in the nature of interest for the purposes of the Income Tax
Act of Canada and to principal before being applied to interest due or fees and
expense reimbursements which are or may be in the nature of interest payments
for the purposes of the Income Tax Act of Canada.
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
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greater than $500,000 in 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 to the reduction of the Obligations in the order provided 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
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expense, loss or damage suffered by reason of any defense, setoff,
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 defined in the
Loan and Security Agreement) 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
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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 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.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
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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.
(b) As soon as available, but in any event not later than
thirty (30) days after
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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 certificate of 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.
(e) No sooner than 60 days and not less than 30 days prior to
the beginning of
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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.
(c) Immediately after becoming aware of any material adverse
change in the
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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 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
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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 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.
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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, the Mortgages, 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
constitute perfected and continuing Liens on all the Collateral, Pledged
Collateral and Guarantor Collateral, having priority over all other Liens (other
than Permitted
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Liens) 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 28, 1997 and for Huron
Plastics Group, Inc. for the fiscal year ended December 31, 1995 and December
31, 1996 and the nine-month period ended September 30, 1997, 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.
(c) The pro forma balance sheet of the Borrower and LDM Canada
as at the Closing Date, attached hereto as Exhibit D, presents fairly and
accurately the Borrower's and
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LDM Canada's financial condition as at such date assuming the Transaction
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, no par value, 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 Transaction, and shall remain Solvent during the
term of this Agreement.
8.9 Debt. After giving effect to the making of the 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, (d) the Loan and Security Agreement and (e) trade payables and other
contractual obligations arising in the ordinary course of busineSection.
8.10 Distributions. Since October 1, 1997, 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 sub leases 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, 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
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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 busineSection.
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. Except as set forth on Schedule 8.15, 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;
(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
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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 negotiations 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
(j) No Environmental Lien has attached to any Premises or
Property of the Borrower or any of its Subsidiaries.
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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.
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
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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 IndebtedneSection.
8.24 Use of Proceeds; Margin Regulations. (a) The proceeds of the Loans
are to be used solely to finance, in part, the Acquisition, for general business
purposes of the Borrower and for acquisitions of Equipment. 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 28, 1997, 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.
8.29 Bank Accounts. Schedule 8.29 contains a complete and accurate list
of all bank
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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 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.
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8.35 Merger. The Merger Documents are in form and substance
satisfactory for effecting the Merger pursuant to such agreements under the laws
of the State of Michigan; the Merger Documents will be filed with the Secretary
of State in the State of Michigan on the Closing Date; and, upon the filing of
the Merger Documents with the State of Michigan, the Merger will be effected and
will be valid in accordance with the terms thereof and the laws of the State of
Michigan.
8.36 Computer Systems. On the basis of an inquiry made of the
Borrower's and each of its Subsidiary's material suppliers, vendors and
customers, the Borrower reasonably believes that the "Year 2000 problem" (that
is, the risk that computer applications used by any Person may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999) will not result in a Material
Adverse Effect.
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
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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.
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. Agent is
authorized to collect all insurance proceeds (other than those pertaining to
Como) directly, and to apply or remit them as follows:
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(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, 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, to the reduction of the Obligations in the order provided for
in Section 4.8.
(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
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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.
(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
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ordinary course of its business, (ii) sales of assets in an aggregate amount not
to exceed $500,000 in any Fiscal Year, (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, (iv) the merger of the Kenco Companies into the
Borrower, with the Borrower as the surviving corporation of such merger, shall
be permitted and (v) the Merger shall be permitted.
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 the 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 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 (i) Guarantees in favor of
the Agent, (ii) Guarantees executed in connection with the Loan and Security
Agreement in favor of the Revolving Loan Lender Agent, (iii) Guarantees of the
Debt of Como in an amount up to $1,000,000, (iv) Guarantees in favor of General
Electric Capital Corporation of the Debt of LDM Canada in an amount up to
$1,400,000 and (v) Guaranty in favor of Comerica Bank with respect to
indebtedness of D&A Realty, Inc. in an amount not to exceed $2,000,000.
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
("Intercompany Loans") made by the Borrower to (I) LDM Canada, provided that (i)
LDM Canada shall have executed and delivered to the Borrower an Intercompany
Note to evidence any such Intercompany Loan, any security interests granted to
the Borrower on the assets of LDM Canada to secure the payments under its
Intercompany Note shall be assigned to the Agent pursuant to
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documentation in form and substance acceptable to the Agent, and such
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 such Intercompany Loans on its books and records in a manner
satisfactory to Agent, (iii) at the time any such Intercompany Loans 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 under this clause (I) shall not at any one time exceed
$17,000,000, consisting of the Closing Date Intercompany Note 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 (as
defined in the Loan and Security Agreement), 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 (II) LDM Germany, provided that (i) LDM
Germany shall have executed and delivered to the Borrower an Intercompany Note
to evidence any such Intercompany Loan, and such Intercompany Note shall conform
to the requirements of a loan to an Unleveraged Wholly Owned Restricted
Subsidiary (as defined in the Indenture) pursuant to the terms and conditions
contained in the Indenture, (ii) the Borrower shall record all such 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 Germany shall be Solvent and (iv) the
aggregate outstanding principal amount of Intercompany Loans under this clause
(II) shall not at any one time exceed $9,160,000;
(e) guaranties permitted pursuant to Section 9.12;
(f) Debt evidenced by the Loan and Security Agreement; and
(e) 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 (i) the Obligations in accordance with the terms
of this Agreement and (ii) the Loan and Security Agreement Obligations in
accordance with the terms of the Loan and Security 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 repurchase any stock or indebtedness,
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
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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 Computer Systems. On or before December 31, 1999, the Borrower
shall, and shall cause each of its Subsidiaries to, purchase, implement and test
new information technology systems that are fully Year 2000 compliant. The
Borrower shall deliver to the Agent, along with the Financial Statements
delivered pursuant to Section 7.2(d), a report that sets forth the status of
such systems and projected operational date, which report shall be in form and
substance satisfactory to the Agent.
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 busineSection.
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 under, and as defined in, the Loan and
Security Agreement 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. (a) 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 $25,000,000 during the
1998 Fiscal Year (excluding the acquisition of the assets of Tadim), and
$15,000,000 during each Fiscal Year thereafter.
(b) Notwithstanding anything to the contrary contained in
clause (a) above, to the extent that Capital Expenditures made by the Borrower
and its Subsidiaries during any Fiscal Year are less than the amount permitted
to be made for such Fiscal Year pursuant to clause (a) (without taking into
account any increase in the amount permitted during such period as a result of
this clause (b)) 100% of such unused amount may be carried forward to the
immediately
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succeeding Fiscal Year and utilized to make Capital Expenditures in excess of
the amount permitted above in such following Fiscal Year.
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, 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 1.00:1.00 for each period of four
consecutive fiscal quarters ended at the end of the most recent fiscal quarter.
9.26 Net LoSection. 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.
9.29 Canadian Tax Matters. The Borrower shall quarterly and more
frequently when requested by the Agent, provide to the Agent or cause LDM Canada
to provide to the Agent (i) a detailed accounting of all amounts paid (upon
collection of LDM Canada's accounts or otherwise) by LDM Canada to the Borrower,
whether or not applied to the Obligations outstanding and whether by way of
loans, loan repayments, dividends or otherwise, together with a calculation of
all withholding and other taxes payable in respect thereof and (ii) evidence
satisfactory to the Agent of the remittance when due to the applicable
Governmental Authorities of all withholding and other taxes payable in respect
thereof.
ARTICLE 10
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CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lenders to make the Term Loans on the Closing Date and to make
the CAPEX Loans, 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 (including any
amendments thereto requested by the Agent) 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.
(b) 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.
(c) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made on such date.
(d) 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.
(e) The Agent and the Lenders shall have received title
insurance policies or, in the case of the LDM Canada Mortgage, title opinions,
in form and substance acceptable to Agent, with respect to the Mortgages.
(f) The Agent shall have received:
(i) evidence of the filing of UCC financing statements on
or before the Closing Date under the UCC or PPSA in 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 and the
LDM Canada Mortgage, as duly recorded in Nova Scotia and the applicable Land
Registry Office, respectively; and
(iii) duly executed such UCC-3 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.
(g) 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
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contemplated thereby.
(h) 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.
(i) 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 Inventory and Accounts,
and the results of such examination and audit shall have been satisfactory to
the Agent and the Lenders in all respects.
(j) Except as set forth on Schedule 8.15, 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.
(k) 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.
(l) 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 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.
(m) 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
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delivering such opinion stating that the Agent and the Lenders may rely on such
document as though it were addressed to them.
(n) 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), after giving effect to
the Transaction.
(o) Payoff letters, in form and substance satisfactory to the
Agent, from each financial institution to the effect that the total amount under
the Seller'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.
(p) 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.
(q) The Borrower shall have delivered to the Agent:
(i) pro forma financial statements (including a balance
sheet and income statement) for the Borrower and its Subsidiaries for the one
year period ended on the last day of the fiscal quarter of the Borrower last
ended prior to the Closing Date, assuming the Transaction was effected on the
first day of such one year period, and such pro forma financial statements shall
be accompanied by an agreed upon procedures report prepared by Ernst & Young,
LLP acceptable to the Agent, and the Agent shall be satisfied with such pro
forma financial statements and the accounting practices and procedures utilized
by the Borrower and its Subsidiaries; and
(ii) the Agent shall have received such accountants'
certificates, calculations and pro forma financial data as shall be reasonably
required by the Agent in order for them to determine compliance with any
applicable covenants contained in the Indenture, all of which shall be in form
and substance satisfactory to the Agent.
(r) The Borrower shall have delivered to the Agent all Merger
Documents, certified as true and correct by a Responsible Officer, all of which
Merger Documents shall be in form and substance reasonably satisfactory to the
Agent, and each of the conditions precedent to each Person's obligations under
the Merger Documents to consummate the Merger shall have been satisfied (without
any waiver thereto not agreed to by the Agent) to the reasonable satisfaction of
the Agent. Simultaneously with the consummation of the transactions contemplated
by this Agreement, the Merger shall have been consummated in substantial
compliance with the terms of the Merger Documents and all applicable laws.
(s) The Lender shall have received written reports of
appraisals of the
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Equipment performed by independent appraisers acceptable to the Lender and on a
basis satisfactory to the Lender, and stating a fair market value of the
Premises and an orderly liquidation value of the Equipment satisfactory to the
Lender.
(t) The Lender shall have received evidence satisfactory to it
that there does not exist on the Premises or in connection with the operation
thereof or of the Borrower's and each of its Subsidiary's respective business,
any material violation of any Environmental Laws.
(u) The Agent shall have received a fully executed copy of the
Fifth Amendment to the Loan and Security Agreement and such amendment shall be
effective pursuant to the terms thereof.
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 Term Loans on the Closing Date shall be
subject to the further conditions precedent that on and as of the date of any
such extension of credit:
(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) so long as any Senior Subordinated Notes remain
outstanding, at the time
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of each Borrowing the Lenders shall have received a certificate, in form and
substance satisfactory to the Agent, establishing to the satisfaction of the
Agent that the Consolidated Fixed Charge Coverage Ratio (as defined in the
Indenture as of the date of this Agreement) after giving effect to the
respective Borrowing is greater than 2.25: 1.0 during the four full fiscal
quarters ending on or prior to the relevant Funding Date.
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 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
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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;
(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;
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(j) the LDM Canada Guarantee, the LDM Holding Guaranty 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 Subsidiary 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 Persons restrict the
amount of or refuse to make CAPEX Loans. If an Event of Default exists,
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the Agent shall, at the direction of the Majority Lenders, do one or more of the
following, in addition to the action 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 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.
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(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.
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 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 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
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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) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(f) release Collateral, Pledged Collateral or Guarantor
Collateral other than as permitted by Section 14.12;
(g) change the definition of "Majority 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 aggregate amount of
$5,000,000; provided, however, that no such assignment shall be made unless a
pro rata assignment of such Lender's Loans and Commitments under, and as defined
in, the Loan and Security Agreement shall be made simultaneously to the same
Person; and provided further, 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 F
("Assignment and Acceptance") and (iii) the assignor Lender or
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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 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 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) Within five Business Days after its receipt of notice by
the Agent that it has received an executed Assignment and Acceptance and payment
of the processing fee, the Borrower shall execute and deliver to the Agent, new
Notes evidencing such Assignee's assigned Loans and Commitment and, if the
assignor Lender has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Loans retained by the assignor
Lender (such Notes to be in exchange for, but not in payment of, the Notes held
by such Lender). 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
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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 no such
participation shall be made unless a pro rata participation of such Lender's
Loans and Commitments under, and as defined in, the Loan and Security Agreement
shall be simultaneously made to the same Person; and provided further, 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..
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Notes held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section.203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
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
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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, 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 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
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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 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
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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 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"
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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 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
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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 [RESERVED].
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 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.
(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 war ranty, 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.
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(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 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.
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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 National Trust & Savings
Association, 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 CAPEX Loans, Term 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:
(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
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(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 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
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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 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
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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
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.
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(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 thereby; (c) costs and
expenses of lien and title searches and title insurance; (d) taxes, fees and
other charges for recording the 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, the Pledged Collateral and Guarantor Collateral
including, without limitation, travel, lodging, and meals for inspections of the
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, the Pledged
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Collateral and 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 under, and as defined in, the Loan and Security Agreement, as Revolving
Loans.
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:
LDM Technologies, Inc.
2500 Executive Hills Drive
Auburn Hills, MI 48326
Attention: Joseph E. Blake
Fax No.: (248) 858-4122
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
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<PAGE> 99
Attention: Joseph E. Blake
Fax No.: (248) 858-4122
Dean & Fulkerson
Fifth Floor
801 West Big Beaver Road
Troy, MI 48084-4767
Attention: Michael B. Lewis
Fax No.: (248) 362-1358
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, 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
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<PAGE> 100
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
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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IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
"BORROWER"
LDM TECHNOLOGIES, INC.
By________________________________
Title:
"AGENT"
BankAmerica Business Credit, Inc., as
the Agent
By________________________________
Title:
"LENDERS"
Commitment: CAPEX
Facility: $10,000,000 BankAmerica Business Credit, Inc., as
a Lender
Term
Facility: $66,000,000 By________________________________
Title:
S-1-
<PAGE> 102
Total Commitment: CAPEX
Facility: $10,000,000
Term
Facility: $66,000,000
S-2-
<PAGE> 103
[ON FILE WITH THE BANK]
<PAGE> 1
EXHIBIT 3
AMENDMENT NO. 5 AND AFFIRMATION OF GUARANTIES
This Amendment No. 5 and Affirmation of Guaranties (this "Amendment")
dated as of February 6, 1998 is by and among LDM Technologies, Inc., a Michigan
corporation ("Borrower"), and LDM Holding Canada, Inc., a Michigan corporation
("LDM Holding") and LDM Technologies Company, a Nova Scotia unlimited liability
company ("LDM Canada") (collectively, the "Guarantors"), and BankAmerica
Business Credit, Inc., a Delaware corporation, for itself as a Lender and as
Agent for the Lenders (in its capacities as Lender and as Agent, "Lender").
R E C I T AL S:
WHEREAS, Borrower and Lender are parties to a Loan and Security Agreement,
dated as of January 22, 1997, as amended and otherwise modified prior to the
date hereof (as so amended and modified, and as the same may be further
amended, restated, supplemented or otherwise modified, the "Loan Agreement"),
pursuant to which Lender has made and may hereafter make loans, advances and
other extensions of credit to Borrower;
WHEREAS, Borrower wishes to obtain, and Lender is willing to grant, an
amendment to the Loan Agreement as set forth herein, subject to the express
terms and conditions specified in this Amendment; and
WHEREAS, this Amendment shall constitute a Loan Document, these Recitals
shall be construed as part of this Amendment and capitalized terms used but not
otherwise defined in this Amendment shall have the meanings ascribed to them in
the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing and the agreements,
promises and covenants set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Amendment of Loan Agreement.
(A) SECTION 1.1 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING DEFINITIONS IN THEIR PROPER ALPHABETICAL ORDER:
"CAPEX Loans" means CAPEX Loans under, and as defined in, the Term
Loan Agreement.
"Fee Letter" means that certain fee letter, dated February 6, 1998,
between Borrower and the Agent.
"Huron" means Huron Plastics Group, Inc., a Michigan Corporation.
<PAGE> 2
"Huron Acquisition" means the acquisition by the Borrower of all
of the outstanding capital stock of Huron and substantially all of
the assets of Tadim.
"Huron Acquisition Agreement" means that certain Stock and Asset
Purchase Agreement, dated as of December 23, 1997 among the
Borrower and the Sellers, as the same has been amended by (i) that
certain First Amendment to Stock and Asset Purchase Agreement,
dated as of January 23, 1998, (ii) that certain Second Amendment to
Stock and Asset Purchase Agreement, dated as of January 30, 1998,
(iii) that certain Third Amendment to Stock and Asset Purchase
Agreement, dated as of February 2, 1998, and (iv) that certain
Fourth Amendment to Stock and Asset Purchase Agreement, dated as of
February 6, 1998, in each case among the Borrower and the Sellers.
"Huron Related Transactions" means, collectively, (i) the Huron
Acquisition, (ii) the Merger, (iii) the Term Loans to be made on
February 6, 1998 and (iv) the Amendment No. 5 and Affirmation of
Guaranties to this Agreement, dated as of February 6, 1998.
"Merger" means the merger of Huron, Lakeport Plastics, Inc., HPG
Body Systems, Inc. and HPG Chassis Systems, Inc. with, and into,
the Borrower, with the Borrower as the surviving corporation
thereof, pursuant to the Merger Documents.
"Merger Documents" means the Agreement and Plan of Merger, dated as
of February 6, 1998, among Huron, Lakeport Plastics, Inc., HPG
Body Systems, Inc. and HPG Chassis Systems, Inc. and the Borrower,
and all other documents entered into or delivered in connection
with the Merger.
"Mortgages" means: (a) each Mortgage, Charge/Mortgage of Land,
Security Agreement, and Assignments of Leases and Rents dated the
date hereof between the Borrower and/or LDM Canada and the Agent
and delivered to the Agent; and (b) all other real property
mortgages, leasehold mortgages, assignments of leases, mortgage
deeds, deeds of trust, deeds to secure debt, security agreements,
and other similar instruments hereafter entered into which provide
the Agent a lien on or other interest in any portion of the
Premises or the Real Estate or which relate to any such Lien or
interest.
"Sellers" means Huron, Tadim and the parties indicated in the
Huron Acquisition Agreement as "selling shareholders" signatory
thereto.
"Tadim" means Tadim, Inc., a Michigan corporation.
2
<PAGE> 3
"Term Agent" means BABC in its capacity as agent for the Term
Lenders under the Term Loan Agreement.
"Term Lender" means a Lender under, and as defined in, the
Term Loan Agreement.
"Term Loan Agreement" means the Term Loan and Security Agreement,
dated as of February 6, 1998, among the Borrower, the Term Agent
and the Term Lenders, as the same may be supplemented, amended or
otherwise modified from time to time.
"Term Loan Agreement Obligations" means the Obligations under, and
as defined in, the Term Loan Agreement.
"Term Loans" means Term Loans under, and as defined in, the Term
Loan Agreement.
(B) SECTION 1.1 OF THE LOAN AGREEMENT IS HEREBY FURTHER AMENDED BY
DELETING THE DEFINITION "APPRAISALS", "ELIGIBLE EQUIPMENT" AND "ELIGIBLE
EQUIPMENT VALUE" IN THEIR ENTIRETY.
(C) SECTION 1.1 OF THE LOAN AGREEMENT IS HEREBY FURTHER AMENDED BY
DELETING THE DEFINITIONS OF "APPLICABLE MARGINS," "BORROWING BASE," "FIXED
CHARGES," "LATEST PROJECTIONS," "LDM CANADA BORROWING BASE," "LDM CANADA
GUARANTEE," "LDM CANADA SECURITY AGREEMENT," "LOAN DOCUMENTS," "MAJORITY
LENDERS," "MAXIMUM REVOLVER AMOUNT," AND "PERMITTED LIENS" AND REPLACING SUCH
DEFINITIONS WITH THE FOLLOWING:
"Applicable Margins" shall mean (i) .25% per annum with respect to
Base Rate Loans and (ii) 2.00% per annum with respect to LIBOR Rate
Loans.
"Borrowing Base" means the sum of:
(a) up to eighty-five percent (85%) of the Net Amount
of Eligible Accounts of the Borrower; plus
(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
advances attributable to this clause (c) shall not exceed
$20,000,000; less
3
<PAGE> 4
(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
Affiliates; 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.
"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 or with the proceeds of
CAPEX Loans; and (v) income taxes paid or payable in cash.
"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 results of operations,
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).
"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
4
<PAGE> 5
(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 goods and services, excise
and sales taxes; and
(iii) 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, collectively, (i) the LDM Canada
Guarantee, dated as of January 22, 1997, duly executed and
delivered by LDM Canada to the Agent for the benefit of itself and
the Lenders and (ii) the LDM Canada Guarantee, dated as of February
6, 1998, duly executed and delivered by LDM Canada to the Term
Agent, for the benefit of itself and the Term Lenders, as each may
be amended, supplemented or otherwise modified from time to time.
"LDM Canada Security Agreement" means, collectively, (i) the
$100,000,000 Cdn. fixed and floating charge demand debenture and
related pledge agreement in respect thereof, each dated as of
January 22, 1997, duly executed and delivered by LDM Canada to the
Agent for the benefit of itself and the Lenders and (ii) the
$100,000,000 Cdn. fixed and floating charge demand debenture and
related pledge agreement in respect thereof, each dated as of
February 6, 1998, duly executed and delivered by LDM Canada in
favor of the Term Agent, for the benefit of itself and the Term
Lenders, as each may be amended, supplemented or otherwise modified
from time to time.
"Loan Documents" means this Agreement, the Intellectual Property
Security Agreement, the Mortgages, 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
5
<PAGE> 6
Agreement.
"Majority Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than 66- % of the Commitments, plus, Term Loan
Lenders whose Pro Rata Shares (as defined in the Term Loan
Agreement) aggregate more than 66- % of the Commitments under, and
as defined in, the Term Loan Agreement.
"Maximum Revolver Amount" means $75,000,000.
"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;
(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)
6
<PAGE> 7
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;
(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;
(h) Liens securing Intercompany Notes in accordance with
Section 9.13;
(i) Liens securing the Term Loan Agreement Obligations;
and
(j) Lien arising under the Escrow Agreement (as defined
in the Huron Acquisition Agreement).
(d) SECTION 2.1 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT IN
ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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 $75,000,000 (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.".
(e) SECTION 2.2(h)(i) OF THE LOAN AGREEMENT IS HEREBY AMENDED BY
DELETING IT IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"(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; provided,
however, that the aggregate principal amount of BABC Loans shall not at any
time exceed $10,000,000. Each BABC Loan is a
7
<PAGE> 8
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.".
(f) SECTION 4.8 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT IN
ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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, pro rata, any fees,
or expense reimbursements then due to the Agent and the Term Agent
from the Borrower under this Agreement and the Term Loan Agreement;
second, to pay, pro rata, any fees or expense reimbursements then
due to the Lenders and the Term Lenders from the Borrower under
this Agreement and the Term Loan Agreement; third, to pay, pro
rata, interest due in respect of all Revolving Loans, including
BABC Loans and Agent Advances, Term Loans and CAPEX Loans; fourth,
to pay or prepay, pro rata, principal of the BABC Loans and the
Agent Advances, Revolving Loans, unpaid reimbursement obligations
in respect of Letters of Credit, Term Loans and CAPEX Loans; and
fifth, to the payment, pro rata, of any other Obligation or Term
Loan Obligation due to the Agent, the Term Agent, any Lender or
any Term 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
8
<PAGE> 9
transfer instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement
delay as provided 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 or Term Loan Obligations, as the case may be.".
(g) SECTION 4.10 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING
IT IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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 forty-five (45) 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.".
(h) SECTION 6.7 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING THE
WORD "MONTHLY" WHERE IT APPEARS IN SUBSECTION (i) THEREOF AND REPLACING IT WITH
THE WORD "WEEKLY".
(i) SECTION 6.9 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING SUBCLAUSE AT THE END THEREOF.
"(d) Notwithstanding anything to the contrary herein
and in particular Section 4.8, all proceeds and collections of
LDM Canada's Accounts and other Collateral and payments
received by the Agent and/or Lenders from LDM Canada shall be
applied to fees and expense reimbursements not in the nature
of interest for the purposes of the Income Tax Act of Canada
and to principal before being applied to interest due or fees
and expense reimbursements which are or may be in the nature
of interest payments for the purposes of the Income Tax Act of
Canada.".
(j) ARTICLE 8 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING SUBSECTIONS AT THE END THEREOF:
9
<PAGE> 10
"8.37 Huron Acquisition Agreement. As of February 6, 1998,
the Borrower has delivered to the Agent a complete and correct copy
of the Huron 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, to the Borrower's knowledge,
any other party thereto is in default in the performance or
compliance with any provisions thereof. The Huron Acquisition
Agreement is in compliance with applicable laws and the Huron
Acquisition has been consummated in accordance with applicable laws
and regulations. The Huron Acquisition Agreement is in full force
and effect as of February 6, 1998 and 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 Huron Acquisition Agreement,
have been obtained, and no such approvals impose any conditions to
the consummation of the transactions contemplated by the Huron
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 sellers' representations or warranties in
the Huron 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 or warranties given by
the Borrower in the Huron Acquisition Agreement is true and
correct in all material respects. Notwithstanding anything
contained in the Huron Acquisition Agreement to the contrary, such
representations and warranties of the Borrower are incorporated
into this Agreement by this Section 8.37 and shall, solely for
purposes of this Agreement and the benefit of the Lenders, survive
both the consummation of the Huron Acquisition and the termination
of the Huron Acquisition Agreement.
8.38 Merger. Merger Documents are in form and substance
satisfactory for effecting the Merger pursuant to such agreements
under the laws of the State of Michigan; the Merger Documents will
be filed with the Secretary of State in the State of Michigan on
February 6, 1998; and, upon the filing of the Merger Documents
with the State of Michigan, the Merger will be effected and will
be valid in accordance with the terms thereof and the laws of the
State of Michigan.
8.39 Computer Systems. On the basis of an inquiry made of the
Borrower's and each of its Subsidiary's material suppliers, vendors
and customers, the Borrower reasonably believes that the "Year 2000
problem" (that is, the risk that computer applications used by any
Person may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to and any date
after December 31, 1999) will not result in a Material Adverse
Effect.".
10
<PAGE> 11
(k) SECTION 9.9 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY (i) DELETING
THE WORD "AND" AT THE END OF CLAUSE (ii) CONTAINED THEREIN AND INSERTING A
COMMA IN LIEU THEREOF AND (ii) INSERTING THE FOLLOWING IMMEDIATELY AFTER CLAUSE
(iii) CONTAINED THEREIN:
", (iv) the merger of the Kenco Companies in to the Borrower, with
the Borrower as the surviving corporation of such merger, shall be
permitted and (v) the Merger shall be permitted.".
(l) SECTION 9.12 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT
IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"9.12 Guarantees. Neither the Borrower nor any of its Subsidiaries
shall make, issue or become liable on any Guaranty, except (i) Guarantees
in favor of the Agent, (ii) Guarantees executed in connection with the
Term Loan Agreement in favor of the Term Agent, (iii) Guarantees of the
Debt of Como in an amount up to $1,000,000, (iv) Guarantees in favor of
General Electric Capital Corporation of the Debt of LDM Canada in an
amount up to $1,400,000 and (v) Guaranty in favor of Comerica Bank with
respect to indebtedness of D&A Realty, Inc. in an amount not to exceed
$2,000,000.".
(m) SECTION 9.13 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT
IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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 made by the Borrower to
(I) LDM Canada, provided that (i) LDM Canada shall have executed and
delivered to the Borrower an Intercompany Note to evidence any such
Intercompany Loan, any security interests granted to the Borrower on the
assets of LDM Canada to secure the payments under its Intercompany Note
shall be assigned to the Agent an pursuant to documentation in form and
substance acceptable to the Agent, and such 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 such Intercompany Loans on its books and records in a manner
satisfactory to Agent, (iii) at the time any such
11
<PAGE> 12
Intercompany Loans 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 under this
clause (I) shall not at any one time exceed $17,000,000, consisting of
the Closing Date Intercompany Note 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 (as defined
in the Loan and Security Agreement), 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 (II) LDM Germany,
provided that (i) LDM Germany shall have executed and delivered to the
Borrower an Intercompany Note to evidence any such Intercompany Loan, and
such Intercompany Note shall conform to the requirements of a loan to an
Unleveraged Wholly Owned Restricted Subsidiary (as defined in the
Indenture) pursuant to the terms and conditions contained in the
Indenture, (ii) the Borrower shall record all such 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 Germany shall be Solvent and
(iv) the aggregate outstanding principal amount of Intercompany Loans
under this clause (II) shall not at any one time exceed $9,160,000;
(e) Guaranties permitted pursuant to Section 9.12;
(f) Debt evidenced by the Term Loan Agreement; and
(e) 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.".
(n) SECTION 9.14 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT IN
ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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 (i) the Obligations
in accordance with the terms of this Agreement and (ii) the
Obligations under, and as defined in, the Term Loan Agreement in
accordance with the terms of the Term Loan Agreement.".
(o) SECTION 9.17 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT IN
ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"9.17 Computer Systems. On or before December 31, 1999, the
Borrower shall, and shall cause each of its Subsidiaries to,
purchase, implement and test new information technology systems
that are fully Year 2000 compliant. The Borrower shall deliver to
the Agent, along with the Financial Statements delivered
12
<PAGE> 13
pursuant to Section 7.2(d), a report that sets forth the status of
such systems and projected operational date, which report shall be
in form and substance satisfactory to the Agent.".
(p) SECTION 9.23 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING
IT IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"9.23 Capital Expenditures. (a) 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 $25,000,000 during the 1998 Fiscal Year,
(excluding the acquisition of the assets of Tadim), and $15,000,000
during each Fiscal Year thereafter.
(b) Notwithstanding anything to the contrary contained in
clause (a) above, to the extent that Capital Expenditures made by
the Borrower and its Subsidiaries during any Fiscal Year are less
than the amount permitted to be made for such Fiscal Year pursuant
to clause (a) (without taking into account any increase in the
amount permitted during such period as a result of this clause (b))
100% of such unused amount may be carried forward to the
immediately succeeding Fiscal Year and utilized to make Capital
Expenditures in excess of the amount permitted above in such
following Fiscal Year.".
(q) SECTION 9.25 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING
IT IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"9.25 Fixed Charge Coverage Ratio. The Borrower will maintain
a Fixed Charge Coverage Ratio of not less than 1.00:1.00 for each
period of four consecutive fiscal quarters ended at the end of the
most recent fiscal quarter.".
(r) SECTION 9 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING SUBSECTION AT THE END THEREOF:
"9.29 Canadian Tax Matters. The Borrower shall quarterly and
more frequently when requested by the Agent, provide to the Agent
or cause LDM Canada to provide to the Agent (i) a detailed
accounting of all amounts paid (upon collection of LDM Canada's
accounts or otherwise) by LDM Canada to the Borrower, whether or
not applied to the Obligations outstanding and whether by way of
loans, loan repayments, dividends or otherwise, together with a
calculation of all withholding and other taxes payable in respect
thereof and (ii) evidence satisfactory to the Agent of the
remittance when due to the applicable Governmental Authorities of
all withholding and other taxes payable in respect thereof.".
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<PAGE> 14
(s) SECTION 10.2 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY RELETTER
SUBSECTION (b) THEREOF AS SUBSECTION (c) AND ADDING THE FOLLOWING AS A NEW
SUBSECTION (b):
(b) the Agent shall have received a Notice of Borrowing on or
prior to the date required by the terms of this Agreement; and"
(t) SECTION 13.1 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT
IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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 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.".
(u) SECTION 13.3(A) OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING
IT IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"(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 aggregate amount of $5,000,000; provided,
however, that no such assignment shall be made unless a pro rata
assignment of such Lender's Loans and Commitments under, and as defined
in, the Term Loan Agreement shall be made simultaneously to the same
Person; and provided further, 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 G ("Assignment and
Acceptance") and (iii) the assignor Lender or Assignee has paid to the
Agent a processing fee in the amount of $2,500.".
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<PAGE> 15
(v) SECTION 13.3(e) OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT
IN ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"(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 no such participation shall be made unless a pro
rata participation of such Lender's Loans and Commitments under, and as
defined in, the Term Loan Agreement shall be simultaneously made to the
same Person; and provided further, 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 right 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.".
(w) SECTION 15.8 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING IT IN
ITS ENTIRETY AND REPLACING IT WITH THE FOLLOWING:
"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
15
<PAGE> 16
16th Floor
Chicago, Illinois 60697
Attention: Portfolio Manager, LDM
Fax No.: (312) 974-8760
If to Borrower:
LDM Technologies, Inc.
2500 Executive Hills Drive
Auburn Hills, MI 48326
Attention: Joseph E. Blake
Fax No.: (248) 858-4122
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.: (248) 858-4122
Dean & Fulkerson
Fifth Floor
801 West Big Beaver Road
Troy, Michigan 48084-4767
Attention: Michael B. Lewis
Fax No. (248) 362-1358
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.".
(x) EXHIBIT G TO THE LOAN AGREEMENT ("PERMITTED PERCENTAGE") IS HEREBY
DELETED IN ITS ENTIRETY.
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<PAGE> 17
2. Consent. (a) Notwithstanding anything contained in Sections 9.9, 9.10,
9.21(i), (iii), (iv) and (v) of the Loan Agreement, the Lender hereby consents
to the execution of the Huron Acquisition Agreement and the consummation of the
Huron Acquisition..
(b) Notwithstanding anything contained in Section 9.10 of the Loan
Agreement, the Lender hereby consents to the Borrower holding 30% of the
equity interests of Sunningdale Plastic Industries, Pte. Ltd., a Singapore
company, in the form such equity interests are held by the Borrower as of the
date of this Amendment.
3. Warranties and Representations. Borrower and each Guarantor hereby
warrants and represents to Lender that:
(a) Authorization, etc. Each of Borrower and each Guarantor has the power
and authority to execute, deliver and perform this Amendment and the Loan
Agreement, as amended hereby, as applicable. Each of 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 Amendment and the Loan Agreement,
as amended hereby, 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 Borrower's or any Guarantor's
execution, delivery and performance of this Amendment, except for those already
duly obtained. This Amendment has been duly executed and delivered by Borrower
and each Guarantor, and constitutes the legal, valid and binding obligation of
Borrower and such Guarantor, enforceable against it in accordance with its
terms without defense, setoff or counterclaim. Neither Borrower's nor any
Guarantor's execution, delivery and performance of this Amendment 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
Borrower or any of its Subsidiaries by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture or instrument to which Borrower or
any of its Subsidiaries is a party or which is binding upon it, (b) any
Requirement of Law applicable to 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 Borrower or any of its Subsidiaries.
(b) Other Warranties and Representations. After giving effect to this
Amendment and the consent set forth in Section 2 hereof, all of the warranties
and representations of Borrower and each Guarantor contained in the Loan
Agreement, the Guarantor Guarantees and the other Loan Documents (including,
without limitations, this Amendment) are true and correct in all material
respects on and as of the date hereof to the same extent as though made on and
as of the date hereof (except those representations and warranties made
expressly as of a different date).
(c) No Default or Event of Default. After giving effect to this Amendment
and the consent set forth in Section 2 hereof, no Default or Event of Default
has occurred and is continuing as of the date hereof.
4. Conditions Precedent. Notwithstanding any other provision contained in
this
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<PAGE> 18
Amendment or any other document, the effectiveness of this Amendment is further
expressly conditioned upon the satisfaction of each condition set forth in this
Section 5 and the delivery of the following documents to Lender on or prior to
the date hereof (unless another date shall be specified) and consummation of
all of the transactions contemplated by each such document, all in form and
substance and manner acceptable to Lender in its sole and absolute discretion:
(a) Amendment. Lender shall have received a duly executed original of
this Amendment signed by Borrower and each Guarantor.
(b) Warranties and Representations. After giving effect to this Amendment
and the consent set forth in Section 2 hereof, all of the warranties and
representations of Borrower and each Guarantor contained in the Loan Agreement,
the Guarantor Guarantees and the other Loan Documents (including, without
limitation, this Amendment) shall be true and correct in all material respects
on and as of the date hereof to the same extent as though made on and as of the
date hereof (except those representations and warranties made expressly as of a
different date).
(c) No Default or Event of Default. After giving effect to this Amendment
and the consent set forth in Section 2 hereof, no Default or Event of Default
shall have occurred and be continuing as of the date hereof.
(d) No Litigation. No litigation, investigation, proceeding, injunction,
restraint or other action shall be pending or threatened against Borrower or
any Affiliate of Borrower, or any officer, director, or executive of any
thereof, which restrains, prevents or imposes adverse conditions upon, or which
otherwise relates to, the execution, delivery or performance of this Amendment
or the Huron Acquisition Agreement.
(e) Consents and Acknowledgments. Borrower shall have obtained all
consents, approvals and acknowledgments which may be required with respect to
the execution, delivery and performance of this Amendment and the Huron
Acquisition Agreement.
(f) Fees, Costs and Expenses. Lender shall have received payment of all
fees, (including, without limitation, all fees set forth in the Fee Letter),
costs and expenses, including, without limitation, reasonable attorneys' fees
and expenses (including, without limitation, the allocated costs and expenses of
in-house counsel) invoiced to the Borrower and as otherwise due pursuant to the
Loan Agreement, incurred by Lender in connection herewith.
(g) Schedules. (i) The Borrower shall provide to the Lender revised
Schedules to the Loan Documents to the extent necessary to reflect the merger
of the Kenco Companies and the Huron Acquisition and the items set forth on the
Schedules shall be satisfactory to the Lender or (ii) a certificate of the
chief financial officer of the Borrower stating that the Schedules do not
require any revision.
(h) Huron Acquisition. The Lender shall have received evidence
satisfactory to
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Lender that the Borrower and the sellers under the Huron Acquisition Agreement
shall have consummated the transactions contemplated by the Huron Acquisition
Agreement in accordance with the terms set forth therein (which terms and
conditions shall be satisfactory to the Lender and its counsel in all
respects), and all documents required to be delivered pursuant to the Huron
Acquisition Agreement shall have been executed and delivered by the Persons
specified therein, and the Borrower shall have furnished to the Lender a
certified copy of the Huron Acquisition Agreement and all exhibits and
schedules thereto, as finally amended, and a certificate signed by the chairman
of the board of the Borrower certifying that (i) the transactions contemplated
by the Huron Acquisition Agreement have been consummated in accordance with the
Huron Acquisition Agreement and no term or condition of the Huron Acquisition
Agreement has been amended, modified or waived except as set forth in the
certified copy of the Huron Acquisition Agreement provided to the Lender, (ii)
any documents required to be filed to effect the Huron Acquisition Agreement
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 Huron Acquisition Agreement to be
performed or complied with by such Person on or before the date of consummation
of the Huron Acquisition unless waived by the sellers thereunder, and the
substance of such certificate shall be true and correct, and the Lender shall
have received copies of the Huron Acquisition Agreement and the other documents
required to be delivered pursuant to the Huron Acquisition Agreement and all
consents, approvals or permits necessary or advisable to be obtained in
connection therewith, in form and substance satisfactory to the Lender and its
counsel.
(i) Resolutions. The Lender shall have received a certified copy of the
resolutions of the Borrower authorizing the execution and delivery of, and the
consummation of the transactions contemplated by, this Amendment and the Huron
Acquisition Agreement and all other documents or instruments to be executed and
delivered in connection herewith and therewith and the performance of its
obligations hereunder and thereunder.
(j) Opinions. All opinions delivered in connection with the Huron
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.
(k) Mortgages; Title Insurance. The Lender shall have received fully
executed Mortgages and shall have received title insurance policies or, in the
case of the LDM Canada Mortgage, title opinions, in form and substance
acceptable to Lender, with respect to the Mortgages.
(l) Solvency. The Lender shall have received a certificate executed by
the chief financial officer of the Borrower in form and substance satisfactory
to the Lender, 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), after giving effect to
the Transaction.
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(m) Payoff. Payoff letters, in form and substance satisfactory to the
Lender, from each Person to the effect that the total amount under the Seller's
agreements with such Person 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 Lender may request.
(n) Financial Information. The Borrower shall have delivered to the
Lender:
(i) pro forma financial statements (including a balance sheet
and income statement) for the Borrower and its Subsidiaries for the one
year period ended on the last day of the fiscal quarter of the Borrower
last ended prior to the Closing Date, assuming the Huron Related
Transactions were effected on the first day of such one year period, and
such pro forma financial statements shall be accompanied by an agreed upon
procedures report prepared by Ernst & Young, LLP acceptable to the Lender,
and the Lender shall be satisfied with such pro forma financial statements
and the accounting practices and procedures utilized by the Borrower and
its Subsidiaries; and
(ii) the Lender shall have received such accountants' reports,
calculations and pro forma financial data as shall be reasonably required
by the Lender in order for them to determine compliance with any applicable
covenants contained in the Indenture, all of which shall be in form and
substance satisfactory to the Lender.
(o) Merger. The Borrower shall have delivered to the Lender all Merger
Documents, certified as true and correct by a Responsible Officer, all of which
Merger Documents shall be in form and substance reasonably satisfactory to the
Lender, and each of the conditions precedent to each Person's obligations
under the Merger Documents to consummate the Merger shall have been
satisfied (without any waiver thereto not agreed to by the Lender) to the
reasonable satisfaction of the Lender. Simultaneously with the consummation of
the transactions contemplated by this Amendment, the Merger shall have been
consummated in substantial compliance with the terms of the Merger Documents
and all applicable laws.
(p) Term Loan Agreement. The Lender shall have received a fully executed
copy of the Term Loan Agreement and all other documents entered into or
delivered in connection with the Term Loan Agreement, the initial Borrowing
under, and as defined in, the Term Loan Agreement, shall have occurred.
5. Further Assurances. Borrower hereby agrees, at its expense, to duly
execute, acknowledge and deliver to Lender all agreements, certificates,
instruments, opinions and other documents, and take all such actions, as Lender
may request in order to further effectuate the purposes of this Amendment and
to carry out the terms hereof.
6. No Novation; No Consent or Waiver. This Amendment is not, and shall not be
construed
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as, a novation, consent, waiver, release or modification with respect to any
of the terms, provisions, conditions, representations, warranties, covenants,
rights, powers or remedies set forth in the Loan Agreement or any of the other
Loan Documents, except for the specific instance and purpose for which it is
granted as expressly specified herein. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision or term
of this Amendment shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance herewith. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Amendment shall be deemed to have been suspended or waived by
Lender unless such suspension or waiver is (a) in writing and signed by Lender
and (b) delivered to Borrower, notwithstanding any prior practice or course of
dealing, or any waiver, forbearance or other similar agreement or
understanding, whether any of the foregoing were or are oral or written, by or
between the parties hereto.
7. Documents Remain in Effect. Except as amended and modified by this
Amendment, the Loan Agreement and the other Loan Documents remain in full force
and effect, and Borrower and each Guarantor hereby ratify, adopt and confirm
their representations, warranties, agreements and covenants contained in, and
obligations and liabilities under, the Loan Agreement and the other Loan
Documents.
8. Reference to Loan Agreement. On and after the effectiveness of this
Amendment, each reference in the Loan Agreement, as amended hereby, to "this
Agreement", "hereunder", "hereof", "herein" or words of like import, and each
reference to the "Loan Agreement" in any other Loan Document, or in any of the
other agreements, documents or other instruments executed and delivered
pursuant to the Loan Agreement, shall mean and be a reference to the Loan
Agreement, as amended hereby.
9. Incorporation of Loan Agreement. Article 15 of the Loan Agreement, as
amended herein, is incorporated herein by reference with the same effect as if
set forth in full herein with only those modifications necessary to permit such
Article to refer to this Amendment.
10. Affirmation of Guaranties. Each of LDM Holding and LDM Canada (i) consents
to and approves the execution and delivery of this Amendment by the parties
hereto, (ii) agrees that this Amendment does not and shall not limit or
diminish in any manner the obligations of the Guarantors under their respective
Guarantor Guarantees dated as of January 22, 1997, or under any of the other
documents executed and/or delivered by any of the Guarantors in connection
therewith, and agrees that such obligations of the Guarantors would not be
limited or diminished in any manner even if the Guarantors had not executed
this Amendment, (iii) agrees that this Amendment shall not be construed as
requiring the consent of the Guarantors in any other circumstance, (iv)
reaffirms its obligations under each of the Guarantor Guarantees and such other
related documents, and (v) agrees that the Guarantor Guarantees and such other
related documents remain in full force and effect and are each hereby ratified
and confirmed.
11. Facsimile Counterparts. Delivery of an executed counterpart of a signature
page to this
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Amendment by facsimile transmission shall be effective as delivery
of a manually executed counterpart of this Amendment.
[signature page follows]
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IN WITNESS WHEREOF, this Amendment No. 5 and Affirmation of Guaranties has
been duly executed as of the date first written above.
LDM TECHNOLOGIES, INC.
By: ___________________________
Title:_________________________
LDM HOLDING CANADA, INC.
By:____________________________
Title:_________________________
LDM TECHNOLOGIES COMPANY
By:____________________________
Title:_________________________
BANKAMERICA BUSINESS CREDIT, INC.,
as Lender and as Agent
By: ___________________________
Title:_________________________
S-1
[TO AMENDMENT NO. 5]
