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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
----- THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended March 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
----- THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
COMMISSION FILE NUMBER 333-75849
OXFORD AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-3262809
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 STEPHENSON HIGHWAY, TROY MICHIGAN 48083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 577-1400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the registrant has been required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The Registrant is a privately held corporation. As such, there is no practicable
method to determine the aggregate market value of the voting stock held by
non-affiliates of the Registrant.
At May 15, 1999, there were outstanding 309,750 shares of the Registrant's
common stock.
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PART I
ITEM 1. BUSINESS
GENERAL
For purposes of this Report, the "Company", "our", "we", and "us" shall
refer to Oxford Automotive, Inc. ("Oxford Automotive") and its consolidated
subsidiaries, unless the context otherwise requires.
We are a leading Tier 1 or direct supplier of high-quality, engineered
metal components, assemblies and modules used by original equipment automotive
manufacturers, commonly referred to as "OEMs". Our core products are complex,
high value-added products, primarily assemblies containing multiple stamped
parts, forgings and various welded, hemmed or fastened components. Our product
focus is directed toward three areas: closure panels, suspension systems, and
complex structural systems. These products, which include large structural
stampings and assemblies, including exposed "Class A" surfaces, leaf springs and
smaller complex welded assemblies, are used in manufacturing a variety of sport
utility vehicles ("SUVs"), light and medium trucks, mini-vans, vans and
passenger cars. We are the sole source supplier of these products to our
customers. On a pro forma basis, assuming the acquisition of Cofimeta S.A.
described below, had occurred on April 1, 1998, we would have had net sales of
$766.7 million and EBITDA (as defined herein) of $61.3 million for the fiscal
year ended March 31, 1999.
Our seven largest customers, based on pro forma net sales for the
fiscal year ended March 31, 1999, assuming the acquisition of Cofimeta S.A. had
occurred April 1, 1998 are: General Motors Corporation ("GM") (34%), Ford Motor
Company ("Ford") (25%), Renault S.A. (15%), DaimlerChrysler AG
("DaimlerChrysler") (10%), PSA Peugeot Citroen ("PSA") (5%), CAMI (a joint
venture of GM and Suzuki Motor Corporation) (1%), and The Saturn Corporation
("Saturn") (1%). We have been providing products directly to GM and Ford for
more than 50 years and have earned outstanding commercial ratings for our
high-quality standards, including GM's Supplier of the Year and Mark of
Excellence Awards, Ford's Q1 Award and CAMI's President's Award. We also sell
our products to other Tier 1 suppliers. For the fiscal year ended March 31,
1999, approximately 71% of our net sales, on a pro forma basis assuming the
acquisition of Cofimeta S.A. occurred on April 1, 1998, were derived from sales
of our products manufactured for SUVs, mini-vans, vans and light trucks. In
recent years, SUVs, mini-vans, vans and light trucks have experienced stronger
growth in vehicle production as compared to the passenger car sector. This
sector includes those platforms and models which have strong consumer demand,
such as Ford's F-Series Pickup, Ranger, Explorer and Windstar,
DaimlerChrysler's Ram pickup and mini-van, and Renault's Kangoo and Espace. See
Note 15 of the Oxford Automotive, Inc. Notes to Consolidated Financial
Statements for a description of the Company's domestic and export sales.
Our recent acquisitions significantly strengthen our position as a
leading Tier 1 supplier of assemblies and modules to the OEMs. These strategic
combinations provide us with the critical mass and capabilities in the areas of
design and engineering, sales and marketing, and product expertise that provide
the basis for our strategy of becoming a fully-integrated, global systems
supplier. We have implemented a successful, focused sales and marketing
initiative. As a result, we were awarded the door assemblies and the side panel
package for the new Saturn LS Program (the "LS Program"), the new vehicle that
Saturn is launching in 1999 based upon the current Opel Vectra. Management
believes these awards from Saturn will generate approximately $65.0 million of
annual net sales beginning with the 1999 model year. In addition, we were
recently awarded the door, hood, and underbody assemblies for a new GM Program
(Pontiac Recon, Buick Signia) to be produced solely in Mexico and chassis
components for the North American production of a global platform for GM. The
door, hood and underbody assemblies will be produced solely in Mexico and
management believes will generate approximately $90.5 million of annual net
sales beginning in the 2001 fiscal year. Management believes the global GM
program (a new twist axle design) will generate approximately $158.0 million of
annual net sales beginning in 2002. Other recent significant business awards,
together with the sales management believes will be generated by the awards,
include: Ford WIN126 floor pan ($24.1 million), Chrysler RS leaf springs ($24.0
million), GMT360 control arms ($50.1
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million), Chrysler AN/DN control arms and brackets ($11.1 million), GMT315
($28.0 million), and other smaller programs ($25.0M). Although we believe these
awards may generate the proposed sales, we cannot assure that such sales will be
sustainable as the automotive industry may experience downturns and a decrease
in customer demand for motor vehicles could adversely affect our sales.
We currently operate 21 facilities which offer the latest technologies
in metal stamping, forging, welding and assembly production equipment, including
fully-automated hydraulic and wide-bed press lines (up to 180 inches), robotic
welding cells, robotic hemming, autophoretic corrosion resistant coating and a
patented eye forming process. We also have the world-wide exclusive rights
(outside the CIS--formerly Soviet Union) to the "MAZ" tapering process for our
suspension applications. In excess of $200 million has been invested since 1992
in capital investments to support sales growth, expand production capabilities
and improve efficiency and flexibility. Our diverse line of over 500 presses
that range up to 3,000 tons including both conventional and transfer technology
and state-of-the-art robotic weld assembly and hemming equipment are capable of
manufacturing a broad assortment of parts and assemblies ranging from simple
stampings to full-size, Class A door and closure panels. We are one of a few
independent suppliers that has the ability to produce large, complex stampings,
as well as the technical expertise and automated assembly capabilities to
provide high value-added modules such as door apertures and assemblies,
A-pillars, Class A surface products and control arms, and multiple leaf and
parabolic leaf springs.
BUSINESS STRATEGY
Our principal objective is to be a leading, full-service, global Tier 1
supplier of integrated systems solutions based on metal forming and related
manufacturing technologies. We believe that we are well positioned to benefit
from two significant trends in the stamping and metal forming segments of the
automotive industry: outsourcing and consolidation. Outsourcing of metal
stamping has increased in response to competitive pressures on OEMs to improve
quality and reduce capital requirements, labor costs, overhead and inventory.
Consolidation among automotive industry suppliers has occurred as OEMs have more
frequently awarded long-term sole source contracts to the most capable global
suppliers. In addition, OEMs are increasingly seeking systems suppliers who can
provide a complete package of design, engineering, manufacturing and project
management support for an integrated system (such as a front-end system). We
intend to capitalize on these trends through internal development and strategic
acquisitions. The key elements of our strategy include the following:
Provide Full-Service Program Capability. We are focused on developing
full-service program capabilities. We work with OEMs throughout the product
development process from concept and prototype development through the design
and implementation of manufacturing processes. Program Management begins with
the assembly of a cross functional team drawn from every aspect of the business
- - program managers with experience in all disciplines, as well as personnel from
such areas as quality, finance, purchasing and human resources. This roster also
includes key representatives from our technical headquarters, the manufacturing
plant and the client. We believe that our ability to provide the package of
design, engineering, prototyping, tooling, blanking, stamping, forging,
assembly, and corrosion resistant coating to our customers creates a unique
capability present in only a limited number of suppliers. We believe this
capability will enable us to manage large programs, assist us in reducing
customer program launch time, lower customer costs and increase our margins.
Supply Complex, High Value-Added Systems. As a result of our technical
design and engineering capabilities and our reputation for highly-efficient
manufacturing operations, we are able to secure supply relationships for
complex, high value-added products, primarily assemblies and modules that
contain multiple stamped parts and various welded, hemmed or fastened
components. For example, we produce the radiator enclosure, floor pan and
toe-to-dash panel for the Ford Windstar, the deck lid on the Saturn Sport Coupe,
the control arm on the PN-131 platform, the control arm assemblies for Ford's
F-Series pickups and DaimlerChrysler's T- 300, the radiator support assembly for
GM's W-car (Grand Prix, Century, Lumina, Monte Carlo, Regal and Intrigue),
complex A-pillar assemblies for the Ford Mustang and the Ford Ranger pickup, and
multiple leaf, parabolic (long taper) multiple leaf, and single leaf long taper
suspension systems for products ranging from Ford's F-Series pickups to
DaimlerChrysler's mini-vans. These complex products typically generate higher
dollar content per vehicle as well as higher margins for the Company as compared
to simple, individual stampings. We plan to capitalize on our ability to develop
and provide integrated modules and assemblies to deliver to the OEMs an
integrated product such
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as a complete door or front-end system. In addition to doors, radiator supports
and Class A surface components, we believe we have unique expertise with respect
to control arms and leaf springs, which we will further develop as a fully
integrated suspension system.
Focus on High Growth Vehicle Categories. Our sales and marketing
efforts have been, and will continue to be, directed toward sectors of the
automotive market that have experienced strong consumer demand. In North America
the high growth segment is SUV's, mini-vans, vans and light trucks, while in
Europe the high growth segment is passenger cars. For the fiscal year ended
March 31, 1999, approximately 82% of our sales in North America were derived
from the SUV segment and in Europe, on a pro forma basis assuming the
acquisition of Cofimeta S.A. had occurred on April 1, 1998, approximately 52% of
our sales were derived from the passenger car segment. In North America, our
sales to the passenger car market have been, and will continue to be, directed
to the segments with stronger sales growth, including Saturn cars.
Provide Superior Engineering Solutions. We provide engineering
solutions to our customers through our extensive product and engineering
expertise. Weight reduction, modularization and integration of components into
systems using state of the art processing technologies address the customer
requirements for continuous improvement. In response to OEM requests, we have
woven integrated simulation software into our design culture. This considerable
investment in time and resources supports one long-term goal: finding new
technologies for old line stamping operations and working to achieve cost
reduction and manufacturing efficiencies.
Establish a Global Presence. We are actively pursuing additional
strategic acquisitions and joint-venture opportunities in Europe and intend to
pursue opportunities that will allow us to increase our presence in South
America, and establish a presence in Asia and other markets in order to serve
our customers on a global basis. Several OEMs have announced certain models
designed for the world automobile market ("World Car"). As a result, the OEMs
have encouraged their existing suppliers to establish foreign production support
for World Car programs. This globalization provides access to new customers and
technology, as well as economic cycle diversification. We currently have
operations in France and have established a presence in Mexico and Venezuela.
Pursue Strategic Acquisitions. In response to the trend in the OEM
market toward "systems suppliers," we are focused on making strategic
acquisitions that will enhance our ability to provide integrated systems (such
as a door or front end system) or otherwise leverage our existing business by
providing additional product, manufacturing and service capabilities. We also
intend to pursue acquisitions that will expand our customer base by providing an
entree to new customers, including the North American operations of Asian and
European based OEMs. We believe that the continuing supplier consolidation in
the stamping and metal forming segments may also provide attractive
opportunities to acquire high-quality companies at favorable prices, including
businesses which can be improved financially through overhead elimination,
organizational restructuring, plant reconfiguration, labor contract negotiations
and management changes. We will also pursue acquisitions that enable us to
achieve a global presence.
RECENT DEVELOPMENTS
On February 5, 1999, we acquired 100% of the shares of Cofimeta S.A.
and approximately 99% of the shares of its four subsidiaries; Somenor S.A.;
Aubry S.A.; Ecrim S.A.; and Socori Technologies S.A. Cofimeta S.A. and its four
subsidiaries are collectively referred to as "Cofimeta." We acquired Cofimeta
for FF80 million (approximately $13.9 million) in immediately available funds
and deferred payments over three years in the amounts of FF27 million
(approximately $4.7 million, based upon the U.S. Dollar exchange rate on
February 2, 1999) for each of the first two years and FF36 million
(approximately $6.2 million, based upon the U.S. Dollar exchange rate on
February 2, 1999) for the third year. Cofimeta is a leading supplier of closure
panels, floor pans, deck lids, structural pillars, cross members, radiator
surrounds and front ends, and Class A surfaces. Cofimeta is headquartered in a
suburb of Paris and operates manufacturing facilities in France located in
Douai, St. Florent and Orbec. Cofimeta employs approximately 1,300 persons and
is a major supplier to Renault and PSA. For the nine months ended September 30,
1998, Cofimeta had net sales of $147.1 million and EBITDA of $9.0 million.
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Amounts set forth in U.S. Dollars with respect to Cofimeta for the nine months
ended September 30, 1998 are based upon the average published U.S. Dollar
exchange rates for the period.
Cofimeta had previously benefited from a final order, entered in June
1997, of the French Commercial Court in Douai, France, approving a continuation
plan for Cofimeta (the "Continuation Plan"). The Continuation Plan authorized
certain restructuring plans, which included reductions in employment levels,
capital increases by its prior parent, and the rescheduling of payment of all
trade payables and other obligations over a ten year period. Pursuant to an
application by Groupe Valfond S.A., the prior owner of Cofimeta, to the Court of
Douai, the court by judgment dated January 7, 1999 authorized, inter alia, (i)
the sale of the Cofimeta shares to the Company, (ii) termination of the
Continuation Plan with respect to Cofimeta, and (iii) the establishment of
Cofimeta Defeasance S.A. by Cofimeta to which the payment obligations of
Cofimeta remaining under the Continuation Plan were transferred. Of the FF 372
million of original Continuation Plan obligations of Cofimeta, which were
transferred to Cofimeta Defeasance, S.A., we have acquired approximately FF 305
million while FF 67 million remain payable to unrelated third parties. Under the
Continuation Plan, approximately 75% of the scheduled repayment of all of the
Continuation Plan obligations will occur in the last five years of the ten year
period.
On June 28, 1999 we acquired, through a wholly owned, indirect
subsidiary 100% of the shares of Gebr. Wackenhut GmbH Karosserie-und
Fahrzeughfabrik ("Wackenhut"). Wackenhut is a supplier of complex pressings,
welded assemblies, complete truck cabs, cataphoretic coatings and finish paint
applications and operates three facilities in Germany located in the Nagold area
near Stuttgart. Wackenhut is an unrestricted subsidiary under our debt
agreements. Pursuant to the terms of the acquisition, we agreed to pay DM 1 for
the Wackenhut shares, provide DM 5 million in subordinated debt and additional
paid in capital, restructure approximately DM 63.4 million in bank debt, and
purchase approximately DM 18.6 million in bank and shareholder debt for DM 1.
The acquisition provides for the restructuring of Wackenhut's credit facilities
and provides additional financing of approximately DM 16.6 million under a line
of credit and up to DM 20.0 million to fund capital expenditures to support
plant expansion and modernization.
INDUSTRY TRENDS
The OEM market to which we sell our products consists of the design,
engineering, development, production and sale of parts, components, assemblies
and modules or systems (several components assembled together) for use in the
manufacture of new motor vehicles. Our performance, growth and strategic plan
are directly related to certain trends within the OEM market. Since the 1980s,
DaimlerChrysler, Ford and GM have each been substantially reducing the number of
suppliers that may bid for awards and outsourcing an increasing percentage of
their production requirements. We believe that other European and Asian
manufacturers will implement plans to do the same. As a result of these trends,
the OEMs are focusing on the development of long-term, sole source relationships
with suppliers who can provide more complex parts, as well as complete
subassemblies and modules on a just-in-time basis while at the same time meeting
strict quality requirements. These requirements are accelerating the trend
toward consolidation of the OEM's supplier base, as those suppliers who lack the
capital and production expertise to meet the OEM's needs, either cease to
operate or are merged with larger suppliers. OEMs benefit from outsourcing
because outside suppliers generally have significantly lower cost structures
and, as described below, suppliers can assist in shortening development periods
for new products.
In addition to consolidation and outsourcing, suppliers are
participating earlier in the design and engineering process, providing research,
as well as product development, product testing/validation, prototyping and
tooling. OEMs generally expect Tier 1 suppliers to (i) participate in the design
and engineering of complex assemblies, (ii) develop the required manufacturing
process to deliver these assemblies on a just-in-time basis, and (iii) assume
responsibility for quality control. This results in shorter development times
for new products, as well as higher quality and lower parts costs.
While the focus today by the OEMs is on quality, cost and service, we
believe that the focus for the future will be on global capabilities, innovation
and ability to provide value-added products and systems. The OEMs have been very
successful in making high-quality and low cost a minimum requirement to remain
in the industry, as opposed to a competitive advantage for certain suppliers.
These evolving requirements can best be addressed by suppliers with
sufficient resources to meet such demands. For full-service suppliers such as
the Company, this environment provides an opportunity to grow by obtaining
business previously provided by other suppliers who can no longer meet the
current or future requirements and expectations of the OEMs and by acquisitions
that further enhance product manufacturing and service capabilities. Although
the requirements of the OEMs have already resulted in significant consolidation
of component suppliers in many product segments, we believe that many
opportunities exist for further consolidation within our stamping and metal
forming industry.
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PRODUCTS
We generate the majority of our net sales from large, complex, high
value-added products, primarily assemblies that generally consist of multiple
parts, which we stamp and forge and combine with various welded or fastened
components. We are the sole source supplier of these complex modules and
assemblies. Our product focus is directed toward three areas: closure panels,
suspension systems, and complex structural systems. These products include
unexposed components and assemblies that are intrinsic to the structural
integrity of the vehicle such as A-pillars, radiator supports, floor pans,
toe-to-dash panels, leaf springs, frame and suspension components and
reinforcements. In addition to unexposed components and assemblies, we have the
capability and expertise to produce Class A surfaces such as door assemblies,
door apertures, rocker panels, fuel filler doors, and box side outers, which
require virtually flawless finishes and more stringent customer requirements
than unexposed assemblies. These products require superior engineering and
automated manufacturing and assembly capabilities due to their exterior
visibility, complexity, and high volume requirements.
While we have the capability to produce small stampings, such as
brackets and braces, we focus on more complex and larger components and
assemblies that typically generate higher dollar content per vehicle as well as
higher margins for the Company. These assemblies, such as the A, B and C
pillars, control arms, leaf springs, door assemblies, door apertures, deck lids
and radiator supports require larger, high tonnage, wide-bed, fully-automated
press capabilities, complex automated weld and hemming assembly, autophoretic
corrosion resistant coating, machining, and automated assembly of purchased
components.
The chart below details by major customer our major products, the type
of vehicle and the model/platform for which they are produced
<TABLE>
<CAPTION>
CUSTOMER TYPE MODEL/PLATFORM COMPONENTS SUPPLIED
- -------- ---- -------------- -------------------
<S> <C> <C> <C>
General Motors Sport Utility Suburban/Tahoe/Yukon Door Assemblies, Door Apertures, Rocker
Panels, Lower Control Arms, Wheel
Moldings
Sport Utility Blazer/Jimmy Leaf Springs, Seat Supports/Rails
Sport Utility Pontiac Recon/Buick Signia Door Assemblies, Tailgate Assemblies,
(2000 Launch) Hoods, Floor Assemblies,
Rocker Panels, Rail Assemblies
Light Truck S10/Sonoma Pickup Leaf Springs
Light Truck C/K Crew Cab Pickup Door Apertures, Wheel Moldings
Light Truck C/K Pick Up Lower Control Arms (4 Wheel Drive),
Rocker Panels, Wheel Moldings
Light Truck C/K Pick Up (Mexico) Class A Blanks
Mini-Van Astro/Safari Struts, Lower Control Arms (All Wheel
Drive), A Pillars, Leaf Springs
Vans Savanna/Express Leaf Springs, Pillar Reinforcements,
Latches, Supports
Medium Duty Commercial Chassis Leaf Springs, Toe-to-Dash Panel
Medium Duty Kodiak Floor Assembly, Fuel Tank Straps, Raised
Roof Panel
Passenger Car Saturn SC Deck Lid, Pillar Reinforcement, Inner
Doors, Window Frame Reinforcement
Passenger Car Saturn SC/SL/SW (1999 Launch) Underbody Rails
Passenger Car Saturn LS (1999 Launch) Body Side Inners, Door Assemblies, Shelf
Panel, Wheel House Inners, Radiator
Support, Heat Shield, Gas Tank Shield
Passenger Car Grand Prix, Regal, Intrigue, Radiator Supports
</TABLE>
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<TABLE>
<CAPTION>
CUSTOMER TYPE MODEL/PLATFORM COMPONENTS SUPPLIED
- -------- ---- -------------- -------------------
<S> <C> <C> <C>
Monte Carlo, Lumina
Passenger Car Corvette Floor Panels
Passenger Car EV1 Floor Panels, Wheel Houses
Passenger Car Malibu, Cutlass Sun Roof Assembly
Passenger Car Grand Am, Alero Door Beams
Passenger Car Park Avenue, Riviera, Aurora, Rocker Panels
Seville, Deville
Passenger Car Joy, Swing, Monza (Mexico) Class A Blanks, Floor Pan Assemblies
Passenger Car Cavalier/Sunfire (Mexico) Floor Pan Assemblies
Passenger Car Astra Dash Panel Reinforcement, Structural
Crossmember, Brackets
Passenger Car Omega Radiator Support Stampings
Ford Sport Utility Explorer, Mountaineer Rear Floor Reinforcement, Center Body
Pillar, B-Pillar Assembly, Leaf Springs
Sport Utility Expedition, Navigator Control Arms
Light Truck F Series Pickup Control Arms, Load Floor, Leaf Springs
Light Truck Ranger, Mazda Pickup A Pillar, Upper/Lower Back Panel, Roof
Panel, Windshield Header, Box Side Outer,
Leaf Springs
Van Windstar Rear Floor Assembly, Dash Panel, Rear
Crossmembers, Cowl Sides, Radiator
Support
Van Econoline Roof Rails, A-Pillar, Floor Pan, Shock
Tower, Fuel Filler Doors, Leaf Springs,
Brackets, Latches
Passenger Car Contour/Mystique/Mondeo Front & Rear Control Arms, Rear
(Europe) Suspension Bar Assembly, Brackets
Passenger Car Cougar Front & Rear Control Arms, Rear
Suspension Bar Assembly, Brackets
Ford/Nissan Mini-Van Villager, Quest Leaf Springs
DaimlerChrysler Sport Utility Cherokee Control Arms
Light Truck Dakota Leaf Springs, Control Arms (1999 Launch)
Sport Utility Durango Skid Plates, Brackets, Control Arms (1999
Launch)
Light Truck Ram Pickup Control Arms
Minivan Extended Voyager/Caravan, Leaf Springs
AWD Eurostar (Europe)
Isuzu Medium Duty NPR/W4 Truck Leaf Springs
CAMI Sport Utility Tracker/Sidekick Rear Bumper, Side Frame Member, Door
Inner Reinforcement, Floor Bar,
Underbody Components
Passenger Car Metro/Swift Rear Cross Members, Side Sill, Dash Panel
</TABLE>
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<TABLE>
<CAPTION>
CUSTOMER TYPE MODEL/PLATFORM COMPONENTS SUPPLIED
- -------- ---- -------------- -------------------
<S> <C> <C> <C>
Renault Passenger Car Megane Engine Cradle, Radiator Support, Pillar
Assemblies, Structural Supports, Gas Tank
Heat Shield, Bulk Head Heat Shield, Door
Beam
Van Kangoo Longitudinal Body Rails, Structural
Supports, Engine Cradles, Structural
Crossmembers
Passenger Car X53 Hood Assembly, Crossmembers,
Reinforcements
Van Express Pillar Reinforcements, Crossmembers
Van Master Pillar Reinforcements, Crossmembers
Passenger Car Clio Door Beam
Van Trafic Pillar Reinforcements, Crossmembers
Passenger Car Safrane Crossmembers, Structural Supports
Passenger Car X40 Crossmembers, Structural Supports
Heavy Truck Various Instrument Panel Assembly, Structural
Pillar Assemblies
Passenger Car Laguna Structural Crossmembers, Fender Support,
Reinforcements
Van Twingo Floor Reinforcements
PSA Van Monospace Pillar Reinforcements, Crossmembers
Passenger Car 205 Hood Outer, Hood Inner, Floor Extensions
Passenger Car ZX/306 Crossmembers
Passenger Car 405 Support, Crossmembers, Inner Fender
Reinforcements
Passenger Car Xantia Heat Shield, Crossmember, Structural
Reinforcements
Passenger Car Various Clutch Pedal Assemblies
Passenger Car Z8 (606) Reinforcements, Crossmembers, Heat
Shield, Tank Shield
Matra Van Espace Floor Pan Assemblies, Pillar Assemblies
Nissan Passenger Car Micra Oil Pan, Heat Shield, Clutch Pedal
Saab Passenger Car 900 Floor Crossmember, Reinforcements
VW Passenger Car Audi Heat Shield, Brackets, Reinforcements
SEAT Passenger Car Toledo Door Beams
Faurecia Passenger Car Audi B6 Crossmembers, Inserts for Instrument Panel
Passenger Car PSA Z8 (606) Seat Structure Crossmembers
Passenger Car PSA X4 (Xantia) Seat Structure Crossmembers
Van VW T5 Van Seat Structure Crossmembers
Sevel Nord Van U64 Trunk Lid Inner, Fender Inner, Floorpan
Parts, Fender Inner, Hood Panel
</TABLE>
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We have received purchase orders for production commencing after the
current model year, which production typically continues through the product's
life cycle and is subject to the volume requirements of customers, for the
following major products: (i) the new Saturn LS Program, which management
believes will generate approximately $65.0 million of annual net sales beginning
with the 1999 model year, (ii) a GM door, hood and underbody assembly platform
will be produced solely in Mexico and management believes this program will
generate approximately $90.5 million of annual net sales beginning in the 2001
fiscal year, (iii) the 2001 DaimlerChrysler Durango/Dakota control arms, which
management believes will generate approximately $11.1 million of annual sales
beginning in 2000 (iv) the GM Blazer /Jimmy/ Bravada control arms, which
management believes will generate approximately $50.1 million of annual net
sales beginning in 2001 and (v) chassis components for the North American
production of a GM global platform, which management believes will generate
approximately $158.0 million of annual sales beginning in 2002. Other recent new
business awards, together with the sales management believes will be generated
by the awards, include: Ford WIN126 floor pan ($24.1 million), Chrysler RS leaf
springs ($24.0 million), GMT315 ($28.0 million), and other smaller programs
($25.0 million). Although we believe these awards may generate the proposed
sales, we cannot assure that such sales will be sustainable as the automotive
industry may experience downturns and a decrease in customer demand for motor
vehicles could adversely affect our sales.
DESIGN AND ADVANCED ENGINEERING
We strive to maintain a technological advantage through investment in
product development and advanced engineering capabilities that utilize
structured program management techniques in an effort to exceed the customer's
expectations for value and service. Our engineering staff encompasses such
disciplines as program management, computer aided design ("CAD"), virtual
prototyping, draw die and process simulation, advanced engineering,
manufacturing feasibility, and tooling and process development. Responsibilities
of our engineers include:
- design;
- initial prototype development;
- design and implementation of manufacturing processes;
- production feasibility and improvement; and
- data management.
As our customers continue to outsource larger assembled systems which
must be designed at earlier stages of vehicle development rather than the
smaller parts which are attached to them, we are increasingly required to
utilize advanced engineering resources early in the planning process. Advanced
engineering resources create improved engineering design, CAD feasibility
studies, working prototypes and testing programs to meet customer
specifications. Given this increased demand for early involvement in the design
and engineering aspects of production development, we established a technical
center in 1998 that houses our engineering and design group. We utilize
structured program management based on the Automotive Industry Action Group
sanctioned Advanced Part Quality Planning principles to ensure part quality in
all phases of design and manufacturing. We have established a data management
and CAD department that is able to support all major customer systems. We
provide full and complete engineering solutions up through "black box" design.
"Black box" design involves the customer setting broad product requirements and
leaving the design, material, tooling and production to the supplier. We also
provide "gray box" engineering capabilities in which the customer has principal
design responsibility while our engineers work closely with the customer in
designing the specifications of the product material, the part to be produced
and the tooling required to produce the finished product. We are also on-line
with all major customers which accelerates the process of design changes.
Our design and advanced engineering expertise is an important
differentiating factor in maintaining our relationships with and obtaining new
business from our customers and, in management's judgment, was an essential
factor in winning the new business described above.
8
<PAGE> 10
CUSTOMERS AND MARKETING
We supply our products on a long-term preferred and sole source basis,
primarily to GM (34%), Ford (25%), Renault (15%), DaimlerChrysler (10%), PSA
(5%), CAMI (1%), and Saturn (1%) (percentages are approximates of net sales for
the fiscal year ended March 31, 1999 on a pro forma basis for the acquisition of
Cofimeta) with the remaining net sales comprised of sales primarily to other
automotive suppliers. We have been providing products directly to GM and Ford
for more than 50 years, and directly to DaimlerChrysler, Renault, and PSA for
more than 20 years. We currently have locations in the United States, Canada,
Mexico, France and Venezuela and provide components for OEMs doing business in
Europe, North America and South America. We believe our presence in Europe and
Mexico is strategically important and has led to several significant new
opportunities with OEMs doing business in these locations. We also believe the
Venezuelan joint venture ("Metalcar") provides further entree into Mexican and
South American markets. We believe Metalcar's production capabilities and strong
management team will provide us with the means to further penetrate these
markets not only for springs, but also metal stamping and other Company
products. We maintain very strong relationships with our customers and
continually strive to exceed customer expectations and anticipate customer
needs. This approach has enabled us to maintain our status as a long-term
supplier with each of our major customers and as part of a limited group of
preferred suppliers invited to bid for platform work.
With the efforts by the OEMs to reduce the product development cycle
time, top suppliers are increasingly included in the early design and
development stages. For example, we obtain many of our new orders through a
presourcing process by which the customer invites one or a few preferred
suppliers to manufacture and design a component, assembly or module that meets
certain price, timing and functional parameters. Upon selection at the
development stage, we typically agree with the customer to cooperate in
developing the product to meet the specified parameters. Upon completion of the
development stage and the award of the manufacturing business, we receive a
blanket purchase order for those components, assemblies or modules for the life
of a vehicle model or platform, which typically range from five to seven years.
Consequently, the key success factors for OEM suppliers now include total
program management that encompasses state-of-the-art design, reduced launch
cycle times, and the manufacture and delivery of high quality products at
competitive prices.
We believe that the advanced engineering and sales organization at our
technical center offers services few other suppliers have available for their
customers. The group's primary activities are:
- quoting/cost estimating;
- assembly/automation;
- CAD design and data control;
- virtual prototyping;
- draw die simulation;
- tool process/design; and
- program management.
The sales group is divided into customer oriented business units, each
with a business unit manager responsible for all facets of customer needs, as
well as strategies for growing their particular customer base. The entire group
is dedicated to advanced technical development and servicing a multitude of
customers' needs as one team.
RAW MATERIALS
The cost of raw materials represented approximately 56.3% of our net
sales for the fiscal year ended March 31, 1999 on a pro forma basis for the
acquisition of Cofimeta. On an annual basis, steel represents approximately
69.0% of total raw materials purchases. We expect to purchase nearly 395,000
tons of steel in fiscal 2000 for use in our production. The remaining 31% of raw
materials purchases is represented by various purchased parts such as forgings,
bushings, ball joints, isolators, corrosion resistant coating, and various
fasteners.
9
<PAGE> 11
We participate with respect to the majority of our North American
platforms in steel purchase programs through Ford, GM and DaimlerChrysler
wherein the steel is purchased by the OEM from the steel mill and sold to us at
a negotiated or matrixed price. These purchase programs effectively neutralize
the exposure to steel price increases and decreases, as any price increases from
the steel mills are either absorbed by the OEM prior to our purchase of the
steel or such increases are reflected in our purchase of the steel and passed
back to the OEM in the product pricing.
COMPETITION
The market for our products is characterized by strong competition from
both captive OEM suppliers and external, non-captive suppliers. We compete with
a limited number of competitors that have the physical assets and technical
resources to produce large bed stampings, complex parts and subassemblies of
multiple parts. Our largest competitors include The Budd Company, a subsidiary
of Thyssen AG; Magna International Inc.; Tower Automotive, Inc.; Aetna
Industries, Inc.; Ogihara America Corp.; Midway Products Corporation; Active
Tool & Manufacturing Co., Inc.; A.G. Simpson Automotive, Inc.; Mayflower Vehicle
Systems Inc.; L&W Engineering; National Automotive Radiator Manufacturing
Company; and divisions of OEMs with internal stamping and assembly operations.
Within the leaf spring segment of our business our main competitor is Rassini,
Inc., and in the suspension segment of our business our major competitors are
TRW, Inc., Dana Corp. and Benteler AG.
We compete for business at the beginning of the development for new
model platforms, as well as the redesign of current models. This process can
begin from two to five years prior to the introduction of the new model. After
the customer awards a program, that supplier is generally designated as the sole
source supplier for the life of that program, which typically lasts 4 to 5 years
for passenger cars and up to 10 years for trucks (particularly for unexposed
structural components and assemblies).
EMPLOYEES
At March 31, 1999, we employed approximately 5,100 persons in the
United States, Canada, Mexico, and France, approximately 1,187 are employed on a
salaried basis and the balance are hourly employees. Substantially all of the
hourly employees are represented by various local unions through collective
bargaining agreements. These individual agreements which are from three to five
years in length expire over the period September 1999 through February 2004.
In 1994, prior to our acquisition, we experienced a two-week work
stoppage at the Chatham, Ontario facility. Other than this event, we have not
experienced any organized work stoppages at any time during the past ten years.
At the present time, we believe that our relations with our employees are good.
REGULATORY MATTERS
Our facilities and operations are subject to a wide variety of federal,
state, local, and foreign environmental laws, regulations, and ordinances,
including those related to air emissions, wastewater discharges, and chemical
and hazardous waste management and disposal ("Environmental Laws"). Our
operations also are governed by laws relating to workplace safety and worker
health, primarily the Occupational Safety and Health Act, and foreign
counterparts to such laws. In many jurisdictions, these laws are complex and
change frequently. The nature of our operations exposes us to risks of
liabilities or claims with respect to environmental and worker health and safety
matters. There can be no assurance that material costs will not be incurred in
connection with such liabilities or claims.
Based on our experience to date, we believe that the future cost of
compliance with existing Environmental Laws (or liability for known
environmental claims) will not have a material adverse effect on our business,
financial condition or results of operations. However, future events, such as
changes in existing Environmental Laws or their
10
<PAGE> 12
interpretation, may give rise to additional compliance costs or liabilities that
could have a material adverse effect on our business, financial condition or
results of operations. Compliance with more stringent Environmental Laws, as
well as more vigorous enforcement policies of regulatory agencies or stricter or
different interpretations of existing Environmental Laws, may require additional
expenditures by the Company that may be material.
Certain Environmental Laws hold current owners or operators of land or
businesses liable for their own and for previous owners' or operators' releases
of hazardous or toxic substances, materials or wastes, pollutants or
contaminants, including petroleum and petroleum products ("Hazardous
Substances"). Certain laws, including but not limited to the Comprehensive
Environmental Response, Compensation & Liability Act ("CERCLA"), may impose
joint and several liability on responsible parties. Because of our operations,
the long history of industrial uses at some of our facilities, the operations of
predecessor owners or operators of certain of the businesses, and the use,
production, and releases of Hazardous Substances at these sites, we are affected
by such liability provisions of the Environmental Laws. Several of our
facilities have experienced some level of regulatory scrutiny in the past and
are or may be subject to further regulatory inspections, future requests for
investigation or liability for past disposal practices.
Our Alma, Michigan plant is listed on the Michigan Department of
Environmental Quality ("MDEQ") list of Michigan Sites of Environmental
Contamination. Based on filings with the MDEQ by the current owner of the
petroleum refinery which adjoins the Alma plant property, the refinery has been
determined by the MDEQ to be the source of certain contamination existing in the
eastern area of the Alma plant property. While we are currently conducting
certain remedial activity at our Alma plant in connection with this
contamination, we may have claims against the refinery owner relating to this
contamination. While we do not expect to incur significant future costs in
connection with this matter, we cannot guarantee that such future costs will not
be material.
The Resource Conservation and Recovery Act and the regulations
thereunder ("RCRA") regulates the generation, treatment and disposal of
hazardous wastes. In the mid-1980s, we entered into a Consent Agreement and
Final Order, through a subsidiary, with the United States Environmental
Protection Agency (the "EPA") relating to the final closure of a surface water
impoundment area at the Alma plant under RCRA. We have remediated the
impoundment soils and sediments and we have implemented a groundwater monitoring
program with EPA approval under RCRA. A final closure report is expected to be
submitted to the EPA in the near future. In addition, we are conducting soil
investigation and groundwater monitoring, with MDEQ involvement, in a separate
section of the Alma plant at which contaminants have been detected by our
consultants. Both of these programs may be affected by the suspected
contamination from the petroleum refinery described above. While future soil
and/or groundwater remediation costs, if any, are not expected to be material,
we cannot predict such costs with certainty and no guarantee can be made that
these costs will not be material.
We have been named as a potentially responsible party, along with
several other companies, in connection with a former disposal facility located
in the St. Louis, Michigan area. The State of Michigan has begun an
investigation of this facility which we, along with certain other named parties,
are monitoring. While the costs of investigation and remediation, if any, are
not expected to be material, we cannot accurately estimate such costs at this
time.
FORWARD LOOKING STATEMENTS
This report contains statements relating to such matters as anticipated
financial performance, business prospects and other matters that may be
construed as forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. In addition, the Company may from
time to time publish or communicate other statements that could also be
construed to be forward-looking statements. These statements are or will be
based on the Company's estimates, assumptions and projections, and are subject
to risks and uncertainties, including those specifically listed below, that
could cause actual results to differ materially from those included in the
forward-looking statements.
11
<PAGE> 13
The risks and uncertainties that may affect the operations,
performance, development and results of operations of the Company include the
following: (1) the OEM supplier industry is highly cyclical and, in large part,
impacted by the strength of the economy generally, by prevailing interest rates
and by other factors which may have an effect on the level of sales of
automotive vehicles; (2) future price reductions, increased quality standards or
additional engineering capabilities may be required by the OEMs, which are able
to exert considerable pressure on their suppliers; (3) the OEMs may decide to
in-source some of the work currently performed by the Company; (4) work
stoppages and slowdowns may be experienced by OEMs and their Tier 1 suppliers,
as a result of labor disputes; (5) there may be a significant decrease in sales
of vehicles using the Company's products or the loss by the Company of the right
to supply any of such products to its major customers; (6)increased competition
could arise in the OEM supplier industry; and (7) changing federal, state, local
and foreign laws, regulations and ordinances relating to environmental matters
could affect the Company's operations.
ITEM 2. PROPERTIES.
Our corporate headquarters, engineering, technical center and sales
offices are currently located in Troy, a suburb of Detroit, Michigan, close to
our core of North American automotive customers. Our manufacturing plants are
strategically located near OEM manufacturing sites.
We operate over 500 presses ranging from under 100 ton to 3,000 ton
capabilities. We are capable of producing components and assemblies from the
smallest brackets to full-size, Class A door and closure panels with our unique
wide-bed (180 inch), automated press line. Production systems include welding
robots, pick and place robots and other state-of-the-art automation, as well as
autophoretic, cataphoretic and hunting corrosion resistant coating systems.
As OEMs have increased quality standards and implemented just-in-time
and sequenced delivery/inventory management methods, the consistency of quality,
as well as the timeliness and reliability of shipments by OEM suppliers, have
become crucial in meeting logistical demands of the OEMs and reducing operating
costs of the supplier. We have responded by developing and adopting
manufacturing practices that seek to maximize quality and eliminate waste and
inefficiency in our own operations and in those of our customers. Our
manufacturing and engineering capabilities enable us to design and build
high-quality, efficient manufacturing systems, processes and equipment. We have
invested heavily in our commitment to quality through education of employees and
implementation of cost management and control systems from the plant floor up.
All suppliers are required to meet numerous quality standards in order
to qualify as a preferred and long-term supplier to the OEMs. The QS-9000
standards were developed by international and domestic automobile and truck
manufacturers to ensure that their suppliers meet consistent quality standards
that can be independently audited. The QS-9000 standards provide for the
standardization and documentation of a supplier's policies and procedures to
improve suppliers' efficiencies. The European automobile and truck manufacturers
have developed similar standards to the QS-9000 standards (EAQF). We are QS-9000
certified and our operations in Europe are EAQF, QS-9000 and ISO 9002 certified.
In addition to the QS-9000 standard, each OEM maintains its own
certification or award system for preferred suppliers based on the supplier's
demonstrated quality, delivery and certain commercial considerations. Ford
requires that all suppliers receive its Q1 rating in order to quote for new
production business. GM's Supplier of the Year Award provides certain
competitive advantages to the recipients but is not a requirement for current GM
suppliers to bid on new business. DaimlerChrysler allows suppliers who have
received its Gold Pentastar Award to retain any current business when it is
replaced by a new model without competitive bidding. Other OEMs maintain various
award programs for their suppliers that recognize outstanding performance by the
supplier. We have received DaimlerChrysler's Gold Pentastar Award for each of
our facilities that have DaimlerChrysler as a customer. We have the Q1 rating
from Ford at all plants that are required to have the Q1 rating.
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<PAGE> 14
A summary of our major facilities, including the facilities of our less
than majority owned affiliates is set forth below:
<TABLE>
<CAPTION>
SIZE
----
FACILITY (SQ. FT.)
-------- ---------
<S> <C>
Alma, Michigan 389,000
Argos, Indiana 386,000
Corydon, Indiana 200,000
Greencastle, Indiana 214,000
Hamilton, Indiana 85,000
Cambridge, Ontario 290,000
Masury, Ohio 150,000
Lapeer, Michigan 85,000
Prudenville, Michigan 76,000
Oscoda, Michigan 57,000
Chatham, Ontario 190,000
Wallaceburg, Ontario 240,000
Saltillo, Mexico(1) 20,000
Silao, Mexico(1) 42,000
Ramos Arizpe, Mexico(1)(2) 330,000
Troy, Michigan(1) 34,000
Douai, France (3) 600,000
St. Florent, France 431,000
Orbec, France 188,000
Valencia, Venezuela(4) 122,000
</TABLE>
(1) All properties above are owned, with the exception of the Silao,
Saltillo, and Ramos Arizpe facilities and the Troy office. These
properties are leased with lease expiration dates ranging from
December 1999 to June 2005.
(2) We have entered into a cross border asset usage facility for this
location. This metal stamping and manufacturing center is under
construction and will support the GM hood, door and underbody
assembly platform as well as other customer opportunities.
(3) The Douai, France location has two facilities.
(4) Owned by Metalurgica Carabobo, S.A., a Venezuelan joint venture of
which we have a 49% interest.
In March 1999 we announced the closure of our Hamilton, Indiana
facility. The decision to close this facility was based on our rationalization
of its current capacity and will result in fixed cost reductions and improved
productivity through reallocation of production to other facilities during
fiscal 2000. The costs associated with the closure had been previously reserved
for and will therefore have no adverse impact on our financial results. We are
currently redeploying production assets from this and other previously closed
facilities to support recently awarded programs (e.g. GM door, hood and
underbody assembly platform).
ITEM 3. LEGAL PROCEEDINGS
We are subject to various claims, lawsuits and administrative
proceedings related to matters arising in the normal course of business. In the
opinion of management, after reviewing the information that is currently
available with respect to such matters and consulting with legal counsel, any
liability which may ultimately be incurred with respect to these matters will
not materially affect our financial position. See Item 1 "Business-Regulatory
Matters".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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<PAGE> 15
There were no matters submitted to a vote of the Company's security
holders during the fourth quarter ended March 31, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
There is no established trading market for any class of common equity of
the Company. As of May 15, 1999, there were 20 shareholders of record of the
Company's common stock.
We have not paid cash dividends during the past two fiscal years and do
not plan to pay cash dividends in the near term. We are restricted in our
ability to pay dividends under certain debt covenants.
The Company did not sell any equity securities during the year ended March
31, 1999 that were not registered under the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth (i) the selected consolidated historical
financial data of BMG North America Limited ("BMG" or the "Predecessor") for the
year ended March 31, 1995 which was derived from the audited consolidated
financial statements of the Predecessor, (ii) selected consolidated historical
financial data of the Predecessor for the period from April 1, 1995 through
October 27, 1995, and (iii) selected consolidated historical financial data of
the Company from October 28, 1995 through March 31, 1996 and the years ended
March 31, 1997, 1998, and 1999. The selected consolidated historical financial
data for the year ended March 31, 1995, the period April 1, 1995 through October
27, 1995; and the period October 28, 1995 through March 31, 1996 was derived
from the audited consolidated financial statements of the Predecessor and the
Company not included herein. The selected consolidated historical financial data
for the years ended March 31, 1997, 1998, and 1999 was derived from the audited
consolidated financial statements of the Company, which are included elsewhere
in this Report, together with the report of PricewaterhouseCoopers LLP,
independent accountants. The following table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the Consolidated Financial Statements of the Company and the
related notes and other financial information presented elsewhere in this
Report.
<TABLE>
<CAPTION>
Historical
---------------------------------------------------------------------------
Predecessor Company
---------------------------------------------------------------------------
4/1/95- 10/28/95-
3/31/95 10/27/95 3/31/96 3/31/97 3/31/98 3/31/99
---------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net Sales $75,097 $49,043 $35,572 $136,861 $410,321 $591,645
Gross Profit 4,206 2,148 3,948 11,773 41,901 55,067
Selling, General and Administrative 4,554 3,922 2,235 7,685 21,839 32,770
Restructuring Provision - - - - 1,610 1,151
Gain on Sale of Equipment - - - - (1,602) (777)
Equipment Impairment and
Nonrecurring charges (a) - - - 287 --
-----------------------------------------------------------------------
Operating Income (Loss) (348) (1,774) 1,713 3,801 20,054 21,923
Interest Expense 1,267 1,048 1,096 3,388 10,710 20,903
Other Income (Expense) - - - 2,201 321 4,445
</TABLE>
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<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Income (Loss) Before Income Taxes (1,615) (2,822) 617 2,614 9,665 5,465
Provision (Benefit) for Income Taxes (349) (938) 202 1,065 4,074 2,312
-----------------------------------------------------------------------
Net Income (Loss) $ (1,266) $(1,884) $415 $1,549 $5,591 $3,153
=======================================================================
Net Income (Loss) per share $- $- $9.10 $9.37 $13.74 $ 5.92
Balance Sheet Data (end of period):
Cash and Cash Equivalents $- $- $- $9,671 $18,321 $19,008
Accounts Receivable 9,835 13,312 8,338 47,626 65,273 152,281
Inventories 4,170 4,429 3,719 13,411 21,305 48,104
Total Assets 41,523 59,770 49,200 243,694 320,032 542,930
Total Debt 12,907 23,233 26,758 99,829 139,448 263,862
Redeemable Preferred Stock - - - 39,300 40,192 40,319
Total Shareholder Equity 10,833 9,329 935(b) 2,341 6,118 928
OTHER DATA:
Depreciation and amortization $1,413 $919 $687 $5,041 $20,279 $25,450
Capital Expenditures 4,284 5,111 3,466 3,326 16,723 33,625
EBITDA (c) $1,065 $(855) $2,400 $11,043 $40,654 $51,818
Gross Margin (d) 5.60% 4.38% 11.10% 8.60% 10.21% 9.31%
</TABLE>
- ------------------------
(a) This provision includes income before taxes for the discontinuance of
Laserweld International, L.L.C. and Parallel Group International, Inc.
Management does not anticipate that these costs will be a part of future
operations.
(b) The reduction in equity of $8.4 million from October 27, 1995 to March 31,
1996, is primarily a result of the elimination of the Predecessor's equity
as a part of the purchase accounting adjustments made upon the acquisition
of the Predecessor on October 27, 1995.
(c) EBITDA is defined as income (loss) before interest, income taxes,
depreciation and amortization. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from
operating activities for the purpose of analyzing the Company's operating
performance, financial position and cash flows.
(d) Gross margin is defined as gross profit as a percent of net sales for each
of the applicable periods.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial
condition and results of operations should be read in conjunction with the
Consolidated Financial Statements of the Company and notes thereto included
elsewhere in this Report. The historical financial information for the Company
has been impacted by several recent acquisitions. The historical information for
the fiscal year ended March 31, 1999 includes the complete results of operations
for Lobdell Emery Corporation ("Lobdell"), which was acquired on January 10,
1997, Howell Industries, Inc. ("Howell"), which was acquired on August 13, 1997,
RPI Holdings, Inc. ("RPIH"), which was acquired on November 25, 1997, and the
suspension division of Eaton Corporation (the "Suspension Division"), which was
acquired on April 1, 1998 and includes only a portion of the operating results
of Cofimeta, which was acquired on February 5, 1999. Each was accounted for
using the purchase method of accounting. The historical information for the
fiscal year ended March 31, 1998 includes only a portion of the results of
operations for Howell and RPIH, and does not include the operating results of
the Suspension Division. The historical
15
<PAGE> 17
information for the fiscal year ended March 31, 1997 includes only the results
of operations of Lobdell for the period subsequent to its acquisition.
Fiscal Year Ended March 31, 1999 Compared to Fiscal Year Ended March 31,
1998
Net Sales -- Net sales for the year ended March 31, 1999 were
$591.6 million. This represents an increase of $181.3 million as compared to net
sales for the fiscal year ended March 31, 1998 of $410.3 million. Net sales for
the fiscal year ended March 31, 1998 included net sales of Howell only from the
acquisition date of August 13, 1997 through March 31, 1998 and net sales of RPIH
only from the acquisition date of November 25, 1997 through March 31, 1998. The
increase for the year was due principally from the incremental sales for Howell
and RPIH as well as the acquisitions of the Suspension Division and Cofimeta
($197.9 million). Net sales also increased as a result of the strength of light
truck and sport utility vehicle production, specifically the T300 and F Series
platforms and C/K door volumes. Sales increases were offset during the year by
the effect of the GM strike ($12.7 million), the delayed launch of the WIN126
platform ($4.3 million), and the discontinuation of certain customer platforms.
On a pro forma basis, had the net sales from all acquisitions been included for
the entire fiscal 1999, net sales would have been $772.9 million.
Gross Profit -- Gross profit was $55.1 million or 9.3% of net
sales for the year ended March 31, 1999 as compared to $41.9 million or 10.2% of
net sales for the year ended March 31, 1998. This represents an increase of
$13.2 million as compared to the prior year. The gross profit increase is
related to the incremental sales resulting from the acquisitions, combined with
operating improvements made throughout the year on existing as well as acquired
sales. Gross Profit was unfavorably impacted by the GM strike ($5.2 million),
the delay in the WIN126 launch ($1.6 million), and the reduction in steel scrap
resale prices ($4.8 million). Gross Profit was adversely impacted by investments
made for program launches (closure panels and rear underbody components for a
new platform in Mexico, Saturn LS, WIN126) and by investments made for capacity
rationalization. Continued efforts are being made through plant and capacity
rationalization and maximization of asset utilization to improve the overall
performance of operations.
Selling, General and Administrative Expenses ("SG&A") -- SG&A
expenses were $32.8 million or 5.5% of net sales as compared to $21.8 million or
5.3% for the year ended March 31, 1998. The increase as a percentage of net
sales is primarily due to the support of current program launches (CAMI, Saturn
and Ford) as well as the resources necessary to support the newly awarded
programs for General Motors (closure panels and rear underbody components for a
new platform to be assembled solely in Mexico and chassis components for the
North American production of global platforms). We intend to invest in the
necessary resources to support customer engineering requirements and global
program management needs.
Operating Income -- Income from operations was $21.9 million or
3.7% of net sales for the year ended March 31, 1999 as compared to $20.1 million
or 4.9% of net sales for the year ended March 31, 1998. For fiscal 1999,
operating income benefited from the growth in the light truck and SUV programs
as well as acquisitions completed during the year. The decrease in operating
margin reflects the effects mentioned above (GM strike, WIN126 launch delay,
scrap resale price reductions) as well as the effects of restructuring
provisions. These restructuring provisions are expected to be offset by future
benefits including fixed cost reduction, equipment redeployment and productivity
improvements resulting in increased capacity utilization.
Other Income - Other income for the year ended March 31, 1999 was
$4.4 million or 0.7% of net sales compared to other income of $0.3 million or
0.1% of net sales for the year ended March 31, 1998. The increase was due
primarily to the sale of marketable securities held for strategic purposes and
income from the joint venture interest in Metalcar.
Interest Expense - The increase in expense of $10.2 million was
due primarily to the issuance of the $35.0 million of 10 1/8% Senior
Subordinated Notes Due 2007, Series B (the "Series B Notes") on April 1, 1998,
and the issuance of $40.0 million of 10 1/8% Senior Subordinated Notes due 2007,
Series C (the "Series C Notes")
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<PAGE> 18
on December 8, 1998. The Series B Notes and Series C Notes represent incremental
borrowings issued at effective interest rates of approximately 9.25% and 9.685%
respectively. The balance of the increase can be attributed to the impact of the
General Motors strike on operating cash flow and the interim financing of
customer tooling for current program launches.
Income Tax -- Income tax expense was $2.3 million for the period
ended March 31, 1999 as compared to $4.1 million for the year ended March 31,
1998. The decreased income tax of $1.8 million is a result of the reduction of
income as explained previously.
Net Income - Due to the foregoing, net income was $3.2 million or
0.5% of net sales for the year ended March 31, 1999 as compared to $5.6 million
or 1.4% of net sales for the year ended March 31, 1998.
Fiscal Year Ended March 31, 1998 Compared to Fiscal Year Ended March 31,
1997
Net Sales -- Net sales for the year ended March 31, 1998 were
$410.3 million. This represents an increase of $273.4 million as compared to net
sales for the fiscal year ended March 31, 1997 of $136.9 million. Net sales for
the fiscal year ended March 31, 1997 included net sales of Lobdell only from the
acquisition date of January 10, 1997 through March 31, 1997. The increase for
the year was due principally from the Lobdell, Howell and RPIH acquisitions
($269.8 million). The balance of the increase is related primarily to the
strength of light truck and SUV production, partially offset by the
discontinuance of certain customer platforms. On a pro forma basis, had the net
sales from all acquisitions been included for the entire fiscal 1998, net sales
would have been $453.7 million.
Gross Profit -- Gross profit was $41.9 million or 10.2% of net
sales for the year ended March 31, 1998 as compared to $11.8 million or 8.6% of
net sales for the year ended March 31, 1997. This represents an increase of
$30.1 million as compared to the prior year. The gross profit increase is
related to the incremental sales resulting from the acquisitions, combined with
operating improvements made throughout the year on existing as well as acquired
sales. The increase in gross margin is a result of operating improvements
through employment and cost reductions, productivity improvements, increased
capacity utilization, quality improvements and production schedule attainment.
The increased gross profit was partially offset by costs associated with the
conversion of Canadian operations to transfer and robotic technology, startup of
the Mexican operations and costs associated with the launch of future platforms
(Saturn LS, Windstar and Ford Heavy duty pickup (PN 131) ).
Selling, General and Administrative Expenses ("SG&A") -- SG&A
expenses were $21.8 million or 5.3% of net sales as compared to $7.7 million or
5.6% for the year ended March 31, 1997. The decrease as a percentage of net
sales was a result of the efficiencies derived through acquisition integration
and cost reduction programs. The financial and administrative functions were
consolidated into the Troy office, thereby allowing for the closure of the Alma
and Southfield administrative offices. The increase in expenditures is primarily
due to the overall growth of the organization during the year and the need to
provide the necessary resources to support customer engineering support, global
program management and the continued growth initiatives of the organization.
Operating Income -- Income from operations was $20.1 million or
4.9% of net sales for the year ended March 31, 1998 as compared to $3.8 million
or 2.8% of net sales for the year ended March 31, 1997. For fiscal 1998,
operating income benefited from the growth in the light truck and SUV programs
as well acquisitions during the year. The increase in operating margin reflects
the continued improvement of operations, implementation of cost saving programs
and the gain on the sale of equipment of the laser welding operations. Partially
offsetting the increase was the recording of restructuring charges as a part of
the Company's overall plant rationalization initiatives.
Other Income - Other income for the year ended March 31, 1998 was
$0.3 million or .07% of net sales as compared to $2.2 million or 1.6% of net
sales for the year ended March 31, 1997. The decrease was due
17
<PAGE> 19
primarily to foreign currency exchange transactions gains recorded in fiscal
1997 that were not present in fiscal 1998.
Interest Expense - Interest expense for the year ended March 31,
1998 was $10.7 million or 2.6% of net sales as compared to $3.4 million or 2.5%
of net sales for the year ended March 31, 1997. While interest as a percentage
of net sales remained relatively flat, the overall increase in expense was due
primarily to the issuance of $125.0 million of 10 1/8% Senior Subordinated Notes
on June 24, 1997. The Notes represent both incremental borrowing as well as an
increased interest rate as compared to outstanding debt of the prior period.
Proceeds of the Notes were used to payoff existing debt and support the
acquisition activities of the Company. The increase in interest expense was
partially offset by interest income derived over the year on unused bond
proceeds available for short term investment.
Income Tax -- Income tax expense was $4.1 million or 1.0% of net
sales for the period ended March 31, 1998 as compared to $1.1 million or 0.8% of
net sales for the year ended March 31, 1997. The increased income tax of $3.0
million is a result of the $7.1 million increase in income before taxes for the
year ended March 31, 1998 as compared to the previous year and an increase in
the overall effective tax rate of the Company.
Net Income - Net income was $5.6 million or 1.4% of net sales for
the year ended March 31, 1998 as compared to $1.5 million or 1.1% of net sales
for the year ended March 31, 1997. The improvement of $4.1 million was a result
of increased operating and other income of $14.4 million, offset by the increase
in interest expense of $7.3 million and income taxes of $3.0 million,
respectively.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Net income adjusted for non-cash charges generated approximately
$16.4 million of cash for the year ended March 31, 1999. Cash increased during
the period based on overall increases in trade accounts payable of $29.0
million, and accrued expenses, income taxes payable, and other non-current
liabilities of $13.2 million. Cash also increased due to an overall decrease in
prepaid expenses and other current assets of $4.3 million. The increase in cash
was offset by an increase in trade accounts receivable of $38.7 million, an
increase in inventory of $2.7 million, an increase in reimbursable tooling of
$4.5 million, an increase in other non-current assets of $4.1 million, and a
decrease in restructuring reserve of $7.1 million. During the year, the Company
used approximately $96.0 million for investing activities, including the
acquisitions of the Suspension Division and Cofimeta, offset primarily by the
net proceeds from the sale of an equity interest in a publicly traded automotive
supplier. The overall cash requirements were funded by approximately $98.4
million of incremental borrowings.
On May 14, 1999, we entered into an amended and restated credit
agreement with NBD Bank, on behalf of itself and as agent for a syndicate of
other lenders, providing for a $35.0 million revolving credit facility to
finance customer tooling, a $30.0 million term loan and a $110.0 million
revolving credit facility (the "Senior Credit Facility"). At March 31, 1999, we
had no borrowings under the working capital revolver, no borrowings under the
tooling revolver and $4.7 million in outstanding letters of credit to support
certain Industrial Development Revenue Bonds and workers compensation
commitments. Approximately $140.3 million was available under the revolver at
March 31, 1999, reduced for the effect of the Letters of Credit, including $35.0
million available under the revolver for customer tooling. At June 1, 1999 we
had approximately $127.0 million available under the Senior Credit Facility. The
obligations under the Senior Credit Facility are secured by substantially all of
our assets and the assets of certain of our subsidiaries. The Senior Credit
Facility contains certain customary covenants, including reporting and other
affirmative covenants, financial covenants, and negative covenants, as well as
customary events of default, including non-payment of principal, violation of
covenants, and cross-defaults to certain other indebtedness, including the
indebtedness evidenced by the notes described below.
During fiscal 1998, we received net proceeds of $37.6 million
from the offering of $125.0 million of 10 1/8% Senior Subordinated Notes due
2007 ("the Series A Notes"), after payment of approximately $83.1 million
18
<PAGE> 20
to refinance existing indebtedness and approximately $4.3 million in issuance
costs. We used approximately $23.2 million and $2.5 million respectively toward
the acquisitions of Howell and RPIH and related expenses. The remainder of the
proceeds were used for general corporate purposes and in part to fund the
acquisition of the Suspension Division. The balance of the Suspension Division
acquisition was funded by the issuance of the Series B Notes, which were issued
April 1, 1998 and are substantially identical to, and rank pari passu in right
of payment with Series A Notes. On December 8, 1998 we issued the Series C
Notes. The net proceeds received from this offering were $41.5 million and were
used to repay borrowings under the Senior Credit Facility and for working
capital and other general corporate purposes. The Series C Notes are
substantially identical to, and rank pari passu in right of payment with the
Series A and Series B Notes (together with the Series C Notes, "the Notes").
On June 9, 1999 we completed an exchange offer for our
outstanding Notes. Pursuant to the exchange offer, all of the Series C Notes
and $159.6 million aggregate principal amount of the Series A and Series B
Notes were exchanged for our registered 10 1/8% Senior Subordinated Notes due
2007, Series D, which are substantially identical to, and rank pari passu in
right of payment with the Notes.
We believe the proceeds of the Notes have enhanced our ability to
meet our growth and business objectives. However, interest payments on the Notes
will represent a significant liquidity requirement for us. We are required to
make scheduled semi-annual interest payments on the Notes of approximately $10.1
million on June 15 and December 15 each year until their maturity on June 15,
2007 or until the Notes are redeemed.
Cash outlays for capital expenditures were $33.6 million, or 5.7%
of net sales for the year ending March 31, 1999 as compared to $16.7 million, or
4.1% of net sales for the year ended March 31, 1998. The increase of $16.9
million was due primarily to the Saturn LS program launch ($6.1 million), the
redeployment of a press line to Argos, Indiana ($3.6 million) and the addition
of a third press line in Masury, Ohio ($2.1 million). Other capital expenditures
related to press equipment and rebuilds, safety and maintenance equipment,
automation and other productivity improvement expenditures, and other items
including computers and welding equipment.
For fiscal 2000, our capital expenditures are expected to be
$35.8 million, consisting of a $23.3 million investment to support new business
and increase capacity, $7.2 million for maintenance, rebuilds and improvements,
and $5.3 million in other expenditures, including health, safety, environmental
and maintenance items.
We believe that cash generated from operations, together with
amounts available under the Senior Credit Facility will be adequate to meet our
debt service requirements, capital expenditures and working capital needs for
the foreseeable future, although no assurance can be given in this regard. Our
future operating performance and ability to service or refinance the Notes and
to extend or refinance our other indebtedness will be subject to future economic
conditions and to financial, business and other factors that are beyond our
control.
RAMOS ARIZPE - MEXICO FACILITY
On March 31, 1999 we entered into a cross-border asset usage
facility through a wholly-owned Mexican subsidiary for the acquisition of new
equipment for and construction of a new facility being built in Ramos Arizpe,
Mexico. Under U.S. Generally Accepted Accounting Principles, this transaction is
classified as an operating lease. The approximately 330,000 sq. ft. facility
will support a General Motors hood, door and underbody assembly program (SUV/
Hybrid vehicle) slated to begin production in April 2000. The program is
expected to generate approximately $90.5 million of sales when in full
production. We were awarded substantially all closure panels and rear underbody
components for the program. Plant rationalization has allowed for the transfer
of equipment already owned to the facility. The lease payments for the facility
will be approximately $5.6 million per year. The award of the program is in line
with our expected growth into Mexico and is seen as key to our future success in
that country.
IMPACT OF GM STRIKE
During a portion of the fiscal year ended March 31, 1999, substantially
all of GM vehicle production was shut down due to two local strikes in Flint,
Michigan. GM is a significant customer of ours and the prolonged
19
<PAGE> 21
shutdown had an adverse effect on our results of operations for the fiscal year
ended March 31, 1999. We took all steps necessary to lessen the overall impact.
The effect of the strike on this period was as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
March 31, 1999
---------------------
(dollars in millions)
<S> <C>
Sales $(12.7)
Gross Profit (5.2)
Net Income (3.1)
EBITDA (5.2)
</TABLE>
YEAR 2000
We are aware of the potential impact of the millennium change on
business. In response, we have created a Year 2000 project team to perform
inventory, remediation, and testing of possibly affected systems. The Year 2000
project team is coordinated at the corporate level with support from senior
management. Key individuals at the facility level are executing the Year 2000
efforts. We have also employed some external Year 2000 contractors to assist
with compliance in some areas. We are following the Year 2000 guidelines set
forth by the Automotive Industry Action Group ("AIAG") and are reporting Year
2000 status quarterly to the AIAG.
We have broken the Year 2000 program into the following assessment
areas: business computer systems, desktop computing, network infrastructure,
voice systems, shop floor systems, non-information technology items, and
suppliers/business partners. As it relates to the AIAG areas for evaluation, we
do not have dedicated product-testing facilities nor do our products contain any
computer chips. We have completed a significant portion of Year 2000 remediation
with the remainder to be finalized by July 31, 1999. In addition, we are
committed to complete Year 2000 testing between March 31, 1999 and September 31,
1999. We will continue Year 2000 compliance testing throughout 1999 to ensure
that regression does not occur.
We have completed a thorough assessment of all manufacturing,
administrative and management software. We have begun to upgrade certain
software modules and/or code to comply with AIAG Year 2000 guidelines and
timing. At the same time, we are implementing new software where compliance
through upgrade could not be achieved in either a timely or cost effective
manner. We are on target and expect to achieve Year 2000 compliance for all of
our software by July 31, 1999. Further, we initiated the move to a common
software system as we continue the implementation effort across all facilities.
We are assessing the Year 2000 readiness of our external suppliers,
business partners, and service providers to ensure that business associations
will not be negatively impacted by the Year 2000 date. We will use alternate
sourcing and contingency planning in situations that threaten our ability to
deliver products or conduct business. Since these other companies are in various
stages of Year 2000 readiness, we will be monitoring their progress throughout
1999, assessing associated risks, and taking a course of action to ensure
business continuity.
In addition to efforts of our internal staff, we are using external
resources to complete the project. The cost of external resources for 1998
totaled $0.3 million and the total capital spending for 1998 was $1.4 million of
which, approximately $0.4 million relates to software projects. In 1999, the
external costs were $0.4 million, which related to remediation activities
derived from Year 2000 testing, and capital expenditures were $0.5 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
In the normal course of business, we are exposed to market risk
associated with fluctuations in foreign exchange rates and interest rates. We
conservatively manage these risks through the use of derivative financial
instruments in accordance with management's guidelines.
20
<PAGE> 22
We enter into all hedging transactions for periods consistent with the
underlying exposures. We do not enter into derivative instruments for trading
purposes.
Foreign Exchange. We enter into foreign currency forward contracts to
protect ourselves from adverse currency rate fluctuations on foreign currency
commitments. These commitments are generally for terms of less than one year.
The foreign currency contracts are executed with banks that we believe are
creditworthy and are denominated in currencies of major industrialized
countries. The gains and losses relating to the foreign currency forward and
option contracts are deferred and included in the measurement of the foreign
currency transaction subject to the hedge. We believe that any gain or loss
incurred on foreign currency forward contracts is offset by the direct effects
of currency movements on the underlying transactions.
We have performed a quantitative analysis of our overall currency rate
exposure at March 31, 1999. Based on this analysis, a 10% change in currency
rates would not have a material effect on our earnings.
Interest Rates. We generally manage risk associated with interest rate
movements through the use of or combination of variable and fixed rate debt. Our
exposure as a result of variable interest rates relates primarily to outstanding
floating rate debt instruments that are indexed to U.S. or European Monetary
Union short-term money market rates.
We have performed a quantitative analysis of our overall interest rate
exposure at March 31, 1999. Based on this analysis, a 10% change in the average
cost of our variable rate debt would not have a material effect on our earnings.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and schedules filed herewith are set
forth on the Index to Financial Statements and Financial Statement Schedules on
page F-1 of the separate financial section of this Report and are incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the name, age and position of each of
the directors and executive officers of Oxford Automotive. Each director of
Oxford Automotive will hold office until the next annual meeting of shareholders
or until his successor has been elected and qualified. Officers of Oxford
Automotive serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
<S> <C> <C>
Selwyn Isakow 47 Chairman of the Board of Directors
Rex E. Schlaybaugh, Jr 50 Vice Chairman of the Board of Directors and Secretary
Steven M. Abelman 48 Director, President and Chief Executive Officer
Manfred J. Walt 46 Director
Dennis K. Pawley 57 Director
Aurelian Bukatko 48 Senior Vice President-Chief Financial Officer
</TABLE>
21
<PAGE> 23
<TABLE>
<S> <C> <C>
Larry C. Cornwall 51 Senior Vice President-Sales and Engineering
John H. Ferguson 50 Vice President-Financial Operations and Assistant Secretary
</TABLE>
Selwyn Isakow, Chairman of the Board of Directors. Mr. Isakow has been
a director of Oxford Automotive since its inception in 1995, was the President
of Oxford Automotive from 1995 to May 1997, and was appointed Chairman of the
Board in May 1997. Since 1985, Mr. Isakow has been the President of The Oxford
Investment Group, Inc. ("Oxford Investment"), a private investment and corporate
development company that acquires majority equity positions on behalf of its
principals in industrial products manufacturing, financial services, niche
distribution and other selected companies. Mr. Isakow generally serves as
Chairman of the Board and a director of all such portfolio companies. Mr. Isakow
is also a director of Champion Enterprises, Inc. and Ramco Gershenson Properties
Trust, and serves on the boards of numerous community organizations. From 1982
to 1985, Mr. Isakow was the Executive Vice President of Comerica Incorporated, a
regional bank holding company, and from 1978 to 1982, was a principal at Booz,
Allen and Hamilton, management consultants.
Rex E. Schlaybaugh, Jr., Vice Chairman of the Board of Directors and
Secretary. Mr. Schlaybaugh has been the Secretary and a director of Oxford
Automotive since its inception in 1995 and was appointed Vice Chairman of the
Board in May 1997. Mr. Schlaybaugh was appointed the Vice Chairman of Oxford
Investment in May 1997. Mr. Schlaybaugh has been a member of the firm of Dykema
Gossett PLLC since 1985. Mr. Schlaybaugh is also a director of certain other
portfolio companies of Oxford Investment. Mr. Schlaybaugh is also a member of
the Board of Directors of the Manufacturers Life Insurance Company (U.S.A.), the
Michigan State Chamber of Commerce and is a Trustee of Oakland University.
Steven M. Abelman, Director, President and Chief Executive Officer. Mr.
Abelman has been President, Chief Executive Officer and a Director of Oxford
Automotive since May 1997. Prior to joining Oxford Automotive, Mr. Abelman was
Deputy Chief Executive Officer of Bundy International and President of Bundy
North America ("Bundy"), an automotive supplier of brake and fuel delivery
systems, from February 1996 until May 1997 and prior to that he was President of
Bundy North America from September 1995 until February 1996. From December 1991
to September 1995, Mr. Abelman was Vice President and General Manager of Augat
Wiring Systems, a manufacturer of automotive wiring systems and components.
Manfred J. Walt, Director. Mr. Walt has been a director of Oxford
Automotive since May 1997. Mr. Walt has been the Executive Vice President and
Chief Financial Officer of Central Park Lodges Ltd., a Canadian assisted living
company located in Toronto, Canada, since May 1998. From October 1997 to
May1998, Mr. Walt was the Sr. Vice President of Gentra, Inc., a Real Estate
Company based in Toronto, Canada. From 1989 to September 1997, Mr. Walt was the
Managing Partner-Financial Services of Edper Brascan Corporation ("Edper"), a
diversified natural resources, energy and property development company. Gentra,
Inc. is an affiliate of Edper. From 1980 to 1989, Mr. Walt served in various
capacities with Edper.
Dennis K. Pawley, Director. Mr. Pawley was appointed a director of
Oxford Automotive in January 1999. Mr. Pawley has been the President and Chief
Operating Officer of Performance Learning, a consulting company located in Las
Vegas, Nevada, since February 1999. From 1991 to 1998, Mr. Pawley served as the
Executive Vice President of Manufacturing for DaimlerChrysler in Auburn Hills,
Michigan.
Aurelian Bukatko, Senior Vice President-Chief Financial Officer. Mr.
Bukatko was appointed Senior Vice President-Chief Financial Officer of Oxford
Automotive in February 1999. From December 1997 to February 1999, Mr. Bukatko
was Corporate Treasurer of Hayes-Lemmerz International, a worldwide manufacturer
of wheels, brake drums and rotors for motor vehicles. From August 1996 to
November 1997, Mr. Bukatko served as Director of Global Currency Management for
the Lear Corporation, a worldwide supplier of automotive interiors. From
September 1991 to July 1996, Mr. Bukatko was the Treasurer and Financial
Director, International for Lear Seating in Gustavsburg, Germany. Before joining
Lear in 1991, Mr. Bukatko spent sixteen years at Inland Steel Industries, Inc.
where he held various financial positions.
22
<PAGE> 24
Larry C. Cornwall, Senior Vice President-Sales and Engineering. Mr.
Cornwall was appointed Vice President- Sales and Engineering of Oxford
Automotive in May 1997. From October 1995 to May 1997, Mr. Cornwall was the
Senior Vice President-Sales and Engineering at BMG. From 1991 to 1995, Mr.
Cornwall was Vice President of Sales and Engineering at Veltri International, an
automotive stamper.
John H. Ferguson, Vice President-Financial Operations and Assistant
Secretary. Mr. Ferguson was appointed as a Vice President-Financial Operations
and Assistant Secretary of Oxford Automotive in May 1997. Prior to that time,
Mr. Ferguson was with Bundy, where he acted as Group Plant Manager from 1994 to
1996 and as Corporate Controller from 1992 to 1994. From 1984 to 1992, Mr.
Ferguson held several positions with GenCorp. Inc., an automotive tire supplier,
including Controller of the Automotive Products Group.
Certain of the officers and directors of Oxford Automotive are also
directors or officers of Oxford Automotive subsidiaries.
BOARD COMMITTEES
The Board of Directors have established an Executive Committee, an
Audit Committee, and a Compensation Committee. The Executive Committee is
responsible for exercising all of the duties of the Board of Directors that may
lawfully be delegated to it by the Board of Directors under Michigan Law. The
Executive Committee consists of Messrs. Isakow, Schlaybaugh and Abelman. The
Audit Committee is responsible for reviewing with management our financial
controls and accounting and reporting activities. The Audit Committee reviews
the qualifications of our independent auditors, makes recommendations to the
Board of Directors regarding the selection of independent auditors, reviews the
scope, fees and results of any audit and reviews non-audit services and related
fees. The Audit Committee consists of Messrs. Schlaybaugh and Walt. The
Compensation Committee is responsible for the administration of all salary and
incentive compensation plans for our officers and key employees, including
bonuses. Salaries and bonuses will be reviewed by the Compensation Committee and
will be adjusted in light of our performance, the responsibilities of each of
our officers in meeting corporate performance objectives and other factors, such
as length of service and subjective assessments. The Compensation Committee
consists of Messrs. Isakow and Walt.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth certain information as to the compensation earned
by our Chief Executive Officer and our four other most highly paid officers (the
"Named Executive Officers") for the last three fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------
Name and Principal All Other Compensation (1)
Position Year Salary ($) Bonus ($) ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Steven M. Abelman, 1999 $291,669 $74,500 $2,687
President and CEO (2) 1998 230,769 150,000 937
1997 - - -
Selwyn Isakow, 1999 108,333 37,500 -
Chairman (3) 1998 95,577 101,250 -
1997 - - -
Rex E. Schlaybaugh, Jr., 1999 150,000 37,500 -
Vice Chairman (4) 1998 138,462 101,250 -
</TABLE>
23
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C>
1997 - - -
Larry C. Cornwall, Senior 1999 199,583 37,500 2,069
Vice President - Sales 1998 161,846 68,000 2,354
and Engineering 1997 124,196 36,000 -
Donald C. Campion, Senior 1999 182,159 - 2,862
Vice President and CFO (5) 1998 147,808 52,500 1,113
1997 - - -
</TABLE>
(1) "All Other Compensation" is comprised of contributions made by the
Company to the accounts of each of the Named Executive Officers
under the Company's 401K Plan. The amount for Mr. Campion includes
$1,500 he received in connection with his separation from the
Company. The Company has agreed to pay Mr. Campion an additional
$50,000 in connection with such separation during the current
fiscal year.
(2) Mr. Abelman was appointed President and Chief Executive Officer in
May 1997. See "-Employment Agreements."
(3) Mr. Isakow was the President of the Company from its inception
until May 1997, for which he did not receive any compensation from
the Company. Steven M. Abelman was appointed President and Chief
Executive Officer in May 1997. Mr. Isakow received compensation
during the last two fiscal years in connection with his position
as Chairman of the Board of the Company.
(4) Mr. Schlaybaugh did not receive any compensation from the Company
prior to the 1998 fiscal year.
(5) Mr. Campion was appointed Senior Vice President-Chief Financial
Officer of Oxford Automotive in July 1997 and resigned from his
position with Oxford Automotive on February 6, 1999. See
"--Employment Agreements."
EMPLOYMENT AGREEMENTS
As of May 1, 1997, Oxford Automotive and Steven M. Abelman entered into
an Employment and Noncompetition Agreement. The agreement provides that Mr.
Abelman will serve as President and Chief Executive Officer of Oxford Automotive
on an "at-will" basis. The agreement provides that Mr. Abelman will receive an
annual base salary, will be eligible to receive a bonus of up to 60% of his
salary as determined by the Board of Directors of Oxford Automotive, and will be
entitled to certain fringe benefits. Mr. Abelman has also agreed not to compete
with the Company during the period of his employment and for two years following
the termination of his employment. Upon the termination of his employment
without cause, Mr. Abelman is entitled to severance payments equal to 1.5 times
his annual base salary.
On November 24, 1995, BMG and Larry C. Cornwall entered into an
Employment Agreement. The agreement provides that Mr. Cornwall will serve as
Senior Vice President-Sales and Marketing of BMG on an "at-will" basis. Mr.
Cornwall has subsequently been appointed as Senior Vice President-Sales and
Engineering of Oxford Automotive. The agreement provides that Mr. Cornwall will
receive an annual base salary, will be eligible to receive a bonus of up to 35%
of his salary as determined by the Board of Directors of BMG, will be eligible
to participate in the Company's profit sharing plan, and will be entitled to
certain fringe benefits. Upon the termination of the agreement, Mr. Cornwall
will be entitled to continue to receive his base salary for the longer of three
months or the Canadian statutory requirement.
As of July 21, 1997, Oxford Automotive and Donald C. Campion entered
into an Employment and Noncompetition Agreement. The agreement provided that Mr.
Campion would serve as Senior Vice President-Chief Financial Officer of Oxford
Automotive on an "at-will" basis. The agreement provided that Mr. Campion would
receive an annual base salary, would be eligible to receive a bonus of up to 50%
of his salary as determined by the
24
<PAGE> 26
Board of Directors of Oxford Automotive, and would be entitled to certain fringe
benefits. Mr. Campion also agreed not to compete with the Company during the
period of his employment and for two years following the termination of his
employment. Upon his resignation, Mr. Campion agreed to certain severance
arrangements with the Company, and his shares were repurchased in accordance
with his Employment and Noncompetition Agreement.
See also Item 13 "Certain Relationships and Related Transactions."
DIRECTOR COMPENSATION AND ARRANGEMENTS
We pay fees to our non-employee directors of up to $2,000 per meeting
and reimburse the out-of-pocket expenses related to directors' attendance at
each Board and committee meeting. In addition, we may elect to adopt a
non-employee director option plan or other similar plan to provide for grants of
stock options or other benefits as a means of attracting and retaining highly
qualified independent directors for the Company. Members of the Board of
Directors are elected pursuant to certain shareholder agreements by and among
the Company and certain of its shareholders. See Item 12 "Security Ownership of
Certain Beneficial Owners and Management."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On August 4, 1997 a Compensation Committee, whose members are Selwyn
Isakow and Manfred Walt, was appointed by the Board of Directors. Mr. Isakow is
our Chairman and was our President from our inception in 1995 to May 1997.
Pursuant to the terms of the Indentures for our outstanding 10 1/8% Senior
Subordinated Notes due 2007, we are not permitted to enter into any transaction
(including employee compensation arrangements) with any Affiliate (as defined)
unless the transaction is arm's length and, if the transaction involves amounts
in excess of $1 million in any one year, the terms of the transaction are set
forth in writing and approved by a majority of the disinterested members of the
Board of Directors. For similar transactions in excess of $5 million in any one
year, an opinion of a recognized investment banking firm that such transaction
is fair, from a financial standpoint, is also required.
Mr. Isakow controls Oxford Investment, a private investment and
corporate development company and Mr. Schlaybaugh is the Vice Chairman of Oxford
Investment. We have entered into a management agreement with Oxford Investment.
Pursuant to the terms of this management agreement, Oxford Investment performs
various consulting, management and financial advisory services on our behalf. We
pay Oxford Investment a monthly management fee of $83,334 and will pay an
investment banking fee, for acquisitions of $2.5 million or more, of 1.0% or
1.25% (for acquisitions outside of North America) of the aggregate acquisition
cost for advice and assistance in connection with such acquisition, with a
minimum fee of $200,000. No investment banking fee will be paid to Oxford
Investment in connection with acquisitions for aggregate consideration of less
than $2.5 million. The initial term of the agreement will end on December 31,
2001, but will automatically extend for additional one-year periods thereafter
unless either party terminates the agreement. In addition, pursuant to the
management agreement, Oxford Investment licenses to us the name "Oxford
Automotive" which is owned by Oxford Investment.
During the fiscal year ended March 31, 1999, we paid Oxford Investment
management fees and expenses of approximately $1.076 million, and investment
banking fees of $1.747 million.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of May 15, 1999, there were 309,750 issued and outstanding shares of
the Common Stock, without par value, of the Company (the "Common Stock"). The
following table sets forth information as of May 15, 1999 with respect to the
Common Stock beneficially owned by each of our directors, the Named Executive
Officers, all of our directors and executive officers as a group, and by other
holders known to us as having beneficial ownership of more than 5% of the Common
Stock. Selwyn Isakow and our other shareholders have entered into certain
agreements, each of which contain substantially identical terms, the result of
which gives Mr. Isakow voting control
25
<PAGE> 27
over 100% of the Common Stock, except under certain circumstances. See "--
Shareholder Agreements." Unless otherwise specified, the address for each person
is 1250 Stephenson Highway, Troy, Michigan 48083.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------ ------ --------
<S> <C> <C>
Selwyn Isakow (1).............................. 162,584 52.49%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
Rex E. Schlaybaugh, Jr ........................ 20,900 6.75%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
Steven M. Abelman (2) ......................... 12,326 3.98%
Manfred J. Walt ............................... 2,300 0.74%
175 Boor St., E., S. Tower, Suite 601
Toronto, Ontario, Canada M4W 3R8
Dennis K. Pawley N/A N/A
7000 Las Vegas Blvd. N.
Las Vegas, Nevada 89115
Aurelian Bukatko............................... 3,000 0.97%
Larry C. Cornwall ............................. 7,000 2.26%
Robert H. Orley ............................... 20,600 6.65%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
Gregg L. Orley ................................ 20,600 6.65%
2000 N. Woodward Avenue, Suite 130,
Bloomfield Hills, Michigan 48304
All directors and officers as a group (8 persons) (1)(2) 213,310 68.96%
</TABLE>
(1) Includes 140,124 shares owned by Hilsel Investment Company
Limited Partnership, of which Tridec Management, Inc. is
General Partner. Mr. Isakow is the President and a
shareholder of Tridec Management, Inc. In addition, Mr.
Isakow may be deemed to be the beneficial owner of all of
the outstanding shares of Common Stock as a result of
certain voting power over such shares pursuant to the
shareholder agreements described below and certain
purchase options that may be exercised by Mr. Isakow with
respect to 49,450 outstanding shares of Common Stock.
(2) Mr. Abelman's Employment and Noncompetition Agreement with
Oxford Automotive provides Oxford Automotive or its
assigns with the right to repurchase his shares of Common
Stock if his employment is terminated for any reason.
SHAREHOLDER AGREEMENTS
Each holder of Common Stock is a party to a shareholder agreement that
provides for certain restrictions on transfer by shareholders and grants certain
other shareholders the option to purchase the shares of a shareholder upon his
death. Each surviving shareholder has the right to exercise this option within
30 days of the death of a shareholder. The exercising shareholders will divide
the deceased shareholder's shares as they agree or, if they are not able to
agree, pro rata. If the exercising shareholders are not able to agree on a
purchase price with the estate of the deceased shareholder, then the per share
purchase price shall be the per share value of the Company based on the greater
of the value of the Company as a going concern or on a liquidation basis, as
determined by an independent appraisal. The purchase price shall be paid by an
initial cash payment of up to 20% of the purchase
26
<PAGE> 28
price with the balance paid pursuant to a five-year, unsecured promissory note
bearing interest at the prime rate. The agreements also provide that each
shareholder will grant a proxy to Mr. Isakow to vote all of the shareholder's
shares at any meeting of the Company; provided, however, that if holders of
shares having a majority in interest of the shares of Common Stock determine
that it is in the best interest of all of the shareholders to sell all or
substantially all of the assets of the Company or to cause the Company to merge
or consolidate with or into another corporation, Mr. Isakow shall exercise the
proxies provided to him consistent with that decision. As a result, except as
described above, Mr. Isakow has voting control over 100% of the Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As of March 31, 1997, Mr. Abelman issued a note to the Company in
connection with his acquisition of shares of the Common Stock. The principal
amount of the note was $130,000 and the note bears interest at the prime rate
plus 1.0%, which rate is adjusted on March 31 of each year to reflect the then
current prime rate. Principal and interest on the note is payable in equal
annual installments with interest on the unpaid principal, with the final
payment due May 31, 2002. As of March 31, 1999 the principal amount outstanding
of the note was $104,000.
On February 1, 1999 we entered into a Consulting Services Agreement
(the "Consulting Agreement") with Performance Learning, Inc., a Nevada
corporation,("Performance Learning"). Dennis K. Pawley, a director of Oxford
Automotive is the President and Chief Operating Officer and a shareholder of
Performance Learning. Under the Consulting Agreement, Performance Learning has
agreed to provide consulting services to us for a one year period, which
commenced on February 15, 1999. As compensation for such consulting services we
will pay Performance Learning a $100,000 retainer, $5,000 per day for each day a
principal of Performance Learning performs consulting services for the Company,
and $1,000 per day for each day a non-principal of Performance Learning performs
consulting services for the Company. The retainer is payable in two equal
installments and the second installment will not be paid if we terminate the
agreement after six months. We will pay additional amounts to reimburse
Performance Learning for reasonable expenses it incurs in connection with
performing the consulting services.
See also Item 11 "Executive Compensation - Compensation Committee
Interlocks and Insider Participation."
LEGAL
Rex E. Schlaybaugh, Jr. is a shareholder, the Vice Chairman of the
Board and a director of the Company. Dykema Gossett PLLC, of which Mr.
Schlaybaugh is a member, has performed legal services for the Company since its
inception. The Company expects to continue to retain the firm as general
counsel.
27
<PAGE> 29
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The financial statements, supplementary financial information, and
financial statement schedules filed herewith are set forth on the Index to
Financial Statements and Financial Statement Schedules on page F-1 of the
separate financial section of this Report, which is incorporated herein by
reference.
A list of Exhibits included as part of this report is set forth in the
Exhibit Index that immediately precedes such exhibits and is incorporated
herein by reference.
(b) The following reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1999:
(i) Report on Form 8-K, dated February 5, 1999, was filed by the
Company on February 18, 1999; such report contained information under Item
2 with respect to the acquisition of Cofimeta.
28
<PAGE> 30
OXFORD AUTOMOTIVE, INC.
INDEX TO FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Description Page
<S> <C>
Report of Independent Accountants ............................................................... F-2
Consolidated Balance Sheets as of March 31, 1999 and 1998........................................ F-3
Consolidated Statements of Operations for the years ended March 31, 1999, 1998 and 1997.......... F-4
Consolidated Statements of Comprehensive Income and Changes in Shareholders' Equity for the years
ended March 31, 1999, 1998 and 1997.............................................................. F-5
Consolidated Statements of Cash Flows for the years ended March 31, 1999, 1998 and 1997.......... F-6
Notes to Consolidated Financial Statements ...................................................... F-7
</TABLE>
Financial Statement Schedules:
II - Valuation and Qualifying Accounts
F-1
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Oxford Automotive, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of comprehensive income and changes in
shareholders' equity and of cash flows present fairly, in all material respects,
the financial position of Oxford Automotive, Inc. and its subsidiaries (the
Company) at March 31, 1999 and 1998 and the results of their operations and
their cash flows for the years ended March 31, 1999, 1998 and 1997 in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Detroit, Michigan
May 24, 1999
F-2
<PAGE> 32
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- ----------------------------------------------------------------------------------------------------------
MARCH 31,
1999 1998
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 19,008 $ 18,321
Trade receivables, net 152,281 65,273
Inventories 48,104 21,305
Refundable income taxes 1,601
Reimbursable tooling 23,201 13,315
Deferred income taxes 3,669 4,399
Unexpended bond proceeds 4,159
Prepaid expenses and other current assets 18,225 2,803
----------- -----------
Total current assets 264,488 131,176
Marketable securities 8,627
Other noncurrent assets 29,677 10,116
Deferred income taxes 25,366 6,405
Property, plant and equipment, net 223,399 163,708
----------- -----------
TOTAL ASSETS $ 542,930 $ 320,032
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 109,343 $ 52,214
Accrued expenses and other current liabilities 54,444 17,050
Restructuring reserve 8,747 6,363
Current portion of borrowings 11,504 10,965
----------- -----------
Total current liabilities 184,038 86,592
Pension liability 7,069 4,727
Postretirement medical benefits liability 42,703 35,992
Deferred income taxes 11,867 15,332
Other noncurrent liabilities 3,648 2,596
Long-term borrowings - less current portion 252,358 128,483
----------- -----------
Total liabilities 501,683 273,722
----------- -----------
Commitments and contingent liabilities (Note 14)
Redeemable Series A $3.00 cumulative preferred stock, $100 stated value -
457,541 shares authorized, 397,539 shares issued
and outstanding in 1999 and 1998 (Notes 3 and 12) 40,319 40,192
----------- -----------
Shareholders' equity
Common stock, no par value, 400,000 shares authorized; 309,750
shares issued and outstanding at March 31, 1999 and 1998 1,050 1,050
Accumulated other comprehensive income (6,705) 318
Retained earnings 6,583 4,750
----------- -----------
Total shareholders' equity 928 6,118
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 542,930 $ 320,032
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 33
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- ----------------------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Net sales $ 591,645 $ 410,321 $ 136,861
Cost of sales 536,578 368,420 125,375
----------- ----------- -----------
GROSS PROFIT 55,067 41,901 11,486
Selling, general and administrative 32,770 21,839 7,685
Restructuring provision 1,151 1,610
Gain on sale of equipment (777) (1,602)
----------- ----------- -----------
OPERATING INCOME 21,923 20,054 3,801
Other income (expense)
Interest expense (20,903) (10,710) (3,388)
Other 4,445 321 2,201
----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 5,465 9,665 2,614
Provision for income taxes (2,312) (4,074) (1,065)
----------- ----------- -----------
NET INCOME 3,153 5,591 1,549
Accrued dividends and accretion on
redeemable preferred stock 1,320 1,334 300
----------- ----------- -----------
NET INCOME APPLICABLE TO COMMON STOCK $ 1,833 $ 4,257 $ 1,249
=========== =========== ===========
NET INCOME PER SHARE (BASIC AND DILUTED) $ 5.92 $ 13.74 $ 9.37
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 34
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND CHANGES IN
SHAREHOLDERS' EQUITY
(DOLLAR AMOUNTS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------
ACCUMULATED
OTHER
CAPITAL COMPREHENSIVE RETAINED
STOCK INCOME EARNINGS TOTAL
<S> <C> <C> <C> <C>
BALANCES AT MARCH 31, 1996 $ 750 $ (230) $ 415 $ 935
Comprehensive income
Net income 1,549 1,549
Foreign currency translation adjustments (33) (33)
Equity adjustment for minimum pension
liability (net of tax of $12) (18) (18)
--------
Comprehensive income 1,498
Accrued dividends and accretion of
redeemable preferred stock (300) (300)
Issuance of common stock, net of redemptions 300 (92) 208
--------- -------- --------- --------
BALANCES AT MARCH 31, 1997 1,050 (281) 1,572 2,341
Comprehensive income
Net income 5,591 5,591
Foreign currency translation adjustments (623) (623)
Unrealized gain on marketable securities 969 969
Equity adjustment for minimum pension
liability (net of tax of $169) 253 253
--------
Comprehensive income 6,190
Accrued dividends and accretion of
redeemable preferred stock (1,334) (1,334)
Excess of purchase price over predecessor
basis (1,079) (1,079)
--------- -------- --------- --------
BALANCES AT MARCH 31, 1998 1,050 318 4,750 6,118
Comprehensive income
Net income 3,153 3,153
Foreign currency translation adjustments (6,054) (6,054)
Reclassification adjustment for net
gains realized in net income (969) (969)
--------
Comprehensive income (3,870)
Accrued dividends and accretion of
redeemable preferred stock (1,320) (1,320)
--------- -------- --------- --------
BALANCES AT MARCH 31, 1999 $ 1,050 $ (6,705) $ 6,583 $ 928
========= ======== ========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 35
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31,
----------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,153 $ 5,591 $ 1,549
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization 25,450 20,279 5,041
Deferred income taxes (7,963) 137 2,136
Gain on sale of equipment (777) (1,586) (195)
Gain on sale of marketable securities (3,459)
Changes in operating assets and liabilities affecting cash
Trade receivables (38,692) (4,615) (8,953)
Inventories (2,718) 1,496 (299)
Reimbursable tooling (4,502) (7,368) (1,601)
Prepaid expenses and other assets 4,250 569 129
Other noncurrent assets (4,139) (836) 3,544
Trade accounts payable 28,971 11,416 (605)
Accrued expenses and other liabilities 6,533 (2,997) (7,957)
Restructuring reserve (7,051) (745) (398)
Income taxes payable/refundable 1,601 2,914 (199)
Other noncurrent liabilities 5,087 1,731 (39)
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 5,744 25,986 (7,847)
----------- ----------- -----------
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (75,080) (24,219) (9,309)
Purchase of property, plant and equipment (33,625) (16,723) (3,326)
Proceeds from sale of equipment 1,550 5,433 341
Purchases of marketable securities (892) (7,658)
Proceeds from sale of marketable securities 12,009
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (96,038) (43,167) (12,294)
----------- ----------- -----------
FINANCING ACTIVITIES
Issuance of share capital 300
Proceeds from borrowing arrangements 108,544 126,653 78,823
Principal payments on borrowing arrangements (10,161) (93,782) (49,186)
Payment of preferred stock dividends (1,194) (1,193)
Debt financing costs (5,195) (5,372)
Redemption and retirement of common stock (92)
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 91,994 26,306 29,845
----------- ----------- -----------
Effect of exchange rate changes on cash (1,013) (475) (33)
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 687 8,650 9,671
Cash and cash equivalents at beginning of period 18,321 9,671
----------- ----------- -----------
Cash and cash equivalents at end of period $ 19,008 $ 18,321 $ 9,671
=========== =========== ===========
Cash paid for interest $ 19,583 $ 7,338 $ 3,033
=========== =========== ===========
Cash paid for income taxes $ 2,900 $ 4,670 $ -
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 36
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
Oxford Automotive, Inc. (the Company) is a full-service supplier of metal
stampings and welded assemblies used as original equipment components
primarily by North American and European original equipment automotive
manufacturers. The Company's products are used in a wide variety of sport
utility vehicles, light and medium trucks, vans and passenger cars. The
Company primarily operates from plants located in the United States,
Canada, France and Mexico. The Company's hourly workforce is represented by
various unions.
Net sales to the Company's three primary customers as a percentage of total
sales are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
1999 1998 1997
<S> <C> <C> <C>
General Motors Corporation 47% 54% 62%
Ford Motor Company 35% 31% 17%
DaimlerChrysler Corporation 13% 9% -
</TABLE>
Accounts receivable from General Motors Corporation, Ford Motor Company,
DaimlerChrysler Corporation, and Renault represent approximately 33%, 20%,
14%, and 12% respectively, of the March 31, 1999 accounts receivable
balance.
Although the Company is directly affected by the economic well being of the
automotive industry and customers referred to above, management does not
believe significant credit risk exists at March 31, 1999. The Company does
not require collateral to reduce such risk and historically has not
experienced significant losses related to receivables from individual
customers or groups of customers in the automotive industry.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts
of Oxford Automotive, Inc. and its wholly-owned subsidiaries, BMG Holdings,
Inc. (BMGH); Howell Industries, Inc. (Howell); Lobdell Emery Corporation
(Lobdell); RPI Holdings, Inc. (RPIH); Oxford Automotive France (Oxford
France); Oxford Automotriz de Mexico S.A. de C.V. (Oxford Mexico); Oxford
Suspension, Inc.; and Oxford Suspension Ltd. Intercompany accounts and
transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
F-7
<PAGE> 37
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
At March 31, 1999 and 1998, the carrying amount of financial instruments
such as cash and cash equivalents, trade receivables and payables and
unexpended bond proceeds, approximated their fair values. The carrying
amount of the borrowings at March 31, 1999 and 1998 approximated their fair
values based on the variable interest rates available to the Company for
similar arrangements, excluding the Senior Subordinated Notes, which had a
fair value of $206,000 at March 31, 1999. The Company had outstanding
forward foreign currency exchange contracts with a notional value of
$49,150 at March 31, 1999.
CASH EQUIVALENTS
The Company considers all highly-liquid investments with maturity of three
months or less when purchased to be cash equivalents.
REVENUE RECOGNITION
Revenue is recognized by the Company upon shipment of product to the
customer.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is principally
determined by the last-in, first-out (LIFO) method for the Company's United
States operations and by the first-in first-out (FIFO) method for the
Company's international operations.
REIMBURSABLE TOOLING
Reimbursable tooling represents net costs incurred on tooling projects for
which the Company expects to be reimbursed by customers. Ongoing estimates
of total costs to be incurred on each tooling project are made by
management. Losses, if any, are recorded when known and in cases where
billings exceed costs incurred, the related tooling gain is recognized upon
acceptance of the tooling by the customer. Certain of the Company's tooling
costs are financed through lending institutions and are reimbursed by
customers on a piece price basis. These tooling assets are classified as
either accounts receivable ($1,551 and $2,676 at March 31, 1999 and 1998,
respectively) or equipment depending upon the ultimate title holder of the
tooling assets.
UNEXPENDED BOND PROCEEDS
Unexpended bond proceeds in the accompanying consolidated balance sheet
represent unexpended proceeds from the issuance of industrial development
revenue bonds by Creative Fabrication Corporation (Creative), a
wholly-owned subsidiary of Lobdell, as discussed in Note 8. Unexpended bond
proceeds are invested in allowable money market accounts and commercial
paper with a maturity of 90 days or less. During 1999, these funds were
used to redeem a portion of the bonds outstanding.
F-8
<PAGE> 38
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost and include
expenditures for improvements which materially increase the useful lives of
existing assets. Expenditures for normal repair and maintenance are charged
to operations as incurred. For federal income tax purposes, depreciation is
computed using accelerated and straight-line methods. For financial
reporting purposes, depreciation is computed principally using the
straight-line method over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
<S> <C>
Land improvements 15
Buildings and improvements 30-40
Machinery and equipment 3-20
</TABLE>
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". This Statement requires that long-lived assets and certain
identifiable intangibles to be held and used by the Company be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. The Company
recognizes impairment losses for assets or groups of assets where the sum
of the estimated future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the related asset or group of
assets. The amount of the impairment loss recognized is the excess of the
carrying amount over the fair value of the asset or group of assets being
measured.
MARKETABLE SECURITIES
Marketable securities at March 31, 1998, mainly composed of equity
securities, are classified as available-for-sale securities and are
reported at fair value using quoted market prices. Unrealized holding gains
and losses are included as a separate component of shareholders' equity
until realized. During fiscal year 1999 the Company sold its marketable
securities, recognizing a gain before taxes of $3,459.
EQUITY INVESTMENT
As discussed in Note 3, the Company holds a 49% interest in Metalurgica
Carabobo, S.A. (Metalcar), a Venezuelan joint venture. The Company accounts
for this investment under the equity method. At March 31, 1999, this
investment, classified in other noncurrent assets, is carried at $5,754
compared with underlying equity in net assets of $3,569. The difference
between these amounts is amortized over 40 years. Cash dividends received
from Metalcar in 1999 were $490.
F-9
<PAGE> 39
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ENVIRONMENTAL COMPLIANCE AND REMEDIATION
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations which do not contribute to current or
future revenue generation are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated. Estimated costs are based upon enacted
laws and regulations, existing technology and the most probable method of
remediation. The costs determined are not discounted and exclude the
effects of inflation and other social and economic factors.
INCOME TAXES
Deferred taxes are provided to give recognition to the effect of expected
future tax consequences of temporary differences between the carrying
amounts for financial reporting purposes and the tax bases for income tax
purposes of assets and liabilities.
FOREIGN EXCHANGE CONTRACTS
Gains and losses of foreign currency firm commitment hedges are deferred
and included in the basis of the transactions underlying the commitments.
During fiscal 1997, the Company recognized a gain of approximately $2,000
related to certain foreign currency exchange transactions terminated during
the year. The gain is included as a component of other income in the
accompanying March 31, 1997 statement of operations. Had the foreign
currency exchange transactions not been terminated, the recognized gain
would normally have been recorded as a component of sales.
FOREIGN CURRENCY TRANSLATION
The foreign currency financial statements of BMGH and Oxford France, where
the local currency is the functional currency, are translated using
exchange rates in effect at period end for assets and liabilities and at
weighted average exchange rates during the period for operating statement
accounts. The resulting foreign currency translation adjustments are
recorded as a separate component of shareholders' equity. Exchange gains
and losses resulting from foreign currency transactions are included in
operating results during the period in which they occur.
CHANGE IN ACCOUNTING PRINCIPLES
Effective April 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". This
Statement requires that all items recognized under accounting standards as
components of comprehensive earnings be reported in the financial
statements. This disclosure is included in the accompanying Consolidated
Statements of Comprehensive Income and Changes in Shareholders' Equity. The
Company has classified items of other comprehensive earnings by their
nature in its financial statements. Prior years' financial statements have
been classified to conform to these requirements.
F-10
<PAGE> 40
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accumulated other comprehensive income consisted of the following
components as of March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Foreign currency translation adjustments $(6,705) $ (651)
Unrealized gain on marketable securities 969
------- -------
Total accumulated other comprehensive income $(6,705) $ 318
======= =======
</TABLE>
The Company adopted SFAS 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits." This Statement revises employers'
disclosures about pension and other postretirement plans as described in
Note 11. It does not change the measurement or recognition of such plans,
but standardizes the disclosure requirements to the extent practical,
requires additional information on changes in the benefit obligations and
fair values of plan assets to facilitate financial analysis, and eliminates
certain disclosures that are perceived to be no longer useful.
The Company adopted Statement of Position (SOP) 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" during
1999. The SOP requires that the following costs be capitalized as a
long-lived asset: external direct costs incurred in developing or obtaining
internal-use software; payroll and related costs for employees who are
directly associated with the internal-use software project (to the extent
of their time spent directly on the project); and interest costs incurred
in developing software for internal use. The proposed SOP also provides
that training costs included in the purchase price of computer software be
expensed as incurred. During fiscal year 1999, the Company capitalized $300
of internal costs in accordance with this statement that previously would
have been expensed.
RECLASSIFICATIONS
Certain amounts from the prior year have been reclassified to conform
with the current year presentation.
3. ACQUISITIONS
On January 10, 1997, the Company acquired Lobdell for aggregate
consideration of $51,754, including acquisition expenses. The acquisition
was financed through the issuance of preferred stock described in Note 12
and a term loan which was subsequently refinanced. The acquisition has
been recorded in accordance with the purchase method of accounting.
Accordingly, the purchase price plus direct cost of the acquisition have
been allocated to the assets acquired and liabilities assumed based on
their estimated fair values at the date of acquisition and Lobdell's
operating results have been included with those of the Company since the
date of acquisition.
F-11
<PAGE> 41
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
On August 13, 1997, the Company acquired all of the outstanding common
stock of Howell for approximately $23,700 in cash, including acquisition
costs. The acquisition was financed through the proceeds of the
subordinated notes described in Note 8. The acquisition has been recorded
in accordance with the purchase method of accounting. Accordingly, the
purchase price plus direct cost of the acquisition have been allocated to
the assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition and Howell's operating results have been
included with those of the Company since the date of acquisition.
On November 25, 1997, Oxford purchased all of the outstanding common stock
of RPIH for $2,500 in cash. The acquisition was financed through the
proceeds of the senior subordinated notes described in Note 8. The
acquisition has been recorded in accordance with the purchase method of
accounting. Accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition. RPIH's operating results have been
included with those of the Company since the date of acquisition.
The majority shareholder of Oxford was also the majority shareholder of
RPIH. The excess of purchase price over predecessor basis is a result of
the common ownership by the majority shareholder of Oxford and represents
the portion of the fair value of the net assets acquired in excess of their
book value, multiplied by the majority shareholder's ownership percentage
in RPIH. The Company has recorded this amount as a deduction from retained
earnings in the accompanying statement of comprehensive income and changes
in shareholders' equity.
On April 1, 1998, the Company purchased the assets of the Suspension
Division of Eaton Corporation (Suspension) for cash and acquisition
expenses of approximately $54,350, including the investment in the Metalcar
joint venture. The acquisition was financed through the proceeds of the
Notes described in Note 8, including the issuance of $35,000 of Series B
10.125% Senior Subordinated Notes Due 2007. The acquisition has been
recorded in accordance with the purchase method of accounting. Accordingly,
the purchase price plus direct cost of the acquisition have been allocated
to the assets acquired and liabilities assumed based on their estimated
fair values at the date of acquisition and Suspension's operating results
have been included with those of the Company since the date of acquisition.
The estimated fair market value of assets acquired and liabilities assumed
is summarized as follows:
<TABLE>
<S> <C>
Current assets $ 25,034
Other noncurrent assets 7,337
Goodwill 4,165
Property, plant and equipment 30,561
Current liabilities (10,946)
Long-term liabilities (1,801)
--------
$ 54,350
========
</TABLE>
F-12
<PAGE> 42
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
3. ACQUISITIONS (CONTINUED)
On February 5, 1999, Oxford France acquired 100% of the shares of
Cofimeta S.A. and approximately 99% of the shares of its four
subsidiaries; Somenor S.A.; Aubry S.A.; Ecrim S.A.; and Socori
Technologies S.A (collectively "Cofimeta"). Cofimeta was acquired for
$37,045 million in cash, including acquisition costs, and deferred
payments of $26,172. The acquisition was financed through proceeds from
the Credit Agreement, as described in Note 8. The acquisition has been
recorded in accordance with the purchase method of accounting.
Accordingly, the purchase price plus direct cost of the acquisition have
been preliminarily allocated to the assets acquired and liabilities
assumed based on their estimated fair values at the date of acquisition.
Management expects that the allocation will be finalized by the end of
fiscal year 2000. Cofimeta's operating results have been included with
those of the Company since the date of acquisition.
The estimated fair market value of assets acquired and liabilities
assumed is summarized as follows:
<TABLE>
<S> <C>
Current assets $ 93,651
Property, plant and equipment 24,090
Deferred tax asset 12,616
Current liabilities (45,448)
Long-term liabilities (21,692)
---------
$ 63,217
=========
</TABLE>
The following unaudited pro forma combined results of operations of the
Company have been prepared as if the acquisitions of Howell, RPIH,
Suspension, and Cofimeta had occurred at the beginning of fiscal 1999 and
1998. The pro forma information is not intended to be a projection of
future results.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
1999 1998
(UNAUDITED)
<S> <C> <C>
Net sales $ 766,747 $ 765,194
Net income (loss) $ 6,827 $ (11,697)
Net income (loss) applicable to common shares $ 5,507 $ (13,031)
Net income (loss) per common share $ 17.78 $ (42.07)
</TABLE>
The foregoing unaudited pro forma results of operations reflect
adjustments for additional interest expense related to the financing of
the acquisitions and depreciation expense, as a result of the revaluation
of property, plant and equipment, net of the related tax benefit.
F-13
<PAGE> 43
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
4. ACCOUNTS RECEIVABLE
Accounts receivable are comprised of the following at March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Trade receivables $ 156,787 $ 65,673
Less - allowance for doubtful accounts (4,506) (400)
--------- --------
Trade receivables, net $ 152,281 $ 65,273
========= ========
</TABLE>
Oxford France sells accounts receivable to various financial institutions
for which it surrenders control. At March 31, 1999, the balance of
account receivables transferred that remained uncollected was
approximately $40,810. In addition, included in accounts receivable at
March 31, 1999 are retention amounts and amounts factored but not yet
financed for approximately $23,132.
5. INVENTORIES
Inventories are comprised of the following at March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Raw materials $ 23,154 $ 6,737
Finished goods and work-in-process 28,646 15,135
--------- --------
51,800 21,872
LIFO and other reserves (3,696) (567)
--------- --------
$ 48,104 $ 21,305
========= ========
</TABLE>
The Company does not separately identify finished goods from
work-in-process.
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Land and land improvements $ 7,492 $ 5,432
Buildings and improvements 39,895 29,126
Machinery and equipment 195,576 140,095
Construction-in-process 26,715 12,204
--------- ---------
269,678 186,857
Less - accumulated depreciation (46,279) (23,149)
--------- ---------
$ 223,399 $ 163,708
========= =========
</TABLE>
F-14
<PAGE> 44
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
6. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Certain property with a net book value of $6,700 was idle at March 31,
1999. Management intends to redeploy these assets amongst its operating
facilities and does not believe that the net book value of these assets is
impaired at March 31, 1999.
In 1999 and 1998, the Company sold assets acquired in connection with the
acquisition of Lobdell and recorded gains on the sales of these assets of
$600 and $1,602, respectively.
As discussed in Note 10, certain of the Company's facilities were closed
during the years ended March 31, 1999 and 1998. As management intends to
sell these facilities, the net book value of the land and buildings,
approximating $2,280, is classified in prepaid expenses and other current
assets as of March 31, 1999 in the accompanying consolidated balance sheet.
7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities are comprised of the
following at March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Employee compensation $ 21,483 $ 4,808
Accrued income, value added and other taxes 9,683 (1,355)
Accrued interest 6,276 3,627
Accrued workers' compensation 4,156 3,287
Advances from customers 2,085
Accrued property taxes 1,836 1,454
Accrued medical benefits 1,258 1,040
Other 7,667 4,189
---------- -----------
$ 54,444 $ 17,050
========== ===========
</TABLE>
F-15
<PAGE> 45
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. BORROWING ARRANGEMENTS
Borrowings consist of the following at March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
SERIES A, B & C 10.125% SENIOR SUBORDINATED NOTES DUE
2007, OXFORD $ 203,111 $ 124,827
BANK SYNDICATE - TERM LOAN, OXFORD
Interest at variable rate over 30 day
LIBOR (7.45% at
March 31, 1999). Quarterly principal payments beginning
July 1999, matures July 2004. 30,000
BANK SYNDICATE--REVOLVING CREDIT LINE, OXFORD
Interest at prime rate
(8.5% at March 31, 1998),
repaid in full during fiscal 1999. 1,825
SHARE PURCHASE OBLIGATION, OXFORD FRANCE
Principal amount of $14,813 less unamortized discount
of $1,867. Interest payable at 3%; discounted
at 10%. Annual payments beginning February 2000,
matures February 2002. 12,946
DEBT OBLIGATION, OXFORD FRANCE
Principal amount of $6,583 less unamortized discount
of $903. Interest payable at 2%; discounted
at 10%. Annual payments beginning February 2000,
matures February 2002. 5,680
CONTINUATION PLAN DEBT, OXFORD FRANCE
Principal amount of $10,975 less unamortized discount
of $4,511. Non-interest bearing; discounted at 10%.
Annual payments beginning June 1999,
matures June 2008. 6,464
INDUSTRIAL DEVELOPMENT REVENUE BONDS, CREATIVE
$8,500 issued September 27, 1995, floating rate interest
(3.3% at March 31, 1999). Quarterly principal payments
based on graduated maturity schedule. Backed by
letter of credit 2,195 7,600
Other 3,466 5,196
------------- --------------
Total 263,862 139,448
Less - current portion of long-term borrowings (11,504) (10,965)
------------- --------------
Long-term borrowings - less current portion $ 252,358 $ 128,483
============= ==============
</TABLE>
F-16
<PAGE> 46
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
8. BORROWING ARRANGEMENTS (CONTINUED)
On June 24, 1997, the Company issued $125,000 of Series A 10.125% Senior
Subordinated Notes Due 2007. On April 1, 1998, the Company issued $35,000
of Series B 10.125% Senior Subordinated Notes Due 2007. On December 8,
1998, the Company issued $40,000 of Series C 10.125% Senior Subordinated
Notes Due 2007. The Series A, Series B, and the Series C Notes are
collectively referred to as "the Notes". The Notes mature on June 15, 2007
and require semi-annual interest payments of approximately $10,125. The
proceeds from the Notes were primarily used to repay certain of the
Company's indebtedness and finance the Company's acquisitions of Howell,
RPIH, Suspension and Cofimeta as described in Note 3. The Notes are
unsecured and issued by Oxford and guaranteed by certain of its
wholly-owned subsidiaries. The Company is restricted regarding the payment
of dividends.
Concurrent with the issuance of the Notes, the Company entered into a
credit agreement with a syndicate of banks (the Credit Agreement), as
subsequently amended, under which the Company may borrow up to $175,000, of
which a maximum of $30,000 is available for letters of credit. At March 31,
1999, there were no borrowings outstanding under the revolving line of
credit, $30,000 was outstanding under the term loan and $4,700 was
outstanding under letters of credit, leaving $140,300 unused and available.
The terms of the Credit Agreement contain, among other provisions,
requirements for maintaining defined levels of tangible net worth, total
debt to cash flows, interest coverage, fixed charge coverage and certain
restrictions on the payment of dividends. Facility fees on the aggregate
amount of the Credit Agreement ranging from 0.375% to 0.50% are payable
quarterly. Borrowings are secured by substantially all of the assets of
Oxford.
Aggregate maturities of long-term borrowings at March 31, 1999 are as
follows:
<TABLE>
<S> <C>
2000 $ 11,504
2001 11,142
2002 13,942
2003 6,926
2004 8,473
Thereafter 211,875
---------
$ 263,862
=========
</TABLE>
F-17
<PAGE> 47
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. INCOME TAXES
The Company's income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
-------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Current
Federal $ 6,037 $ 3,116 $ (821)
State 1,078 1,098 (124)
Foreign 3,160
--------- --------- ---------
10,275 4,214 (945)
--------- --------- ---------
Deferred
Federal (3,067) 2,300 899
State (317) (608) 137
Foreign (4,579) (1,832) 974
--------- --------- ---------
(7,963) (140) 2,010
--------- --------- ---------
$ 2,312 $ 4,074 $ 1,065
========= ========= =========
</TABLE>
The difference between the statutory rate and the Company's effective rate
was as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
-------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 34.0%
Foreign rates varying from 35%, 35%
and 34%, respectively 0.1 (0.5) 1.8
FSC Benefit (5.6)
State taxes, net of federal benefit 9.0 3.3 0.3
Nondeductible items 5.8 1.9 4.1
Other (2.0) 2.5 0.5
---- ---- ----
Effective income tax rate 42.3% 42.2% 40.7%
==== ==== ====
</TABLE>
F-18
<PAGE> 48
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax assets and
(liabilities) are as follows at March 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Deferred tax liabilities
Tax depreciation in excess of book $ (27,495) $ (30,930)
Inventory reserve (149) (1,581)
Other (3,295) (170)
----------- ------------
Gross deferred tax liabilities (30,939) (32,681)
----------- ------------
Deferred tax assets
Postretirement medical benefits 16,353 14,397
Workers' compensation 1,698 1,345
Medical benefits accrual 503 473
Allowance for bad debts 1,379 97
AMT credit carryforward 721
Pension benefits 4,058 2,514
Net operating loss carryforwards 13,770 2,381
Restructuring reserve 3,498 3,698
Foreign tax credit 1,445
Other 4,982 3,448
----------- ------------
Gross deferred tax assets 48,407 28,353
----------- ------------
Valuation allowance (300) (200)
----------- ------------
Net deferred tax asset (liability) $ 17,168 $ (4,528)
=========== ============
</TABLE>
A valuation allowance is provided on the tax benefits otherwise associated
with certain tax attributes unless it is considered more likely than not
that the benefit will be realized.
The Company has net operating loss carryforwards for federal income tax
purposes with potential future tax deductions of approximately $1,681 at
March 31, 1999. The federal net operating losses expire during 2011. The
Company also has Foreign Tax Credit carryforwards for federal income tax
purposes of $1,444 at March 31, 1999. These credits expire in 2004. In
addition, the Company has Alternative Minimum Tax Credit carryforwards of
$721, which have no expiration date.
The Company has net operating loss carryforwards for Canadian income tax
purposes with potential future tax deductions of approximately $13,991 at
March 31, 1999. The Canadian net operating losses expire from 2004 to 2006.
In addition, the Company has net operating loss carryforwards for Mexican
income tax purposes with potential future tax deductions of approximately
$4,391 at March 31, 1999. The Mexican net operating losses expire in six to
ten years.
F-19
<PAGE> 49
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
9. INCOME TAXES (CONTINUED)
The company also has net operating losses for French tax purposes with
potential future tax deductions of approximately $34,705 at March 31,
1999, of which $20,625 expire in three to five years. The remaining net
operating losses do not have an expiration date.
The Company has net operating loss carryforwards with potential future
tax deductions of approximately $7,418 for state income tax purposes and
Tennessee Jobs Tax Credit carryforwards of approximately $190 at March
31, 1999, both of which expire between 2010 and 2012.
10. RESTRUCTURING RESERVES
A summary of the restructuring activity is presented below.
<TABLE>
<S> <C>
BALANCE AT MARCH 31, 1997 $ 7,050
1998 provision 1,610
Restructuring accrual associated with the acquisition
of Howell 1,339
Reduction in workforce and other cash outflows (2,355)
Reversal of excess accruals to noncurrent assets (1,281)
-----------
BALANCE AT MARCH 31, 1998 6,363
1999 provision 1,151
Restructuring accrual associated with the acquisition
of Suspension and Cofimeta 10,291
Reduction in workforce and other cash outflows (8,257)
Reversal of excess accruals to noncurrent assets (801)
-----------
BALANCE AT MARCH 31, 1999 $ 8,747
===========
</TABLE>
In connection with the acquisition of Lobdell described in Note 3,
management established certain restructuring reserves aggregating $7,050 in
Lobdell's opening balance sheet based upon its plan to exit certain
activities of Lobdell. Management's restructuring plan included the sale of
certain subsidiaries, closure of a Lobdell owned manufacturing facility and
sale of the current Lobdell owned corporate offices. Included in the
restructuring reserves at March 31, 1997 were costs for severance and
benefits for employees to be relocated and terminated ($5,052) and other
restructuring related costs ($1,998).
In connection with management's plans to reduce costs and improve operating
efficiencies at other facilities, the Company recorded a provision for
restructuring of $1,610 during the year ended March 31, 1998 and
established restructuring reserves aggregating $1,339 in Howell's opening
balance sheet. The restructuring reserve established in Howell's opening
balance sheet represents management's best estimate of the costs to be
incurred in connection with the closure of a leased Howell facility. As a
result of this closure, no employees are expected to be terminated.
F-20
<PAGE> 50
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
10. RESTRUCTURING RESERVES (CONTINUED)
The provision for restructuring recorded during the years ended March 31,
1999 and 1998 represents costs associated with management's plans to
close two Company facilities. Costs recorded in 1998 primarily relate to
fixed assets. Costs recorded in 1999 primarily relate to severance costs.
As a result of these closures, 189 employees were permanently separated.
The accrual recorded in connection with the acquisition of Suspension
represents costs associated with management's plan to close the operating
facility in Hamilton. Management expects that approximately 119 employees
will be permanently severed as a result of this closure. This
restructuring action should be completed by September 1999.
In connection with the acquisition of Cofimeta, described in Note 3,
management established certain restructuring reserves aggregating $8,581.
Management's restructuring plan includes the facility closure and the
termination of certain production processes. Included in the
restructuring reserve at March 31, 1999 were costs for severance and
benefits for employees to be terminated of $7,485 and other restructuring
costs, primarily property losses, of $1,096. These restructuring actions
should be completed during fiscal year 2000.
The reversal of excess accruals recorded during the years ended March 31,
1999 and 1998 are due to management's finalization of its restructuring
plans established in purchase accounting. No future requirement for these
accruals exists. These reversals were recorded as a reduction of
noncurrent assets.
11. BENEFIT PLANS
The Company sponsors 17 noncontributory plans covering substantially all
employees meeting the age and length of service requirements as specified
in the plans. The plan covering salaried employees provides pension
benefits that are based on a percentage of the employee's average monthly
compensation during the five highest consecutive years out of their last
ten years, and their years of credited service up to a maximum of 30
years. The hourly plans do not provide for increases in future
compensation levels. The Company's funding policy for the plan covering
salaried employees is to make contributions in amounts sufficient to
annually fund the plan's current service cost and the initial past
service cost, plus interest, over a period of 30 years. Plans covering
hourly employees generally provide benefits of stated amounts based on
their unique labor agreements for each year of service. The Company's
funding policy for these plans is to make at least the minimum annual
contributions required by applicable regulations.
The Company sponsors seven defined contribution 401(k) plans. The Company
generally contributes 25% of the first 6% of the base compensation that a
participant contributes to the plans.
In addition to the Company's pension plans, the Company sponsors unfunded
defined benefit medical plans that provide postretirement medical
benefits to certain full-time employees meeting the age, length of
service and contractual requirements as specified in the plans.
F-21
<PAGE> 51
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
11. BENEFIT PLANS (CONTINUED)
The following table sets forth the plans' funded status and amounts
recognized on the Company's balance sheets at March 31:
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION PLANS BENEFIT PLANS
------------------------- --------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
CHANGES IN PLAN ASSETS
Beginning balance $ 71,224 $ 55,520 $ - $ -
Assets acquired 33,525 5,058
Actual return on plan assets 4,197 12,573
Employer contributions 5,353 2,650 1,334 1,211
Benefits paid from plan assets (4,948) (4,063) (1,334) (1,211)
Other (3,168) (514)
----------- ----------- ----------- ----------
Ending balance 106,183 71,224
----------- ----------- ----------- ----------
CHANGE IN BENEFIT OBLIGATIONS
Beginning balance 72,529 59,070 40,661 38,136
Obligations assumed 31,633 5,158 3,612
Service cost 3,943 2,153 1,510 1,025
Interest cost 7,118 4,828 3,522 2,711
Plan amendments 1,591
Actuarial loss (gain) 767 5,998 35
Total benefits paid (4,948) (4,063) (1,334) (1,211)
Other (3,115) (615)
----------- ----------- ----------- ----------
Ending balance 109,518 72,529 48,006 40,661
----------- ----------- ----------- ----------
FUNDED STATUS (3,335) (1,305) (48,006) (40,661)
Unrecognized net actuarial loss (gain) 4,327 (1,053) 5,303 4,669
Unrecognized prior service cost 1,509 324
----------- ----------- ----------- ----------
NET AMOUNT RECOGNIZED IN THE
CONSOLIDATED BALANCE SHEET $ 2,501 $ (2,034) $ (42,703) $ (35,992)
=========== =========== =========== ==========
AMOUNTS RECOGNIZED IN THE CONSOLI-
DATED BALANCE SHEET CONSIST OF
Prepaid benefit cost $ 9,570 $ 2,693 $ - $ -
Accrued benefit liability (7,069) (4,727) (42,703) (35,992)
----------- ----------- ----------- ----------
Net amount recognized $ 2,501 $ (2,034) $ (42,703) $ (35,992)
=========== =========== =========== ==========
</TABLE>
F-22
<PAGE> 52
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
11. BENEFIT PLANS (CONTINUED)
PENSION PLANS IN WHICH BENEFIT OBLIGATION
EXCEEDS PLAN ASSETS AT MARCH 31,
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
Fair value of plan assets $ 38,637 $ 25,885
Benefit obligation 44,382 28,398
COMPONENTS OF NET PERIODIC BENEFIT COST
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Pension benefits
Service cost $ 3,943 $ 2,153 $ 1,074
Interest cost 7,118 4,828 2,127
Expected return on plan assets (9,044) (5,041) (2,138)
Amortization of prior service cost 40
Recognized actuarial net loss 18 2
----------- ----------- ----------
Net periodic benefit cost $ 2,075 $ 1,942 $ 1,063
=========== =========== ==========
Net periodic benefit cost of defined
contribution plans $ 452 $ 355 $ 76
=========== =========== ==========
Other postretirement benefits
Service cost $ 1,510 $ 1,025 $ 272
Interest cost 3,522 2,711 623
Recognized actuarial net loss 35
----------- ----------- ----------
Net periodic benefit cost $ 5,067 $ 3,736 $ 895
=========== =========== ==========
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Pension benefits
Discount rate
U.S. plans 7.25% 7.25% 7.75%
Canadian plans 6.50% 6.50% 8.00%
Expected return on assets
U.S. plans 8.50-9.00% 9.00% 9.00%
Canadian plans 8.50% 8.50% 8.50%
Salary progression
U.S. plans 4.50% 4.50% 4.50%
Canadian plans 5.50% 5.50% 5.50%
Other retirement benefits
Discount rate 7.25% 7.25% 7.75%
</TABLE>
F-23
<PAGE> 53
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
11. BENEFIT PLANS (CONTINUED)
The weighted average annual assumed healthcare cost trend rate is 8.5% in
1999 trending to 6.5% in 2009 and thereafter for retirees less than 65
years of age. The healthcare cost trend rate assumption has a significant
effect on the amounts reported. For example, increasing the assumed
healthcare cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of March
31, 1999 by approximately $6,301 and net periodic postretirement benefit
cost for the year ended March 31, 1999 by approximately $638.
In addition to the above plans, the Company has a non-funded pension
arrangement in France covering all employees. At March 31, 1999, accrued
pension costs of $2,486 were included in accrued expenses.
12. REDEEMABLE PREFERRED STOCK
In connection with the acquisition of Lobdell described in Note 3, Series
A $3.00 Cumulative Preferred Stock (Series A Preferred) with a face value
of $39,754 was issued. The annual dividend on the Series A Preferred is
$3.00 per share, payable semi-annually. Dividends on the Series A
Preferred are cumulative, but do not bear interest. Under the terms of the
issuance of the Series A Preferred (the Stock Agreement), the holders of
the Series A Preferred maintain limited voting rights. Holders are
entitled to vote on any provisions that would adversely affect their
rights or privileges or management's plans to issue any equity securities
that would rank prior to the Series A Preferred. Holders are also entitled
to elect at least one director of Lobdell, which, under certain provisions
of the Stock Agreement, may increase to two.
Lobdell is required to redeem all shares of Series A Preferred on December
31, 2006 at a price of $100 per share, plus all declared or accumulated
but unpaid dividends. If Oxford does not commence an initial public
offering of common stock (IPO) prior to June 30, 2006, then the redemption
price of the Series A Preferred is $103 per share. If an IPO does not
occur by December 31, 2001, each holder of Series A Preferred has the
option to redeem annually a maximum of 20 percent of the shares held at a
price of $100 per share on each December 31, beginning in 2002.
Beginning February 1, 1999, Series A Preferred holders are allowed to
transfer, sell or assign the shares. Lobdell has the right of first
refusal to purchase any of the shares transferred, sold or assigned by a
holder of Series A Preferred.
Holders of Series A Preferred are entitled to convert their shares to
Oxford common stock issued in connection with an IPO. Individual holders
may convert a maximum of 50% of their shares, but the total of all Series
A Preferred shares converted may not exceed 25% of the shares issued in
the IPO.
The Series A Preferred has been included in the accompanying consolidated
balance sheet at its fair value at the date of issuance of $39,754, and
has been adjusted for accrued dividends and accretion totaling $565 and
$438 for the years ended March 31, 1999 and 1998, respectively.
F-24
<PAGE> 54
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS
The Company is charged fees and expenses by a related party, The Oxford
Investment Group, Inc., for consulting, finance and management services.
Fees and expenses charged to the Company by The Oxford Investment Group,
Inc. approximated $1,076, $1,005, and $275 for the years ended March 31,
1999, 1998 and 1997, respectively. In connection with the acquisitions of
the Suspension Division and Cofimeta, Howell, and Lobdell, investment
banking fees of $1,747, $230, and $300 were paid to The Oxford Investment
Group, Inc., during the periods ended March 31, 1999, 1998 and 1997,
respectively.
As described in Note 3, the majority shareholder of the Company was also
the majority shareholder of RPIH.
14. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
As of March 31, 1999, the Company had long-term operating leases covering
certain machinery and equipment. The minimum rental commitments under
noncancellable operating leases with lease terms in excess of one year are
as follows as of March 31, 1999:
<TABLE>
<S> <C>
2000 $ 3,144
2001 8,505
2002 7,072
2003 5,980
2004 5,976
-----------
$ 30,677
===========
</TABLE>
MEXICAN ASSET USAGE AGREEMENT
On March 31, 1999 Oxford Mexico entered into an asset usage agreement for
the acquisition of new equipment for and construction of a new facility
being built in Ramos Arizpe, Mexico through a special purpose entity
(SPE). This agreement is classified as an operating lease. Payments for
the facility under this agreement, which vary based upon interest rates at
LIBOR plus 2.88% - 4.0%, will be approximately $5,575 per year beginning
on April 1, 2000. The asset usage agreement is for five years, with
renewal options covering an additional four years. In addition to the
lease payments, Oxford has guaranteed up to $63,000 of the debt of the
SPE.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
which govern environmental matters. These laws regulate the discharge of
materials into the environment and may require the Company to remove or
mitigate the environmental effects of the disposal or release of petroleum
or chemical substances. The Company has identified several environmental
matters resulting from prior operations. Due to the relatively early stage
of investigation of certain of these identified matters as well as
potential indemnification by other potentially responsible parties,
management is unable to reasonably estimate the ultimate cost of
remediating certain of these identified environmental matters. The Company
has recorded a liability in other noncurrent liabilities of approximately
$1,712 and $1,746 at March 31, 1999 and 1998, respectively, for estimated
costs of known environmental matters.
F-25
<PAGE> 55
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
14. COMMITMENTS AND CONTINGENCIES (CONTINUED)
GENERAL
The Company is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of
business. In the opinion of management, after reviewing the information
which is currently available with respect to such matters and consulting
with legal counsel, any liability which may ultimately be incurred with
respect to these matters will not materially affect the financial
position, results of operations or cash flows of the Company.
15. SEGMENT INFORMATION
Effective April 1, 1998, the Company adopted SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information". This statement
establishes reportable standards for reporting information about operating
segments in annual financial statements and related disclosures about
products and geographic areas. The Company has one reportable segment in
the global automotive original equipment supply industry. Net sales and
operating income (loss) are attributed to geographic regions based upon
their location of origin. Net sales, operating income (loss) and
identifiable assets by geographic area are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Net sales
United States $ 378,227 $ 324,335 $ 54,660
Canada 167,547 85,030 82,201
Mexico 9,666 956
Europe 36,205
------------ ----------- -----------
$ 591,645 $ 410,321 $ 136,861
============ =========== ===========
Operating income (loss)
United States $ 19,405 $ 22,234 $ 1,101
Canada 2,116 (462) 2,700
Mexico (1,152) (1,718)
Europe 1,554
------------ ----------- -----------
$ 21,923 $ 20,054 $ 3,801
============ =========== ===========
Identifiable assets
United States $ 370,727 $ 274,450 $ 186,541
Canada 44,100 40,634 57,153
Mexico 5,373 4,948
Europe 122,730
------------ ----------- -----------
$ 542,930 $ 320,032 $ 243,694
============ =========== ===========
</TABLE>
F-26
<PAGE> 56
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
- --------------------------------------------------------------------------------
16. SUBSEQUENT EVENT
On June 28, 1999, pursuant to a Participation Purchase Agreement,
dated as of June 28, 1999 (the "Wackenhut Purchase Agreement"), between a
wholly owned, indirect subsidiary of the Company (the "Purchaser") and Fawack
Holding GmbH and Fagro Press-und Stanzwerk GmbH (the "Sellers") and certain
other parties, the Purchaser acquired 100% of the shares of Gebr. Wackenhut
GmbH Karosserie-und Fahrzeugfabrik ("Wackenhut"). Wackenhut is an
unrestricted subsidiary under the Company's debt agreements.
Pursuant to the terms of the Wackenhut Purchase Agreement, the Purchaser
agreed to pay DM 1 for the shares, provide DM 5 million (US$2.6 million) in
subordinated debt and additional paid in capital, restructure approximately DM
63.4 million (US$33.5 million) in bank debt, and purchase approximately DM 18.6
million (US$9.8 million) in bank and shareholder debt for DM 1. In addition to
the restructuring of Wackenhut's credit facilities, the agreement provides
additional financing of approximately DM 16.6 million (US$9.0 million) under a
line of credit and up to DM 20.0 million (US$11.0 million) to fund capital
expenditures to support plant expansion and modernization. The consideration
provided for in the Wackenhut Purchase Agreement was determined by the Company
after a complete review of Wackenhut's operations and negotiations between
representatives of the Sellers and the banks. The acquisition, subordinated
debt and additional paid in capital were financed from the Company's available
cash and credit facility with Bank One, as agent.
Wackenhut is a supplier of complex pressings, welded assemblies, complete
truck cabs, cataphoretic coatings and finish paint applications and operates
three facilities in Germany located in the Nagold area near Stuttgart. The
Company intends to continue and expand the current operations of Wackenhut.
17. CONDENSED CONSOLIDATING INFORMATION
The Notes are issued by Oxford Automotive, Inc. and guaranteed by certain
of its wholly-owned subsidiaries, including Lobdell, Howell, BMGH, RPIH and
Suspension (the Guarantor Subsidiaries). The Notes are not guaranteed by the
Company's other consolidated subsidiary, Oxford Mexico (the Non-guarantor
Subsidiary). The guarantee of the Notes by the Guarantor Subsidiaries is full
and unconditional. The following condensed consolidated financial information
presents the financial position, results of operations and cash flows of (i) the
Company as if it accounted for its subsidiaries on the equity method, (ii) the
Guarantor Subsidiaries on a combined basis and (iii) the Non-guarantor
Subsidiary. Condensed consolidated financial information for the periods prior
to March 31, 1998 are not presented because the non-guarantors during those
periods were inconsequential, individually and in the aggregate, to the
consolidated financial statements, and management has determined that they would
not be material to investors.
F-27
<PAGE> 57
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 9,741 $ 9,158 $ 109 $ - $ 19,008
Receivables (net) 114 45,345 106,822 152,281
Inventories 14,402 33,702 48,104
Reimbursable tooling 3,010 8,766 11,425 23,201
Income taxes refundable
Deferred income taxes 536 3,133 3,669
Prepaid expenses and other 2,151 13,174 2,900 18,225
--------- -------- --------- --------- ---------
TOTAL CURRENT ASSETS 15,552 90,845 158,091 264,488
Other noncurrent assets 10,898 13,572 30,573 55,043
Property, plant and equipment (net) 4,003 28,259 191,137 223,399
Investment in consolidated subsidiaries 87,546 45,166 (132,712)
--------- -------- --------- --------- ---------
TOTAL ASSETS $ 117,999 $132,676 $ 424,967 $(132,712) $ 542,930
========= ======== ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,046 $ 34,906 $ 72,391 $ $ 109,343
Intercompany accounts (130,223) 4,573 125,650
Restructuring reserve 6,676 2,071 8,747
Accrued expenses and other 5,432 24,596 24,416 54,444
Current portion of borrowings 1,877 6,301 3,326 11,504
--------- -------- --------- --------- ---------
TOTAL CURRENT LIABILITIES (120,868) 77,052 227,854 184,038
Pension liability 7,069 7,069
Postretirement medical benefits 42,703 42,703
Deferred income taxes and other 1,975 13,540 15,515
Long-term borrowings 231,234 20,070 1,054 252,358
--------- -------- --------- --------- ---------
TOTAL LIABILITIES 110,366 99,097 292,220 501,683
Redeemable preferred stock 40,319 40,319
--------- -------- --------- --------- ---------
Shareholders' equity
Common stock 1,050 37,045 91,002 (128,047) 1,050
Accumulated other comprehensive income (1,955) (4,750) (6,705)
Retained earnings (accumulated deficit) 6,583 (1,511) 6,176 (4,665) 6,583
--------- -------- --------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 7,633 33,579 92,428 (132,712) 928
--------- -------- --------- ---------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 117,999 $132,676 $ 424,967 $(132,712) $ 542,930
========= ======== ========= ========= =========
</TABLE>
F-28
<PAGE> 58
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 13,673 $ 322 $ 4,326 $ $ 18,321
Receivables (net) 7,206 868 64,652 (7,453) 65,273
Inventories 40 21,265 21,305
Reimbursable tooling 13,315 13,315
Income taxes refundable 1,601 1,601
Deferred income taxes 92 4,307 4,399
Prepaid expenses and other 172 10 8,443 (1,663) 6,962
---------- -------- --------- -------- ----------
TOTAL CURRENT ASSETS 21,143 1,240 117,909 (9,116) 131,176
Other noncurrent assets 14,626 45 10,477 25,148
Property, plant and equipment (net) 2,141 3,663 157,904 163,708
Investment in consolidated subsidiaries 31,861 (31,861)
---------- -------- --------- -------- ----------
TOTAL ASSETS $ 69,771 $ 4,948 $ 286,290 $(40,977) $ 320,032
========== ======== ========= ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 746 $ 351 $ 50,956 $ 161 $ 52,214
Intercompany accounts (65,132) 6,041 52,986 6,105
Restructuring reserve 6,363 6,363
Accrued expenses and other 2,281 104 23,983 (9,318) 17,050
Current portion of borrowings 10,965 10,965
---------- -------- --------- -------- ----------
TOTAL CURRENT LIABILITIES (62,105) 6,496 145,253 (3,052) 86,592
Pension liability 4,727 4,727
Postretirement medical benefits 35,992 35,992
Deferred income taxes and other 279 (576) 18,225 17,928
Long-term borrowings 124,828 3,655 128,483
---------- -------- --------- -------- ----------
TOTAL LIABILITIES 63,002 5,920 207,852 (3,052) 273,722
---------- -------- --------- -------- ----------
Redeemable preferred stock 40,192 40,192
---------- -------- --------- -------- ----------
Shareholders' equity
Common stock 1,050 32,974 (32,974) 1,050
Accumulated other comprehensive income 969 147 (798) 318
Retained earnings (accumulated deficit) 4,750 (1,119) 6,070 (4,951) 4,750
---------- -------- --------- -------- ----------
TOTAL SHAREHOLDERS' EQUITY 6,769 (972) 38,246 (37,925) 6,118
---------- -------- --------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 69,771 $ 4,948 $ 286,290 $(40,977) $ 320,032
========== ======== ========= ======== ==========
</TABLE>
F-29
<PAGE> 59
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Sales $ - $ 45,871 $ 545,774 $ $ 591,645
Cost of sales 42,896 493,682 536,578
---------- -------- --------- -------- ----------
GROSS PROFIT 2,975 52,092 55,067
Selling, general and administrative expenses (2,054) 2,648 32,176 32,770
Restructuring provision (59) 1,210 1,151
Gain on sale of equipment (16) (761) (777)
---------- -------- --------- -------- ----------
OPERATING INCOME 2,054 402 19,467 21,923
Other income (expense)
Interest expense (2,438) (595) (17,870) (20,903)
Other 3,682 (306) 1,069 4,445
---------- -------- --------- -------- ----------
INCOME BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES 3,298 (499) 2,666 5,465
Benefit (provision) for income taxes (1,179) 107 (1,240) (2,312)
---------- -------- --------- -------- ----------
INCOME BEFORE EQUITY IN INCOME OF
CONSOLIDATED SUBSIDIARIES 249 (392) 1,426 3,153
Equity in income of consolidated subsidiaries 1,034 (1,034)
---------- -------- --------- -------- ----------
NET INCOME $ 3,153 $ (392) $ 1,426 $ (1,034) $ 3,153
========== ======== ========= ======== ==========
</TABLE>
F-30
<PAGE> 60
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR ELIMINATIONS/
PARENT SUBSIDIARY SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
<S> <C> <C> <C> <C> <C>
Sales $ - $ 956 $ 409,365 $ - $ 410,321
Cost of sales 2,674 365,746 368,420
---------- -------- --------- -------- ----------
GROSS PROFIT (1,718) 43,619 41,901
Selling, general and administrative expenses (665) 22,504 21,839
Restructuring provision 1,610 1,610
Gain on sale of equipment (1,602) (1,602)
---------- -------- --------- -------- ----------
OPERATING INCOME 665 (1,718) 21,107 20,054
Other income (expense)
Interest expense (467) 2 (10,245) (10,710)
Other 21 300 321
---------- -------- --------- -------- ----------
INCOME BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES 198 (1,695) 11,162 9,665
Benefit (provision) for income taxes (314) 576 (4,336) (4,074)
---------- -------- --------- -------- ----------
INCOME BEFORE EQUITY IN INCOME OF
CONSOLIDATED SUBSIDIARIES (116) (1,119) 6,826 5,591
Equity in income of consolidated subsidiaries 5,707 (5,707)
---------- -------- --------- -------- ----------
NET INCOME $ 5,591 $ (1,119) $ 6,826 $ (5,707) $ 5,591
========== ======== ========= ======== ==========
</TABLE>
F-31
<PAGE> 61
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 1999
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR
PARENT SUBSIDIARY SUBSIDIARIES CONSOLIDATED
<S> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (24,520) $ (4,569) $ 34,833 $ 5,744
INVESTING ACTIVITIES --------- --------- ---------- ----------
Purchase of businesses, net of cash acquired (91,396) 16,316 (75,080)
Purchase of property, plant and equipment (2,221) (2,069) (29,335) (33,625)
Purchase of marketable securities (892) (892)
Proceeds from sale of equipment 16 1,534 1,550
Proceeds from sale of marketable securities 12,009 12,009
--------- --------- ---------- ----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (82,500) 14,263 (27,801) (96,038)
--------- --------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from borrowing arrangements 108,544 108,544
Principal payments on borrowing arrangements (261) (9,900) (10,161)
Payment of preferred stock dividends (1,194) (1,194)
Debt financing costs (5,195) (5,195)
---------- --------- ---------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 103,088 (11,094) 91,994
--------- --------- ---------- ----------
Effect of foreign currency rate fluctuations on cash (858) (155) (1,013)
--------- --------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (3,932) 8,836 (4,217) 687
Cash at beginning of period 13,673 322 4,326 18,321
--------- --------- ---------- ----------
Cash at end of period $ 9,741 $ 9,158 $ 109 $ 19,008
========= ========= ========== ==========
</TABLE>
F-32
<PAGE> 62
OXFORD AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
NON-GUARANTOR GUARANTOR
PARENT SUBSIDIARY SUBSIDIARIES CONSOLIDATED
<S> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (71,916) $ 3,801 $ 94,101 $ 25,986
--------- --------- ---------- ----------
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired (24,219) (24,219)
Purchase of property, plant and equipment (2,228) (3,774) (10,721) (16,723)
Proceeds from sale of equipment 5,433 5,433
Purchases of marketable securities (7,658) (7,658)
--------- --------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (34,105) (3,774) (5,288) (43,167)
--------- --------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from borrowing arrangements 124,828 1,825 126,653
Principal payments on borrowing arrangements (93,782) (93,782)
Payment of preferred stock dividends (1,193) (1,193)
Debt financing costs (5,372) (5,372)
--------- --------- ---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 119,456 (93,150) 26,306
--------- --------- ---------- ----------
Effect of foreign currency rate fluctuations on cash 295 (770) (475)
--------- --------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 13,435 322 (5,107) 8,650
Cash at beginning of period 238 9,433 9,671
--------- --------- ---------- ----------
Cash at end of period $ 13,673 $ 322 $ 4,326 $ 18,321
========= ========= ========== ==========
</TABLE>
F-33
<PAGE> 63
OXFORD AUTOMOTIVE, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of period 400 1,272 39
Additions
Acquisition 4,195 200 1,254
Provision for additional allowance 11 12
Deductions
Currency translation adjustments (1)
Reversals (644)
Doubtful accounts (charged) recovered (100) (427) (33)
------ ---- ------
Balance, end of period $4,506 $400 $1,272
====== ==== ======
</TABLE>
<PAGE> 64
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) 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 on June 7,
1999.
OXFORD AUTOMOTIVE, INC.
By: /s/ Steven M. Abelman
----------------------------------------
Steven M. Abelman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on June 7, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Selwyn Isakow
- -------------------------------------- Chairman of the Board and Director
Selwyn Isakow
/s/ Rex E. Schlaybaugh, Jr.
- -------------------------------------- Vice Chairman of the Board and Director
Rex E. Schlaybaugh, Jr.
/s/ Steven M. Abelman
- -------------------------------------- President, Chief Executive Officer and
Steven M. Abelman Director
/s/ Aurelian Bukatko
- -------------------------------------- Senior Vice President-Chief Financial
Aurelian Bukatko Officer (Principal Accounting and
Financial Officer)
/s/ Manfred J. Walt
- -------------------------------------- Director
Manfred J. Walt
/s/ Dennis K. Pawley
- -------------------------------------- Director
Dennis K. Pawley
</TABLE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No Annual Report or Proxy Materials have been or will be sent to
security holders.
S-1
<PAGE> 65
EXHIBIT INDEX
Exhibit No Description
- ---------- -----------
2.1 Agreement and Plan of Merger by and among Howell Industries,
Inc., the Company and HI Acquisition, Inc., dated May 21, 1997
(previously filed as Exhibit 2.1 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference).
2.2 Shareholders Agreement by and among the Company, HI
Acquisition, Inc., and NBD Bank and Morton Schiff, co-trustees
of the Herbert H. Freedland Marital Trusts, dated May 21, 1997
(previously filed as Exhibit 2.2 to the Registrant's
Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference).
2.3 Agreement and Plan of Merger dated as of November 14, 1996, by
and between Lobdell Emery Corporation, BMG-MI, Inc. (now known
as "Oxford Automotive, Inc."), L-E Acquisition, Inc., the
Shareholders of Lobdell Emery Corporation, and D. Kennedy
Fesenmyer, as Shareholders' Agent (previously filed as Exhibit
2.3 to the Registrant's Registration Statement on Form S-4,
Registration No. 333-32975).
2.4 Amendment to Agreement and Plan of Merger, dated December 27,
1996 by and among Lobdell Emery Corporation, BMG-MI, Inc. (now
known as "Oxford Automotive, Inc."), L-E Acquisition, Inc., D.
Kennedy Fesenmyer, as Shareholders' Agent, and Lobdell
Holdings, Inc. (previously filed as Exhibit 2.4 to the
Registrant's Registration Statement on Form S-4, Registration
No. 333-32975)
2.5 Agreement and Plan of Merger, dated as of January 8, 1997
among Lobdell Holdings, Inc. and BMG-MI, Inc. (now known as
"Oxford Automotive, Inc.") (previously filed as Exhibit 2.5 to
the Registrant's Registration Statement on Form S-4,
Registration No. 333-32975).
2.6 Stock Purchase Agreement, dated as of November 25, 1997, by
and among Oxford Automotive, Inc. and the Shareholders of RPI
Holdings, Inc. (previously filed as Exhibit 2.1 to the
Registrant's Form 8-K dated November 25, 1997, and
incorporated herein by reference)
2.7 Asset Purchase Agreement, dated as of March 13, 1998, between
Oxford Automotive, Inc. and Eaton Corporation. (previously
filed as Exhibit 2.1 to the Registrant's Form 8-K dated April
1, 1998, and incorporated herein by reference)
2.8 Share and Debt Purchase and Sale Agreement (the "Purchase
Agreement") between Oxford Automotive France SAS and Groupe
Valfond SA, dated December 15, 1998 (previously filed as
Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended December 31, 1998, File No.
333-58131, and incorporated herein by reference).
2.9 Amendments No. 1 and 2 to the Share and Debt Purchase and Sale
Agreement, dated December 20, 1998 and December 28, 1998,
respectively, by and between Oxford Automotive France SAS and
Groupe Valfond SA (previously filed as Exhibit 2.8 to the
Registrant's Registration Statement on Form S-4, File No.
333-75849 and incorporated herein by reference)
3.1 Articles of Incorporation of the Company (previously filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form
S-4, File No. 333-32975, and incorporated herein by reference)
E-1
<PAGE> 66
Exhibit No Description
- ---------- -----------
3.2 Bylaws of the Company (previously filed as Exhibit 3.11 to
the Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
4.1 Indenture, dated as of June 15, 1997, by and among the
Company, the Subsidiary Guarantors and First National Trust
Association, as Trustee (including form of the 10 1/8% Senior
Subordinated Notes Due 2007, form of the Guaranty, and form of
Supplemental Indenture) (previously filed as Exhibit 4.1 to
the Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
4.2 *Amended and Restated Credit Agreement between the Company and
NBD Bank, as agent, dated May 14, 1999.
4.3 Security Agreement between the Company and NBD Bank, as agent,
dated June 24, 1997 (previously filed as Exhibit 4.3 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
4.4 Security Agreement between 829500 Ontario Limited and First
Chicago NBD Bank Canada dated June 24, 1997 (previously filed
as Exhibit 4.4 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.5 Security Agreement between 976459 Ontario Limited and First
Chicago NBD Bank Canada dated June 24, 1997 (previously filed
as Exhibit 4.5 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.6 Security Agreement between BMG Holdings, Inc. and First
Chicago NBD Bank Canada dated June 24, 1997 (previously filed
as Exhibit 4.6 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.7 Security Agreement between BMG North America Limited and First
Chicago NBD Bank Canada dated June 24, 1997 (previously filed
as Exhibit 4.7 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.8 Security Agreement among Lobdell Emery and its subsidiaries
and NBD Bank, as agent, dated June 24, 1997 (previously filed
as Exhibit 4.8 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.9 Guarantee Agreement among 829500 Ontario Limited, 976459
Ontario Limited, BMG Holdings, Inc. and NBD Bank, as agent,
dated June 24, 1997 (previously filed as Exhibit 4.9 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
4.10 Guarantee Agreement between BMG North America Limited and NBD
Bank, as agent, dated June 24, 1997 (previously filed as
Exhibit 4.10 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.11 Guarantee Agreement among Lobdell Emery and its subsidiaries
and NBD Bank, as agent, dated June 24, 1997 (previously filed
as Exhibit 4.11 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
E-2
<PAGE> 67
Exhibit No Description
- ---------- -----------
4.12 Pledge Agreement and Irrevocable Proxy between the Company and
NBD Bank, as agent, dated June 24, 1997 (previously filed as
Exhibit 4.12 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.13 Pledge Agreement and Irrevocable Proxy between Lobdell Emery
and NBD Bank, as agent, dated June 24, 1997 (previously filed
as Exhibit 4.13 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.14 Pledge Agreement and Irrevocable Proxy between Concept
Management Corporation and NBD Bank, as agent, dated June 24,
1997 (previously filed as Exhibit 4.14 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference)
4.15 Subrogation and Contribution Agreement among the Company and
the Guarantors, dated June 24, 1997 (previously filed as
Exhibit 4.15 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
4.16 Pledge Agreement and Irrevocable Proxy between the Company and
NBD Bank, as agent, dated February 4, 1999 (previously filed
as Exhibit 4.16 to the Registrant's Registration Statement on
Form S-4, File No. 333-75849, and incorporated herein by
reference)
4.17 Pledge Agreement and Irrevocable Proxy between OASP, Inc. and
NBD Bank, as agent, dated February 4, 1999 (previously filed
as Exhibit 4.17 to the Registrant's Registration Statement on
Form S-4, File No. 333-75849, and incorporated herein by
reference)
4.18 Joinder Agreement among the Company, certain subsidiaries of
the Company, certain lenders, and NBD Bank, as agent, dated
February 4, 1999 (previously filed as Exhibit 4.18 to the
Registrant's Registration Statement on Form S-4, File No.
333-75849, and incorporated herein by reference)
4.19 Registration Rights Agreement dated April 1, 1998 by and among
the Company, the Subsidiary Guarantors and the Initial
Purchaser (previously filed as Exhibit 4.3 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31,
1998, and incorporated herein by reference)
4.20 Indenture, dated as of December 1, 1998, by and among the
Company, the Subsidiary Guarantors and U.S. Bank Trust
National Association, as Trustee (including form of the
10 1/8% Senior Subordinated Notes Due 2007, Series C, form of
Guaranty, and form of Supplemental Indenture) (previously
filed as Exhibit 4.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended December 31, 1998, File
No. 333-58131, and incorporated herein by reference)
4.21 Registration Rights Agreement dated December 8, 1998 by and
among the Registrant, the Subsidiary Guarantors and the
Initial Purchasers of the 10 1/8% Senior Subordinated Notes
Due 2007, Series C (previously filed as Exhibit 4.2 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 1998, File No. 333-58131, and
incorporated herein by reference)
4.22 Consent and Amendment of Security Documents among the Company,
certain subsidiaries of the Company, and NBD Bank, as agent,
dated March 31, 1999 (previously filed as Exhibit 4.24 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
E-3
<PAGE> 68
Exhibit No Description
- ---------- -----------
10.1 Form of RPI Note (previously filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.2 Form of Director Indemnification Agreement (previously filed
as Exhibit 10.2 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
10.3 Employment and Noncompetition Agreement between the Company
and Steven M. Abelman (previously filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.4 Employment Agreement between BMG North America and Larry C.
Cornwall (previously filed as Exhibit 10.5 to the Registrant's
Registration Statement on Form S-4, File No. 333-32975, and
incorporated herein by reference)
10.5 Shareholders Agreement among certain of the Shareholders of
the Company and BMG-MI, Inc. (now known as Oxford Automotive,
Inc.), dated October 23, 1995 (previously filed as Exhibit
10.6 to the Registrant's Registration Statement on Form S-4,
File No. 333-32975, and incorporated herein by reference)
10.6 Shareholders Agreement among certain of the Shareholders of
the Company and the Company dated January 10, 1997 (previously
filed as Exhibit 10.7 to the Registrant's Registration
Statement on Form S-4, File No. 333-32975, and incorporated
herein by reference)
10.7 Management and Consulting Agreement ("Management Agreement")
between the Company and The Oxford Investment Group, Inc.,
dated June 24, 1997 (previously filed as Exhibit 10.8 to the
Registrant's Registration Statement on Form S-4, File No.
333-32975, and incorporated herein by reference)
10.8 Settlement Agreement and Mutual Release, dated July 15, 1997,
regarding Lobdell Preferred Shareholders (previously filed as
Exhibit 10.9 to the Registrant's Registration Statement on
Form S-4, File No. 333-32975, and incorporated herein by
reference)
10.9 Amendment to Management Agreement, dated November 24, 1997
(previously filed as Exhibit 10.10 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1998,
and incorporated herein by reference)
E-4
<PAGE> 69
10.10 Form of Purchase Agreement among the Company and the Initial
Purchasers of the 10 1/8% Senior Subordinated Notes
(previously filed as Exhibit 10.11 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1998,
and incorporated herein by reference)
10.11 Purchase Agreement among the Registrant and the Initial
Purchasers of the 10 1/8% Senior Subordinated Notes Due 2007,
Series C, dated December 1, 1998 (previously filed as Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal Quarter ended December 31, 1998, and incorporated
herein by reference)
10.12 *Asset Use Agreement between Automotive Business Trust 1999-A
and Oxford Automotriz de Mexico S.A. de C.V. dated March 31,
1999.
10.13 *Guaranty of the Company in favor of Automotive Business Trust
1999-A dated March 31, 1999.
12 *Statement regarding computation of ratios
21 *Subsidiaries of the Registrant
27 *Financial Data Schedule
----------
* Filed herewith
E-5
<PAGE> 1
EXHIBIT 4.2
OXFORD AUTOMOTIVE, INC.
------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of May 14, 1999
------------------------------------------
THE BORROWING SUBSIDIARIES PARTY HERETO,
THE LENDERS PARTY HERETO
and
NBD BANK, as Agent
ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC.
i
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C>
I. DEFINITIONS.....................................................................................1
1.1 Certain Definitions....................................................................1
1.2 Other Definitions; Rules of Construction..............................................24
II. THE COMMITMENTS, THE SWINGLINE FACILITY
AND THE ADVANCES .............................................................................25
2.1 Commitment of the Lenders and Canadian and
Swingline Facility....................................................................25
2.2 Termination and Reduction of Commitments..............................................28
2.3 Fees..................................................................................29
2.4 Disbursement of Advances..............................................................29
2.5 Conditions for First Disbursement.....................................................31
2.6 Further Conditions for Disbursement...................................................34
2.7 Subsequent Elections as to Borrowings.................................................34
2.8 Limitation of Requests and Elections..................................................35
2.9 Minimum Amounts; Limitation on Number of Borrowings; Etc..............................35
2.10 Borrowing Base Adjustment.............................................................36
2.11 Security and Collateral...............................................................36
III. PAYMENTS AND PREPAYMENTS OF ADVANCES...........................................................37
3.1 Principal Payments and Prepayments....................................................37
3.2 Interest Payments.....................................................................39
3.3 Letters of Credit and Acceptances.....................................................39
3.4 Additional Terms for Acceptances......................................................41
3.5 Payment Method........................................................................43
3.6 No Setoff or Deduction................................................................43
3.7 Payment on Non-Business Day; Payment Computations.....................................44
3.8 Additional Costs......................................................................44
3.9 Illegality and Impossibility..........................................................45
3.10 Indemnification.......................................................................45
3.11 Taxes.................................................................................45
3.12 Substitution of Lender................................................................47
IV. REPRESENTATIONS AND WARRANTIES.................................................................47
4.1 Corporate Existence and Power.........................................................47
4.2 Corporate Authority...................................................................48
4.3 Binding Effect........................................................................48
4.4 Subsidiaries..........................................................................48
4.5 Litigation............................................................................48
4.6 Financial Condition...................................................................48
4.7 Use of Advances.......................................................................49
4.8 Consents, Etc.........................................................................49
4.9 Taxes.................................................................................49
4.10 Title to Properties...................................................................49
4.11 Borrowing Base........................................................................50
4.12 ERISA.................................................................................50
4.13 Disclosure............................................................................50
4.14 Environmental Matters.................................................................50
4.15 Solvency..............................................................................50
4.16 No Defaults under Certain Agreements..................................................51
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.17 Intellectual Property.................................................................51
4.18 Preferred Stock.......................................................................51
4.19 Investment Company Act; Other Regulations.............................................51
4.20 Senior Subordinated Debt Documents....................................................51
4.21 Unrestricted Subsidiaries.............................................................52
4.22 Acquisitions..........................................................................52
4.23 Material Agreement....................................................................52
4.24 Compliance With Laws..................................................................53
4.25 Year 2000.............................................................................53
4.26 OPI Acquisition.......................................................................53
4.27 Mexican Facility......................................................................53
V. COVENANTS......................................................................................53
5.1 Affirmative Covenants.................................................................53
(a) Preservation of Corporate Existence, Etc.....................................53
(b) Compliance with Laws, Etc....................................................54
(c) Maintenance of Properties; Insurance.........................................54
(d) Reporting Requirements.......................................................54
(e) Accounting; Access to Records, Books, Etc....................................56
(f) Maintenance of Business Lines................................................57
(g) Additional Security and Collateral...........................................57
(h) Further Assurances...........................................................57
(i) Year 2000....................................................................57
5.2 Negative Covenants....................................................................57
(a) Net Worth....................................................................58
(b) Total Covenant Obligations to Total Covenant EBITDA Ratio....................58
(c) Fixed Charge Coverage Ratio..................................................58
(d) Interest Coverage Ratio......................................................58
(e) Indebtedness.................................................................58
(f) Liens........................................................................60
(g) Merger; Acquisitions; Etc....................................................61
(h) Disposition of Assets; Etc...................................................62
(i) Nature of Business...........................................................63
(j) Dividends and Other Restricted Payments......................................63
(k) Capital Expenditures.........................................................64
(l) Loans, Advances and Investments..............................................64
(m) Transactions with Affiliates.................................................66
(n) Sale and Leaseback Transactions and other Financing Transactions.............66
(o) Negative Pledge Limitation...................................................67
(p) FSC Commissions..............................................................67
(q) Inconsistent Agreements......................................................67
(r) Subsidiary Dividends.........................................................67
(s) Preferred Stock..............................................................67
(t) Other Indebtedness and Agreements............................................67
(u) Management Fees..............................................................68
(v) Restricted Subsidiaries......................................................68
5.3 Additional Covenants..................................................................68
VI. DEFAULT........................................................................................69
6.1 Events of Default.....................................................................69
(a) Nonpayment...................................................................69
(b) Misrepresentation............................................................69
(c) Certain Covenants............................................................69
(d) Other Defaults...............................................................69
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
(e) Cross Defaults...............................................................69
(f) Judgments....................................................................70
(g) ERISA........................................................................70
(h) Insolvency, Etc..............................................................70
(i) Security Documents...........................................................71
(j) Control......................................................................71
(k) Cofimeta Acquisition; Mexican Facility.......................................71
6.2 Remedies..............................................................................71
6.3 Distribution of Proceeds of Collateral................................................72
VII. THE AGENT AND THE LENDERS......................................................................74
7.1 Appointment and Authorization.........................................................74
7.2 Agent and Affiliates..................................................................74
7.3 Scope of Agent's Duties...............................................................74
7.4 Reliance by Agent.....................................................................74
7.5 Default...............................................................................75
7.6 Liability of Agent....................................................................75
7.7 Nonreliance on Agent and Other Lenders................................................75
7.8 Indemnification.......................................................................75
7.9 Successor Agent.......................................................................76
7.10 Sharing of Payments...................................................................76
VIII. MISCELLANEOUS..................................................................................77
8.1 Amendments, Etc.......................................................................77
8.2 Notices...............................................................................78
8.3 No Waiver By Conduct; Remedies Cumulative.............................................78
8.4 Reliance on and Survival of Various Provisions........................................78
8.5 Expenses; Indemnification.............................................................79
8.6 Successors and Assigns................................................................81
8.7 Counterparts..........................................................................83
8.8 Governing Law.........................................................................83
8.9 Table of Contents and Headings........................................................84
8.10 Construction of Certain Provisions....................................................84
8.11 Integration and Severability..........................................................84
8.12 Independence of Covenants.............................................................84
8.13 Interest Rate Limitation..............................................................84
8.14 Judgment and Payment..................................................................85
8.15 Acknowledgments.......................................................................85
8.16 Waiver of Jury Trial..................................................................85
</TABLE>
EXHIBITS
Exhibit A - Borrowing Base Certificate
Exhibit B - Company Security Agreement
Exhibit C - Environmental Certificate
Exhibit D - Guaranty
Exhibit E - Guarantor Security Agreement
Exhibit F - Revolving Credit Note
iii
<PAGE> 5
Exhibit G - Swingline Note
Exhibit H - Term Note
Exhibit I - Tooling Revolving Credit Note
Exhibit J - Disbursement of Advances
Exhibit K - Disbursement of Swingline Loans
Exhibit L - Subsequent Elections as to Borrowings
Exhibit M - Assignment and Acceptance
SCHEDULES
Schedule 1.1(A) - Existing Letters of Credit
Schedule 1.1(B) - Mexican Facility Documents
Schedule 1.1(C) - Mexican Subsidiaries
Schedule 1.1(D) - Existing Restricted Subsidiaries
Schedule 1.1(E) - Senior Subordinated Debt Documents
Schedule 4.4 - Subsidiaries
Schedule 4.5 - Litigation
Schedule 4.17 - Intellectual Property
Schedule 4.18 - Lobdell Preferred Stock
Schedule 4.22 - Cofimeta Indebtedness
Schedule 4.26 - OPI Acquisition
Schedule 5.2(e) - Indebtedness
Schedule 5.2(f) - Liens
Schedule 5.2(o) - Negative Pledges
Schedule 5.2(u) - Management Fees
iv
<PAGE> 6
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May
14, 1999 (this "Agreement"), is by and among OXFORD AUTOMOTIVE, INC., a Michigan
corporation (the "Company"), each of the Subsidiaries of the Company designated
in Section 1.1 as a Borrowing Subsidiary (a "Borrowing Subsidiary" and
collectively with the Company the "Borrowers"), the lenders set forth on the
signature pages hereof, their successors and assigns, and each other Person
becoming a lender hereunder from time to time (collectively, together with any
Affiliates of such Lenders designated by such Lenders to make Canadian Advances
hereunder, the "Lenders" and individually a "Lender"), and NBD BANK, a Michigan
banking corporation, as agent (in such capacity, and collectively with any of
its Affiliates designated by it to administer any of its functions hereunder at
any time, the "Agent") for the Lenders.
RECITAL
The Company, the subsidiary borrowers and lenders party thereto, and
NBD Bank, as Agent, are parties to an Amended and Restated Credit Agreement
dated as of March 31, 1999 (as amended, the "Existing Credit Agreement"), and
the parties hereto desire to amend and restate the Existing Credit Agreement as
set forth herein.
The parties hereto agree to amend and restate the Existing Credit
Agreement in its entirety as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms
shall have the following respective meanings:
"Acceptance" shall mean Bankers' Acceptances and BA Equivalent
Loans.
"Acceptance Fee" shall mean the fee payable at the time of the
acceptance of Bankers' Acceptances established by multiplying the face amount of
such Bankers' Acceptances by the Applicable Margin and by multiplying the
product so obtained by a fraction having a numerator equal to the number of days
in the term of such Bankers' Acceptances and a denominator of 365.
"Acquisition" is defined in Section 5.2(g).
"Advance" shall mean any Loan, any acceptance of any Bankers'
Acceptance, any BA Equivalent Loan, and any Letter of Credit Advance.
"Affiliate", when used with respect to any Person, shall mean
any other Person which, directly or indirectly, controls or is controlled by or
is under common control with such Person. For purposes of this definition
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise, and a Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any class of voting
Capital Stock of the controlled Person.
1
<PAGE> 7
"Applicable Lending Office" shall mean, with respect to any
Loan made by any Lender or with respect to such Lender's Commitments, the office
or branch of such Lender or of any Affiliate of such Lender located at the
address specified as the applicable lending office for such Lender set forth
next to the name of such Lender in the signature pages hereof or any other
office, branch or Affiliate of such Lender or of any Affiliate of such Lender
hereafter selected and notified in writing to the Company and the Agent by such
Lender. Any Affiliate of any such Lender so selected and notified shall have all
rights of a Lender hereunder.
"Applicable Margin" shall mean, with respect to any Floating
Rate Loan, Bankers' Acceptance, LIBOR Loan, commitment fee payable under Section
2.3(a) and Letter of Credit fee payable pursuant to Section 2.3(b), as the case
may be, the per annum rate (expressed as a percentage) in accordance with the
following:
<TABLE>
<CAPTION>
================================================================================
Total Covenant Floating Rate Bankers' Facility Fees
Obligations to Loans Acceptances,
Total Covenant Letter of Credit
EBITDA Ratio Fees and
LIBOR Loans
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
>4.75 1.00% 2.25% 0.50%
- --------------------------------------------------------------------------------
>4.00 but <4.75 0.75% 2.00% 0.50%
-
- --------------------------------------------------------------------------------
>3.50 but <4.00 0.50% 1.80% 0.45%
-
- --------------------------------------------------------------------------------
>3.00 but <3.50 0.125% 1.375% 0.375%
-
- --------------------------------------------------------------------------------
<3.00 0.00% 1.125% 0.375%
- -
================================================================================
</TABLE>
The Applicable Margin shall be based upon the Total Covenant
Obligations to Total Covenant EBITDA Ratio as calculated as of the last day of
each fiscal quarter of the Company and the Applicable Margin shall be adjusted
on (a) the last day of the second month following the close of the fiscal
quarter for the first three fiscal quarters, and (b) the last day of the fourth
month following the close of the last fiscal quarter, based on the financial
statements of the Company and related compliance certificate pursuant to Section
5.1(d) to the Lenders; provided that, (i) as of the Effective Date, the
Applicable Margin shall be based on a Total Covenant Obligations to Total
Covenant EBITDA Ratio of greater than 4.00 to 1.00 but less than or equal to
4.75 and (ii) upon the occurrence and during the continuance of any Event of
Default the Applicable Margin shall be based on a Total Covenant Obligations to
Total Covenant EBITDA Ratio of greater than 4.75 to 1.00, in each case
regardless of the actual Total Covenant Obligations to Total Covenant EBITDA
Ratio.
"Arranger" shall mean First Chicago Capital Markets, Inc.
"Assignment and Acceptance" is defined in Section 8.6(d).
"BA Equivalent Loan" shall mean a Loan contemplated as such in
Section 3.4.
2
<PAGE> 8
"BA Rate" shall mean the rate per annum determined as being
the arithmetic average (rounded upwards, if necessary, to the nearest .01%) of
the rates quoted for First Chicago/NBD Canada for one month bankers'
acceptances as appears on the Reuters Screen CDOR (Certificate of Deposit
Offered Rate) page, as determined as at 10:00 a.m. (Toronto time) on the
relevant Business Day (for non-Business Days, and if no CDOR rate is available
for a given Business Day, the CDOR rate for the immediately previous Business
Day for which a CDOR rate is available shall be used)
"BA Interest Period" shall mean, relative to any Bankers
Acceptance or BA Equivalent Loan, the period beginning on (and including) the
date on which such Bankers Acceptance is accepted or continued or such BA
Equivalent Loan is made or continued to (but excluding) the date which is 30, 60
or 90 days thereafter, as selected by the Company.
"Bankers' Acceptance" shall mean a non-interest bearing bill
of exchange in a form satisfactory to the Agent, denominated in CAD, drawn and
endorsed by a Canadian Borrowing Subsidiary and presented to each Canadian
Lender for acceptance pursuant to this Agreement.
"BMG" shall mean BMG North America Limited, a corporation
incorporated under the laws of the Province of Ontario, Canada.
"BMO" shall mean Bank of Montreal, a Canadian chartered bank.
"Board of Directors" shall mean the board of directors of the
Company.
"Borrowing" shall mean the aggregation of Advances, including
each Letter of Credit and Bankers' Acceptance issuance, of the Lenders made to
any Borrower, or continuations and conversions of any Advances, made pursuant to
Article II on a single date and, in the case of any LIBOR Loans or Bankers'
Acceptances, for a single Interest Period, which Borrowings may be classified
for purposes of this Agreement by reference to the type of Loans or the type of
Advance comprising the related Borrowing, e.g., a "LIBOR Borrowing" is a
Borrowing comprised of LIBOR Loans and a "Letter of Credit Borrowing" is an
Advance comprised of a single Letter of Credit.
"Borrowing Base" shall mean, as of any date, the sum of:
(a) an amount equal to 85% of the value of Eligible Accounts
Receivable, plus
(b) an amount equal to 50% of the value of Eligible Deferred
Tooling Reimbursement Payments, plus
(c) an amount equal to 50% of the value of Eligible Inventory,
plus
(d) an amount of fixed asset reliance equal to the sum of the
following: (i) $113,562,000, (ii) 50% of the then net book value of Eligible
Fixed Assets (exclusive of Eligible Fixed Assets described in clause (iii) of
this paragraph) acquired after February 4, 1999 but prior to March 31, 2000,
plus (iii) an amount equal to the sum of 70% of the orderly liquidation value
determined from time to time by the Agent for equipment which constitutes
Eligible Fixed Assets acquired after February 4, 1999 in an Acquisition
permitted by Section 5.2(g) and 70% of the fair market value determined from
time to time by the Agent for real estate which constitutes Eligible Fixed
Assets acquired in an Acquisition permitted by Section 5.2(g) consummated after
February 4, 1999; minus
3
<PAGE> 9
(e) $30,000,000; minus
(f) until such time as the construction and acquisition of the
Mexican Manufacturing Facility has been substantially completed and paid for, an
amount equal to the remaining cost to complete the acquisition, construction and
equipping of the Mexican Manufacturing Facility, and as described by the Company
to the Agent prior to the Effective Date (it being acknowledged that as of the
Effective Date the cost of such acquisition, construction and equipping is
approximately $75,000,000, and the cost to complete is $75,000,000 minus the
amount paid for such acquisition, construction or equipping from financing under
the Mexican Facility as of the date of any Borrowing Base determination).
"Borrowing Base Certificate" for any date shall mean an
appropriately completed report as of such date in substantially the form of
Exhibit A hereto, certified as true and correct as of such date by the Chief
Financial Officer or Treasurer of the Company.
"Borrowing Subsidiary" shall mean any Subsidiary designated by
the Company to the Agent as a "Borrowing Subsidiary" hereunder so long as (a)
each of the Company and each Guarantor guarantees the obligation of such
Borrowing Subsidiary pursuant to a Guaranty, and grants a first priority lien
and security interest on its assets to the extent required under Section 2.11 to
secure such Guaranty and all obligations of such Borrowing Subsidiary, (b) such
Borrowing Subsidiary delivers all corporate or organizational documents and
authorizing resolutions and legal opinions requested by the Agent and (c) such
Borrowing Subsidiary executes all agreements, instruments and documents and
takes such other action requested by the Agent, including without limitation
becoming bound by the terms hereof as a Borrowing Subsidiary and granting a
first priority lien and security interest on its assets to the extent required
under Section 2.11 to secure all Advances and other obligations of such
Borrowing Subsidiary to the Lenders and the Agent. As of the Effective Date, the
only Borrowing Subsidiaries are BMG and Oxford Suspension Ltd..
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which the Agent is not open to the public for carrying on
substantially all of its banking functions in Detroit, Michigan or, with respect
to any Canadian Advance, First Chicago/NBD Canada is not open to the public for
carrying on substantially all of its banking functions in Toronto, Ontario.
"CAD" or "C$" shall mean the lawful money of Canada.
"Canadian Advances" shall mean all Loans, including
Acceptances, denominated in CAD.
"Canadian Borrowing Subsidiary" shall mean any Borrowing
Subsidiary which is also a Canadian Subsidiary.
"Canadian Intercreditor Agreement" shall mean the
intercreditor agreement in form and substance satisfactory to the Agent among
the Agent, BMG and all other material lenders to BMG or any of its Subsidiaries,
as amended or modified from time to time.
"Canadian Lender" shall mean any Lender which, whether
directly or through an Affiliate of such Lender, can make Canadian Advances
hereunder free of withholding taxes of Canada and that is designated from time
to time by the Agent and the Company, with the consent of such Lender, as a
Canadian Lender.
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"Canadian Percentage" of any Canadian Lender as of any date,
shall mean a fraction (expressed as a percentage), the numerator of which is the
Commitment of such Canadian Lender and the denominator which is the aggregate
Commitments of all Canadian Lenders.
"Canadian Subsidiary" shall mean any Subsidiary of the Company
organized under the laws of Canada or any Province thereof.
"Capital Expenditures" shall mean, without duplication, any
expenditures, other than under a Capital Lease, for any purchase or other
acquisition of any asset which would be classified as a fixed or capital asset
on a consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with Generally Accepted Accounting Principles.
"Capital Lease" of any Person shall mean any lease which, in
accordance with Generally Accepted Accounting Principles, is or should be
capitalized on the books of such Person.
"Capital Stock" shall mean (i) in the case of any corporation,
all capital stock and any securities exchangeable for or convertible into
capital stock and any warrants, rights or other options to purchase or otherwise
acquire capital stock or such securities or any other form of equity securities,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distribution of assets of, the
issuing Person.
"Change in Control" shall mean:
(a) prior to a primary sale or sales of shares of Capital
Stock of the Company resulting in the sale of more than 50% of each class of
outstanding Capital Stock of the Company pursuant to any one or more public
offerings thereof (a "Majority IPO"), (i) Permitted Holders shall cease to
control, directly or indirectly, in each case free and clear of all Liens, at
least 35% (on a fully diluted basis) of the issued and outstanding shares of
Voting Stock of the Company and have the right and authority to appoint,
designate or otherwise elect at least 51% of the members of the Board of
Directors of the Company or (ii) other than the Permitted Holders, any Person,
or two or more Persons acting in concert, acquire or own beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of an amount of the outstanding
shares of Voting Stock of the Company on a fully diluted basis which is equal to
or greater than the amount owned by the Permitted Holders;
(b) after a Majority IPO, (i) Permitted Holders shall cease
to control, directly or indirectly, in each case free and clear of all Liens, at
least 20% (on a fully diluted basis) of the issued and outstanding shares of
Voting Stock of the Company and have the right and authority to appoint,
designate or otherwise elect at least 20% of the members of the Board of
Directors of the Company or (ii) any Person, or two or more Persons acting in
concert, acquire or own beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Exchange Act of
1934) of an amount of the outstanding shares of Voting Stock of the Company on a
fully diluted basis which is equal to or greater than the amount owned by the
Permitted Holders; or
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<PAGE> 11
(c) after the first public offering of Capital Stock of the
Company, during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of directors (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a majority vote of
the directors of the Company then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office; or
(d) any "Change of Control" as defined in the Senior
Subordinated Note Indenture.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Cofimeta" shall mean Cofimeta, S.A., a societe anonyme
organized and existing under the laws of France.
"Cofimeta Acquisition" shall mean the Acquisition to be
completed pursuant to the Cofimeta Acquisition Documents.
"Cofimeta Acquisition Date" shall mean February 5, 1999, the
date on which the Cofimeta Acquisition was completed.
"Cofimeta Acquisition Documents" shall mean the agreements
dated on or about December 15, 1998 between the Company and Groupe Valfond,
together with all agreements, documents and instruments executed in connection
therewith or otherwise pursuant thereto, under which the French Acquisition
Company will acquire 100% of the Capital Stock of Cofimeta.
"Commitments" shall mean, collectively, the Revolving Credit
Commitments, the Tooling Revolving Credit Commitments and the Term Loan
Commitments.
"Company Security Agreement" shall mean the security agreement
entered into by the Company for the benefit of the Agent and the Lenders
pursuant to this Agreement in substantially the form of Exhibit B hereto, as
amended or modified from time to time.
"Consolidated" or "consolidated" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two or more
Persons of the amounts signified by such term for all such Persons determined on
a consolidated basis in accordance with Generally Accepted Accounting
Principles.
"Contingent Liabilities" of any Person shall mean, as of any
date and without duplication, all obligations of others for which such Person is
contingently liable, as guarantor, surety, accommodation party, partner or in
any other capacity, or in respect of which obligations such Person assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of such Person in respect of any letters of credit, surety bonds or
similar obligations and all obligations of such Person to advance funds to, or
to purchase assets, property or services from, any other Person in order to
maintain the financial condition of such other Person.
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"Creative" shall mean Creative Fabrication Corporation, a
Tennessee corporation.
"Creative Letter of Credit" shall mean the irrevocable letter
of credit number 442 issued by NBD Bank on September 27, 1995 for the account of
Creative, as renewed or extended or otherwise modified from time to time.
"Creative Revenue Bond" shall mean the $8,500,000 Industrial
Development Revenue Bond (Creative Fabrication Corporation Project), Series 1995
issued by the Industrial Development Board of the County of McMinn, a public
non-profit corporation and public instrumentality of the County of McMinn,
Tennessee.
"Creative Revenue Bond Documents" shall mean the indenture of
trust, loan agreement, reimbursement agreement, irrevocable letter of credit,
pledge and security agreement, deed of trust, security agreement, fixture filing
and assignment of rents, security agreement, guarantor security agreement,
irrevocable guaranty agreement and all other agreements and documents executed
or issued in connection with the Creative Revenue Bond, all as amended or
modified from time to time.
"Default" shall mean any event or condition which might become
an Event of Default with notice or lapse of time or both.
"Defaulting Lender" shall mean any Lender that fails to make
available to the Agent such Lender's Loans required to be made hereunder or
shall have not made a payment required to be made to the Agent hereunder. Once a
Lender becomes a Defaulting Lender, such Lender shall continue as a Defaulting
Lender until such time as such Defaulting Lender makes available to the Agent
the amount of such Defaulting Lender's Loans, to the extent the Borrowers have
not repaid the relevant Loans, and all other amounts required to be paid to the
Agent pursuant to this Agreement.
"Discount Rate" shall mean with respect to Bankers'
Acceptances issued pursuant to this Agreement with the same maturity date, the
rate determined by the Agent as being the discount rate, calculated on the basis
of a year of 365 days, of the Agent established in accordance with its normal
practices at or about 10:00 a.m. on the date of issue of such Bankers'
Acceptances, for bankers' acceptances having a comparable face value and an
identical maturity date to the face value and maturity date of the Agent's
portion of such issue of Bankers' Acceptances.
"Discounted Proceeds" shall mean in respect of any Bankers'
Acceptance to be accepted and purchased by a Lender hereunder on any day, an
amount (rounded to the nearest whole cent, and with one-half of one cent being
rounded up) calculated on such day by multiplying (i) the face amount of such
Bankers' Acceptance by (ii) the price, where the price is determined by dividing
one by the sum of one plus the product of (A) the Discount Rate (expressed as a
decimal) and (B) a fraction, the numerator of which is the number of days in the
term of such Bankers' Acceptance and the denominator of which is 365.
"Disqualified Stock" shall mean any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, or which
otherwise has any mandatory payments with respect thereto.
"Dollar Equivalent" shall mean as of any date, with respect to
any amount in a currency other than Dollars, the sum in Dollars resulting from
the conversion of such amount from such currency into
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<PAGE> 13
Dollars at the spot exchange rate determined by the Agent to be available to it
for the purchase of such currency with Dollars at approximately 11:00 a.m. local
time of the Applicable Lending Office on such date as a determination of the
Dollar Equivalent is made.
"Documents" shall have the meaning ascribed thereto in Section
3.3(b).
"Dollars" and "$" shall mean the lawful money of the United
States of America.
"Domestic Subsidiary" shall mean each present and future
Subsidiary of the Company which is not a Foreign Subsidiary.
"Dutch Holding Company" shall mean a Subsidiary of the Company
and wholly owned directly by the Company or by a Guarantor, which Subsidiary is
organized under the laws of the Netherlands and formed after the Effective Date
to, among other purposes, own 100% of the Capital Stock, free and clear of any
Liens other than in favor of the Agent, of the French Acquisition Company,
provided that such Subsidiary satisfies all the requirements of this Agreement.
The Dutch Holding Company shall be deemed a Restricted Subsidiary.
"EBITDA" shall mean, for any period, the Net Income for such
period plus, without duplication, all amounts deducted in determining such Net
Income on account of (a) Interest Expense, (b) income tax expense (including
Michigan Single Business Tax expense), (c) depreciation and amortization
expense, and (d) all other non cash items reducing Net Income (other than items
that will require cash payments and for which an accrual or reserve is, or is
required under Generally Accepted Accounting Principles to be, made, except as
otherwise consented to by the Agent), and minus all non cash items increasing
Net Income, in each case for such period, all as determined for the Company and
its Restricted Subsidiaries on a consolidated basis in accordance with Generally
Accepted Accounting Principles.
"Effective Date" shall mean the effective date specified in
the final paragraph of this Agreement.
"Eligible Accounts Receivable" shall mean, as of any date and
without duplication, those trade accounts receivable owned by a Borrower or a
Guarantor that are payable in Dollars, CAD or any other readily available and
freely tradable currency acceptable to the Agent and in which such Borrower or
Guarantor has granted to the Agent for the benefit of the Lenders and the Agent
a first-priority perfected security interest pursuant to the Security
Agreements, subject to only such Liens as are permitted Section 5.2(f)(i),
valued at the face amount thereof less sales, excise or similar taxes and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed, but shall not include
any such account receivable (a) that is not a bona fide existing obligation
created by the sale and actual delivery of inventory, goods or other property,
or the furnishing of services or other good and sufficient consideration to
customers of a Borrower
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<PAGE> 14
or a Guarantor in the ordinary course of business, (b) that is more than 90 days
past due or that remains outstanding more than 90 days after the earlier of the
date of the invoice or the shipment of the related inventory, goods or other
property or the furnishing of the related services or other consideration, (c)
that is subject to any dispute, contra-account, defense, offset or counterclaim
or any Lien (except those in favor of the Agent for the benefit of the Lenders
and the Agent under the Security Documents), or the inventory, goods, property,
services or other consideration of which such account receivable constitutes
proceeds is subject to any such Lien, (d) in respect of which the inventory,
goods, property, services or other consideration have been rejected, (e) that is
due from any Affiliate or Subsidiary of any Borrower or Guarantor, (f) that has
been classified by any Borrower or Guarantor as doubtful or has otherwise failed
to meet established or customary credit standards of any Borrower or Guarantor,
(g) that is payable by any Person located outside the United States or Canada
(which shall not be deemed to include any territories of the United States or
Canada), other than a Subsidiary of General Motors Corporation, Ford Motor
Company or DaimlerChrysler AG, or any other substantial auto manufacturer or
supplier approved by the Agent, (h) with respect to which any representation or
warranty contained in Section 4.11 is incorrect at any time, (i) that is payable
by the United States or any of its departments, agencies or instrumentalities or
by any state or other governmental entity unless such Borrower or Guarantor
shall have notified the Agent thereof and shall have executed and delivered any
and all instruments and documents and taken such other action required by the
Agent to duly effect the assignment thereof to the Agent under the Federal
Assignment of Claims Act, as amended, or other applicable law now or hereafter
in effect, (j) that is payable by any Person as to which 30% or more of the
accounts receivable payable by such Person to any Borrower or Guarantor do not
otherwise constitute Eligible Accounts Receivable, (k) that is payable by any
Person that is the subject of any proceeding seeking to adjudicate it a bankrupt
or insolvent or seeking liquidation, winding up or reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or that is
not generally paying its debts as they become due or has admitted in writing its
inability to pay its debts generally or has made a general assignment for the
benefit of creditors, (l) that is evidenced by a promissory note or other
instrument, (m) that is subordinate or junior in right or priority of payment to
any other obligation or claim, (n) arising as a result of or relating to Tooling
if such account receivable is not currently due or arising as a result of or
relating to Tooling if it arises under any Tooling Contract financed by any
lender other than by Advances by the Lenders under this Agreement, or (o) that
for any other reason is at any time reasonably deemed by the Agent to be
ineligible.
"Eligible Deferred Tooling Reimbursement Payments" shall mean
such portion of the assets, net of any payments received thereon, of a Borrower
or Guarantor which consists of Tooling reimbursement payments provided that each
of the following conditions are satisfied: (a) the sale of the related Tooling
is covered under specific written purchase orders or agreements between a
Borrower or Guarantor and the purchaser of such Tooling, and the terms and
provisions of all such purchase orders and agreements and the purchaser thereof
must be satisfactory to the Agent, (b) the Agent has a first priority, perfected
and enforceable security interest in the Borrower's or Guarantor's interest in
such assets, including without limitation, any account receivable or other
proceeds of a Borrower or Guarantor relating to such long term assets, subject
to only such Liens as are permitted by Section 5.2(f)(i), (c) the unpaid balance
of such Tooling as represented by a Borrower or Guarantor is not subject to any
defense, counterclaim, setoff, contra-account, credit, allowance or adjustment
and (d) such Tooling has been constructed in accordance with the requirements
and other terms of such purchase orders and other agreements relating thereto
and the purchaser thereof has approved such Tooling and is not disputing the
acceptability of such Tooling. For purposes of this definition, all Tooling
reimbursement payments of a Borrower or Guarantor which are the subject of any
Tooling Contract financed by any lender other than by Advances by the Lenders
under this Agreement shall be excluded from this definition and no (i) Eligible
Inventory or (ii) accounts receivable included within Eligible Accounts
Receivable shall be included as part of Eligible Deferred Tooling Reimbursement
Payments.
"Eligible Fixed Assets" shall mean, as of any date, those
tangible fixed assets owned by a Borrower or a Guarantor in which such Borrower
or Guarantor has granted to the Agent and Lenders a first-priority perfected
security interest pursuant to the Security Agreements, subject to only such
Liens as are permitted Section 5.2(f)(i), but not including any such fixed asset
(a) that is not usable in the
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<PAGE> 15
business of a Borrower or Guarantor, (b) that is located outside the United
States or Canada or such other jurisdiction approved by the Agent, (c) that is
subject to, or any accounts or other proceeds resulting from the sale or other
disposition thereof could be subject to, any Lien (except those in favor of the
Agent and the Lenders under the Security Agreements), (d) that is not in the
possession of the Company, (e) that is held for sale or lease or is the subject
of any lease, (f) that is subject to any trademark, trade name or licensing
arrangement, or any law, rule or regulation, that could limit or impair the
ability of the Agent and the Lenders to promptly exercise all rights of the
Agent and the Lenders under the Security Agreements, (g) if such fixed asset is
located on premises not owned by the Company and the landlord or other owner of
such premises shall not have waived its distraint, lien and similar rights with
respect to such fixed asset, and shall not have agreed to permit the Agent to
enter such premises after the occurrence of an Event of Default pursuant to a
waiver and agreement of such Person in favor of and in form and substance
acceptable to the Agent, (h) with respect to which any insurance proceeds are
not payable to the Agent as a lender loss payee or are payable to any loss payee
other than the Agent or a Borrower or Guarantor, and (i) that for any other
reason is at any time reasonably deemed by the Agent to be ineligible.
"Eligible Inventory" shall mean, as of any date, that
inventory owned by a Borrower or a Guarantor that constitutes raw materials,
work-in-process or finished goods in which such Borrower or Guarantor has
granted to the Agent for the benefit of the Lenders and the Agent a
first-priority perfected security interest pursuant to the Security Agreements,
subject to only such Liens as are permitted Section by 5.2(f)(i), valued at the
lower of cost or market on a FIFO basis, but shall not include any such
inventory (a) that does not constitute raw materials, work-in-process or
finished goods readily salable or usable in the business of a Borrower or a
Guarantor, (b) that is located outside the United States or Canada (which shall
not be deemed to include any territories of the United States or Canada) or such
other jurisdiction approved by the Agent, (c) that is subject to, or any
accounts or other proceeds resulting from the sale or other disposition thereof
could be subject to, any Lien (except those in favor of the Agent for the
benefit of the Lenders and the Agent under the Security Documents), including
any sale on approval or sale or return transaction or any consignment, (d) that
is not in the possession of such Borrower or Guarantor, (e) that is held for
lease or is the subject of any lease, (f) that is subject to any trademark,
trade name or licensing arrangement, or any law, rule or regulation, that could
limit or impair the ability of the Agent to promptly exercise all rights of the
Agent under the Security Documents, (g) if such inventory is located on premises
not owned by such Borrower or Guarantor and the landlord or other owner of such
premises shall not have waived its distraint, lien and similar rights with
respect to such inventory and shall not have agreed to permit the Lenders and
the Agent to enter such premises pursuant to a waiver and agreement of such
Person in favor of and in form and substance acceptable to the Lenders and the
Agent or any other substantial auto manufacturer or supplier approved by the
Agent, (h) with respect to which any insurance proceeds are not payable to the
Agent for the benefit of the Lenders as a lender loss payee or are payable to
any loss payee other than the Agent or such Borrower or Guarantor, (i) that is
classified as Eligible Deferred Tooling Reimbursement Payments, (j) that is
Tooling unless such Tooling qualifies as Eligible Tooling, or (k) that for any
other reason is at any time reasonably deemed by the Agent to be ineligible.
"Eligible Tooling" shall mean such portion of assets, net of
any payments received thereon, of a Borrower or Guarantor which consists of
Tooling, provided that each of the following conditions is satisfied: (a) the
sale of such Tooling is covered under specific written purchase orders or
agreements between a Borrower or Guarantor and the purchaser of such Tooling,
and the terms and provisions of all such purchase orders and agreements and the
purchaser thereof must be satisfactory to the Agent, (b) the Agent has a first
priority, perfected and enforceable security interest in such Borrower's or
Guarantor's interest in such Tooling and any account receivable or other
proceeds of a
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<PAGE> 16
Borrower or Guarantor relating to such Tooling, subject to only such Liens as
are permitted by Section 5.2(f)(i), and (c) the unpaid balance of such Tooling
as represented by a Borrower or Guarantor is not subject to any defense,
counterclaim, setoff, contra-account, credit, allowance or adjustment. For
purposes of this definition, all Tooling of a Borrower or Guarantor which is the
subject of any Tooling Contract financed by any lender other than by Advances by
the Lenders under this Agreement shall be excluded from this definition, and no
(i) accounts receivable included within Eligible Accounts Receivable, or (ii)
Eligible Deferred Tooling Reimbursement Payments shall be included as part of
Eligible Tooling.
"Environmental Certificate" shall mean the environmental
certificate given by the Borrowers and the Guarantors to the Agent for the
benefit of the Lenders pursuant to this Agreement in substantially the form of
Exhibit C hereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, any
trade or business (whether or not incorporated) which, together with such Person
or any Subsidiary of such Person, would be treated as a single employer under
Section 414 of the Code and the regulations promulgated thereunder.
"Event of Default" shall mean any of the events or conditions
described in Section 6.1.
"Existing Credit Agreement" is defined in the recital
paragraph of this Agreement.
"Existing Letters of Credit" shall mean the letters of credit
set forth on Schedule 1.1(A).
"Federal Funds Rate" shall mean the per annum rate established
and announced by the Agent from time to time as the opening federal funds rate
paid by the Agent in its regional federal funds market for overnight borrowings
from other banks, which Federal Funds Rate shall change simultaneously with any
change in such announced rates.
"First Chicago/NBD Canada" shall mean First Chicago NBD Bank,
Canada, a Canadian chartered bank, and its successors and assigns.
"Fixed Charges" shall mean, for any period, the sum, without
duplication, of (a) Total Covenant Interest Expense for such period, plus (b)
all payments of principal or other sums paid or payable during such period by
the Company or its Restricted Subsidiaries with respect to Indebtedness of the
Company or its Restricted Subsidiaries, other than payments on the Revolving
Credit Advances and Tooling Revolving Credit Advances, plus (c) Rental Charges
paid or payable during such period by the Company and its Restricted
Subsidiaries, plus (d) all dividends, distributions and other obligations paid
with respect to any class of the Company's Capital Stock or any dividend,
payment or distribution paid in connection with the redemption, purchase,
retirement or other acquisition, directly or indirectly, of any shares of the
Company's Capital Stock, plus (e) all net income taxes accrued in such period by
the Company or its Restricted Subsidiaries, plus (f) all payments of principal
or other sums paid or payable, whether directly or indirectly, during such
period by the Company or any of its Restricted Subsidiaries with respect to
Indebtedness of any Unrestricted Subsidiary, plus (g) all payments on the
Mexican Facility Obligations allocable to principal.
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"Fixed Charge Coverage Ratio" shall mean, as of the end of any
fiscal quarter of the Company, the ratio of (a) Total Covenant EBITDA for the
four consecutive fiscal quarters of the Company then ending, plus, to the extent
not added back to such Total Covenant EBITDA, Rental Charges for the four
consecutive fiscal quarters of the Company then ending, minus Capital
Expenditures (exclusive of (i) for purposes of this definition, the Mexican
Facility Obligations in an amount not to exceed $75,000,000 shall not constitute
Capital Expenditures, (ii) up to $5,000,000 of Capital Expenditures for the
Saturn Innovate program in the fiscal year of the Company ending March 31, 1999,
(iii) up to $5,000,000 of Capital Expenditures for the Mexican GMT 250 program
in the fiscal year of the Company ending March 31, 1999, (iv) up to $10,000,000
in aggregate amount of Capital Expenditures for productivity improvement
programs acceptable to the Agent in the fiscal years of the Company ending March
31, 1999 and 2000 on a combined basis, and (v) up to $10,000,000 in aggregate
amount of Capital Expenditures for program specific Capital Expenditures for
programs not yet awarded or for changes to existing programs which occur after
the Effective Date, in each case acceptable to the Agent and for each of the
fiscal years of the Company ending March 31, 2001 and 2002) for the four
consecutive fiscal quarters of the Company then ending, to (b) the Fixed Charges
for the four consecutive fiscal quarters of the Company then ending.
"Floating Rate" shall mean the per annum rate equal to the sum
of (a) the Applicable Margin, plus (b) (i) with respect to U.S. Advances and
other obligations denominated in Dollars, the greater of (x) the Prime Rate in
effect from time to time, and (y) the sum of one half of one percent (1/2%) per
annum plus the Federal Funds Rate in effect from time to time; and (ii) with
respect to Canadian Advances and other obligations denominated in CAD, the
greater of (x) the per annum rate of interest quoted, published and commonly
known as the "prime rate" of First Chicago/NBD Canada which First Chicago/NBD
Canada establishes as the reference rate of interest in order to determine
interest rates for loans to its Canadian commercial borrowers, which rate is not
necessarily the lowest rate of interest offered by First Chicago/NBD Canada in
connection with extensions of credit; and (y) the BA Rate plus 1/2 of 1% per
annum; in each case adjusted automatically with each quoted or published change
in such rate, all without the necessity of any notice to any Borrower, which
Floating Rate shall change simultaneously with any change in any such rates.
"Floating Rate Loan" shall mean any Loan which bears interest
at the Floating Rate.
"Foreign Subsidiary" shall mean any Subsidiary incorporated or
formed in any jurisdiction other than any State of the United States of America.
"French Acquisition Company" shall mean Oxford Automotive
France, SAS, a societe par actions simplifiee organized and existing under the
laws of France.
"Generally Accepted Accounting Principles" shall mean
generally accepted accounting principles applied on a basis consistent with that
reflected in the financial statements referred to in Section 4.6.
"Guaranties" shall mean each guaranty entered into by the
Guarantors for the benefit of the Agent and the Lenders pursuant to this
Agreement in substantially the form of Exhibit D hereto, as amended or modified
from time to time.
"Guarantor Security Agreement" shall mean each security
agreement entered into by the Guarantors for the benefit of the Agent and the
Lenders pursuant to this Agreement in substantially the form of Exhibit E
hereto, as amended or modified from time to time.
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<PAGE> 18
"Guarantors" shall mean each Domestic Subsidiary of the
Company existing as of the Effective Date, each Canadian Subsidiary, the Company
(in its capacity as guarantor of the Borrowing Subsidiaries), and each Person
becoming a Restricted Subsidiary of the Company after the Effective Date or
otherwise entering into a Guaranty from time to time; provided, however, that
the Dutch Holding Company, French Acquisition Company, the Mexican Subsidiaries,
OPI, Cofimeta and the Subsidiaries of Cofimeta existing as of the Effective Date
shall not be required to become Guarantors hereunder.
"Hedging Agreement" shall mean an agreement, device or
arrangement entered into by the Company or any of its Restricted Subsidiaries
providing for payments which are related to fluctuations of interest rates,
currency exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"Hedging Obligations" of a Person shall mean any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all Hedging Agreements, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Hedging Agreement.
"Howell" shall mean Howell Industries, Inc., a Michigan
corporation.
"Indebtedness" of any Person shall mean, as of any date, (a)
all obligations of such Person for borrowed money, and similar monetary
obligations evidenced by bonds, notes, debentures, Capital Lease obligations,
bankers acceptances or otherwise, (b) all obligations of such Person as lessee
under any Capital Lease, (c) all obligations which are secured by any Lien
existing on any asset or property of such Person whether or not the obligation
secured thereby shall have been assumed by such Person, (d) all obligations of
such Person for the unpaid purchase price for goods, property or services
acquired by such Person, except for trade accounts payable and taxes arising in
the ordinary course of business that are not past due, (e) all obligations of
such Person to purchase goods, property or services where payment therefor is
required regardless of whether delivery of such goods or property or the
performance of such services is ever made or tendered (generally referred to as
"take or pay contracts"), (f) all Hedging Obligations, and (g) all Contingent
Liabilities.
"Interest Coverage Ratio" shall mean, as of the end of any
fiscal quarter of the Company, the ratio of (a) Total Covenant EBITDA for the
four consecutive fiscal quarters of the Company then ending to (b) Total
Covenant Interest Expense for the four consecutive fiscal quarters of the
Company then ending.
"Interest Expense" shall mean, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such total interest expense, and to the
extent incurred by the Company or its Restricted Subsidiaries, (i) interest
expense attributable to Capital Lease obligations, (ii) amortization of debt
discount, (iii) capitalized interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) net costs associated with
Hedging Agreements (including amortization of fees), (vii) Preferred Stock
dividends in respect of all Preferred Stock held by Persons other than the
Company or a Restricted Subsidiary, and (viii) interest actually paid by the
Company or any Restricted Subsidiary on any Indebtedness of any other Person.
Notwithstanding the
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foregoing, net interest expense attributable to deferred reimbursement tooling
indebtedness, i.e., only that portion of Tooling Indebtedness to be paid by the
purchaser of the related Tooling in the piece price over the term of the related
tooling contract consistent with current practice, shall not be included in
Interest Expense.
"Interest Payment Date" shall mean (a) with respect to any
LIBOR Loan or Acceptance, the last day of each Interest Period with respect
thereto and, in the case of any Interest Period exceeding three months, those
days that occur during such Interest Period at intervals of three months after
the first day of such Interest Period, and (b) in all other cases, the last
Business Day of each March, June, September and December occurring after the
date hereof, commencing with the first such Business Day occurring after the
date of this Agreement.
"Interest Period" shall mean any BA Interest Period or LIBOR
Interest Period.
"Letter of Credit" shall mean a standby or commercial letter
of credit issued by the Agent on behalf of the Lenders for the account of the
Company under an application and/or other documentation acceptable to the Agent
requiring, among other things, immediate reimbursement by the Company to the
Agent in respect of all drafts or other demand for payment honored thereunder
and all expenses paid or incurred by the Agent relative thereto, and shall
include the Creative Letter of Credit and all other Existing Letters of Credit.
"Letter of Credit Advance" shall mean each issuance of a
Letter of Credit.
"LIBOR" shall mean, with respect to any LIBOR Loan and the
related LIBOR Interest Period, the per annum rate that is equal to the sum of:
(a) the Applicable Margin, plus
(b) the rate per annum obtained by dividing (i) the per
annum rate of interest at which deposits in Dollars for such LIBOR Interest
Period and in an aggregate amount comparable to the amount of such LIBOR Loan to
be made by the Agent in its capacity as a Lender hereunder are offered to the
Agent by other prime banks in the London interbank market, at approximately
11:00 a.m. London time, on the second LIBOR Business Day prior to the first day
of such LIBOR Interest Period by (ii) an amount equal to one minus the stated
maximum rate (expressed as a decimal) of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) that are specified on the first day of such LIBOR Interest Period by
the Board of Governors of the Federal Reserve System (or any successor agency
thereto) for determining the maximum reserve requirement with respect to
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System; all as
conclusively determined by the Agent, such sum to be rounded up, if necessary,
to the nearest whole multiple of one one-hundredth of one percent (1/100 of 1%).
"LIBOR Business Day" shall mean, with respect to any LIBOR
Loan, a day which is both a Business Day and a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"LIBOR Interest Period" shall mean, with respect to any LIBOR
Loan, the period commencing on the day such LIBOR Loan is made or converted to a
LIBOR Loan and ending on the day which is one, two, three or six months
thereafter (or such longer period requested by the Company and
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<PAGE> 20
acceptable to the Lenders), as the Company may elect under this Agreement, and
each subsequent period commencing on the last day of the immediately preceding
LIBOR Interest Period and ending on the day which is one, two or three months
thereafter (or such longer period requested by the Company and acceptable to the
Lenders), as the Company may elect under this Agreement, provided, however, that
(a) any LIBOR Interest Period which commences on the last LIBOR Business Day of
a calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last LIBOR
Business Day of the appropriate subsequent calendar month, (b) each LIBOR
Interest Period which would otherwise end on a day which is not a LIBOR Business
Day shall end on the next succeeding LIBOR Business Day or, if such next
succeeding LIBOR Business Day falls in the next succeeding calendar month, on
the next preceding LIBOR Business Day, and (c) no LIBOR Interest Period which
would end after the Revolving Credit Termination Date with respect to any
Revolving Credit Loan, after the Maturity Date with respect to the Term Loan or
after the Tooling Revolving Credit Termination Date with respect to any Tooling
Revolving Credit Loan shall be permitted.
"LIBOR Loan" shall mean any Loan which bears interest at LIBOR.
"Lien" shall mean any pledge, assignment, hypothecation,
mortgage, security interest, deposit arrangement, option, conditional sale or
title retaining contract, sale and leaseback transaction, financing statement
filing, lessor's or lessee's interest under any lease, subordination of any
claim or right, or any other type of lien, charge, encumbrance, preferential
arrangement or other claim or right.
"Loan" shall mean any Revolving Credit Loan, any Tooling
Revolving Credit Loan, the Term Loan and any Swingline Loan. Any such Loan or
any portion thereof may also be denominated as a Floating Rate Loan, a Bankers'
Acceptance or BA Equivalent Loan or a LIBOR Loan and such Loans are referred to
herein as "types" of Loans.
"Loan Documents" shall mean, collectively, this Agreement, the
Notes, the Security Documents, any Hedging Agreements among any of the Borrowers
and any of the Lenders or any of Lenders' Affiliates and any other agreement,
instrument or document executed in connection with any of the foregoing at any
time, all as amended or modified from time to time.
"Lobdell" shall mean Lobdell Emery Corporation, a Michigan
corporation.
"Lobdell Preferred Stock" shall mean all existing preferred
stock issued by Lobdell, including the Series B Preferred Stock and Series A
Preferred Stock, in the aggregate amount of $50,700,000.
"Lobdell Preferred Stock Documents" shall mean all stock
certificates, agreements and other documents relating to the terms of the
Preferred Stock or otherwise relating to the Preferred Stock.
"Material Adverse Effect" shall mean (i) a material adverse
effect on the property, business, operations, financial condition, liabilities
or capitalization of the Company and its Restricted Subsidiaries, taken as a
whole, (ii) a material adverse effect on the ability of the Company or any
Guarantor to perform its obligations under the Loan Documents or (iii) a
material adverse effect on the rights and remedies of the Agent or the Lenders
under the Loan Documents.
"Maturity Date" shall mean the earlier to occur of (a) the
date on which the maturity of the Term Loan is accelerated pursuant to Section
6.2 and (b) July 31, 2004.
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"Mexican Facility" shall mean the $75,000,000 Cross-Border
Asset Usage Facility of the Mexican Subsidiaries pursuant to the Mexican
Facility Documents.
"Mexican Facility Documents" shall mean the agreements and
documents described on Schedule 1.1(B).
"Mexican Facility Guaranty" shall mean the Guaranty dated
March 31, 1999 executed by the Company in favor of the Mexican Trust
guaranteeing the lease payments of the Mexican Subsidiaries under the Asset
Usage Agreement (as defined on Schedule 1.1 (B)).
"Mexican Facility Obligations" shall mean all present and
future obligations and liabilities of any kind, direct, contingent or otherwise,
pursuant to the Mexican Facility Documents or otherwise under the Mexican
Facility.
"Mexican Facility Tranche A Lenders" shall mean the lenders of
the Mexican Facility Tranche A Loans.
"Mexican Facility Tranche A Guaranty" shall mean that portion
of the Mexican Facility Guaranty allocable to the Mexican Facility Tranche A
Loans.
"Mexican Facility Tranche A Loans" shall mean the up to
$63,000,000 of Tranche A Loans made or to be made under, and as defined in, the
Mexican Facility Documents.
"Mexican Intercreditor Agreement" shall mean the intercreditor
agreement dated March 31, 1999 in form and substance satisfactory to the Agent
among the Agent, BMO and all parties thereto, as amended or modified from time
to time.
"Mexican Manufacturing Facility" shall mean the Ramos Arizape
manufacturing facility of the Company to be located in Mexico as described by
the Company to the Agent prior to the Effective Date.
"Mexican Subsidiaries" shall mean Subsidiaries of the Company
described on Schedule 1.1(C), which are the only Subsidiaries of the Company
located in Mexico or organized or existing under the laws of Mexico or any
political subdivision thereof as of the Effective Date. The Mexican Subsidiaries
shall be deemed Restricted Subsidiaries.
"Mexican Trust" shall mean Oxford Automotive Business Trust
1999-A, a special purpose trust, and lessor under the Mexican Facility.
"Mexico" shall mean the United Mexican States.
"Multiemployer Plan" shall mean any "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Net Cash Proceeds" shall mean, without duplication (a) in
connection with any sale or other disposition of any asset or any settlement by,
or receipt of payment in respect of, any property insurance claim or
condemnation award, the cash proceeds (including any cash payments received by
way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment
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<PAGE> 22
receivable or otherwise, but only as and when received) of such sale, settlement
or payment, net of reasonable and documented attorneys' fees, accountants' fees,
investment banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset which
is the subject of such sale, insurance claim or condemnation award (other than
any Lien in favor of the Agent for the benefit of the Agent and the Lenders) and
other customary fees actually incurred in connection therewith and net of taxes
paid or reasonably estimated to be payable as a result thereof and (b) in
connection with any issuance or sale of any equity securities or debt securities
or instruments or the incurrence of loans, the cash proceeds received from such
issuance or incurrence, net of investment banking fees, reasonable and
documented attorneys' fees, accountants' fees, underwriting discounts and
commissions and other reasonable and customary fees and expenses actually
incurred in connection therewith.
"Net Income" shall mean, for any period, the net income of the
Company and its consolidated Restricted Subsidiaries; provided, however, that
there shall not be included in such Net Income: (i) any net income (or loss) of
any Person if such Person is not a Restricted Subsidiary, except that subject to
the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Net Income
up to the aggregate amount of cash actually distributed by such Person during
such period to the Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause (ii) below); (ii)
any net income of any Restricted Subsidiary if such Restricted Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the exclusion contained
in clause (iii) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Net Income up to
the aggregate amount of cash that could have been distributed by such Restricted
Subsidiary consistent with such restriction during such period to the Company or
another Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the Company's
equity in a net loss of any such Restricted Subsidiary for such period shall be
included in determining such Net Income; (iii) any gain (or loss) realized upon
the sale or other disposition of any assets of the Company or its consolidated
Subsidiaries (including pursuant to any sale-and-leaseback arrangement) which is
not sold or otherwise disposed of in the ordinary course of business and any
gain (or loss) realized upon the sale or other disposition of any Capital Stock
of any Person; (iv) extraordinary or nonrecurring gains or non-cash losses; and
(v) the cumulative effect of a change in accounting principles.
"Net Worth" of any Person shall mean, as of any date, the
amount of any capital stock, paid in capital and similar equity accounts plus
(or minus in the case of a deficit) the capital surplus and retained earnings of
such Person, less treasury stock, all as determined under Generally Accepted
Accounting Principles; provided, however, that any foreign currency translation
adjustment account of the Company and its Subsidiaries shall be disregarded in
the calculation of Net Worth.
"Note" shall mean any Revolving Credit Note, any Tooling
Revolving Credit Note, any Term Loan Note or the Swingline Note.
"OASP I" shall mean OASP, Inc., a Michigan corporation, and
wholly-owned Subsidiary of the Company.
"OASP II" shall mean OASP II, Inc., a Michigan corporation,
and wholly owned Subsidiary of the Company.
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"OPI" is defined on Schedule 4.26.
"OPI Acquisition" shall mean the Acquisition of all
outstanding shares of OPI by the Company, a Guarantor (either an existing
Guarantor or a Guarantor to be formed after the date hereof), the French
Acquisition Company, Cofimeta or a wholly owned Foreign Subsidiary which is a
Restricted Subsidiary, provided that if any such Subsidiary is not a Guarantor
such Subsidiary and each Subsidiary which is not a Guarantor owning such
Subsidiary, directly or indirectly, shall not incur or maintain any Indebtedness
(except as otherwise permitted by this Agreement if such Subsidiary is the
French Acquisition Company or Cofimeta) and at least 65% of the Capital Stock of
the Subsidiary owning OPI, directly or indirectly, which is owned directly by a
Guarantor or the Company shall be pledged to the Agent, for the benefit of
itself and the Lenders on a first priority basis, by such Guarantor or the
Company, as the case may be, and all as further described on Schedule 4.26.
"Overdue Rate" shall mean (a) in respect of principal of
Floating Rate Loans, a rate per annum that is equal to the sum of three percent
(3%) per annum plus the Floating Rate, (b) in respect of principal of LIBOR
Loans, a rate per annum that is equal to the sum of three percent (3%) per annum
plus the per annum rate in effect thereon until the end of the then current
Interest Period for such Loan and, thereafter, a rate per annum that is equal to
the sum of three percent (3%) per annum plus the Floating Rate, and (c) in
respect of other amounts payable by the Company hereunder (other than interest),
a per annum rate that is equal to the sum of three percent (3%) per annum plus
the Floating Rate.
"Oxford" shall mean The Oxford Investment Group, Inc., a
Michigan corporation.
"Oxford Suspension Ltd." shall mean Oxford Suspension Ltd., a
corporation incorporated under the laws of the Province of Ontario, Canada.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Disqualified Stock" is defined is Section 5.2(j).
"Permitted Holders" shall mean (i) any of Selwyn Isakow, his
spouse and any of his lineal descendants and their respective spouses
(collectively, the "Isakow Family") whether acting in their own name or as one
or as a majority of Persons having the power to exercise the voting rights
attached to, or having investment power over, shares held by others, (ii) any
Person wholly owned and controlled by any member of the Isakow Family, (iii) any
trust solely for the benefit of one or more members of the Isakow Family
(whether or not any member of the Isakow Family is a trustee of such trust) and
(iv) the individuals that are holders on the Effective Date of the voting common
stock of the Company.
"Permitted Liens" shall mean Liens permitted by Section 5.2(f)
hereof.
"Person" shall include an individual, a corporation, an
association, a partnership, a limited liability company, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a trade or
business (whether or not incorporated), a government (foreign or domestic) and
any agency or political subdivision thereof, or any other entity.
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<PAGE> 24
"Plan" shall mean, with respect to any Person, any pension
plan (including a Multiemployer Plan) subject to Title IV of ERISA or to the
minimum funding standards of Section 412 of the Code which has been established
or maintained by such Person, any Subsidiary of such Person or any ERISA
Affiliate, or by any other Person if such Person, any Subsidiary of such Person
or any ERISA Affiliate could have liability with respect to such pension plan.
"Planned Asset Sales" shall mean the manufacturing facility of
Creative in Athens, Tennessee.
"Pledge Agreement" shall mean each pledge agreement entered
into by the Company or any Guarantor for the benefit of the Agent and the
Lenders pursuant to this Agreement in form and substance satisfactory to the
Agent, as amended or modified from time to time.
"Preferred Stock" shall mean all Lobdell Preferred Stock and
all other preferred stock or similar Capital Stock issued by the Company or any
of its Restricted Subsidiaries at any time.
"Prime Rate" shall mean the per annum rate announced by the
Agent from time to time as its "prime rate" (it being acknowledged that such
announced rate may not necessarily be the lowest rate charged by the Agent to
any of its customers); which Prime Rate shall change simultaneously with any
change in such announced rate.
"Prohibited Transaction" shall mean any transaction involving
any Plan which is proscribed by Section 406 of ERISA or Section 4975 of the
Code.
"Rental Charges" shall mean the maximum amount of all rents
and other payments (exclusive of property taxes, property and liability
insurance premiums and maintenance costs) paid or required to be paid by the
Company or its Restricted Subsidiaries during such period under any lease of
real or personal property in respect of which the Company or its Restricted
Subsidiaries is obligated as a lessee or user, other than any Capital Lease.
"Reportable Event" shall mean a reportable event as described
in Section 4043(b) of ERISA including those events as to which the thirty (30)
day notice period is waived under Part 2615 of the regulations promulgated by
the PBGC under ERISA.
"Required Lenders" shall mean Lenders holding not less than
(i) 51% (or 100% where required pursuant to Section 8.1) of the Commitments
(provided that, after the Term Loan is made, the amount of the Term Loan
Commitment shall be deemed equal to the outstanding principal balance of the
Term Loan for purposes of this clause (i) of this definition), or (ii) 51% (or
100% where required pursuant to Section 8.1) of the Advances if the Commitments
have expired or been terminated.
"Restricted Subsidiary" shall mean each Subsidiary of the
Company existing as of the Effective Date and described on Schedule 1.1(D)
(including the Guarantors and the Borrowing Subsidiaries) and each other
Subsidiary of the Company that is designated by the Company as a Restricted
Subsidiary.
"Revolving Credit Advance" shall mean any Revolving Credit
Loan and any Letter of Credit Advance.
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"Revolving Credit Commitments" shall mean, with respect to
each Lender, the commitment of each such Lender to make Revolving Credit Loans,
and to participate in Letter of Credit Advances and Swingline Loans, in amounts
not exceeding in the aggregate principal or face amount outstanding at any time
the Revolving Credit Commitment amount for such Lender set forth next to the
name of such Lender on the signature pages hereof, or, as to any Lender becoming
a party hereto after the Effective Date, as set forth in the applicable
Assignment and Acceptance, in each case as reduced pursuant to Section 2.2 or
modified pursuant to Section 8.6.
"Revolving Credit Loan" shall mean any borrowing, including
any Bankers' Acceptance in the case of Canadian Advances, under Section 2.4
evidenced by Revolving Credit Notes and made pursuant to Section 2.1(a).
"Revolving Credit Note" shall mean any promissory note of a
Borrower evidencing the Revolving Credit Loans made to it in substantially the
form annexed hereto as Exhibit F, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"Revolving Credit Termination Date" shall mean the earlier to
occur of (a) July 31, 2004 and (b) the date on which the Revolving Credit
Commitments shall be terminated pursuant to Section 2.2 or Section 6.2.
"Security Agreements" shall mean the Company Security
Agreement and the Guarantor Security Agreements.
"Security Documents" shall mean, collectively, the Security
Agreements, the Documents, the Environmental Certificate, the Creative Bond
Documents, the Guaranties, the Pledge Agreements, the subrogation and
contribution agreement among the Company and the Guarantors, any consent and
amendment of security documents executed by the Company or any of the Guarantors
and all other related agreements and documents, including mortgages, deeds of
trust, financing statements and similar documents, delivered pursuant to this
Agreement or otherwise entered into by any Person to secure or guarantee the
Advances or otherwise relating hereto, all as amended or modified from time to
time.
"Senior Subordinated Debt Documents" shall mean the Senior
Subordinated Note Indentures, the Senior Subordinated Notes and all agreements
and documents executed in connection therewith at any time, including without
limitation those agreements and documents listed on Schedule 1.1(E) hereto.
"Senior Subordinated Notes" shall mean the Senior Subordinated
Notes issued by the Company in the aggregate principal amount of $200,000,000
due 2007 issued pursuant to the Senior Subordinated Note Indentures.
"Senior Subordinated Note Indentures" shall mean,
collectively, the Senior Subordinated Indenture between the Company, the
subsidiary guarantors named therein and First Trust National Association, as
trustee, dated as of June 24, 1997, as amended or modified from time to time and
the Indenture between the Company, the subsidiary guarantors named therein, and
U.S. Bank Trust National Association, as trustee, dated as of December 1, 1998,
as amended or modified from time to time.
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"Solvent" when used with respect to any Person, shall mean
that, as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise," as of such
date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its debts
as they mature. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
"Subordinated Debt" of any Person shall mean, as of any date,
that Indebtedness of such Person for borrowed money which is expressly
subordinate and junior in right and priority of payment to the Advances and
other Indebtedness of such Person to the Lenders in manner and by agreement
satisfactory in form and substance to the Agent and subject to such other terms
and provisions, including without limitation maturities, covenants, defaults,
rates and fees, acceptable to the Agent, and shall include, without limitation,
all indebtedness owing pursuant to the Senior Subordinated Debt Documents and
any Permitted Disqualified Stock.
"Subordinated Debt Documents" shall mean the Senior
Subordinated Debt Documents and any other agreement or document evidencing or
relating to any Subordinated Debt, whether under the Senior Subordinated Notes
or any other Subordinated Debt.
"Subsidiary" of any Person shall mean any other Person
(whether now existing or hereafter organized or acquired) in which (other than
directors qualifying shares required by law) at least a majority of the
securities or other ownership interests of each class having ordinary voting
power or analogous right (other than securities or other ownership interests
which have such power or right only by reason of the happening of a
contingency), at the time as of which any determination is being made, are
owned, beneficially and of record, by such Person or by one or more of the other
Subsidiaries of such Person or by any combination thereof. Unless otherwise
specified, reference to "Subsidiary" shall mean a Subsidiary of the Company.
"Swingline Facility" shall have the meaning specified in
Section 2.1(d).
"Swingline Loan" shall mean any loan under Section 2.4
evidenced by a Swingline Note and made by the Agent (including First Chicago/NBD
Canada) to a Borrower pursuant to Section 2.1(d).
"Swingline Note" shall mean any promissory note of a Borrower
evidencing the Swingline Loans in substantially the form of Exhibit G hereto, as
amended or modified from time to time and together with any promissory note or
notes issued in exchange or replacement therefor.
"Tax Sharing Agreement" shall mean any tax sharing or similar
agreement, if any, entered into between the Company and its Subsidiaries at any
time, as amended or modified from time to time.
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"Term Loan" shall mean the single borrowing under Section 2.4
evidenced by the Term Notes and made to the Company pursuant to Section 2.1(c).
"Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of each Lender to make a portion of the Term Loan in an
amount not exceeding in the aggregate principal amount outstanding at any time
the Term Loan Commitment amount for such Lender set forth next to the name of
such Lender on the signature pages hereof, or, as to any Lender becoming a party
hereto after the Effective Date, as set forth in the applicable Assignment and
Acceptance, in each case as reduced by payments on the Term Loan or modified
pursuant to Section 8.6.
"Term Loan Notes" shall mean the promissory notes of the
Company evidencing the Term Loan, in substantially the form of Exhibit H, as
amended or modified from time to time and together with any promissory note or
notes issued in exchange or replacement therefor.
"Tooling" shall mean dies, molds, tooling and similar items.
"Tooling Contract" shall mean any contract for the fabrication
or purchase of Tooling.
"Tooling Indebtedness" shall mean all present and future
Indebtedness of the Company and its Restricted Subsidiaries the proceeds of
which are utilized to finance Tooling for which the sales of such Tooling is
covered under specific written purchase orders or agreements between the Company
or any Subsidiary and the purchaser of such Tooling, which Indebtedness can be
and is being fully serviced by payments for such Tooling so financed and which
payments are not in dispute, all as determined by the Agent, and which
Indebtedness can be classified as "Tooling Indebtedness" under the Senior
Subordinated Debt Documents.
"Tooling Revolving Credit Borrowing Base" shall mean as of any
day, the sum of (a) an amount equal to 100% of the value of Eligible Deferred
Tooling Reimbursement Payments, plus (b) an amount equal to 100% of the value of
Eligible Tooling.
"Tooling Revolving Credit Commitments" shall mean, with
respect to each Lender, the commitment of each such Lender to make Tooling
Revolving Credit Loans in amounts not exceeding in the aggregate principal
outstanding at any time the Tooling Revolving Credit Commitment amount for such
Lender set forth next to the name of such Lender on the signature pages hereof,
or, as to any Lender becoming a party hereto after the Effective Date, as set
forth in the applicable Assignment and Acceptance, in each case as reduced
pursuant to Section 2.2 or modified pursuant to Section 8.6.
"Tooling Revolving Credit Loan" shall mean any borrowing under
Section 2.4 evidenced by the Tooling Revolving Credit Notes and made pursuant to
Section 2.1(b) for Tooling Indebtedness.
"Tooling Revolving Credit Notes" shall mean the promissory
notes of the Company evidencing the Tooling Revolving Credit Loans, in
substantially the form annexed hereto as Exhibit I, respectively, as amended or
modified from time to time and together with any promissory note or notes issued
in exchange or replacement therefor.
"Tooling Revolving Credit Termination Date" shall mean the
earlier to occur of (a) the date on which the maturity of the Tooling Revolving
Credit Loans is accelerated pursuant to Section 6.2 and (b) July 31, 2004.
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"Total Covenant EBITDA" shall mean, for any period, EBITDA for
such period, provided that:
(a) to adjust for the impact on Net Income due to the
General Motors Corporation strike, (i) $3,200,000 shall be added to the amount
of EBITDA determined for the second calendar quarter of 1998; (b) (ii)
$3,300,000 shall be added to the amount of EBITDA determined for the third
calendar quarter of 1998 and (iii) $1,300,000 shall be subtracted from the
amount of EBITDA determined for the fourth calendar quarter of 1998;
(b) to the extent deducted from such EBITDA and allowed
hereunder, payments by the Company and the Mexican Subsidiaries on the Mexican
Facility Obligations shall be added to Total Covenant EBITDA; and
(c) for any fiscal quarter ending on or before March
31, 2000, EBITDA, for purposes of determining Total Covenant EBITDA, EBITDA
shall be calculated excluding the Mexican Subsidiaries, provided that Total
Covenant EBITDA shall be reduced to the extent EBITDA as calculated for the
Mexican Subsidiaries only is less than any of the following amounts for the
fiscal quarter indicated: (i) negative $900,000 for the fiscal quarter ending
March 31, 1999, (ii) negative $800,000 for the fiscal quarter ending June 30,
1999, (iii) negative $600,000 for the fiscal quarter ending September 30, 1999,
(iv) negative $500,000 for the fiscal quarter ending December 31, 1999, and (v)
negative $600,000 for the fiscal quarter ending March 31, 2000.
"Total Covenant Interest Expense" shall mean, for any period,
Interest Expense, plus, to the extent not included in Interest Expense, the
interest component of all payments on the Mexican Facility Obligations, for such
period.
"Total Debt" shall mean, as of any date, each of the
following, on a consolidated basis for the Company and its Restricted
Subsidiaries without duplication: (a) all Indebtedness for borrowed money and
similar monetary obligations evidenced by bonds, notes, debentures, Capital
Lease obligations, bankers acceptances or otherwise, including without
limitation all assumed Indebtedness and all obligations in respect of the
deferred purchase price of properties or assets and the factoring of accounts
receivable, in each case whether direct or indirect; plus (b) all liabilities
secured by any Lien existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; plus (c)
all reimbursements obligations under outstanding letters of credit in respect of
drafts which may be presented or have been presented and have not yet been paid
and are not included in clause (a) above; plus (d) Permitted Disqualified Stock;
plus (e) all guarantees and all other Contingent Liabilities with respect to any
of the indebtedness, obligations or liabilities described in the foregoing
clauses (a), (b), (c) or (d), including without limitation all guarantees and
other Contingent Liabilities of the Company or any Restricted Subsidiary with
respect to any such indebtedness, obligations or liabilities of any Unrestricted
Subsidiaries; less (f) deferred reimbursement tooling indebtedness, i.e., only
that portion of Tooling Indebtedness to be paid by the purchaser of the related
Tooling in the piece price over the term of the related tooling contract
consistent with current practice; less (g) cash equivalents acceptable to the
Agent and cash of the Company and its Restricted Subsidiaries, less any book
overdrafts, bank overdrafts or similar items.
"Total Covenant Obligations" shall mean, as of any date, each
of the following, on a consolidated basis for the Company and its Restricted
Subsidiaries, without duplication: (a) Total Debt; plus (b) the outstanding
amount of all Mexican Facility Obligations.
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"Total Covenant Obligations to Total Covenant EBITDA Ratio"
shall mean, as of the end of any fiscal quarter of the Company, the ratio of (a)
Total Covenant Obligations as of the end of such fiscal quarter to (b) Total
Covenant EBITDA for the four consecutive fiscal quarters of the Company then
ending.
"U.S. Advances" shall mean all Loans denominated in Dollars
and all Letters of Credit.
"U.S. Percentage" of any Lender as of any date, shall mean a
fraction (expressed as a percentage), the numerator of which is the difference
of (a) the Revolving Credit Commitment of such Lender on such date minus (b) the
Canadian Advances made by such Lender (including any Affiliate of such Lender)
which are outstanding as of such date, after giving effect to any Canadian
Advances to be made as of such date, and the denominator of which is the
difference of (i) the aggregate Revolving Credit Commitments of all Lenders
minus (ii) the aggregate Canadian Advances which are outstanding as of such
date.
"Unfunded Benefit Liabilities" shall mean, with respect to any
Plan as of any date, the net pension liability as determined under FAS 87.
"Unrestricted Guaranties" shall mean all Contingent
Liabilities of the Company or of any Guarantor or other Restricted Subsidiary
with respect to any Indebtedness of any Unrestricted Subsidiaries, which
Contingent Liabilities shall be deemed outstanding in an amount equal to the
maximum amount that could be payable thereunder.
"Unrestricted Subsidiary" shall mean any Subsidiary of the
Company (including any newly acquired or newly formed Subsidiary) which is not a
Restricted Subsidiary.
"Voting Stock" of a Person shall mean all classes of Capital
Stock of such Person then outstanding and normally entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers, trustees or similar individuals thereof.
"Wholly Owned Subsidiary" shall mean a Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company and/or one or more other Wholly Owned Subsidiaries.
"Working Capital" of any Person shall mean, as of any date,
the amount, if any, by which the current assets of such Person exceeds the
current liabilities (exclusive of the current portion of long term debt) of such
Person, all as determined in accordance with Generally Accepted Accounting
Principles.
"Year 2000 Issues" shall mean anticipated costs, problems and
uncertainties associated with the inability of certain computer applications to
effectively handle data including dates on and after January 1, 2000, as such
inability affects the business, operations and financial condition of the
Company and its Subsidiaries and of the Company and its Subsidiaries' material
customers, suppliers and vendors.
"Year 2000 Program" is defined in Section 4.25.
1.2 Other Definitions; Rules of Construction. As used herein,
the terms "Agent", "Lender", "Lenders", "Company", "Borrowing Subsidiary",
"Borrowers" and "this Agreement" shall have the respective meanings ascribed
thereto in the introductory paragraph of this Agreement. Such
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<PAGE> 30
terms, together with the other terms defined in Section 1.1, shall include both
the singular and the plural forms thereof and shall be construed accordingly.
All computations required hereunder and all financial terms used herein shall be
made or construed in accordance with Generally Accepted Accounting Principles
unless such principles are inconsistent with the express requirements of this
Agreement; provided that, if the Company notifies the Agent that the Company
wishes to amend any covenant in Article V to eliminate the effect of any change
in Generally Accepted Accounting Principles in the operation of such covenant
(or if the Agent notifies the Company that the Required Lenders wish to amend
Article V for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of Generally Accepted Accounting Principles in
effect immediately before the relevant change in Generally Accepted Accounting
Principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Lenders. Use of the terms "herein", "hereof", and "hereunder" shall be deemed
references to this Agreement in its entirety and not to the Section or clause in
which such term appears. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Notwithstanding anything herein, in any financial
statements of the Company or in Generally Accepted Accounting Principles to the
contrary, for purposes of calculating the Applicable Margin and of calculating
and determining compliance with the financial covenants (both actual and pro
forma) in Sections 5.2(a), (b), (c) and (d), including defined terms used
therein, (i) no Unrestricted Subsidiary shall be consolidated with the Company
and its other Subsidiaries and each Unrestricted Subsidiary shall be treated as
if it were an investment in an unconsolidated Subsidiary and all income,
liabilities and assets of each Unrestricted Subsidiary shall be excluded from
all such calculations and determinations thereunder except to the extent
expressly provided herein, and (ii) any Acquisitions made by the Company or any
of its Subsidiaries, including through mergers or consolidations and including
the incurrence of all Total Covenant Obligations related thereto and any other
related financial transactions, during the period for which such financial
covenants were calculated shall be deemed to have occurred on the first day of
the relevant period for which such financial covenants and the Applicable Margin
were calculated on a pro forma basis acceptable to the Agent. Without limiting
the foregoing, EBITDA, Fixed Charges, Interest Expense, Total Covenant EBITDA
and Total Covenant Obligations, for purposes of the financial covenants
contained in Sections 5.2(b), (c) and (d) and of calculating the Applicable
Margin, shall be calculated as if the Cofimeta Acquisition and all Indebtedness
incurred in connection therewith shall have occurred on the first day of the
relevant period for which such financial covenants and the Applicable Margin
were calculated on a pro forma basis acceptable to the Agent.
ARTICLE II.
THE COMMITMENTS, THE SWINGLINE FACILITY
AND THE ADVANCES
2.1 Commitments of the Lenders and Canadian and Swingline
Facility.
(a) Revolving Credit Advances.
(i) U.S. Advances. Each Lender agrees, for
itself only, subject to the terms and conditions of this Agreement, to make
Revolving Credit Loans to the Company or any Borrowing Subsidiary pursuant to
Section 2.4 and to participate in Letter of Credit Advances to the Company or
any Borrowing Subsidiary pursuant to Section 2.4 and Section 3.3, from time to
time from and including the Effective Date to but excluding the Revolving Credit
Termination Date, denominated in Dollars and not to
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exceed in aggregate principal amount at any time outstanding the respective
amounts determined pursuant to Section 2.1(e).
(ii) Canadian Advances. (A) Each Canadian Lender
agrees, for itsel only, subject to the terms and conditions of this Agreement,
to make Canadian Advances to the Company or the Canadian Borrowing Subsidiaries
pursuant to Section 2.4, from time to time from and including the Effective Date
to but excluding the Revolving Credit Termination Date, denominated in CAD not
to exceed an aggregate principal amount at any time outstanding to the Company
and the Canadian Borrowing Subsidiaries the respective amounts determined
pursuant to Section 2.1(e).
(B) If on any date a Canadian Advance is to
be made to the Company or a Canadian Borrowing Subsidiary (x) such Canadian
Advance may not be made because the aggregate Revolving Credit Commitments of
the Canadian Lenders would be exceeded and (y) the amount by which such
Revolving Credit Commitments of the Canadian Lenders would be exceeded is less
than or equal to the aggregate unused Revolving Credit Commitments of Lenders
that are not Canadian Lenders, each Lender that is not a Canadian Lender shall
make a U.S. Advance to the Company on such date, if the conditions for such an
Advance are satisfied, and the proceeds of such U.S. Advance shall be
simultaneously applied to repay the outstanding U.S. Advances of the Canadian
Lenders, in each case in amounts such that, after giving effect to such
Borrowing and repayments and the Borrowing from the Canadian Lenders of the
requested Canadian Advance, the provisions of Section 2.1(e) will not be
violated. If any Borrowing of U.S. Advances is required pursuant to this Section
2.1(a)(ii)(B), the Company shall notify the Agent in the manner provided for
U.S. Advances in Section 2.4 and the Agent will notify each Lender of the amount
to be advanced by such Lender.
(b) Tooling Revolving Credit Loans. Each Lender agrees,
for itself only, subject to the terms and conditions of this Agreement, to make
Tooling Revolving Credit Loans to the Company or any Borrowing Subsidiary
pursuant to Section 2.4 from time to time from and including the Effective Date
to but excluding the Tooling Revolving Credit Termination Date, denominated in
Dollars or Canadian Dollars and not to exceed in aggregate principal amount at
any time outstanding the amount determined pursuant to Section 2.1(e).
(c) Term Loan. Each Lender agrees, for itself only,
subject to the terms and conditions of this Agreement, to make its portion of
the Term Loan to the Company at one time on the Effective Date in an amount
equal to its Term Loan Commitment.
(d) Swingline Loans. (i) Any Borrower may request the
Agent to make, and the Agent may, in its sole discretion, make Swingline Loans
to the Borrowers from time to time on any Business Day during the period from
the Effective Date until the Revolving Credit Termination Date in an aggregate
principal amount for all Borrowers not to exceed at any time the lesser of (A)
the Dollar Equivalent of $30,000,000 (the "Swingline Facility") and (B) the
aggregate amount of Revolving Credit Advances that could be but is not borrowed
as of such date. Each Lender's Revolving Credit Commitment shall be deemed
utilized by an amount equal to such Lender's pro rata share (based on such
Lender's Revolving Credit Commitment) of the Dollar Equivalent of each Swingline
Loan for purposes of determining the amount of Revolving Credit Advances
required to be made by such Lender, but no Lender's (including NBD Bank's)
Revolving Credit Commitment, shall be deemed utilized for purposes of
determining commitment fees under Section 2.3(a). Swingline Loans shall bear
interest at the Floating Rate. Within the limits of the Swingline Facility, so
long as the Agent, in its sole discretion, elects to make Swingline Loans, the
Borrowers may borrow and reborrow under this Section 2.1(d)(i).
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Swingline Loans to the Borrowing Subsidiaries will be made by the Agent through
its Affiliate First Chicago/NBD Canada.
(ii) The Agent may at any time in its sole
and absolute discretion require that any Swingline Loan be refunded by a
Revolving Credit Loan which is a Floating Rate Borrowing from the Lenders (or
the Canadian Lenders in the case of a Swingline Loan to a Borrowing Subsidiary),
and upon written notice thereof by the Agent to such Lenders and the relevant
Borrower, such Borrower shall be deemed to have requested a Floating Rate
Borrowing in an amount equal to the amount of such Swingline Loan, and such
Floating Rate Borrowing shall be made to refund such Swing Line Loan. Each such
Lender shall be absolutely and unconditionally obligated to fund its pro rata
share (based on such Lender's Revolving Credit Commitment) of such Floating Rate
Borrowing or, if applicable, purchase a participating interest in the Swingline
Loans pursuant to Section 2.1(d)(iii) and such obligation shall not be affected
by any circumstance, including, without limitation, (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender has or may
have against the Agent, First Chicago/NBD Canada or the Company or any if its
Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or
continuance of a Default or an Event of Default, subject to Section 2.1(d)(iii);
(C) any adverse change in the condition (financial or otherwise) of the Company
or any of its Subsidiaries; (D) any breach of this Agreement or any other
agreement by any other Lender, the Company or any Guarantor; or (E) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing (including without limitation the Company's failure to satisfy any
conditions contained in Article II or any other provision of this Agreement).
(iii) If Floating Rate Loans may not be made
by the Lenders as described in Section 2.1(d)(ii) due to any Event of Default
pursuant to Section 6.1(h) or if the Lenders are otherwise legally prohibited
from making such Floating Rate Loans, then effective on the date each such
Floating Rate Loan would otherwise have been made, each Lender (or the Canadian
Lenders in the case of a Swingline Loan to a Borrowing Subsidiary) severally
agrees that it shall unconditionally and irrevocably, without regard to the
occurrence of any Default or Event of Default or any other circumstances, in
lieu of deemed disbursement of Loans, to the extent of such Lender's Revolving
Credit Commitment, purchase a participating interest in the Swingline Loans by
paying its participation percentage thereof. Each such Lender will immediately
transfer to the Agent, in same day funds, the amount of its participation. After
such payment to the Agent, each Lender shall share on a pro rata basis
(calculated by reference to its Revolving Credit Commitment) in any interest
which accrues thereon and in all repayments thereof. If and to the extent that
any such Lender shall not have so made the amount of such participating interest
available to the Agent, such Lender and the Borrowers severally agree to pay to
the Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Agent until the date such amount is paid
to the Agent, at (A) in the case of the Borrowers, the interest rate specified
above and (B) in the case of such Lender, the Federal Funds Rate for the first
five days after the date of demand by the Agent and thereafter at the interest
rate specified above.
(e) Limitation on Amount of Advances.
Notwithstanding anything in this Agreement to the contrary, (i) the Dollar
Equivalent of the aggregate principal amount of the Revolving Credit Advances
made or participated in by any Lender (which for any Lender includes all U.S.
Advances and all Canadian Advances by such Lender, whether directly by such
Lender or through an Affiliate of such Lender in the case of Canadian Advances)
at any time outstanding shall not exceed the amount of its respective Revolving
Credit Commitment as of the date any such Advance is made, (ii) the aggregate
principal amount of Letter of Credit Advances outstanding at any time shall not
exceed $30,000,000 (iii) the aggregate Dollar Equivalent of all Canadian
Advances shall not exceed $40,000,000
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at any time, (iv) the sum of the Dollar Equivalent of the aggregate Revolving
Credit Advances plus the Dollar Equivalent of the aggregate amount of
Unrestricted Guaranties shall not exceed the aggregate Revolving Credit
Commitments, (v) the sum of the Dollar Equivalent of the aggregate Revolving
Credit Advances, plus the aggregate Tooling Revolving Credit Loans, plus the
aggregate Dollar Equivalent of the Unrestricted Guaranties, plus the outstanding
Swingline Loans and plus the aggregate outstanding amount of the Mexican
Facility Tranche A Loans shall not exceed the amount of the Borrowing Base, (vi)
the aggregate principal amount of the Tooling Revolving Credit Loans made by any
Lender at any time outstanding shall not exceed the amount of its respective
Tooling Revolving Credit Commitment as of the date any such Loan is made, (vii)
the aggregate Tooling Revolving Credit Loans shall not exceed the amount of the
Tooling Revolving Credit Borrowing Base, and (viii) the principal amount of the
Term Loan made by any Lender shall not exceed the amount of such Lenders Term
Loan Commitment as of the date the Term Loan is made.
(f) Amendment and Restatement. This Agreement
amends and restates the Existing Credit Agreement, and all Advances and Letters
of Credit outstanding under the Existing Credit Agreement shall constitute
Advances and Letters of Credit under this Agreement and all fees and other
obligations accrued under the Existing Credit Agreement will continue to accrue
and be paid under this Agreement, subject to the rates and amounts specified in
this Agreement. As stated in the Notes and the Security Documents, the Advances
and other obligations pursuant hereto are issued in exchange and replacement for
the Advances and other obligations under the Existing Credit Agreement, shall
not be a novation or satisfaction thereof and shall be entitled to the same
collateral, plus additional collateral as specified herein, with the same
priority.
2.2 Termination and Reduction of Commitments. (a) The
Company shall have the right to terminate or reduce the Revolving Credit
Commitments or the Tooling Revolving Credit Commitments at any time and from
time to time, provided that (i) the Company shall give three Business Days'
prior written notice of such termination or reduction to the Agent specifying
the amount and effective date thereof, (ii) each partial reduction thereof shall
be in a minimum amount of $5,000,000 and in an integral multiple of $1,000,000
and shall reduce such Commitments of all of the Lenders proportionately in
accordance with the respective Commitment amounts for each such Lender, (iii) no
such termination or reduction shall be permitted with respect to any portion of
any such Commitments as to which a request for an Advance pursuant to Section
2.4 is then pending, (iv) the Revolving Credit Commitments may not be terminated
if any Revolving Credit Advances are then outstanding and may not be reduced
below the principal amount of Revolving Credit Advances and Swingline Loans then
outstanding, and (v) the Tooling Revolving Credit Commitments may not be
terminated if any Tooling Revolving Credit Loans are then outstanding and may
not be reduced below the principal amount of the Tooling Revolving Credit Loans
then outstanding. The Revolving Credit Commitments or Tooling Revolving Credit
Commitments or any portion thereof terminated or reduced pursuant to this
Section 2.2, whether optional or mandatory, may not be reinstated
(b) For purposes of this Agreement, a Letter of
Credit Advance (i) shall be deemed outstanding in an amount equal to the sum of
the maximum amount available to be drawn under the related Letter of Credit on
or after the date of determination and on or before the stated expiry date
thereof plus the amount of any draws under such Letter of Credit that have not
been reimbursed as provided in Section 3.3 and (ii) shall be deemed outstanding
at all times on and before such stated expiry date or such earlier date on which
all amounts available to be drawn under such Letter of Credit have been fully
drawn, and thereafter until all related reimbursement obligations have been paid
pursuant to Section 3.3. As provided in Section 3.3, upon each payment made by
the Agent in respect of any draft or other demand for payment under any Letter
of Credit, the amount of any Letter of Credit Advance
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<PAGE> 34
outstanding immediately prior to such payment shall be automatically reduced by
the amount of each Loan deemed advanced, if any, in respect of the related
reimbursement obligation of the Company.
2.3 Fees. (a) The Company agrees to pay to the Agent, for
the benefit of each Lender, a facility fee on the daily average amount (whether
used or unused) of its respective Revolving Credit Commitment, Tooling Revolving
Credit Commitment and Term Loan and the during each calendar quarter or portion
thereof, for the period from the Effective Date to but excluding the Revolving
Credit Termination Date with respect to the Revolving Credit Commitments, to the
Tooling Revolving Credit Termination Date with respect to the Tooling Revolving
Credit Commitments and to the Maturity Date with respect to the Term Loan, at a
rate equal to the Applicable Margin in effect. Accrued facility fees shall be
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing on the first such Business Day occurring
after the Effective Date, and on the Revolving Credit Termination Date, the
Tooling Revolving Credit Termination Date and the Maturity Date.
(b) The Company agrees to pay to the Agent (i) with
respect to Letters of Credit, a fee computed at the Applicable Margin calculated
on the maximum amount available to be drawn from time to time under a Letter of
Credit, which fee shall be paid quarterly in arrears on the last Business Day of
each March, June, September and December and on the Termination Date, which fees
shall be for the pro rata benefit of the Lenders and (ii) in addition to all
other fees, with respect to all Letters of Credit, a fee computed at the rate of
0.25% per annum calculated on the face amount of each Letter of Credit, which
fee shall be paid quarterly in arrears on the last Business Day of each March,
June September and December and on the Termination Date, and shall be solely for
the account of the Agent. Such fees are nonrefundable. The Company further
agrees to pay to the Agent, on demand, such other customary administrative fees,
charges and expenses of the Agent in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of such Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued. Notwithstanding anything in the Creative
Revenue Bond Documents to the contrary, the fees payable for the Creative Letter
of Credit shall be governed by this Section 2.3(b).
(c) The Company further agrees to pay to the Agent,
the Arranger and/or their Affiliates such fees in such amounts as may from time
to time be agreed upon in writing by the Company, the Agent and the Arranger.
2.4 Disbursement of Advances. (a) The applicable Borrower
shall give the Agent notice of its request for an Advance in substantially the
form of Exhibit J hereto not later than 1:00 p.m. Detroit time (i) three LIBOR
Business Days prior to the date such Borrowing is requested to be made if such
Borrowing is to be made as a LIBOR Borrowing, (ii) five Business Days prior to
the date any Letter of Credit Borrowing is requested to be made, (iii) three
Business Days prior to the date such Borrowing is requested to be made if such
Borrowing is to be made as an Acceptance Borrowing and (iv) one Business Day
prior to the date such Borrowing is requested to be made in all other cases
(other than Swingline Loans), which notice shall specify whether a LIBOR
Borrowing, Floating Rate Borrowing, Acceptance or Letter of Credit Borrowing is
requested and, in the case of each requested LIBOR Borrowing or Acceptance
Borrowing, the Interest Period to be initially applicable to such Borrowing and,
in the case of each Letter of Credit Borrowing, such information as may be
necessary for the issuance thereof by the Agent. The Applicable Borrower shall
give the Agent notice of its request for each Swingline Loan in substantially
the form of Exhibit K hereto not later than 1:00 p.m. Detroit time on the same
Business Day such Swingline Loan is requested to be made. The Agent, not later
than the Business Day next succeeding the day such notice is given, shall
provide notice of such requested
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Borrowing (not including Swingline Loans) to each Lender. Subject to the terms
and conditions of this Agreement, the proceeds of each such requested Borrowing
or Swingline Loan shall be made available to such Borrower by depositing the
proceeds thereof in immediately available funds, in an account maintained and
designated by such Borrower at the principal office of the Agent in the case of
U.S. Advances and at the principal office of First Chicago/NBD Canada in the
case of Canadian Advances. Subject to the terms and conditions of this
Agreement, the Agent shall, on the date any Letter of Credit Borrowing is
requested to be made, issue the related Letter of Credit on behalf of the
Lenders for the account of the Company. Notwithstanding anything herein to the
contrary, the Agent may decline to issue any requested Letter of Credit on the
basis that the beneficiary, the purpose of issuance or the terms or the
conditions of drawing are unacceptable to it in its reasonable discretion.
(b) Each Lender, on the date any Borrowing is
requested to be made, shall make its pro rata share of such Borrowing available
in immediately available funds for disbursement to the applicable Borrower
pursuant to the terms and conditions of this Agreement. Unless the Agent shall
have received notice from any Lender prior to the date such Borrowing is
requested to be made under this Section 2.4 that such Lender will not make
available to the Agent such Lender's pro rata portion of such Borrowing, the
Agent may assume that such Lender has made such portion available to the Agent
on the date such Borrowing is requested to be made in accordance with this
Section 2.4. Each Lender's pro rata share of any U.S. Advance shall be based on
its U.S. Percentage, and each Canadian Advance shall be made by the Canadian
Lenders (either directly or through an Affiliate) based on its Canadian
Percentage. If and to the extent such Lender shall not have so made such pro
rata portion available to the Agent, the Agent may (but shall not be obligated
to) make such amount available to such Borrower , and such Lender and such
Borrower severally agree to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date such amount is made
available to such Borrower by the Agent until the date such amount is repaid to
the Agent, at the Federal Funds Rate for the first five days after the date such
Loan is made and thereafter at the interest rate applicable to such Borrowing
during such period. If such Lender shall pay such amount to the Agent together
with interest, such amount so paid shall constitute a Loan by such Lender as a
part of such Borrowing for purposes of this Agreement. The failure of any Lender
to make its pro rata portion of any such Borrowing available to the Agent shall
not relieve any other Lender of its obligations to make available its pro rata
portion of such Borrowing on the date such Borrowing is requested to be made,
but no Lender shall be responsible for failure of any other Lender to make such
pro rata portion available to the Agent on the date of any such Borrowing.
(c) All Revolving Credit Loans made under this
Section 2.4 to the Borrowers shall be evidenced by the Revolving Credit Notes
issued by the Borrowers, all Tooling Revolving Credit Loans shall be evidenced
by the Tooling Revolving Credit Notes issued by the Borrowers, the Term Loan
shall be evidenced by the Term Notes issued by the Company and all Swingline
Loans under this Section 2.4 shall be evidenced by the Swingline Notes issued by
the Borrowers, and all such Loans shall be due and payable and bear interest as
provided in Article III. Each Lender is hereby authorized by the Borrowers to
record on the schedules attached to the Notes or in its books and records, the
date, amount and type of each Loan and the duration of the related Interest
Period (if applicable), the amount of each payment or prepayment of principal
thereon, and the other information provided for on such schedule, which schedule
or books and records, as the case may be, shall constitute prima facie evidence
of the information so recorded, provided, however, that failure of any Lender to
record, or any error in recording, any such information shall not relieve the
Borrowers of their obligations to repay the outstanding principal amount of the
Loans, all accrued interest thereon and other amounts payable with respect
thereto in accordance with the terms of the Notes and this Agreement. Subject to
the terms and conditions of this Agreement, the Borrowers may borrow Loans
30
<PAGE> 36
under this Section 2.4 and under Section 3.3, prepay Loans pursuant to Section
3.1 and reborrow Revolving Credit Advances and Tooling Revolving Credit
Advances, but not the Term Loan, under this Section 2.4 and under Section 3.3.
(d) Nothing in this Agreement shall be construed to
require or authorize any Lender to issue any Letter of Credit, it being
recognized that the Agent has the sole obligation under this Agreement to issue
Letters of Credit on behalf of the Lenders. Upon each issuance, extension and
renewal by the Agent, each Lender shall automatically and unconditionally
acquire a pro rata risk participation interest in such Letter of Credit Advance
based on the amount of its respective Revolving Credit Commitment, and each
Existing Letter of Credit shall be deemed issued hereunder and each Lender shall
automatically and unconditionally acquire a pro rata risk participation interest
therein based on the amount of its respective Revolving Credit Commitment, upon
becoming a Lender hereunder. If the Agent shall honor a draft or other demand
for payment presented or made under any Letter of Credit, the Agent shall
provide notice thereof to each Lender promptly after such draft or demand is
honored unless the Company shall have satisfied its reimbursement obligation
under Section 3.3 by payment to the Agent on such date. Each Lender, on the date
of such notice, shall absolutely and unconditionally make its pro rata share
(based on its Revolving Credit Commitment) of the amount paid by the Agent
available in immediately available funds at the principal office of the Agent
for the account of the Agent. If and to the extent such Lender shall not have
made such pro rata portion available to the Agent, such Lender and the Company
severally agree to pay to the Agent forthwith on demand such amount together
with interest thereon, for each day from the date such amount was paid by the
Agent until such amount is so made available to the Agent at a per annum rate
equal to the Federal Funds Rate for the first five days after the date of demand
by the Agent and thereafter at the interest rate applicable during such period
to the Floating Rate Loans. If a Loan has been disbursed in respect to the
reimbursement obligation of the Company under Section 3.3 in the case of Letter
of Credit, then if such Lender shall pay such amount to the Agent together with
such interest, such amount so paid shall constitute a Loan by such Lender as
part of such Borrowing disbursed in respect of the reimbursement obligation of
the Company under Section 3.3 for purposes of this Agreement. The failure of any
Lender to make its pro rata portion of any such amount paid by the Agent
available to the Agent shall not relieve any other Lender of its obligation to
make available its pro rata portion of such amount, but no Lender shall be
responsible for failure of any other Lender to make such pro rata portion
available to the Agent.
2.5 Conditions for First Disbursement. The obligation of
the Lenders to make the first Borrowing hereunder is subject to receipt by each
Lender and the Agent of the following documents and completion of the following
matters, in form and substance satisfactory to each Lender and the Agent:
(a) Charter Documents. Certificates of recent date of
the appropriate authority or official of each Borrower and each Guarantor's
respective state or province of organization (listing all charter documents of
each Borrower and each Guarantor, respectively, on file in that office if such
listing is available) and certifying as to the good standing and existence of
each Borrower and each Guarantor, respectively, together with copies of such
charter documents of each Borrower and each Guarantor, certified as of a recent
date by such authority or official and certified as true and correct as of the
Effective Date by a duly authorized officer of each Borrower and each Guarantor,
respectively;
(b) Operating Agreements, By-Laws and Corporate
Authorizations. Copies of the operating agreements or article of incorporation,
as the case may be, and by-laws of each Borrower and each Guarantor together
with all authorizing resolutions and evidence of other corporate action taken by
each Borrower and each Guarantor to authorize the execution, delivery and
performance by each
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<PAGE> 37
Borrower and each Guarantor of the Loan Documents to which each Borrower and
such Guarantor, respectively, is a party and the consummation by each Borrower
and such Guarantor, respectively, of the transactions contemplated hereby,
certified as true and correct as of the Effective Date by a duly authorized
officer of each Borrower and each Guarantor, respectively;
(c) Incumbency Certificate. Certificates of
incumbency of each Borrower and each Guarantor containing, and attesting to the
genuineness of, the signatures of those officers authorized to act on behalf of
each Borrower and such Guarantor in connection with the Loan Documents to which
each Borrower or such Guarantor is a party and the consummation by each Borrower
and such Guarantor of the transactions contemplated hereby, certified as true
and correct as of the Effective Date by a duly authorized officer of each
Borrower and each Guarantor, respectively;
(d) Notes. The Notes duly executed on behalf of the
Borrowers for each Lender and the Swingline Notes duly executed on behalf of the
Borrowers for the Agent and First Chicago/NBD Canada;
(e) Security Documents. The Security Agreements duly
executed on behalf of the Company and the Guarantors, the Pledge Agreements duly
executed by the Company and, to the extent applicable, each Guarantor and the
Guaranties duly executed on behalf of each Guarantor, granting to the Lenders
and the Agent the collateral and security intended to be provided pursuant to
Section 2.11, together with:
(i) Recording, Filing, Etc. Evidence of the
recordation, filing and other action (including payment of any applicable taxes
or fees) in such jurisdictions as the Lenders or the Agent may deem necessary or
appropriate with respect to the Security Documents, including the filing of
financing statements, financing statement assignments, financing statement
amendments and similar documents which the Lenders and the Agent may deem
necessary or appropriate to create, preserve or perfect the liens, security
interests and other rights intended to be granted to the Lenders or the Agent
thereunder, together with Uniform Commercial Code record and other searches in
such offices as the Lenders or the Agent may request;
(ii) Leased Property; Landlord Waivers. A
schedule setting forth all real property leased by the Company and each
Guarantor, together with copies of the related leases, certified as true and
correct as of the Effective Date by a duly authorized officer of the Company,
and an agreement of each landlord under such leases, in form and substance
acceptable to the Lenders and the Agent, waiving its distraint, lien and similar
rights with respect to any property subject to the Security Documents and
agreeing to permit the Lenders and the Agent to enter such premises in
connection therewith;
(iii) Casualty and Other Insurance. Evidence
that the casualty and other insurance required pursuant to Section 5.1(c) and
the Security Agreements is in full force and effect;
(iv) Stock. The original stock certificates
of any Capital Stock which is required to be pledged pursuant to Section 2.11
and appropriate stock powers, together with any recordings or other filings
required by law and any consents and waivers requested by the Agent with respect
to the exercise of any rights under the Pledge Agreements, including without
limitation any shareholders' and board of directors' consents so requested; and
32
<PAGE> 38
(v) Environmental Matters. The Environmental
Certificate duly executed on behalf of the Borrowers and each of the Guarantors;
(f) Legal Opinion. The favorable written opinion of
Dykema Gossett PLLC, Fasken Campell Godfrey and Salans Hertzfeld & Heilbronn,
counsels for the Borrowers and Guarantors, with respect to such matters as the
Agent may request;
(g) Consents, Approvals, Etc. Copies of all
governmental and nongovernmental consents, approvals, authorizations,
declarations, registrations or filings, if any, required on the part of the
Company or any Guarantor in connection with the execution, delivery and
performance of the Loan Documents or the transactions contemplated hereby or as
a condition to the legality, validity or enforceability of the Loan Documents,
certified as true and correct and in full force and effect as of the Effective
Date by a duly authorized officer of the Company, or, if none is required, a
certificate of such officer to that effect;
(h) Fees. Payment of the fees described in Section
2.3(c);
(i) Solvency Certificate. A solvency certificate
duly executed by the Company and its Subsidiaries in form and substance
satisfactory to the Agent;
(j) Subordinated Debt. Evidence satisfactory to the
Agent, including without limitation legal opinions of the Company's counsel,
that all transactions contemplated pursuant to this Agreement, including without
limitation making of all Advances and all transactions contemplated pursuant to
the Cofimeta Acquisition Documents, are in compliance with, and do not cause any
breach or other default under, any of the Senior Subordinated Debt Documents;
(k) Canadian Intercreditor Agreement. The Canadian
Intercreditor Agreement duly executed by all parties thereto, together with any
documents required in connection therewith by the Agent;
(l) Mexican Intercreditor Agreement. The Mexican
Intercreditor Agreement duly executed by all parties thereto, together with any
documents required in connection therewith by the Agent;
(m) Mexican Facility. The Mexican Facility shall
close on or before the Effective Date in accordance with the form of Mexican
Facility Documents delivered to the Agent prior to the Effective Date.
(n) Due Diligence. The satisfactory completion of
the Cofimeta Acquisition and all due diligence with respect to the Company, the
Mexican Subsidiaries, Cofimeta, its other Subsidiaries, the Cofimeta Acquisition
and the Mexican Facility, including, but not limited to, the satisfactory review
of all Mexican Facility Documents and Cofimeta Acquisition Documents, all terms,
conditions and provisions of the Mexican Facility and the Cofimeta Acquisition,
all final projections, all pro forma and prospective financial statements, all
sources and uses statements, pro forma borrowing base and covenant compliance
projections and certificates, appraisals, new business awards and contracts of
the Company and its Subsidiaries, the organizational structure of the Company
and its Subsidiaries after the Mexican Facility and the Cofimeta Acquisition,
all environmental matters relating to Cofimeta, the continuance plan relating to
Cofimeta and all required court and other approvals required in connection with
the Cofimeta Acquisition, and the form and structure, including the financial,
legal, accounting, tax and all
33
<PAGE> 39
other aspects of the Mexican Facility and the Cofimeta Acquisition, all of which
shall be satisfactory to the Agent and its counsel; and
(o) Miscellaneous. Such other documents, and
completion of such other matters, as the Agent may reasonably request.
It is acknowledged and agreed by the Borrowers that all Notes, Guaranties,
Security Documents and other Loan Documents executed in connection with the
Existing Credit Agreement continue in full force and effect and are ratified and
confirmed, and, among other terms and provisions contained therein, continue to
evidence, secure and guarantee, as the case may be, all of the Advances and
Lender Indebtedness and shall be considered Notes, Guaranties, Security
Documents and Loan Documents as defined herein, provided that the Borrowers
agree to execute and deliver, and cause each of their Subsidiaries to execute
and deliver, all appropriate amendments and other documents, if any, and
additional Security Documents and other Loan Documents as may be required by the
Agent in connection herewith, and all such additional agreements and documents
shall be promptly executed and delivered to the Agent, and no event later than
10 days after requested by the Agent.
2.6 Further Conditions for Disbursement. The obligation of
the Lenders to make any Advance (including the first Advance), or any
continuation or conversion under Section 2.7, is further subject to the
satisfaction of the following conditions precedent:
(a) The representations and warranties contained
herein and in the other Loan Documents shall be true and correct on and as of
the date such Advance is made (both before and after such Advance is made) as if
such representations and warranties were made on and as of such date;
(b) No Default or Event of Default shall exist or
shall have occurred and be continuing on the date such Advance is made (whether
before or after such Advance is made);
(c) The Agent shall have received the Borrowing Base
Certificate if required pursuant to Section 5.1(d)(v) as of the close of
business on the last day of the month next preceding the date such Advance is
made; and
(d) In the case of any Letter of Credit Advance, the
Company shall have delivered to the Agent an application for the related Letter
of Credit and other related documentation requested by and acceptable to the
Agent appropriately completed and duly executed on behalf of the Company; and
(e) In the case of any Acceptance, the Borrowing
Subsidiary shall have delivered all documents and agreements required pursuant
to Section 3.4.
The Borrowers shall be deemed to have made a representation and warranty to the
Lenders at the time of the making of, and the continuation or conversion of,
each Advance to the effects set forth in clauses (a) and (b). For purposes of
this Section 2.6 the representations and warranties contained in Section 4.6
hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Borrowings. The applicable
Borrower may elect (a) to continue a LIBOR Borrowing, or a portion thereof, as a
LIBOR Borrowing or (b) to convert a LIBOR Borrowing or a portion thereof to a
Floating Rate Borrowing, (c) to convert a Floating Rate Borrowing to
34
<PAGE> 40
a LIBOR Borrowing, (d) to continue an Acceptance or a portion thereof, as an
Acceptance or (e) to convert an Acceptance or a portion thereof to a Floating
Rate Borrowing, in each case by giving notice thereof to the Agent (with
sufficient executed copies for each Lender) in substantially the form of Exhibit
L hereto not later than 1:00 p.m. Detroit time three LIBOR Business Days prior
to the date any such continuation of or conversion to a LIBOR Borrowing is to be
effective, not later than 1:00 p.m. Toronto time three Business Days prior to
the date any such continuation of or conversion to an Acceptance is to be
effective and not later than 1:00 p.m. Detroit time one Business Day prior to
the date of any such continuation or conversion is to be effective in all other
cases, provided that an outstanding LIBOR Borrowing or Acceptance Borrowing may
only be converted on the last day of the then current Interest Period with
respect to such Borrowing, and provided, further, if a continuation of a
Borrowing as, or a conversion of a Borrowing to, a LIBOR Borrowing or Acceptance
Borrowing is requested, such notice shall also specify the Interest Period to be
applicable thereto upon such continuation or conversion. The Agent, not later
than the Business Day next succeeding the day such notice is given, shall
provide notice of such election to the Lenders. If the applicable Borrower shall
not timely deliver such a notice with respect to any outstanding LIBOR Borrowing
or Acceptance Borrowing, such Borrower shall be deemed to have elected to
convert such LIBOR Borrowing or Acceptance Borrowing to a Floating Rate
Borrowing on the last day of the then current Interest Period with respect to
such Borrowing.
2.8 Limitation of Requests and Elections. Notwithstanding
any other provision of this Agreement to the contrary, (a) if, upon receiving a
request for a LIBOR Borrowing pursuant to Section 2.4, or a request for a
continuation of a LIBOR Borrowing or a request for a conversion of a Floating
Rate Borrowing to a LIBOR Borrowing pursuant to Section 2.7, (i) deposits in
Dollars for periods comparable to the LIBOR Interest Period elected by the
Company are not available to any Lender in the relevant interbank market, or
(ii) LIBOR will not adequately and fairly reflect the cost to any Lender of
making, funding or maintaining the related LIBOR Loan or (iii) by reason of
national or international financial, political or economic conditions or by
reason of any applicable law, treaty or other international agreement, rule or
regulation (whether domestic or foreign) now or hereafter in effect, or the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for, or shall limit or impair the ability
of, any Lender to make or fund the relevant Loan or to so continue or convert
such Loan then the Company shall not be entitled, so long as such circumstances
continue, to request such a Borrowing pursuant to Section 2.4 or a continuation
of or conversion to such a Borrowing pursuant to Section 2.7 and (b) if the
Agent shall have determined that by reason of circumstances affecting the money
market, there is no market for Acceptances, then the right of the Borrowing
Subsidiaries to request Acceptances and the acceptance thereof shall be
suspended until the Agent determines that the circumstances causing such
suspension no longer exists and the Agent so notifies the Borrowing
Subsidiaries. In the event that such circumstances no longer exist, the Lenders
shall again consider requests for such Borrowings pursuant to Section 2.4, and
requests for continuations of and conversions to such Borrowings pursuant to
Section 2.7.
2.9 Minimum Amounts; Limitation on Number of Borrowings;
Etc. Except for (a) Borrowings which exhaust the entire remaining amount of the
relevant Commitments, and (b) payments required pursuant to Section 3.1(c), each
Floating Rate Borrowing denominated in Dollars and each prepayment thereof shall
be in a minimum amount of $500,000 and in an integral multiple of $100,000, each
LIBOR Borrowing and each continuation or conversion thereof pursuant to Section
2.7 shall be in a minimum amount of $2,000,000 and in an integral multiple of
$500,000, each Letter of Credit Advance shall be in a minimum amount of
$100,000, each Floating Rate Borrowing denominated in CAD and
35
<PAGE> 41
each prepayment thereof shall be in a minimum amount of CAD $500,000 and in
integral multiple of CAD $100,000, and each Acceptance and each continuation or
conversion thereof pursuant to Section 2.7 shall be in a minimum amount of CAD
$2,000,000 and in an integral multiple of CAD $500,000. The aggregate number of
LIBOR Borrowings and Acceptance Borrowings outstanding at any one time under
this Agreement may not exceed eight (8). The aggregate number of Letter of
Credit Advances outstanding at any time under this Agreement may not exceed five
(5). No Letter of Credit shall have a stated expiry date later than the earlier
to occur of (i) the first anniversary of its date of issuance or (ii) the fifth
Business Day before the Revolving Credit Termination Date.
2.10 Borrowing Base Adjustments. The Borrowers agree that if
at any time any trade account receivable, fixed asset, tooling reimbursement
obligation or any inventory of the Borrowers or any Guarantor fails to
constitute Eligible Accounts Receivable, Eligible Fixed Assets, Eligible
Inventory, Eligible Tooling or Eligible Deferred Tooling Reimbursement Payments,
as the case may be, for any reason, the Agent may, at any time upon written
notice to the Company and notwithstanding any prior classification of
eligibility, classify such asset or property as ineligible and exclude the same
from the computation of the Borrowing Base without in any way impairing the
rights of the Lenders and the Agent, in and to the same under the Security
Agreements. The Borrowers agree that real estate shall only be included in the
Borrowing Base if the Borrowers shall have delivered an appraisal acceptable to
the Agent performed by an independent third party appraiser acceptable to the
Agent; it being acknowledged that any real estate appraisals delivered prior to
the Effective Date are acceptable to the Agent.
2.11 Security and Collateral. To secure the payment when due
of the Notes and all other obligations of the Borrowers under this Agreement,
any Hedging Agreement or any other Loan Document to the Lenders and the Agent
and of the Company under the Mexican Facility Tranche A Guaranty, the Company
shall execute and deliver, or cause to be executed and delivered, to the Agent
Security Documents granting the following:
(a) Security interests in all present and future
accounts, inventory, equipment, general intangibles, instruments, chattel paper,
documents, fixtures and all other personal property of each Borrower and each
Guarantor, which security interests shall secure all present and future
indebtedness, obligations and liabilities of each of the Borrowers to the
Lenders and the Agent, provided that such security interests granted by any
Borrower which is a Foreign Subsidiary and not a Canadian Subsidiary shall
secure only the present and future indebtedness, obligations and liabilities of
such Borrower to the Lenders and the Agent.
(b) Guarantees of all Guarantors, which Guarantees
shall guarantee all present and future indebtedness, obligations and liabilities
of the Borrowers to the Lenders and the Agent.
(c) (i) Pledges of 100% of the Capital Stock of all
Domestic Subsidiaries and Canadian Subsidiaries which are Restricted
Subsidiaries owned directly or indirectly by the Company and (ii) pledges of 65%
of the Capital Stock of Foreign Subsidiaries which are not Canadian Subsidiaries
and are Restricted Subsidiaries and are owned by the Company or any Domestic
Subsidiaries, provided that such pledges granted by any Borrower which is a
Foreign Subsidiary and not a Guarantor shall secure only the present and future
indebtedness, obligations and liabilities of such Borrower to the Lenders and
the Agent.
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<PAGE> 42
(d) Liens on all present and future real property of
each Borrower and Guarantor, other than the real property of Lobdell to the
extent Lobdell is prohibited from granting such a Lien under the existing terms
of the Lobdell Preferred Stock Documents, provided that such Liens granted by
any Borrower which is a Foreign Subsidiary and not a Canadian Subsidiary shall
secure only the present and future indebtedness, obligations and liabilities of
such Borrower to the Lenders and the Agent. The Borrowers acknowledge and agree
that they will, and will cause each Guarantor, to execute and deliver on or
before June 15, 1999, all mortgages, deeds of trust, mortgagee title policies,
surveys and other documents reasonably required by the Agent in connection with
the granting of a first priority lien and security interest on the real property
described in this Section 2.11(d).
(e) All other security and collateral described in
the Security Documents.
ARTICLE III.
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments and Prepayments.
(a) Unless earlier payment is required under this
Agreement, the Borrowers shall pay to the Lenders on the Revolving Credit
Termination Date the entire outstanding principal amount of the Revolving Credit
Advances.
(b) Unless earlier payment is required under this
Agreement, the Borrowers shall pay the Lenders on the Tooling Revolving Credit
Termination Date the entire principal amount of the Tooling Revolving Credit
Loans.
(c) The Company shall pay to the Agent for the pro
rata account of each Lender the unpaid principal amount of the Term Loan in 22
quarterly principal payments as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Payment Date Principal Installment
- --------------------------------------------------------------------------------
<S> <C>
July 31, 1999 $500,000
- --------------------------------------------------------------------------------
October 31, 1999 $500,000
- --------------------------------------------------------------------------------
January 31, 2000 $500,000
- --------------------------------------------------------------------------------
April 30, 2000 $1,125,000
- --------------------------------------------------------------------------------
July 31, 2000 $1,125,000
- --------------------------------------------------------------------------------
October 31, 2000 $1,125,000
- --------------------------------------------------------------------------------
January 31, 2001 $1,125,000
- --------------------------------------------------------------------------------
April 30, 2001 $1,500,000
- --------------------------------------------------------------------------------
July 31, 2001 $1,500,000
- --------------------------------------------------------------------------------
October 31, 2001 $1,500,000
- --------------------------------------------------------------------------------
January 31, 2002 $1,500,000
- --------------------------------------------------------------------------------
April 30, 2002 $1,500,000
- --------------------------------------------------------------------------------
July 31, 2002 $1,500,000
- --------------------------------------------------------------------------------
October 31, 2002 $1,500,000
- --------------------------------------------------------------------------------
January 31, 2003 $1,500,000
- --------------------------------------------------------------------------------
April 30, 2003 $1,875,000
- --------------------------------------------------------------------------------
July 31, 2003 $1,875,000
- --------------------------------------------------------------------------------
October 31, 2003 $1,875,000
- --------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 43
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
January 31, 2004 $1,875,000
- --------------------------------------------------------------------------------
April 30, 2004 $2,250,000
- --------------------------------------------------------------------------------
July 31, 2004 $2,250,000
- --------------------------------------------------------------------------------
</TABLE>
The Term Loan shall be paid in full on the Maturity Date.
(d) In addition to all other payments of the
Advances required hereunder, the Borrowers shall prepay the Advances by an
amount equal to 100% of all of the Net Cash Proceeds, payable upon receipt of
such Net Cash Proceeds, from any sale or other disposition of any assets
(exclusive of the sale of inventory and the factoring of accounts receivable to
the extent permitted under Section 5.2(e)(x) in the ordinary course of business
upon customary credit terms, sales of scrap or obsolete material or equipment
which are not material in the aggregate and transfers of assets to the Mexican
Subsidiaries to the extent permitted by Section 5.2(l)(v)), in excess of
$2,000,000 in aggregate amount in any fiscal year, provided that (i) the
Borrowers shall not be required to prepay the Advances from the Net Cash
Proceeds from the sale or any disposition of assets if such Net Cash Proceeds
will be used within 180 days (or 360 days if such sale involves the Planned
Asset Sales) of their receipt to purchase similar assets of comparable value and
(ii) the Borrower shall not be required to prepay the Advances in connection
with the transfer of any assets to a joint venture in accordance with Section
5.2(l) and it is acknowledged that the Borrowing Base shall be immediately
decreased by the value of such assets being transferred which were included in
the Borrowing Base. The Company shall provide a certificate to the Agent within
20 days after each sale of assets, which, but for the above proviso, would cause
a prepayment under this Section 3.1(d), which certificate shall describe such
sale of assets and estimate when such Net Cash Proceeds will be used to purchase
similar assets of comparable value; and if such Net Cash Proceeds are not used
within 180 days (or 360 days if such sale involves the Planned Asset Sales)
after such sale or such earlier date when the Company has determined not to
purchase similar assets of comparable value with such Net Cash Proceeds the
Company will then prepay the Advances with such Net Cash Proceeds.
Notwithstanding the foregoing, upon and during the continuance of any Event of
Default, 100% of all the Net Cash Proceeds from any sale or other disposition of
any assets shall be used to prepay the Advances. Such mandatory prepayments
shall be applied first to the Term Loan (applied pro rata to all remaining
principal installments on the Term Loan) until paid in full, and thereafter
applied pro rata to the other Advances, provided that such prepayments on the
Advances other than the Term Loans will not reduce the Commitments relating
thereto.
(e) The Company may at any time and from time to
time prepay all or a portion of the Loans, without premium or penalty, provided
that (i) the Company may not prepay any portion of any Borrowing as to which an
election for a continuation of or a conversion to a LIBOR Borrowing or
Acceptance Borrowing is pending pursuant to Section 2.7, and (ii) unless earlier
payment is required under this Agreement, any LIBOR Borrowing or Acceptance
Borrowing may only be prepaid on the last day of the then current Interest
Period with respect to such Borrowing.
(f) In addition to all other payments of
Advances required hereunder, if at any time the aggregate outstanding principal
amount of the Advances shall exceed any of the limits provided under Section
2.1(e), the Borrowers shall forthwith pay to the Lenders an amount for
application to the outstanding principal amount of the Loans, or provide to the
Lenders cash collateral in respect of outstanding Letters of Credit in an
amount, such that the aggregate amount of such payments with respect to the
Loans and such cash collateral is not less than the amount of such excess.
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<PAGE> 44
3.2 Interest Payments. The Borrowers shall pay interest
to the Lenders on the unpaid principal amount of each Loan made to them, for the
period commencing on the date such Loan is made until such Loan is paid in full,
son each Interest Payment Date and at maturity (whether at stated maturity, by
acceleration or otherwise), and thereafter on demand, at, in the case of
Swingline Loans, the Floating Rate and, in all other cases, the following rates
per annum:
(a) During such periods that such Loan is a
Floating Rate Loan, the Floating Rate.
(b) During such periods that such Loan is a LIBOR
Loan, the LIBOR applicable to such Loan for each related LIBOR Interest Period.
(c) During such periods such Loan is a BA Equivalent
Loan, the applicable rate specified in Section 3.4.
Notwithstanding the foregoing, the Borrowers shall pay interest on demand by the
Agent at the Overdue Rate on the outstanding principal amount of any Loan and
any other amount payable by the Borrowers hereunder (other than interest) which
is not paid in full when due (whether at stated maturity, by acceleration or
otherwise) for the period commencing on the due date thereof until the same is
paid in full.
For the purposes of the Interest Act (Canada) and Canadian Advances hereunder:
(i) whenever any interest or fee under this Agreement is
calculated using a rate based on a year of 360 days or 365
days, such rate determined pursuant to such calculation, when
expressed as an annual rate, is equivalent to (X) the
applicable rate based on a year of 360 days or 365 days, as
the case may be, (Y) multiplied by the actual number of days
in the relevant calendar year, and (Z) divided by 360 or 365
as the case may be;
(ii) the principle of deemed reinvestment of interest does
not apply to any interest calculation under this Agreement;
and
(iii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or
yields.
3.3 Letters of Credit and Acceptances. (a) (i) The
Borrowers agree to pay to the Lenders, on the day on which the Agent shall honor
a draft or other demand for payment presented or made under any Letter of Credit
and on the maturity date of each Bankers' Acceptance, an amount equal to the
amount paid by the Agent in respect of such draft or other demand under such
Letter of Credit and Bankers' Acceptances, an amount equal to the face value of
each Bankers' Acceptance accepted by such Lender maturing on that day
(notwithstanding that a Lender may be the holder thereof at maturity) and all
reasonable expenses paid or incurred by the Agent relative thereto. Unless the
Borrowers shall have made such payment to the Lenders on such day, upon each
such payment by the Agent with respect to a Letter of Credit and each such
maturity date of each Banker's Acceptance, the Agent shall be deemed to have
disbursed to the relevant Borrowers, and such Borrowers shall be deemed to have
elected to satisfy its reimbursement and payment obligation by, a Revolving
Credit Borrowing in the appropriate currency bearing interest at the Floating
Rate for the account of the relevant Lenders in an amount equal to the amount so
paid by the Agent in respect of such draft or other demand under such Letter of
Credit or in the face value of such Banker's Acceptance then maturing. Such
Revolving Credit Borrowing shall be
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disbursed notwithstanding any failure to satisfy any conditions for disbursement
of any Loan set forth in Article II hereof and, to the extent of the Revolving
Credit Borrowing so disbursed, the reimbursement and payment obligation of the
Company under this Section 3.3(a)(i) shall be deemed satisfied; provided,
however, that nothing in this Section 3.3 shall be deemed to constitute a waiver
of any Default or Event of Default caused by the failure to the conditions for
disbursement or otherwise.
(ii) If, for any reason (including without limitation
as a result of the occurrence of an Event of Default with respect to the Company
pursuant to Section 6.1(g)), Floating Rate Loans may not be made by the Lenders
as described in Section 3.3(a)(i), then (A) the Borrowers agree that each amount
not paid pursuant to the first sentence of Section 3.3(a)(i) shall bear
interest, payable on demand by the Agent, at the interest rate then applicable
to Floating Rate Borrowings, and (B) effective on the date each such Floating
Rate Borrowing would otherwise have been made, each Lender severally agrees that
it shall unconditionally and irrevocably, without regard to the occurrence of
any Default or Event of Default, in lieu of deemed disbursement of Floating Rate
Loans, to the extent of such Lender's Revolving Credit Commitment in the case of
Letters of Credit, purchase a participating interest in each reimbursement
amount paid by the Agent with respect to Letters of Credit. Each Lender will
immediately transfer to the Agent, in same day funds, the amount of its
participation. Each Lender shall share on a pro rata basis (calculated by
reference to its Revolving Credit Commitment) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any Lender
shall not have so made the amount of such participating interest available to
the Agent, such Lender and the Borrowers severally agree to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date of demand by the Agent until the date such amount is paid to the
Agent, at (x) in the case of the Borrowers, the interest rate then applicable to
Floating Rate Borrowings and (y) in the case of such Lender, the Federal Funds
Rate for the first five days after the date of demand by the Agent and
thereafter at the interest rate then applicable to Floating Rate Borrowings.
(b) The reimbursement and other payment obligations
of the Borrowers under this Section 3.3 shall be absolute, unconditional and
irrevocable and shall remain in full force and effect until all obligations of
the Borrowers to the Lenders hereunder shall have been satisfied, and such
obligations of the Borrowers shall not be affected, modified or impaired upon
the happening of any event, including without limitation, any of the following,
whether or not with notice to, or the consent of, the Borrowers:
(i) Any lack of validity or enforceability
of any Letter of Credit, Acceptance or any documentation relating to any Letter
of Credit, any Acceptance or to any transaction related in any way thereto (the
"Documents");
(ii) Any amendment, modification, waiver,
consent, or any substitution, exchange or release of or failure to perfect any
interest in collateral or security, with respect to any of the Documents;
(iii) The existence of any claim, setoff,
defense or other right which the Company or any of its Subsidiaries may have at
any time against any beneficiary or any transferee of any Letter of Credit or
Acceptance (or any Persons or entities for whom any such beneficiary, transferee
or holder may be acting), the Agent or any Lender or any other Person or entity,
whether in connection with any of the Documents, the transactions contemplated
herein or therein or any unrelated transactions;
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(iv) Any draft or other statement or document
presented under any Letter of Credit or Acceptance proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(v) Payment by the Agent to the beneficiary
under any Letter of Credit against presentation of documents which do not comply
with the terms of the Letter of Credit, including failure of any documents to
bear any reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on
the part of the Agent or any Lender or any party to any of the Documents to
enforce, assert or exercise any right, power or remedy conferred upon the Agent,
any Lender or any such party under this Agreement or any of the Documents, or
any other acts or omissions on the part of the Agent, any Lender or any such
party;
(vii) Any defense based on the lack of
presentment for payment and any other defense to payment of any amounts due to a
Lender in respect of any Acceptance accepted by it pursuant to this Agreement
which might exist solely by reason of such Acceptance being held, at the
maturity thereof, by such Lender in its own right;
(viii) Any other event or circumstance that
would, in the absence of this clause, result in the release or discharge by
operation of law or otherwise of the Company from the performance or observance
of any obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature which any Borrower has or may
have against the beneficiary or holder of any Letter of Credit or Acceptance
shall be available hereunder to any Borrower against the Agent or any Lender.
Nothing in this Section 3.3 shall limit the liability, if any, of the Agent and
the Lenders to the Company pursuant to Section 8.5(b).
3.4 Additional Terms for Acceptances. Subject to the terms
and conditions hereof, upon giving to the Agent prior written notice in
accordance with Section 2.4 hereof, on any Business Day a Borrowing Subsidiary
may borrow from the Canadian Lenders by way of Acceptances, provided that:
(a) (i) each Lender shall have received a Bankers'
Acceptance or Bankers' Acceptances in the aggregate principal amount of such
Borrowing from such Lender in due and proper form duly completed and executed by
the Borrowing Subsidiary and presented for acceptance to such Lender prior to
10:00 a.m. (Toronto time) on the date for such Borrowing, together with such
other document or documents as such Lender may reasonably require (including the
execution by the Borrowing Subsidiary of such Lender's usual form of bankers'
acceptances) and the Acceptance Fee shall have been paid to such Lender at or
prior to such time;
(ii) each Bankers' Acceptance shall be
stated to mature on a Business Day, no later than the Revolving Credit
Termination Date, which is 30, 60 or 90 days from the date of its acceptance;
(iii) each Bankers' Acceptance shall be
stated to mature on a Business Day in such a way that no Lender will be required
to incur any costs for the redeployment of funds as a consequence of any
repayment required during any period for which such Bankers' Acceptance is
outstanding;
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(iv) no days of grace shall be permitted on
any Bankers' Acceptance; and
(v) the aggregate face amount of the
Bankers' Acceptances to be accepted by a Lender shall be determined by the Agent
by reference to the respective relevant Revolving Credit Commitments of the
Lenders, except that, if the face amount of a Bankers' Acceptance which would
otherwise be accepted by a Lender would not be $100,000 or a whole multiple
thereof, such face amount shall be increased or reduced by the Agent in its sole
discretion to $100,000 or the nearest whole multiple of that amount, as
appropriate.
(b) Each Borrowing Subsidiary acknowledges, agrees
and confirms that each Lender may at any time and from time to time hold, sell,
rediscount or otherwise dispose of any Acceptance accepted and purchased by it
hereunder. Each Borrowing Subsidiary acknowledges, agrees and confirms with the
Lenders that the records of each Lender in respect of payment of any Banker's
Acceptance by such Lender shall be binding on the Borrowing Subsidiary and shall
be conclusive evidence (in the absence of manifest error) of a Floating Rate
Loan to the Borrowing Subsidiary and of an amount owing by the Borrowing
Subsidiary to such lender.
(c) In the event a Lender is unable to accept
Bankers' Acceptances, such Lender shall have the right at the time of accepting
drafts to require the Borrowing Subsidiary to accept a Loan from such Lender in
lieu of the issue and acceptance of a Bankers' Acceptance requested by the
Borrowing Subsidiary to be accepted so that there shall be outstanding while the
Bankers' Acceptances are outstanding BA Equivalent Loans from such Lender as
contemplated herein. The principal amount of each BA Equivalent Loan shall be
that amount which, when added to the amount of interest (calculated at the
applicable Discount Rate) which will accrue during the BA Equivalent Interest
Period shall be equal, at maturity, to the face amount of the drafts which would
have been accepted by such Lender had it accepted Bankers' Acceptances. The "BA
EQUIVALENT INTEREST PERIOD" for each BA Equivalent Loan shall be equal to the
Interest Period of the drafts presented for acceptance as Bankers' Acceptances
on the relevant date of Borrowing. On the relevant date of the Borrowing the
Borrowing Subsidiary shall pay to the Agent a fee equal to the Acceptance Fee
which would have been payable to such Lender if it were a Lender accepting
drafts having a term to maturity equal to the applicable BA Equivalent Interest
Period and an aggregate face amount equal to the sum of the principal amount of
the BA Equivalent Loan and the interest payable thereon by the Borrowing
Subsidiary for the Applicable BA Equivalent Interest Period. The provisions of
this Agreement dealing with Bankers' Acceptances shall apply, mutatis mutandis,
to BA Equivalent Loans.
(d) Each Bankers' Acceptance issued pursuant to this
Agreement shall be purchased by the Lender accepting such Bankers' Acceptance
for the Discounted Proceeds thereof. Concurrent with the acceptance of each
Bankers' Acceptance, each Lender shall make available to the Agent the
Discounted Proceeds thereof for disbursement to the Borrowing Subsidiary in
accordance with the terms hereof. In each case, upon receipt of such Discounted
Proceeds from the Lenders and upon fulfilment of the applicable conditions set
forth herein, the Agent shall make such funds available to the Borrowing
Subsidiary in accordance with this Agreement. Upon each issue of Bankers'
Acceptances as a result of the conversion of outstanding Borrowings into
Bankers' Acceptances, the Borrowing Subsidiary shall, concurrently with the
conversion, pay in advance to the Agent on behalf of the Lenders, the amount by
which the face value of such Bankers' Acceptances exceeds the Discounted
Proceeds of such Bankers' Acceptances, to be applied against the principal
amount of the Borrowing being so converted. The Borrowing Subsidiary shall at
the same time pay to the Agent the applicable Acceptance Fee.
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(e) To enable the Lenders to make Advances in the
manner specified in this Section 3.4, the Borrowing Subsidiary shall, in
accordance with the request of each Lender either (i) provide a power of
attorney to complete, sign, endorse and issue Bankers' Acceptances, in such form
as such Lender may require; or (ii) supply each Lender with such number of
drafts as such Lender may reasonably request, duly endorsed and executed on
behalf of the Borrowing Subsidiary. Each Lender shall exercise such care in the
custody and safekeeping of drafts as it would exercise in the custody and
safekeeping of similar property owned by it. Each Lender will, upon request by
the Borrowing Subsidiary, promptly advise the Borrowing Subsidiary of the number
and designations, if any, of the uncompleted drafts then held by it.
3.5 Payment Method. (a) All payments with respect to U.S.
Advances to be made by the Borrowers hereunder will be made in Dollars and all
payments with respect to Canadian Advances to made by the Borrowers hereunder
shall be made in CAD, and in each case in immediately available funds to the
Agent for the account of the relevant Lenders at its address referred to in
Section 8.2 not later than 1:00 p.m. Detroit time on the date on which such
payment shall become due and, with respect to Canadian Advances, to First
Chicago/NBD Canada for the account of the relevant Lenders at its address
referred to in Section 8.2 not later than 1:00 p.m. Toronto time on the date on
which such payment shall become due. Payments received after 1:00 p.m. shall be
deemed to be payments made prior to 1:00 p.m. on the next succeeding Business
Day. The Borrowers hereby authorize the Agent (including First Chicago/NBD
Canada) to charge their accounts with the Agent (including First Chicago/NBD
Canada) in order to cause timely payment of amounts due hereunder to be made
(subject to sufficient funds being available in such accounts for that purpose).
(b) At the time of making each such payment, the
Borrowers shall, subject to the other terms and conditions of this Agreement,
specify to the Agent that Borrowing or other obligation of the Borrowers
hereunder to which such payment is to be applied. In the event that the
Borrowers fails to so specify the relevant obligation or if an Event of Default
shall have occurred and be continuing, the Agent may apply such payments as it
may determine in its sole discretion.
(c) On the day such payments are deemed received,
the Agent shall remit to the Lenders their pro rata shares of such payments in
immediately available funds. In the case of payments of principal and interest
on any Borrowing, such pro rata shares shall be determined with respect to each
such Lender by the ratio which the outstanding principal balance of its Loan
included in such Borrowing bears to the outstanding principal balance of the
Loans of all of the Lenders included in such Borrowing, in the case of fees paid
pursuant to Section 2.3 and other amounts payable hereunder (other than the
Agent's fees and amounts payable to any Lender under Section 3.8), such pro rata
shares shall be determined with respect to each such Lender by the ratio which
the Commitments of such Lender bears to the Commitments of all the Lenders or
such other pro rata shares as specified in this Agreement.
3.6 No Setoff or Deduction. Subject to Section 3.11, all
payments of principal of and interest on the Advances and other amounts payable
by the Borrowers hereunder shall be made by the Borrowers without setoff or
counterclaim and, subject to the next succeeding sentence, free and clear of,
and without deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, assessments, or other charges of
whatever nature, imposed by any governmental authority, or by any department,
agency or other political subdivision or taxing authority. Subject to Section
3.11, if any such taxes, levies, imposts, duties, fees, assessments or other
charges are imposed, the Borrowers will pay such additional amounts as may be
necessary so that payment of principal of and interest on the Loans and other
amounts payable hereunder, after withholding or deduction for or on account
thereof, will not be less than any amount provided to be paid hereunder and, in
any such case,
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the Borrowers will furnish to the Lenders certified copies of all tax receipts
evidencing the payment of such amounts within 45 days after the date any such
payment is due pursuant to applicable law.
3.7 Payment on Non-Business Day; Payment Computations.
Except as otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Loan or any other amount due
hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of any installment of principal, interest shall be payable thereon at
the rate per annum determined in accordance with this Agreement during such
extension. Computations of interest and other amounts due under this Agreement
shall be made on the basis of a year of 360 days (or 365 days when determining
the Floating Rate or rates or fees with respect to Acceptances) for the actual
number of days elapsed, including the first day but excluding the last day of
the relevant period.
3.8 Additional Costs. (a) In the event that any applicable
law, treaty or other international agreement, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to any Lender or the Agent, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Lender or the Agent with any
guideline, request or directive of any such authority (whether or not having the
force of law), shall (i) affect the basis of taxation of payments to any Lender
or the Agent of any amounts payable by the Borrowers under this Agreement (other
than taxes imposed on the overall net income of any Lender or the Agent, by the
jurisdiction, or by any political subdivision or taxing authority of any such
jurisdiction, in which any Lender or the Agent, as the case may be, has its
principal office), (ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by any Lender or the Agent, or (iii) shall
impose any other condition with respect to this Agreement, or any of the
Commitments, the Notes or the Loans or any Letter of Credit, and the result of
any of the foregoing is to increase the cost to any Lender or the Agent, as the
case may be, of making, funding or maintaining any LIBOR Loan Acceptance, or any
Letter of Credit or to reduce the amount of any sum receivable by any Lender or
the Agent, as the case may be, thereon, then the Borrowers shall pay to such
Lender or the Agent, as the case may be, from time to time, upon request by such
Lender (with a copy of such request to be provided to the Agent) or the Agent,
additional amounts sufficient to compensate such Lender or the Agent, as the
case may be, for such increased cost or reduced sum receivable to the extent, in
the case of any LIBOR Loan, such Lender or the Agent is not compensated therefor
in the computation of the interest rate applicable to such LIBOR Loan. A
statement as to the amount of such increased cost or reduced sum receivable,
prepared in good faith and in reasonable detail by such Lender or the Agent, as
the case may be, and submitted by such Lender or the Agent, as the case may be,
to the relevant Borrower, shall be prima facie evidence thereof.
(b) In the event that any applicable law, treaty or
other international agreement, rule or regulation (whether domestic or foreign)
now or hereafter in effect and whether or not presently applicable to any Lender
or the Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender or the Agent with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects or would affect the amount
of capital required or expected to be maintained by such Lender or the Agent (or
any corporation controlling such Lender or the Agent) and such Lender or the
Agent, as the case may be, determines that the amount of such capital is
increased by or based upon the existence of such Lender's or the Agent's
obligations hereunder and such increase has the effect of reducing the rate of
return on such Lender's or the Agent's (or such controlling corporation's)
capital as a consequence of such obligations hereunder to
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a level below that which such Lender or the Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Lender or the Agent to be material, then the Borrowers shall pay to such
Lender or the Agent, as the case may be, from time to time, upon request by such
Lender (with a copy of such request to be provided to the Agent) or the Agent,
additional amounts sufficient to compensate such Lender or the Agent (or such
controlling corporation) for any increase in the amount of capital and reduced
rate of return which such Lender or the Agent reasonably determines to be
allocable to the existence of such Lender's or the Agent's obligations
hereunder. A statement as to the amount of such compensation, prepared in good
faith and in reasonable detail by such Lender or the Agent, as the case may be,
and submitted by such Lender or the Agent to the relevant Borrower, shall be
prima facie evidence thereof.
3.9 Illegality and Impossibility. In the event that any
applicable law, treaty or other international agreement, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Lender, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Lender with any guideline, request
or directive of such authority (whether or not having the force of law),
including without limitation exchange controls, shall make it unlawful or
impossible for any Lender to maintain any Loan under this Agreement, the
relevant Borrower shall upon receipt of notice thereof from such Lender repay in
full the then outstanding principal amount of each Loan so affected, together
with all accrued interest thereon to the date of payment and all amounts owing
to such Lender under Section 3.10, (a) on the last day of the then current
Interest Period applicable to such Loan if such Lender may lawfully continue to
maintain such Loan to such day, or (b) immediately if such Lender may not
continue to maintain such Loan to such day.
3.10 Indemnification. If any Borrower makes any payment of
principal with respect to any LIBOR Loan on any other date than the last day of
a LIBOR Interest Period applicable thereto (whether pursuant to Section 3.1(c),
Section 3.9, Section 6.2 or otherwise), or if any Borrower fails to borrow any
LIBOR Loan after notice has been given to the Lenders in accordance with Section
2.4, or if any Borrower fails to make any payment of principal or interest in
respect of a LIBOR Loan when due, such Borrower shall reimburse each Lender on
demand for any resulting loss or expense incurred by each such Lender, including
without limitation any loss incurred in obtaining, liquidating or employing
deposits from third parties, whether or not such Lender shall have funded or
committed to fund such Loan. A statement as to the amount of such loss or
expense, prepared in good faith and in reasonable detail by such Lender and
submitted by such Lender to the relevant Borrower, shall be conclusive and
binding for all purposes absent manifest error in computation. Calculation of
all amounts payable to such Lender under this Section 3.10 shall be made as
though such Lender shall have actually funded or committed to fund the relevant
LIBOR Loan through the purchase of an underlying deposit in an amount equal to
the amount of such Loan in the relevant market and having a maturity comparable
to the related Interest Period and through the transfer of such deposit to a
domestic office of such Lender in the United States; provided, however, that
such Lender may fund any LIBOR Loan in any manner it sees fit and the foregoing
assumption shall be utilized only for the purpose of calculation of amounts
payable under this Section 3.10.
3.11 Taxes. (a) Each Lender (which, for purposes of this
Section 3.11, shall not include any Affiliate of such Lender used to make
Canadian Advances hereunder) that is not organized and incorporated under the
laws of the United States or any State thereof making U.S. Advances agrees to
file with the Agent and the Company, in duplicate, (a) on or before the later of
(i) the Effective Date and (ii) the date such Lender becomes a Lender under this
Agreement and (b) thereafter, for each taxable
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year of such Lender (in the case of a Form 4224) or for each third taxable year
of such Lender (in the case of any other form) during which interest or fees
arising under this Agreement and the Notes are received, unless not legally able
to do so as a result of a change in the United States income tax enacted, or
treaty promulgated, after the date specified in the preceding clause (a), on or
prior to the immediately following due date of any payment by the Company
hereunder, a properly completed and executed copy of either Internal Revenue
Service Form 4224 or Internal Revenue Service Form 1001 and Internal Revenue
Service Form W-8 or Internal Revenue Service Form W-9 and any additional form
necessary for claiming complete exemption from United States withholding taxes
(or such other form as is required to claim complete exemption from United
States withholding taxes), if and as provided by the Code or other
pronouncements of the United States Internal Revenue Service, and such Lender
warrants to the Company that the form so filed will be true and complete;
provided that such Lender's failure to complete and execute such Form 4224 or
Form 1001, or Form W-8 or Form W-9, as the case may be, and any such additional
form (or any successor form or forms) shall not relieve the Company of any of
its obligations under this Agreement, except as otherwise provided in this
Section 3.11.
(b) Notwithstanding anything herein to the
contrary, for any period with respect to which a Lender has failed to provide
the Company with the appropriate form pursuant to Section 3.11(a) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under Section 3.6 with respect to
withholding taxes imposed by the United States; provided, however, that should a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to withholding because of its failure to deliver
a form required hereunder, the Borrowers shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such taxes.
(c) Each Canadian Lender that is created
or organized under the laws of a jurisdiction other than Canada or a Province
thereof making Canadian Advances shall deliver, or have its designated Affiliate
to be used to make Canadian Advances deliver, to the Company and the Agent on
the Effective Date (or on the date on which such Canadian Lender becomes a
Lender hereunder), evidence that the Minister of National Revenue is satisfied
that payments made to such Lender hereunder are not subject to Taxes pursuant to
Regulation 805(2) of the Income Tax Act ("Evidence of Canadian Tax Exemption").
In addition, from time to time after the Effective Date (or the date on which
such Canadian Lender becomes a Lender hereunder) upon the reasonable request of
the Company, each such Canadian Lender further agrees to deliver to the Company
and the Agent further Evidence of Canadian Tax Exemption, unless any change in
treaty, law, regulation or official interpretation thereof prevents such Lender
from duly providing same. Notwithstanding anything in this Section 3.11 to the
contrary, the Company shall not have any obligation to pay any withholding taxes
or to indemnify any Canadian Lender for any withholding taxes to the extent that
such taxes result from the failure of such Lender to comply with its obligations
under this paragraph.
(d) Notwithstanding anything herein to the
contrary, for any period with respect to which a Canadian Lender has failed to
provide the Company with the appropriate form pursuant to Section 3.11(c)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Canadian Lender shall not be entitled to indemnification under Section 3.6
with respect to withholding taxes imposed by Canada; provided however, that
should a Canadian Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to withholding taxes because of its
failure to deliver a form required hereunder, the Company shall take such steps
as such Lender shall reasonably request to assist such Lender to recover such
Taxes.
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(e) If any Borrower is required to pay
additional amounts to or for the account of any Lender pursuant to Section 3.6,
and each Lender which is not a Canadian Lender shall be entitled to such amounts
if it is ever required to make or participate in Canadian Advances under this
Agreement, then such Lender will change the jurisdiction of its Applicable
Lending Office so as to eliminate or reduce any such additional payment which
may thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender. For the purposes of making any
Canadian Advances, any Lender may designate any Affiliate of such Lender in
Canada to make such Canadian Advances on its behalf, provided that such
designation is made in writing to the Agent and the Borrowers. Upon such
designation, such Affiliate shall have all rights as a Lender with respect to
such Canadian Advances.
3.12 Substitution of Lender. If (i) the obligation of any
Lender to make or maintain LIBOR Loans has been suspended pursuant to Section
3.9 when not all Lenders' obligations have been suspended, (ii) any Lender has
demanded compensation under Section 3.8 when all Lenders have not done so or
(iii) any Lender is a Defaulting Lender, the Company shall have the right, if no
Default or Event of Default then exists, to replace such Lender (a "Replaced
Lender") with one or more other lenders (collectively, the "Replacement Lender")
acceptable to the Agent, provided that (x) at the time of any replacement
pursuant to this Section 3.12, the Replacement Lender shall enter into one or
more Assignment and Acceptances, pursuant to which the Replacement Lender shall
acquire the Commitments and outstanding Advances and other obligations of the
Replaced Lender and, in connection therewith, shall pay to the Replaced Lender
in respect thereof an amount equal to the sum of (A) the amount of principal of,
and all accrued interest on, all outstanding Loans of the Replaced Lender, and
(B) the amount of all accrued, but theretofore unpaid, fees owing to the
Replaced Lender under Section 2.3, (y) the Company shall pay any amount which
would be payable by the Company to the Replaced Lender pursuant to Section 3.10
if the Company prepaid at the time of such replacement all of the Loans of such
Replaced Lender outstanding at such time, and (z) all obligations of the Company
then owing to the Replaced Lender (other than those specifically described in
clause (x) above in respect of which the assignment purchase price has been, or
is concurrently being, paid) shall be paid in full to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
Assignment and Acceptances, the payment of amounts referred to in clauses (x),
(y) and (z) above and, if so requested by the Replacement Lender, delivery to
the Replacement Lender of the appropriate Note or Notes executed by the Company,
the Replacement Lender shall become a Lender hereunder and the Replaced Lender
shall cease to constitute a Lender hereunder. The provisions of this Agreement
(including without limitation Sections 3.10 and 8.5) shall continue to govern
the rights and obligations of a Replaced Lender with respect to any Loans made
or any other actions taken by such lender while it was a Lender. Nothing herein
shall release any Defaulting Lender from any obligation it may have to any
Borrower, the Agent or any other Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lenders and the
Agent that:
4.1 Corporate Existence and Power. Each of the Borrowers and
the Guarantors is a corporation or other organization duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation or formation, and is duly qualified to do business, and is in good
standing, in all additional jurisdictions where such qualification is necessary
under applicable law, except for jurisdictions where their failure to be so
qualified would not result in any Material Adverse
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Effect. Each of the Company and the Guarantors has all requisite corporate or
other organizational power to own or lease the properties used in its business
and to carry on its business as now being conducted and as proposed to be
conducted, and to execute and deliver the Loan Documents to which it is a party
and to engage in the transactions contemplated by this Agreement.
4.2 Corporate Authority. The execution, delivery and
performance by each of the Borrowers and the Guarantors of the Loan Documents to
which each of them is a party have been duly authorized by all necessary
corporate or other organizational action and are not in contravention of any
law, rule or regulation, or any judgment, decree, writ, injunction, order or
award of any arbitrator, court or governmental authority, or of the terms of
such Borrower's or such Guarantor's charter, operating agreement or by-laws, or
of any contract or undertaking to which such Borrower or such Guarantor is a
party or by which such Borrower or such Guarantor or any of their property may
be bound or affected and will not result in the imposition of any Lien on any of
such Borrower's or such Guarantor's property or of any of such Borrower's or
such Guarantor's property, except for Permitted Liens.
4.3 Binding Effect. These Loan Documents to which each of the
Borrowers and the Guarantors is a party are the legal, valid and binding
obligations of such Borrower and such Guarantor, respectively, enforceable
against each of them in accordance with their respective terms.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation or formation and ownership of each
Subsidiary of the Company. Each such Subsidiary and each corporation or other
organization becoming a Subsidiary of the Company after the date hereof is and
will be a corporation or other organization duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and is and
will be duly qualified to do business in each additional jurisdiction where such
qualification is or may be necessary under applicable law, except for such
failure which could not have a Material Adverse Effect. Each Subsidiary of the
Company has and will have all requisite corporate or other organizational power
to own or lease the properties used in its business and to carry on its business
as now being conducted and as proposed to be conducted. All outstanding shares
of Capital Stock of each Subsidiary of the Company have been and will be validly
issued and are and will be fully paid and nonassessable and, except with respect
to the Lobdell Preferred Stock or as disclosed in writing to and approved by the
Agent from time to time, are and will be owned, beneficially and of record, by
the Company or another Subsidiary of the Company free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto,
there is no action, suit or proceeding pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any of its
Subsidiaries before or by any court, governmental authority or arbitrator, which
if adversely decided might result, either individually or collectively, in any
Material Adverse Effect and, to the best of the Company's knowledge, there is no
basis for any such action, suit or proceeding.
4.6 Financial Condition. The consolidated and consolidating
balance sheet of the Company and its Subsidiaries and the consolidated and
consolidating statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year ended March 31, 1998 and
reported on by Price Waterhouse LLP, independent certified public accountants,
copies of which have been furnished to the Lenders, fairly present, and the
financial statements of the Company and its Subsidiaries delivered pursuant to
Section 5.1(d) will fairly present, the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof, and the
consolidated results of operations of the Company and its Subsidiaries for the
respective periods indicated, all in accordance with Generally Accepted
Accounting Principles consistently applied (subject, in the case of said interim
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statements, to year-end audit adjustments). There has been no Material Adverse
Effect since March 31, 1998. There is no Contingent Liability of the Company or
any of its Subsidiaries that is not reflected in such financial statements or in
the notes thereto which could have a Material Adverse Effect. Neither the
Company nor any Restricted Subsidiary is liable directly or indirectly, for any
of the Indebtedness or other liabilities of any Unrestricted Subsidiary or for
any Contingent Liabilities with respect to any Unrestricted Subsidiary except as
permitted by Section 5.2(e).
4.7 Use of Advances. The Company will use the proceeds of the
Advances to complete the Cofimeta Acquisition, to refinance existing
indebtedness of the Guarantors, and for its and the Guarantors' general
corporate purposes. The Tooling Revolving Credit Advances shall be used solely
to finance Tooling in progress and Tooling receivables. Neither the Company nor
any of its Subsidiaries extends or maintains, in the ordinary course of
business, credit for the purpose, whether immediate, incidental, or ultimate, of
buying or carrying margin stock (within the meaning of Regulations T, U or X of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Advance will be used for the purpose, whether immediate,
incidental, or ultimate, of buying or carrying any such margin stock or
maintaining or extending credit to others for such purpose. The Capital Stock of
Cofimeta is not "margin stock" within the meaning of Regulations T, U or X of
the Board of Governors of the Federal Reserve System and is not "marginable OTC
stock" or "foreign margin stock" within the meaning of Regulation T of the Board
of Governors of the Federal Reserve System. After applying the proceeds of each
Advance, such margin stock will not constitute more than 25% of the value of the
assets (either of the Company alone or of the Company and its Subsidiaries on a
consolidated basis) that are subject to any provisions of any Loan Document that
may cause the Advances to be deemed secured, directly or indirectly, by margin
stock.
4.8 Consents, Etc. Except for such consents, approvals,
authorizations, declarations, registrations or filings delivered by the Company
pursuant to Section 2.5(g), if any, each of which is in full force and effect,
no consent, approval or authorization of or declaration, registration or filing
with any governmental authority or any nongovernmental Person or entity,
including without limitation any creditor, lessor or stockholder of the Company
or any of its Subsidiaries, is required on the part of any Borrower or any
Guarantor in connection with the execution, delivery and performance of the Loan
Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of any of the Loan Documents.
4.9 Taxes. The Company and its Subsidiaries have filed all tax
returns (federal, state and local) required to be filed and have paid all taxes
shown thereon to be due, including interest and penalties, or have established
adequate financial reserves on their respective books and records for payment
thereof. Neither the Company nor any of its Subsidiaries knows of any actual or
proposed tax assessment or any basis therefor, and no extension of time for the
assessment of deficiencies in any federal or state tax has been granted by the
Company or any such Subsidiary. The Company will not amend any Tax Sharing
Agreement without the prior approval of the Agent except to add wholly owned
Subsidiaries to any such Tax Sharing Agreement.
4.10 Title to Properties. Except as otherwise disclosed in the
latest balance sheet referred to in Section 4.6 or delivered pursuant to Section
5.1(d), the Company or one or more of its Subsidiaries have good and marketable
fee simple title (or the equivalent thereto in any relevant foreign
jurisdiction) to all of the real property, and a valid and indefeasible
ownership or leasehold interest in all of the other properties and assets
(including, without limitation, the collateral subject to the Security Documents
to which any of them is a party) reflected in said balance sheet or subsequently
acquired by the Company or any such Subsidiary. All of such properties and
assets are free and clear of any Lien,
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except for Permitted Liens. The Security Documents grant a first priority,
perfected and enforceable lien and security interest in all collateral described
therein, subject only to Permitted Liens.
4.11 Borrowing Base. All trade accounts receivable, fixed
assets and inventory of the Borrowers and the Guarantors represented or reported
by the Company to be, or otherwise included in, Eligible Accounts Receivable,
Eligible Deferred Tooling Reimbursement Payments, Eligible Fixed Assets and
Eligible Inventory, comply in all respects with the requirements therefor set
forth in the respective definitions thereof, and the computation of the
Borrowing Base set forth in each Borrowing Base Certificate is true and correct.
The aggregate amount of all Revolving Credit Advances, plus all Tooling
Revolving Credit Loans, plus all Unrestricted Guarantees, plus the outstanding
Swingline Loans and plus the outstanding amount of all Mexican Facility Tranche
A Loans is equal to or less than the Borrowing Base and the aggregate amount of
all Tooling Revolving Credit Loans is equal to or less than the Tooling
Revolving Credit Borrowing Base.
4.12 ERISA. The Company and its ERISA Affiliates and their
respective Plans are in compliance in all material respects with those
provisions of ERISA and of the Code which are applicable with respect to any
Plan. No Prohibited Transaction and no Reportable Event has occurred with
respect to any such Plan which could, in the aggregate, result in any liability
to the Company or any of its ERISA Affiliates in excess of $2,000,000. None of
the Company or any of its ERISA Affiliates is an employer with respect to any
Multiemployer Plan. The Company and its ERISA Affiliates have met or are meeting
in compliance with all laws and regulations the minimum funding requirements
under ERISA and the Code with respect to each of their respective Plans, if any,
and have not incurred any liability to the PBGC or any Plan. The execution,
delivery and performance of the Loan Documents do not constitute a Prohibited
Transaction. There is no Unfunded Benefit Liability, with respect to any Plan of
the Company or its ERISA Affiliates which could have a Material Adverse Effect.
4.13 Disclosure. No report or other information furnished in
writing by or on behalf of the Company or any of its Subsidiaries to any Lender
or the Agent in connection with the negotiation or administration of this
Agreement contains any material misstatement of fact or omits to state any
material fact or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which they were made. No Loan
Document nor any other document, certificate, or report or statement or other
information furnished to any Lender or the Agent by or on behalf of the Company
or any of its Subsidiaries in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact in order to make the statements contained herein and therein not
misleading in light of the circumstances in which they were made. There is no
fact known to the Company which materially and adversely affects, or which in
the future may (so far as the Company can now reasonably foresee) materially and
adversely affect, the business, properties, operations or condition, financial
or otherwise, of the Company or any of its Subsidiaries, which has not been set
forth in this Agreement (including without limitation the schedules hereto) or
in the other documents, certificates, statements, reports and other information
furnished in writing to the Lenders by or on behalf of the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby.
4.14 Environmental Matters. The representations and warranties
set forth in the Environmental Certificate are true and complete.
4.15 Solvency. The Company and its Subsidiaries are and, after
giving effect to the transactions described herein and the Subordinated Debt
Documents and to the incurrence or assumption of all obligations being incurred
or assumed in connection herewith, will be Solvent.
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4.16 No Defaults under Certain Agreements. Neither the Company
nor any of its Subsidiaries is in default or has received any written notice of
default under or with respect to any contract or agreement to which it is a
party or by which it is bound, including without limitation any agreements for
the incurrence of any indebtedness or any tooling or purchase contracts, which
could have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.17 Intellectual Property. Set forth on Schedule 4.17 is a
complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof, of the
Company and each of its Subsidiaries showing as of the Effective Date the
jurisdiction in which registered, the registration number and the date of
registration. The Company and each of its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, service marks, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
(the "Intellectual Property") except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect. No
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does the Company or any of its Subsidiaries
know of any valid basis for any such claim, the use of such Intellectual
Property by the Company and each of its Subsidiaries does not infringe on the
rights of any Person, and, to the knowledge of the Company, no Intellectual
Property has been infringed, misappropriated or diluted by any other Person
except for such claims, infringements, misappropriation and dilutions that, in
the aggregate, could not have a Material Adverse Effect.
4.18 Preferred Stock. All Lobdell Preferred Stock Documents
are listed on Schedule 4.18 hereto, and true, correct and complete copies of all
Lobdell Preferred Stock Documents have been delivered to the Agent. All
dividends, distributions, redemptions and other payments required on the Lobdell
Preferred Stock are described on Schedule 4.18. Other than the Lobdell Preferred
Stock, there is no other Preferred Stock as of the Effective Date.
4.19 Investment Company Act; Other Regulations. Neither the
Company nor any of its Subsidiaries is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. Neither the Company nor any of its Subsidiaries
is subject to regulation under any federal or state statute or regulation which
limits its ability to incur Indebtedness.
4.20 Senior Subordinated Debt Documents. All representations
and warranties of the Company contained in any Senior Subordinated Debt Document
are true and correct in all material respects. The Company has received net
proceeds in the approximate amount of $120,800,000 on June 24, 1997 and in the
approximate amount of $36,400,000 on April 1, 1998 and $40,600,000 on December
8, 1998 from its issuance of the Senior Subordinated Notes, and all agreements,
instruments and documents executed or delivered pursuant to the issuance of the
Senior Subordinated Notes are described on Schedule 1.1(D) hereto. All Advances
and all other present and future indebtedness, obligations and liabilities
pursuant to the Loan Documents and all Hedging Obligations of each Borrower and
each Guarantor owed to any Lender or an Affiliate of a Lender is "Senior Debt "
and "Designated Senior Debt" as defined in the Senior Subordinated Debt
Documents and, other than the Advances and all other present and future
indebtedness, obligations and liabilities pursuant to the Loan Documents, there
is no other "Designated Senior Debt" thereunder. There is no Event of Default or
event or condition which could become an Event of Default with notice or lapse
of time or both, under the Senior Subordinated Debt Documents and each of the
Senior Subordinated Debt Documents is in full force and effect. Other than
pursuant to the Senior Subordinated Notes, there is no obligation pursuant to
any Senior Subordinated Debt Document or other document or
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agreement evidencing or relating to any Subordinated Debt outstanding or to be
outstanding on the Effective Date which obligates the Company to pay any
principal or interest or redeem any of its Capital Stock or incur any other
monetary obligation. The Term Loan is and will be incurred pursuant to, and in
full compliance with, Section 4.3(a) of the Senior Subordinated Note Indenture,
and the Term Loan is classified as Indebtedness incurred under Section 4.3(a) of
the Senior Subordinated Note Indenture and are not classified as Indebtedness
outstanding or incurred pursuant to Section 4.3(b) of the Senior Subordinated
Note Indenture. All Tooling Revolving Credit Loans constitute "Tooling
Indebtedness" as defined in the Senior Subordinated Note Indenture and are
incurred pursuant to Section 4.3 (b) of the Senior Subordinated Note Indenture
and do not need to meet the requirements of Section 4.3(a). All Revolving Credit
Advances, up to the full amount of the aggregate Revolving Credit Commitments,
are incurred pursuant to Section 4.3(b) of the Senior Subordinated Note
Indenture and do not need to meet the requirements of Section 4.3(a).
4.21 Unrestricted Subsidiaries. Other than the guaranties
permitted by Section 5.2(e)(x), neither the Company nor any Restricted
Subsidiary of the Company is liable, directly or indirectly, for any of the
Indebtedness or other liabilities of any Unrestricted Subsidiary or has any
Contingent Liabilities with respect to any Unrestricted Subsidiary, other than
trade payables for the sale of goods in the ordinary course of business and in
compliance with Section 5.2(m).
4.22 Acquisitions. The Company has completed the Cofimeta
Acquisition in accordance with the Cofimeta Acquisition Documents and in
accordance with all laws and regulations and all other Requirements of Law, and
has acquired, free and clear of all Liens, good and marketable title to 100% of
the Capital Stock of Cofimeta. Complete and correct copies of all Cofimeta
Acquisition Documents have been delivered to the Agent on or before the Cofimeta
Acquisition Date, and the Company has satisfied all conditions precedent
required as of closing under the Cofimeta Acquisition to complete the Cofimeta
Acquisition, including without limitation all conditions to the Cofimeta
Acquisition required under Section 5.2(g). The Company directly owns, free and
clear of all Liens, 100% of the Capital Stock of the OASP I and OASP II, OASP I
directly owns, free and clear of all Liens, 99.4% of the Capital Stock of the
French Acquisition Company, OASP II directly owns, free and clear of all Liens,
0.6% of the Capital Stock of the French Acquisition Company and the French
Acquisition Company directly owns, free and clear of all Liens, 100% of the
Capital Stock of Cofimeta. Neither OASP I, OASP II nor the French Acquisition
Company has or will have any Indebtedness other than as set forth on Schedule
4.22(a) and the aggregate amount of the Indebtedness of Cofimeta and its
Subsidiaries immediately after giving effect to the Cofimeta Acquisition is set
forth on Schedule 4.22(b). The aggregate consideration paid or payable,
including without limitation any Indebtedness assumed in connection with the
Cofimeta Acquisition or the OPI Acquisition or other guarantees or other
liabilities incurred in connection therewith on a consolidated basis, will not
exceed the Dollar Equivalent of (a) $73,000,000 (which includes the assumption
of the Total Covenant Obligations as set forth on Schedule 4.22(c)) plus
140,000,000 French Francs of factored receivable Indebtedness in connection with
the Cofimeta Acquisition or (b) $12,000,000 in connection with the OPI
Acquisition.
4.23 Material Agreements. Neither the Company nor any
Subsidiary is a party to any agreement or instrument or subject to any charter
or other corporate restriction which could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
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4.24 Compliance With Laws. The Company and its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective property except for any failure
to comply with any of the foregoing which could not reasonably be expected to
have a Material Adverse Effect.
4.25 Year 2000. The Company has made a full and complete
assessment of the Year 2000 Issues and has a realistic and achievable program
for remediating the Year 2000 Issues on a timely basis (the "Year 2000
Program"). Based on such assessment and on the Year 2000 Program, the Company
does not reasonably anticipate that Year 2000 Issues will have a Material
Adverse Effect.
4.26 OPI Acquisition. If consummated, the OPI Acquisition will
be completed on substantially the terms described on Schedule 4.26 hereto and
described to the Agent prior to the Effective Date.
4.27 Mexican Facility. All representations and warranties of
the Company or any of its Subsidiaries contained in any Mexican Facility
Document are true and correct in all material respects. All agreements,
instruments and documents executed or delivered pursuant to the Mexican Facility
are described on Schedule 1.1(B) hereto. There is no Event of Default or event
or condition which could become an Event of Default with notice or lapse of time
or both, under the Mexican Facility Documents and each of the Mexican Facility
Documents is in full force and effect. The Mexican Facility provides an
aggregate of $75,000,000 of financing and provides sufficient financing to
complete the acquisition, construction and equipping of the Mexican
Manufacturing Facility. No commitment to lend or otherwise advance funds has
been terminated under the Mexican Facility Documents. The maximum amount of the
Mexican Facility Tranche A Loans is $63,000,000. The obligations and liabilities
under the Mexican Facility Tranche A Guaranty do not and will not exceed the
outstanding amount of the Mexican Facility Tranche A Loans and, other than the
Mexican Facility Guaranty, there are no, and will not be any, liabilities or
obligations, direct, contingent or otherwise, of any kind owing by the Company
or any of its Subsidiaries (other than the Mexican Subsidiaries) pursuant to the
Mexican Facilities.
ARTICLE V.
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees
that, until the termination of all Commitments and Letters of Credit and
thereafter until payment in full of the principal of and accrued interest on the
Notes and the payment and performance of all other obligations of the Company
under this Agreement, any Hedging Agreement with any Lender and any other Loan
Document, unless the Required Lenders shall otherwise consent in writing, it
shall, and shall cause each of its Restricted Subsidiaries to:
(a) Preservation of Corporate Existence, Etc.
Do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and its qualification as a foreign
corporation or other organization in good standing in each jurisdiction in which
such qualification is necessary under applicable law, and the rights, licenses,
permits (including those required under Environmental Laws), franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
businesses, except to the extent any of the foregoing would not have a Material
Adverse Effect; and defend all of the foregoing against all claims, actions,
demands, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority.
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(b) Compliance with Laws, Etc. Comply in all
respects with all applicable laws, rules, regulations and orders of any
governmental authority, whether federal, state, local or foreign (including
without limitation ERISA, the Code and Environmental Laws), in effect from time
to time, except to the extent any of the foregoing would not have a Material
Adverse Effect; and pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon it or upon its income, revenues
or property, before the same shall become delinquent or in default, as well as
all lawful claims for labor, materials and supplies or otherwise, which, if
unpaid, might give rise to Liens upon such properties or any portion thereof,
except to the extent that payment of any of the foregoing is then being
contested in good faith by appropriate legal proceedings and with respect to
which adequate financial reserves have been established on the books and records
of the Company or any of its Restricted Subsidiaries.
(c) Maintenance of Properties; Insurance.
Maintain, preserve and protect all property that is material to the conduct of
the business of the Company or any of its Restricted Subsidiaries and keep such
property in good repair, working order and condition and from time to time make,
or cause to be made all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times in
accordance with customary and prudent business practices for similar businesses,
except to the extent any of the foregoing would not have a Material Adverse
Effect; and maintain in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated and maintain in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of its activities
or any properties owned, occupied or controlled by it, in such amount as it
shall reasonably deem necessary, and maintain such other insurance as may be
required by law or as may be reasonably requested by the Required Lenders for
purposes of assuring compliance with this Section 5.1(c).
(d) Reporting Requirements. Furnish to the
Lenders and the Agent the following:
(i) Promptly and in any event within
three calendar days after becoming aware of the occurrence of (A) any Default or
Event of Default, (B) the commencement of any material litigation against, by or
affecting the Company or any of its Restricted Subsidiaries, and any material
developments therein, or (C) entering into any material contract or undertaking
that is not entered into in the ordinary course of business or (D) any
development in the business or affairs of the Company or any of its Restricted
Subsidiaries which has resulted in or which is likely in the reasonable judgment
of the Company, to result in a Material Adverse Effect, a statement of the Chief
Financial Officer or Treasurer of the Company setting forth details of each such
Default or Event of Default or such litigation, material contract or undertaking
or development and the action which the Company or such Subsidiary, as the case
may be, has taken and proposes to take with respect thereto;
(ii) As soon as available and in any event
within 45 days after the end of each of the first three fiscal quarters of the
Company, the consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as of the end of such quarter, and the related
consolidated and consolidating statements of income, retained earnings and
changes in cash flows for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting
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forth in each case in comparative form the corresponding figures for the
corresponding date or period of the preceding fiscal year, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by the Chief
Financial Officer or Treasurer of the Company as having been prepared in
accordance with Generally Accepted Accounting Principles, together with a
certificate of the Chief Financial Officer or Treasurer of the Company stating
(A) that no Default or Event of Default has occurred and is continuing or, if a
Default or Event of Default has occurred and is continuing, a statement setting
forth the details thereof and the action which the Company has taken and
proposes to take with respect thereto, and (B) that a computation (which
computation shall accompany such certificate and shall be in reasonable detail)
showing compliance with Section 5.2(a), (b), (c) and (d) hereof is in conformity
with the terms of this Agreement;
(iii) As soon as available and in any event
within 115 days after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income, retained
earnings and changes in cash flows of the Company and its Subsidiaries for such
fiscal year, with a customary audit report of PricewaterhouseCoopers LLP, or
other independent certified public accountants selected by the Company and
acceptable to the Agent, without qualifications unacceptable to the Agent, and
including a unaudited schedule in form acceptable to the Agent prepared by such
accountants setting forth the consolidating balance sheet of the Company and its
Restricted Subsidiaries as of the end of such fiscal year and the related
consolidating statements of income, retained earnings and changes in cash flows
of the Company and its Restricted Subsidiaries for such fiscal year, together
with a certificate of the Chief Financial Officer or the Treasurer of the
Company stating (A) that no Default or Event of Default has occurred and is
continuing and, if such a Default or Event of Default exists and is continuing,
a statement setting forth the nature and status thereof, and (B) that a
computation (which computation shall accompany such certificate and shall be in
reasonable detail) showing compliance with Sections 5.2(a), (b), (c) and (d)
hereof is in conformity with the terms of this Agreement and showing such other
matters as required by the Agent from time to time, all in form and substance
satisfactory to the Agent;
(iv) Promptly after the sending or filing
thereof, copies of all reports, proxy statements and financial statements which
the Company or any of its Subsidiaries sends to or files with any of their
respective security holders or any securities exchange or the Securities and
Exchange Commission or any successor agency thereof;
(v) On or before the 30th day after the
end of each month during which the Advances (other than the Term Loan) exceeded
$35,000,000 on any date during such month and at least two Business Days prior
to any request for an Advance which would cause the aggregate Advances (other
than the Term Loan) to exceed $35,000,000, a Borrowing Base Certificate prepared
as of the close of business on the last day of such month or the most recently
ended month, as the case may be, together with supporting schedules, in form and
detail satisfactory to the Agent, setting forth such information as the Agent
may request with respect to the aging, value, location and other information
relating to the computation of the Borrowing Base and the eligibility of any
property or assets included in such computation together with a report with
respect to the Company setting forth a summary and aging of accounts payable of
the Company, a listing of any checks held after the due date of the related
vendor invoice and setting forth the corresponding due dates of such invoices,
in form and detail satisfactory to the Agent, certified as true and correct by
the Chief Financial Officer or Treasurer of the Company;
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(vi) As soon as available and in any event
at least 30 days prior to the end of each fiscal year of the Company, copies of
preliminary capital and operating budgets and financial forecasts for the
Company and its Subsidiaries for the following fiscal year, and as soon as
available in any event within 30 days after the end of each fiscal year of the
Company, copies of the final capital and operating budgets and financial
forecasts for the Company and its Subsidiaries for such fiscal year, in each
case prepared on both a consolidated and consolidating basis and for a
twelve-month period on a month by month basis (or more frequent period if so
prepared by the Company in the ordinary course) by or under the direction of the
Chief Financial Officer or Treasurer of the Company in form and detail
satisfactory to the Agent, and, promptly and in any event within 10 days after
preparation thereof, copies of any revisions to such budgets and forecasts;
(vii) Promptly and in any event within 10
calendar days after receiving or becoming aware thereof (A) a copy of any notice
of intent to terminate any Plan of the Company its Subsidiaries or any ERISA
Affiliate filed with the PBGC, (B) a statement of the Chief Financial Officer or
Treasurer of the Company setting forth the details of the occurrence of any
Reportable Event with respect to any such Plan, (C) a copy of any notice that
the Company, any of its Subsidiaries or any ERISA Affiliate may receive from the
PBGC relating to the intention of the PBGC to terminate any such Plan or to
appoint a trustee to administer any such Plan, or (D) a copy of any notice of
failure to make a required installment or other payment within the meaning of
Section 412(n) of the Code or Section 302(f) of ERISA with respect to any such
Plan;
(viii) Promptly and in any event within 10
days after receipt, a copy of any management letter or comparable analysis
prepared by the auditors for the Company or any of its Subsidiaries;
(ix) Promptly after the sending or filing
thereof, copies of all reports, financial statements and other documents which
the Company or any of its Subsidiaries is required to deliver pursuant to the
Mexican Facility Documents; and
(x) Promptly, such other information
respecting the business, properties, operations or condition, financial or
otherwise, of the Company or any of its Restricted Subsidiaries or any of its
Unrestricted Subsidiaries with respect to which the Company or any of its
Restricted Subsidiaries has any Contingent Liabilities as any Lender or the
Agent may from time to time reasonably request.
(e) Accounting; Access to Records, Books, Etc.
Maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
accordance with Generally Accepted Accounting Principles and to comply with the
requirements of this Agreement and, at any reasonable time and from time to
time, (i) during regular business hours, permit any Lender or the Agent or any
agents or representatives thereof to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, the
Company and its Subsidiaries, and to discuss the affairs, finances and accounts
of the Company and its Subsidiaries with their respective directors, officers,
employees and independent auditors, and by this provision the Company hereby
authorizes such Persons to discuss such affairs, finances and accounts with any
Lender or the Agent and (ii) during regular business hours, permit the Agent or
any of its agents or representatives to conduct a comprehensive field audit of
its and its Subsidiaries' books, records, properties and assets, including
without limitation all collateral subject to the Security Documents, provided
that prior to an Event of Default no more than one such field audit
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(exclusive of any field audits prior to the Effective Date, which are at the
expense of the Company) per fiscal year shall be at the expense of the Company.
(f) Maintenance of Business Lines. Maintain
all principal lines of business in which the Company or any of its Restricted
Subsidiaries is presently engaged.
(g) Additional Security and Collateral.
Promptly (i) execute and deliver, and cause each Restricted Subsidiary of the
Company to execute and deliver, additional Security Documents, within 30 days
after request therefor by the Lenders and the Agent, sufficient to grant to the
Agent for the benefit of the Lenders and, in the case of Hedging Obligations,
their Affiliates and the Agent liens and security interests in any after
acquired property of the type described in Section 2.11 and (ii) except as
otherwise provided in this Agreement, cause each Person becoming a Restricted
Subsidiary of the Company from time to time to execute and deliver to the Agent,
within 30 days after such Person becomes a Restricted Subsidiary, a Guaranty and
Security Documents, together with other related documents described in Section
2.5 sufficient to grant to the Agent for the benefit of the Lenders and, in the
case of Hedging Obligations, their Affiliates and the Agent liens and security
interests in all collateral of the type described in Section 2.11. The Company
shall notify the Agent, within 10 days after the occurrence thereof, of the
acquisition of any property by the Company or any Restricted Subsidiary that is
not subject to the existing Security Documents, any Person's becoming a
Restricted Subsidiary and any other event or condition that may require
additional action of any nature in order to preserve the effectiveness and
perfected status of the liens and security interests of the Lenders and the
Agent with respect to such property pursuant to the Security Documents.
(h) Further Assurances. Execute and deliver,
and cause each Restricted Subsidiary of the Company to execute and deliver,
within 30 days after request therefor by the Required Lenders or the Agent, all
further instruments and documents and take all further action that may be
necessary or desirable, or that the Agent may request, in order to give effect
to, and to aid in the exercise and enforcement of the rights and remedies of the
Lenders under, the Loan Documents, including without limitation causing each
lessor of real property to the Company or any of its Restricted Subsidiaries to
execute and deliver to the Agent, prior to or upon the commencement of any
tenancy, an agreement in form and substance acceptable to the Lenders and the
Agent duly executed on behalf of such lessor waiving any distraint, lien and
similar rights with respect to any property subject to the Security Documents
and agreeing to permit the Lenders and the Agent to enter such premises in
connection therewith. The Company further agrees to take all necessary action to
ensure that the Agent and the Lenders may rely on the audited financial
statements of the Company and its Subsidiaries, including without limitation any
necessary acknowledgments or other consents from the Company's auditors as may
be required under applicable law.
(i) Year 2000. Take, and cause each of its
Subsidiaries to take, all such actions as are reasonably necessary to
successfully implement the Year 2000 Program and to assure that Year 2000 Issues
will not have a Material Adverse Effect. At the request of the Agent, the
Company will provide a description of the Year 2000 Program, together with any
updates or progress reports with respect thereto.
5.2 Negative Covenants. Until the termination of all
Commitments and Letters of Credit and thereafter until payment in full of the
principal of and accrued interest on the Notes and the payment and performance
of all other obligations of the Company under this Agreement, any Hedging
Agreement with any Lender and any other Loan Document, the Company agrees that,
unless the
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Required Lenders shall otherwise consent in writing, it shall not, and shall not
permit any of its Restricted Subsidiaries to:
(a) Net Worth. Permit or suffer the
Consolidated Net Worth of the Company and its Restricted Subsidiaries to be less
than (i) $40,176,000, plus (ii) an amount equal to 50% of Consolidated net
income of the Company and its Subsidiaries (without reduction for a net loss)
for the three month period ending March 31, 1999 and for each fiscal year of the
Company subsequent to its fiscal year ended March 31, 1999, plus (iii) an amount
equal to 100% of the Net Cash Proceeds in connection with the issuance or other
sale by the Company of any of its Capital Stock.
(b) Total Covenant Obligations to Total
Covenant EBITDA Ratio. Permit or suffer the Total Covenant Obligations to Total
Covenant EBITDA Ratio, to be greater than (i) 5.25 to 1.00 as of the end of any
fiscal quarter of the Company ending on or prior to December 31, 1999, (ii) 5.00
to 1.00 as of the end of any fiscal quarter of the Company ending at any time
from and including March 31, 2000 to and including December 31, 2000, (iii) 4.75
to 1.0 as of the end of any fiscal quarter of the Company and again at any time
from and including March 31, 2001 to and including December 31, 2001, (iv) 4.5
to 1.0 as of the end of any fiscal quarter of the Company ending at any time
from and including March 31, 2002 to and including December 31, 2002, (v) 4.25
to 1.0 as of the end of any fiscal quarter of the Company ending at any time
from and including March 31, 2003 to and including December 31, 2003, or (vi)
4.00 to 1.00 as of the end of any fiscal quarter thereafter.
(c) Fixed Charge Coverage Ratio. Permit or
suffer the Fixed Charge Coverage Ratio to be less than (i) 1.00 to 1.00 as of
the end of any fiscal quarter of the Company ending on or before December 31,
2000, (ii) 1.05 to 1.00 as of the end of any fiscal quarter ending at any time
from and including March 31, 2001 to and including December 31, 2002, or (iii)
1.10 to 1.0 as of the end of any fiscal quarter thereafter.
(d) Interest Coverage Ratio. Permit or suffer
the Interest Coverage Ratio to be less than (i) 2.00 to 1.0 as of the end of any
fiscal quarter ending on or before December 31, 1999, (ii) 2.10 to 1.0 as of the
end of any fiscal quarter of the Company ending at any time from and including
March 31, 2000 to and including December 31, 2000, (iii) 2.25 to 1.00 as of the
end of any fiscal quarter of the Company ending at any time from and including
March 31, 2001 to and including December 31, 2001, (iv) 2.50 to 1.0 at any time
from and including March 31, 2002 to and including December 31, 2002 or (v) 2.75
to 1.00 as of the end of any fiscal quarter thereafter.
(e) Indebtedness. Create, incur, assume or in
any manner become liable in respect of, or suffer to exist, any Indebtedness
other than:
(i) The Advances and the other obligations
and liabilities pursuant to any of the Loan Documents;
(ii) The Indebtedness described in Schedule
5.2(e), including Contingent Liabilities, provided that no increase in the
principal amount thereof (as such amount is reduced from time to time) shall be
permitted and no modifications of the terms thereof which would result in an
earlier final maturity date or decreased weighted average life thereof shall be
permitted;
(iii) Indebtedness of the Company or any
Restricted Subsidiary owing to the Company or any Guarantor, provided that any
such Indebtedness owing by any Borrower shall be fully subordinate to all
Advances and all other obligations of the Company to the Agent and the
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Lenders, by written agreement pursuant to terms and conditions satisfactory to
the Agent and the Required Lenders;
(iv) Indebtedness constituting purchase
money debt or Capital Leases in aggregate outstanding principal amount not
exceeding $15,000,000 at any time;
(v) Subordinated Debt under the Senior
Subordinated Notes in aggregate principal amount not to exceed $200,000,000;
(vi) Other Subordinated Debt of the Company
or any Guarantor, provided that (A) after giving effect to such Subordinated
Debt, the Company is able to borrow at least $25,000,000 of additional Loans,
(B) both before and after giving effect to such Subordinated Debt, no Event of
Default or Default exists or would be caused thereby, (C) after giving effect to
such Subordinated Debt, the pro forma Total Covenant Obligations to Total
Covenant EBITDA Ratio is at least 0.25 below the level required under Section
5.2(b), on a pro forma basis acceptable to the Agent;
(vii) Tooling Indebtedness (in addition to
the Tooling Revolving Credit Advances) on terms and in amounts acceptable to the
Agent;
(viii) Hedging Agreements with any Lender,
any Affiliate of a Lender or other Person acceptable to the Agent, provided that
no Hedging Agreement shall be entered into for purposes of financial
speculation;
(ix) Indebtedness of the Restricted
Subsidiaries of BMG in aggregate principal amount not to exceed $2,500,000 and
secured by the real property owned by such Subsidiaries as of the Effective
Date, provided that the terms of such Indebtedness are no more onerous on such
Subsidiaries as the terms of the Indebtedness of such Subsidiaries secured by
such real property that existed immediately prior to the Effective Date;
(x) Guarantees by the Company of the
Indebtedness of Unrestricted Subsidiaries to the extent permitted by, and
subject to the terms of, Section 5.2(l)(viii); and
(xi) Indebtedness solely in connection with
the factoring of receivables by Foreign Subsidiaries of the Company which are
not Canadian Subsidiaries, in each case in the ordinary course of business and
on customary terms and conditions; provided that such factoring arrangements are
acceptable to the Agent and the aggregate outstanding amount thereof does not
exceed the sum of the amount thereof outstanding as of January 31, 1999 plus
$30,000,000 minus the amount of the "Tranche B Loans" and "Tranche C
Certificates" under, and as defined in, the Mexican Facility Documents.
Notwithstanding the above or anything else herein to the contrary, neither OASP
I, OASP II, the Dutch Holding Company nor the French Acquisition Company shall
have any Indebtedness other than a guaranty by OASP I and OASP II of the
Advances and other obligations owing pursuant to any Loan Document, a
subordinated guaranty by OASP I and OASP II in favor of the holders of the
obligations owing under the Senior Subordinated Notes and a guarantee by the
French Acquisition Company in the amount of 66,000,000 French Francs of the debt
of Cofimeta Defeasance Company incurred in connection with the closing of the
Cofimeta Acquisition as further described on Schedule 4.22, and the aggregate
amount of the Indebtedness of Cofimeta and its Subsidiaries shall be limited to
(x) existing Indebtedness of Cofimeta and its Subsidiaries described on Schedule
5.2(e) hereto, as reduced from time
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to time, (y) other Indebtedness allowed under Section 5.2(e)(xi) above and (z)
future unsecured and secured (to the extent secured by assets acceptable to the
Agent) Indebtedness for working capital and capital expenditures, provided that
the aggregate amount permitted pursuant to the foregoing clauses (y) and (z)
shall not exceed $30,000,000 minus the amount of the "Tranche B Loans" and
"Tranche C Certificates", under, and as defined in, the Mexican Facility
Documents, in aggregate amount or such greater amount consented to in writing by
the Agent in its sole discretion.
(f) Liens. Create, incur or suffer to exist any
Lien on any of the assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, whether now owned or hereafter acquired, of the
Company or any of its Restricted Subsidiaries, other than:
(i) Liens for taxes not delinquent or
for taxes being contested in good faith by appropriate proceedings and as to
which adequate financial reserves have been established on its books and
records;
(ii) Liens (other than any Lien imposed by
ERISA or any Environmental Law) created and maintained in the ordinary course of
business which do not secure obligations material in the aggregate and which
would not have a Material Adverse Effect and which constitute (A) pledges or
deposits under worker's compensation laws, unemployment insurance laws or
similar legislation, (B) good faith deposits in connection with bids, tenders,
contracts or leases to which the Company or any of its Subsidiaries is a party
for a purpose other than borrowing money or obtaining credit, including rent
security deposits, (C) liens imposed by law, such as those of carriers,
warehousemen and mechanics, if payment of the obligation secured thereby is not
yet due, (D) Liens securing taxes, assessments or other governmental charges or
levies not yet subject to penalties for nonpayment, and (E) pledges or deposits
to secure public or statutory obligations of the Company or any of its
Subsidiaries, or surety, customs or appeal bonds to which the Company or any of
its Subsidiaries is a party;
(iii) Liens affecting real property which
constitute minor survey exceptions or defects or irregularities in title, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of such real property,
provided that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or materially impair their
use in the operation of the businesses of the Company or any of its
Subsidiaries;
(iv) Liens created pursuant to the Security
Documents and Liens expressly permitted by the Security Documents;
(v) Each Lien described in Schedule 5.2(f)
hereto may be suffered to exist upon the same terms as those existing on the
date hereof, but no increase in the principal amount thereof shall be permitted;
(vi) Any Lien created to secure payment of a
portion of the purchase price of, or existing at the time of acquisition of, any
tangible fixed asset acquired by the Company or any of its Restricted
Subsidiaries may be created or suffered to exist upon such fixed asset if the
outstanding principal amount of the Indebtedness secured by such Lien does not
at any time exceed 100% of the purchase price paid by the Company or such
Restricted Subsidiary for such fixed asset and the aggregate principal amount of
all Indebtedness secured by such Liens does not exceed the amount permitted
under Section 5.2(e)(iv), provided that such Lien does not encumber any other
asset at any
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time owned by the Company or such Restricted Subsidiary, and provided, further,
that not more than one such Lien shall encumber such fixed asset at any one time
and neither OASP I, OASP II, the Dutch Holding Company nor the French
Acquisition Company shall incur or permit or suffer any such Lien to exist;
(vii) Liens in favor of the Company or any
Guarantor as security for Indebtedness of any Subsidiary to the Company or
another Restricted Subsidiary, provided that any such Liens are subordinated to
the Liens in favor of the Agent on terms satisfactory to the Agent;
(viii) The interest or title of a lessor
under any operating lease otherwise permitted under this Agreement with respect
to the property subject to such lease to the extent performance of the
obligations of the Company or its Restricted Subsidiary thereunder are not
delinquent;
(ix) Liens on the real property owned by
Restricted Subsidiaries of BMG as of the Effective Date securing the
Indebtedness permitted by Section 5.2(e)(ix); and
(x) Liens on accounts receivable of Foreign
Subsidiaries which are not Canadian Subsidiaries securing the Indebtedness
permitted by Section 5.2(e)(xi) and other Liens on the assets of Cofimeta and
its Subsidiaries to the extent permitted by the proviso to Section 5.2(e).
(g) Merger; Acquisitions; Etc. Purchase or
otherwise acquire, whether in one or a series of transactions, directly or
indirectly, by merger or otherwise, all or a substantial portion of the business
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, of any Person, or all or a substantial portion of the Capital Stock
of any other Person (an "Acquisition"); nor merge or consolidate or amalgamate
with any other Person or take any other action having a similar effect;
provided, however, that this Section 5.2(g) shall not prohibit any merger or
acquisition if (i) such merger involves the Company, the Company shall be the
surviving or continuing corporation thereof, (ii) immediately before and after
giving effect to such merger or acquisition, no Default or Event of Default
shall exist or shall have occurred and be continuing and the representations and
warranties contained in Article IV and in the other Loan Documents shall be true
and correct on and as of the date thereof (both before and after such merger or
acquisition is consummated) as if made on the date such merger or acquisition is
consummated, (iii) at least 10 Business Days' prior to the consummation of such
merger or acquisition, the Company shall have provided to the Lenders an opinion
of counsel and a certificate of the Chief Financial Officer or Treasurer of the
Company (attaching pro forma computations acceptable to the Agent to demonstrate
compliance with all financial covenants hereunder), each stating that such
merger or acquisition complies with this Section 5.2(g), all laws and
regulations and that any other conditions under this Agreement relating to such
transaction have been satisfied, and such certificate shall contain such other
information and certifications as requested by the Agent and be in form and
substance satisfactory to the Agent, (iv) at least 10 Business Days' prior to
the consummation of such merger or acquisition, the Company shall have delivered
all acquisition documents and other agreements and documents relating to such
merger or acquisition, and the Agent shall have completed a satisfactory review
thereof and completed such other due diligence satisfactory to the Agent,
provided that if such acquisition is being done by an Unrestricted Subsidiary or
such merger involves Unrestricted Subsidiaries only, then the requirements of
this clause (iv) will be satisfied if the Company provides the Lenders with a
certificate representing that neither the Company nor any Restricted Subsidiary
shall be liable, directly or indirectly, for any of the Indebtedness or other
liabilities of such Unrestricted Subsidiary or for any Contingent Liabilities
with respect to any such Unrestricted Subsidiary except as permitted by Section
5.2(e), (v) immediately before and after giving effect to such merger or
acquisition,
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the pro forma Total Covenant Obligations to Total Covenant EBITDA Ratio is less
than or equal to the lesser of 4.5 to 1.0 or 0.25 below the level required under
Section 5.2(b), on a pro forma basis acceptable to the Agent, (vi) both before
and after giving effect to such merger and acquisition, the Company is able to
borrow at least $25,000,000 of additional Loans on a pro forma basis acceptable
to the Agent, (vii) the Company shall, at least 10 Business Days prior to the
consummation of merger or acquisition, provide such other certificates and
documents as requested by the Agent, in form and substance satisfactory to the
Agent, (viii) the target of such merger or acquisition is in the same line of
business as the Company, (ix) the target of such merger or acquisition is
located in the United States of America or Canada, (x) the Board of Directors
(or similar governing body) and the management of the target of such merger or
acquisition has approved such merger or acquisition and (xi) the aggregate
consideration paid or payable in connection with all Acquisitions permitted by
this proviso (excluding the Cofimeta Acquisition and the OPI Acquisition and
amounts paid or payable solely by Unrestricted Subsidiaries (other than OPI) and
investments and other transactions permitted by Section 5.2(l)(viii)), including
without limitation any Indebtedness assumed in connection therewith or
guarantees or other liabilities incurred in connection therewith, shall not
exceed $75,000,000. Notwithstanding the foregoing, (x) the requirements listed
in clauses (ii), (iii), (iv), (v), (vi), (vii) and (ix) of this Section 5.2(g)
shall not be required to be satisfied in connection with any acquisition done
solely by an Unrestricted Subsidiary, provided that the terms of Section 5.2(e),
Section 5.2(l) and all other terms and provisions hereof shall be applicable,
(y) the requirements listed in clauses (v) and (vi) shall not apply to the
Cofimeta Acquisition or the OPI Acquisition if the OPI Acquisition occurs on or
before January 31, 2000, the aggregate consideration paid or payable in
connection with the OPI Acquisition, including without limitation any
Indebtedness assumed in connection therewith or guarantees or other liabilities
incurred in connection therewith, will not exceed the Dollar Equivalent of
$12,000,000 and provided that all other terms and provisions hereof shall be
applicable and (z) neither OPI nor any Mexican Subsidiary will make, directly or
indirectly, any Acquisition or otherwise assist or be involved in any
Acquisition.
(h) Disposition of Assets; Etc. Sell, lease,
license, transfer, assign or otherwise dispose of all or any portion of its
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether in one or a series of transactions, other than
inventory sold in the ordinary course of business upon customary credit terms,
the sale of accounts receivable in connection with the factoring of accounts
receivable in the ordinary course of business of Foreign Subsidiaries which are
not Canadian Subsidiaries on customary terms and conditions and otherwise
allowed pursuant hereto and sales of scrap or obsolete material or equipment
which are not material in the aggregate, and shall not permit or suffer any
Restricted Subsidiary or OPI to do any of the foregoing; provided, however, that
this Section 5.2(h) shall not prohibit any such sale, lease, license, transfer,
assignment or other disposition if (i) the consolidated book value (disregarding
any write-downs of such book value other than ordinary depreciation and
amortization) of all of the business, assets, rights, revenues and property of
the Company and its Restricted Subsidiaries disposed of in any consecutive
twelve-month period shall be less than 10% of the consolidated book value of the
assets of the Company and its Restricted Subsidiaries as of the beginning of
such twelve month period and the aggregate book value of all assets disposed of
after the Effective Date shall be less than 25% of the consolidated book value
of assets of the Company and its Restricted Subsidiaries at the time of any such
disposition and if, immediately after such transaction, no Default or Event of
Default shall exist or shall have occurred and be continuing, (ii) sales as to
which proceeds are used within 180 days (or 360 days if such sale involves the
Planned Asset Sales) to purchase or construct assets of at least equivalent
value to those sold, provided that the Company and its Subsidiaries may not sell
a substantial portion of their assets pursuant to this clause (ii), (iii)
transfers of assets from any Subsidiary to the Company or a Guarantor which is a
Wholly Owned Subsidiary, (iv) any transfer of assets to the Mexican Subsidiaries
to the extent permitted by Section 5.2(l)(v), and (v) any transfer of all of the
Capital Stock of the French Acquisition Company owned by OASP I and OASP II to
the Dutch Holding Company
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in exchange for 100% of the Capital Stock of the Dutch Holding Company and
otherwise in conformance with all of the terms of this Agreement; provided,
however, in the case of any of the foregoing permitted sales, leases, licenses,
transfers, assignments or other dispositions under this Section 5.2(h) (an
"Asset Sale") the Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale, other than pursuant to clauses (iii),
(iv) or (v) of this Section 5.2(h), unless (A) the Company (or the Subsidiary,
as the case may be) receives consideration at the time of such Asset Sale at
least equal to the fair market value (evidenced by a resolution of the Board of
Directors set forth in an officer's certificate delivered to the Agent) of the
assets and (B) at least 75% of the consideration therefor received by the
Company or such Subsidiary is in the form of cash, provided that cash
equivalents and the assumption of Indebtedness of the Company or any Guarantor
and the unconditional release of the Company or such Guarantor from such
Indebtedness in connection with such Asset Sale, in each case acceptable to the
Agent, shall be considered cash for purposes of this Section 5.2(h); provided
that the amount of (x) any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet), of the Company or any Subsidiary that
are assumed by the transferee of any such assets such that the Company or such
Subsidiary have no further liability and (y) any securities, notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are converted by the Company or such Subsidiary into cash (to the extent of
the cash received), shall be deemed to be cash for purposes of this provision
and the definition of Net Cash Proceeds, and the Agent promptly shall obtain a
first priority security interest in any non cash consideration for any Asset
Sale.
(i) Nature of Business. Make any material
change in the nature of its business from that engaged in on the date of this
Agreement or engage in any other businesses other than those in which it is
engaged on the date of this Agreement.
(j) Dividends and Other Restricted Payments.
Make, pay, declare or authorize any dividend, payment or other distribution in
respect of any class of its Capital Stock or any dividend, payment or
distribution in connection with the redemption, purchase, retirement or other
acquisition, directly or indirectly, of any Capital Stock other than such
dividends, payments or other distributions (i) to the extent payable solely in
shares of common stock of the Company, (ii) to the extent payable to the Company
by a Restricted Subsidiary of the Company, (iii) dividends and distributions on
Preferred Stock to the extent permitted under Section 5.2(s), (iv) if no Event
of Default or Default exists or would be caused thereby, an aggregate amount not
to exceed $1,000,000 made after the Effective Date, (v) which in aggregate
amount do not exceed 25% of the Net Income accrued during fiscal quarters ending
after the Effective Date for which the Total Covenant Obligations to Total
Covenant EBITDA Ratio was not greater than 3.0 to 1.0, provided that both before
and after the making or declaration of such dividend, payment or other
distribution (A) the pro forma Total Covenant Obligations to Total Covenant
EBITDA Ratio is not greater than 3.0 to 1.0, on a pro forma basis acceptable to
the Agent, (B) the Company is able to borrow at least $25,000,000 of additional
Loans on a pro forma basis acceptable to the Agent and (C) no Default or Event
of Default shall have occurred or be caused thereby, and (vi) if no Event of
Default or Default exists or would be caused thereby, an aggregate amount not to
exceed $2,500,000 for all employees made after the Effective Date for the
purpose of redeeming the Capital Stock of the Company owned by any employees of
the Company, other than a Permitted Holder, upon the termination of the
employment by the Company or any of its Restricted Subsidiaries of such
employee, provided that (A) any amounts used to redeem such Capital Stock under
this clause (vi) shall first reduce the amount allowed or accumulated under
Section 5.2(j)(iv) until the amount allowed thereunder is exhausted and then
shall reduce the amount allowed under Section 5.2(j)(v) and (B) the amounts
payable for the redemption of such Capital Stock will not be paid any sooner or
in any greater amount than contractually required. The Company will not, and
will not permit any of its Restricted Subsidiaries, to issue any Preferred Stock
or any Disqualified Stock, other than (1) any Preferred Stock
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which does not require any dividends, payments, redemptions or other
distributions of any kind until at least one year after the later of the
Revolving Credit Termination Date, the Tooling Revolving Credit Termination Date
or the Maturity Date, (2) the existing Lobdell Preferred Stock and (3) any other
Preferred Stock or Disqualified Stock which meets all of the requirements for
the issuance by the Company of Subordinated Debt (i.e. all payments and other
obligations thereunder are expressly subordinate and junior in right and
priority of payment to the Advances and other Indebtedness of such Person to the
Lenders in manner and by agreement satisfactory in form and substance to the
Agent and such Preferred Stock or Disqualified Stock is subject to such other
terms and provisions, including without limitation maturities, covenants,
defaults, rates and fees, acceptable to the Agent), and such Preferred Stock and
Disqualified Stock allowed under this clause (3) shall be treated as if it were
Subordinated Debt for all purposes of this Agreement and is defined herein as
"Permitted Disqualified Stock".
(k) Capital Expenditures. Acquire or contract
to acquire any fixed asset or make any other Capital Expenditure if the
aggregate purchase price and other acquisition costs of all such fixed assets
acquired and other Capital Expenditures made by the Company or any of its
Restricted Subsidiaries during any fiscal year of the Company would exceed, on a
consolidated basis, an amount equal to $37,500,000 for the fiscal year of the
Company ending March 31, 1999, $47,000,000 for the fiscal year of the Company
ending March 31, 2000, or $50,000,000 for any fiscal year thereafter, plus the
sum of (i) 20% of the net book value, or, if appraisals of such fixed assets
have been obtained, 15% of the orderly liquidation value of such fixed assets
which consist of equipment and of the fair market value of real property which
consists of real estate (in each case, as determined by an appraisal acceptable
to the Agent) acquired in an Acquisition (other than the Cofimeta Acquisition)
permitted hereunder by the Company and its Restricted Subsidiaries, to be added
as of the effective date of such Acquisition (and on a pro rata basis for the
fiscal year in which such Acquisition occurs), plus (ii) the amount of Capital
Expenditures allowed for the previous fiscal year (with giving effect to any
increase in the amount thereof caused by this clause (ii), commencing with the
fiscal year ending March 31, 1999) minus the amount of actual Capital
Expenditures for the previous fiscal year. For purposes of this Section 5.2(k),
the Mexican Facility Obligations in an amount not to exceed $75,000,000 shall
not constitute Capital Expenditures.
(l) Loans, Advances and Investments. Make any
loan or advance, including without limitation any transfer, of any of its funds
or property or make any other extension of credit to, or increase its investment
or acquire any additional interest whatsoever in, any Person, or enter into any
joint venture or similar arrangement with any other Person, or permit OPI to do
any of the foregoing, other than each of the following if no Event of Default
exists:
(i) loans and advances to Guarantors which are evidenced by
promissory notes payable on demand and in form and substance satisfactory to the
Agent and which are pledged to the Agent for the benefit of the Lenders and
investments in Guarantors;
(ii) loans and advances to, and investments in, the French
Acquisition Company to be made on or within three Business Days of February 4,
1999 to consummate the Cofimeta Acquisition in an aggregate amount not to exceed
$73,000,000 and as described in the Cofimeta Acquisition Documents, provided
that if any of the foregoing are loans or advances they shall be evidenced by a
promissory note payable on demand and in form and substance satisfactory to the
Agent and pledged on a first priority basis and pursuant to documents acceptable
to the Agent for the benefit of itself and the Lenders;
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(iii) additional loans and advances to, and investments in,
the French Acquisition Company, Cofimeta and/or OPI in an aggregate amount not
to exceed $10,000,000, provided that if any of the foregoing is a loan or
advance it shall be evidenced by a promissory note payable on demand and in form
and substance satisfactory to the Agent and pledged, on a first priority basis
and pursuant to documents acceptable to the Agent, to the Agent for the benefit
of itself and the Lenders;
(iv) loans and advances in an aggregate amount not to exceed
$12,000,000 to a wholly owned Subsidiary which is a Restricted Subsidiary,
whether currently existing or to be formed in the future, to consummate the OPI
Acquisition, provided that if any such loan or advance is to a Subsidiary which
is not a Guarantor such Subsidiary and each Subsidiary which is not a Guarantor
owning such Subsidiary, directly or indirectly, shall not incur or maintain any
Indebtedness (except as otherwise permitted by this Agreement if such Subsidiary
is the French Acquisition Company or Cofimeta) and at least 65% of the Capital
Stock of the Subsidiary owning OPI, directly or indirectly, which is owned
directly by a Guarantor or the Company shall be pledged to the Agent, for the
benefit of itself and the Lenders on a first priority basis, by such Guarantor
or the Company, as the case may be;
(v) transfers of fixed assets by the Company and its
Subsidiaries to the Mexican Subsidiaries for the purpose of completing the
Mexican Manufacturing Facility, provided that the aggregate fair market value of
such fixed assets does not exceed $20,000,000;
(vi) advances of Tooling Revolving Credit Loans borrowed by
the Company to Cofimeta, OPI or the Mexican Subsidiaries in aggregate
outstanding amount not to exceed $35,000,000 for the sole purpose of financing
Tooling Contracts of Cofimeta, OPI or the Mexican Subsidiaries, provided that
such Indebtedness of Cofimeta, OPI or the Mexican Subsidiaries to the Company
would constitute Tooling Indebtedness, no assets relating to such Tooling
Contracts are included in the Tooling Revolving Credit Borrowing Base or the
Borrowing Base and such advances are evidenced by promissory notes payable on
demand and in form and substance satisfactory to the Agent and which are
pledged, on a first priority basis and pursuant to documents acceptable to the
Agent, to the Agent for the benefit of itself and the Lenders;
(vii) transfer of all of the Capital Stock of the French
Acquisition Company owned by OASP I and OASP II to the Dutch Holding Company in
exchange for 100% of the Capital Stock of the Dutch Holding Company, provided
that (A) OASP I shall grant to the Agent for the benefit of itself and the
Lenders a first priority enforceable pledge on 65% of the Capital Stock of the
Dutch Holding Company, (B) the pledge of 65% of the Capital Stock of the French
Acquisition Company shall be released and (C) the Company shall deliver such
documents and opinions in connection therewith as requested by the Agent and all
other terms of this Agreement relating to the Dutch Holding Company and its
formation are satisfied; provided that it is acknowledged that if the Dutch
Holding Company owns any Unrestricted Subsidiary formed or acquired after the
Effective Date (other than OPI) the Agent and the Company shall mutually agree
on a method by which the pledge of the Dutch Holding Company is non recourse to
such Unrestricted Subsidiary;
(viii) other loans and advances to, and investments in and
guarantees by the Company (valued at the maximum amount that could be payable
thereunder, and provided that all such guarantees shall be collection
guarantees, not payment guarantees, and be on terms and conditions satisfactory
to the Agent), of the Indebtedness of Unrestricted Subsidiaries, Restricted
Subsidiaries which are not Wholly Owned Subsidiaries or joint ventures which do
not exceed $30,000,000 for all of the foregoing in aggregate outstanding amount
(with the outstanding amount thereof being deemed decreased by any cash
repayments of such loans or advances or cash dividends paid to the Company or
any Restricted
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Subsidiary with respect to any such investments), provided that (A) if such
transaction involves a loan or advance, such loans and advances are evidenced by
promissory notes payable on demand or on such other terms acceptable to the
Agent and in form and substance satisfactory to the Agent and which are pledged,
on a first priority basis and pursuant to documents acceptable to the Agent, to
the Agent for the benefit of itself and the Lenders, (B) both before and after
giving effect to such loan, advance or investment, the pro forma Total Covenant
Obligations to Total Covenant EBITDA Ratio is less than or equal to the lesser
of 4.50 to 1.0 or 0.25 below the level required under Section 5.2(b), on a pro
forma basis acceptable to the Agent, (C) both before and after giving effect to
such loan or advance the Company is able to borrow at least $25,000,000 of
additional Loans on a pro forma basis acceptable to the Agent, and (D) no Event
of Default or Default exists or would be caused thereby and the Company provides
such certificates and legal opinions as requested by the Agent in connection
therewith; and
(ix) loans, advances, and investments described on Schedule
5.2(l) hereto, but no increase in the amount thereof as such loans, advances and
investments may be reduced from time to time.
(m) Transactions with Affiliates. Other than as
permitted by Section 5.2(u), enter into or permit to exist any transaction or
series of related transactions (including without limitation the purchase, sale,
lease or exchange of any property, employee compensation arrangements or
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless the terms of such transaction (i) are no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained at
the time of such transaction in a comparable transaction in arm's-length
dealings with a Person who is not such an Affiliate, (ii) if such Affiliate
Transaction (or series of related Affiliated Transactions) involves aggregate
payments in an amount in excess of $1,000,000 in any one year, (A) are set forth
in writing, (B) comply with clause (i) of this Section 5.2(m) and (C) have been
approved by a majority of disinterested members of the Board of Directors of the
Company, and (iii) if such Affiliate Transaction (or series of related Affiliate
Transactions) involves aggregate payments in an amount in excess of $5,000,000
in any one year, (A) comply with clause (ii) and (B) have been determined by a
nationally recognized investment banking firm to be fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries.
(n) Sale and Leaseback and other Financing
Transactions. Other than the Mexican Facility pursuant to the terms of the
Mexican Facility Documents delivered to the Agent prior to the Effective Date,
(i) become or remain liable in any way, whether directly or by assignment or as
a guarantor or other contingent obligor, for the obligations of the lessee or
user under any lease or contract for the use of any real or personal property if
such property is owned on the date of this Agreement or thereafter acquired by
the Company or any of its Subsidiaries and has been or is to be sold or
transferred to any other Person and was, is or will be used by the Company or
any such Subsidiary for substantially the same purpose as such property was used
by the Company or such Subsidiary prior to such sale or transfer, or (ii) enter
into or become or remain liable in any way, whether directly or by assignment or
as a guarantor or other contingent obligor or otherwise, any synthetic lease,
tax ownership/operating lease, off balance sheet financing or similar financing,
provided that it is acknowledged that this clause (ii) does not prohibit normal
operating leases entered into in the ordinary course of business as determined
by the Agent. It is acknowledged and agreed by the Borrowers that (x) the
aggregate outstanding amount under the Mexican Facility or otherwise pursuant to
the Mexican Facility Documents shall not exceed $75,000,000, as reduced from
time to time, (y) the obligations and liabilities under the Mexican Facility
Tranche A Guaranty will not exceed the outstanding amount of the Mexican
Facility Tranche A Loans, as reduced from time to time, and (z) other than the
Mexican Facility Guaranty, there are no liabilities or
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obligations, direct, contingent or otherwise, of any kind owing by the Company
of any of its Subsidiaries (other than the Mexican Subsidiaries) pursuant to the
Mexican Facilities.
(o) Negative Pledge Limitation. Enter into
any agreement with any Person, other than the Lenders or the Agent pursuant
hereto and other than the existing provisions without amendment contained in the
Lobdell Preferred Stock Documents and in the agreements listed on Schedule
5.2(o), which prohibits or limits the ability of the Company or any Restricted
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired.
(p) FSC Commissions. Pay or become obligated
for the payment during any fiscal year of the Company, commissions to all
related wholly owned foreign sales corporations in excess of an amount
acceptable to the Agent in aggregate amount plus reimbursement of the reasonable
administrative expenses of such wholly owned foreign sales corporations.
(q) Inconsistent Agreements. Enter into any
agreement containing any provision which would be violated or breached by this
Agreement or any of the transactions contemplated hereby or by performance by
the Company or any of its Subsidiaries of its obligations in connection
therewith.
(r) Subsidiary Dividends. Other than those
restrictions existing as of the Effective Date or described in Schedule 5.2(o)
without giving effect to any amendment thereof on or after the Effective Date,
permit any of its Restricted Subsidiaries, directly or indirectly, to create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction which by its terms materially restricts the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
such Restricted Subsidiary's Capital Stock, (ii) pay any Indebtedness owed to
the Company or any of its other Restricted Subsidiaries, (iii) make any loans or
advances to the Company or any of such other Restricted Subsidiaries or (iv)
transfer any material portion of its assets to the Company or any of such other
Restricted Subsidiaries.
(s) Preferred Stock. Make any amendment or
modification to any Lobdell Preferred Stock Document, other than the adjustment
in the price of the Lobdell Preferred Stock made prior to the Effective Date
based on post closing adjustments and which do not result in any additional
obligations of Lobdell or of the Company or any of its Restricted Subsidiaries,
or enter into any other agreement or document relating thereto other than the
documents listed on Schedule 4.18 hereto or make, pay, declare or authorize any
dividend, payment or other distribution with respect to any Preferred Stock or
any dividend, payment or distribution in connection with the redemption,
purchase, retirement or other acquisition, directly or indirectly, of any
Preferred Stock other than as required under the Lobdell Preferred Stock
Documents listed on Schedule 4.18 hereto, provided that no dividend, payment or
other distribution in respect to the Preferred Stock or dividend, payment or
distribution in connection with the redemption, purchase, retirement or other
acquisition, directly or indirectly, of any Preferred Stock, including those
required under the Lobdell Preferred Stock Documents, will be made if any Event
of Default exists under Section 6.1(a) or would be caused thereby.
(t) Other Indebtedness and Agreements. Make
any amendment or modification to any indenture, note or other agreement
evidencing or governing any Indebtedness (other than Indebtedness hereunder of
the Company or any of its Subsidiaries) or to any Tax Sharing Agreement or any
Mexican Facility Document, or directly or indirectly voluntarily prepay, defease
or in substance defease, purchase, redeem, retire or otherwise acquire any such
Indebtedness or any Mexican Facility
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Obligation, (except, when no Default or Event of Default exists, for the
prepayment of Subordinated Debt solely from the Net Cash Proceeds received by
the Company from the primary sale or sales of shares of common stock (which may
not be Disqualified Stock) of the Company pursuant to any one or more public
offerings thereof), or designate any Indebtedness (other than the Indebtedness
under the Loan Documents and under Hedging Agreements with Lenders) as
"Designated Senior Debt" under the Senior Subordinated Debt Documents.
(u) Management Fees. Pay any management,
consulting or similar fees or amounts to any of its Affiliates other than (i) to
the Company or a Guarantor and (ii) as described on Schedule 5.2(u), without
giving effect to any amendment or modification of the agreement described on
Schedule 5.2(u), provided that no such management, consulting or similar fees or
amounts (other than out of pocket expenses) shall be paid pursuant to this
clause (ii) if any Event of Default or Default exists or would be caused
thereby, and Oxford Investment has acknowledged and agreed that no such
management, consulting or similar fees or amounts (other than out of pocket
expenses) will be so paid.
(v) Restricted Subsidiaries. Except with the
consent of the Agent, which consent will not be unreasonably withheld, permit or
suffer any Restricted Subsidiary to not be a Wholly Owned Subsidiary, other than
Laserweld International, L.L.C. ("Laserweld") or Creative, provided that no
loans or advances to, investments in or sales or other transfers of assets to
Creative or Laserweld have been or will be made by the Company or any Restricted
Subsidiary at any time on or after the Effective Date, and the Company
represents that neither Laserweld nor Creative is operating as of the Effective
Date.
5.3 Additional Covenants.
(a) Other Terms. If at any time any Borrower
or Guarantor shall enter into or be a party to any instrument or agreement with
respect to any Indebtedness which in the aggregate, together with any related
Indebtedness, exceeds $500,000, including all such instruments or agreements in
existence as of the date hereof and all such instruments or agreements entered
into after the date hereof, relating to or amending any terms or conditions
applicable to any of such Indebtedness which includes covenants, terms,
conditions or defaults not substantially provided for in this Agreement or more
favorable to the lender or lenders thereunder than those provided for in this
Agreement, then the Company shall promptly so advise the Agent and the Lenders.
Thereupon, if the Agent shall request, upon notice to the Company, the Agent and
the Lenders shall enter into an amendment to this Agreement or an additional
agreement (as the Agent may request), providing for substantially the same
covenants, terms, conditions and defaults as those provided for in such
instrument or agreement to the extent required and as may be selected by the
Agent. In addition to the foregoing, any covenants or defaults or similar
provisions (which include without limitation any provisions requiring any
mandatory prepayments or defeasance under the Senior Subordinated Debt Documents
or the Mexican Facility Documents) contained in any Senior Subordinated Debt
Document or Mexican Facility Documents not substantially provided for in this
Agreement or more favorable to the holders of Subordinated Debt or Mexican
Facility Obligations issued in connection therewith are hereby incorporated by
reference into this Agreement to the same extent as if set forth fully herein,
and no subsequent amendment, waiver, termination or modification thereof shall
affect any such covenants, terms, conditions or defaults as incorporated herein.
(b) Restricted and Unrestricted Subsidiaries.
Neither the Company nor any Restricted Subsidiary of the Company shall be liable
at any time, directly or indirectly, for any of the Indebtedness or other
liabilities of any such Unrestricted Subsidiary or for any Contingent
Liabilities with respect to any Unrestricted Subsidiary except as permitted by
Section 5.2(e). No Restricted Subsidiary may be designated as an Unrestricted
Subsidiary at any time without the prior written
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approval of the Agent and the Required Lenders. Any Unrestricted Subsidiary may
be designated as a Restricted Subsidiary by the Company at any time provided
that such designation is approved by the Agent. Neither OPI, any Mexican
Subsidiary, the Dutch Holding Company, the French Acquisition Company, Cofimeta
nor any of their Subsidiaries is or will be a guarantor or otherwise directly or
contingently liable for any of the Indebtedness or other obligations pursuant to
the Senior Subordinated Debt Documents, and the Borrowers are and will be at all
times in compliance with all terms and conditions under the Senior Subordinated
Debt Documents.
ARTICLE VI.
DEFAULT
6.1 Events of Default. The occurrence of any one of the
following events or conditions shall be deemed an "Event of Default" hereunder
unless waived pursuant to Section 8.1:
(a) Nonpayment. The Company shall fail to pay
when due, whether at stated maturity, by acceleration or otherwise, any
principal on the Loans or any reimbursement obligation under Section 3.3
(whether by deemed disbursement of a Revolving Credit Borrowing or otherwise),
or, within five days after becoming due, any interest on the Loans or any fees
or any other amount payable hereunder; or
(b) Misrepresentation. Any representation or
warranty made by the Company or any of the Guarantors in Article IV hereof, or
in any Security Document, or any other certificate, report, financial statement
or other document furnished by or on behalf of the Company or any of the
Guarantors in connection with this Agreement, shall prove to have been incorrect
in any material respect when made or deemed made; or
(c) Certain Covenants. The Company shall fail
to perform or observe any term, covenant or agreement contained in Article V
hereof; or
(d) Other Defaults. Any default which remains
uncured beyond any applicable cure period shall exist under any material
purchase or tooling contract that could have a Material Adverse Effect, or the
Company or any Guarantor shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or in any other Loan Document,
and any such failure shall remain unremedied for 15 calendar days after written
notice thereof shall have been given to the Company by the Agent; or
(e) Cross Default. Failure of the Company or
any of its Restricted Subsidiaries to pay when due any Indebtedness aggregating
in excess of $3,000,000 or any Mexican Facility Obligations ("Material
Obligations") or the default by the Company or any of its Restricted
Subsidiaries in the observance or performance (beyond the applicable grace
period with respect thereto, if any) of any term, provision or condition
contained in any agreement under which any such Material Obligations was created
or is governed, or any other event shall occur or condition exist, the effect of
which default or event is to cause, or to permit the holder or holders of such
Material Obligations to cause, such Material Indebtedness to become due prior to
its stated maturity; or any Material Obligations of the Company or any of its
Restricted Subsidiaries shall be declared to be due and payable or required to
be prepaid or repurchased (other than by a regularly scheduled payment) prior to
the stated maturity thereof; or
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(f) Judgments. One or more judgments or orders
for the payment of money in an aggregate amount of $4,000,000 shall be rendered
against the Company or any of its Restricted Subsidiaries, or any other judgment
or order (whether or not for the payment of money) shall be rendered against or
shall affect the Company or any of its Restricted Subsidiaries which causes or
could cause a Material Adverse Effect, and either (i) such judgment or order
shall have remained unsatisfied and the Company or such Restricted Subsidiary
shall not have taken action necessary to stay enforcement thereof by reason of
pending appeal or otherwise, prior to the expiration of the applicable period of
limitations for taking such action or, if such action shall have been taken, a
final order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such judgment or
order; or
(g) ERISA. The occurrence of a Reportable Event
that results in or could result in liability of the Company or any of its ERISA
Affiliates to the PBGC or to any Plan and such Reportable Event is not corrected
within 30 days after the occurrence thereof; or the occurrence of any Reportable
Event which could constitute grounds for termination of any Plan of the Company
or any of its ERISA Affiliates by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan and such Reportable Event is not corrected within 30 days after the
occurrence thereof; or the Company or any of its ERISA Affiliates shall fail to
pay when due any liability to the PBGC or to a Plan; or any Person engages in a
Prohibited Transaction with respect to any Plan which results in or could result
in liability of the Company, any of its ERISA Affiliates, any Plan of the
Company or any of its ERISA Affiliates or any fiduciary of any such Plan; or the
PBGC shall have instituted proceedings to terminate, or to cause a trustee to be
appointed to administer, any Plan of the Company or any of its ERISA Affiliates;
or failure by the Company or any of their ERISA Affiliates to make a required
installment or other payment to any Plan within the meaning of Section 302(f) of
ERISA or Section 412(n) of the Code that results in or could result in liability
of the Company or any of their ERISA Affiliates to the PBGC or any Plan; or the
withdrawal of the Company or any of its ERISA Affiliates from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(9a)(2) of ERISA; or the Company or any of its ERISA Affiliates becomes an
employer with respect to any Multiemployer Plan without the prior written
consent of the Agent, and in each case above, such event or condition, together
with all other events or conditions, if any, could subject the Company and its
Restricted Subsidiaries to any tax, penalties or other liability which in the
aggregate may exceed $4,000,000; or
(h) Insolvency, Etc. The Company or any of its
Restricted Subsidiaries or Mexican Subsidiaries shall be dissolved or liquidated
(or any judgment, order or decree therefor shall be entered), or shall generally
not pay its debts as they become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors, or shall institute, or there shall be instituted against the Company
or any of its Restricted Subsidiaries or Mexican Subsidiaries any proceeding or
case seeking to adjudicate it a bankrupt or insolvent or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief or protection of debtors or seeking the entry of an
order for relief, or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its assets, rights,
revenues or property, and, if such proceeding is instituted against the Company
or such Restricted Subsidiary or Mexican Subsidiary and is being contested by
the Company or such Restricted Subsidiary or Mexican Subsidiary, as the case may
be, in good faith by appropriate proceedings, such proceeding shall remain
undismissed or unstayed for a period of 60 days or an order for relief is
entered; or the Company or such Restricted Subsidiary or Mexican Subsidiary
shall take any action (corporate or other) to authorize or further any of the
actions described above in this subsection; or
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(i) Security Documents. Any event of default
described in any Loan Document shall have occurred and be continuing, or any
material provision of any Loan Document shall at any time for any reason cease
to be valid and binding and enforceable against any obligor thereunder, or the
validity, binding effect or enforceability thereof shall be contested by any
Person, or any obligor, shall deny that it has any or further liability or
obligation thereunder, or any material provision thereof shall be terminated,
invalidated or set aside, or be declared ineffective or inoperative or in any
way cease to give or provide to the Lenders and the Agent the benefits purported
to be created thereby; or
(j) Control. Any Change of Control shall occur;
or
(k) Cofimeta Acquisition; Mexican Facility. (i)
the Cofimeta Acquisition shall be unwound, reversed or otherwise rescinded in
whole or in any material part for any reason, (ii) Company shall agree to any
material amendment to, or waiver any of its material rights under, or otherwise
change any material terms of, any of the Cofimeta Acquisition Documents as in
effect on February 4, 1999, in a manner adverse to Company or any of its
Subsidiaries or to Lenders without the prior written consent of Agent, or (iii)
any commitment to lend or other obligation to advance funds pursuant to the
Mexican Facility or otherwise under the Mexican Facility Documents shall be
terminated for any reason or any Loan Agreement Event of Default or other
default shall occur under the Mexican Facility Documents.
6.2 Remedies. (a) Upon the occurrence and during the
continuance of any Event of Default, the Agent may and, upon being directed to
do so by the Required Lenders, shall by written notice to the Company (i)
terminate the Commitments or (ii) declare the outstanding principal of, and
accrued interest on, the Notes, all unpaid reimbursement obligations in respect
of drawings under Letters of Credit and all other amounts owing under this
Agreement to be immediately due and payable, or (iii) demand immediate delivery
of cash collateral, and the Company agrees to deliver such cash collateral upon
demand, in an amount equal to the maximum amount that may be available to be
drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Commitments shall
terminate forthwith and all such amounts, including such cash collateral, shall
become immediately due and payable, provided that in the case of any event or
condition described in Section 6.1(h) with respect to the Company or any
Guarantor, the Commitments shall automatically terminate forthwith and all such
amounts, including such cash collateral, shall automatically become immediately
due and payable without notice; in all cases without demand, presentment,
protest, diligence, notice of dishonor or other formality, all of which are
hereby expressly waived. Such cash collateral delivered in respect of
outstanding Letters of Credit shall be deposited in a special cash collateral
account to be held by the Agent as collateral security for the payment and
performance of the Company's obligations under this Agreement to the Lenders and
the Agent.
(b) The Agent may and, upon being directed
to do so by the Required Lenders, shall, in addition to the remedies provided in
Section 6.2(a), exercise and enforce any and all other rights and remedies
available to it or the Lenders, whether arising under any Loan Document or under
applicable law, in any manner deemed appropriate by the Agent, including suit in
equity, action at law, or other appropriate proceedings, whether for the
specific performance (to the extent permitted by law) of any covenant or
agreement contained in any Loan Document or in aid of the exercise of any power
granted in any Loan Document.
(c) Upon the occurrence and during the
continuance of any Event of Default, each Lender may at any time and from time
to time, without notice to the Company (any
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requirement for such notice being expressly waived by the Company) set off and
apply against any and all of the obligations of the Company now or hereafter
existing under this Agreement, whether owing to such Lender or any other Lender
or the Agent, any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Company and any
property of the Company from time to time in possession of such Lender,
irrespective of whether or not such Lender shall have made any demand hereunder
and although such obligations may be contingent and unmatured. The Company
hereby grants to the Lenders and the Agent a lien on and security interest in
all such deposits, indebtedness and property as collateral security for the
payment and performance of the obligations of the Company under this Agreement.
The rights of such Lender under this Section 6.2(c) are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which such Lender may have.
(d) Notwithstanding anything in this Agreement
or any Loan Document to the contrary, in the event the Borrowers do not pay the
Revolving Credit Advances in full on the Revolving Credit Termination Date, each
Lender agrees, unconditionally and irrevocably, that it will purchase, either
through an assignment or a participation or such other manner (which may include
a conversion of certain Canadian Advances to Dollars) required by the Agent, an
interest in all of the Revolving Credit Advances then outstanding, including all
U.S. Advances and all Canadian Advances (whether or not such Lender is a
Canadian Lender), such that each Lender's share of each Revolving Credit Advance
is equal to its pro rata share thereof based on the amount its Revolving Credit
Commitment bears to the aggregate Revolving Credit Commitment of all Lenders.
Such assignments and participations will be made pursuant to such procedures and
documents required by the Agent, and all appropriate adjustments among the
Lenders will be made. Each Lender shall be absolutely and unconditionally
obligated under this Section 6.2(d) and such obligation shall not be affected by
any circumstance, including, without limitation, (A) any set-off, counterclaim,
recoupment, defense or other right which such Lender has or may have against the
Agent, First Chicago/NBD Canada or the Company or any if its Subsidiaries or
anyone else for any reason whatsoever; (B) the occurrence or continuance of a
Default or an Event of Default; (C) any adverse change in the condition
(financial or otherwise) of the Company or any of its Subsidiaries; (D) any
breach of this Agreement or any other agreement by any other Lender (provided
that any Defaulting Lender shall not be entitled to receive any payments or
other transfers under this Section 6.2(d) and the Agent will make all
appropriate adjustments hereunder), the Company or any Guarantor; or (E) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing. The Borrowers shall be liable, jointly and severally, for any
withholding taxes, if any, which may be payable under Section 3.6 (but without
giving effect to Section 3.11(b) or Section 3.11(d)) as a result of such
participations or assignments.
6.3 Distribution of Proceeds of Collateral. All proceeds
of any realization on the collateral pursuant to the Security Documents and any
payments received by the Agent or any Lender subsequent to and during the
continuance of any Event of Default, shall be allocated and distributed by the
Agent as follows:
(a) First, to the payment of all costs and
expenses and other amounts owing to the Agent, including without limitation all
attorneys' fees, in connection with the enforcement of the Security Documents
and otherwise administering this Agreement;
(b) Second, to the payment of all fees,
including commitment fees, owing to the Lenders pursuant to this Agreement and
the Notes on a pro rata basis (other than Acceptance Fees and fees which are
payable solely to the Agent or any Lender directly) in accordance with the
respective Advances of the Lenders or any other amounts owing to the Agent, for
application to payment of such
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liabilities;
(c) Third, to the Lenders and beneficiaries of
the Mexican Facility Tranche A Guaranty on a pro rata basis in accordance with
the respective Advances of the Lenders consisting of interest owing to the
Lenders under this Agreement and the Notes, the obligations under the Mexican
Facility Tranche A Guaranty allocable to interest on the Mexican Facility
Tranche A Loans and net obligations and liabilities relating to Hedging
Agreements, for application to payment of such liabilities;
(d) Fourth, to the Lenders and beneficiaries of
the Mexican Facility Tranche A Guaranty on a pro rata basis in accordance with
the respective Advances of the Lenders consisting of principal (including
without limitation any cash collateral for any outstanding Letters of Credit)
and the respective obligations under the Mexican Facility Tranche A Guaranty
allocable to principal on the Mexican Facility Tranche A Loans, for application
to payment of such liabilities;
(e) Fifth, to the payment of any and all other
amounts owing to the Lenders under this Agreement or any other Loan Document on
a pro rata basis in accordance with the respective Advances of the Lenders for
application to payment of such liabilities; and
(f) Sixth, to the Company, its Restricted
Subsidiaries or such other Person as may be legally entitled thereto.
Notwithstanding the foregoing, no payments of principal, interest or fees
delivered to the Agent for the account of any Defaulting Lender shall be
delivered by the Agent to such Defaulting Lender. Instead, such payments shall,
for so long as such Defaulting Lender shall be a Defaulting Lender, be held by
the Agent, and the Agent is hereby authorized and directed by all parties hereto
to hold such funds in escrow and apply such funds as follows:
(i) First, if applicable to any payments
due to the Agent, and
(ii) Second, to Loans required to be made by
such Defaulting Lender on any borrowing date to the extent such Defaulting
Lender fails to make such Loans.
Notwithstanding the foregoing, upon the termination of all Commitments and the
payment and performance of all of the Advances and other obligations owing
hereunder (other than those owing to a Defaulting Lender), any funds then held
in escrow by the Agent pursuant to the preceding sentence shall be distributed
to each Defaulting Lender, pro rata in proportion to amounts that would be due
to each Defaulting Lender but for the fact that it is a Defaulting Lender.
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ARTICLE VII.
THE AGENT AND THE LENDERS
7.1 Appointment and Authorization. Each Lender hereby
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to the Agent by the terms hereof or thereof, together with all such powers as
are reasonably incidental thereto. The provisions of this Article VII are solely
for the benefit of the Agent and the Lenders, and the Borrowers shall not have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for any Borrower.
7.2 Agent and Affiliates. NBD Bank in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Agent. NBD Bank and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, and generally engage in any
kind of banking, trust, financial advisory or other business with the Company or
any of its Subsidiaries as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Lenders.
7.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Lender, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or shall otherwise exist against the Agent. As to any
matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement actions under the Notes and the Security
Documents), the Agent shall not be required to exercise any discretion or take
any action, but the Agent shall take such action or omit to take any action
pursuant to the reasonable written instructions of the Required Lenders and may
request instructions from the Required Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, pursuant to the written
instructions of the Required Lenders (or all of the Lenders, as the case may be,
in accordance with the requirements of this Agreement), which instructions and
any action or omission pursuant thereto shall be binding upon all of the
Lenders; provided, however, that the Agent shall not be required to act or omit
to act if, in the judgment of the Agent, such action or omission may expose the
Agent to personal liability or is contrary to the Loan Documents or applicable
law.
7.4 Reliance by Agent. The Agent shall be entitled to rely
upon any certificate, notice, document or other communication (including any
cable, telegram, telex, facsimile transmission or oral communication) believed
by it to be genuine and correct and to have been sent or given by or on behalf
of a proper Person. The Agent may treat the payee of any Note as the holder
thereof unless and until the Agent receives written notice of the assignment
thereof pursuant to the terms of this Agreement signed by such payee and the
Agent receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The Agent
may employ agents (including without limitation collateral agents and including
without limitation First Chicago/NBD Canada with respect to administering the
Canadian Advances, acting as collateral agent in Canada and enforcing any of the
Agent's rights and remedies under the Loan Documents in Canada) and may consult
with legal counsel (who may be counsel for the Borrowers), independent public
accountants and other experts selected by it and shall not be liable to the
Lenders, except as to money or property received by it or its authorized agents,
for the negligence or misconduct of any such agent selected by it with
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reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts. In
performing any of the functions of the Agent, First Chicago/NBD Canada or any
other Affiliate of the Agent shall be entitled to all of the same powers,
immunities, exculpations, indemnifications and other rights of the Agent
described in this Article VII and otherwise in the Loan Documents. It is
acknowledged and agreed that First Chicago/NBD Canada will be acting as
collateral agent for the Lenders with respect to all collateral in Canada, and
all liens and security interests in Canada will be in favor of First Chicago/NBD
Canada for the benefit of itself and each of the Lenders, and as administrative
agent for payments and fundings of Canadian Advances.
7.5 Default. The Agent shall not be deemed to have knowledge
of the occurrence of any Default or Event of Default, unless the Agent has
received written notice from a Lender or the Borrowers specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice, the Agent shall give written
notice thereto to the Lenders.
7.6 Liability of Agent. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable to the Lenders for any
action taken or not taken by it or them in connection herewith with the consent
or at the request of the Required Lenders or in the absence of its or their own
gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any recital, statement, warranty
or representation contained in any Loan Document, or in any certificate, report,
financial statement or other document furnished in connection with this
Agreement, (ii) the performance or observance of any of the covenants or
agreements of the Borrowers or any Guarantor, (iii) the satisfaction of any
condition specified in Article II hereof, or (iv) the validity, effectiveness,
legal enforceability, value or genuineness of any Loan Document or any
collateral subject thereto or any other instrument or document furnished in
connection herewith.
7.7 Nonreliance on Agent and Other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Company and its
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decision in taking or not taking action
under this Agreement. The Agent shall not be required to keep itself informed as
to the performance or observance by the Company or any of its Subsidiaries of
the Loan Documents or any other documents referred to or provided for herein or
to inspect the properties or books of the Company or any of its Subsidiaries
and, except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any information
concerning the affairs, financial condition or business of the Company or any of
its Subsidiaries which may come into the possession of the Agent or any of its
affiliates.
7.8 Indemnification. The Lenders agree to indemnify the Agent
(to the extent not reimbursed by the Borrowers, but without limiting any
obligation of the Borrowers to make such reimbursement), ratably according to
the respective principal amounts of the Advances then outstanding made by each
of them (or if no Advances are at the time outstanding, ratably according to the
respective amounts of their Commitments), from and against any and all claims,
damages, losses, liabilities, costs or expenses of any kind or nature whatsoever
(including, without limitation, fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
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arising out of this Agreement or the transactions contemplated hereby or any
action taken or omitted by the Agent under this Agreement, provided, however,
that no Lender shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including without limitation fees and expenses of
counsel) 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, to the extent that
the Agent is not reimbursed for such expenses by the Borrowers, but without
limiting the obligation of the Borrowers to make such reimbursement. Each Lender
agrees to reimburse the Agent promptly upon demand for its ratable share of any
amounts owing to the Agent by the Lenders pursuant to this Section. If the
indemnity furnished to the Agent under this Section shall, in the judgment of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity from the Lenders and cease, or not commence, to take any action until
such additional indemnity is furnished.
7.9 Successor Agent. The Agent may resign as such at any time
upon ten days' prior written notice to the Company and the Lenders. In the event
of any such resignation, the Required Lenders shall, by an instrument in writing
delivered to the Company and the Agent, appoint a successor (which successor
shall be approved by the Company provided no Default or Event of Default then
exists), which shall be a commercial bank organized under the laws of the United
States or any State thereof and having a combined capital and surplus of at
least $500,000,000. If a successor is not so appointed or does not accept such
appointment before the Agent's resignation becomes effective, the retiring Agent
may appoint a temporary successor to act until such appointment by the Required
Lenders is made and accepted or if no such temporary successor is appointed as
provided above by the retiring Agent, the Required Lenders shall thereafter
perform all the duties of the Agent hereunder until such appointment by the
Required Lenders is made and accepted. Any successor to the Agent shall execute
and deliver to the Borrowers and the Lenders an instrument accepting such
appointment and thereupon such successor Agent, without further act, deed,
conveyance or transfer shall become vested with all of the properties, rights,
interests, powers, authorities and obligations of its predecessor hereunder with
like effect as if originally named as Agent hereunder. Upon request of such
successor Agent, the Borrowers and the retiring Agent shall execute and deliver
such instruments of conveyance, assignment and further assurance and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in such successor Agent all such properties, rights, interests,
powers, authorities and obligations. The provisions of this Article VII shall
thereafter remain effective for such retiring Agent with respect to any actions
taken or omitted to be taken by such Agent while acting as the Agent hereunder.
7.10 Sharing of Payments. The Lenders agree among themselves
that, in the event that any Lender shall obtain payment in respect of any
Advance or any other obligation owing to the Lenders under this Agreement
through the exercise of a right of set-off, banker's lien, counterclaim or
otherwise in excess of its ratable share of payments received by all of the
Lenders on account of the Advances and other obligations (or if no Advances are
outstanding, ratably according to the respective amounts of the Commitments),
such Lender shall promptly purchase from the other Lenders participations in
such Advances and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all of the
Lenders share such payment in accordance with such ratable shares. The Lenders
further agree among themselves that if payment to a Lender obtained by such
Lender through the exercise of a right of set-off, banker's lien, counterclaim
or otherwise as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have
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shared the benefit of such payment shall, by repurchase of participations
theretofore sold, return its share of that benefit to each Lender whose payment
shall have been rescinded or otherwise restored. The Borrowers agree that any
Lender so purchasing such a participation may, to the fullest extent permitted
by law, exercise all rights of payment, including set-off, banker's lien or
counterclaim, with respect to such participation as fully as if such Lender were
a holder of such Advance or other obligation in the amount of such
participation. The Lenders further agree among themselves that, in the event
that amounts received by the Lenders and the Agent hereunder are insufficient to
pay all such obligations or insufficient to pay all such obligations when due,
the fees and other amounts owing to the Agent in such capacity shall be paid
therefrom before payment of obligations owing to the Lenders under this
Agreement. Except as otherwise expressly provided in this Agreement, if any
Lender or the Agent shall fail to remit to the Agent or any other Lender an
amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the Agent or such other
Lender at a rate per annum equal to the rate at which borrowings are available
to the payee in its overnight federal funds market. It is further understood and
agreed among the Lenders and the Agent that if the Agent shall engage in any
other transactions with the Borrowers and shall have the benefit of any
collateral or security therefor which does not expressly secure the obligations
arising under this Agreement except by virtue of a so-called dragnet clause or
comparable provision, the Agent shall be entitled to apply any proceeds of such
collateral or security first in respect of the obligations arising in connection
with such other transaction before application to the obligations arising under
this Agreement.
ARTICLE VIII.
MISCELLANEOUS
8.1 Amendments, Etc. (a) No amendment, modification,
termination or waiver of any provision of this Agreement nor any consent to any
departure therefrom shall be effective unless the same shall be in writing and
signed by the Required Lenders and, to the extent any rights or duties of the
Agent may be affected thereby, the Agent, provided, however, that no such
amendment, modification, termination, waiver or consent shall, without the
consent of the Agent and all of the Lenders, (i) authorize or permit the
extension of time for, or any reduction of the amount of, any payment of the
principal of, or interest on, the Notes or any Letter of Credit reimbursement
obligation, or any fees or other amount payable hereunder, (ii) amend or extend
the respective Commitments of any Lender or modify the provisions of this
Section regarding the taking of any action under this Section or the provisions
of Section 6.3 or Section 7.10 or the definition of Required Lenders or any
provision of this Agreement requiring the consent of all of the Lenders, (iii)
provide for the discharge of any material Guarantor under the Guaranties or the
release of any substantial amount of the collateral subject to any Security
Document, other than the release of Liens on Collateral that is permitted to be
sold by this Agreement, and the Agent is hereby authorized to release any such
Liens, or (iv) modify any other provision of this Agreement which by its terms
requires the consent of all of the Lenders.
(b) Any such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(c) Notwithstanding anything herein to the
contrary, other than in connection with any amendment, modification,
termination, waiver or consent hereunder which requires the consent of all of
the Lenders, no Defaulting Lender shall be entitled to vote (whether to consent
or to withhold its consent) with respect to any amendment, modification,
termination or waiver of any
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provision of this Agreement or any departure therefrom or any direction from the
Lenders to the Agent, and, for purposes of determining the Required Lenders at
any time, the Commitments and the Advances of each Defaulting Lenders shall be
disregarded in such a vote.
8.2 Notices. (a) Except as otherwise provided in Section
8.2(c) hereof, all notices and other communications hereunder shall be in
writing and shall be delivered or sent to the Borrowers at 1250 Stephenson
Highway, Troy, Michigan 48083, Attention: President, Facsimile No. (248)
577-3455, Telephone No. (248) 577-1400, and to the Agent and the Lenders at the
respective addresses for notices set forth on the signatures pages hereof, or to
such other address as may be designated by the Borrowers, the Agent or any
Lender by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the time of actual delivery
thereof to such address, or, unless sooner delivered, (i) if sent by certified
or registered mail, postage prepaid, to such address, on the third day after the
date of mailing, or (ii) if sent by facsimile transmission, upon confirmation of
receipt by telephone at the number specified for confirmation, provided,
however, that notices to the Agent shall not be effective until received. Each
Borrowing Subsidiary agrees that the Company may give any notices or other
requests on its behalf under this Agreement, including without limitation
requests for Advances, and the Borrowing Subsidiary will be bound thereby.
(b) Notices by the Borrowers to the Agent
with respect to terminations or reductions of the Commitments pursuant to
Section 2.2, requests for Borrowings pursuant to Section 2.4, requests for
continuations or conversions of Borrowings pursuant to Section 2.7 and notices
of prepayment pursuant to Section 3.1 shall be irrevocable and binding on the
Borrowers.
(c) Any notice to be given by the Borrowers to
the Agent pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by the
Agent or any Lender hereunder, may be given by telephone, and all such notices
must be immediately confirmed in writing in the manner provided in Section
8.2(a). Any such notice given by telephone shall be deemed effective upon
receipt thereof by the party to whom such notice is to be given. The Borrowers
shall indemnify and hold harmless the Lenders and the Agent from any and all
losses, damages, liabilities and claims arising from their good faith reliance
on any such telephone notice.
8.3 No Waiver By Conduct; Remedies Cumulative. No course
of dealing on the part of the Agent or any Lender, nor any delay or failure on
the part of the Agent or any Lender in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent's or such Lender's rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent or any Lender under any Loan
Document is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable law.
Every right and remedy granted by any Loan Document or by applicable law to the
Agent or any Lender may be exercised from time to time and as often as may be
deemed expedient by the Agent or any Lender and, unless contrary to the express
provisions of any Loan Document, irrespective of the occurrence or continuance
of any Default or Event of Default.
8.4 Reliance on and Survival of Various Provisions. All
terms, covenants, agreements, representations and warranties of any Borrower or
Guarantor made herein or in any Security Document or in any certificate, report,
financial statement or other document furnished by or on behalf of any Borrower
or Guarantor in connection with this Agreement shall be deemed to be material
and to have been relied upon by the Lenders, notwithstanding any investigation
heretofore or hereafter made by
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any Lender or on such Lender's behalf, and those covenants and agreements of the
Borrowers set forth in Sections 3.8, 3.10 and 8.5 hereof shall survive the
repayment in full of the Advances and the termination of the Commitments.
8.5 Expenses; Indemnification. (a) The Borrowers jointly
and severally agree to pay, or reimburse the Agent for the payment of, on
demand, (i) the reasonable fees and expenses of counsel to the Agent, including
without limitation the fees and expenses of Dickinson Wright PLLC, in connection
with the preparation, execution, delivery and administration of the Loan
Documents and in connection with advising the Agent as to its rights and
responsibilities with respect thereto, and in connection with any amendments,
waivers or consents in connection therewith, (ii) all stamp and other taxes and
fees payable or determined to be payable in connection with the execution,
delivery, filing or recording of the Loan Documents (or the verification of
filing, recording, perfection or priority thereof) or the consummation of the
transactions contemplated hereby, and any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes or fees, (iii)
all reasonable costs and expenses of the Agent and the Lenders (including
reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise)) in connection with any Default or
Event of Default or the enforcement of, or the exercise or preservation of any
rights under, any Loan Document or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in
connection with any Event of Default and (iv) all reasonable costs and expenses
of the Agent (including reasonable fees and expenses of counsel) in connection
with any action or proceeding relating to a court order, injunction or other
process or decree restraining or seeking to restrain the Agent from paying any
amount under, or otherwise relating in any way to, any Letter of Credit and any
and all costs and expenses which any of them may incur relative to any payment
under any Letter of Credit.
(b) The Borrowers jointly and severally
hereby indemnify and agree to hold harmless the Lenders and the Agent, and their
respective officers, directors, employees and agents, from and against any and
all claims, damages, losses, liabilities, costs or expenses of any kind or
nature whatsoever which the Lenders or the Agent or any such Person may incur or
which may be claimed against any of them by reason of or in connection with any
Letter of Credit, and neither any Lender nor the Agent or any of their
respective officers, directors, employees or agents shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary in connection therewith; (ii) the
validity, sufficiency or genuineness of documents or of any endorsement thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (iii) payment by the Agent to the
beneficiary under any Letter of Credit against presentation of documents which
do not comply with the terms of any Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;
(iv) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with any
Letter of Credit; or (v) any other event or circumstance whatsoever arising in
connection with any Letter of Credit; provided, however, that the Company shall
not be required to indemnify the Lenders and the Agent and such other Persons,
and the Lenders shall be liable to the Company to the extent, but only to the
extent, of any direct, as opposed to consequential or incidental, damages
suffered by the Company which were caused by (A) the Agent's wrongful dishonor
of any Letter of Credit after the presentation to it by the beneficiary
thereunder of a draft or other demand for payment and other documentation
strictly complying with the terms and conditions of such Letter of Credit, or
(B) the payment by the Agent to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of the
Letter of Credit to the extent, but only to the extent, that such payment
constitutes gross negligence of willful misconduct of the Agent. It is
understood that in making any payment under a Letter of Credit the Agent will
rely on documents presented to it under such Letter of Credit as to any and all
matters set forth therein without further
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investigation and regardless of any notice or information to the contrary, and
such reliance and payment against documents presented under a Letter of Credit
substantially complying with the terms thereof shall not be deemed gross
negligence or willful misconduct of the Agent in connection with such payment.
It is further acknowledged and agreed that the Company may have rights against
the beneficiary or others in connection with any Letter of Credit with respect
to which the Lenders are alleged to be liable and it shall be a precondition of
the assertion of any liability of the Lenders under this Section that the
Company shall first have exhausted all remedies in respect of the alleged loss
against such beneficiary and any other parties obligated or liable in connection
with such Letter of Credit and any related transactions.
(c) Each Borrower hereby jointly and severally
indemnifies and agrees to hold harmless the Lenders and the Agent, and their
respective officers, directors, employees and agents, from and against any and
all claims, damages, losses, liabilities, costs or expenses of any kind or
nature whatsoever (including reasonable attorneys fees and disbursements
incurred in connection with any investigative, administrative or judicial
proceeding whether or not such Person shall be designated as a party thereto)
which the Lenders or the Agent or any such Person may incur or which may be
claimed against any of them by reason of or in connection with entering into
this Agreement or the transactions contemplated hereby, including without
limitation those arising in connection with or relating to any acquisition and
the transactions contemplated thereby and under Environmental Laws; provided,
however, that the Borrowers shall not be required to indemnify any such Lender
and the Agent or such other Person, to the extent, but only to the extent, that
such claim, damage, loss, liability, cost or expense is attributable to the
gross negligence or willful misconduct of such Lender or the Agent, as the case
may be.
(d) In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
each Borrower hereby jointly and severally indemnifies, exonerates and holds the
Agent, each Lender and each of their respective affiliates, officers, directors,
employees and agents (collectively, the "Indemnified Parties") free and harmless
from and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(i) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of any
Advance;
(ii) the entering into and performance of
this Agreement and any other agreement or instrument executed in connection
herewith by any of the Indemnified Parties (including any action brought by or
on behalf of any Borrower as the result of any determination by the Required
Lenders not to fund any Advance unless such determination is determined by a
final non appealable order by of competent jurisdiction to be wrongful);
(iii) any investigation, litigation or
proceeding related to any acquisition or proposed acquisition by the Company or
any of its Subsidiaries of any portion of the stock or assets of any Person or
any merger, investment, issuance of Capital Stock or any transaction related
thereto by the Company or any of its Subsidiaries, whether or not the Agent or
such Lender is party thereto;
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(iv) any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or other matter relating
to the protection of the environment or the release by the Company or any of its
Subsidiaries of any Hazardous Material; or
(v) the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission, discharging or releasing from,
any real property owned or operated by the Company or any of its Subsidiaries of
any Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Company or such
Subsidiary, except for any such Indemnified Liabilities arising for the account
of a particular Indemnified Party by reason of the activities of the Indemnified
Party on the property of the Company or such Subsidiary conducted subsequent to
a foreclosure on such property by the Lenders or by reason of the relevant
Indemnified Party's gross negligence or willful misconduct or breach of this
Agreement, and if and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Company shall be
obligated to indemnify the Indemnified Parties for all Indemnified Liabilities
subject to and pursuant to the foregoing provisions, regardless of whether the
Company or any of its Subsidiaries had knowledge of the facts and circumstances
giving rise to such Indemnified Liability.
8.6 Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that the Borrowers may not, without the prior
consent of all of the Lenders, assign their rights or obligations hereunder or
under the Notes or any Security Document and the Lenders shall not be obligated
to make any Advance hereunder to any entity other than the Borrowers.
(b) Any Lender may sell to any financial
institution or institutions, and such financial institution or institutions may
further sell, a participation interest (undivided or divided) in, the Advances
and such Lender's rights and benefits under the Loan Documents, and to the
extent of that participation interest such participant or participants shall
have the same rights and benefits against the Borrowers under Section 3.8, 3.10
and 6.2(c) as it or they would have had if such participant or participants were
the Lender making the Advances to the Borrowers hereunder, provided, however,
that (i) such Lender's obligations under this Agreement shall remain unmodified
and fully effective and enforceable against such Lender, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of its Notes for all
purposes of this Agreement, (iv) the Borrowers, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement, and (v) such Lender
shall not grant to its participant any rights to consent or withhold consent to
any action taken by such Lender or the Agent under this Agreement other than
action requiring the consent of all of the Lenders hereunder.
(c) The Agent from time to time in its sole
discretion may appoint agents for the purpose of servicing and administering
this Agreement and the transactions contemplated hereby and enforcing or
exercising any rights or remedies of the Agent provided under any Loan Documents
or otherwise. In furtherance of such agency, the Agent may from time to time
direct that the Borrowers provide notices, reports and other documents
contemplated by this Agreement (or duplicates thereof) to such agent. The
Borrowers hereby consent to the appointment of such agent and agrees to provide
all such notices, reports and other documents and to otherwise deal with such
agent acting on behalf of the Agent in the same manner as would be required if
dealing with the Agent itself.
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(d) Each Lender may, with the prior consent of
the Company (which shall not be unreasonably withheld and shall not be required
if an Event of Default has occurred and is continuing or if such assignment is
to another Lender or an Affiliates of a Lender) and the Agent (which shall not
be unreasonably withheld), assign to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Lender's rights and obligations
under this Agreement, the amount of the Commitments of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than $5,000,000, and in integral multiples of $1,000,000 thereafter, or
such lesser amount as the Company and the Agent may consent, (iii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance in the
form of Exhibit M hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment and a processing and recordation fee of
$5,000, and (iv) any Lender may without the consent of the Company or the Agent,
and without paying any fee, assign to any Affiliate of such Lender that is a
bank or financial institution all of its rights and obligations under this
Agreement. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(e) By executing and delivering an Assignment
and Acceptance, the Lender assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Company and its Subsidiaries or the
performance or observance by the Borrowers and the Guarantors of any of their
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance 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; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.
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(f) The Agent shall maintain at its address
designated on the signature pages hereof a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and the Commitments of, and principal
amount of the Advances owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrowers, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(g) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, together with any
Note or Notes subject to such assignment, the Agent shall, if such Assignment
and Acceptance has been completed, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give
prompt notice thereof to the Company. Within five Business Days after its
receipt of such notice, the Borrowers, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered Note or Notes a new Note or
Notes to the order of such assignee in an amount equal to the Commitments
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment hereunder, a new Note to the order of the
assigning Lender in an amount equal to the Commitments retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit M hereto.
(h) The Borrowers shall not be liable for any
costs or expenses of any Lender in effectuating any participation or assignment
under this Section 8.6.
(i) The Lenders may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 8.6, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Company and its Subsidiaries.
(j) Notwithstanding any other provision set
forth in this Agreement, any Lender may at any time create a security interest
in, or assign, all or any portion of its rights under this Agreement (including,
without limitation, the Advances owing to it and the Note or Notes held by it)
in favor of any Federal Reserve Lender in accordance with Regulation A of the
Board of Governors of the Federal Reserve System; provided that such creation of
a security interest or assignment shall not release such Lender from its
obligations under this Agreement.
8.7 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
8.8 Governing Law. This Agreement is a contract made
under, and shall be governed by and construed in accordance with, the law of the
State of Michigan applicable to contracts made and to be performed entirely
within such State and without giving effect to choice of law principles of such
State. The Borrowers and the Lenders further agrees that any legal or equitable
action or proceeding with respect to any Loan Document or the transactions
contemplated hereby shall be brought in any court of the State of Michigan, or
in any court of the United States of America sitting in Michigan, and each of
the Borrowers and the Lenders hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its Person and
property, and, in the case of each Borrower
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irrevocably appoints the Company as its agent for service of process and
irrevocably consents to the service of process in connection with any such
action or proceeding by personal delivery to such agent or to the Company, as
the case may be, or by the mailing thereof by registered or certified mail,
postage prepaid to the Company at its address for notices pursuant to Section
8.2. The Borrowers shall at all times maintain such an agent in Michigan for
such purpose and shall notify the Lenders and the Agent of such agent's address
in Michigan within ten days of any change of address. Nothing in this paragraph
shall affect the right of the Lenders and the Agent to serve process in any
other manner permitted by law or limit the right of the Lenders or the Agent to
bring any such action or proceeding against the Borrowers or any property in the
courts of any other jurisdiction. The Borrowers and the Lenders hereby
irrevocably waives any objection to the laying of venue of any such action or
proceeding in the above described courts.
8.9 Table of Contents and Headings. The table of contents and
the headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions hereof.
8.10 Construction of Certain Provisions. If any provision of
this Agreement refers to any action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person, whether or not
expressly specified in such provision.
8.11 Integration and Severability. The Loan Documents embody
the entire agreement and understanding between the Borrowers, the Agent and the
Lenders, and supersede all prior agreements and understandings, relating to the
subject matter hereof, other than any commitment letter and fee letter among the
Company, the Arranger and the Agent with respect to matters among the Company,
the Arranger and the Agent. In case any one or more of the obligations of the
Borrowers under the Loan Document shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Borrowers shall not in any way be affected or impaired
thereby, and such invalidity, illegality or unenforceability in one jurisdiction
shall not affect the validity, legality or enforceability of the obligations of
the Borrowers under any Loan Document in any other jurisdiction.
8.12 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or such condition exists.
8.13 Interest Rate Limitation. Notwithstanding any provisions
of any Loan Document, in no event shall the amount of interest paid or agreed to
be paid by the Borrowers exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of any Loan Document at the time
performance of such provision shall be due, shall involve exceeding the interest
rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Lender
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Advances outstanding hereunder (whether or not then due and
payable)
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and not to the payment of interest, or shall be refunded to the
relevant Borrower if such principal and all other obligations of the Borrowers
to the Lenders have been paid in full.
8.14 Judgment and Payment. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder by any Borrower in one currency into another currency, such Borrower
agrees, to the fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures in the relevant jurisdiction the relevant Lender could purchase the
first currency with such other currency for the first currency on the Business
Day immediately preceding the day on which the final judgment is given.
(b) The obligations of any Borrower in respect
of any sum due to any party hereto or any holder of the obligations owing
hereunder (the "Applicable Creditor") shall, notwithstanding any payment
obligation or judgment in a currency (the "Payment Currency") other than
applicable currency, be discharged only to the extent that, on the Business Day
following receipt by the Applicable Creditor of any sum adjudged to be so due in
the Payment Currency, the Applicable Creditor may in accordance with normal
banking procedures in the relevant jurisdiction purchase applicable currency
with the Payment Currency; if the amount of applicable currency so purchased is
less than the sum originally due to the Applicable Creditor in applicable
currency, each Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Applicable Creditor against such loss. The
obligations of the Borrowers contained in this Section 8.14 shall survive the
termination of this Agreement and the payment of all other amounts owing
hereunder.
8.15 Acknowledgments. The Company hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) none of the Agent or any Lender has any fiduciary
relationship with or duty to the Company arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Agent and the Lenders, on the one hand, and the Company, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor;
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Company and the Lenders; and
(d) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
8.16 WAIVER OF JURY TRIAL. THE LENDERS AND THE AGENT AND THE
BORROWERS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER ANY LENDER, THE
AGENT, NOR THE BORROWERS SHALL SEEK TO CONSOLIDATE, BY
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COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY ANY PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY SUCH
PARTY.
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<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written, which shall be the Effective Date of this Agreement.
OXFORD AUTOMOTIVE, INC.
By:
----------------------------------
Its:
-----------------------------
BMG NORTH AMERICA LIMITED
By:
----------------------------------
Its:
-----------------------------
OXFORD SUSPENSION LTD.
By:
----------------------------------
Its:
------------------------------
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Address for Notices: NBD BANK, as a Lender and as Agent
NBD Bank
611 Woodward Avenue By:
Detroit, Michigan 48226 ------------------------------
Its:
Attention: Rick Ellis --------------------------
Facsimile No.: (313) 226-0855
Facsimile
Confirmation No.: (313) 225-3743
Revolving Credit Commitment: $18,731,428.50
Tooling Revolving Credit Commitment: $5,960,000.00
Term Loan Commitment: $5,108,571.49
Percentage of
Total Commitments: 100%
Applicable Lending Office:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Address for Notices: FIRST CHICAGO NBD BANK, CANADA,
as the Affiliate designated by
NBD Bank to make Canadian
Advances on its behalf and as
Agent for the purposes
specified in this Agreement
161 Bay Street, Suite 4240
Toronto, Ontario M5J 2S1 By:
Attention: Michael Bauer ----------------------------
Its:
------------------------
Facsimile No.: (416) 363-7574
Facsimile
Confirmation No.: (416) 865-0466
88
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EXHIBIT 10.12
EXECUTION COPY
================================================================================
ASSET USE AGREEMENT
dated as of March 31, 1999
between
AUTOMOTIVE BUSINESS
TRUST 1999-A
as the Obligee
and
OXFORD AUTOMOTRIZ
DE MEXICO S.A. DE C.V.
as the Obligor
---------------------------------------
================================================================================
THIS IS COUNTERPART NO. _____ OF SIX (6) SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS DOCUMENT CONSTITUTES CHATTEL
PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT
MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN
COUNTERPART NO. 1.
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SECTION 1. Definitions; Construction.......................................................................1
(a) Definitions.....................................................................................1
SECTION 2. Agreement for Purchases and Construction Advances...............................................1
(a) Purchases.......................................................................................1
(b) Construction Advances...........................................................................2
(c) Funding Dates...................................................................................2
(d) Agreement.......................................................................................2
(e) Capitalized Interest and Yield during Construction Period.......................................3
SECTION 3. Conditions......................................................................................3
SECTION 3.1 Conditions Precedent to Acquisition Dates..............................................3
(a) Operative Documents....................................................................3
(b) Corporate Documents, Incumbency Certificate, etc.......................................4
(c) Acquisition Date Notice................................................................4
(d) Asset Use Supplement...................................................................4
(e) Intentionally omitted..................................................................4
(f) Liens..................................................................................4
(g) Plans and Specifications...............................................................5
(h) Authorized Officer's Certificate.......................................................5
(i) Recordation of Instruments.............................................................5
(j) Opinions...............................................................................5
(k) Intentionally omitted..................................................................5
(l) Appraisal..............................................................................5
(m) Certified Copy of Prime Construction Contract..........................................6
(n) Architect's Certificate................................................................6
(o) Insurance Certificates.................................................................6
(p) No Material Adverse Change.............................................................6
(q) Absence of Liens, etc..................................................................6
(r) Material Consents, etc.................................................................6
(s) Maximum Cost...........................................................................7
(t) Available Commitment...................................................................7
(u) Payment of Fees........................................................................7
(v) No Default.............................................................................7
(w) Other Documents........................................................................7
SECTION 3.2 Conditions Precedent to Construction Advances..........................................7
(a) Construction Advance Notice............................................................7
(b) Construction Documents Assignment......................................................7
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(c) Absence of Liens, etc..................................................................8
(d) Material Consents, etc.................................................................8
(e) Maximum Cost...........................................................................8
(f) Payment of Fees........................................................................8
(g) No Default.............................................................................8
(h) Other Documents........................................................................8
SECTION 3.3 Conditions Precedent to Completion Date................................................8
SECTION 4. Delivery, Acceptance and Use of Assets; Characterization........................................9
(a) Delivery, Acceptance and Use....................................................................9
(b) Characterization................................................................................9
SECTION 5. Term............................................................................................9
SECTION 6. Return of Assets................................................................................9
(a) Location of Redelivery..........................................................................9
(b) Return Conditions..............................................................................10
(c) Delivery of Maintenance Records, etc.; Inspection..............................................11
(d) Inspection by Independent Architect or Surveyor................................................11
(e) Revocation of Return Option....................................................................11
(f) Rights in Equity...............................................................................11
SECTION 7. Basic Hire and Other Payments..................................................................12
(a) Basic Hire.....................................................................................12
(b) Supplemental Hire..............................................................................12
(c) Method of Payment..............................................................................12
(d) Calculation of Basic Hire......................................................................13
(e) Choice of Basic Assumptions....................................................................13
SECTION 8. Net Agreement..................................................................................13
SECTION 9. Certain Covenants of Obligor...................................................................14
(a) Financial Information and Reports; Further Assurances..........................................14
SECTION 10. Use of Assets; Compliance with Laws............................................................15
(a) Use of Assets..................................................................................15
(b) Compliance with Laws...........................................................................15
(c) Exclusive Possession; Manning, etc., of Assets.................................................16
(d) Maintenance of Asset Documentation.............................................................16
(e) Quiet Enjoyment................................................................................17
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SECTION 11. Maintenance and Repair of Assets...............................................................17
SECTION 12. Replacements; Alterations; Modifications.......................................................18
SECTION 13. Marking of Assets; Inspection..................................................................19
(a) Notice of Security Interest....................................................................19
(b) Inspection.....................................................................................19
SECTION 14. Assignment and Subleasing......................................................................20
(a) By the Obligor.................................................................................20
(b) By the Obligee.................................................................................20
SECTION 15. Liens..........................................................................................20
SECTION 16. Loss, Damage or Destruction....................................................................21
(a) Risk of Loss, Damage or Destruction............................................................21
(b) Occurrence of Event of Loss....................................................................21
(c) Payment of Casualty Loss Value.................................................................21
(d) Partial Event of Loss..........................................................................22
SECTION 17. Insurance......................................................................................23
(a) Coverage.......................................................................................23
(b) Adjustment of Losses...........................................................................23
(c) Application of Insurance Proceeds..............................................................23
(d) Policy Requirements............................................................................23
(e) Delivery of Insurance Certificates.............................................................24
SECTION 18. General Tax Indemnity..........................................................................24
SECTION 19. Indemnification................................................................................28
SECTION 20. No Warranties..................................................................................29
SECTION 21. Obligor's Representations and Warranties.......................................................30
SECTION 22. Events of Default..............................................................................32
(a) Non-Payment....................................................................................33
(b) Specific Defaults..............................................................................33
(c) Other Defaults.................................................................................33
(d) Cross-Default..................................................................................33
(e) Representation or Warranty.....................................................................34
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(f) Insolvency.....................................................................................34
(g) Voluntary Proceedings..........................................................................34
(h) Involuntary Proceedings........................................................................34
(i) Failure of Enforceability......................................................................35
(j) Change of Control..............................................................................35
SECTION 23. Remedies Upon Default..........................................................................35
SECTION 24. Obligee's Right to Perform for the Obligor.....................................................37
SECTION 25. Covenant of the Obligee With Respect to Obligee Liens..........................................38
SECTION 26. Further Assurances.............................................................................38
SECTION 27. Notices........................................................................................38
SECTION 28. Obligor's Purchase Options and Obligations, Return Option, Extension
Option and Reversion Right.....................................................................38
(a) Obligor's Purchase Options.....................................................................38
(b) Return Option..................................................................................40
(c) Extension of Agreement Term....................................................................43
(d) Reversion Right................................................................................43
SECTION 29. Payment of Transaction Expenses and Other Costs and Expenses...................................44
(a) Transaction Expenses...........................................................................44
(b) Other Costs and Expenses.......................................................................44
SECTION 30. Owner for Income Tax Purposes..................................................................44
SECTION 31. LIBOR Provisions...............................................................................44
(a) Funding Loss...................................................................................44
(b) Basis for Determining Variable Hire Inadequate or Unfair.......................................44
(c) Illegality.....................................................................................45
(d) Increased Cost and Reduced Return..............................................................45
SECTION 32. Governing Law and Jurisdiction.................................................................47
SECTION 33. Waiver of Jury Trial...........................................................................49
SECTION 34. Currency of Account and Payment................................................................49
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SECTION 35. Judgment Currency.....................................................................49
SECTION 36. Waivers, Amendments, etc..............................................................50
SECTION 37. Translation of Agreement into Spanish.................................................51
SECTION 38. Miscellaneous.........................................................................52
</TABLE>
SCHEDULES
Schedule I Notice Information
Schedule II Disclosure Documents
Schedule III Commitments
EXHIBITS
Exhibit A Form of Asset Use Supplement
Exhibit B-1 Form of Acquisition Date Notice
Exhibit B-2 Form of Construction Advance Notice
Exhibit C Form of Purchase Order
Exhibit D Form of Pledge Agreement
Exhibit D-1 Form of Mortgage
Exhibit E Form of Completion Certificate
Exhibit F Form of Continuation Notice
-v-
<PAGE> 7
ASSET USE AGREEMENT
ASSET USE AGREEMENT dated as of March 31, 1999, (herein, as amended and
supplemented from time to time, called this "Agreement") between AUTOMOTIVE
BUSINESS TRUST 1999-A, a Delaware business trust (herein, together with its
successors and assigns, called the "Obligee" or "Owner"), and OXFORD AUTOMOTRIZ
DE MEXICO S.A. DE C.V., a corporation organized and existing under the laws of
Mexico (herein called the "Obligor").
W I T N E S S E T H:
WHEREAS, the Obligor desires to obtain the use of the Assets of the
Obligee and the Obligee desires to provide the Obligor with such use in each
case on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the prompt payment of all amounts
of Basic Hire and all other amounts owing hereunder by the Obligor and the
performance and the observance by the Obligor of all the agreements, covenants
and provisions contained herein for the benefit of the Owner, the Depositor, and
the Participants and in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Owner agrees to grant to the
Obligor the use of, and the Obligor agrees to use the Assets on the terms and
conditions hereinafter set forth herein.
SECTION 1. Definitions; Construction.
(a) Definitions. All capitalized terms used herein shall,
unless defined herein, have the respective meanings set forth in
Appendix A to this Agreement, and the rules of interpretation set forth
in Appendix A shall apply to this Agreement.
SECTION 2. Agreement for Purchases and Construction Advances.
(a) Purchases. Subject to the terms and conditions of this
Agreement (including without limitation, the conditions set forth in
Section 3.1), (i) on the First Acquisition Date the Obligee shall (x)
purchase and accept title to the Land and any Improvements
(collectively, the "Property") existing thereon for the Acquisition
Cost specified in the Asset Use Supplement and (y) demise and grant use
of the Property together with any improvements which thereafter may be
constructed on the Land pursuant to the Construction Agency Agreement
to the Obligor and (ii) on each subsequent Acquisition Date the Obligee
shall purchase the Equipment listed in the Asset Use Supplement
delivered on the First Acquisition Date for the Acquisition Cost
therefor as specified in the Asset Use Supplement; provided, however,
that the Obligee shall have no obligation to pay any such Acquisition
Cost referred to above unless it shall have received an Acquisition
Date Notice from the
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Asset Use Agreement
Obligor and funds from the Participants in an aggregate amount equal to
such Acquisition Cost. Upon receipt of such funds from the Participants
and satisfaction of the conditions set forth herein, the Obligee will
deliver the Acquisition Cost of the Assets to the Obligor and the other
Persons to be paid that portion of Acquisition Cost constituting
Transaction Expenses (to the extent invoiced) on such Acquisition Date
by wire transfer of immediately available funds to such account as
designated in writing by the Obligor in its Acquisition Date Notice.
(b) Construction Advances. Subject to the terms and conditions
of this Agreement (including without limitation, the conditions set
forth in Section 3.2), on each date specified by the Obligor in a
Construction Advance Notice, the Obligee shall fund an aggregate amount
equal to the amount specified in such Construction Advance Notice, for
the purpose of (x) paying to the Builder(s) specified in such
Construction Advance Notice the progress payments and other amounts
then due and payable with respect to the Property on such date, (y)
paying Transaction Expenses (to the extent invoiced) to the Persons
entitled thereto and (z) subject to clause (e) below, paying that
portion of the Construction Advance constituting interest and Yield
accrued and payable with respect to the Loans and Class I Certificates,
to the extent such Loans and Class I Certificates represent interest
and Yield payable during the Interim Term with respect to any Asset;
provided, however, that the Obligee shall have no obligation to make
any such Construction Advance unless it shall have received funds from
the Participants in an aggregate amount equal to such Construction
Advance. Upon receipt of such funds from the Participants and
satisfaction of the conditions set forth herein, the Obligee will make
the Construction Advance by wire transfer of immediately available
funds to such account(s) as designated in writing by the Obligor in its
Construction Advance Notice.
(c) Funding Dates. Each Acquisition Date and Construction
Advance Date shall occur on notice from the Obligor to the Obligee, in
the form of a properly completed Acquisition Date Notice or
Construction Advance Notice, as the case may be, received by the
Obligee not later than five (5) Business Days prior to the proposed
Funding Date; provided, however, that the aggregate of all Acquisition
Costs and Construction Advances paid for by the Obligee, after giving
effect to the applicable Funding, shall not exceed the Maximum Cost.
Notwithstanding any other provision hereof, no Funding shall be made on
any date after the Commitment Termination Date.
(d) Agreement. Subject to, and upon all of the terms and
conditions of this Agreement, the Obligee hereby agrees to allow the
Obligor to use the Assets and the Obligor hereby agrees to use the
Assets listed on Schedule I to the Asset Use Supplement referred to in
Section 2(a) for the Term. Provided that no Event of Default has
occurred and is continuing hereunder, neither the Obligee nor anyone
claiming through or under the Obligee,
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<PAGE> 9
Asset Use Agreement
shall interfere with the Obligor's quiet enjoyment and use of any Asset
hereunder during the Term hereof. The Assets are hereby demised for use
to the Obligor without any representation or warranty, express or
implied, by the Obligee and subject to the rights of the parties in
possession, the existing state of title (including, without limitation,
Permitted Liens) and all Applicable Law. The execution by the Obligor
of each Acquisition Date Notice and each Asset Use Supplement shall be
deemed to be a representation by the Obligor that it has independently
ascertained, and is fully satisfied with, the physical and legal status
of the Assets referred to therein. The Obligor shall in no event have
any recourse against the Obligee for any defect in or exception to
title to any Asset, except to the extent that said exception to title
is created or caused directly by the Obligee.
(e) Capitalized Interest and Yield during Construction Period.
During the Interim Term interest and Yield with respect to the Assets
shall accrue and be added to the Asset Use Balance. Such capitalized
interest and Yield shall constitute part of each Construction Advance
made with respect to the Assets.
SECTION 3. Conditions.
SECTION 3.1 Conditions Precedent to Acquisition Dates. The
Obligee shall have no obligation to purchase any Asset on an Acquisition Date
nor to demise for use the same to the Obligor unless, in each case, each of the
following conditions are either fulfilled to the satisfaction of the Obligee and
applicable Participants or waived by the Obligee and applicable Participants:
(a) Operative Documents. On or prior to the
Closing Date, (i) this Agreement shall have been executed and
delivered by the parties hereto, (ii) the Guaranty shall have
been executed and delivered by the Guarantor, (iii) the Trust
Agreement shall have been executed and delivered by the
parties thereto, (iv) the Loan Agreement shall have been
executed and delivered by the Obligee and the Lenders, (v) the
Pledge Agreement shall have been executed and delivered by the
parties thereto, (vi) the Construction Agency Agreement shall
have been executed and delivered by the parties thereto, (vii)
Real Estate Purchase and Sale Contract shall have been
executed and delivered by the parties thereto, (viii) the
Assignment Agreement shall have been entered into by the
parties thereto, (ix) the Mortgages shall have been filed in
proper legal form for registration in favor of the Tranche B
Lenders, Class I Certificateholders and Tranche A Lenders at
the Public Registry of Property, respectively in first and
second priority, together with the corresponding aviso
preventive, (x) [Intentionally Omitted], and (xi) the
Intercreditor Agreement shall have been entered into by the
parties thereto.
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<PAGE> 10
Asset Use Agreement
(b) Corporate Documents, Incumbency Certificate,
etc. On or prior to the Closing Date, the Obligee shall have
received from each of the Obligor and the Guarantor, (1) a
certified copy of its articles or certificate of incorporation
and by-laws as in effect on the First Acquisition Date,
certified by its Secretary or Assistant Secretary as of the
initial Acquisition Date, which certificate shall state that
such articles or certificate of incorporation and by-laws are
in full force and effect in the form attached to such
certificate, (2) a certificate of existence with respect to
it, dated no earlier than the twentieth (20th) day prior to
the Closing Date, (3) a certificate of its Secretary or
Assistant Secretary certifying as to the incumbency of its
officers who are authorized to execute and deliver on its
behalf the Operative Documents and other documents,
instruments and agreements to be executed by it pursuant to
this Agreement and the other Operative Documents (4) certified
copies of the powers-of-attorney pursuant to which the Obligor
shall execute the relevant agreements and (5) a notarized
power-of-attorney (together with an acceptance letter) granted
to the process agent in New York for each of the Obligor and
the Guarantor.
(c) Acquisition Date Notice. The Obligee shall
have received a fully executed Acquisition Date Notice
substantially in the form of Exhibit B-1 (each an "Acquisition
Date Notice"), which notice shall specify the date of the
proposed acquisition, the aggregate Acquisition Cost for the
Assets, covered by the Asset Use Supplement, (including
approved Transaction Expenses) to be funded on such date, and
shall be accompanied by a Purchase Order covering all of the
Assets to be funded on such date.
(d) Asset Use Supplement. The Obligee shall have
received an Asset Use Supplement for the Assets, duly executed
by the Obligor, and dated the First Acquisition Date.
(e) Intentionally omitted.
(f) Liens. The Obligee and Lenders shall have
received reports acceptable to Obligee and counsel to each
Participant from each appropriate filing or recording offices,
in respect of a search of the applicable files and any indices
of Liens maintained by such offices (including, if applicable,
indices of judgement, revenue and tax liens), which reports
shall evidence that the Assets are free and clear of all Liens
other than Permitted Liens and are owned by the Person from
whom the Obligee is required to purchase same pursuant to the
relevant Acquisition Date Notice.
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Asset Use Agreement
(g) Plans and Specifications. Prior to the First
Acquisition Date, the Obligee shall have received a full set
of general and detailed plans and specifications of the Land
and the Improvements to be constructed thereon.
(h) Authorized Officer's Certificate. The Obligee
shall have received a certificate from an Authorized Officer
of the Obligor to the effect that the representations and
warranties of the Obligor contained herein and in any
certificate of the Obligor delivered pursuant hereto shall be
true and correct on and as of such Acquisition Date with the
same effect as though made on and as of such Acquisition Date.
(i) Recordation of Instruments. The Obligee shall
have received evidence satisfactory to it that appropriate
instruments have been filed in all jurisdictions necessary to
perfect properly the first priority security interest in the
Assets and other collateral, subject to no recorded Liens
other than Permitted Liens of the type described in clauses
(a), (b) and (c) of the definition thereof.
(j) Opinions. (i) With respect to the initial
Acquisition Date, the Obligee and each Participant shall have
received written opinions of Baker & McKenzie and Dykema
Gossett PLLC counsel to the Obligor and the Guarantor, dated
the Acquisition Date and in form and substance satisfactory to
the Obligee and (ii) with respect to each Acquisition Date,
each Participant shall have received a written opinion of
Baker & McKenzie or other counsel reasonably satisfactory to
the Obligee and the Participants, with respect to the
perfection of the first priority security interest relating to
the Assets created by Obligee in favor of the Participants and
the validity, enforceability and perfection of the Obligee's
Lien on the Assets purported to be created thereby, which
opinions shall be in form and substance satisfactory to the
Obligee and the Participants.
(k) Intentionally omitted.
(l) Appraisal. The Obligee, and the Class I
Certificateholders shall have received, no later than five (5)
Business Days prior to the First Acquisition Date, an
Appraisal of the Land, Improvements as if constructed in
accordance with the Plans and Specifications, and Equipment to
be placed or installed thereon, which Appraisal shall be dated
as of a date that is satisfactory to the Obligee, and the
Class I Certificateholders, and shall show that upon
Completion of the Property and as of the Expiration Date, the
Fair Market Sales Value of the Improvements to be constructed
shall not be less than the Estimated Improvement Costs.
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<PAGE> 12
Asset Use Agreement
(m) Certified Copy of Prime Construction Contract.
The Obligee and the Class I Certificateholders shall have
received a copy of the Prime Construction Contract, certified
by the Guarantor and Obligor to be a true, correct and
complete copy of the Prime Construction Contract.
(n) Architect's Certificate. The Obligee shall
have received a certificate from the Prime Architect or as to
individual matters, other qualified professionals, in form and
scope satisfactory to the Obligee, certifying that in the
opinion of such Architect, based on the prevailing standard of
care (i) the Property as improved in accordance with the Plans
and Specifications and the contemplated use thereof by the
Obligor will comply in all material respects with all
Applicable Law (including, without limitation, all zoning and
land use laws) and (ii) the Plans and Specifications have been
prepared in accordance with all Applicable Law (including,
without limitation, building, planning, zoning and fire codes)
and upon completion of the Improvements in accordance with the
Plans and Specifications, such Improvements on the Property
will not encroach in any manner onto any adjoining land
(except as permitted by express written easements or as
insured by appropriate title insurance) and will consist of
all Improvements on such Property.
(o) Insurance Certificates. The Obligee and each
Participant shall have received certificates of insurance,
loss payable endorsements and other evidence that the Obligor
has complied with the provisions of Section 17.
(p) No Material Adverse Change. With respect to
each Acquisition Date, there shall have occurred no material
adverse change in the business, assets, operations, properties
or financial condition of Obligor or the Guarantor and any of
their respective Subsidiaries taken as a whole, since March
31, 1998.
(q) Absence of Liens, etc. No Event of Loss shall
have occurred with respect to the Assets, and the Assets shall
be free from any destruction or damage. The Assets shall be
free and clear of all Liens, other than any Permitted Lien of
the type described in clause (a), (b) or (c) of the definition
of Permitted Liens.
(r) Material Consents, etc. All material licenses,
registrations, permits, consents and approvals required by
Federal, state or local laws or by any governmental body,
agency or authority in connection with the Obligee's ownership
of, and the delivery, acquisition, installation, use and
operation of, the Assets shall have been obtained to the
satisfaction of the Obligee;
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Asset Use Agreement
(s) Maximum Cost. After giving effect to such
purchase, (i) the Acquisition Cost of the Assets shall not
exceed the Fair Market Sales Value of such Assets as set forth
in the Appraisal thereof delivered pursuant to clause (l), and
(ii) the aggregate Asset Costs of all Assets subject to this
Agreement shall not exceed the Maximum Cost.
(t) Available Commitment. Notwithstanding any
other provision hereof, the Owner shall not be obligated to
make any Advance to the extent that such Advance shall exceed
the commitment available for the Assets, as set forth in
Schedule III.
(u) Payment of Fees. The Obligor shall have paid
all fees then due and payable pursuant to the Fee Letter
(which fees may, subject to clause (s), be included in the
Acquisition Cost).
(v) No Default. No Default or Event of Default
shall have occurred and be continuing.
(w) Other Documents. The Obligee shall have
received such other documents, appraisals, opinions,
certificates and waivers, in form and substance satisfactory
to the Obligee, as the Obligee may require in the exercise of
its reasonable discretion.
SECTION 3.2 Conditions Precedent to Construction Advances.
The Obligee shall have no obligation to fund any Construction Advance unless
each of the following conditions are either fulfilled to the satisfaction of the
Obligee and applicable Participants or waived by the Obligee and applicable
Participants:
(a) Construction Advance Notice. The Obligee shall
have received a fully executed Construction Advance Notice
substantially in the form of Exhibit B-2 (each a "Construction
Advance Notice"), which notice shall specify the date of the
proposed advance and the amount of the Construction Advance to
be funded on such date with respect to the Assets (including
approved Transaction Expenses and Construction Advances to be
paid with respect to interest on the Loans and Yield on the
Class I Certificates).
(b) Construction Documents Assignment. The
Construction Documents Assignment shall have been duly
authorized, executed and delivered by the Construction Agent,
and the Consent and Agreement thereof shall have been duly
executed by the Prime Contractor and Prime Architect.
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<PAGE> 14
Asset Use Agreement
(c) Absence of Liens, etc. No Event of Loss shall
have occurred with respect to the Assets, and the Assets shall
be free from any destruction or damage. The Assets shall be
free and clear of all Liens, other than any Permitted Lien of
the type described in clause (a), (b) or (c) of the definition
of Permitted Liens.
(d) Material Consents, etc. With respect to the
construction for which Funding has been requested, all
material licenses, registrations, permits, consents and
approvals required by Federal, state or local laws or by any
governmental body, agency or authority in connection with the
construction of the applicable Assets shall have been obtained
to the satisfaction of the Obligee.
(e) Maximum Cost. After giving effect to the
making of such Construction Advance, (i) the Asset Cost of the
Assets shall not exceed the Fair Market Sales Value of such
Assets as set forth in the Appraisal thereof delivered
pursuant to Section 3.1(l), and (ii) the aggregate Asset Costs
of all Assets subject to this Agreement shall not exceed the
Maximum Cost.
(f) Payment of Fees. The Obligor shall have paid
all fees then due and payable pursuant to the Fee Letter
(which fees may, subject to clause (e), be included in the
Construction Advance).
(g) No Default. No Default or Event of Default
shall have occurred and be continuing.
(h) Other Documents. The Obligee shall have
received such other documents, appraisals, opinions,
certificates and waivers, in form and substance satisfactory
to the Obligee, as the Obligee may require in the exercise of
its reasonable discretion.
SECTION 3.3 Conditions Precedent to Completion Date. The
Completion Date with respect to the Property shall occur on the earliest date on
which the conditions set forth in this Section 3.3 shall have been satisfied or
waived by the Required Participants:
(a) the construction with respect to the Property
shall have been substantially completed in accordance with the
applicable Plans and Specifications and all Applicable Law;
(b) the Assets shall be ready for operation in
accordance with the Plans and Specifications therefor, and all
appropriate Governmental Action shall have been taken for the
operation of the Assets; and
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<PAGE> 15
Asset Use Agreement
(c) the Trustee, each Lender and each Class I
Certificateholder shall have received a Completion Certificate
from the Obligor in form and substance reasonably acceptable
to the Obligee.
SECTION 4. Delivery, Acceptance and Use of Assets;
Characterization.
(a) Delivery, Acceptance and Use. The Obligee shall not
be liable to the Obligor for any failure or delay in obtaining any of
the Assets or making delivery thereof. THE EXECUTION BY THE OBLIGEE AND
THE OBLIGOR OF THE ASSET USE SUPPLEMENT FOR THE ASSETS SHALL (A)
EVIDENCE THAT THE ASSETS MAY BE UTILIZED UNDER, AND IS SUBJECT TO ALL
OF THE TERMS, PROVISIONS AND CONDITIONS OF, THIS AGREEMENT, AND (B)
CONSTITUTE THE OBLIGOR'S UNCONDITIONAL AND IRREVOCABLE ACCEPTANCE OF
THE ASSETS FOR ALL PURPOSES OF THIS AGREEMENT.
(b) Characterization. As further described herein, the
Obligor and the Obligee hereby agree to treat the arrangement created
pursuant to this Agreement as a financing or conditional sale for
Mexico Federal income tax purposes.
SECTION 5. Term. Unless otherwise specified in the Asset Use
Supplement the Basic Term for the Assets shall commence on (and include) the
Basic Term Commencement Date and, unless this Agreement is sooner terminated
with respect to all the Assets pursuant to the provisions hereof, shall end on
the last day of the Basic Term thereof, as specified in the Asset Use
Supplement, or if this Agreement is extended with respect to the Assets pursuant
to Section 28(c) hereof, on the last day of the Additional Term thereof.
SECTION 6. Return of Assets. Upon the expiration or earlier
termination of the Term with respect to the Assets (unless the Obligor has
exercised its purchase option pursuant to Section 28(a) or its Reversion Right
in accordance with the Trust Agreement), the Obligor will, at its expense, cause
the Assets to be redelivered to the Obligee by surrendering and delivering
possession of the Assets to the Obligee or the Obligee's agent (or, if one or
more third party sales have been consummated in accordance with Section 28(b),
to the applicable purchaser(s) thereof) in compliance with all of the provisions
of this Section 6.
(a) Location of Redelivery. The Obligor will, at its
expense, cause the Assets to be redelivered to the Obligee by
surrendering and delivering possession of the Assets to the Obligee or
the Obligee's agent (or, if one or more third party sales have been
consummated in accordance with Section 28(b), to the applicable
purchaser(s) thereof) as shall be designated by the Obligee in writing;
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<PAGE> 16
Asset Use Agreement
(b) Return Conditions. At the time of such return to the
Obligee, each of the following provisions shall have been satisfied:
(i) the Assets (and each part or component
thereof) shall be in good operating order, repair and
condition, ordinary wear and tear excepted, and not in need of
any further repair or reconditioning to permit the Assets to
be fully operational and fit for use as an Asset of the type
specified in the Asset Use Supplement (the condition specified
in this clause (i) being referred to herein as the "Redelivery
Condition");
(ii) the Assets (and each part or component
thereof) shall be in full compliance with Section 10(b),
Section 10(d) and Section 11 without any Permitted
Noncompliance thereunder;
(iii) the Assets (and each part or component
thereof) shall conform to and comply with all Applicable Laws;
(iv) the Assets shall have attached or affixed
thereto (x) all Required Alterations and (y) all Optional
Alterations to the extent such Optional Alterations are
subject to the terms of this Agreement as provided in Section
12;
(v) each Asset (and each part or component
thereof) shall be free and clear of all Liens, other than
Liens of the type described in clause (a) or (b) of the
definition of Permitted Liens;
(vi) the Assets shall be free of all advertising,
insignia and distinctive markings placed thereon by the
Obligor or any sub-obligor except as expressly provided
herein;
(vii) each Asset shall be free of sub-use
agreements;
(viii) all (x) Required Alterations and (y) to the
extent commenced prior to the Termination Date, Optional
Alterations and other modifications, restorations and
rebuilding with respect to the Assets, shall have been
completed in a good and workmanlike manner and in compliance
with all Applicable Laws and Insurance Requirements, and the
Obligor shall have paid the cost of all such Required
Alterations, Optional Alterations and other modifications,
restorations and rebuilding prior to the redelivery of the
Assets under this Section 6; and
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Asset Use Agreement
(ix) any damaged equipment, outfit, tools, spare
parts or replacement parts that constitute part of the Assets
shall have been repaired or replaced as required by the
Operative Documents.
The Obligor shall pay for any repairs necessary to restore the Asset to
the condition required by this Section 6.
(c) Delivery of Maintenance Records, etc.; Inspection.
For the purpose of surrendering possession of the Assets required under
this Section 6, the Obligor shall at its own cost, expense and risk,
deliver to the Obligee all manuals and inspection, modification,
overhaul and maintenance records applicable to the Assets (which
records may exclude the cost of repairs, maintenance, modifications and
overhauls) in its possession or to which is has reasonable access and
permit the Obligee or its representatives access to the Assets during
normal business hours for the purposes of inspecting the Assets and
verifying that the return conditions set forth in this Section 6 have
been complied with.
(d) Inspection by Independent Architect or Surveyor. Not
later than one (1) month and not earlier than three (3) months prior to
the Assets' redelivery, the Assets shall, at the sole cost and expense
of the Obligor, be inspected by an independent architect or independent
surveyor appointed by the Obligor and approved by the Obligee, the
Tranche B Lenders and the Class I Certificate holders to determine the
Assets' compliance with the Redelivery Condition. The Obligee, each
Tranche B Lender and each Class I Certificateholder shall have received
a report from such independent architect with respect to the Assets not
later than one (1) month prior to the Assets' redelivery hereunder,
certifying that the Assets are in compliance with the Redelivery
Condition.
(e) Revocation of Return Option. If one or more of the
provisions of this Section 6 or any provision of Section 28(b) shall
not be fulfilled as of the date set forth herein or therein with
respect to the Assets, then the Obligee shall declare by written notice
to the Obligor its Return Option to be null and void (whether or not
theretofore exercised by the Obligor), in which event the Obligor shall
be obligated to purchase all Assets pursuant to Section 28(a) hereof on
the Termination Date therefor.
(f) Rights in Equity. The provisions of this Section 6
and the provisions of Section 28(b) are of the essence of this
Agreement, and upon application to any court of equity having
Jurisdiction in the premises, the Obligee shall be entitled to a decree
against the Obligor requiring specific performance of the covenants of
tile Obligor set forth in this Section 6 and Section 28(b).
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Asset Use Agreement
SECTION 7. Basic Hire and Other Payments.
(a) Basic Hire. The Obligor hereby agrees to pay Basic
Hire with respect to the Assets during the Term thereof as set forth in
this Section 7(a).
(i) With respect to the Assets during the
Construction Period therefor, Basic Hire shall accrue on each
day and be payable (with the proceeds of a Construction
Advance as described in Section 2(e)) on each Hire Payment
Date during the Interim Term of the Assets.
(ii) The Obligor hereby agrees to pay to the
Obligee, Basic Hire for the Assets for the Basic Term with
respect to all Hire Payment Dates. Such Basic Hire shall be
payable in installments falling due on each Hire Payment Date
in an amount equal to the Variable Hire payable with respect
to the Variable Hire Periods ending on such Hire Payment Date;
provided, that any amounts of Variable Hire due and payable
with respect to the Assets during the Construction Period
therefor may, subject to Section 2(e), be paid with the
proceeds of a Construction Advance; provided, further, that
notwithstanding that a Variable Hire Period may be for six (6)
months, Basic Hire, including the Variable Hire payable with
respect to such six-month Variable Hire Period, shall be due
and payable no less frequently than each Hire Payment Date
occurring three (3) months following the last day of the
initial Variable Hire Period after the Base Term Commencement
Date.
(b) Supplemental Hire. The Obligor also agrees to pay to
the Obligee, or to whomsoever shall be entitled thereto as expressly
provided herein, all Supplemental Hire, promptly as the same shall
become due and owing, and in the event of any failure on the part of
the Obligor so to pay any such Supplemental Hire hereunder the Obligee
shall have all rights, powers and remedies provided for herein or by
law or equity or otherwise in the case of nonpayment of Basic Hire.
(c) Method of Payment. All payments of Basic Hire and
Supplemental Hire required to be made by the Obligor to the Obligee
shall be paid in immediately available funds to the account outside
Mexican territory designated by the Obligee. If the date that any
payment of Basic Hire is due is other than a Business Day the payment
of Basic Hire otherwise payable on such date shall be payable on the
next succeeding Business Day. All payments of Basic Hire required to be
made by the Obligor to the Obligee hereunder shall be paid to the
Obligee at its address specified at the beginning of this Agreement or
at such other address as the Obligee may hereafter designate in writing
to the Obligor. All such payments shall be received by the Obligee not
later than 1:30 P.M., New York time on the date due; funds received
after such time shall for all purposes be deemed to have been
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Asset Use Agreement
received by the Obligee on the next succeeding Business Day. If any
Basic Hire shall not be paid when due, the Obligor shall pay to the
Obligee, or if any Supplemental Hire payable to or on behalf or for the
account of the Obligee or other Person thereunto entitled is not paid
when due, the Obligor shall pay to whomever shall be entitled thereto,
in each case as a Supplemental Hire, interest at the Overdue Rate (to
the maximum extent permitted by law) on such overdue amount from and
including the due date thereof (not including any applicable grace
period) to but excluding the Business Day of payment thereof.
(d) Calculation of Basic Hire.
(i) The Funding Agent shall three (3) Business
Days prior to each Hire Payment Date calculate the amount of
Basic Hire and Supplemental Hire due and payable by the
Obligor on the applicable Hire Payment Date. The Funding
Agent's calculation of Basic Hire and Supplemental Hire due
and payable shall be binding upon the Obligor in the absence
of demonstrable error.
(ii) The Trustee shall: (i) not later than five (5)
Business Days prior to any Hire Payment Date request the
Funding Agent to confirm the amount of Basic Hire and
Supplemental Hire due and payable on such Hire Payment Date;
and (ii) not later than three (3) Business Days prior to any
Hire Payment Date request the Funding Agent to calculate the
amount of Basic Hire and Supplemental Hire due and payable on
the next succeeding Hire Payment Date. The Trustee or Funding
Agent on behalf of the Trustee will cause to be delivered,
three (3) Business Days prior to each Hire Payment Date,
notice of the occurrence of such Hire Payment Date and the
amount due thereon; provided however, that in the event such
notice is not delivered to the Obligor, the Obligor shall
remain responsible for all amounts due and payable on such
Hire Payment Date.
(e) Choice of Basic Assumptions. It is the intent of the
parties hereto, acknowledging that Bank of Montreal, as Lender and
Funding Agent, may solicit other lenders for the purpose of syndicating
the Loans. In the event the Bank of Montreal is unsuccessful in its
efforts to fully syndicate the Loans, the Obligee agrees that the
pricing terms of the transaction contemplated hereunder shall be
changed to ensure that the Bank of Montreal is able to fully syndicate
the Loans.
SECTION 8. Net Agreement. THIS AGREEMENT IS A NET ASSET USE
AGREEMENT. THE OBLIGOR ACKNOWLEDGES AND AGREES THAT ITS OBLIGATIONS HEREUNDER,
INCLUDING, WITHOUT LIMITATION, ITS OBLIGATIONS TO PAY BASIC HIRE FOR THE ASSETS
COVERED HEREBY AND TO PAY ALL SUPPLEMENTAL HIRE PAYABLE HEREUNDER, SHALL BE
UNCONDITIONAL AND IRREVOCABLE UNDER ANY AND ALL CIRCUMSTANCES, SHALL NOT BE
SUBJECT TO CANCELLATION, TERMINATION, MODIFICATION OR REPUDIATION
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Asset Use Agreement
BY THE OBLIGOR, AND SHALL BE PAID AND PERFORMED BY THE OBLIGOR WITHOUT NOTICE OR
DEMAND AND WITHOUT ANY ABATEMENT, REDUCTION, DIMINUTION, SET OFF, DEFENSE,
COUNTERCLAIM OR RECOUPMENT WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY
ABATEMENT, REDUCTION, DIMINUTION, SET OFF, DEFENSE, COUNTERCLAIM OR RECOUPMENT
DUE OR ALLEGED TO BE DUE TO, OR BY REASON OF, ANY PAST, PRESENT OR FUTURE CLAIMS
WHICH THE OBLIGOR MAY HAVE AGAINST THE OBLIGEE, ANY PARTICIPANT, THE DEPOSITOR,
ANY BUILDER, MANUFACTURER OR SUPPLIER, OR ANY, OTHER PERSON FOR ANY REASON
WHATSOEVER, OR ANY DEFECT IN ANY ASSET, OR THE CONDITION, DESIGN, OPERATION OR
FITNESS FOR USE THEREOF, ANY DAMAGE TO, OR ANY LOSS OR DESTRUCTION OF, ANY
ASSET, OR ANY LIENS OR RIGHTS OF OTHERS WITH RESPECT TO ANY ASSET, OR ANY
PROHIBITION OR INTERRUPTION OF OR OTHER RESTRICTION AGAINST THE OBLIGOR'S USE,
OPERATION OR POSSESSION OF ANY ASSET, FOR ANY REASON WHATSOEVER, OR ANY
INTERFERENCE WITH SUCH USE, OPERATION OR POSSESSION BY ANY PERSON OR ENTITY, OR
ANY DEFAULT BY THE OBLIGEE IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS HEREIN
CONTAINED, OR ANY OTHER INDEBTEDNESS OR LIABILITY, HOWSOEVER AND WHENEVER
ARISING, OF THE OBLIGEE, OR OF ANY PARTICIPANT OR THE DEPOSITOR, OR OF THE
OBLIGOR TO ANY OTHER PERSON, OR BY REASON OF INSOLVENCY, BANKRUPTCY OR SIMILAR
PROCEEDINGS BY OR AGAINST THE OBLIGEE, TRUST COMPANY, ANY PARTICIPANT, THE
DEPOSITOR, THE OBLIGOR OR THE GUARANTOR, OR FOR ANY OTHER REASON WHATSOEVER,
WHETHER SIMILAR OR DISSIMILAR TO ANY OF THE FOREGOING, ANY PRESENT OR FUTURE LAW
TO THE CONTRARY NOTWITHSTANDING; IT BEING THE INTENTION OF THE PARTIES HERETO
THAT ALL BASIC HIRE AND SUPPLEMENTAL HIRE PAYABLE BY THE OBLIGOR HEREUNDER SHALL
CONTINUE TO BE PAYABLE IN ALL EVENTS AND IN THE MANNER AND AT THE TIMES HEREIN
PROVIDED, WITHOUT NOTICE OR DEMAND, UNLESS THE OBLIGATION TO PAY THE SAME SHALL
BE TERMINATED PURSUANT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT. NOTHING IN
THIS SECTION 8 SHALL PROHIBIT THE OBLIGOR FROM PURSUING ANY RIGHT IT MAY HAVE
UNDER THIS AGREEMENT OR OTHERWISE BY A SEPARATE PROCEEDING AGAINST THE OBLIGEE,
ANY PARTICIPANT, THE DEPOSITOR OR ANY OTHER PERSON.
SECTION 9. Certain Covenants of Obligor. The Obligor hereby
covenants to the Obligee and each Participant that the Obligor shall, at all
times until payment in full of all Obligations and the termination of all
commitments of the Participants under the Operative Documents, comply with the
covenants set forth in this Section 9.
(a) Financial Information and Reports; Further
Assurances. The Obligor will deliver to the Obligee, the Depositor and
each Participant:
(i) an English translation of the unaudited
consolidated financial statements of the Obligor, within
ninety (90) business days of the close of its fiscal year, or
such later time as is then permitted under Mexican law;
(ii) an English translation of the audited
consolidated financial statements of the Obligor, within one
hundred twenty (120) days of the close of its fiscal year, or
such later time as is then permitted under Mexican law;
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Asset Use Agreement
(iii) an English translation of the audited
consolidated financial statements of the Obligor, together
with a reconciliation (in the form required by the Commission)
to United States generally accepted accounting principles, in
each case within one hundred eighty (180) days of the close of
the fiscal year;
(iv) an English translation of the unaudited
quarterly consolidated financial statements of the Obligor for
each of the first three fiscal quarters, in each case within
sixty (60) business days of the close of the relevant quarter;
(v) simultaneously with the delivery of each set
of consolidated financial statements referred to in clauses
(ii), (iii) and (iv) above, an Authorized Officers'
Certificate stating whether any Event of Default or Event of
Loss exists on the date of such certificate and, if any Event
of Default or Event of Loss then exists, setting forth the
details thereof and the action which the Obligor is taking or
proposes to take with respect thereto;
(vi) upon any officer of the Obligor becoming aware
of the existence of an Event of Default or Event of Loss, an
Authorized Officers' Certificate setting forth the details
thereof and the action which the Obligor is taking or proposes
to take with respect thereto.
SECTION 10. Use of Assets; Compliance with Laws.
(a) Use of Assets. The Obligor agrees that the Assets may
be used only in a manner consistent with the Construction Agency
Agreement and, after the Basic Term Commencement Date, the Assets shall
be used solely as an automotive stamping and component assembly plant
(including all incidental and supporting services) and in a manner
consistent with the standards applicable to similar manufacturing
facilities and in any event not less than the highest standards applied
by Guarantor at similar manufacturing facilities owned by Guarantor or
any of its Subsidiaries; provided, however that in no event shall the
Assets be used for the storage of any Hazardous Material, except to the
extent such storage relates to the operation, maintenance, repair and
use of the Assets as permitted under this Section 10(a) and such
storage does not violate any Environmental Law in any material respect.
The Obligor shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Assets as contemplated by
this Asset Use Agreement and the Construction Agency Agreement. The
Obligor shall not commit or permit any waste of the Assets or any part
thereof.
(b) Compliance with Laws. The Obligor agrees that the
Assets will be used, operated and maintained (x) in compliance in all
material respects and with all statutes, laws,
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Asset Use Agreement
ordinances, rules and regulations of any United States or Mexican
Federal, state or local governmental body, agency or authority
applicable to the use and operation of the Assets, including, without
limitation, all Applicable Laws and environmental, noise and pollution
laws (including notifications and reports) and (y) in compliance with
all Insurance Requirements; provided, however, that the Obligor shall
not be obligated to so comply with laws, rules or regulations to the
extent that (i) the application or validity of any such law, rule or
regulation is being contested diligently and in good faith by
appropriate proceedings or compliance with such law, rule or regulation
shall have been excused or exempted by a nonconforming use permit,
waiver, extension or forbearance exempting it from such law, rule or
regulation and (ii) failure to comply with such law, rule or regulation
shall impose no risk of criminal or material civil liability on the
Obligee and shall impose no material risk of the sale, forfeiture or
loss of any Asset during the pendency of such noncompliance (any
noncompliance satisfying both of the foregoing clauses (i) and (ii)
being referred to herein as "Permitted Noncompliance"). Subject to the
foregoing provisions, the Obligor shall procure and maintain in effect
all licenses, registrations, certificates, permits, approvals and
consents required by Federal, state or local laws or by any
governmental body, agency or authority in connection with the
ownership, use and operation of the Assets, including, without
limitation, those required by environmental, noise and pollution laws
(including notifications and reports) unless the failure to procure or
maintain any such licenses, registrations, certificates, permits,
appeals or consents would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Obligor
shall not use any Asset, or knowingly permit any Asset to be used, for
the transportation of any nuclear fuels, radioactive products,
asbestos, PCB's, nuclear wastes, poisons or explosive materials, nor
will the Obligor knowingly permit the Assets to engage in any unlawful
trade or violate any law or carry any unlawful cargo that will expose
the Assets to penalty, forfeiture or capture.
(c) Exclusive Possession; Manning, etc., of Assets.
Subject to the terms and conditions of this Agreement, the Obligor and
any permitted sub-user shall have exclusive possession and control of
the Assets, and shall man, victual, equip, supply, furnish, outfit,
maintain and repair, and operate the Assets at its own expense or by
its own procurement throughout the Term. The Manager of the Assets
shall be engaged and employed by the Obligor and shall remain the
Obligor's servants, working the Assets on behalf of and at the risk of
the Obligor. The Obligee shall not be required to pay any charges, or
any other costs, charges and expenses whatsoever incident to the use,
operation and maintenance of the Assets during the Term.
(d) Maintenance of Asset Documentation. The Obligor
shall, without expense to the Obligee, throughout the Term maintain, or
cause to be maintained the documentation of the Assets in the name of
the Obligee under the laws of Mexico and the Obligee shall
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Asset Use Agreement
upon the request of the Obligor execute such documents and furnish such
information as the Obligor may reasonably require to enable the Obligor
to maintain, or cause to be maintained, such documentation.
Notwithstanding anything to the contrary herein, no action or inaction
by the Participants or the Obligee, or any of their respective
Affiliates, that results in the loss (whether temporary or permanent)
or other termination of the eligibility of the Assets for documentation
under the laws of Mexico shall result in the Obligor having
responsibility for costs, expenses or other Claims arising from such
termination of eligibility or qualification.
(e) Quiet Enjoyment. The Obligee warrants and covenants
that, unless an Asset Use Event of Default shall have occurred and be
continuing and this Agreement shall have been declared to be in default
pursuant to Section 23(a), the Obligor shall be entitled to the quiet
use and enjoyment of the benefits of the Assets including the right to
uninterrupted possession, use and operation of the Assets, and the
Obligee shall not take or permit any Person claiming by, through or
under it to take any action inconsistent with the Obligor's rights
hereunder or under any of the other Operative Documents or otherwise,
through its own actions or inactions, interfere or permit any such
Person to interfere with such quiet use or enjoyment or such
possession, use or operation or the rights of the Obligor or any other
permitted sub-user or assignee to such quiet use or enjoyment or such
possession, use or operation under any sub-use agreement or assignment
permitted hereunder.
SECTION 11. Maintenance and Repair of Assets. The Obligor agrees,
at its own cost and expense, to maintain the Assets in good order and operating
condition and in accordance with the terms of all manufacturer's warranties and
in as good an operating condition, repair and appearance as when originally
delivered, ordinary wear and tear excepted, and in compliance in all material
respects with such maintenance and repair standards, ordinary wear and tear
excepted, promulgated by the manufacturer for such Assets and, unless such
noncompliance constitutes a Permitted Noncompliance, in compliance in all
material respects with all Applicable Laws applicable to the maintenance and
condition of the Assets, including, without limitation, Applicable Laws,
environmental, noise and pollution laws and regulations (including notifications
and reports), and Mexican law and any other legislative, executive,
administrative or judicial body exercising any power or jurisdiction over the
Assets, to the extent that such laws and rules affect the title, operation,
maintenance or use of the Assets. The Obligor agrees to prepare and deliver to
the Obligee and each Participant within a reasonable time prior to the required
date of filing (or, to the extent permissible, file on behalf of the Obligee and
each Participant) any and all reports (other than income tax returns) of which
it has knowledge to be filed by the Obligee or any Participant with any Federal,
state or other regulatory authority by reason of the ownership by the Obligee of
the Assets or the leasing thereof to the Obligor. The Obligor hereby waives any
right now or hereafter conferred by law to make repairs on the Assets at the
expense of the Obligee.
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Asset Use Agreement
SECTION 12. Replacements; Alterations; Modifications. In case the
Assets (or any equipment, part or appliance therein) are required to be altered,
added to, replaced or modified in order to comply with any laws, regulations,
requirements or rules ("Required Alteration") pursuant to Section 10 or 11
hereof, the Obligor agrees to make such Required Alteration at its own expense,
unless a failure to make such Required Alteration constitutes a Permitted
Noncompliance (in which case the Obligor shall not be required to make such
Required Alteration so long as such failure constitutes a Permitted
Noncompliance), and the same shall immediately be and become the property of the
Obligee and subject to the terms of this Agreement. The Obligor may make any
optional alteration to any Asset ("Optional Alteration"); provided, that such
Optional Alteration does not adversely affect the value, utility or remaining
useful life of such Asset or cause such Asset to become suitable for use only by
Obligor. In the event such Optional Alteration is removable without causing
irreparable damage to the Asset, and is not a part, item of equipment or
appliance which replaces any part, item of equipment or appliance originally
incorporated or installed in or attached to such Asset on the Acquisition Date
therefor, or any part, item of equipment or appliance in replacement of or
substitution for any such original part, item of equipment or appliance, any
such Optional Alteration shall be and remain the property of the Obligor. To the
extent such Optional Alteration is not readily removable without causing damage
to the Asset to which such Optional Alteration has been made, or is a part, item
of equipment or appliance which replaces any part, item of equipment or
appliance originally incorporated or installed in or attached to such Asset on
the Acquisition Date therefor or any part, item of equipment or appliance in
replacement of or substitution for any such original part, item of equipment or
appliance, the same shall immediately be and become part of the Asset for all
purposes of this Agreement and shall be subject to the terms of this Agreement.
All Required Alterations and all parts installed or replacements made by the
Obligor upon any Asset pursuant to its obligation to maintain and keep the
Assets in good order, operating condition and repair under Section 11 hereof
shall be considered accessions to such Asset and title thereto or security
interest therein shall be immediately vested in the Obligee. Except as required
or permitted by the provisions of this Section 12, the Obligor shall not modify
an Asset without the prior written authority and approval of the Obligee. Any
Required Alterations, and any parts installed or replacements made by Obligor
upon any Asset pursuant to its obligation to maintain and keep the Assets in
good order, operating condition and repair under Section 11 (collectively,
"Replacement Parts") and all other parts which become the property of Obligee
pursuant to this Agreement shall be free and clear of all Liens (other than
Permitted Liens) and shall be, accessions to such Asset and title thereto or
security interest therein shall be immediately and automatically vested in
Obligee, for the benefit of the Participants. All Replacement Parts shall be in
an operating condition that is as good as, and shall have a value and utility
substantially equal to, or better than the replaced parts. Any part (other than
a removable part) at any time removed from any Asset shall remain subject to the
interests of Obligee and the Participants under the Agreement, no matter where
located, until such time as such part shall be replaced by a part which has been
incorporated or installed in or attached to such Asset and which meets the
requirements for a Replacement Part specified above. No later than 45 days after
the end of each fiscal quarter of
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Asset Use Agreement
Obligor, Obligor shall deliver to Obligee, for the benefit of the Participants a
Purchase Order evidencing the conveyance by Obligor to Obligee of all
Replacement Parts not previously evidenced by a Purchase Order and such other
documents in respect of such part or parts as the Required Class I
Certificateholders may reasonably request in order to confirm that title to such
part or parts has passed to Obligee, as hereinabove provided. All replacements
pursuant to this Section 12 shall be purchased by Obligor with its own funds.
There shall be no obligation on the part of the Obligee or any Participant to
pay for or otherwise finance any such replacement.
SECTION 13. Marking of Assets; Inspection.
(a) Notice of Security Interest. On each Asset with an
Acquisition Cost greater than or equal to $250,000 a notice in both the
English and Spanish languages, reading as follows (or containing such
other information as may be approved by the Obligee), printed in plain
type of such size that the paragraph of reading matter shall cover a
space not less than six inches wide by nine inches high, shall be
placed and kept prominently displayed on such Asset:
"PROPERTY OF WILMINGTON TRUST COMPANY AS TRUSTEE UNDER AN
ASSET USE AGREEMENT DATED AS OF MARCH 31, 1999."
This Asset is owned by Automotive Business Trust 1999-A ("Obligee"), a
Delaware business trust, and (i) is covered by a first priority security
interest in favor of Bank of Montreal, as Funding Agent for the Lenders and
Class I Certificateholders under the Loan Agreement dated March 31, 1999 and
Trust Agreement dated as of March 19, 1999 and (ii) is and may be in the
possession of and used by Oxford Automotriz de Mexico S.A. de C.V. ("Obligor").
Under the terms of said Agreement, neither the Obligee, the Obligor, any
sub-obligor, the master or agent of this Asset nor any other person has any
right. power or authority to create, incur or permit to be placed or imposed
upon this Asset any lien whatsoever other than Permitted Liens under the
Agreement.
(b) Inspection. Subject to any Applicable Laws, the
Obligee, each Participant and any engineers accompanying the Obligee or
any Participant or Person designated by the Obligee or any Participant
to visit and inspect each of the Assets on such Person's behalf. shall
have the right, at such Person's risk and expense (including, without
limitation, as to personal injury and death) and under conditions
reasonably acceptable to the Obligor (including, without limitation,
with respect to time and place of inspection, the execution of waivers
of liability reasonably acceptable to the Obligor, maintaining
confidentiality, and the provision of proof of insurance reasonably
acceptable to Obligor), to visit and inspect the Assets, and the
Obligor will use reasonable efforts to make available its books and
records related thereto and, pay the reasonable fees and expenses of no
more than one (1) architect or surveyor with respect to each inspection
of the Assets, all upon reasonable notice and at
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Asset Use Agreement
such reasonable times during normal business hours and as may be
reasonably requested; provided, however, that unless there is an
existing Event of Default, (x) the Obligee and Participants may not
make more than one (1) inspection in any calendar year without the
Obligor's prior written consent and (y) such inspection rights must be
exercised subject to the supervision of the Obligor or its designee.
Unless an Asset Use Event of Default shall have occurred and be
continuing, the Obligor shall not be required to disclose any
confidential information or allow anyone to inspect confidential
materials. For the purposes of this Section 13(b), the Assets' records
shall not be deemed to be confidential materials.
SECTION 14. Assignment and Subleasing.
(a) By the Obligor. THE OBLIGOR SHALL NOT, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE OBLIGEE AND THE REQUIRED PARTICIPANTS,
LEASE OR SUB-LEASE ANY ASSET, THE OBLIGOR SHALL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE OBLIGEE AND ALL OF THE PARTICIPANTS, RELINQUISH,
ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS, INTERESTS OR OBLIGATIONS
HEREUNDER; PROVIDED HOWEVER THAT THE OBLIGOR SHALL BE PERMITTED TO
SUBLEASE A PORTION OF THE ASSETS, FOR A TERM NOT TO EXTEND BEYOND THE
TERMINATION DATE HEREOF, TO PERSONS ENGAGED IN THE LASER WELDING
PROCESS AND OTHER RELATED MANUFACTURING PROCESSES. ANY ATTEMPTED LEASE
OR SUB-LEASE, RELINQUISHMENT, ASSIGNMENT, TRANSFER OR ENCUMBRANCE BY
THE OBLIGOR IN CONTRAVENTION OF THIS SECTION 14(a) SHALL BE NULL AND
VOID.
(b) By the Obligee. The Obligee shall not sell, assign,
transfer or grant a security interest in all or any part of the
Obligee's rights, obligations, title or interest in, to and under the
Assets, this Agreement, any Asset Use Supplement and/or any Basic Hire
and Supplemental Hire payable under this Agreement or any Asset Use
Supplement except as contemplated by the Operative Documents.
SECTION 15. Liens. The Obligor will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to (i) any
Asset, the Obligee's title thereto or any interest therein, or (ii) this
Agreement or any of the Obligee's interests hereunder, except in the case of
either clause (i) or (ii), Permitted Liens. The Obligor, at its own expense,
will promptly pay, satisfy and otherwise take such actions as may be necessary
to keep this Agreement and all Assets free and clear of, and to duly discharge
or eliminate or bond in a manner satisfactory to the Obligee and each
Participant, any such Lien not excepted above if the same shall arise at any
time. The Obligor will notify the Obligee and each Participant in writing
promptly upon becoming aware of any tax or other
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Asset Use Agreement
Lien (other than any Permitted Lien excepted above) that shall attach to any
Asset, and of the full particulars thereof.
SECTION 16. Loss, Damage or Destruction.
(a) Risk of Loss, Damage or Destruction. The Obligor
hereby assumes all risk of loss, damage, theft, taking, destruction,
confiscation, condemnation, requisition or commandeering, partial or
complete, of or to the Assets, however caused or occasioned, such risk
to be borne by the Obligor with respect to the Assets from the date of
this Agreement, and continuing until such Asset has been returned to
the Obligee or its designee in accordance with the provisions of
Section 6 or has been purchased by the Obligor in accordance with the
provisions of Section 28(a). The Obligor agrees that no occurrence
specified in the preceding sentence shall impair, in whole or in part,
any obligation of the Obligor under this Agreement, including, without
limitation, the obligation to pay Basic Hire.
(b) Occurrence of Event of Loss. If an Event of Loss
occurs with respect to the Assets during the Term, the Obligor shall
give to the Obligee prompt written notice thereof (an "Event of Loss
Notice") and the Obligor shall pay to the Obligee the Casualty Loss
Value of the Asset suffering such Event of Loss in accordance with
clause (c).
(c) Payment of Casualty Loss Value. If an Event of Loss
shall have occurred with respect to the Assets, then the Obligor shall
pay to the Obligee on the earlier of (x) the next succeeding Hire
Payment Date that is no earlier than one hundred eighty (180) days
following the date of such Event of Loss and (y) the last day of the
Term (such earlier date, the "Casualty Loss Value Payment Date") an
amount equal to the sum of (i) all unpaid Basic Hire payable for such
Asset for any Variable Hire Period in which the Event of Loss has
occurred, plus (ii) the Casualty Loss Value of such Asset determined as
of such Casualty Loss Value Payment Date, plus (iii) all other
Supplemental Hire due for such Asset as of the date of payment of the
amounts specified in the foregoing clauses (i) and (ii). Any payments
received at any time by the Obligee or by, the Obligor from any
insurer, any Government Authority, or other party (except the Obligor)
as a result of the occurrence of such Event of Loss will be applied in
reduction of the Obligor's obligation to pay the foregoing amounts, if
not already paid by the Obligor, or, if already paid by the Obligor,
will be applied to reimburse the Obligor for its payment of such
amount, unless an Event of Default shall have occurred and be
continuing. Upon payment in full of such Casualty Loss Value, Basic
Hire and Supplemental Hire, (A) the obligation of the Obligor to pay
Basic Hire hereunder with respect to such Asset shall terminate and the
Term of such Asset shall terminate, and (B) the Obligee shall transfer
to the Obligor, "as is where is" without recourse or warranty, (except
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Asset Use Agreement
as to the absence of Liens attributable to the Obligee described in
clause (b) of the definition of Permitted Liens), all of the Obligee's
right, title and interest in and to the Assets.
(d) Partial Event of Loss.
(i) If an Event of Loss occurs with respect to
less than all of the Assets and the cost of refurbishment,
reconstruction, repair or replacement of such Assets is
$2,000,000 or greater, the Obligee, upon demonstration by the
Obligor to the reasonable satisfaction of the Obligee that
such refurbishment, reconstruction, repair or replacement may
be effected prior to the end of the Term, shall pay over to
the Obligor those insurance proceeds it received with respect
to such Event of Loss for the purpose of reimbursing the
Obligor for expenses incurred in connection with such
refurbishment, reconstruction, repair or replacement and the
Obligor shall refurbish, reconstruct, repair or replace the
Assets suffering such Event of Loss to the conditions required
by Section 11 hereof as soon as reasonably practicable after
such loss but in no event later than the last day of the Term.
If in the Obligee's reasonable judgment such Assets may not be
restored prior to the end of the Term it shall retain all
insurance proceeds received in respect of such Event of Loss
and may apply the same to the satisfaction of the payment of
the Casualty Loss Value due and the Obligor shall pay to the
Obligee the balance of the Casualty Loss Value in accordance
with clause (c).
(ii) If an Event of Loss occurs with respect to
less than all of the Assets and the cost of refurbishment,
reconstruction, repair or replacement of such Assets is less
than $2,000,000, the Obligor shall, as soon as reasonably
practicable but in no event later than the last day of the
Term, refurbish, reconstruct, repair or replace the Assets
suffering such Event of Loss to the conditions required by
Section 11 hereof, and, to the extent the Obligee receives
payment of insurance proceeds with respect to such Event of
Loss, such proceeds shall be paid over to the Obligor for the
purpose of reimbursing it for expenses incurred in connection
with such refurbishment, reconstruction, or otherwise paying
repair or replacement.
(iii) Notwithstanding anything in this clause (d) to
the contrary, if an Event of Default has occurred and is
continuing, all insurance proceeds paid to the Obligee with
respect to an Event of Loss shall be retained by the Obligee
until such Event of Default is cured or such proceeds are
applied, in whole or in part, to the satisfaction of the
Casualty Loss Value due.
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Asset Use Agreement
SECTION 17. Insurance.
(a) Coverage. The Obligor, at its own cost and expense,
shall carry and maintain or cause to be carried and maintained at all
times during the Term insurance, on or with respect to the Assets and
the operation thereof in an amount described on the Asset Use
Supplement; provided, that, in all events such insurance shall be in
such amounts and for such risks consistent with prudent industry
practice and at least comparable in amounts and against risks
customarily insured against by the Obligor, the Guarantor and their
respective Affiliates in respect of Assets owned or Agreement by them
similar in type to the Assets. All insurance required under this
Section 17 shall be provided by financially sound and reputable
insurers that are rated in Best's Insurance Guide or any successor
thereto (or if there be none, an organization having a similar national
reputation) at least as good as insurers of similar Assets owned by the
Guarantor on the First Acquisition Date.
(b) Adjustment of Losses. Losses, if any, with respect to
the Assets under all insurances or entries in protection and indemnity
associations, whether or not required to be carried under Section
17(a), shall be adjusted with the insurance companies, including the
filing of appropriate proceedings, by the Obligee, except in those
cases where the Obligee has elected or is required to turn proceeds
over to the Obligor, in which case the Obligor shall perform the
adjustments; provided, however, that if an Event of Default shall have
occurred and be continuing, such losses shall be adjusted solely by the
Obligee.
(c) Application of Insurance Proceeds. So long as no
Event of Default shall exist and be continuing hereunder, the entire
proceeds of: (x) any property or casualty insurance or third party
payments with respect to any damage to the Assets or (y) any payments
made by any Governmental Authority in respect of any taking,
confiscation, requisition or commandeering, or condemnation
("Confiscation Payments") with respect to the Assets shall be paid to
the Obligee and the Obligee shall be named loss payee on the insurance
described in clause (x). All proceeds of insurance in respect of loss
or damage to the Assets shall be paid to the Obligee or its assigns if
an Event of Default shall have occurred and be continuing at the time
such proceeds are payable, and such proceeds shall, at the option of
the Obligee, be held by the Obligee as security for the Obligor's
obligations hereunder or applied against any payment obligations of the
Obligor under this Agreement.
(d) Policy Requirements. Each policy required hereunder
shall provide thirty (30) days' prior notice to the Obligee of
cancellation or material change, and the Obligor shall obtain a waiver
by such insurance company of any right to claim any premiums or
commissions against the Obligee, any Participant or the Depositor. In
addition, each liability policy required hereunder shall (i) be primary
without right of contribution of any other insurance carried by or on
behalf of the Obligee, the Participants and the Depositor and (ii)
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Asset Use Agreement
include the Obligee, the Depositor and each Participant as additional
insureds as their respective interests may appear.
(e) Delivery of Insurance Certificates. Prior to the
First Acquisition Date and thereafter at the request of the Obligee,
the Obligor shall deliver to the Obligee, the Depositor and each
Participant certificates of insurance issued by the insurer(s) for the
insurance required to be maintained hereunder. If the Obligor shall
fail to cause the insurance required under this Section to be carried
and maintained, the Obligee, the Depositor or any Participant may
provide such insurance and the Obligor shall reimburse the Obligee, the
Depositor or such Participant, as the case may be, upon demand for the
cost thereof as a Supplemental Hire hereunder.
SECTION 18. General Tax Indemnity.
(a) The Obligor agrees to pay, defend and indemnify and
hold the Obligee, the Depositor, each Participant and their respective
successors and assigns (each, a "Tax Indemnitee") harmless on an
After-Tax Basis from any and all Mexican and United States Federal,
state, local and foreign taxes, including, without limitation, sales
and use taxes, fees, withholdings (other than with respect to Basic
Hire), levies, imposts, duties, ad valorem or property taxes, import
taxes, value added taxes, asset taxes, all license, franchise or
registration fees, fines, tariffs, assessments and charges of any kind
and nature whatsoever, together with any penalties, fines or interest
thereon (herein called "taxes or other impositions") howsoever imposed,
whether levied or imposed upon or asserted against any Tax Indemnitee,
the Obligor, any Asset or any part thereof, by any Federal, state or
local government or taxing authority in Mexico or the United States, or
by any taxing authority or governmental subdivision of a foreign
country, upon or with respect to (i) any Asset or any part thereof,
(ii) the manufacture, construction, ordering, purchase, ownership,
delivery, leasing, subleasing, re-leasing, possession, use,
maintenance, registration, re-registration, titling, re-titling,
licensing, documentation, return, repossession, sale or other
application or disposition of any Asset or any part thereof, (iii) the
rentals, receipts or earnings arising from any Asset or any part
thereof, or (iv) this Agreement, each Asset Use Supplement, the Basic
Hire and/or Supplemental Hire payable by the Obligor hereunder;
provided, however, that the foregoing indemnity shall not apply to:
(1) any Mexico or United States Federal, state,
local or foreign tax or other imposition based on or measured
by net income (including any capital gains taxes, excess
profits taxes, minimum taxes, alternative minimum taxes.
branch profits taxes, accumulated earnings taxes and personal
holding company taxes) or in the nature of a net income tax or
imposed in lieu of a net income tax, and any franchise tax and
other tax based on capital, receipts, net worth, surplus or
comparable basis
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<PAGE> 31
Asset Use Agreement
of measurement (provided, that, notwithstanding this clause
(1), the Obligor shall pay, defend and indemnify each Tax
Indemnitee as provided in clause (a) above for any taxes
imposed by Mexican tax authorities on income from Mexican
sources including but not limited to withholding taxes);
(2) any tax or other impositions in respect of
this Agreement of any Asset that results from any act, event
or omission (other than any act, event or omission expressly
provided in Section 28(b)(v)) that occurs, or is imposed with
respect to any period after, the earliest of (i) the return of
possession of the Asset in compliance with this Agreement,
(ii) the expiration or earlier termination of this Agreement
or (iii) the termination of this Agreement as the result of an
Event of Loss;
(3) any tax or other impositions that are imposed
on any Tax Indemnitee as a result of the gross negligence or
willful misconduct of such Tax Indemnitee or its Affiliate or
the willful breach by such Tax Indemnitee or such Affiliate of
its obligations hereunder;
(4) any tax or other impositions that have not
been paid and that are being contested in accordance with
clause (b) below;
(5) any tax or other impositions that result from
any voluntary transfer by any Tax Indemnitee of any interest
in any Asset or any interest arising under this Agreement, or
from any voluntary transfer of any interest in any Tax
Indemnitee, or from any involuntary transfer of any of the
foregoing interests in connection with any bankruptcy or other
proceeding for the relief of debtors in which such Tax
Indemnitee is the debtor or any foreclosure by a creditor of
any Tax Indemnitee (other than, in any case, any transfer in
connection with the exercise by the Obligor of its purchase
option pursuant to Section 28(a) or a sale of any Asset
pursuant to Section 28(b), in connection with the occurrence
of an Event of Default, or an Event of Loss, or otherwise
pursuant to this Agreement);
(6) any tax that is enacted or adopted as a
substitute for or in lieu of any tax that would not have been
indemnified against pursuant to Section 18(a);
(7) any tax or other impositions imposed on any
Tax Indemnitee that would not have been imposed upon such Tax
Indemnitee but for any failure of such Tax Indemnitee to
comply with any information, documentation, reporting or other
similar requirements concerning the nationality, residence,
identity or connection with the jurisdiction imposing such tax
or other impositions, if such compliance is required, under
Applicable Law or treaty, to obtain or establish relief or
exemption
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<PAGE> 32
Asset Use Agreement
from or reduction in such tax or other impositions and the
Obligor has provided such Tax Indemnitee with a timely notice
of such information, documentation, reporting or similar
requirement;
(8) any tax or other impositions imposed as a
result of any amendment or supplement to any Operative
Document unless such amendment is requested or consented to by
Obligor in writing; and
(9) any tax or other impositions imposed on, or
with respect to, a transferee (or a subsequent transferee) of
an original Tax Indemnitee to the extent of the excess of such
tax or other impositions over the amount of such tax or other
impositions that would have been imposed on, or with respect
to, such original Tax Indemnitee had there not been a transfer
by such original Tax Indemnitee of (A) the Assets or any
interest therein or (B) any interest in, or arising under, any
or all of the Operative Documents.
Notwithstanding the foregoing provisos (1) through (9), Obligor shall indemnify
each Tax Indemnitee for any taxes identified in provisos 1, 4 or 6 (or any
increase in such taxes) imposed on such Tax Indemnitee net of any decrease in
such taxes realized by such Tax Indemnitee, to the extent that such tax or tax
increase would not have occurred if on each Funding Date the Obligee had
advanced funds to the Obligor in the form of a loan secured by the Assets in an
amount equal to the amount funded on such Funding Date, with debt service for
such loan equal to the Basic Hire payable on each Hire Payment Date and a
principal balance at the maturity of such loan in an amount equal to the
aggregate amount of the Asset Costs then outstanding at the end of the term of
this Agreement. Notwithstanding the provisos (1) through (8), but subject to
proviso (9), the Obligor shall pay or reimburse, and indemnify and hold
harmless, any Tax Indemnitee which is not incorporated under the laws of the
United States, or a state thereof, from any deduction or withholding of any
United States Federal income tax to the extent such deduction or withholding
results from a change of treaty, law or regulation. The Obligor will prepare and
file any reports or returns required to be made with respect to any tax or other
imposition for which the Obligor is responsible, directly or indirectly, if
permitted by applicable law to file the same, and if not so permitted, the
Obligor shall prepare such reports or returns for signature by the Obligee or,
upon request of the Obligee, will promptly provide the Obligee with all
information necessary for the making and timely filing of such reports or
returns by the Obligee, and shall forward the same, together with immediately
available funds for payment of any tax or other imposition due, to the Obligee,
at least five (5) Business Days in advance of the date such payment is to be
made. Upon written request, the Obligor shall furnish the Obligee with copies of
all paid receipts or other appropriate evidence of payment for all taxes or
other impositions paid by the Obligor pursuant to this Section 18. All of the
indemnities contained in this Section 18 in respect of (i) any act, event or
omission that occurs on or prior to termination of this Agreement and (ii) any
sale described in
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<PAGE> 33
Asset Use Agreement
Section 28(b)(v) shall continue in full force and effect notwithstanding the
expiration or earlier termination of this Agreement in whole or in part,
including the expiration or termination of the Term with respect to any Asset
(or all) of the Assets, and are expressly made for the benefit of, and shall be
enforceable by, the Obligee, the Depositor and each Participant.
(b) In the event any claim, action, proceeding or suit is
brought against any Tax Indemnitee with respect to which the Obligor
would be required to indemnify such Tax Indemnitee, such Tax Indemnitee
shall promptly give written notice of any such claim, action,
proceeding or suit to the Obligor, provided, further, that the failure
of any Tax Indemnitee to give such notice to the Obligor shall not
relieve the Obligor from any of its obligations to provide
indemnification to any Tax Indemnitee under this Section 18, except to
the extent that such failure prejudices the Obligor's ability to
contest such claim, action, proceeding or suit or to the extent that
any amount for which indemnity of such Tax Indemnitee is required
hereunder is otherwise a result of such Tax Indemnitee's failure to
give notice. The Obligor may, at the Obligor's expense, in its own name
or in the name and on behalf of the Tax Indemnitee resist and defend
such action, suit or proceeding, or cause the same to be resisted or
defended by counsel selected by the Obligor and reasonably satisfactory
to such Tax Indemnitee and in the event of any failure by the Obligor
to do so, the Obligor shall pay all costs and expenses (including,
without limitation, attorney's fees and expenses) incurred by such Tax
Indemnitee in connection with such action, suit or proceeding;
provided, that, if, in the good faith judgement of the relevant Tax
Indemnitee, the settlement of any action, suit or proceeding could
materially and adversely affect such Tax Indemnitee's income tax
liabilities (other than with respect to the transactions contemplated
by this Agreement) then the Obligor shall not settle any such actions
for which it has assumed the responsibility of defense without the
consent of such Tax Indemnitee.
(c) If any Tax Indemnitee shall actually recognize (as
determined in good faith by the relevant Tax Indemnitee) a tax benefit
by reason of any tax paid or indemnified by Obligor pursuant to this
Section 18 (whether such tax benefit shall be by means of a foreign tax
credit, depreciation or cost recovery deduction, other credit or
deduction, or otherwise) not otherwise taken into account in computing
such payment or indemnity, such Tax Indemnitee shall pay to Obligor an
amount equal to the amount of such tax benefit plus any tax benefit
recognized as the result of any payment made pursuant to this sentence,
when, as, if, and to the extent, recognized; provided, that such Tax
Indemnitee shall not be required to make any payment pursuant to this
sentence if and so as long as an Event of Default has occurred and is
continuing. Each such Tax Indemnitee shall in good faith use reasonable
efforts in filing its tax returns and in dealing with taxing
authorities to seek and claim any such tax benefits.
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<PAGE> 34
Asset Use Agreement
(d) Obligor also agrees that (i) any and all payments by
Obligor under this Agreement or any other Operative Document and (ii)
any and all payments by the Obligee under this Agreement or any other
Operative Document (including, without limitation, all payments to the
holders of Notes or Class I Certificates (a "Holder") shall be made
free and clear of, and without deduction or withholding for, any and
all taxes or other impositions that are subject to indemnification
under this Section 18, and that if Obligor or the Obligee shall be
required under Applicable Law to deduct or withhold any such
indemnifiable taxes or other impositions from or in respect of any
payment hereunder or under any other Operative Document, then at the
time such payment is made: (A) Obligor shall pay an additional amount
such that the net amount actually received by the Person entitled to
such payment (the "Payee") (including, without limitation, in the case
of payments of Basic Hire by Obligor to the Obligee to be used for
payments to a Holder) will, after making all required deductions and
withholdings for all such indemnifiable taxes or other impositions
(including deductions and withholdings applicable to additional amounts
payable under this paragraph) and after taking into account all
indemnifiable taxes or other impositions imposed on or with respect to
the receipt or accrual of such additional amounts, equal the full
amount of the payment due hereunder or under any other Operative
Document, (B) Obligor shall make all deductions as are required under
Applicable Law and (C) Obligor shall pay the full amount deducted or
withheld to the relevant taxing authority or other Governmental
Authority in accordance with Applicable Law and shall pay the balance
of such additional amount directly to the Payee, in the case of any
payment described in clause (i) of this sentence, and to the Obligee,
in the case of any payment described in clause (ii) of this sentence.
SECTION 19. Indemnification. The Obligor hereby assumes liability
for, and does hereby agree to indemnify, protect, save, defend, and hold
harmless the Obligee, Trust Company, the Depositor, each Participant and their
respective officers, directors, stockholders, successors, assigns, agents and
servants (each such party being herein, for purposes of this Section 19, called
an "Indemnified Person") on an After-Tax Basis from and against any and all
obligations, fees (including switching fees), charges (including demurrage
charges), liabilities, losses, damages, penalties, claims, demands, actions,
suits, judgments, costs and expenses, including legal expenses, of every kind
and nature whatsoever, imposed on, incurred by, or asserted against any
Indemnified Party, in any way relating to or arising out of (a) the manufacture,
construction, ordering, purchase, acceptance or rejection, ownership, titling or
retitling, registration or re-registration, delivery, leasing, subleasing,
releasing, possession, use, operation, storage, removal, return, repossession,
sale or other disposition of the Assets or any Asset, or any part thereof,
including, without limitation, any of such as may arise from (i) the
transactions contemplated by this Agreement or the other Operative Documents,
(ii) the loss or damage to any property or death or injury to any persons, (iii)
patent or latent defects in any Asset (whether or not discoverable by the
Obligor or any Indemnified Party), (iv) any claims based on strict liability in
tort, (v) any claims based on patent, trademark, tradename or copyright
infringement, (vi) any claims based upon any non-compliance with or violation of
any
28
<PAGE> 35
Asset Use Agreement
environmental control, noise or pollution laws or requirements, including
without limitation, fines and penalties arising from violations of or
noncompliance with such requirements or failure to report discharges, and costs
of clean-up of any discharge and (vii) any loss or damage to any commodities
loaded or unloaded by the Assets; or (b) any failure on the part of the Obligor
to perform or comply with any of the terms of this Agreement; or (c) any power
of attorney issued to the Obligor. The Obligor shall give each Indemnified Party
prompt notice of any occurrence, event or condition known to the Obligor as a
consequence of which any Indemnified Party may be entitled to indemnification
hereunder. The Obligor shall forthwith upon demand of any such Indemnified Party
reimburse such Indemnified Party for amounts reasonably expended by it in
connection with any of the foregoing or pay such amounts directly; provided,
however, that the Obligor shall not be liable to such Indemnified Party for any
of the foregoing to the extent they arise from the gross negligence or willful
misconduct of such Indemnified Party. The Obligor shall be subrogated to an
Indemnified Party's rights in any matter with respect to which the Obligor has
actually reimbursed such Indemnified Party for amounts expended by it or has
actually paid such amounts directly pursuant to this Section 19. In case any
action, suit or proceeding is brought or, to such Indemnified Party's knowledge,
threatened, against any Indemnified Party in connection with any claim
indemnified against hereunder, such Indemnified Party will, promptly after
receipt of notice of the commencement or threat of such action, suit or
proceeding, notify the Obligor thereof in writing, enclosing a copy of all
papers served upon such Indemnified Party. The Obligor may at the Obligor's
expense, resist and defend such action, suit or proceeding, or cause the same to
be resisted or defended by counsel selected by the Obligor and reasonably
satisfactory to such Indemnified Party and in the event of any failure by the
Obligor to do so, the Obligor shall pay all costs and expenses (including,
without limitation, attorney's fees and expenses) incurred by such Indemnified
Party in connection with such action, suit or proceeding; provided, however,
that the failure of any Indemnified Party to give such notice to the Obligor
shall not relieve the Obligor from any of its obligations to provide
indemnification under this Section 19, except to the extent that any amount for
which indemnity is required hereunder is a result of such failure to give
notice; provided further that the Obligor shall be relieved of its obligations
to provide indemnification to an Indemnified Party under this Section 19 to the
extent that such Indemnified Party shall deliver to the Obligor a written notice
waiving the benefits of the indemnification of such Indemnified Party provided
by this Section 19 in connection with such claim, action, proceeding or suit.
The provisions of this Section 19, and the obligations of the Obligor under this
Section 19, shall apply from the date of the execution of this Agreement
notwithstanding that the Term may not have commenced with respect to the Assets,
and shall survive and continue in full force and effect notwithstanding the
expiration or earlier termination of this Agreement in whole or in part,
including the expiration or termination of the Term with respect to any Asset or
all Assets, and are expressly made for the benefit of, and shall be enforceable
by, each Indemnified Party.
SECTION 20. No Warranties. IT IS AGREED THAT NONE OF THE
OBLIGEE, TRUST COMPANY, THE DEPOSITOR OR ANY PARTICIPANT SHALL BE DEEMED TO HAVE
29
<PAGE> 36
Asset Use Agreement
MADE, AND EACH IS DEEMED TO HEREBY DISCLAIM ANY WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, AS TO TITLE TO, AS TO THE DESIGN, CONDITION OR
MERCHANTABILITY OF, AS TO THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP
IN OR THE CONFORMITY THEREOF TO THE PLANS AND SPECIFICATIONS, OR AS TO THE
FITNESS OF THE ASSETS FOR ANY PARTICULAR PURPOSE OR AS TO ELIGIBILITY OF THE
ASSETS FOR ANY PARTICULAR TRADE, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY OTHER WARRANTY OR
REPRESENTATION WHATSOEVER. THE OBLIGOR HEREBY WAIVES ANY CLAIM (INCLUDING ANY
CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT
HAVE AGAINST THE OBLIGEE, TRUST COMPANY, THE DEPOSITOR, ANY PARTICIPANT OR ANY
OTHER INDEMNIFIED PERSON FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR
CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY THE ASSETS OR BY THE OBLIGOR'S LOSS
OF USE THEREOF FOR ANY REASON WHATSOEVER, INCLUDING COMPLIANCE WITH
ENVIRONMENTAL LAWS. So long and only so long as an Event of Default shall not
have occurred and be continuing, and so long and only so long as the Assets
shall be subject to this Agreement and the Obligor shall be entitled to
possession of the Assets hereunder, the Obligee authorizes the Obligor, at the
Obligor's expense, to .assert for the Obligee's account, all rights and powers
of the Obligee under any Builder's, manufacturer's, vendor's or dealer's
warranty with respect to the Assets and the Obligee agrees to cooperate with the
Obligor to the extent reasonably necessary to permit the Obligor to realize the
benefits of such warranties; provided, however, that the Obligor shall
indemnify, protect, save, defend and hold harmless the Obligee, Trust Company,
the Depositor, the Participants and the other Indemnified Persons from and
against any and all claims, and all costs, expenses, damages, losses and
liabilities incurred or suffered by the Obligee in connection therewith, as a
result of, or incident to, any action by the Obligor pursuant to the foregoing
authorization. Nothing in this Section 20 shall be construed as a waiver of any
right that either the Obligee or the Obligor may have against any person other
than the Obligee, the Trustee, the Depositor, the Participants and the other
Indemnified Persons.
SECTION 21. Obligor's Representations and Warranties. The
Obligor hereby represents and warrants that:
(a) the Obligor is a corporation duly organized and
validly existing under the laws of Mexico, and is qualified to do
business in, and is in good standing in, each state or other
jurisdiction in which the nature of its business makes such
qualification necessary;
(b) the Obligor has the corporate power and authority to
execute and perform this Agreement and to demise the Assets hereunder,
and has duly authorized the execution, delivery and performance of this
Agreement;
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<PAGE> 37
Asset Use Agreement
(c) the demise of the Assets from the Obligee by the
Obligor, the execution and delivery of this Agreement, the Asset Use
Supplement and other related instruments, documents and agreements, the
compliance by the Obligor with the terms hereof and thereof, and the
payments and performance by the Obligor of all of its obligations
hereunder and thereunder (i) have been duly and legally authorized by
appropriate corporate action taken by the Obligor, (ii) are not in
contravention of, and will not result in a violation or breach of, any
of the terms of the Obligor's Certificate of Incorporation (or
equivalent document), its By-Laws, or of any provisions relating to
shares of the capital stock of the Obligor, and (iii) except where such
violation or breach could not reasonably be expected to have a Material
Adverse Effect, (x) not violate or constitute a breach of any provision
of law, any order of any court or other agency of government, or any
indenture, agreement or other instrument to which the Obligor is a
party, or by or under which the Obligor or any of the Obligor's
property is bound, or (y) be in conflict with, result in a breach of,
or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or instrument, or result in the creation
or imposition of any Lien upon any of the Obligor's property or assets
other than Permitted Liens;
(d) this Agreement has been executed by the duly
authorized officer or officers of the Obligor and delivered to the
Obligee and constitutes, and when executed by the duly authorized
officer or officers of the Obligor and delivered to the Obligee the
Asset Use Supplement and related instruments, documents and agreements
with respect to the Assets will constitute, the legal, valid and
binding obligations of the Obligor, enforceable in accordance with
their terms;
(e) neither the execution and delivery of this Agreement
or any Asset Use Supplement by the Obligor, nor the payment and
performance by the Obligor of all of its obligations hereunder and
thereunder, requires the consent or approval of, the giving of notice
to, or the registration, filing or recording with, or the taking of any
other action in respect of, any Federal, state, local or foreign
government or governmental authority or agency or any other Person;
(f) no mortgage, deed of trust, or other Lien (other than
a Permitted Lien) which now covers or affects any property or interest
therein of the Obligor, now attaches to any Asset, the proceeds thereof
or this Agreement, or in any manner affects or will affect adversely
the Obligee's rights and security interest therein;
(g) with respect to any Assets for which an Acquisition
Date Notice has been made, the Obligor holds (or, upon Completion of
the Improvements, will hold) all licenses, certificates and permits
from governmental authorities necessary to use and operate the Assets
in accordance with the provisions of this Agreement;
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Asset Use Agreement
(h) there is no litigation or other proceeding now
pending or, to the best of the Obligor's knowledge, threatened against
or affecting the Obligor, in any court or before any regulatory
commission, board or other administrative governmental agency (i) which
would directly or indirectly adversely affect or impair the title of
the Obligee to the Assets or (ii) which could reasonably be expected to
have a Material Adverse Effect;
(i) all balance sheets, statements of profit and loss and
other financial statements set forth in the Disclosure Documents fairly
present the financial condition of the Obligor on the dates for which,
and the results of its operations for the periods for which, the same
have been furnished, and have been prepared in accordance with
generally accepted accounting principles consistently followed
throughout the periods covered thereby (except as noted therein); and
there has been no material adverse change in the financial condition of
the Obligor, since the date of the Disclosure Documents, except as may
be contemplated and disclosed under the Disclosure Documents;
(j) no approval that has not been obtained by the Obligor
as of the date of this representation and warranty is required from any
regulatory body, board, authority or commission, nor from any other
administrative or governmental agency, nor from any other Person, with
respect to the execution, delivery and performance of this Agreement,
other than such approvals the failure to obtain could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect;
(k) except for the filings required pursuant to Section
3.1(i), no further action, including any filing or recording of any
document (including any other financing statement) is necessary or
advisable in order to establish and perfect the Obligee's title to and
interest in the Assets as against the Obligor and any third parties in
any applicable jurisdictions in the United States, or Mexico;
(l) the Disclosure Documents are true and correct in all
material respects and do not omit any information necessary to make the
information provided, in light of the circumstances under which such
information was provided, not materially misleading; and
(m) the Obligor is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 22. Events of Default. Any of the following events shall
constitute an Event of Default:
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Asset Use Agreement
(a) Non-Payment. The Obligor shall fail to make (i) any
payment of Basic Hire within five (5) Business Days of the date due,
(ii) any payment of Casualty Loss Value, EBO Purchase Option Amount,
End of Term Purchase Option Amount or Deficiency on the date due or
(iii) any other Supplemental Hire within ten (10) days after notice
thereof; or
(b) Specific Defaults.
(i) The Obligor shall fail to observe or perform
any of the covenants, agreements or obligations of the Obligor
set forth in Sections 6, 14(a), 28(a) and 28(b); or
(ii) the Obligor shall fail to maintain in effect
the insurance required under Section 17 or (iii) the Guarantor
shall fall to observe any of its covenants, agreements or
obligations set forth in the Guaranty; or
(c) Other Defaults. The Obligor shall fail to perform or
observe any other covenant, condition, or agreement to be performed or
observed by it under this Agreement, or in any Operative Document or
other agreement or certificate furnished to the Obligee or any
Participant in connection with this Agreement, and such failure shall
continue unremedied for thirty (30) days after the earlier of (i)
written notice to the Obligor specifying such failure and demanding the
same to be remedied and (ii) the date on which a responsible officer of
the Obligor shall have actual knowledge thereof; or
(d) Cross-Default. The Guarantor or any of its
Subsidiaries shall (i) fail to make any payment in respect of any
Indebtedness having an aggregate principal amount (including amounts
owing to all creditors under any combined or syndicated credit
arrangement) of more than $3,000,000 when due (whether by scheduled
maturity, required prepayment acceleration, demand, or otherwise) and
such failure continues after the applicable grace or notice period, if
any, specified in the relevant document on the date of such failure
(ii) fail to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement or
instrument relating to any Indebtedness having an aggregate principal
amount (including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $3,000,000 and such failure
continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if the
effect of such failure, event or condition is to cause, or to permit
the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated
maturity or (iii) any Guaranty Event of Default shall have occurred and
be continuing; or
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Asset Use Agreement
(e) Representation or Warranty. Any representation or
warranty made by (i) the Obligor under this Agreement or in any Asset
Use Supplement, (ii) the Guarantor in the Guaranty, or (iii) the
Obligor or the Guarantor in any document or certificate furnished by
the Obligor or the Guarantor, as the case may be, to the Obligee or any
Participant in connection herewith or pursuant hereto, shall prove to
be untrue or incorrect in any material respect when made; or
(f) Insolvency. The Obligor or the Guarantor shall become
insolvent or make an assignment for the benefit of creditors or consent
to the appointment of a trustee, sindico, liquidator or receiver; or a
trustee, sindico, liquidator or a receiver shall be appointed for the
Obligor or the Guarantor or for a substantial part of its property
without its consent and shall not be dismissed for a period of ninety
(90) consecutive days; or any execution or writ or process shall be
issued under any action or proceeding against the Obligor or the
Guarantor whereby any of the Assets may be taken or restrained; or
(g) Voluntary Proceedings. The Obligor or the Guarantor
shall (i) generally fail to pay, or admit in writing its inability to
pay, its debts as they become due, or shall voluntarily commence any
case or proceeding or file any petition under the Ley de Quiebras y de
Suspension de Pagos or any bankruptcy, suspension of payments,
insolvency or similar law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, trustee, sindico,
liquidator, custodian or liquidator for itself or a substantial portion
of its property, assets or business or to effect a plan or other
arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of any
involuntary petition filed against it in any bankruptcy, suspension of
payments, insolvency or similar case or proceeding, or shall be
adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the
appointment of, a receiver, trustee, sindico, liquidator, custodian or
liquidator for itself or a substantial portion of its property, assets
or business, or (ii) take corporate action for the purpose of
effectuating any of the foregoing; or
(h) Involuntary Proceedings. Involuntary proceedings or
an involuntary petition shall be commenced or filed against the Obligor
or the Guarantor under the Ley de Quiebras y de Suspension de Pagos or
any bankruptcy, suspension of payments, insolvency or similar law or
seeking the dissolution, liquidation or reorganization of the Obligor
or the Guarantor or the appointment of a receiver, trustee, custodian
or liquidator for the Obligor or the Guarantor or of a substantial part
of the property, assets or business of the Obligor or the Guarantor, or
any writ, judgment, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of the property,
assets or business of the Obligor or the Guarantor, and such
proceedings or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
stayed, release,
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<PAGE> 41
Asset Use Agreement
vacated or fully bonded, within ninety (90) consecutive days after
commencement, filing or levy, as the case may be; or
(i) Failure of Enforceability. This Agreement or the
Guaranty shall cease to be the legally valid, binding and enforceable
obligation of the Obligor and the Guaranty, respectively; or the
Obligor or the Guarantor shall, directly or indirectly, contest in any
manner such effectiveness, validity, binding nature or enforceability;
or
(j) Change of Control. Any Change of Control shall occur.
SECTION 23. Remedies Upon Default.
(a) Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing, the
Obligee shall, at the request of the Required Participants, or may,
with the consent of the Required Participants, declare this Agreement
to be in default (provided that, upon the occurrence of any event
specified in clause (f), (g) or (h) of Section 22, the commitments of
the Obligee hereunder and all Loan Commitments shall automatically
terminate and the unpaid Asset Costs of the Assets and all accrued and
unpaid Basic Hire and other amounts due hereunder shall automatically
become due and payable without further act of or notice by the Obligee
or any Participant), and the Obligee may exercise one or more of the
following remedies as the Obligee in its sole discretion may elect:
(i) The Obligee may terminate or cancel this
Agreement, without prejudice to any other remedies of the
Obligee hereunder and under applicable law, with respect to
all or any Assets, and whether or not this Agreement has been
so terminated, may enter the premises of the Obligor or any
other party to take immediate possession of the Assets and
remove all or any Assets by summary proceedings or otherwise,
or may cause the Obligor, at the Obligor's expense, to store,
maintain, surrender and deliver possession of the Assets in
the same manner as provided in Section 6 hereof, all without
liability to the Obligee for or by reason of such entry or
taking of possession, whether for the restoration of damage to
property caused by such taking or otherwise;
(ii) The Obligee may hold or keep idle the Assets,
as the Obligee in its sole discretion may determine, provided
that the Obligee shall have a duty to use commercially
reasonable efforts to mitigate its damages and the amounts
owed to the Obligee, free and clear of any rights of the
Obligor and without any duty to account to the Obligor with
respect to such action or inaction or for any proceeds with
respect thereto, except that the Obligor's obligation to pay
Basic Hire for any Variable Hire
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<PAGE> 42
Asset Use Agreement
Periods commencing after the Obligor shall have been deprived
of possession pursuant to this Section 23 shall be reduced by
the net proceeds, if any, received by the Obligee from leasing
the Assets to any Person other than the Obligor for the same
Variable Hire Periods or any portion thereof;
(iii) The Obligee may sell all or any of the Assets
at public or private sale as the Obligee may determine, free
and clear of any rights of the Obligor, and the Obligor shall
pay to the Obligee, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Hire due
for the Asset(s) so sold for any Variable Hire Period
commencing after the date on which such sale occurs), the sum
of (x) all unpaid Basic Hire payable for each Asset for all
Variable Hire Periods, plus (y) an amount equal to the excess,
if any, of (A) the Casualty Loss Value of the Asset(s) so
sold, computed as of the Hire Payment Date coincident with or
next preceding the date of such sale, over (B) the net
proceeds of such sale, plus interest at the Overdue Rate on
the amount of such excess from the Hire Payment Date as of
which such Casualty Loss Value is computed until the date of
actual payment, plus (z) all unpaid Supplemental Hire due with
respect to each Asset so sold;
(iv) Whether or not the Obligee shall have
exercised, or shall thereafter at any time exercise, any of
its rights under clause (i) or (ii) above with respect to any
Assets, the Obligee, by written notice to the Obligor
specifying a payment date, may demand that the Obligor pay to
the Obligee, and the Obligor shall pay to the Obligee, on the
payment date specified in such notice, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the
Basic Hire due for any Assets for any Variable Hire Period
commencing after the payment date specified in such notice and
in lieu of the exercise by the Obligee of its remedies under
clause (ii) above in the case of a re-lease of such Assets or
under clause (iii) above with respect to a sale of such
Assets), the sum of (i) all unpaid Basic Hire payable for such
Assets for all Variable Hire Periods, plus (ii) all unpaid
Supplemental Hire due with respect to such Assets as of the
payment date specified in such notice, plus (iii) an amount,
with respect to each such Asset, equal to the Casualty Loss
Value of such Asset computed as of the Hire Payment Date
coincident with or next preceding the payment date specified
in such notice; provided, however, that with respect to any
such Asset returned to or repossessed by the Obligee, the
amount recoverable by the Obligee pursuant to the foregoing
shall be reduced (but not below zero) by an amount equal to
the fair market sales value of such Asset as of the date on
which the Obligee has obtained possession of such Asset;
(v) Unless all of the Assets have been sold in
their entirety, the Obligee may, whether or not the Obligee
shall have exercised or shall thereafter at any time
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<PAGE> 43
Asset Use Agreement
exercise any of its rights under clause (ii), (iii) or (iv) of
this Section 23 with respect to the Assets or portions
thereof, demand, by written notice to the Obligor specifying a
date not earlier than ten (10) days after the date of such
notice, that the Obligor purchase, on such date, the Assets
(or the remaining portion thereto in accordance with the
provisions of Section 28(a) for a purchase price equal to the
End of Term Purchase Option Amount for such Assets; provided,
however that no such written notice shall be required upon the
occurrence of any Event of Default described in clause (f),
(g) or (h) of Section 22; and
(vi) The Obligee may exercise any other right or
remedy which may be available to it under applicable law or
proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof or to
rescind this Agreement.
In addition, the Obligor shall be liable for all costs and expenses, including
reasonable attorney's fees, incurred by the Obligee, Trust Company, the
Depositor or any Participant by reason of the occurrence of any Event of Default
or the exercise of the Obligee's remedies with respect thereto, including all
costs and expenses incurred in connection with the return of the Assets in
accordance with Section 6 hereof or in placing the Assets in the condition
required by said Section. For the purpose of clause (iv) above, the "fair market
sales value" of any Asset shall mean such value as has been determined by an
independent qualified appraiser selected by the Obligee. Except as otherwise
expressly provided above, no remedy referred to in this Section 23 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to the Obligee at law or in
equity; and the exercise or beginning of exercise by the Obligee of any one or
more of such remedies shall not constitute the exclusive election of such
remedies and shall not preclude the simultaneous or later exercise by the
Obligee of any or all of such other remedies. No express or implied waiver by
the Obligee of any Event of Default shall in any way be, or be construed to be,
a waiver of any future or subsequent Event of Default.
(b) After the sale of all of the Assets pursuant to the
exercise of the Obligee's remedies under this Agreement, any amounts
collected by the Obligee in such sale or sales which exceed the sum of
(i) the applicable Casualty Loss Values for all Assets subject to this
Agreement, plus (ii) any amounts owed by the Obligor to the Obligee
under this Agreement, plus (iii) the costs incurred by the Obligee in
consummating such sale, shall be paid to the Obligor by the Obligee.
SECTION 24. Obligee's Right to Perform for the Obligor. If the
Obligor fails to make any payment of Supplemental Hire required to be made by it
hereunder or fails to perform or comply with any of its agreements contained
herein, the Obligee may itself, after notice to the Obligor, make such payment
or perform or comply with such agreement, and the amount of such payment and the
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Asset Use Agreement
amount of the reasonable expenses of the Obligee incurred in connection with
such payment or the performance of or compliance with such agreement, as the
case may be, together with interest thereon at the Overdue Rate shall, if not
paid by the Obligor to the Obligee on demand, be deemed a Supplemental Hire
hereunder; provided, however that no such payment, performance or compliance by
the Obligee shall be deemed to cure any Event of Default hereunder.
SECTION 25. Covenant of the Obligee With Respect to Obligee
Liens. The Obligee hereby agrees that so long as this Agreement is in effect and
the Obligor shall not have elected the Return Option, the Obligee will, at the
request of the Obligor and at the Obligee's own cost and expense, promptly take
such action as may be necessary to discharge, or to cause to be discharged, all
Liens attributable to the Obligee of the type described in clause (b) of the
definition of "Permitted Liens" on the Assets.
SECTION 26. Further Assurances. The Obligor will promptly and
duly execute and deliver to the Obligee and the Participants such other
documents and assurances, including, without limitation, such amendments to this
Agreement as may be reasonably required by the Obligee or any Participant, and
will take such further action as the Obligee or any Participant may from time to
time reasonably request in order to carry out more effectively the intent and
purposes of this Agreement and to establish and protect the rights and remedies
created or intended to be created in favor of the Obligee and its rights, title
and interests in and to the Assets.
SECTION 27. Notices. All notices provided for or required under
the terms and provisions hereof shall be in writing or by facsimile and
addressed, delivered or transmitted to the appropriate Person at its address or
facsimile number as set forth on Schedule I hereto, or at such other address or
facsimile number as may from time to time be designated by such Person in
writing to the respective parties. Any notice, if mailed and properly addressed
with postage prepaid or if properly addressed and sent by pre-paid courier
service, shall be deemed given when delivered; any notice, if transmitted by
facsimile, shall be deemed given when transmitted and electronically confirmed
if transmitted and confirmed prior to 2:00 p.m. on a Business Day (and if
transmitted and confirmed after 2:00 p.m. on a Business Day or if transmitted
and confirmed on a day other than a Business Day, will be deemed received on the
next succeeding Business Day).
SECTION 28. Obligor's Purchase Options and Obligations,
Return Option, Extension Option and Reversion Right.
(a) Obligor's Purchase Options.
(i) End of Term Purchase Option. With respect to
the Asset Use Supplements, the Obligor shall be entitled, at
its option, upon written notice to the Obligee as hereinafter
provided, to purchase all, but not less than all, Assets then
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<PAGE> 45
Asset Use Agreement
subject to this Agreement; provided that (i) no Event of
Default shall have occurred and be continuing, (ii) the
Obligee shall not have commenced its exercise of remedies
under Section 23(a)(iii) and the Obligee shall not have
commenced leasing the Assets to others under Section 23(a)(ii)
and (iii) such purchase shall be consummated, and the Obligor
shall pay the purchase price therefor to the Obligee in
immediately available funds, on the Termination Date for the
Assets covered by such Agreement Schedule. The purchase price
for each such Asset shall be an amount (the "End of Term
Purchase Option Amount"), payable in immediately available
funds, equal to the sum of (w) the Casualty Loss Value of such
Asset as of the Termination Date, plus (x) the Basic Hire due
and payable for such Asset on the Termination Date, plus (y)
any applicable sales, transfer or other similar taxes imposed
as a result of such sale (other than gross or net income taxes
attributable to such sale), plus (z) any Supplemental Hire
then due and owing to the Obligee hereunder. The Obligee's
sale of the Assets shall be on an as-is, where-is basis,
without any representation or warranty by, or recourse to, the
Obligee except that the Obligee shall warrant that each such
Asset shall be returned free and clear of all Liens of the
sort described in clause (d) of the definition of Permitted
Liens. Upon receipt of the End of Term Purchase Option Amount
therefor and satisfaction of the other conditions herein, the
Owner shall deliver to the Obligor, or its designee, such
instruments of transfer as reasonably requested by the
Obligor. If the Obligor intends to exercise said purchase
option in respect of the Termination Date, the Obligor shall
give written notice to the Obligee to such effect not less
than ninety (90) days prior to the expiration of the Term of
said Assets. If the Obligor shall have given such written
notice to the Obligee, or if the Obligor shall have failed to
give notice to the Obligee of its election of the Return
Option under Section 28(b) at least ninety (90) days prior to
the end of the Term, such notice or omission shall constitute
the irrevocable and binding obligation of the Obligor to
purchase all Assets and to pay the Obligee the End of Term
Purchase Option Amount on the Termination Date thereof (unless
the Obligor, the Obligee and all of the Participants shall
have agreed to extend the Term pursuant to Section 28(c)).
(ii) Early Buyout Option. With respect to the Asset
Use Supplements, the Obligor shall be entitled, at its option,
upon written notice to the Obligee as hereinafter provided, to
purchase all, but not less than all, Assets then subject to
this Agreement on any Hire Payment Date occurring after the
initial Acquisition Date; provided, however, that (i) no Event
of Default shall have occurred and be continuing, (ii) the
Obligee shall not have commenced its exercise of remedies
under Section 23(a)(iii) and the Obligee shall not have
commenced leasing the Assets to others under Section 23(a)(ii)
and (iii) such purchase shall be consummated, and the Obligor
shall pay the purchase price therefor to the Obligee in
immediately available
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Asset Use Agreement
funds, on the Hire Payment Date specified in the Obligor's
notice to the Obligee. The purchase price for the Assets shall
be an amount (the "EBO Purchase Option Amount") equal to the
sum of (w) the Casualty Loss Value of such Asset as of the
immediately preceding Hire Payment Date, plus (x) all accrued
and unpaid interest on Loans and Yield on Certificate Amounts,
to the extent such Loans and Certificate Amounts are allocable
to the Assets, plus (y) any applicable sales, transfer or
other similar taxes imposed as a result of such sale (other
than gross or net income taxes attributable to such sale),
plus (z) any Supplemental Hire then due and owing to the
Obligee hereunder (including without limitation, any amounts
payable pursuant to Section 31(a) as a result of such
purchase). The Obligee's sale of the Assets shall be on an
as-is, where-is basis, without any representation or warranty
by, or recourse to, the Obligee except that the Obligee shall
warrant that the Assets shall be returned free and clear of
all Liens of the sort described in clause (d) of the
definition of Permitted Liens. If the Obligor intends to
exercise said purchase option, the Obligor shall provide the
Obligee with not less than sixty (60) days prior written
notice thereof specifying the proposed purchase date (which
date shall be a Hire Payment Date).
(b) Return Option. With respect to all Asset Use
Supplements, in the event the Obligor has not exercised its option to
purchase all of the Assets then subject to this Agreement pursuant to
Section 28(a) or, exercised its Reversion Right granted to it under
Section 5.10 of the Trust Agreement or with the Obligee and all of the
Participants extended the Term pursuant to Section 28(c), then the
Obligor shall have the option (the "Return Option") to return all (but
not less than all) of the Assets; provided, however, that (x) the
Obligor shall have given irrevocable written notice of its election of
the Return Option not less than ninety (90) days prior to the
expiration of the Term and (y) the Obligor shall comply with all terms
and provisions of this Section 28(b). In the event that the Obligor has
exercised its Return Option pursuant to this Section 28(b) and fails to
return all of the Assets then being returned on or prior to the then
scheduled Termination Date, then the Obligor shall be deemed to have
elected to purchase all such Assets and to pay the Obligee the End of
Term Purchase Option Amount.
(i) Marketing of Assets. The Obligor shall, during
the period commencing on the date of its notice of its
election of the Return Option and ending on the final
Termination Date for the Assets (such period, the "Marketing
Period"), use its best efforts to obtain bona fide bids for
the Assets then subject to this Agreement from prospective
purchasers who are not the Obligor, the Guarantor or any
Affiliate thereof and who are financially capable of
purchasing such Assets for cash on an as-is, where-is basis,
without recourse to the Obligee or warranty from the Obligee
(except that the Obligee shall warrant that each such Asset
shall be returned
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Asset Use Agreement
free and clear of all Liens attributable to the Obligee of the
sort described in clause (b) of the definition of Permitted
Liens). All bids received by the Obligor prior to the end of
the Term of such Assets shall be immediately certified to the
Obligee in writing, setting forth the amount of such bid and
the name and address of the person or entity submitting such
bid. Notwithstanding the foregoing, the Obligee, each Tranche
B Lender and each Class I Certificateholder shall have the
fight, but not the obligation, to seek bids for the Assets
during the Marketing Period.
(ii) Sale of Assets to Third Party Buyer(s). On the
Termination Date, provided that all the conditions hereof have
been met, the Obligee shall sell (or cause to be sold) all
Assets then subject to the Asset Use Supplement, for cash to
the bidder or bidders, if any, selected by the Obligor, on an
as-is, where-is basis and without recourse to the Obligee or
warranty from the Obligee (except that the Obligee shall
warrant that each such Asset shall be returned free and clear
of all Liens attributable to the Obligee of the sort described
in clause (a) or (b) of the definition of Permitted Liens),
and upon receipt by the Obligee of the sales price the Obligee
shall instruct the Obligor to deliver and the Obligor shall
deliver such Assets to such bidder in accordance with Section
6; provided, that (x) any such sale to a third party shall be
consummated, and the sales price for such Assets shall be paid
to the Obligee in immediately available funds, on or before
the Termination Date, and (y) the Obligee shall not be
obligated to sell such Assets if (I) the Net Proceeds of Sale
of such Assets are less than the aggregate Maximum Obligee
Risk Amount applicable to such Assets as of the Termination
Date, or (II) the Obligee has not received the amounts, if
any, payable by the Obligor pursuant to clauses (iii) and
(iv). Except as expressly set forth herein, the Obligor shall
have no right, power or authority to bind the Obligee in
connection with any proposed sale of the Assets.
(iii) End of the Term Report and Indemnity. The
Obligor shall, prior to the date occurring forty-five (45)
days before the Termination Date, deliver to the Obligee an
Appraisal in form and substance satisfactory to the Obligee,
the Tranche B Lenders and the Class I Certificateholders (the
"End of the Term Report"), which End of the Term Report shall
state the appraiser's conclusions as to the reason for any
decline in the Fair Market Sales Value of the Assets from that
anticipated for the Termination Date in the Appraisal
delivered on the Acquisition Date therefor. The Obligor shall
pay to the Obligee on or prior to the Termination Date, as
Supplemental Hire, an amount (not to exceed the Maximum
Obligee Risk Amount) equal to the diminution in Fair Market
Sales Value of the Assets that the End of the Tenn Report
demonstrates was the result of a decline in the Fair Market
Sales Value of the Assets due to: (A) extraordinary use,
failure to maintain, to repair, to restore, to rebuild or to
replace, failure to comply with all applicable laws, failure
to use, workmanship,
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Asset Use Agreement
method of removal or maintenance, repair, rebuilding or
replacement (excepting in each case ordinary wear and tear),
(B) any modification made to, or any rebuilding of, any Asset
or any part thereof, (C) the existence or presence of any
hazardous substance on any Asset, (D) any taking, confiscation
or deprivation of use of any Asset by any Governmental
Authority, (E) any use of any Asset other than as contemplated
by the Appraisal delivered on the Acquisition Date for such
Asset, (F) the failure of the Obligee to have good and
marketable title to any Asset free and clear of all Liens
(other than Liens of the type described in clause (a) or (b)
of the definition of Permitted Liens), (G) the existence of
any sub-Agreement relating to any Asset, (H) the existence of
any Liens on any Asset (other than Liens of the type described
in clause (a) or (b) of the definition of Permitted Liens), or
(I) the existence of any actions, suits or proceedings pending
or threatened with respect to any Asset (other than any such
actions, suits or proceedings that are caused by acts or
omissions of the Obligee or the Participants in violation of
the terms of the Operative Documents).
(iv) Deficiency Payment. If the aggregate proceeds
of sale of all Assets received by the Obligee from sales to
third parties pursuant to clause (ii), after deducting
therefrom the aggregate amount of all costs incurred by the
Obligee in connection with such sales (such net amount being
hereinafter referred to as "Net Proceeds of Sale") are less
than the aggregate Estimated Residual Value of all of the
Assets as of the Termination Date, the Obligor shall, on the
Termination Date, pay to the Obligee as an end of term Hire
adjustment, in immediately available funds, (x) an amount
equal to such deficiency (a "Deficiency") as an adjustment to
the Basic Hire payable under this Agreement for such Assets,
plus (y) the Basic Hire due and payable for such Assets on the
Termination Date, plus (z) any Supplemental Hire then due and
owing to the Obligee or any other Indemnified Person hereunder
(including all amounts due pursuant to Section 28(b)(iii));
provided, however, that if no Default or Event of Default
shall have occurred and be continuing hereunder, the amount of
the Deficiency payable by the Obligor with respect to the
Assets covered by such Asset Use Supplement shall not exceed
the Maximum Obligor Risk Amount as set forth in such Asset Use
Supplement for such Termination Date.
(v) Obligor Payment if No Sale. If a sale of all
Assets then covered by this Agreement either to the Obligor
pursuant to Section 28(a) hereof or to a third party pursuant
to Section 28(b) hereof has not been consummated on the
Termination Date with respect thereto for any reason, then the
Obligor shall, on the Termination Date of such Assets, pay to
the Obligee as an end of term Variable Hire adjustment, in
immediately available funds, as an adjustment to the Basic
Hire payable under this Agreement for such Assets, an amount
equal to (i) the Maximum Obligor Risk
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Asset Use Agreement
Amount as set forth in the Asset Use Supplement for such
Termination Date, if on the Termination Date no Default or
Event of Default shall have occurred and be continuing
hereunder or (ii) the Estimated Residual Value of all of such
Assets, if on the Termination Date a Default or Event of
Default shall have occurred and be continuing hereunder, plus,
in either case, the Basic Hire due and payable for such Assets
on the Termination Date plus all Supplemental Hire then due
and owing with respect to such Assets. The Obligor shall
remain liable for the payment of, and upon the consummation by
the Obligee of the sale of any Assets after the Termination
Date thereof, the Obligor shall pay, or reimburse the Obligee
for the payment of, all applicable sales or other taxes
imposed as a result of such sale, other than gross or net
income taxes attributable to such sale, and such obligation
shall survive the termination of this Agreement.
(vi) Conveyance of Assets to Obligee or Third Party
Buyer. If the Obligor exercises its Return Option, then the
Obligor shall, on the Termination Date for each Asset and at
the Obligor's sole cost and expense, (x) deliver all of the
Assets to the Obligee or the purchaser(s) thereof in
accordance with the provisions of Section 6, (y) execute and
deliver to the Obligee or such purchaser(s), as applicable,
appropriate instruments conveying to such Person(s) all of the
Obligor's right, title and interest in and to the Assets being
conveyed and all warranties relating to such Assets and (z)
cause an opinion of counsel to be delivered to the Obligee or
such purchaser(s) as to the validity and effectiveness of the
conveyance contemplated by such conveyance instruments, which
opinion shall be in form and substance satisfactory to the
Obligee.
(c) Extension of Agreement Term. The Obligee, the Obligor
and the Participants may, upon the written request of the Obligor and
at the sole discretion of the Obligee and the Participant, agree to
extend the Basic Tenn for all, but not less than all, Assets subject to
this Agreement for an additional period or additional periods on terms
(including without limitation, with respect to amounts of Basic Hire
payable by the Obligor during such period or periods) mutually agreed
to by the Obligor and the Obligee, and upon the effectiveness of any
such extension, the Termination Date shall automatically be extended to
the last day of the Term for all purposes of the Operative Documents.
(d) Reversion Right. The Obligor shall be entitled to
exercise the Reversion Right granted to it under Section 5.10 of the
Trust Agreement, subject to the conditions set forth therein; provided,
that the Reversion Right may not be exercised by the Obligor after the
date occurring ninety (90) days prior to the expiration of the Term.
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Asset Use Agreement
SECTION 29. Payment of Transaction Expenses and Other Costs and
Expenses.
(a) Transaction Expenses. The Obligor agrees, whether or
not the transactions contemplated by this Agreement are consummated, to
pay (or reimburse the Obligee for the payment of) all Transaction
Expenses.
(b) Other Costs and Expenses. The Obligor further agrees
to pay (or reimburse for the payment of), upon demand, (i) the
reasonable fees, out-of-pocket expenses and disbursements of any law
firm or other external counsel in connection with any amendment,
supplement, waiver or consent with respect to any Operative Documents
requested or approved by the Obligor and (ii) all reasonable
out-of-pocket expenses (including the reasonable fees, out-of-pocket
expenses and disbursements of counsel) incurred by the Obligee, Trust
Company, the Depositor or the Participants in connection with (x) the
enforcement of any rights or remedies against the Obligor or the
Guarantor in connection with the Operative Documents and (y) the
negotiation of any restructuring or "work-out" with the Obligor or the
Guarantor, whether or not consummated, of any Obligations.
SECTION 30. Owner for Income Tax Purposes. The Obligee agrees
that the Obligor shall be deemed the owner of the Assets for Mexico federal,
state and local income tax purposes and that, so long as no Event of Default
shall have occurred and be continuing, the Obligee shall take no action
inconsistent with such ownership for income tax purposes.
SECTION 31. LIBOR Provisions.
(a) Funding Loss. If any payment of Variable Hire with
respect to Loans or Certificate Amounts based on the LIBOR is made on
any day other than the Hire Payment Date applicable thereto, the
Obligor shall reimburse the Obligee within fifteen (15) days after
demand for any resulting loss or expense incurred by the Obligee or any
Participant, including (without limitation) any loss incurred in
obtaining, liquidating or employing funding from third parties,
provided that the Obligee or any such Participant shall have delivered
to the Obligor a certificate as to the amount of such loss or expense,
which certificate shall take effect for all purposes hereof as
determined in such certificate in the absence of manifest error unless
and until otherwise judicially ordered. The Obligee or such Participant
will, at the request of the Obligor, furnish such additional
information concerning the determination of such loss as the Obligor
may reasonably request.
(b) Basis for Determining Variable Hire Inadequate or
Unfair. If on or prior to the first day of any Variable Hire Period,
deposits in dollars (in the applicable amounts) are not being offered
to the Obligee or any Participant (or any Affiliates of any thereof) in
the relevant market for such Variable Hire Period, then the Obligee
shall forthwith give notice
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<PAGE> 51
Asset Use Agreement
thereof to the Obligor, whereupon until the Obligee notifies the
Obligor that the circumstances giving rise to such suspension no longer
exist, (i) the obligation of the Obligee to fund Acquisition Costs
and/or Construction Advances based on LIBOR shall be suspended and (ii)
all interest and Yield comprising Variable Hire shall be determined on
the basis of the Alternate Base Rate plus the applicable Loan Margin or
Certificate Margin, as the case may be.
(c) Illegality. If, on or after the date hereof, the
adoption of any Applicable Law, or any change therein, or any change in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Obligee
or any Participant (or any Funding Office thereof) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall in the opinion of
counsel to the Obligee make it unlawful or impossible for the Obligee
or any Participant (or any Funding Office thereof) to make, maintain or
fund its portion of the Funding for Assets subject to this Agreement,
and the Obligee shall so notify the Obligor, whereupon until the
Obligee notifies the Obligor that the circumstances giving rise to such
suspension no longer exist, the obligation to fund based on LIBOR shall
be suspended and all Fundings (including all Loans and Certificate
Amounts comprising such Fundings) shall accrue interest or Yield, as
the case may be, on the basis of the Alternate Base Rate plus the
applicable Loan Margin or Certificate Margin, as the case may be. The
Obligee with the consent of the Obligor (which consent shall not
unreasonably be withheld), will designate a hire funding office if such
designation will avoid the need for giving such notice and will not, in
the judgment of the Obligee, be otherwise disadvantageous to the
Obligee. If such notice is given (i) the Obligor shall be entitled upon
its request to a reasonable explanation of the factors underlying such
notice and (ii) Variable Hire shall begin to be at the Alternate Base
Rate either (a) on the last day of the then Variable Hire Period
applicable thereto, if the Obligee or the applicable Participant may
lawfully continue to maintain and fund LIBOR to such day or (b)
immediately, if the Obligee or any Participant shall determine that it
may not lawfully continue to maintain and fund LIBOR to such day.
(d) Increased Cost and Reduced Return.
(A) In the event that the adoption of any
Applicable Law, or any change therein or in the interpretation
or application thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or
administration thereof or compliance by the Obligee or any
Participant with any request or directive after the date
hereof (whether or not having the force of law) of any such
authority, central bank or comparable agency, other than such
changes with respect to taxes which are governed by Section
18:
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Asset Use Agreement
(i) does or shall subject the Obligee or any
Participant to any additional tax of any kind
whatsoever with respect to this Agreement or any
amounts hereunder or thereunder, or change the basis
or the applicable rate of taxation of payments to the
Obligee or any Participant of Variable Hire or any
other amount payable hereunder (except for the
imposition of or change in any tax on or measured by
the overall net income of the Obligee or any
Participant (other than any such tax imposed by means
of withholding)); provided, however, that such
amounts payable hereunder shall be without
duplication of amounts paid or payable under Section
18 hereof and which would otherwise be covered under
this clause (i);
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, insurance
assessment, compulsory loan or similar requirement
against assets held by, or deposits or other
liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other
acquisition of funds by, any office of the Obligee or
any Participant which are not otherwise included in
determination of the Variable Hire hereunder; or
(iii) does or shall impose on the Obligee or
any Participant any other condition;
and the result of any of the foregoing is to increase the cost
to the Obligee of making any Funding, or the cost to any
Participant of funding or refunding the Loans or Certificate
Amounts comprising such Funding, or to reduce any amount
receivable hereunder, then in any such case, the Obligor shall
promptly pay to the Obligee, upon demand, any additional
amounts necessary to compensate the Obligee for such increased
cost or reduced amount receivable and such amounts will be
deemed to be for all purposes hereof as determined by the
Obligee, unless and until otherwise revised by court order
with respect to funding or refunding the Loans and Certificate
Amounts allocable to such Funding; provided, however, that the
Obligor shall not be obligated to pay any amount pursuant to
this Section 31(d)(A) to the extent that such increase in cost
or reduction in amount receivable occurred more than ninety
(90) days prior to the Obligee's or such Participant's notice
thereof to the Obligor.
(B) If the Obligee or any Participant shall have
determined that, after the date hereof, the adoption of any
Applicable Law regarding capital adequacy, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of
any such authority, central bank
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Asset Use Agreement
or comparable agency, has or would have the effect of reducing
the rate of return on capital of the Obligee or any
Participant (or any entity directly or indirectly controlling
the Obligee or any Participant) as a consequence of the
Obligee's obligations hereunder to a level below that which
the Obligee or any Participant (or any entity directly or
indirectly controlling the Obligee or any other Participant)
could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect
to capital adequacy) within fifteen (15) days after demand by
the Obligee, the Obligor shall pay to the Obligee such
additional amount or amounts as will compensate the Obligee or
any Participant or such controlling receiver for such
reduction; provided, however, that the Obligor shall not be
obligated to pay any amount pursuant to this Section 31(d)(B)
to the extent that such reduction in rate of return occurred
more than ninety (90) days prior to the Obligee's or such
Participant's notice thereof to the Obligor.
(C) the Obligee will promptly notify the Obligor
of any event of which it has knowledge, occurring after the
date hereof, which will entitle the Obligee or any Participant
to compensation pursuant to this Section and will, if
practicable, with the consent of the Obligor (which consent
shall not unreasonably be withheld), designate a Hire Funding
Office or take any other reasonable action if such designation
or action will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of the
Obligee, be otherwise disadvantageous to the Obligee or any
Participant. A certificate of the Obligee claiming
compensation under this Section and setting forth in
reasonable detail its computation of the additional amount or
amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. In determining such amount, any
reasonable averaging and attribution methods may be used.
SECTION 32. Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS
(OTHER THAN THE PLEDGE AGREEMENT) SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(b) ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE OBLIGOR, THE OBLIGEE,
TRUST COMPANY, THE DEPOSITOR, ANY PARTICIPANT OR THE GUARANTOR SHALL BE
BROUGHT AND MAINTAINED
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Asset Use Agreement
EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR IN THE
COURT OF SUCH OTHER JURISDICTION IN WHICH THE DEFENDANT SHALL HAVE ITS
CORPORATE DOMICILE. EACH PARTY HERETO HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK AND TO THE COURTS OF THEIR RESPECTIVE CORPORATE DOMICILES FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH
SUCH LITIGATION AND WAIVES ANY RIGHT TO WHICH IT MAY BE ENTITLED ON
ACCOUNT OF PLACE OF ITS RESIDENCE OR DOMICILE.
(c) THE OBLIGOR HEREBY IRREVOCABLY APPOINTS CT
CORPORATION (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT
1633 BROADWAY, NEW YORK, NEW YORK, UNITED STATES, ATTENTION: PROCESS
SERVICE DEPARTMENT, AS ITS PROCESS AGENT TO RECEIVE, ON ITS BEHALF AND
ON BEHALF OF ITS PROPERTY, AND DESIGNATES SUCH ADDRESS AS ITS ADDRESS
FOR, SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER
PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH
SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO
THE OBLIGOR IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE
ADDRESS, AND THE OBLIGOR HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE
PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE
METHOD OF SERVICE, THE OBLIGOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE OBLIGOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE OBLIGOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE OBLIGOR HEREBY IRREVOCABLY
WAIVES
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Asset Use Agreement
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND
THE OTHER OPERATIVE DOCUMENTS.
SECTION 33. Waiver of Jury Trial. THE OBLIGOR, THE OBLIGEE AND
TRUST COMPANY 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 OPERATIVE 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 PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE OBLIGOR,
THE OBLIGEE AND TRUST COMPANY 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 OPERATIVE 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 OPERATIVE DOCUMENTS.
SECTION 34. Currency of Account and Payment. The Dollar is the
currency of account and payment for each and every sum at any time due from the
Obligor or the Guarantor under this Agreement or any other Operative Document or
in connection with the Obligations.
SECTION 35. Judgment Currency. The Obligations of the Obligor
and/or the Guarantor in respect of any sum due to the Obligee, Trust Company,
the Depositor, any Participant or any other Indemnified Person under this
Agreement, under the Guaranty or under or in respect of any other Operative
Document shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum was originally denominated
(the "Original Currency"), be discharged only to the extent that on the Business
Day following receipt by the Obligee, Trust Company, the Depositor, such
Participant or such other Indemnified Person of any sum adjudged to be so due in
the Judgment Currency, the Obligee, Trust Company, the Depositor, such
Participant or such other Indemnified Person in accordance with normal banking
procedures, purchases the Original Currency with the Judgment Currency. If the
amount of Original Currency so purchased is less than the sum originally due to
the Obligee, Trust Company, the Depositor, such Participant or such other
Indemnified Person, the Obligor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Obligee, Trust Company, the
Depositor, such Participant or
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Asset Use Agreement
such other Indemnified Person, as the case may be, against such loss, and if the
amount of Original Currency so purchased exceeds the sum originally due to the
Obligee, Trust Company, the Depositor, such Participant or such other
Indemnified Person, as the case may be, the Obligee, Trust Company, the
Depositor, such Participant or such other Indemnified Person, as the case may
be, agrees to remit such excess to the Obligor.
SECTION 36. Waivers, Amendments, etc. The provisions of this
Agreement may from time to time be amended, modified or waived, if such
amendment, modification or waiver is in writing and signed by a duly authorized
officer of the Obligor and a duly authorized officer of the Obligee, and the
provisions of the other Operative Documents may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
signed by a duly authorized officer of the party against which the enforcement
of the amendment, modification or waiver is sought; provided, however, that no
such amendment, modification or waiver of this Agreement or any other Operative
Document shall be effective to:
(1) modify any requirement hereunder that any particular
action be taken by all the Lenders, all the Class I Certificateholders
or all the Participants without the written consent of all the Lenders,
all the Class I Certificateholders or all the Participants, as the case
may be;
(2) modify this Section 36 or clause (a) of Section 14,
change the definition of "Required Class I Certificateholders",
"Required Lenders" or "Required Participants" amend or otherwise modify
Part V of the Trust Agreement, release the Guarantor from its
obligations under the Guaranty or release all or substantially all of
the collateral security (except as otherwise specifically provided in
any Operative Document), without the written consent of each
Participant;
(3) increase the Loan Commitment of any Lender or
increase the Maximum Cost without the written consent of each
Participant adversely affected thereby;
(4) extend the Term with respect to the Assets without
the written consent of the Obligor, the Obligee and each Participant;
(5) extend the due date for, or reduce the amount of, any
scheduled payment of Basic Hire or Supplemental Hire (including without
limitation, any payment due under Section 28(a) or 28(b)) without the
written consent of the Obligee and each affected Participant;
(6) extend the due date for, or reduce the amount of, any
scheduled repayment of principal of or interest or fees (including
commitment fees) payable in respect of any Loan
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Asset Use Agreement
without the written consent of the holder of that Note evidencing such
Loan, or extend the due date for, or reduce the amount of, any
scheduled repayment of Certificate Amounts of or Yield or fees
(including commitment fees) payable in respect of any Class I
Certificate without the written consent of the holder of the Class I
Certificate evidencing such Certificate Amount;
(7) affect adversely the interests, rights or obligations
of the Trustee or the Depositor (in its capacity as Trustee or
Depositor), without the written consent of the Trustee or the
Depositor, as the case may be;
(8) reduce any fees described in the Fee Letter without
the written consent of the Bank of Montreal;
(9) amend, modify or waive the provisions of Part V of
the Trust Agreement without the written consent of each affected
Participant; or
(10) effect any amendment, modification or waiver that by
its terms adversely affects the rights of any Person participating in
any Tranche different from those of any other Person participating in
the other Tranche, without the written consent of the holders of the
Notes or Class I Certificates, as the case may be, evidencing at least
51% of the aggregate amount of Loans or Certificate Amounts outstanding
under the Tranche or Tranches affected by such modification.
No failure or delay on the part of the Obligee, the Trustee or any Participant
in exercising any power or right under this Agreement or any other Operative
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Obligor or the Guarantor in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the Obligee,
the Trustee or any Participant under this Agreement or any other Operative
Document shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval under this
Agreement or any other Operative Document shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder or thereunder.
SECTION 37. Translation of Agreement into Spanish. This
Agreement and the Asset Use Supplements are executed in the English language.
The parties hereto agree that this Agreement and the Asset Use Supplement shall
be translated into Spanish at any time upon direction of the Obligor, by any of
the following Mexican court-approved translators, at the election of the
Obligor: (1) Ms. Araceli Ruiz-Vivanco, Ruiz Vivanco y Asociados, S.C., Paseo de
la Reforma #509-4to. piso, Col. Cuauhtemoc, 06500 Mexico, D.F., Telephone:
5-211-8435/211-8437/211-8438, Facsimile:
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Asset Use Agreement
5-286-3146, (2) Mr. Francisco J. Laguardia, Av. Bosques No. 1506-502, Col. Lomas
de Tecamachalco, 52780 Huixquilcan, Edo. Mex., Telephone: 5-245-0799, Facsimile:
5-245-0675, (3) Mr. Victor Hermosillo, Paseo de la Reforma No. 199, Pisos 15 y
16, Col. Cuauhtemoc, 06500 Mexico, D.F., Telephone: 5-591-1655/535-8062,
Facsimile: 5-703-2247, or (4) Yolanda Angulo, Providencia 1218, Local 4, Col.
del Valle, Mexico, D.F. 03100, Telephone: 5-575-5882. The parties hereto
irrevocably agree that the Spanish translation of this Agreement and/or the
Asset Use Supplement so produced shall be the only Spanish translation of this
Agreement and/or the Asset Use Supplement that shall be admissible in any
Mexican or other court or before any arbitrator or arbitration panel however
constituted, and that, in case of dispute, the Spanish version shall prevail,
except in actions instituted in any country where English is the principal
language, in which case the English version shall prevail.
SECTION 38. Miscellaneous. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating or diminishing the Obligee's rights under
the remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by applicable law, the Obligor
hereby waives any provision of law which renders any provision of this Agreement
prohibited or unenforceable in any respect. All of the covenants, conditions and
obligations contained in this Agreement shall be binding upon and shall inure to
the benefit of the respective successors and assigns of the Obligee and (subject
to the restrictions of Section 14(a) hereof) the Obligor. If there is more than
one Obligor named herein, the liability of each Obligor shall be joint and
several. This Agreement and the Asset Use Supplement may be executed by the
parties hereto and thereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument; provided, that only the
counterpart marked as "Counterpart No. 1" shall evidence the monetary
obligations of the Obligor hereunder and thereunder, and to the extent, if any,
that this Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code, as in effect from time to time in any applicable
jurisdiction), no security interest in this Agreement or the Asset Use
Supplement may be created by the transfer or possession of any counterpart
hereof other than such Counterpart No. 1. This Agreement, the Asset Use
Supplement and each related instrument, document, agreement and certificate,
collectively constitute the complete and exclusive statement of the terms of the
agreement between the Obligee and the Obligor with respect to the acquisition
and leasing of the Assets, and cancel and supersede any and all prior oral or
written understandings with respect thereto.
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Asset Use Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives as of the date first
above written.
Obligor:
Attest: OXFORD AUTOMOTRIZ DE MEXICO
(the Obligor) S.A. DE C.V.
______________________________ By: ______________________________
(Corporate Seal) Name:
Title:
Obligee:
Attest: AUTOMOTIVE BUSINESS TRUST
(the Obligee) 1999-A
By: WILMINGTON TRUST
COMPANY, not in its individual
______________________________ capacity but exclusively as Trustee
(Corporate Seal)
By: ________________________
Name:
Title:
THIS IS COUNTERPART NO. _____ OF SIX (6) SERIALLY NUMBERED MANUALLY
EXECUTED COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS DOCUMENT
CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE
TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1.
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Asset Use Agreement
THE UNDERSIGNED HEREBY ACKNOWLEDGES
RECEIPT OF AN EXECUTED COPY OF THE FOREGOING
ASSET USE AGREEMENT AND CONSENTS TO ITS TERMS HEREOF,
AS OF THIS _____ DAY OF _________________, 1999
OXFORD AUTOMOTIVE INC.,
as Guarantor
By: ________________________
Name:
Title:
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EXECUTION COPY
APPENDIX A
to
Asset Use Agreement
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by the Operative Documents, and reference to a
Person in a particular capacity excludes such Person in any other
capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative
Document), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms of the
other Operative Documents and reference to any promissory note includes
any promissory note which is an extension or renewal thereof or a
substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable
Law as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and
regulations promulgated thereunder and reference to any section or
other provision of any Applicable Law means that provision of such
Applicable Law from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) reference in any Operative Document to any Article,
Section, Appendix, Schedule or Exhibit means such Article or Section
thereof or Appendix, Schedule or Exhibit thereto, and reference in any
Article, Section or definition to any clause means such clause of such
Article, Section or definition;
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(vii) "hereunder", "hereof ', "hereto" and words of similar
import shall be deemed references to an Operative Document as a whole
and not to any particular Article, Section or other provision thereof;
(viii) "Including" (and with correlative meaning "include")
means including without limiting the generality of any description
preceding such term; and
(ix) relative to the determination of any period of
time,"from" means "from and including" and "to" means "to but
excluding".
B. Accounting Terms. In each Operative Document, unless expressly
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.
C. Conflict in Operative Documents. If there is any conflict
between any Operative Documents, such Operative Document shall be interpreted
and construed, if possible, so as to avoid or minimize such conflict but, to the
extent (and only to the extent) of such conflict, the Asset Use Agreement shall
prevail and control.
D. Legal Representation of the Parties. The Operative Documents
were negotiated by the parties with the benefit of legal representation and any
rule of construction or interpretation otherwise requiring the Operative
Document to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. Defined Terms. Unless a clear contrary intention appears,
terms defined herein have the respective indicated meanings when used in each
Operative Document.
"ABR Period" means (a) any period during which, in accordance with
Section 31 of the Asset Purchase Agreement, Variable Hire is determined by
reference to the Alternate Base Rate and (b) the initial Variable Hire Period
described in clause (iii) of the proviso of the definition of "Variable Hire
Period".
"Acceleration" is defined in Section 5.2 of the Loan Agreement.
"Acquisition Cost" means with respect to the Assets on any date of
determination an amount equal to the sum of (i) the total cost paid by the
Obligee with respect to such Assets on the Acquisition Date therefor, plus (ii)
all Transaction Expenses approved and paid by the Obligor in connection with the
delivery of Land, Improvements or Equipment (it being understood that, for the
purposes of utilizing Acquisition Cost to determine Basic Hire, Casualty Loss
Value, Estimated Residual Value, Maximum Obligor Risk Amount and Maximum Obligee
Risk Amount with respect to the Property, Transaction Expenses with respect to
the transactions occurring on each Acquisition Date will be applied pro rata to
the Land, Improvements or Equipment subject to any Asset Use Supplement executed
and delivered on such Acquisition Date).
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"Acquisition Date" means (a) the date on which the Owner purchases the
Land (b) the date of the initial Construction Advances with respect to
Improvements to be constructed on the Land or (c) the date on which the Owner
purchases the Equipment; provided, however, that no Acquisition Date shall occur
later than the Commitment Termination Date.
"Acquisition Date Notice" is defined in Section 3.1(c) of the Asset Use
Agreement.
"Additional Term" means, for the Assets, the period following the end
of the Basic Term for such Assets with respect to which the Obligor and the
Obligee have agreed to extend the term of the Asset Use Agreement pursuant to
Section 28(c) of the Asset Use Agreement.
"Advance" means an advance of funds by the Obligee pursuant to Article
II of the Asset Use Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Alternate Base Rate" means, for any day, a rate per annum equal to
rate of interest then most recently announced by Bank of Montreal in New York,
New York as its prime rate for U.S. Dollars loaned in the United States. If the
aforesaid rate changes from time to time after the date of the Asset Use
Agreement, the Alternate Base Rate shall be automatically increased or
decreased, if appropriate and as the case may be, without notice to the Obligor
as of the effective time of each change. The Alternate Base Rate is not
necessarily intended to be the lowest rate of interest in connection with
extensions of credit.
"Applicable Law" shall mean all applicable laws, statutes, treaties,
rules, codes, ordinances, regulations, permits, certificates, orders,
interpretations, licenses and permits of any Governmental Authority and
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other administrative, judicial or quasi-judicial tribunal or
agency of competent jurisdiction.
"Appraisal" means, with respect to the Assets, an appraisal of the Fair
Market Sales Value of such Assets by American Appraisal Associates or any other
appraiser selected by the Obligee and reasonably acceptable to the Obligor.
"Asset Cost" means, with respect to the Assets determined as of any
date, the sum of the Acquisition Cost for such Assets and all Construction
Advances (if any) made with respect to such Assets (including without limitation
all Construction Advances made in accordance with Section 2(c) of the Asset Use
Agreement) on or prior to such date of determination.
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"Assets" means collectively, (i) the Land, (ii) the Improvements and
(iii) the Equipment.
"Asset Use Agreement" means that Asset Use Agreement, dated as of March
31, 1999 between the Obligee and Obligor, to which these definitions are
appended as Appendix A.
"Asset Use Balance" means, as of any date of determination, an amount
equal to the sum of the Loan Balance and the Certificate Balance and all other
amounts owing by the Obligor under the Operative Documents (including without
limitation, accrued and unpaid Basic Hire and Supplemental Hire, if any).
"Asset Use Event of Default" means the occurrence of an Event of
Default under Section 22 of the Asset Use Agreement.
"Asset Use Supplement" means an Asset Supplement substantially in the
form attached hereto as Exhibit A, to be executed by the Obligee and the Obligor
with respect to the Asset covered thereby as provided in Section 4 of the Asset
Use Agreement, evidencing that each such Asset has been demised for use by the
Obligee to the Obligor under the Asset Use Agreement.
"Assignment Agreement" means that Assignment Agreement of Private
Sale--Purchase Agreement Rights dated as of March 31, 1999 by and between the
Obligor and the Obligee.
"Assignee Lender" is defined in Section 10.6.1 of the Loan Agreement.
"Authorized Officer" means, relative to the Obligor or the Guarantor,
those of its officers whose incumbency shall have been certified to the Obligee
and the Participants pursuant to Section 3.1(b) of the Asset Use Agreement or
pursuant to any subsequent certificate of the Secretary of such Person
certifying as to the incumbency of the officers of such Person who are
authorized to execute and deliver on behalf of such Person the documents,
instruments and agreements contemplated by the Operative Documents.
"Authorized Officer's Certificate" means, with respect to the Obligor
or the Guarantor, a certificate duly executed by an Authorized Officer of such
Person and addressed to the Obligee and each Participant.
"Basic Hire" means, on any Hire Payment Date,
(a) during the Interim Term and Basic Term, an amount
equal to (i) the amount of Variable Hire payable on the applicable Hire
Payment Date multiplied by (ii) the quotient (expressed as a decimal)
determined by dividing (x) such amount of Variable Hire by (y) such
amount of Variable Hire minus the Mexico Reserve Amount; and
(b) during each Additional Term, as the parties may agree
pursuant to Section 28(c) of the Asset Use Agreement.
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For purposes of the formula set forth in clause (a) above, "Mexico Reserve
Amount" means the amount of Mexican income tax (withholding tax) payable by
foreign residents with respect to such Variable Hire.
"Basic Term" for the Assets means the period commencing on the Basic
Term Commencement Date and ending on the day which is five years and six months
after such date unless earlier terminated in accordance with the provisions
hereof.
"Basic Term Commencement Date" means (a) with respect to the Assets on
the Acquisition Date thereof, the date specified as the Basic Term Commencement
Date in the Asset Use Supplement for the Assets.
"Board of Directors" means the Board of Directors of any Person, or any
duly authorized committee of such Board or any officers of such Person duly
authorized so to act by such Board, provided that if the transaction giving rise
to the need for action by the Board of Directors of such Person, together with
any related transactions, involve aggregate value or consideration in excess of
$10,000,000, "Board of Directors" means the entire Board of Directors of such
Person and not a committee of such Person or an officer of such Board.
"Board Resolution" means a copy of a resolution or resolutions
certified by the Secretary or an Assistant Secretary of any Person to have been
duly adopted by the Board of Directors, or by the Executive Committee of the
Board of Directors or any other committee to the extent that such other
committee has been authorized by the Board of Directors to adopt a "Board
Resolution" for purposes hereof, and to be in full force and effect on the date
of such certification, or a certificate executed by officers of such Person to
the extent that such officers have been authorized to act for purposes hereof
setting forth the action taken by such officers and stating that the officers
are duly authorized to take such action, in each case as filed with the
corporate records of such Person.
"Builder" means Kitchell S.A. de C.V.
"Building Contract" means, with respect to the Land, the construction
contract between the Builder and the Obligor.
"Business Day" means any day other than a day on which banking
institutions in the State of New York or the State of Illinois are authorized or
required by law to close and, if the LIBOR is then the basis for calculating
Basic Hire, a day on which dealings in Dollars are carried on in the London
interbank market.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. ss.3801 et seq.
"Capitalized Asset Use Agreement Obligation" of any Person means any
obligation of such Person to pay hire or other amounts under an Asset Use
Agreement of (or other agreement conveying
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the night to use) real or personal property that is required to be classified
and accounted for as a capital lease obligation on a balance sheet of such
Person under IAS and, for purposes of the Operative Documents, the amount of
such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with IAS.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of such Person's capital
stock and warrants, options and similar rights to acquire such capital stock.
"Casualty Loss Value" as of any date means an amount equal to the
Acquisition Cost of such Asset minus all amounts of Casualty Loss Value
allocable to such Asset to the extent actually paid on or prior to such date,
whether pursuant to Section 16(c) or 23(a)(iv) of the Asset Use Agreement or
otherwise.
"Casualty Loss Value Payment Date" is defined in Section 16(c) of the
Asset Use Agreement.
"Certificate Amounts" means, with respect to any Class I
Certificateholder, its Class I Investment.
"Certificate Balance" means as of any date of determination an amount
equal to the sum of the outstanding Certificate Amount together with all accrued
and unpaid Yield thereon.
"Certificate Margin" means, on any date, (a) at any time that Yield is
determined by reference to LIBOR, 3.50%, and (b) at any time during an ABR
Period, 1.75%.
"Certificate Register" shall have the meaning set forth in Section
4.3(b) of the Trust Agreement.
"Certificates" shall have the meaning set forth in Section 4.3 of the
Trust Agreement.
"Change of Control" means, and shall be deemed to have occurred if: (1)
Guarantor owns less than 51% of the outstanding voting stock of Obligor or (2)
there has been a change of control as defined in the Credit Agreement.
"Claims" shall have the meaning set forth in Section 6.5 of the Trust
Agreement.
"Class I Certificate" is defined in Section 4.3 of the Trust Agreement.
"Class I Certificate Commitment" means the commitment of each Class I
Certificateholder to make the Class I Investment under the Trust Agreement.
"Class I Certificateholders" means, collectively, each holder of a
Class I Certificate under the Trust Agreement.
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"Class I Investment" means, with respect to each Class I
Certificateholder, the aggregate amount of investments in the Trust made by such
Class I Certificateholder pursuant to Section of the Trust Agreement.
"Closing Date" means the initial Funding Date hereunder.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any comparable successor law.
"Commitment" means (i) with respect to any Class I Certificateholder,
that Class I Certificateholder's Class I Certificate Commitment and (ii) with
respect to any, Lender, that Lender's Loan Commitment.
"Commitment Percentage" means either (i) relative to any Class I
Certificateholder, the applicable percentage relating to the Class I Investment,
as the case may be, set forth opposite such Class I Certificateholder's name on
Schedule III to the Asset Use Agreement under the applicable column heading, as
such percentage may be adjusted from time to time or (ii) relative to any
Lender, the applicable percentage relating to Tranche A Loans or Tranche B
Loans, as the case may be, set forth opposite such Lender's name on Schedule III
to the Asset Use Agreement under the applicable column heading or as set forth
in a lender assignment agreement pursuant to which such Lender becomes a Lender
hereunder, as such percentage may be adjusted from time to time pursuant to
lender assignment agreements executed and delivered by such Lender from time to
time. A Lender shall not have any Commitment to make Tranche A Loans or Tranche
B Loans if its Commitment Percentage under the respective heading is zero.
"Commitment Termination Date" means March 31, 2000.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated, whether
voting or non-voting of such Person's common stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
series and classes of such common stock. For purposes of this definition,
"Common Stock" shall include shares, interests, participation or other
equivalents corresponding to common stock under the laws of the jurisdiction of
organization of the Person.
"Completion" means, with respect to the Property, such time as the
conditions set forth in Section 3.3 of the Asset Use Agreement are satisfied.
"Completion Certificate" means the Completion Certificate duly executed
by the Construction Agent on the Completion Date, substantially in the form of
Exhibit E to the Asset Use Agreement.
"Completion Date" means with respect to the Land, the date that the
Land and the Improvements thereon satisfies the conditions set forth in Section
3.3 of the Asset Use Agreement.
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"Compliance Certificate" means a certificate duly completed and
executed by an Authorized Officer of the Guarantor, or Obligor, respectively in
such form and with such detail as the Oblige may reasonably request for the
purpose of monitoring the Guarantor's or Obligor's compliance with the financial
covenants contained in the Guaranty or Asset Use Agreement. respectively and
determining the applicable Loan Margin (as defined in the Loan Agreement).
"Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy, easement rights
or title to the Property or any part thereof, wholly or partially (temporarily
or permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.
"Consent and Agreement" means that Consent and Agreement attached as
Annex I to the Construction Documents Assignment.
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of such Person and each of its Subsidiaries if and to the extent
that the accounts of such Person and each of its Subsidiaries would normally be
consolidated, all in accordance with IAS. The term "consolidated" shall have a
similar meaning.
"Construction" means, with respect to the Property, the applicable
construction and installation of all Improvements contemplated by the applicable
plans and specifications.
"Construction Advance" means, with respect to the Assets, each amount
funded by the Obligee pursuant to Section 3.2 of the Asset Use Agreement with
respect to such Assets, and includes each amount funded by the Obligee in
accordance with Section 2(c) of the Asset Use Agreement for the purpose of
paying interest on the Loans and Yield on the Class I Certificates during the
Construction Period for such Assets.
"Construction Advance Date" means, with respect to the Assets, each
date on which the Obligee funds a Construction Advance with respect to such
Assets; provided, however, that no Construction Advance Date shall occur later
than the Commitment Termination Date.
"Construction Advance Notice" is defined in Section 3.2(a) of the Asset
Use Agreement.
"Construction Agency Agreement" means that Construction Agency
Agreement dated as of March 1, 1999, between the Trust and the Construction
Agent.
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"Construction Agency Event of Default" means the occurrence of a
Construction Agency Event of Default under Section 5.1 of the Construction
Agency Agreement.
"Construction Agent" is defined in the preamble to the Construction
Agency Agreement.
"Construction Documents" is defined in Section 2.4 of the Construction
Agency Agreement.
"Construction Documents Assignment" means that Construction Documents
Assignment attached as Exhibit A to the Construction Agency Agreement.
"Construction Guarantee Amount" is defined in Section 5.4 of the
Construction Agency Agreement.
"Construction Period" means, with respect to the Assets, the period
commencing on (and including) the Acquisition Date for such Assets and ending on
(but excluding) the Basic Term Commencement Date for such Assets.
"Continuation Notice" means a notice of continuation duly executed by
an Authorized Officer of the Obligor, substantially in the form of Exhibit F to
the Asset Use Agreement, specifying the duration of the next succeeding Variable
Hire Period.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of March 31, 1999 among Guarantor, the borrowing subsidiaries thereof,
NBD Bank, as agent, and the other lenders named therein.
"Default" means any condition or event that after notice or lapse of
time or both would constitute an Event of Default.
"Deficiency" is defined in Section 28(b)(iv) of the Asset Use
Agreement.
"Deposit Account" is defined in Section 7(d)(i) of the Asset Use
Agreement.
"Deposit Bank" means Wilmington Trust Company.
"Depositor" shall have the meaning set forth in the preamble to the
Trust Agreement.
"Depositor Certificate" shall have the meaning assigned in Section
4.2(b) of the Trust Agreement.
"Disclosure Documents" means the financial statements described in
Schedule II of the Asset Use Agreement.
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"Disqualified Stock" of any Person means any Capital Stock of such
Person that, by its terms (or by the terms of any security into which it is
convertible or for which it is exercisable, redeemable or exchangeable),
matures, or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part on or prior to, the stated final maturity of the Indenture Notes, except to
the extent that such Capital Stock is solely redeemable with, or solely
exchangeable for any Capital Stock of such Person that is not Disqualified
Stock.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBO Purchase Option Amount" is defined in Section 28(a)(ii) of the
Asset Use Agreement.
"Eligible Trustee" shall mean a bank (within the meaning of Section
2(a)(5) of the Investment Company Act of 1940 (the "1940 Act")) that meets the
requirements of Section 26(a)(1) of the 1940 Act, is not an Affiliate of the
Depositor or an Affiliate of any Person involved in the organization or
operation of the Depositor, is organized and doing business under the laws of
any state or the United States of America, is authorized under such laws to
exercise corporate trust powers and to accept the trust conferred under the
Trust Agreement, has a combined capital and surplus and undivided profits of at
least $100,000,000 and is subject to supervision or examination by federal or
state authority. If such bank publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this definition the combined capital surplus
and undivided profits of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
"End of Term Purchase Option Amount" is defined in Section 28(a)(i) of
the Asset Use Agreement.
"Environmental Law" means all applicable international, foreign,
federal, state and local laws, regulations, conventions, treaties, written
governmental agreements and written governmental policies that are legally
binding, statutes, ordinances, codes, rules, directives, orders, decrees,
judicial and administrative judgments and rules of common law, whether now or
hereafter in effect, that relate in any way to any Hazardous Substance in
connection with the regulation or protection of human health, natural resources
or the environment.
"Equipment" means the equipment described in Schedule I to the Asset
Use Supplement.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Group" means the Guarantor and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Guarantor, are treated as a single
employer under section 414(b) or 414(c) of the Code.
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"Estimated Equipment Costs" is defined in Section 2.8(c) of the
Construction Agency Agreement.
"Estimated Improvement Costs" is defined in Section 2.8(c) of the
Construction Agency Agreement.
"Event of Default" means either an Asset Use Event of Default or a
Construction Agency Event of Default, as the case may be.
"Event of Loss" with respect to the Assets means (i) the permanent loss
of such Assets or any substantial part thereof, or (ii) the loss of the use of
such Assets due to theft or disappearance for a period in excess of sixty (60)
days, or (iii) the destruction, damage beyond repair, or rendition of such
Assets or any substantial part thereof permanently unfit for commercial use for
any reason whatsoever, or (iv) the Condemnation, confiscation, seizure, or
requisition of title to such Assets by any Governmental Authority under the
power of eminent domain or otherwise, or (v) the requisition of use of such
Assets for a period in excess of the shorter of one hundred eighty (180)
consecutive days, the remainder of the Term or (vi) as a result of any rule,
regulation, order or other action by any Governmental Authority, the use of such
Assets in the normal course of the Obligor's business shall have been prohibited
for a continuous period of six (6) months.
"Expenses" shall mean liabilities, obligations, losses (excluding loss
of anticipated profits), damages, claims, actions, suits, judgments,
out-of-pocket costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever.
"Facility Fee" means, at any date:
(a) with respect to the Tranche A Loans, the percentage
set forth below opposite the then effective Pricing Level for such
date:
<TABLE>
<CAPTION>
Pricing Level Facility Fee
<S> <C>
I 0.500%
II 0.500%
III 0.450%
IV 0.375%
V 0.375%;
</TABLE>
(b) with respect to the Tranche B Loans, 0.50%; and
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(c) with respect to the Certificate Amounts, 0.50%.
"Fair Market Sales Value" means, with respect to the Assets, the amount
that would be cash an arm's-length transaction between an informed and willing
purchaser and an informed and willing seller, neither of whom is under any
compulsion to purchase or sell, respectively, for the ownership of such Assets.
"Fee Letter" means the fee letter dated as of March 31, 1999, between
the Funding Agent and the Guarantor.
"First Acquisition Date" means the date on which the Obligor shall
purchase the Land and any Improvements existing thereon.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve (12) consecutive calendar
months ending on March 31.
"Force Majeure Event" means any event beyond the control of the
Construction Agent, including, but not limited to a non-performance by any
Person other than Construction Agent under any Construction Documents so long as
Construction Agent is diligently pursuing the enforcement of rights under such
Construction Documents and/or seeking alternate means of performance, an Event
of Loss, a Condemnation, strikes, lockouts, adverse soil conditions, acts of
God, adverse weather conditions, inability to obtain labor or materials,
government activities (including zoning delays or unavailability of Governmental
Action), civil commotion and enemy action; but excluding any event, cause or
condition that results from the Construction Agent's financial condition or
failure to pay or any event, cause or condition which could be remedied by the
Construction Agent through the exercise of commercially reasonable efforts or
the commercially reasonable expenditure of funds.
"Funding" means the payment of the Acquisition Cost for the Assets or
the funding of any Construction Advance for the Assets.
"Funding Agent" means Bank of Montreal as Funding Agent for the Lenders
and the Class I Certificateholders.
"Funding Date" means an Acquisition Date or a Construction Advance
Date.
"Funding Office" means the office of the Obligee or any Participant
hereafter identified in writing as its Funding Office.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, decrees,
licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or
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required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use and operation of the Assets (or any part thereof).
"Governmental Authority" shall mean any Federal, state, county,
municipal, foreign, international, regional or other governmental authority,
agency, board, body, instrumentality or court.
"Guarantor" shall mean Oxford Automotive Inc.
"Guaranty" shall mean the Oxford Automotive Inc. Guaranty, dated as of
March 31, 1999, of Guarantor in favor of the Trust.
"Guaranty Event of Default" is defined in Section 7 of the Guaranty.
"Hazardous Substance" means any of the following: (i) explosives,
radioactive materials, asbestos, polychlorinated biphenyls, lead and radon gas;
or (ii) any substance, material, product, derivative, compound, mixture,
mineral, chemical, waste, gas, medical waste, or pollutant, in each case whether
naturally occurring, human-made or the by-product of any process, that is
considered under any applicable Environmental Law to be toxic, corrosive,
flammable, carcinogenic, mutagenic or hazardous to the environment or human
health.
"Hire Payment Date" means (i) the last day of each applicable Variable
Hire Period (and, if such Variable Hire Period shall exceed three months, also
on the date occurring three months after the commencement of such Variable Hire
Period) and (ii) the last day of the Basic Term and, if applicable, the last day
of each Additional Term; provided, however, that during any ABR Period. "Hire
Payment Date" shall also mean the last day of March, June, September and
December, or, if any such day is not a Business Day, the next succeeding
Business Day.
"IAS" means accounting principles issued by the International
Accounting Standards Committee as in effect from time to time;
"Improvements" means the improvements described in Schedule I to the
Asset Use Supplement.
"[I]ncluding" means including, without limitation.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services that in
accordance with IAS would be shown on the liability side of the balance sheet of
such Person (but excluding trade account payables and other accrued current
liabilities arising in the ordinary course of business); (c) all obligations
incurred in connection with bankers' acceptances and the face amount of all
letters of credit (other than letters of credit issued for the benefit of trade
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creditors in the ordinary course of business of such Person in connection with
obtaining goods, materials or services) issued for the account of such Person
and, without duplication, all drafts drawn thereunder; (d) all obligations of
the Person and its Subsidiaries under leases of property (whether real, personal
or mixed) by that Person as an obligor that, in conformity with IAS, is, or is
required to be, accounted for as a capital lease on the balance sheet of that
Person, in each case taken at the amount thereof accounted for as liabilities in
accordance with IAS; (e) all Indebtedness referred to in clauses (a) through (d)
above secured or covered by any Lien upon or in property owned by such Person,
even though such Person has not assumed or become liable for the payment of such
Indebtedness; (f) all obligations of such Person under currency exchange
agreements, interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates; and (g) without duplication, all direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(a) through (f) above.
"Indemnified Person" is defined in Section 19 of the Asset Use
Agreement.
"Insolvency Event" means the an event where
(i) the Obligor or the Guarantor shall become insolvent
or make an assignment for the benefit of creditors or consent to the
appointment of a trustee, sindico, liquidator or receiver; or a
trustee, sindico, liquidator or a receiver shall be appointed for the
Obligor or the Guarantor or for a substantial part of its property
without its consent and shall not be dismissed for a period of ninety
(90) consecutive days; or any execution or writ or process shall be
issued under any action or proceeding against the Obligor or the
Guarantor whereby any of the Assets may be taken or restrained; or
(ii) the Obligor or the Guarantor shall (A) generally fail
to pay, or admit in writing its inability to pay, its debts as they
become due, or shall voluntarily commence any case or proceeding or
file any petition under the Ley de Quiebras y de Suspension de Pagos or
any bankruptcy, suspension of payments, insolvency or similar law or
seeking dissolution, liquidation or reorganization or the appointment
of a receiver, trustee, sindico, liquidator, custodian or liquidator
for itself or a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its creditors, or shall
file any answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition filed against it in
any bankruptcy, suspension of payments, insolvency or similar case or
proceeding, or shall be adjudicated bankrupt, or shall make a general
assignment for the benefit of creditors, or shall consent to, or
acquiesce in the appointment of, a receiver, trustee, sindico,
liquidator, custodian or liquidator for itself or a substantial portion
of its property, assets or business, or (B) take corporate action for
the purpose of effectuating any of the foregoing; or
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(iii) involuntary proceedings or an involuntary petition
shall be commenced or filed against the Obligor or the Guarantor under
the Ley de Quiebras v de Suspension de Pagos or any bankruptcy.
suspension of payments, insolvency or similar law or seeking the
dissolution, liquidation or reorganization of the Obligor or the
Guarantor or the appointment of a receiver, trustee, custodian or
liquidator for the Obligor or the Guarantor or of a substantial part of
the property, assets or business of the Obligor or the Guarantor, or
any writ, judgment, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of the property,
assets or business of the Obligor or the Guarantor, and such
proceedings or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
stayed, release, vacated or fully bonded, within ninety (90)
consecutive days after commencement, filing or levy, as the case may
be.
"Insurance Requirements" means, collectively, (a) all terms of any
insurance policy covering or applicable to the Assets, and (b) all requirements
of the issuer of any such policy.
"Interest Rate" means, on any date with respect to any Loan, the sum of
LIBOR (Reserve Adjusted) for the applicable Variable Hire Period plus the
applicable Loan Margin for such Loan on such date plus the Facility Fee for such
Loan; provided, however, that if such date occurs during an ABR Period, the
Interest Rate for such Loan on such date shall be equal to the sum of the
Alternate Base Rate on such date plus the applicable Loan Margin for such Loan
on such date.
"Interim Term" means, with respect to the Assets the period commencing
on (and including) the Acquisition Date for such Assets and ending on (but
excluding) the Basic Tenn Commencement Date therefor.
"Land" means the land described in Schedule I to the Asset Use
Supplement.
"Land Acquisition Cost" is defined in Section 2.8(c) of the
Construction Agency Agreement.
"Lenders" means, collectively, the Tranche A Lenders and the Tranche B
Lenders.
"LIBOR" means, relative to any Variable Hire Period, the U.S. Dollar
rate (rounded upward, if necessary, to the nearest one-sixteenth of one percent)
listed on page 3750 (i.e., the LIBOR page) of the Telerate News Service titled
"British Banker Association Interest Settlement Rates" for a designated maturity
of three (3) months determined as of 11:00 a.m. London Time, on the day that is
two (2) Business Days prior to the first day of such Variable Hire Period for
delivery on the first day of such Hire Period (provided that if the Telerate
News Services publishes more than one (1) such LIBOR, the average of such rates
shall apply, or ceases to publish the LIBOR, then the LIBOR shall be determined
from the Reuters Screen LIBOR Page or, if such "Reuters" quotation is not
available, from such substitute financial reporting service as the Obligee in
its discretion shall determine).
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"LIBOR (Reserve Adjusted)" means, with respect to any Variable Hire
Period, a rate per annum (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent) determined pursuant to the following formula:
LIBOR = LIBOR
-------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBOR (Reserve Adjusted) for any Variable Hire Period will be determined by
the Funding Agent on the basis of the LIBOR Reserve Percentage in effect on, and
the applicable rates furnished to and received by the Funding Agent two (2)
Business Days before the first day of such Variable Hire Period.
"LIBOR Reserve Percentage" means, relative to any Variable Hire Period,
the reserve percentage (expressed as a decimal) equal to the maximum aggregate
reserve requirements (including all basic, emergency, supplemental, marginal and
other reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements) specified under regulations issued
from time to time by the Board of Governors of the Federal Reserve System or any
successor thereto (the "F.R.S. Board") and then applicable to assets or
liabilities consisting of or including "Eurocurrency Liabilities", as currently
defined in Regulation D of the F.R.S. Board, having a term approximately equal
or comparable to such Variable Hire Period.
"Lien" means liens, mortgages, encumbrances, pledges, charges, guaranty
or payment source trust arrangements and security interests of any kind.
"Loan Agreement" means the Loan Agreement dated as of March 31, 1999,
among the Obligee, as the borrower thereunder, and the various financial
institutions as are or may from time to time become parties thereto.
"Loan Agreement Default" means any condition or event that after notice
or lapse of time or both would constitute a Loan Agreement Event of Default.
"Loan Agreement Event of Default" is defined in Section 5.1 of the Loan
Agreement.
"Loan Balance" means as of any date of determination an amount equal to
the sum of the outstanding Loans together with all accrued and unpaid interest
thereon.
"Loan Commitments" means the commitments of the Lenders to make Loans
under the Loan Agreement.
"Loan Margin" means, as the context may require, the Tranche A Loan
Margin or the Tranche B Loan Margin.
"Loans" is defined in Section 2.1 of the Loan Agreement.
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"Manager" means the plant manager.
"Marketing Period" is defined in Section 28(b) of the Asset Use
Agreement.
"Material Adverse Effect" means any of (a) a material adverse effect on
the business, assets, operations, properties or financial condition of the
Obligor, Guarantor and any of their respective Subsidiaries, taken as a whole,
(b) a material adverse effect on the use, operation, value or estimated useful
life of any Asset or (c) a material adverse effect on the enforceability of the
Liens of the Obligee upon any Asset.
"Maximum Cost" means $75,000,000.
"Maximum Obligee Risk Amount" for the Assets means (a) the percentage
set forth in the Asset Use Supplement for such Assets under the caption "Maximum
Obligee Risk Percentage" applicable to the Basic Term or Additional Term,
multiplied by (b) the Casualty Loss Value for such Assets (determined as of the
Termination Date).
"Maximum Obligee Risk Percentage" is defined in the Asset Use
Supplement.
"Maximum Obligor Risk Amount" for the Assets means (a) the percentage
set forth in the Asset Use Supplement for such Assets under the caption "Maximum
Obligor Risk Percentage" applicable to the Basic Term or Additional Term,
multiplied by (b) the Casualty Loss Value for such Assets (determined as of the
Termination Date).
"Maximum Obligor Risk Percentage" is defined in the Asset Use
Supplement.
"Mortgage" means that certain mortgage entered into by and between the
Obligee and the Lenders dated as of March 31, 1999.
"Multiemployer Plan" means any multiple employer plan, as defined in
Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then
making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Net Income" means, for any period, the aggregate of all amounts which,
in accordance with IAS, would be included as net income on the consolidated
financial statements of the Obligor, Guarantor and their respective Subsidiaries
for such period.
"Note" means a Tranche A Note or a Tranche B Note.
"Obligations" means all obligations (monetary or otherwise) of any type
or description under any Operative Document, owing by the Obligor to the
Obligee, Trust Company, the Depositor, any Participant or any Indemnified
Person, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising,
and
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whether for Basic Hire, Supplemental Hire, principal, interest, fees, expenses,
indemnification or otherwise.
"Obligee" is defined in the preamble of this Asset Use Agreement.
"Obligor" is defined in the preamble of the Asset Use Agreement.
"Officer's Certificate" shall mean the Certificate signed (i) in the
case of a corporation, by the President, any Vice President, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of such
corporation, (ii) in the case of a partnership or limited liability company, by
the Chairman of the Board, the President or any Vice President, the Treasurer or
an Assistant Treasurer of a corporate general partner, and (iii) in the case of
a commercial bank or trust company, by the Chairman or Vice Chairman of the
Executive Committee or the Treasurer, any Trust Officer, any Vice President, any
Executive or Senior or Second or Assistant Vice President, or any other officer
or assistant officer or other authorized Person customarily performing the
functions similar to those performed by the persons who at the time shall be
such officers, or to whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"Operative Documents" means, collectively, this Asset Use Agreement,
the Asset Use Supplement, the Real Estate Purchase and Sale Contract, the
Assignment Agreement, the Trust Agreement, the Loan Agreement, the Guaranty, the
Pledge Agreement, the Construction Agency Agreement, the Construction Documents
Assignment, the Mortgage and any other document or agreement that the Obligor
and Required Participants agree in writing to designate as an "Operative
Document".
"Outside Completion Date" means, with respect to the Assets, the date
specified as the Outside Completion Date for the Assets in the Asset Use
Supplement covering such Assets; provided, that such date shall be satisfactory
to the Obligee in its sole discretion.
"Overdue Rate" means the lesser of (a) the highest interest rate
permitted by Applicable Law and (b) an interest rate per annum equal to the
Alternate Base Rate plus the Tranche A Loan Margin, Tranche B Loan Margin or
Certificate Margin (as applicable) plus 29%.
"Owner" is defined in the preamble to the Asset Use Agreement.
"Oxford Entity" means the Guarantor, the Construction Agent, the
Obligor, any other Guarantor and any other Construction Agent.
"Participant Balance" means, with respect to any Participant as of any
date of determination: (i) with respect to any Lender, an amount equal to the
aggregate outstanding Loans of such Lender, together with all accrued and unpaid
interest thereon or (ii) with respect to any Class I Certificateholder, an
amount equal to the aggregate outstanding Certificate Amounts of the Obligee,
together with all amounts of accrued and unpaid Yield thereon.
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"Participants" means, collectively, each Lender and each Class I
Certificateholder.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Permitted Investments" means each of (i) direct obligations of the
United States of America and agencies thereof; (ii) obligations fully guaranteed
by the United States of America; (iii) certificates of deposit issued by, or
bankers' acceptances of, or time deposits with, any bank, trust company or
national banking association incorporated or doing business under the laws of
the United States of America or one of the states thereof having combined
capital and surplus and retained earnings of at least $100,000,000, having
general obligations rated at least A1 by Moody's Investors Service, Inc. or A+
by Standard & Poor's Corporation (but excluding any new investment as to which
there is a public announcement by the rating agency providing a rating thereon
that such rating is under consideration for a possible downgrade below A1 or A+,
as the case may be), including the Obligee in its individual capacity if such
conditions are met; or (iv) commercial paper of any holding company of a bank,
trust company or national banking association described in clause (iii);
provided, however, that no investment shall be eligible as and included within
the definition of the term "Permitted Investment" unless the final maturity or
date of return of such investment is equal to three months or less from the date
of purchase thereof.
"Permitted Liens" means:
(a) any rights in favor of the Obligee, the Depositor or
the Participants under the Operative Documents;
(b) any Lien arising out of any act of, or any failure to
act by, or any claim (including any claim for taxes) against, the
Obligee, any Participant, the Depositor or any of their respective
Affiliates which is unrelated to the transactions contemplated by the
Asset Use Agreement or any Lien arising out of any breach by the
Obligee, any Participant, the Depositor or any of their respective
Affiliates of their obligations under the Operative Documents;
(c) any Lien, claim, security interest or encumbrance
(including, without limitation, Liens of landlords, carriers,
warehousemen, mechanics or materialmen) in favor of any person securing
payment of the price of goods or services provided in the ordinary
course of business for amounts the payment of which is not overdue or
is being contested in good faith by appropriate proceedings, so long as
such proceedings do not involve any reasonable danger of sale,
forfeiture or loss of all or any material part of the Assets and do not
materially adversely affect any Lien created in favor of the Obligee
under this Asset Use Agreement;
(d) any Lien for current taxes, assessments or other
governmental charges which are not delinquent or the validity of which
is being contested in good faith by appropriate proceedings promptly
initiated and diligently prosecuted so long as such proceedings do not
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involve any reasonable danger of sale, forfeiture or loss of all or any
material part of the Assets and do not materially adversely affect any
Lien in favor of the Obligee under this Asset Use Agreement;
(e) attachments, judgments and other similar Liens
arising in connection with court proceedings, provided that within
sixty (60) days of the attachment thereof (or five (5) days prior to
any execution or sale pursuant thereto), the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are being contested in good faith and by appropriate
proceedings; and
(f) any rights of the Obligor under this Asset Use
Agreement.
"Permitted Noncompliance" is defined in Section 10(b) of the Asset Use
Agreement.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee(s) of a trust, unincorporated
organization, or government or governmental authority, agency or political
subdivision thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and is maintained, or
contributed to, by any member of the ERISA Group for employees of any member of
the ERISA Group.
"Plans and Specifications" means the plans and specifications for the
Construction, as delivered by the Obligor on or prior to the First Acquisition
Date, as such plans and specifications may be amended from time to time in
accordance with the Construction Agency Agreement.
"Pledge Agreement" means the Equipment Pledge Agreement entered into as
of March 31, 1999 by and among the Pledgor, the Pledgee and Mr. Jose Cruz
Echevarria Gomez, as depository.
"Pledgee" means Bank of Montreal in its individual capacity and as
Funding Agent for the Tranche B Lenders under the Loan Agreement and the Class I
Certificateholders under the Trust Agreement.
"Pledgor" means "Automotive Business Trust 1999-A".
"Pricing Level" means, on any date, the Pricing Level (i.e. Pricing
Level I, II, III, IV or V) set forth below opposite the Total Debt to Adjusted
EBITDA Ratio (as defined in the Credit Agreement) of the Obligor on such date:
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<TABLE>
<CAPTION>
Ratio of Total Debt
Pricing Level to Adjusted EBITDA
------------- -----------------------------
<S> <C>
I more than 4.75:1.00
II more than 4.00:1.00 but less
than or equal to 4.75:1.00
III more than 3.50:1.00 but less
than or equal to 4:00:1:00
IV more than or equal to
3.00:1.00 but less than or
equal to 3.50:1.00
V less than 3.00:1.00
</TABLE>
The Pricing Level shall be based upon the Total Debt to Adjusted EBITDA Ratio as
calculated as of the last day of each fiscal quarter of the Obligor and the
Pricing Level shall be adjusted on (a) the last day of the second month
following the close of the fiscal quarter for the first three fiscal quarters,
and (b) the last day of the fourth month following the close of the last fiscal
quarter, based on the financial statements of the Obligor and related compliance
certificate delivered pursuant to Section 9 of the Asset Use Agreement;
provided, that upon the occurrence and during the continuance of an Event of
Default the Pricing Level shall be Pricing Level I, in each case regardless of
the actual Total Debt to Adjusted EBITDA Ratio.
"Prime Architect" means Kitchell Contractors Inc. of Arizona.
"Prime Construction Contract" means the construction contract dated as
of ______________, 1999 between Kitchell S.A. de C.V., as Prime Contractor and
Oxford Automotriz de Mexico S.A. De C.V. as Construction Agent.
"Prime Contractor" means Kitchell S.A. de C.V.
"Project Costs" means the aggregate of the Land Acquisition Cost,
Estimated Equipment Costs and Estimated Improvement Costs.
"Property" means the Land and all Improvement constructed thereon.
"Purchase Order" means, with respect to any Asset or Replacement Part,
a purchase order substantially in the form of Exhibit C of the Asset Use
Agreement, duly executed by the Seller or the Builder of such Asset or
Replacement Part, conveying title to such Asset or Replacement Part to the
Obligee.
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"Real Estate Purchase and Sale Contract" means that Real Estate
Purchase and Sale Contract dated as of March 31, 1999 between Promociones Y
Construcciones Santa Maria, S.A. and Oxford Automotriz de Mexico, S.A. de C.V.
"Redelivery Condition" is defined in clause (b) of Section 6 of the
Asset Use Agreement.
"Replacement Parts" is defined in Section 12 of the Asset Use
Agreement.
"Required Alteration" is defined in Section 12 of the Asset Use
Agreement.
"Required Class I Certificateholders" shall mean 66-2/3% of the Class I
Certificateholders.
"Required Lenders" means, at any time, Lenders holding more than
66-2/3% of the aggregate principal amount of Loans outstanding at such time (or,
if no Loans are then outstanding, Lenders having more than 66-2/3% of the Loan
Commitments at such time).
"Required Participants" means, at any time, Participants holding more
than 66-2/3% of the sum of (x) the aggregate principal amount of Loans
outstanding at such time and (y) the aggregate Certificate Amounts outstanding
at such time.
"Required Prepayment" means, as of any date of determination, an amount
equal to the sum of all Basic Hire scheduled to become due on the Hire Payment
Date immediately following such date.
"Resident Trustee" means a trustee of the Trust meeting the
requirements of Section 3807(a) of the Business Trust Statute and shall
initially be Wilmington Trust Company, not in its individual capacity but solely
as resident trustee under this Agreement.
"Responsible Officer" means as to any Oxford Entity, the President,
Chief Executive Officer, Executive Vice President, the Treasurer or any
Assistant Treasurer, Secretary or any Assistant Secretary of such Person.
"Return Option" is defined in Section 28(b) of the Asset Use Agreement.
"Reversion Right" means the Obligor's reversion right as described in
Section 5.10 of the Trust Agreement.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Subsidiary" means with respect to any Person, any corporation,
partnership or other business entity of which more than 50% of the outstanding
capital stock (or other ownership interest) having ordinary voting power to
elect a majority of the board of directors, managers or other voting members of
the governing body of such entity (irrespective of whether at the time capital
stock (or
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other ownership interest) of any other class or classes of such entity shall or
might have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person, by such Person and one or more
other Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.
"Supplemental Hire" means (a) all amounts, liabilities and obligations
which the Obligor assumes or agrees to pay hereunder to the Obligee or others,
including, without limitation, payments of Casualty Loss Value, EBO Purchase
Option Amount, End of Tenn Purchase Option Amount, any amounts due under Section
23, LIBOR break costs and any indemnities that may become payable by the Obligor
hereunder, but excluding Basic Hire, (b) all commitment fees payable to the
Lenders by the Obligee pursuant to Section 2.6 of the Loan Agreement and (c) all
commitment fees payable to the Class I Certificate holders pursuant to Section
4.8 of the Trust Agreement.
"Tax Indemnitee" is defined in Section 18 of the Asset Use Agreement.
"Term" means the full term of the Asset Use Agreement with respect to
the Assets, including the Interim Term (if any), the Basic Tenn and each
Additional Term (if any).
"Termination Date", for the Assets, means the last day of the Basic
Term for such Assets, or if the Term for such Assets has been extended pursuant
to Section 28(c) of the Asset Use Agreement, the last day of the Additional Term
for such Assets.
"Total Commitments" means the total commitments indicated on Schedule
III to the Asset Use Agreement.
"Tranche" means, as the context may require, the Tranche A Loans, the
Tranche B Loans or the Class I Certificates.
"Tranche A Lenders" means, collectively, each financial institution
party from time to time to the Loan Agreement as a Tranche A Lender.
"Tranche A Loan Commitment" is defined in Section 2.1(a) of the Loan
Agreement and listed in Schedule III of the Asset Use Agreement.
"Tranche B Loan Commitment" is defined in Section 2.1(b) of the Loan
Agreement and listed in Schedule III of the Asset Use Agreement.
"Tranche A Loan Margin" means, at any date, the percentage set forth
below opposite the then effective Pricing Level for such day:
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<TABLE>
<CAPTION>
Alternate Base
Pricing Level LIBOR Margin Rate Margin
------------- ------------ --------------
<S> <C> <C>
I 0.2625% 1.00%
II 0.2375% 0.75%
III 0.1875% 0.50%
IV 0.175% 0.125%
V 0.150% 0%
</TABLE>
"Tranche A Loans" is defined in Section 2.1 of the Loan Agreement.
"Tranche A Note" means a promissory note of the Obligee payable to the
order or any Lender, substantially in the form of Exhibit A to the Loan
Agreement (as such promissory note may be amended, endorsed or otherwise
modified form time to time), evidencing the aggregate indebtedness of the
Obligee to such Lender resulting from Tranche A Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"Tranche B Lenders" means, collectively, each financial institution
party from time to time to the Loan Agreement as a Tranche B Lender.
"Tranche B Loan Margin" means, on any date, (a) at any time that
interest on the Loans is determined by reference to LIBOR, 3.50%, and (b) at any
time during an ABR Period, 1.75%.
"Tranche B Loans" is defined in Section 2.1 of the Loan Agreement.
"Tranche B Note" means a promissory note of the Obligee payable to the
order or any Lender, substantially in the form of Exhibit B to the Loan
Agreement (as such promissory note may be amended, endorsed or otherwise
modified form time to time), evidencing the aggregate indebtedness of the
Obligee to such Lender resulting from Tranche B Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"Transaction Expenses" means all costs and expenses actually incurred
in connection with the preparation, execution and delivery of the Asset Use
Agreement and the other Operative Documents and the transactions contemplated
hereby and thereby including without limitation:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel for each of the Obligee, the Obligor and the
Guarantor negotiating the terms of the Operative Documents, including
this Asset Use Agreement, the Asset Use Supplement, the Guaranty and
any documents, agreements and instruments necessary to consummate the
transactions
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contemplated hereby and thereby, preparing for the closings under, and
rendering opinions in connection with, such transactions and in
rendering other services customary for counsel representing parties to
transactions contemplated by such Operative Documents;
(b) any other reasonable fees, out-of-pocket expenses,
disbursements or costs of the Obligee related to such Operative
Documents and the transactions contemplated thereby; and
(c) any and all taxes and fees incurred in recording,
registering or filing this Asset Use Agreement, any Supplement or any
other Operative Document, any deed, declaration, mortgage, security
agreement, notice or financing statement with any public office,
registry or governmental agency in connection with the transactions
contemplated by the Operative Documents.
"Trust" means Automotive Business Trust 1999-A.
"Trust Agreement" means the Trust Agreement dated as of March 19, 1999,
between the Depositor, the Class I Certificateholders, and Wilmington Trust
Company.
"Trust Assets" shall mean all right, title and interest of the Trust in
and to the property and rights deposited with and assigned to the trust from
time to time.
"Trust Company" means Wilmington Trust Company, a Delaware banking
corporation.
"Trustee" means Wilmington Trust Company, not in its individual
capacity but exclusively as trustee of Automotive Business Trust 1999-A.
"United States" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"Variable Hire" means, on any date, the sum of
(a) the sum of (x) (i) the aggregate outstanding
principal amount of the Tranche A Loans on such date, multiplied by
(ii) the Interest Rate for the Tranche A Loans multiplied by (iii)
1/360 (or, if such date occurs during an ABR Period, 1/365 or 1/366, as
applicable), plus (y) (i) the aggregate Loan Commitments of the Tranche
A Lenders minus the aggregate outstanding principal amount of the
Tranche A Loans on such date, multiplied by (ii) the Facility Fee for
Tranche A Loans in effect on such date, multiplied by (iii) 1/360 (or,
if such date occurs during an ABR Period, 1/365 or 1 /366, as
applicable);
plus
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(b) the sum of (x) (i) the aggregate outstanding
principal amount of the Tranche B Loans on such date, multiplied by
(ii) the Interest Rate for the Tranche B Loans multiplied by (iii)
1/360 (or, if such date occurs during an ABR Period, 1/365 or 1/366, as
applicable), plus (y) (i) the aggregate Loan Commitments of the Tranche
B Lenders minus the aggregate outstanding principal amount of the
Tranche B Loans on such date, multiplied by (ii) the Facility Fee for
Tranche B Loans, multiplied by (iii) 1/360 (or, if such date occurs
during an ABR Period, 1/365 or 1/366, as applicable);
plus
(c) the sum of (x) (i) the aggregate outstanding
Certificate Amounts on such date, multiplied by (ii) the Yield Rate
multiplied by (iii) 1/360 (or, if such date occurs during an ABR
Period, 1/365 or 1/366, as applicable), plus (y) (i) the aggregate
Commitments of the Class I Certificateholders minus the aggregate
outstanding Certificate Amounts on such date, multiplied by (ii) the
Facility Fee for Certificate Amounts, multiplied by (iii) 1/360 (or, if
such date occurs during an ABR Period, 1/365 or 1/366, as applicable).
"Variable Hire Period" means, with respect to any Assets acquired on
any Acquisition Date,
(a) initially, the period beginning on (and including)
the Acquisition Date for such Assets and ending on (but excluding) the
day which numerically corresponds to such Acquisition Date one month
thereafter (or, if such month has no numerically corresponding day, on
the last Business Day of such month);
(b) thereafter until the Basic Term Commencement Date,
each period beginning on (and including) the last day of the
immediately preceding Variable Hire Period for such Assets and ending
on (but excluding) the earlier of (x) the day which numerically
corresponds to such day one month thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month)
and (y) the Basic Term Commencement Date; and
(c) on and after the Basic Term Commencement Date, each
period beginning on (and including) the last day of the immediately
preceding Variable Hire Period and ending on (but excluding) the day
which numerically corresponds to such day one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on
the last Business Day of such month), as the Obligor may select in a
Continuation Notice (provided, that (x) the Obligor shall not be
permitted to select Variable Hire Periods to be in effect at any one
time which have expiration dates occurring on more than four different
dates and (y) if the Obligor shall not have delivered a Continuation
Notice to the Funding Agent on or prior to 10:00 a.m. (New York time)
on the date occurring three Business Days prior to the last day of
then-current Variable Hire Period, then the next succeeding Variable
Hire Period shall be of one month's duration);
A-26
<PAGE> 87
provided, however, that (i) if such Variable Hire Period would otherwise end on
a day which is not a Business Day, such Variable Hire Period shall end on the
next following Business Day (unless such next following Business Day is the
first Business Day of a calendar month, in which case such Variable Hire Period
shall end on the Business Day next preceding such numerically corresponding
day), (ii) no Variable Hire Period may end later than the last day of the
then-current Term of the Asset Use Agreement and (iii) with respect to the
Assets acquired on the First Acquisition Date, the initial Variable Hire Period
shall begin on (and include) the First Acquisition Date and end on (but exclude)
the date occurring three (3) Business Days after the First Acquisition Date
(provided that such initial Variable Hire Period shall be deemed to be extended
until the Obligor provides the Obligee with a Continuation Notice), and the
succeeding Variable Hire Periods with respect thereto shall be determined as set
forth in clauses (b) and (c) above.
"Warranty Assignment" is defined in Section 3.1(g) of the Asset Use
Agreement.
"Yield" is defined in Section 4.5(a) of the Trust Agreement.
"Yield Rate" means, on any date with respect to the Certificate
Amounts, the sum of LIBOR (Reserve Adjusted) plus the applicable Certificate
Margin plus the Facility Fee for the Certificate Amounts; provided, however,
that if such date occurs during an ABR Period, the Yield Rate shall be equal to
the sum of the Alternate Base Rate on such date plus the applicable Certificate
Margin.
A-27
<PAGE> 1
EXHIBIT 10.13
EXECUTION COPY
================================================================================
OXFORD AUTOMOTIVE INC. GUARANTY
Dated as of March 31, 1999
of
OXFORD AUTOMOTIVE, INC.
in favor of
AUTOMOTIVE BUSINESS TRUST 1999-A
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
Page
cv
<S> <C>
Preamble .........................................................................................................1
Recitals..........................................................................................................1
SECTION 1. Guaranty...............................................................................1
SECTION 2. Guarantor's Obligations Unconditional..................................................2
SECTION 3. Waiver and Agreement...................................................................3
SECTION 4. Waiver of Subrogation..................................................................4
SECTION 5. Rights of the Beneficiaries............................................................4
SECTION 6. Term of Guaranty Agreement.............................................................4
SECTION 7. Acceleration of Guaranty...............................................................4
SECTION 8. Representations and Warranties of Guarantor............................................4
(a) Corporate Existence and Power..........................................................4
(b) Corporate and Governmental Authorization, etc..........................................5
(c) Binding Effect.........................................................................5
(d) Financial Information..................................................................5
(e) Litigation.............................................................................5
(f) ERISA..................................................................................5
(g) Environmental Matters..................................................................6
(h) Taxes..................................................................................6
(i) Not an Investment Company..............................................................6
(j) Full Disclosure........................................................................6
SECTION 9. Covenants of Guarantor.................................................................6
SECTION 10. Notices, etc...........................................................................7
SECTION 11. Severability of this Guaranty..........................................................7
SECTION 12. Miscellaneous..........................................................................7
</TABLE>
-i-
<PAGE> 3
GUARANTY
This GUARANTY (herein the "Guaranty"), dated as of March 31, 1999, of
Oxford Automotive Inc. (the "Guarantor"), is made in favor of Automotive
Business Trust 1999-A (the "Obligee"). Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to such term in Appendix A to
the Asset Use Agreement dated as of March 31, 1999, entered into between Obligee
and Oxford Automotriz de Mexico S.A. de C.V., as Obligor (the "Asset Use
Agreement"), unless the context otherwise requires.
WHEREAS, Guarantor is the direct beneficial owner of all the issued and
outstanding capital stock of Obligor;
WHEREAS, Obligee is unwilling to enter into the Asset Use Agreement
unless Guarantor executes this Guaranty and, as an inducement to Obligee,
Guarantor is entering into this Guaranty and providing the guaranty described
herein;
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interest of Guarantor to execute this
Guaranty inasmuch as Guarantor will derive substantial direct and indirect
benefits from the transactions contemplated by the Asset Use Agreement.
NOW, THEREFORE, Guarantor covenants and agrees as follows:
SECTION 1. Guaranty. Guarantor, as primary obligor and not as surety,
hereby unconditionally and irrevocably guarantees to Obligee and its respective
successors and permitted assigns (individually, a "Beneficiary" and,
collectively, the "Beneficiaries") as their respective interests may appear: (a)
the due, punctual and full payment by Obligor of all amounts (including, without
limitation, amounts payable as damages in case of an Event of Default and all
such amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. ss.362(a)
and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy
Code, 11 U.S.C. ss.502(b) and ss.506(b)) to be paid by Obligor in accordance
with the Asset Use Agreement and any other Operative Document whether such
obligations now exist or arise hereafter, as and when the same shall become due
and payable in accordance with the terms thereof; and (b) the due, prompt and
faithful performance when due of, and compliance with, all other obligations,
covenants, terms, conditions and undertakings of Obligor contained in the Asset
Use Agreement or any other Operative Documents to which Obligor is or is to be a
party in accordance with the terms thereof (such obligations referred to in
clauses (a) and (b) above being hereinafter called the "Obligations"). Guarantor
further agrees to pay any and all reasonable costs and expenses (including
reasonable fees and disbursements of counsel) that may be paid or incurred by
any Beneficiary in collecting any Obligations and/or in preserving or enforcing
any rights under this Guaranty or under the Obligations.
The Guaranty is a guaranty of payment, performance and compliance and
not of collectability, is in no way conditioned or contingent upon any attempt
to collect from or enforce performance or compliance by Obligor or upon any
other event, contingency or circumstance whatsoever, and shall be binding upon
and against Guarantor without regard to the validity or enforceability of the
Asset Use Agreement or any other Operative Document.
<PAGE> 4
If for any reason whatsoever Obligor shall fail or be unable duly,
punctually and fully to pay the Obligations as and when the same shall become
due and payable or to perform or comply with the Obligations when due to be
performed or observed, in each case, in accordance with the Operative Documents,
or if a Guaranty Event of Default (as defined herein) occurs Guarantor will
immediately pay or cause to be paid the Obligations to the Person or Persons
entitled to receive the same (according to their respective interests) under the
terms of the Operative Documents, as appropriate, or perform or comply with the
Obligations or cause the same to be performed or complied with, together with
interest on any amount due and owing from the date the same shall have become
due and payable to the date of payment at a rate equal to the Overdue Rate.
SECTION 2. Guarantor's Obligations Unconditional. The covenants and
agreements of Guarantor set forth in this Guaranty shall be primary obligations
of Guarantor, and such obligations shall be continuing, absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Guarantor with its obligations
hereunder or the full and strict compliance by Obligor of all of the
Obligations), whether based upon any claim that Obligor, Guarantor, or any other
Person may have against any Beneficiary or any other Person or otherwise, and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstance or condition
whatsoever (whether or not Guarantor or Obligor shall have any knowledge or
notice thereof) including, without limitation:
(a) Any amendment, modification, addition, deletion, supplement
or renewal to or of or other change in the Obligations or any Operative Document
or any of the agreements referred to in any thereof, or any other instrument or
agreement applicable to any Operative Document or any of the parties to such
agreements, or to the Assets, or any assignment, mortgage or transfer thereof or
of any interest therein, or any furnishing or acceptance of additional security
for, guaranty of or right of offset with respect to, any of the Obligations; or
the failure of any security or the failure of any Beneficiary to perfect or
insure any interest in any collateral;
(b) Any failure, omission or delay on the part of Obligor or
any Beneficiary to conform or comply with any term of any instrument or
agreement referred to in clause (a) above;
(c) Any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect of any instrument,
agreement, guaranty, right of offset or security referred to in clause (a) above
or any obligation or liability of Obligor or any Beneficiary, or any exercise or
non-exercise by any Beneficiary of any right, remedy, power or privilege under
or in respect of any such instrument, agreement, guaranty, right of offset or
security or any such obligation or liability;
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to
Obligor, any Beneficiary or any other Person or any of their respective
properties or creditors, or any action taken by any trustee or receiver or by
any court in any such proceeding;
(e) Any limitation on the liability or obligations of any
Person under the Asset Use Agreement, or any other Operative Document, the
Obligations, any collateral security for the Obligations or any other guaranty
of the Obligations or any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any of the
foregoing, or any other agreement, instrument, guaranty or security referred to
in clause (a) above or any term of any thereof;
2
<PAGE> 5
(f) Any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any damage to or loss or
destruction of, or any interruption or cessation in the use of the Assets by
Obligor or any other Person for any reason whatsoever (including, without
limitation, any governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of any governmental or
military authority, or any act of God or of the public enemy) regardless of the
duration thereof (even though such duration would otherwise constitute a
frustration of a lease), whether or not resulting from accident and whether or
not without fault on the part of Obligor or any other Person;
(g) Any merger or consolidation of Obligor or Guarantor into or
with any other corporation or any sale, lease or transfer of any of the assets
of Obligor or Guarantor to any other Person;
(h) Any change in the ownership of any shares of capital stock
of Obligor or any corporate change in Obligor or Guarantor; or
(i) Any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing and any other circumstance that might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or that might otherwise limit recourse
against Guarantor.
The obligations of Guarantor set forth herein constitute the full
recourse obligations of Guarantor enforceable against it to the full extent of
all its assets and properties, notwithstanding any provision in any agreements
limiting the liability to any Beneficiary or any other Person.
SECTION 3. Waiver and Agreement. Guarantor waives any and all notice
of the creation, renewal, extension or accrual of any of the Obligations and
notice of or proof of reliance by any Beneficiary upon this Guaranty or
acceptance of this Guaranty, and the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Guaranty. Guarantor unconditionally waives, to the extent permitted by
law: (a) acceptance of this Guaranty and proof of reliance by any Beneficiary
hereon; (b) notice of any of the matters referred to in Section 2, or any right
to consent or assent to any thereof, (c) all notices that may be required by
statute, rule of law or otherwise, now or hereafter in effect, to preserve
intact any rights against Guarantor, including without limitation, any demand,
presentment, protest, proof or notice of nonpayment under the Asset Use
Agreement or any other Operative Document, and notice of default or any failure
on the part of Obligor to perform and comply with any covenant, agreement, term
or condition of the Asset Use Agreement or any other Operative Document; (d)
except to the extent expressly provided in Section 4, any right to the
enforcement, assertion or exercise against Obligor of any right, power,
privilege or remedy conferred in the Asset Use Agreement or any other Operative
Document or otherwise; (e) any requirement of diligence on the part of any
Person; (f) any requirement of any Beneficiary to take any action whatsoever, to
exhaust any remedies or to mitigate the damages resulting from a default by
Obligor under the Asset Use Agreement or any other Operative Document; and (g)
any notice of any sale, transfer or other disposition by any Person of any right
under, title to or interest in the Asset Use Agreement, any other Operative
Document or the Assets.
Guarantor agrees that, without limiting the generality of this
Guaranty, if an Event of Default shall have occurred and be continuing and
Obligee is prevented by applicable law from exercising its remedies under the
Asset Use Agreement, Obligee shall be entitled to receive hereunder from
Guarantor, upon demand therefor, the sums which would have otherwise been due
from Obligor had such remedies been exercised.
3
<PAGE> 6
SECTION 4. Waiver of Subrogation. Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire against Obligor
that arise from the existence, payment, performance or enforcement of
Guarantor's obligations under this Guaranty or any other Operative Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the
Beneficiaries against Obligor or any Collateral which Obligee now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including the right to take or receive
from Obligor, directly or indirectly, in cash or other property or by set-off or
in any manner, payment or security on account of such claim or other rights, in
each case, unless and until the Obligations shall have been fully and finally
paid in cash and, in the case of a bankruptcy or insolvency of Obligor, whether
such bankruptcy or insolvency occurs before, on or after payment in full of the
Obligations, one year has elapsed from the date the Obligations shall have been
fully and finally paid in cash. If any amount shall be paid to Guarantor in
violation of the preceding sentence and the Obligations shall not have been
fully and finally paid in cash, such amount shall be deemed to have been paid to
Guarantor for the benefit of, and held in trust for, the Beneficiaries, and
shall forthwith be paid to Obligee to be credited and applied pursuant to the
terms of the Asset Use Agreement. Guarantor acknowledges that it will receive
direct and indirect benefits from the arrangements contemplated by the Asset Use
Agreement and that the waiver set forth in this Section 4 is knowingly made in
contemplation of such benefits.
SECTION 5. Rights of the Beneficiaries. This Guaranty is made for the
benefit of, and shall be enforceable by, each Beneficiary as its interest may
appear.
SECTION 6. Term of Guaranty Agreement. This Guaranty and all
guaranties, covenants and agreements of Guarantor contained herein shall
continue in full force and effect and shall not be discharged until such time as
all the Obligations shall be fully and finally indefeasibly paid in full in cash
and all the agreements of Obligor and Guarantor hereunder and under the Asset
Use Agreement and the other Operative Documents shall have been duly performed.
If, as a result of any bankruptcy, dissolution, reorganization, insolvency,
arrangement or liquidation proceedings (or proceedings similar in purpose or
effect) or if for any other reason, any payment received by any Beneficiary by
or on behalf of Obligor in respect of the Obligations is rescinded or must be
returned by such Beneficiary, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, this Guaranty shall continue to be
effective or reinstated as if such payment had not been made and, in any event,
as provided in the preceding sentence.
SECTION 7. Acceleration of Guaranty. Guarantor agrees that: (i) upon
the occurrence of any Insolvency Event in respect of Obligor or Guarantor at any
time or (ii) upon the breach by the Guarantor of any of its financial covenants
contained in the Credit Agreement, (each a "Guaranty Event of Default")
Guarantor will pay to the Beneficiaries forthwith the full amount which would be
payable hereunder by Guarantor if all the Obligations were then due and payable.
SECTION 8. Representations and Warranties of Guarantor. As of the date
hereof and each Acquisition Date, Guarantor hereby represents and warrants to
the Obligee and each of the Beneficiaries on and as of such Acquisition Date:
(a) Corporate Existence and Power. Guarantor is a corporation
duly incorporated, validly existing and in good standing under the laws
of Michigan, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on
its business as now conducted.
4
<PAGE> 7
(b) Corporate and Governmental Authorization, etc. The
execution, delivery and performance by Guarantor of this Guaranty and
the performance of, on behalf of Obligor or in accordance with the
terms hereof, the Asset Use Agreement and each of the other Operative
Documents, are within the corporate powers of Guarantor, have been duly
authorized by all necessary corporate action, requires no action by or
in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of Guarantor or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Guarantor or
any of its Subsidiaries or result in the creation or imposition of any
Lien on any asset of Guarantor or any of its Subsidiaries other than
Permitted Liens. This Guaranty has been or will be duly executed and
delivered by Guarantor.
(c) Binding Effect. This Guaranty constitutes a legal, valid
and binding agreement of Guarantor and when executed and delivered in
accordance with the term hereof will constitute legal, valid and
binding obligations of Guarantor, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditor's
rights generally and by general equitable principles.
(d) Financial Information.
(i) The consolidated balance sheet of Guarantor and its
Consolidated Subsidiaries as of March 31, 1998 and the related
consolidated statements of income, cash flows and changes in
redeemable preferred stock and stockholders' equity for the
fiscal year then ended, reported on by Price Waterhouse Coopers
and set forth in Guarantor's 1998 Form 10-K, a copy of which has
been delivered to each of the Class I Certificateholders, fairly
present, in conformity with generally accepted accounting
principles, the consolidated financial position of Guarantor and
its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal
year.
(ii) Since March 31, 1998 there has been no material
adverse effect on the business, financial position, results of
operations or prospects of Guarantor and its Consolidated
Subsidiaries, considered either separately or as a whole.
(e) Litigation. There is no action, suit or proceeding pending,
or to Guarantor's knowledge, threatened against or affecting, Guarantor
or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a significant
possibility of an adverse decision which could cause a material adverse
effect on the business, financial position, results of operations or
prospects of Guarantor and its Consolidated Subsidiaries considered
separately or as a whole or which in any manner draws into question the
validity of this Guaranty or any other Operative Document.
(f) ERISA. Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with
respect to each Plan. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or made any amendment
5
<PAGE> 8
to any Plan, which has resulted in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA, in each case, except where any failure to fulfill such
obligations or minimum funding standards, any imposition of any such Lien or any
posting of any such bond or other security or any incurrence of any such
liability. is not reasonably likely to result in a material adverse effect on
Guarantor's ability to fulfill its obligations under this Guaranty.
(g) Environmental Matters. In the ordinary course of its
business, Guarantor conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of
Guarantor and its Subsidiaries, in the course of which it identifies
and evaluates associated liabilities and costs (including any capital
or operating expenditures required for clean-up or closure of
properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a condition of
any license, permit or contract, any related constraints on operating
activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of
operations conducted thereat and any actual or potential liabilities to
third parties, including employees, and any related costs and
expenses). Guarantor upon due inquiry represents and warrants that, as
of the date of this Guaranty, Environmental Laws will have no material
adverse effect on the business, financial condition, results of
operations or prospects of Guarantor and its Consolidated Subsidiaries,
considered as a whole.
(h) Taxes. Guarantor and its Subsidiaries have filed all United
States Federal and state income tax returns and all other tax returns
which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by
Guarantor or any Subsidiary, other than taxes contested in good faith
by Guarantor or such Subsidiary. The charges, accruals and reserves on
the books of Guarantor and its Subsidiaries in respect of taxes or
other governmental charges are adequate.
(i) Not an Investment Company. Guarantor is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(j) Full Disclosure. All written information heretofore
furnished by Guarantor to Obligee or any Certificate Purchaser for
purposes of or in connection with this Guaranty or any other Operative
Document or any transaction contemplated hereby or thereby is, and all
such written information hereafter furnished by Guarantor to Obligee
will be, true and accurate in all material respects on the date as of
which such information is stated or certified. Guarantor has disclosed
to the Obligee in writing any and all facts which materially and
adversely affect or may so affect, the business, financial position or
results of operations of Guarantor and its Consolidated Subsidiaries,
taken separately and as a whole, or the ability of Guarantor to perform
its obligations under this Guaranty.
SECTION 9. Covenants of Guarantor. The Guarantor hereby covenants and
agrees with each Beneficiary that, so long as this Guaranty shall remain in
effect, that it shall comply with its affirmative covenants and negative
covenants as set forth in the Credit Agreement (the "Covenants") and such
Covenants as in effect on the date hereof shall be and be deemed incorporated by
reference herein, mutatis mutandis, and shall be a part hereof as if fully set
forth herein; provided, however, that such Covenants, to the extent amended in
accordance with the terms of the Intercreditor Agreement, shall be
6
<PAGE> 9
deemed amended for the purposes hereof. In the event the Credit Agreement is
terminated, the Covenants in effect, to the extent amended as provided in the
preceding sentence, immediately prior to such termination shall survive and
remain part of this Guaranty.
SECTION 10. Notices, etc. All notices, demands, requests, consents,
approvals and other instruments hereunder shall be in writing and shall be
deemed to have been properly given if mailed and properly addressed and posted
or if sent by pre-paid courier overnight mail or certified mail to Guarantor at:
Oxford Automotive Inc., Attn: Chief Financial Officer, 1250 Stephenson Highway,
Troy, MI 48083.
SECTION 11. Severability of this Guaranty. In case any provisions of
this Guaranty or any application thereof shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions and statements and any other application thereof shall not in any way
be affected or impaired thereby. To the extent permitted by law, Guarantor
hereby waives any provision of law that renders any term or provision hereof
invalid or unenforceable in any respect.
SECTION 12. Miscellaneous. THIS GUARANTY SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Guaranty
shall be binding upon Guarantor and its successors, transferees and
assigns and inure to the benefit of and be enforceable by the respective
successors, permitted transferees, and permitted assigns of the Beneficiaries,
provided, however, that Guarantor may not assign any of its obligations
hereunder without the prior written consent of Obligee. The table of contents
and headings in this Guaranty are for purposes of reference only, and shall not
limit or otherwise affect the meaning hereof. This Guaranty constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
[remainder of page intentionally left blank]
7
<PAGE> 10
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed as of the date first above written.
OXFORD AUTOMOTIVE INC.
By: /s/ Aurelian Bukatko
------------------------------
Name: Aurelian Bukatko
Title: Senior Vice President & CFO
8
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIOS
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
10/28/95- 4/1/95 -
3/31/99 3/31/98 3/31/97 3/31/96 10/27/95 3/31/95
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes $5,465 $9,665 $2,614 $617 ($2,822) ($1,615)
ADD:
Portion of rents
representative of interest factor 4,285 1,736 440 54 73 143
Interest on indebtedness 20,903 10,710 3,388 1,096 1,048 1,267
------- ------- ------ ------ ------- -------
$30,653 $22,111 $6,442 $1,767 ($1,701) ($205)
======= ======= ====== ====== ======= =======
FIXED CHARGES
Portion of rents
representative of interest factor 4,285 1,736 440 54 73 143
Interest on indebtedness 20,903 10,710 3,388 1,096 1,048 1,267
------- ------- ------ ------ ------- -------
$25,188 $12,446 $3,828 $1,150 $1,121 $1,410
======= ======= ====== ====== ======= =======
Ratio of Earnings to Fixed Charges 1.2 1.8 1.7 1.5 -- --
======= ======= ====== ====== ======= =======
Deficiency of Earnings over
fixed charges -- -- -- -- ($2,822) ($1,615)
======= =======
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Jurisdiction of Percent Assumed
Name of Subsidiary Incorporation Owned Names
- ------------------ ------------- ----- -------
<S> <C> <C> <C>
Lobdell Emery Corporation ("Lobdell") Michigan 100% The Lobdell-Emery
Manufacturing Company
Creative Fabrication Corporation Tennessee 100% Oxford Automotive
BMG Holdings, Inc. ("BMGH") Ontario, Canada 100%
BMG North America Limited ("BMG") Ontario, Canada 100%-BMGH
Howell Industries, Inc. Michigan 100%
Oxford Suspension Ltd. Ontario, Canada 100%
Oxford Suspension, Inc. ("OSI") Michigan 100%
Metalurgica Carabobo S.A. Venezuela 49%-OSI
RPI Holdings, Inc. ("RPIH") Michigan 100%
RPI, Inc. Michigan 100%-RPIH
Oxford Automotriz de Mexico S.A. de C.V. ("OAM") Mexico, D.F. 100%
Oxford Automotriz Silao S.A. de C.V. Mexico, D.F. 100%-OAM
Oxford Automotriz Saltillo S.A. de C.V. Mexico, D.F. 100%-OAM
Oxford Automotive France SAS France (1) 100%
Cofimeta S.A. France (2) 100%
Aubry S.A. France (3) 100%
Ecrim S.A. France (4) 100%
Somenor S.A. France (4) 100%
Socori Technologies S.A. France (5) 100%
Cofimeta Defeasance S.A. France (1) 100%
</TABLE>
(1) Paris Trade Registry
(2) Nanterre Trade Registry
(3) Bourges Trade Registry
(4) Lisieux Trade Regsitry
(5) Versailles Trade Registry
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDED MARCH 31,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 19,008
<SECURITIES> 0
<RECEIVABLES> 152,281
<ALLOWANCES> 4,506
<INVENTORY> 48,104
<CURRENT-ASSETS> 264,488
<PP&E> 223,399
<DEPRECIATION> 25,450
<TOTAL-ASSETS> 542,930
<CURRENT-LIABILITIES> 184,038
<BONDS> 203,111
40,319
0
<COMMON> 1,050
<OTHER-SE> 928
<TOTAL-LIABILITY-AND-EQUITY> 542,930
<SALES> 591,645
<TOTAL-REVENUES> 591,645
<CGS> 536,578
<TOTAL-COSTS> 536,578
<OTHER-EXPENSES> 33,144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,903
<INCOME-PRETAX> 5,465
<INCOME-TAX> 2,312
<INCOME-CONTINUING> 3,153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,153
<EPS-BASIC> 5.92
<EPS-DILUTED> 5.92
</TABLE>
