SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended June 30, 1994
( ) 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 0-627
Douglas & Lomason Company
(exact name of registrant as specified in its charter)
Michigan 38-0495110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24600 Hallwood Court, Farmington Hills, Michigan 48335-1671
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (810) 478-7800
Former name, former address and former fiscal year, if changed since last
year: Same
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES _X_ NO ___
CLASS OUTSTANDING AT AUGUST 12, 1994
Common stock, $2 par value 4,227,970 shares
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Balance Sheets
June 30 December 31
1994 1993
ASSETS
<S> <C> <C>
Current assets:
Notes and accounts receivable $ 76,929,905 $ 70,458,109
Inventories
Raw materials 11,740,419 7,796,730
Work in process and finished goods 9,341,389 6,638,703
21,081,808 14,435,433
Cash and other current assets 7,353,334 9,330,661
105,365,047 94,224,203
Property, plant and equipment, net 69,830,440 69,109,773
Other non-current assets 9,767,525 10,949,345
Total assets $184,963,012 $174,283,321
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Short-term debt $ --- $ 7,000,000
Current maturities of long-term debt 5,882,387 5,829,315
Accounts payable and accrued expenses 54,660,573 44,390,029
Taxes on income 1,156,853 800,149
Total current liabilities 61,699,813 58,019,493
Long-term debt, less current maturities 23,170,843 21,825,630
Postretirement benefits other than
pensions 7,009,116 6,521,094
Other liabilities 10,421,987 10,242,484
Shareholders' equity
Preferred stock
No par value, authorized 500,000
shares, issued - none
Common stock
Par value $2 per share authorized
10,000,000 shares; issued and
outstanding 4,227,970 shares in
1994 and 4,223,395 in 1993 8,455,940 8,454,440
Other capital 27,991,101 27,986,476
Retained earnings 46,214,212 41,233,704
Total shareholders' equity 82,661,253 77,674,620
Total liabilities and
shareholders' equity $184,963,012 $174,283,321
</TABLE>
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Income
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $123,253,404 $103,858,609 $246,719,362 $219,261,650
Cost of sales 113,582,619 95,563,385 225,892,785 198,554,234
Gross profit 9,670,785 8,295,224 20,826,577 20,707,416
Selling, general and
administrative expense 5,434,963 4,824,495 10,876,910 9,883,464
Operating income 4,235,822 3,470,729 9,949,667 10,823,952
Other income (expenses):
Interest expense, net (591,478) (651,214) (1,207,887) (1,361,678)
Interest income
and other 256,725 35,316 459,324 184,796
(334,753) (615,898) (748,563) (1,176,882)
Earnings before provision
for income taxes 3,901,069 2,854,831 9,201,104 9,647,070
Income tax expenses 1,390,000 1,005,000 3,375,000 3,435,000
Earnings before cumulative
effect of change in
accounting 2,511,069 1,849,831 5,826,104 6,212,070
Cumulative effect of change
in accounting for post-
retirement benefits,
net of income taxes --- --- --- 3,756,930
Net earnings $ 2,511,069 $ 1,849,831 $ 5,826,104 $ 2,455,140
Earnings per share before
cumulative effect of
change in accounting $ .60 $ .44 $ 1.38 $ 1.48
Cumulative per share
effect of change in
accounting --- --- --- .90
Net earnings per share $ .60 $ .44 $ 1.38 $ .58
Weighted average number
of shares 4,227,970 4,207,281 4,227,858 4,201,557
</TABLE>
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<TABLE>
<CAPTION>
DOUGLAS & LOMASON COMPANY
Consolidated Condensed Statements of Cash Flows
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 5,826,104 $ 2,455,140
Depreciation 6,274,800 5,652,714
Postretirement benefits other than
pensions --- 5,963,381
Changes in operating assets and liabilities:
Increase in accounts receivable (6,471,796) (4,352,968)
Increase in inventories (6,646,375) (2,988,084)
Decrease in prepaid expenses and other assets 1,294,844 310,749
Increase in accounts payable,
and accrued expenses 10,270,544 4,698,610
Increase (decrease) in other liabilities 1,077,299 (1,720,773)
Net cash provided by operating activities 11,625,420 10,018,769
Cash flows from investing activities:
Proceeds from the sale of property,
plant and equipment 187,240 15,526
Acquisition of property, plant and
equipment (7,182,707) (10,942,778)
Net cash used by investing activities (6,995,467) (10,927,252)
Cash flows from financing activities:
Proceeds from long-term debt 4,500,000 ---
Repayment of long-term debt (3,154,787) (2,701,715)
Repayment of short-term debt (7,000,000) ---
Proceeds from exercised stock
options, net 6,125 586,475
Dividends paid (845,594) (841,666)
Net cash used by financing activities (6,494,256) (2,956,906)
Net decrease in cash (1,864,303) (3,865,389)
Cash at beginning of year 2,745,818 8,238,779
Cash at end of quarter $ 881,515 $ 4,373,390
</TABLE>
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DOUGLAS & LOMASON COMPANY
Notes to Consolidated Condensed Financial Statements
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position as of June 30, 1994 and 1993, and the results of operations
for the six months then ended, and changes in financial position for
the six months then ended, subject to year end audit adjustments.
<PAGE>
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Liquidity and Capital Resources
Funds provided from operations of $11.6 million were the principal source of
cash in the first six months of 1994. Capital expenditures of $7.0 million
and financing activities of $6.5 million, principally debt repayment net of
borrowings and dividends resulted in a negative cash flow of $1.9 million.
In June, 1994, the Company entered into an amended and restated unsecured
revolving credit agreement with two banks which matures in June, 1997.
Borrowings outstanding under this facility totaled $4.5 million at June 30,
1994. The amended agreement increased the credit facility from $20.0 million
to $35.0 million.
Results of Operations
Net Sales
Net sales for the quarter ended June 30, 1994, were $123.3 million, up 18.7%
from $103.9 million in the same period of 1993. For the six months ended June
30, 1994, sales of $246.7 million, up 12.5% from the $219.3 million for the
same period of 1993. Industry sales of automobiles, vans and light trucks
continued to have a strong consumer demand during the entire first six months
of 1994.
Cost of Sales
Cost of sales as a percentage of net sales increased only slightly in the
second quarter of 1994 compared to the same period of 1993. For the first six
month period of 1994, the cost of sales increased 1.0% as a percentage of net
sales. These unfavorable trends in 1994 are a direct result of customer
demands for price concessions, increased material costs from suppliers and
start-up costs of new operations.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in 1994 increased $1.0 million or
10.1% as compared to the same period of 1993. Incentive compensation,
additional staffing and maintenance in Information Services and travel
expenses are the principal components of this increase.
Depreciation Expense
Depreciation expense for the quarter ended June 30, 1994, was $3.2 million up
9.2% from $2.9 million in the second quarter of 1993. Depreciation expense in
the first six months of 1994 of $6.3 million increased $.6 million or 11.0%
from the $5.7 million in the same period of 1993. These increases were the
result of capital expenditures of $20.5 million in 1993.
Interest Expense
Interest expense for the quarter ended June 30, 1994, was $591,000 down 9.2%
from the same period of 1993. Interest expense in the first six months of
1994 decreased $154,000 or 11.3% from the same period of 1993, principally as
a result of the lower debt level in 1994.
<PAGE>
Net Earnings
Net earnings of $2.5 million or $.60 per share in the second quarter of 1994
increased 35.7% from the $1.8 million or $.44 per share in the comparable
period of 1993. Net earnings of $5.8 million or $1.38 per share in the first
six months of 1994 compare to $2.5 million or $.58 per share in the same
period of 1993. Results of the first half of 1993 included $3.8 million or
$.90 per share related to a change in accounting for postretirement benefits.
Net earnings improvement is principally attributable to higher sales level.
Financial Condition
The balance sheet at June 30, 1994, remains strong. The current ratio stood
at 1.7 to 1 and funded debt to capitalization ratio was a very strong .23 to
1.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Amended and Restated Credit Agreement dated as of June
24, 1994 between Douglas & Lomason Company and two
banks.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the
second quarter of 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DOUGLAS & LOMASON COMPANY
-------------------------
(Registrant)
Date: August 12, 1994 /s/ James J. Hoey
-------------------------
James J. Hoey
Senior Vice President &
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
Officer)
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
June 24, 1994 (this "Agreement"), is by and among DOUGLAS & LOMASON
COMPANY, a Michigan corporation (the "Company"), and the banks
named in Section 2.1 hereof (herein collectively called the "Banks"
and individually called a "Bank").
INTRODUCTION
WHEREAS, the Company and the Banks executed an Amended and
Restated Credit Agreement dated as of December 19, 1991, as amended
(as amended, the "Original Credit Agreement"), to provide a
revolving credit facility in favor of the Company in the amount of
$20,000,000; and
WHEREAS, the Company has requested that the Banks amend and
restate the Original Credit Agreement as herein provided, to, among
other things, replace the revolving credit facility provided under
the Original Credit Agreement with a new revolving credit facility
in an aggregate principal amount not to exceed $35,000,000 at any
time outstanding.
ARTICLE I. DEFINITIONS
1.1 Certain Definitions. As used herein the following terms
shall have the following respective meanings:
"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.
"Borrowing" shall mean the Loans of the Banks to be made to
the Company, or continuations and conversions of such Loans, made
pursuant to Article II on a single date and for a single Interest
Period, which Borrowings may be classified for purposes of this
Agreement by reference to the type of Loans comprising the related
Borrowing, e.g., a "Eurodollar Rate Borrowing" is a Borrowing
comprised of Eurodollar Rate Loans.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which the Banks are not open to the public for
carrying on substantially all of their banking functions.
"Capitalization" of any person shall mean the sum of the
principal amount of Funded Debt outstanding of such person, plus
the Tangible Net Worth of such person.
"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.
"CD Interest Period" shall mean, with respect to any CD Rate
Loan, the period commencing on the day such Loan is made or
converted to a CD Rate Loan and ending on the date 30, 60, 90 or
180 days thereafter, as the Company may elect under Section 2.4 or
Section 2.7, and, with respect to any continuation of such Loan as
a CD Rate Loan, each subsequent period commencing on the last day
of the immediately preceding CD Interest Period and ending on the
date 30, 60, 90 or 180 days thereafter, as the Company may elect
under Section 2.7, provided, however, that (a) each CD Interest
Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day, and (b) no CD
Interest Period which would end after the Termination Date shall be
permitted.
"CD Rate" shall mean, with respect to any CD Rate Loan and the
related CD Interest Period, the per annum rate that is equal to the
sum of:
(a) seven-eighths of one percent (7/8%) per annum, plus
(b) the rate per annum obtained by dividing (i) the
arithmetic mean of secondary market bid rates per annum (expressed
as a percentage) quoted at approximately 10:00 a.m. New York time
(or as soon thereafter as practicable) on the first day of the
related CD Interest Period by two or more New York certificate of
deposit dealers of recognized standing selected by the Reference
Bank for the purchase from the Reference Bank at face value of
negotiable certificates of deposit of the Reference Bank with a
term comparable to such CD Interest Period in an aggregate amount
comparable to the related CD Rate Loan, 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) under any
regulations of the Board of Governors of the Federal Reserve System
(or any successor agency thereto), applicable on the first day of
the related CD Interest Period to a negotiable certificate of
deposit of the Reference Bank with a term comparable to such CD
Interest Period in an aggregate amount comparable to the related CD
Rate Loan, plus
(c) the annual assessment rate (expressed as a percentage)
estimated by the Reference Bank on the first day of the related CD
Interest Period to be payable by the Reference Bank to the Federal
Deposit Insurance Corporation (or any successor agency thereto) for
such Corporation's (or such successor's) insuring Dollar deposits
of the Reference Bank in the United States during the related CD
Interest Period;
all as conclusively determined by the Reference Bank, such sum to
be rounded up, if necessary, to the nearest whole multiple of one
one-hundredth of one percent (1/100 of 1%).
"CD Rate Loan" shall mean any Loan which bears interest at the
CD Rate.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations thereunder.
"Commitments" shall mean the several agreements of the Banks
to make Loans hereunder in the respective amounts specified in
Section 2.1, as such amounts may be reduced from time to time
pursuant to Section 2.2, and "Commitment" shall mean any one of the
Commitments.
"Commitment Percentage" for any Bank at any time shall mean
the ratio (expressed as a percentage) of the aggregate principal
amount of its Commitment to the Total Commitments.
"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.
"Controlled Group" shall have the meaning defined in Section
414(b) of the Code.
"Contingent Liabilities" of any person shall mean, as of any
date, all obligations of such person or of others for which such
person is contingently liable, as obligor, guarantor, surety or in
any other capacity, or in respect of which obligations such person
assures a creditor against loss or agrees to take any action to
prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such
person in respect of 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.
"Cumulative Net Income" of any person shall mean, as of any
date, the net income (after deduction for income and other taxes of
such person determined by reference to income or profits of such
person) for the period commencing on the specified date through the
end of the most recently completed fiscal year of such person (but
without reduction for any net loss incurred for any fiscal year
during such period), taken as one accounting period, all as
determined in accordance with generally accepted accounting
principles.
"Current Assets" and "Current Liabilities" of any person shall
mean, as of any date, all assets or liabilities, respectively, of
such person which, in accordance with generally accepted accounting
principles, should be classified as current assets or current
liabilities, respectively, on a balance sheet of such person.
"Default" shall mean any event or condition described in
Section 6.1 which might become an Event of Default with notice or
lapse of time or both.
"Dollars" and "$" shall mean the lawful money of the United
States of America.
"Effective Date" shall mean the effective date specified in
the final paragraph of this Agreement.
"Environmental Laws" shall mean all provisions of law,
statute, ordinances, rules, regulations, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by
the government of the United States of America or any foreign
government or by any state, province, municipality or other
political subdivision thereof or by any court, agency or
instrumentality, regulatory authority or commission of any of the
foregoing concerning the protection of, or regulating the discharge
of substances into, the environment.
"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.
"Eurodollar Business Day" shall mean, with respect to any
Eurodollar Rate 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.
"Eurodollar Interest Period" shall mean, with respect to any
Eurodollar Rate Loan, the period commencing on the day such
Eurodollar Rate Loan is made or converted to a Eurodollar Rate Loan
and ending on the date one, two, three or six months thereafter, as
the Company may elect under Section 2.4 or Section 2.7, and each
subsequent period commencing on the last day of the immediately
preceding Eurodollar Interest Period and ending on the date one,
two, three or six months thereafter, as the Company may elect under
Section 2.7, provided, however, that (a) any Eurodollar Interest
Period which commences on the last Eurodollar 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 Eurodollar Business Day of the appropriate
subsequent calendar month, (b) each Eurodollar Interest Period
which would otherwise end on a day which is not a Eurodollar
Business Day shall end on the next succeeding Eurodollar Business
Day or, if such next succeeding Eurodollar Business Day falls in
the next succeeding calendar month, on the next preceding
Eurodollar Business Day, and (c) no Eurodollar Interest Period
which would end after the Termination Date shall be permitted.
"Eurodollar Rate" shall mean, with respect to any Eurodollar
Rate Loan and the related Eurodollar Interest Period, the per annum
rate that is equal to the sum of:
(a) three-quarters of one percent (3/4%) per annum, plus
(b) the rate per annum obtained by dividing (i) the per annum
rate of interest at which deposits in Dollars for such Eurodollar
Interest Period and in an aggregate amount comparable to the amount
of such Eurodollar Rate Loan are offered to the Reference Bank by
other prime banks in the London interbank market, at approximately
11:00 a.m. London time, on the second Eurodollar Business Day prior
to the first day of such Eurodollar 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 is specified on the first day of such Eurodollar
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 Reference Bank, such sum to
be rounded up, if necessary, to the nearest whole multiple of one
one-hundredth of one percent (1/100 of 1%).
"Eurodollar Rate Loan" shall mean any Loan which bears
interest at the Eurodollar Rate.
"Event of Default" shall mean any of the events or conditions
described in Section 6.1.
"Fixed Rate Loan" shall mean any CD Rate Loan or Eurodollar
Rate Loan.
"Floating Rate" shall mean the per annum rate equal to the
Prime Rate in effect from time to time which Floating Rate shall
change simultaneously with any change in such Prime Rate.
"Floating Rate Loan" shall mean any Loan which bears interest
at the Floating Rate.
"Funded Debt" shall mean and include, without duplication:
(a) any obligation payable more than one year from the date of
any determination hereunder, which under generally accepted
accounting principles is shown on the balance sheet as a liability
(including Capital Lease obligations but excluding other reserves
to the extent that such reserves do not constitute an obligation,
and excluding any current liability);
(b) indebtedness payable more than one year from the date of
any determination hereunder which is secured by any Lien on
property owned by the Company or any Subsidiary, whether or not the
indebtedness secured thereby shall have been assumed by the Company
or such Subsidiary;
(c) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of
business) and other contingent liabilities (whether direct or
indirect in connection with the obligations, stock or dividends of
any Person, which may be payable more than one year from the date
of any determination hereunder;
(d) obligations (payable more than one year from the date of
any determination hereunder) under any contract providing for the
making of loans, advances or capital contributions to any Person,
or for the purchase of any property from any Person, in each case
in order to enable such person primarily to maintain working
capital, net worth or any other balance sheet condition or to pay
debts, dividends or expenses;
(e) obligations (payable more than one year form the date of
any determination hereunder) under any contract for the purchase of
materials, supplies or other property or services as such contract
(or any related document) requires that payment for such materials,
supplies or other property or services shall be made regardless of
whether or not delivery of such materials, supplies or other
property or services is ever made or tendered; and
(f) obligations under any other contract which, in economic
effect, is substantially equivalent to a guarantee, provided such
obligations are payable more than one year from the date of any
determination hereunder;
all as determined in accordance with generally accepted accounting
principles.
"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.
"Hazardous Materials" shall mean any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances or related materials defined in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 6901, et seq.) and in the
regulations adopted and publications promulgated pursuant thereto,
or any other federal, state or local government law, ordinance,
rule or regulation.
"Indebtedness" of any person shall mean, as of any date, (a)
all obligations of such person for borrowed money, (b) all
obligations of such person as lessee under any Capital Lease, (c)
all obligations which are secured by any Lien existing on any asset
or property of such person whether or not the obligation secured
thereby shall have been assumed by such person, (d) the unpaid
purchase price for goods, property or services acquired by such
person, except for trade accounts payable arising in the ordinary
course of business that are not past due, (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 liabilities of such person in respect of Unfunded Benefit
Liabilities (which shall in no event be deemed to include any
amounts shown as liabilities of such person under Statement of
Financial Accounting Standard 106) under any plan of such person or
of any member of a Controlled Group of which such person is a
member, (g) all obligations of such person in respect of any
interest rate or currency swap, rate cap or other similar
transaction (valued in an amount equal to the highest termination
payment, if any, that would be payable by such person upon
termination for any reason on the date of determination), and (h)
all obligations of others similar in character to those described
in clauses (a) through (g) of this definition for which such person
is contingently liable, as obligor, guarantor, surety or in any
other capacity, or in respect of which obligations such person
assures a creditor against loss or agrees to take any action to
prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such
person in respect of letters of credit, surety bonds or similar
obligations and all obligations of such person to advance funds to,
or to purchase assets, property or services from, any other person
in order to maintain the financial condition of such other person.
"Interest Payment Date" shall mean (a) with respect to any
Fixed Rate Loan, the last day of each Interest Period with respect
to such Fixed Rate Loan and, in the case of any Interest Period
exceeding three months or 90 days, as the case may be, those days
that occur during such Interest Period at intervals of three months
or 90 days, as the case may be, after the first day of such
Interest Period, and (b) in all other cases, the last day of each
March, June, September and December occurring after the date
hereof, commencing with the last Business Day of June 1994, and on
the Termination Date.
"Interest Period" shall mean any CD Interest Period or
Eurodollar Interest Period.
"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 and, without limiting the
foregoing, shall also include any of the foregoing that are
delivered as a deferred pledge.
"Loans" shall mean the Revolving Credit Loans and "Loan" shall
mean any Revolving Credit Loan. Any such Loan or portion thereof
may also be denominated as a Floating Rate Loan or a Fixed Rate
Loan (which may be further denominated as a CD Rate Loan or
Eurodollar Rate Loan) and such Floating Rate Loans and Fixed Rate
Loans (including such CD Rate Loans and Eurodollar Rate Loans) are
referred to herein as "types" of Loans.
"Multiemployer Plan" shall mean any "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or Section 414(f) of the
Code.
"Notes" shall mean the Revolving Credit Notes, and "Note"
shall mean either of the Notes.
"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 Fixed Rate 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.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean Liens permitted by Section 5.2(g)
hereof.
"person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock
company, an unincorporated organization, a joint venture, a trade
or business (whether or not incorporated), a government (foreign or
domestic) and any agency or political subdivision thereof, or any
other entity.
"Plan" shall mean, with respect to any person, any pension
plan (other than a Multiemployer Plan) subject to Title IV of ERISA
or to the minimum funding standards of Section 412 of the Code
which has been established or maintained by 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.
"Prime Rate" shall mean the per annum rate announced by the
Reference Bank 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 Reference Bank 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.
"Reference Bank" shall mean NBD Bank, N.A., a national banking
association of Detroit, Michigan, or such substitute Bank as may be
appointed from time to time pursuant to Section 7.15.
"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.
"Revolving Credit Loans" shall mean the borrowings under
Section 2.4 evidenced by the Revolving Credit Note and made
pursuant to Section 2.1, and "Revolving Credit Loan" shall mean any
of the Revolving Credit Loans.
"Revolving Credit Notes" shall mean the promissory notes of
the Company evidencing the Revolving Credit Loans, in substantially
the form annexed hereto as Exhibits A-1 and A-2, as amended or
modified from time to time and together with any promissory note or
notes issued in exchange or replacement therefor, and "Revolving
Credit Note" shall mean either of the Revolving Credit Notes.
"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.
"Tangible Net Worth" of any person shall mean, as of any date,
(a) the amount of any capital stock, paid in capital and similar
equity accounts plus (or minus in the case of a deficit) the
capital surplus and retained earnings of such person and the amount
of any foreign currency translation adjustment account shown as a
capital account of such person, less (b) the net book value of all
items of the following character which are included in the assets
of such person: (i) goodwill, including without limitation, the
excess of cost over book value of any asset, (ii) organization or
experimental expenses, (iii) unamortized debt discount and expense,
(iv) patents, trademarks, trade names and copyrights, (v) treasury
stock, (vi) deferred taxes and deferred charges, (vii) franchises,
licenses and permits, and (viii) other assets which are deemed
intangible assets under generally accepted accounting principles.
Without limiting the foregoing, "Tangible Net Worth" shall include
the Deferred Income Tax Liabilities and shall exclude the Deferred
Income Tax and Deferred Engineering & Design Assets shown on the
consolidated balance sheet of the Company and its Subsidiaries from
time to time.
"Term Loan Agreements" shall mean the Term Loan Agreements by
and among the Company and the Banks dated as of May 20, 1988 and
December 19, 1991, each as amended or modified from time to time.
"Termination Date" shall mean the earlier to occur of (a) June
24, 1997 and (b) the date on which the Commitments shall be
terminated pursuant to Section 2.2 or Section 6.2; provided,
however, that the Termination Date provided under clause (a) of
this definition shall be subject to two automatic extensions for a
period of one additional year each unless either Bank shall notify
the Company and the other Bank in writing no later than sixty days
prior to the then existing Termination Date under such clause (a)
that such Bank has elected to revoke such extension, in which such
case the Termination Date shall be the then existing Termination
Date under clause (a) of this definition.
"Total Commitments" shall mean, at any date, the sum of the
Commitments hereunder.
"Total Liabilities" of any person shall mean, as of any date,
all obligations which, in accordance with generally accepted
accounting principles, are or should be classified as liabilities
on a balance sheet of such person.
"Unfunded Benefit Liabilities" shall mean, with respect to
any Plan as of any date, the amount of the unfunded benefit
liabilities determined in accordance with Section 4001(a)(18) of
ERISA.
"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 of such person.
1.2 Other Definitions; Rules of Construction. As used
herein, the terms "Banks", "Company" and "this Agreement" shall
have the respective meanings ascribed thereto in the introductory
paragraph of this Agreement. Such terms, together with the other
terms defined in Section 1.1, shall include both the singular and
the plural forms thereof and shall be construed accordingly. 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. 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.
ARTICLE II. THE COMMITMENTS
2.1 Commitments of the Banks. Each Bank agrees, for itself
only, subject to the terms and conditions of this Agreement, to
make Revolving Credit Loans to the Company pursuant to Section 2.4
from time to time from and including the Effective Date to but
excluding the Termination Date, not to exceed in aggregate
principal amount at any time outstanding the amount set forth
opposite its name below as its Commitment:
<TABLE>
<CAPTION>
Name of Bank Commitment
- - ------------ -----------
<S> <C>
NBD Bank, N.A. $19,250,000
Comerica Bank 15,750,000
===========
Total: $35,000,000
</TABLE>
Each Revolving Credit Loan shall consist of advances made by the
Banks severally in proportion to their respective Commitments.
Each Revolving Credit Loan shall be in the aggregate principal
amount of $1,000,000 or any integral multiple thereof.
2.2 Termination and Reduction of Commitments. The Company
may terminate or reduce the 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
Banks specifying the amount and effective date thereof, (ii) each
partial reduction of the Commitments shall be in a minimum amount
of $5,000,000 and in an integral multiple of $1,000,000 and shall
reduce the Commitment of each Bank proportionately in accordance
with the percentage each such Commitment bears to the Total
Commitments, (iii) no such termination or reduction shall be
permitted with respect to any portion of the Commitments as to
which a request for a Loan pursuant to Section 2.4 is then pending,
and (iv) the Commitments may not be terminated if any Loans are
then outstanding and may not be reduced below the principal amount
of Loans then outstanding. The Commitments or any portion thereof
terminated or reduced pursuant to this Section 2.2, whether
optional or mandatory, may not be reinstated.
2.3 Fees. The Company agrees to pay to the Banks a
commitment fee on the daily average unused amount of the
Commitments, for the period from the Effective Date to but
excluding the Termination Date, at a rate equal to three-eighths of
one percent (3/8 of 1%) per annum. Commitment fees shall be
payable quarterly in arrears on the last day of each March, June,
September and December, commencing with the last Business Day of
June 1994, and on the Termination Date.
2.4 Disbursement of Loans. The Company shall give the Banks
notice of its request for each Loan in substantially the form of
Exhibit B hereto not later than 12:00 noon Detroit time (i) three
Eurodollar Business Days prior to the date such Loan is requested
to be made if such Loan is to be made as a Eurodollar Rate Loan,
(ii) one Business Day prior to the date such Loan is requested to
be made if such Loan is to be made as a CD Rate Loan, and (iii) on
the date such Loan is requested to be made in all other cases,
which notice shall specify whether a CD Rate Loan, Eurodollar Rate
Loan or Floating Rate Loan is requested and, in the case of each
requested Fixed Rate Loan, the Interest Period to be initially
applicable to such Loan. Subject to the terms and conditions of
this Agreement, each Bank shall make available its proportionate
share of the proceeds of each such requested Loan to the Company by
depositing the proceeds thereof, in immediately available funds, in
an account maintained and designated by the Company at such Bank.
2.5 Conditions for First Disbursement. The obligation of the
Banks to advance their respective shares of the first Loan
hereunder is subject to receipt by the Banks of the following
documents and completion of the following matters, in form and
substance satisfactory to the Banks:
(a) Charter Documents. A certified copy of recent date by
the appropriate authority or official of the Company's state of
incorporation of all charter documents of the Company on file in
that office and certifying as to the good standing and corporate
existence of the Company, and certified as true and correct as of
the Effective Date by a duly authorized officer of the Company;
(b) By-Laws and Corporate Authorizations. Copies of the by-
laws of the Company together with all authorizing resolutions and
evidence of other corporate action taken by the Company to
authorize the execution, delivery and performance by the Company of
this Agreement and the Notes and the consummation by the Company of
the transactions contemplated hereby, certified as true and correct
as of the Effective Date by a duly authorized officer of the
Company;
(c) Incumbency Certificate. Certificates of incumbency of
the Company containing, and attesting to the genuineness of, the
signatures of those officers authorized to act on behalf of the
Company in connection with this Agreement and the Notes to which
the Company is a party and the consummation by the Company of the
transactions contemplated hereby, certified as true and correct as
of the Effective Date by a duly authorized officer of the Company;
(d) Notes. The Notes duly executed on behalf of the Company;
(e) Legal Opinion. The favorable written opinion of
Dickinson, Wright, Moon, Van Dusen & Freeman, counsel for the
Company, with respect to such matters as the Banks may reasonably
request;
(f) 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 in connection with the execution, delivery and performance
of this Agreement, the Notes, or the transactions contemplated
hereby, or as a condition to the legality, validity or
enforceability of this Agreement, or the Notes, 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.
(g) Other Documents. Such other documents as the Banks may
reasonably request.
2.6 Further Conditions for Disbursement. The obligation of
the Banks to advance their respective shares of any Loan (including
the first Loan) or any continuation or conversion under Section
2.7, is further subject to the satisfaction of the following
conditions precedent:
(a) The representations and warranties contained in Article
IV hereof shall be true and correct on and as of the date such Loan
is made (both before and after such Loan is made) as if such
representations and warranties were made on and as of such date;
and
(b) No Default or Event of Default, shall exist or shall have
occurred and be continuing on the date such Loan is made (whether
before or after such Loan is made).
The Company shall be deemed to have made a representation and
warranty to the Banks at the time of the making of, and the
continuation or conversion of, each Loan to the effect set forth in
clauses (a) and (b) of this Section 2.6. For purposes of this
Section 2.6 the representations and warranties contained in Section
4.6 hereof shall be deemed made with respect to both the financial
statements referred to therein and the most recent financial
statements delivered pursuant to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Loans. The Company may elect
(a) to continue a Fixed Rate Loan of one type, or a portion
thereof, as a Fixed Rate Loan of the then existing type, (b) to
convert a Fixed Rate Loan of one type, or a portion thereof, to a
Loan of another type, or (c) to convert a Floating Rate Loan, or a
portion thereof, to a Fixed Rate Loan, in each case by giving
notice thereof to the Banks in substantially the form of Exhibit C
hereto not later than 10:00 a.m. Detroit time three Eurodollar
Business Days prior to the date any such continuation of or
conversion to a Eurodollar Rate Loan is to be effective and not
later than 10:00 a.m. Detroit time one Business Day prior to the
date such continuation or conversion is to be effective in all
other cases, provided that an outstanding Fixed Rate Loan may only
be converted on the last day of the then current Interest Period
with respect to such Loan, and provided, further, if a continuation
of a Loan as, or a conversion of a Loan to, a Fixed Rate Loan is
requested, such notice shall also specify the Interest Period to be
applicable thereto upon such continuation or conversion. If the
Company shall not timely deliver such a notice with respect to any
outstanding Fixed Rate Loan, the Company shall be deemed to have
elected to convert such Fixed Rate Loan to a Floating Rate Loan on
the last day of the then current Interest Period with respect to
such Loan.
2.8 Limitation of Requests and Elections. Notwithstanding
any other provision of this Agreement to the contrary, if, upon
receiving a request for a Fixed Rate Loan pursuant to Section 2.4,
or a request for a continuation of a Fixed Rate Loan as a Fixed
Rate Loan of the then existing type, or a request for conversion of
a Fixed Rate Loan of one type to a Fixed Rate Loan of another type,
or a request for a conversion of a Floating Rate Loan to a Fixed
Rate Loan pursuant to Section 2.7, (a) in the case of any
Eurodollar Rate Loan or CD Rate Loan, deposits in Dollars for
periods comparable to the Interest Period elected by the Company
are not available to the Banks in the relevant interbank or
secondary market, or (b) the CD Rate or the Eurodollar Rate, as the
case may be, will not adequately and fairly reflect the cost to the
Banks of making, funding or maintaining the related CD Rate Loan
or Eurodollar Rate Loan, as the case may be, or (c) by reason of
national or international financial, political or economic
conditions or by reason of any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in
effect, or the interpretation or administration thereof by any
governmental authority charged with the interpretation or
administration thereof, or compliance by the Banks 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 the Banks
(i) to make or fund the relevant Fixed Rate Loan or (ii) to
continue such Fixed Rate Loan as a Fixed Rate Loan of the then
existing type or (iii) to convert a Loan to such a Fixed Rate Loan,
then the Company shall not be entitled, so long as such
circumstances continue, to request a Fixed Rate Loan of the
affected type pursuant to Section 2.4 or a continuation of or
conversion to a Fixed Rate Loan of the affected type pursuant to
Section 2.7. In the event that such circumstances no longer exist,
the Banks shall again consider requests for Fixed Rate Loans of the
affected type pursuant to Section 2.4, and requests for
continuations of and conversions to Fixed Rate Loans of the
affected type pursuant to Section 2.7.
ARTICLE III. PAYMENTS AND PREPAYMENTS OF LOANS
3.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement,
the Company shall pay to the Banks on the Termination Date the
entire outstanding principal amount of the Loans.
(b) The Company may at any time and from time to time prepay
all or a portion of the Loans, without premium or penalty, provided
that (i) the Company may not prepay any portion of any Loan as to
which an election for a continuation of or a conversion to a Fixed
Rate Loan is pending pursuant to Section 2.7, (ii) unless earlier
payment is required under this Agreement, any Fixed Rate Loan may
only be prepaid on the last day of the then current Interest Period
with respect to such Loan and (iii) any prepayment shall be applied
to each Bank's Note ratably in accordance with the aggregate
outstanding principal amount of the Loans.
3.2 Interest Payments. The Company shall pay interest to the
Banks on the unpaid principal amount of each Loan, for the period
commencing on the date such Loan is made until such Loan is paid in
full, on each Interest Payment Date and at maturity (whether at
stated maturity, by acceleration or otherwise), and thereafter on
demand, at the following rates per annum:
(a) During such periods that such Loan is a Floating Rate
Loan, the Floating Rate.
(b) During such periods that such Loan is a CD Rate Loan, the
CD Rate applicable to such Loan for each related CD Interest
Period.
(c) During such periods that such Loan is a Eurodollar Rate
Loan, the Eurodollar Rate applicable to such Loan for each related
Eurodollar Interest Period.
Notwithstanding the foregoing paragraphs (a) through (c), (x) the
Company shall pay additional interest at the rate of one-half of
one percent (1/2%) per annum on each Loan outstanding at any time
during the continuance of an Event of Default, and (y) the Company
shall pay interest on demand at the Overdue Rate on the outstanding
principal amount of any Loan and any other amount payable by the
Company 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.
3.3 Payment Method. (a) All payments to be made by the
Company hereunder will be made in Dollars and in immediately
available funds to each Bank at its address set forth in Section
7.2 not later than 1:00 p.m. Detroit time on the date on which such
payment shall become due. Payments received after 1:00 p.m.
Detroit time shall be deemed to be payments made prior to 1:00 p.m.
Detroit time on the next succeeding Business Day. The Company
hereby authorizes each Bank to charge its general account with such
Bank in order to cause timely payment of amounts due hereunder to
be made (subject to sufficient funds being available in such
account for that purpose).
(b) At the time of making each such payment, the Company
shall, subject to the other terms and conditions of this Agreement,
specify to each Bank that Loan or other obligation of the Company
hereunder to which such payment is to be applied. In the event
that the Company fails to so specify the relevant obligation or if
an Event of Default shall have occurred and be continuing, each
Bank may apply such payments as it may determine in its sole
discretion.
3.4 No Setoff or Deduction. All payments of principal of and
interest on the Loans and other amounts payable by the Company
hereunder shall be made by the Company without setoff or
counterclaim, and free and clear of, and without deduction or
withholding for, or on account of, any present or future taxes,
levies, duties, fees, assessments, or other charges of whatever
nature, imposed by any governmental authority, or by any
department, agency or other political subdivision or taxing
authority.
3.5 Payment on Non-Business Day; Payment Computations.
Except as otherwise provided in this Agreement to the contrary,
whenever any installment of principal of, or interest on, any Loan
or any other amount due hereunder becomes due and payable on a day
which is not a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day and, in the case of any
installment of principal, interest shall be payable thereon at the
rate per annum determined in accordance with this Agreement during
such extension. Computations of interest and other amounts due
under this Agreement shall be made on the basis of a year of 360
days for the actual number of days elapsed, including the first day
but excluding the last day of the relevant period.
3.6 Additional Costs. (a) In the event that any applicable
law, treaty, rule or regulation (whether domestic or foreign) now
or hereafter in effect and whether or not presently applicable to
a Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or
administration thereof, or compliance by a Bank with any guideline,
request or directive of any such authority (whether or not having
the force of law), shall (a) affect the basis of taxation of
payments to a Bank of any amounts payable by the Company under this
Agreement (other than taxes imposed on the overall net income of
such Bank, by the jurisdiction, or by any political subdivision or
taxing authority of any such jurisdiction, in which such Bank, as
the case may be, has its principal office), or (b) 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 a Bank, or (c) shall impose any other
condition with respect to this Agreement, the Commitments, the
Notes or the Loans, and the result of any of the foregoing is to
increase the cost to a Bank, as the case may be, of making, funding
or maintaining any Fixed Rate Loan or to reduce the amount of any
sum receivable by a Bank, as the case may be, thereon, then the
Company shall pay to such Bank, as the case may be from time to
time, upon request by such Bank additional amounts sufficient to
compensate such Bank for such increased cost or reduced sum
receivable to the extent, in the case of any Fixed Rate Loan, such
Bank is not compensated therefor in the computation of the interest
rate applicable to such Fixed Rate Loan. A statement as to the
amount of such increased cost or reduced sum receivable, prepared
in good faith and in reasonable detail by a Bank and submitted by
such Bank to the Company, shall be conclusive and binding for all
purposes absent manifest error in computation.
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect
and whether or not presently applicable to a Bank, or any
interpretation or administration thereof by any governmental
authority charged with the interpretation or administration
thereof, or compliance by a Bank 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 Bank (or any corporation controlling such Bank), and such
Bank determines that the amount of such capital is increased by or
based upon the existence of such Bank's Loans or Commitment
hereunder and such increase has the effect of reducing the rate of
return on such Bank's (or such controlling corporation's) capital
as a consequence of such Loans or Commitment hereunder to a level
below that which such Bank (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 Bank to be material, then the Company shall pay to such
Bank from time to time, upon request by such Bank additional
amounts sufficient to compensate such Bank (or such controlling
corporation) for any increase in the amount of capital and reduced
rate of return which such Bank reasonably determines to be
allocable to the existence of such Bank's Loans or Commitment
hereunder. A statement as to the amount of such compensation,
prepared in good faith and in reasonable detail by such Bank and
submitted by the Bank to the Company, shall be conclusive and
binding for all purposes absent manifest error in computation.
3.7 Illegality and Impossibility. In the event that any
applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not presently
applicable to a Bank, or any interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by a Bank
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 such
Bank to maintain any Fixed Rate Loan under this Agreement, the
Company shall upon receipt of notice thereof from such Bank, repay
in full the then outstanding principal amount of each Fixed Rate
Loan so affected, together with all accrued interest thereon to the
date of payment and all amounts owing to such Bank under Section
3.8, (a) on the last day of the then current Interest Period
applicable to such Loan if such Bank may lawfully continue to
maintain such Loan to such day, or (b) immediately if such Bank may
not continue to maintain such Loan to such day.
3.8 Indemnification. If the Company makes any payment of
principal with respect to any Fixed Rate Loan on any other date
than the last day of an Interest Period applicable thereto (whether
pursuant to Section 3.7, Section 6.2 or otherwise), or if the
Company fails to borrow any Fixed Rate Loan after notice has been
given to the Banks in accordance with Section 2.4, or if the
Company fails to make any payment of principal or interest in
respect of a Fixed Rate Loan when due, the Company shall reimburse
the Banks on demand for any resulting loss or expense incurred by
the Banks, including without limitation any loss incurred in
obtaining, liquidating or employing deposits from third parties,
whether or not the Banks 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 the Banks and
submitted by the Banks to the Company, shall be conclusive and
binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to the Banks under this Section
3.8 shall be made as though the Banks shall have actually funded or
committed to fund the relevant Fixed Rate Loan through the purchase
of an underlying deposit in an amount equal to the amount of such
Loan and having a maturity comparable to the related Interest
Period; provided, however, that each Bank may fund any Fixed Rate
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 3.8.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
4.1 Corporate Existence and Power. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan, and is duly qualified to
do business, and is in good standing, in all additional
jurisdictions where such qualification is necessary under
applicable law. The Company has all requisite corporate power to
own or lease the properties used in its business and to carry on
its business as now being conducted and as proposed to be
conducted, and to execute and deliver this Agreement and the Notes
and to engage in the transactions contemplated by this Agreement.
4.2 Corporate Authority. The execution, delivery and
performance by the Company of this Agreement and the Notes have
been duly authorized by all necessary corporate action and are not
in contravention of any law, rule or regulation, or any judgment,
decree, writ, injunction, order or award of any arbitrator, court
or governmental authority, or of the terms of the Company's charter
or by-laws, or of any contract or undertaking to which the Company
is a party or by which the Company or its property may be bound or
affected.
4.3 Binding Effect. This Agreement is, and the Notes when
delivered hereunder will be, legal, valid and binding obligations
of the Company enforceable against the Company in accordance with
their respective terms.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth
the corporate name, jurisdiction of incorporation and ownership of
each Subsidiary of the Company. Each such Subsidiary and each
corporation becoming a Subsidiary of the Company after the date
hereof is and will be a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is and will be duly qualified to do business in
each additional jurisdiction where such qualification is necessary
under applicable law. Each Subsidiary of the Company has and will
have all requisite corporate power to own or lease the properties
used in its business and to carry on its business as now being
conducted and as proposed to be conducted. All outstanding shares
of capital stock of each class of each Subsidiary of the Company
have been and will be validly issued and are and will be fully paid
and nonassessable and, except as disclosed in writing to the Banks
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 change in the business, properties, operations or condition
(financial or otherwise), of the Company or any of its Subsidiaries
or in any material adverse effect on the legality, validity or
enforceability of this Agreement or the Notes and, to the best of
the Company's knowledge, there is no basis for any such action,
suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of
the Company and its Subsidiaries and the consolidated statements of
earnings, shareholders' equity and cash flow of the Company and its
Subsidiaries for the fiscal year ended December 31, 1993 and
certified by KPMG Peat Marwick, independent public auditors, copies
of which have been furnished to the Banks, 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. There has been no
material adverse change in the business, properties, operations or
condition, financial or otherwise, of the Company or any of its
Subsidiaries since December 31, 1993. There is no material
Contingent Liability of the Company that is not reflected in such
financial statements or in the notes thereto.
4.7 Use of Loans. The Company may use the proceeds of the
Loans for its general corporate purposes. Neither the Company nor
any of its Subsidiaries extends or maintains, in the ordinary
course of business, credit for the purpose, whether immediate,
incidental, or ultimate, of buying or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loan
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. After
applying the proceeds of each Loan, 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 this
Agreement.
4.8 Consents, Etc. 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 the
Company in connection with the execution, delivery and performance
of this Agreement, the Notes, or the transactions contemplated
hereby or as a condition to the legality, validity or
enforceability of this Agreement or the Notes.
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 Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in
the latest balance sheet delivered pursuant to Section 4.6 or
5.1(d) of this Agreement, the Company and its Subsidiaries have
good and marketable fee simple title to all of the real property,
and a valid and indefeasible ownership interest in all of the other
properties and assets reflected in said balance sheet or
subsequently acquired by the Company or any Subsidiary. All of
such properties and assets are free and clear of any Lien, except
for Permitted Liens.
4.11 ERISA. The Company, its Subsidiaries, their 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. None of the Company, any of its Subsidiaries or any
of their ERISA Affiliates is an employer with respect to any
Multiemployer Plan. The Company, its Subsidiaries and their ERISA
Affiliates have met 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 this Agreement and the
Note do not constitute a Prohibited Transaction. There is no
material unfunded benefit liability, determined in accordance with
Section 4001(a)(18) of ERISA, with respect to any Plan of the
Company, its Subsidiaries or their ERISA Affiliates.
4.12 Environmental and Safety Matters. The Company and each
Subsidiary is in substantial compliance with all federal, state and
local laws, ordinances and regulations relating to safety and
industrial hygiene or to the environmental condition, including
without limitation all Environmental Laws in jurisdictions in which
the Company or any Subsidiary owns or operates a facility or site,
or arranges or has arranged for disposal or treatment of Hazardous
Materials, accepts or has accepted for transport any Hazardous
Materials, or holds or has held any interest in real property or
otherwise. No demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by
any governmental authority, private person or entity or otherwise,
arising under, relating to or in connection with any Environmental
Laws is pending or threatened against the Company or any of its
Subsidiaries, any real property in which the Company or any such
Subsidiary holds or has held an interest or any past or present
operation of the Company or any Subsidiary, which could reasonably
be expected to have a material adverse effect upon the Company or
any Subsidiary.
ARTICLE V. COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees
that, until the Termination Date and thereafter until payment in
full of the principal of and accrued interest on the Notes and the
performance of all other obligations of the Company under this
Agreement, unless the Banks shall otherwise consent in writing, it
shall, and shall cause each of its Subsidiaries to:
(a) Preservation of Corporate Existence, Etc. Do or cause to
be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except to the extent
permitted by Section 5.2(f), and its qualification as a foreign
corporation in good standing in each jurisdiction in which such
qualification is necessary under applicable law, and the rights,
licenses, permits (including those required under Environmental
Laws), franchises, patents, copyrights, trademarks and trade names
material to the conduct of its businesses; and defend all of the
foregoing against all claims, actions, demands, suits or
proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority.
(b) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and orders of
any governmental authority, whether federal, state, local or
foreign (including without limitation ERISA, the Code and
Environmental Laws), in effect from time to time; and pay and
discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as
well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, 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 such Subsidiary.
(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 Subsidiaries and keep such
property in good repair, working order and condition and from time
to time make, or cause to be made all needful and proper repairs,
renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection
therewith may be properly conducted at all times in accordance with
customary and prudent business practices for similar businesses;
and, maintain in full force and effect insurance with responsible
and reputable insurance companies or associations in such amounts,
on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried
by companies engaged in similar businesses and owning similar
properties similarly situated and maintain in full force and effect
public liability insurance, insurance against claims for personal
injury or death or property damage occurring in connection with any
of its activities or any of any properties owned, occupied or
controlled by it, in such amount as it shall reasonably deem
necessary, and maintain such other insurance as may be required by
law or as may be reasonably requested by the Banks for purposes of
assuring compliance with this Section 5.1(c).
(d) Reporting Requirements. Furnish to the Banks 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 or (B) the commencement of any material litigation
against, by or affecting the Company or any of its Subsidiaries,
and any material developments therein, a statement of the chief
financial officer of the Company setting forth details of such
Default or Event of Default or such litigation 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 60 days
after the end of each of the first three quarters of each fiscal
year of the Company, the consolidated balance sheet of the Company
and its Subsidiaries as of the end of such quarter, and the related
consolidated statements of earnings, shareholders' equity and cash
flow for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, setting 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 of the Company as
having been prepared in accordance with generally accepted
accounting principles together with a computation (which
computation shall be in reasonable detail) showing compliance with
Section 5.2(a), (b), (c), (d) and (i) of this Agreement;
(iii) As soon as available and in any event within 120
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 earnings, shareholders' equity and cash flow of the
Company and its Subsidiaries for such fiscal year, certified by
KPMG Peat Marwick, or other independent public auditors selected by
the Company and acceptable to the Banks, without qualifications
unacceptable to the Banks, together with a certificate of such
accountants stating (A) that they have reviewed this Agreement and
stating further whether, in the course of their review of such
financial statements, they have become aware of any Default or
Event of Default, and, if such a Default or Event of Default then
exists and is continuing, a statement setting forth the nature and
status thereof, and (B) that a computation as of the last day of
such fiscal year by the Company (which computation shall accompany
such certificate and shall be in reasonable detail) showing
compliance with Section 5.2 (a), (b), (c), (d) and (i) hereof is in
conformity with the terms of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of
all reports, proxy statements, registration 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; and
(v) Promptly, such other information respecting the business,
properties, operations or condition (financial or otherwise), of
the Company or any of its Subsidiaries as either Bank 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) permit the
Banks 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 does hereby authorize such persons to discuss such affairs,
finances and accounts with the Banks, and (ii) permit the Banks or
any of their agents or representatives to conduct a comprehensive
field audit of its books, records, properties and assets; and
(f) Further Assurances. Will execute and deliver within 30
days after request therefor by the Banks, all further instruments
and documents and take all further action that may be necessary or
desirable, or that the Banks may request, in order to give effect
to, and to aid in the exercise and enforcement of the rights and
remedies of the Banks under, this Agreement and the Notes. In
addition, the Company agrees to deliver to the Banks from time to
time upon the acquisition or creation of any Subsidiary not listed
in Schedule 4.4 hereto supplements to Schedule 4.4 such that such
Schedule, together with such supplements, shall at all times
accurately reflect the information provided for thereon.
5.2 Negative Covenants. Until the Termination Date and
thereafter until payment in full of the principal of and accrued
interest on the Notes and the performance of all other obligations
of the Company under this Agreement, the Company agrees that,
unless the Banks shall otherwise consent in writing, it shall not,
and shall not permit any of its Subsidiaries to:
(a) Current Ratio. Permit or suffer the ratio of
consolidated Current Assets of the Company and its Subsidiaries to
consolidated Current Liabilities of the Company and its
Subsidiaries to be less than 1.4 to 1.0 at any time.
(b) Working Capital. Permit or suffer the consolidated
Working Capital of the Company and its Subsidiaries to be less than
$32,000,000 at any time.
(c) Tangible Net Worth. Permit or suffer consolidated
Tangible Net Worth of the Company and its Subsidiaries to be at any
time less than the sum of (i) $59,000,000, plus (ii) 50% of
Cumulative Net Income of the Company and its Subsidiaries since
January 1, 1994, plus (iii) 75% of the net cash proceeds of any
issuance of capital stock of the Company after January 1, 1994.
(d) Funded Debt to Capitalization. Permit or suffer the
ratio of consolidated Funded Debt of the Company and its
Subsidiaries to consolidated Capitalization of the Company and its
Subsidiaries to be greater than .60 to 1.0.
(e) Dividends. During the continuance of any Default or
Event of Default or if as a result thereof a Default or Event of
Default would exist, declare or pay any dividends (except dividends
payable in capital stock of the Company) or make any other
distribution upon its shares of capital stock, or acquire or retire
any of its capital stock.
(f) Merger; Sale of Stock or Assets; Etc. Sell, lease,
transfer or otherwise dispose of all or a substantial portion of
its assets or business to any Person, except that any Subsidiary of
the Company may sell, lease, transfer or otherwise dispose of such
assets or business to the Company or to any other Subsidiary; nor
merge or consolidate with any other Person, provided that:
(i) the Company may merge with any other corporation
provided that the Company shall be the surviving or continuing
corporation and immediately after such merger or consolidation, no
Default or Event of Default shall exist or shall have occurred and
be continuing;
(ii) Any Subsidiary may merge into the Company or into
another Subsidiary; and
(iii) Any Subsidiary may merge or consolidate with
any other corporation, provided that immediately after such merger
or consolidation no Default or Event of Default shall exist or
shall have occurred and be continuing.
(g) Liens. Create, incur or suffer to exist, any Lien to
exist on any of the property, real, personal or mixed, tangible or
intangible, of the Company or any Subsidiary, other than:
(i) Liens in favor of the Company as security for
indebtedness for borrowed money owing to the Company by any
Subsidiary;
(ii) 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;
(iii) Liens created in connection with worker's
compensation, unemployment insurance, and social security, or
to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money), leases, statutory
obligations, surety and bonds, and other obligations of like
nature made in the ordinary course of business;
(iv) Any Lien created to secure payment of a portion of the
purchase price of any tangible personal property may be
created or suffered to exist upon such tangible personal
property if the outstanding principal amount of the obligation
secured by such Lien does not at any time exceed the purchase
price paid by the Company or any Subsidiary for such tangible
personal property, provided that such Lien does not extend to
any other asset at any time owned by the Company or any
Subsidiary, and provided, further, that not more than one such
Lien shall burden such tangible personal property at any one
time;
(v) Liens on property financed with the proceeds of municipal
revenue bonds, provided that each Lien shall be confined
solely to the items of property purchased with the proceeds of
such bonds and shall secure only indebtedness arising from
such bonds; and
(vi) Liens existing at the Effective Date and set forth on
Schedule 5.2(g) hereto.
(h) Loans; Guarantees. Make, or permit to remain
outstanding, loans or advances to any person, firm or corporation,
or guarantee or otherwise become or remain secondarily liable in
any manner (except by endorsement for deposit in the usual course
of business) on undertakings of others in an aggregate amount at
any one time outstanding in excess of $4,000,000, excluding from
the limitations imposed by this Section 5.2(h) advances by the
Company to suppliers of tools, dies, fixtures and special machines
and guarantees, and contingent obligations incurred by the Company
to State agencies, municipal corporations, or special borrowing
authorities in connection with the issuance, by such State
agencies, municipal corporations or special borrowing authorities,
for the benefit of the Company of obligations the interest on which
is intended to be exempt from Federal income taxation.
(i) Interest Coverage Ratio. Permit or suffer the ratio of
(x) consolidated earnings from continuing operations of the Company
and its Subsidiaries before deduction of interest expenses paid or
accrued and provision for income taxes, to (y) interest expense
paid or accrued, for any period of four consecutive fiscal quarters
of the Company commencing after June 30, 1993 to be less than
1.25:1.0.
ARTICLE VI. DEFAULT
6.1 Events of Default. The occurrence of any one of the
following events or conditions shall be deemed an "Event of
Default" hereunder unless waived by the Banks pursuant to
Section 7.1:
(a) Nonpayment. The Company shall fail to pay when due
(whether by required prepayment or otherwise) any principal of or
interest on any of the Notes or any fees or any other amount
payable hereunder; or
(b) Misrepresentation. Any representation or warranty made
by the Company in Article IV hereof or any other certificate,
report, financial statement or other document furnished by or on
behalf of the Company 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 (other than Section 5.1(d)); or
(d) Other Defaults. The Company shall fail to perform or
observe any other term, covenant or agreement contained in this
Agreement, and any such failure shall remain unremedied for 15
calendar days after notice thereof shall have been given to the
Company, as the case may be, by a Bank; or
(e) Cross Default. The Company or any of its Subsidiaries
shall fail to pay any part of the principal of, the premium, if
any, or the interest on, or any other payment of money due under
any of its Indebtedness (other than Indebtedness hereunder), beyond
any period of grace provided with respect thereto, which
individually or together with other such Indebtedness as to which
any such failure exists has an aggregate outstanding principal
amount in excess of $1,000,000; or if the Company or any of its
Subsidiaries fails to perform or observe any other term, covenant
or agreement contained in any agreement, document or instrument
evidencing or securing any such Indebtedness having such aggregate
outstanding principal amount, or under which any such Indebtedness
was issued or created, beyond any period of grace, if any, provided
with respect thereto if the effect of such failure is to cause, or
permit the holders of such Indebtedness (or a trustee on behalf of
such holders) to cause, any payment in respect of such Indebtedness
to become due prior to its due date; or
(f) Judgments. One or more judgments or orders for the
payment of money in an aggregate amount of $1,000,000 shall be
rendered against the Company or any of its Subsidiaries, or any
other judgment or order (whether or not for the payment of money)
shall be rendered against or shall affect the Company or any of its
Subsidiaries which causes or could cause a material adverse change
in the business, properties, operations or condition (financial or
otherwise), of the Company or any of its Subsidiaries or which does
or could have a material adverse effect on the legality, validity
or enforceability of this Agreement or the Notes, and either (i)
such judgment or order shall have remained unsatisfied and the
Company or such Subsidiary shall not have taken action necessary to
stay enforcement thereof by reason of pending appeal or otherwise,
prior to the expiration of the applicable period of limitations for
taking such action or, if such action shall have been taken, a
final order denying such stay shall have been rendered, or (ii)
enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order; or
(g) ERISA. The occurrence of a Reportable Event that results
in or could result in liability of the Company, any Subsidiary of
the Company or their ERISA Affiliates to the PBGC or to any Plan
and such Reportable Event is not corrected within thirty (30) days
after the occurrence thereof; or the occurrence of any Reportable
Event which could constitute grounds for termination of any Plan of
the Company, its Subsidiaries or their 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 thirty (30) days after the occurrence
thereof; or the filing by the Company, any Subsidiary of the
Company or any of their ERISA Affiliates of a notice of intent to
terminate a Plan or the institution of other proceedings to
terminate a Plan; or the Company, any Subsidiary of the Company or
any of their ERISA Affiliates shall fail to pay when due any
liability to the PBGC or to a Plan; or the PBGC shall have
instituted proceedings to terminate, or to cause a trustee to be
appointed to administer, any Plan of the Company, its Subsidiaries
or their ERISA Affiliates; or any person engages in a Prohibited
Transaction with respect to any Plan which results in or could
result in liability of the Company, any Subsidiary of the Company,
any of their ERISA Affiliates or any Plan of the Company, its
Subsidiaries or their ERISA Affiliates or fiduciary of any such
Plan; or failure by the Company, any Subsidiary of 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, any Subsidiary of the Company or any
of their ERISA Affiliates to the PBGC or any Plan; or the
withdrawal of the Company, any of its Subsidiaries or any of their
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, any of its Subsidiaries or any of their ERISA
Affiliates becomes an employer with respect to any Multiemployer
Plan without the prior written consent of the Banks; or
(h) Insolvency, Etc. The Company or any of its Subsidiaries
shall be dissolved or liquidated (or any judgment, order or decree
therefor shall be entered), or shall generally not pay its debts as
they become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit
of creditors, or shall institute, or there shall be instituted
against the Company or any of its Subsidiaries, any proceeding or
case seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors or seeking the entry of an order for relief,
or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its assets,
rights, revenues or property, and, if such proceeding is instituted
against the Company or such Subsidiary and is being contested by
the Company or such Subsidiary, as the case may be, in good faith
by appropriate proceedings, such proceeding shall remain
undismissed or unstayed for a period of 60 days; or the Company or
such Subsidiary shall take any action (corporate or other) to
authorize or further any of the actions described above in this
subsection.
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any
Event of Default, the Banks, upon the written consent of each Bank,
may by notice to the Company (i) terminate the Commitments or ii)
declare the outstanding principal of, and accrued interest on, the
Notes and all other amounts owing under this Agreement to be
immediately due and payable whereupon the Commitments shall
terminate forthwith and all such amounts 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, the
Commitments shall automatically terminate forthwith and all such
amounts 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.
(b) The Banks may jointly, in addition to the remedies
provided in Section 6.2(a), exercise and enforce any and all other
rights and remedies available to them, whether arising under this
Agreement or the Notes or under applicable law, in any manner
deemed appropriate by the Banks, including suit in equity, action
at law, or other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or
agreement contained in this Agreement or in the Notes or in aid of
the exercise of any power granted in this Agreement or the Notes.
(c) Upon the occurrence and during the continuance of any
Event of Default, the Banks may at any time and from time to time,
without notice to the Company (any 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, 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 a Bank to or for the credit
or the account of the Company and any property of the Company from
time to time in possession of a Bank, irrespective of whether or
not such Bank shall have made any demand hereunder and although
such obligations may be contingent and unmatured. The Company
hereby grants to the Banks 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 the Banks under this Section 6.2(c)
are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Banks may have. In
the event of any exercise of any right of setoff by either Bank,
the Banks agree that any such setoff shall be shared prorata among
the Banks in accordance with the then outstanding principal amount
of the Indebtedness of the Company owing to the Banks under this
Agreement and the Notes.
ARTICLE VII. MISCELLANEOUS
7.1 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 Banks. Any such
amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
7.2 Notices. (a) Except as otherwise provided in
Section 7.2(c) hereof, all notices and other communications
hereunder shall be in writing and shall be delivered or sent to the
Company at 24600 Hallwood Court, Farmington Hills, Michigan 48335-
1671, Attention: Senior Vice President and Chief Financial Officer,
Facsimile No. (313)478-7240, and to NBD Bank, N.A., 611 Woodward
Avenue, Detroit, Michigan 48226, Attention: Teresa K. Schuster,
Michigan Banking Division, Facsimile No. (313) 225-1671, and to
Comerica Bank, 500 Woodward Avenue, Sixth Floor, M/C 3242, Detroit,
Michigan 48226, Attention: Valerie A. Kin, Facsimile No. (313)
222-3503, or to such other address as may be designated by the
Company or the Banks by notice to the other parties hereto. All
notices and other communications shall be deemed to have been given
at the time of actual delivery thereof to such address, or if sent
by certified or registered mail, postage prepaid, to such address,
on the third day after the date of mailing, or in the case of telex
notice, upon receipt of the appropriate answerback, provided,
however, that notices to the Banks shall not be effective until
received.
(b) Notices by the Company to the Banks with respect to
terminations or reductions of the Commitment pursuant to
Section 2.2, requests for Loans pursuant to Section 2.4, requests
for continuations or conversions of Loans pursuant to Section 2.7
and notices of prepayment pursuant to Section 3.1 shall be
irrevocable and binding on the Company.
(c) Any notice to be given by the Company to the Banks
pursuant to Sections 2.4 or 3.1 and any notice to be given by the
Banks hereunder, may be given by telephone, and all such notices
given by the Company must be immediately confirmed in writing in
the manner provided in Section 7.2(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.
7.3 No Waiver By Conduct; Remedies Cumulative. No course of
dealing on the part of any Bank, nor any delay or failure on the
part of any Bank in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or
privilege or otherwise prejudice any Bank'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 Banks under this Agreement or the Notes is intended
to be exclusive of any other right or remedy, and every right and
remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Agreement
or the Notes or by applicable law to the Banks may be exercised
from time to time and as often as may be deemed expedient by the
Banks and, unless contrary to the express provisions of this
Agreement or the Notes, irrespective of the occurrence or
continuance of any Default or Event of Default.
7.4 Reliance on and Survival of Various Provisions. All
terms, covenants, agreements, representations and warranties of the
Company made herein or in any certificate, report, financial
statement or other document furnished by or on behalf of the
Company in connection with this Agreement shall be deemed to be
material and to have been relied upon by the Banks, notwithstanding
any investigation heretofore or hereafter made by the Banks, and
those covenants and agreements of the Company set forth in Sections
3.6 and 7.5 hereof shall survive the repayment in full of the Loans
and the termination of the Commitments.
7.5 Expenses; Indemnification. The Company agrees to pay, or
reimburse the Banks for the payment of, on demand, (i) all out-of-
pocket expenses of the Banks, including the reasonable fees and
expenses of counsel to the Banks, in connection with the
preparation, execution, delivery and administration of this
Agreement, the Notes and the consummation of the transactions
contemplated hereby, and in connection with advising the Banks as
to their rights and responsibilities with respect thereto, and in
connection with any modifications, amendments, waivers or consents
in connection therewith, and (ii) all stamp and other taxes and
fees payable or determined to be payable in connection with the
execution, delivery, filing or recording of this Agreement, the
Notes and the consummation of the transactions contemplated hereby,
and any and all liabilities with respect to or resulting from any
delay in paying or omitting to pay such taxes or fees, and (iii)
all reasonable costs and expenses of the Banks (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, this Agreement or the
Notes or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement.
7.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that the Company may
not, without the prior consent of the Banks, assign its rights or
obligations hereunder or under the Notes and the Banks shall not be
obligated to make any Loan hereunder to any entity other than the
Company. Each Bank may grant to any financial institution or
institutions, whether or not affiliated with such Bank, and such
financial institution or institutions may further grant, a
participation interest in all or any part of, the Loans and such
Bank's rights and benefits under this Agreement, and its Note, and
to the extent of that grant such participant or participants shall
have the same rights and benefits against the Company under
Section 6.2(c) as it or they would have had if such participant or
participants were the Bank making the Loans to the Company
hereunder, provided, however, that (a) such Bank's obligations
under this Agreement shall remain unmodified and fully effective
and enforceable against such Bank, (b) such Bank shall remain
solely responsible to the other parties hereto for the performance
of such obligations, (c) such Bank shall remain the holder of its
Note for all purposes of this Agreement, (d) the Company shall
continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement, and
(e) such Bank shall not grant to its participant or participants
any rights to consent or withhold consent to any action taken by
the Bank under this Agreement. The Banks from time to time in
their 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 Banks provided under this Agreement, the Notes, or
otherwise. In furtherance of such agency, the Banks may from time
to time direct that the Company provide notices, reports and other
documents contemplated by this Agreement (or duplicates thereof) to
such agent. The Company hereby consents to the appointment of such
agent and agrees to provide all such notices, reports and other
documents and to otherwise deal with such agent acting on behalf of
the Banks in the same manner as would be required if dealing with
the Banks itself.
7.7 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.
7.8 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 Company further agrees
that any legal action or proceeding with respect to this Agreement
or the Notes or the transactions contemplated hereby may be brought
in any court of the State of Michigan, or in any court of the
United States of America sitting in Michigan, and the Company
hereby submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person and
property.
7.9 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.
7.10 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.
7.11 Integration and Severability. This Agreement embodies
the entire agreement and understanding between the Company and the
Banks, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. In case any one or more of
the obligations of the Company under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations
of the Company 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 Company under this
Agreement or the Notes in any other jurisdiction.
7.12 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.
7.13 Interest Rate Limitation. Notwithstanding any other
provisions of this Agreement or the Notes, in no event shall the
amount of interest paid or agreed to be paid by the Company exceed
an amount computed at the highest rate of interest permissible
under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of this Agreement or the Notes 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 the Banks
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 Loans
outstanding hereunder (whether or not then due and payable) and not
to the payment of interest, or shall be refunded to the Company if
such principal and all other obligations of the Company to the
Banks have been paid in full.
7.14 Waiver of Jury Trial. The Banks and the Company, after
consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right any of
them may have to a trial by jury in any litigation based upon or
arising out of this 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 the Banks nor the
Company shall seek to consolidate, by counterclaim or otherwise,
any such action in which a jury trial has been waived with any
other action in which a jury trial cannot be or has not been
waived. These provisions shall not be deemed to have been modified
in any respect or relinquished by the Banks or the Company except
by a written instrument executed by all of them.
7.15 Substitution of Reference Bank. If the Reference Bank's
Commitment shall terminate (otherwise than on termination of all
the Commitments), or, as the case may be, Loans made by it
hereunder are assigned, or prepaid or repaid (otherwise than on the
ratable prepayment or repayment of the Loans among the Banks) for
any reason whatsoever, the Reference Bank shall thereupon cease to
be the Reference Bank and the Banks shall designate another Bank
that is willing to act as Reference Bank.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered on June 30, 1994,
which shall be the Effective Date of this Agreement,
notwithstanding the day and year first above written.
DOUGLAS & LOMASON COMPANY
By: /s/ James J. Hoey
Its: Senior Vice President &
Chief Financial Officer
NBD BANK, N.A.
By: /s/ Teresa K. Schuster
Its: Second Vice President
COMERICA BANK
By: /s/ Val Kin
Its: Assistant Vice President
<PAGE>
EXHIBIT A-1
REVOLVING CREDIT NOTE
$19,250,000 June ___, 1994
Detroit, Michigan
FOR VALUE RECEIVED, the undersigned, DOUGLAS & LOMASON
COMPANY, a Michigan corporation (the "Company"), hereby promises to
pay to the order of NBD BANK, N.A. (the "Bank"), at the main
banking office of the Bank in lawful currency of the United States
of America and in immediately available funds, the principal sum of
Nineteen Million Two Hundred Fifty Thousand and 00/100 Dollars
($19,250,000), in accordance with the terms of the Amended and
Restated Credit Agreement referred to below, and to pay interest on
the unpaid principal balance hereof from time to time outstanding,
in like money and funds, for the period from the date hereof until
such unpaid principal balance shall be paid in full, at the rates
per annum and on the dates provided in the Credit Agreement
referred to below.
The Bank is hereby authorized by the Company to endorse on the
schedule attached to this Note or otherwise on the books and
records of the Bank the date and amount of each advance and
duration of any 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 shall constitute prima facie evidence of the
information so endorsed, provided that any failure by the Bank to
make any such endorsement shall not relieve the Company of its
obligation to repay the outstanding principal amount of this Note,
all accrued interest hereon and any amount payable with respect
hereto in accordance with the terms of this Note and the Credit
Agreement.
The Company and each endorser or guarantor hereof waives
demand, presentment, protest, diligence, notice of dishonor and any
other formality in connection with this Revolving Credit Note.
Should the indebtedness evidenced by this Revolving Credit Note or
any part thereof be collected in any proceeding or be placed in the
hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, interest or other sums due and payable
hereon, all costs of collecting the Revolving Credit Note,
including attorneys' fees and expenses.
This Note evidences Loans made under an Amended and Restated
Credit Agreement, dated as of June 24, 1994 (the "Credit
Agreement"), by and among the Company, the Bank and Comerica Bank
to which reference is hereby made for a statement of the
circumstances under which this Note is subject to prepayment and
under which its due date may be accelerated. Capitalized terms used
but not defined in this Note shall have the respective meanings
assigned to them in the Credit Agreement.
This Revolving Credit Note is made under, and shall be
governed by and construed in accordance with, the laws of the State
of Michigan applicable to contracts made and to be performed
entirely within such State and without giving effect to choice of
law principles of such State.
DOUGLAS & LOMASON COMPANY
By:__________________________________
Its:___________________________
