<PAGE> 1
As filed with the Securities and Exchange Commission on September 19, 1997
Registration No. 333-32975
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
OXFORD AUTOMOTIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
MICHIGAN 3465 38-3262809
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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2365 FRANKLIN ROAD
BLOOMFIELD HILLS, MICHIGAN 48302
(248) 745-9600
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
REX E. SCHLAYBAUGH, JR.
OXFORD AUTOMOTIVE, INC.
2365 FRANKLIN ROAD
BLOOMFIELD HILLS, MICHIGAN 48203
(248) 745-9600
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
COPIES TO:
Gerald T. Lievois
Dykema Gossett PLLC
1577 North Woodward Avenue, Suite 300
Bloomfield Hills, MI 48304-2820
(248) 203-0866
Approximate date of commencement of the proposed sale of the
securities to the public: As soon as practicable after the effective date of
this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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TABLE OF ADDITIONAL REGISTRANTS
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Exact Name of Guarantor Jurisdiction of IRS Employer Primary Standard Industrial
Registrant as Specified Incorporation Identification No. Classification Code Number
in its Charter
Lobdell Emery Corporation Michigan 38-0768460 3465
BMG North America Limited Ontario 98-0113060 3465
BMG Holdings, Inc. Ontario 00-0000000 3465
Winchester Fabrication
Corporation Michigan 38-3209840 3465
Creative Fabrication
Corporation Tennessee 62-1613148 3465
Parallel Group International,
Inc. Indiana 35-1971190 3465
Laserweld International,
L.L.C. Indiana 35-1969204 3465
Concept Management
Corporation Michigan 38-3209841 3465
Lewis Emery Capital
Corporation Michigan 38-6602578 3465
Howell Industries, Inc. Michigan 38-0479830 3465
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CROSS-REFERENCE SHEET
FOR REGISTRATION STATEMENT ON FORM S-4
AND PROSPECTUS.
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S-4 ITEM LOCATION IN PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus........................ Facing Page of Registration Statement; Cross- Reference
Sheet; Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus................................................. Inside Front Cover Page of Prospectus; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information................................. Summary; Risk Factors, Summary Consolidated Historical
and Pro Forma Financial Data
4. Terms of the Transaction...................................... Summary; The Exchange Offer; Description of the Notes;
Plan of Distribution
5. Pro Forma Financial Information............................... Not Applicable
6. Material Contacts with the Company Being
Acquired...................................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters............................................ Not Applicable
8. Interests of Named Experts and Counsel........................ Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities................ Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants................... Not Applicable
11. Incorporation of Certain Information by
Reference..................................................... Not Applicable
12. Information with Respect to S-2 or S-3
Registrants................................................... Not Applicable
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13. Incorporation of Certain Information by
Reference............................................ Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants................... Summary; Risk Factors; Capitalization; Pro Forma Combined
Financial Data; Selected Consolidated
Historical Financial Data; Management's Discussion
and Analysis of Financial Condition and Results of
Operations; Business, Management; Description of Certain
Indebtedness and Preferred Stock; Certain Transactions;
Experts; Financial Statements
C. INFORMATION ABOUT THE COMPANY
BEING ACQUIRED
15. Information with Respect to S-3 Companies............ Not Applicable
16. Information with Respect to S-3 or S-2
Companies............................................ Not Applicable
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies...................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited................... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited,
or in an Exchange Offer.............................. The Exchange Offer; Management; Principal Shareholders, Certain
Transactions; Description of Certain Indebtedness and Preferred
Stock; Description of the Notes
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR 10_% SENIOR SUBORDINATED
NOTES DUE 2007 OF
[OXFORD AUTOMOTIVE, INC. LOGO]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON ,1997, UNLESS EXTENDED
Oxford Automotive, Inc. (the "Company"), hereby offers to exchange an
aggregate principal amount of up to $125,000,000 of its 10 1/8% Senior
Subordinated Notes Due 2007 (the "New Notes") for a like principal amount of
its 10 1/8% Senior Subordinated Notes Due 2007 (the "Old Notes") outstanding on
the date hereof upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"). The New Notes and the Old Notes are
collectively hereinafter referred to as the "Notes." The terms of the New Notes
are identical in all material respects to those of the Old Notes, except for
certain transfer restrictions, registration rights and certain interest rate
step-up provisions relating to the Old Notes. The New Notes will be issued
pursuant to, and entitled to the benefits of, the Indenture (as defined herein)
governing the Old Notes. The New Notes will mature on June 15, 2007. The New
Notes will bear interest from and including the date of consummation of the
Exchange Offer. Interest on the New Notes will be payable semi-annually on June
15 and December 15 of each year, commencing December 15, 1997. Additionally,
interest on the New Notes will accrue from the last interest payment date on
which interest was paid on the Old Notes surrendered in exchange therefor or,
if no interest has been paid on the Old Notes, from the date of original issue
of the Old Notes. The New Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after June 15, 2002, at the
redemption prices set forth herein, plus accrued and unpaid interest, if any,
to the date of redemption. In addition, at any time and from time to time prior
to June 15, 2000, the Company may redeem in the aggregate up to 35% of the
original principal amount of the Notes with the net proceeds of one or more
Public Equity Offerings (as defined) following which there is a Public Market
(as defined), at a redemption price of 110.125% of the principal amount to be
redeemed, plus accrued and unpaid interest, if any, to the redemption date,
provided that at least 65% of the original principal amount of the Notes
remains outstanding after each such redemption. Upon a Change of Control (as
defined), each holder of Notes ("Holder") will have the right to require the
Company to repurchase all or a portion of such Holder's Notes at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase. See "Description of the Notes --
Change of Control."
The New Notes will be general unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined) of the Company. The New Notes will rank pari passu with or senior
to all subordinated indebtedness of the Company. The Company is a holding
company that will derive all of its operating income and cash flow from its
subsidiaries. The New Notes will be fully and unconditionally guaranteed
(collectively, the "Subsidiary Guaranties") on a joint and several basis, and
on an unsecured, senior subordinated basis by certain Restricted Subsidiaries
(as defined) (collectively, the "Subsidiary Guarantors") of the Company. See
"Description of the Notes -- Subsidiary Guaranties."
As of June 30, 1997, after giving effect to the offering of the Old
Notes (the "Offering"), and the application of the net proceeds thereof, the
Company had no outstanding Senior Indebtedness and the
<PAGE> 6
Subsidiary Guarantors' outstanding Senior Indebtedness was approximately $17.9
million. See "Description of the Notes -- Subordination." In addition, the
Company had available approximately $101.0 million of undrawn borrowings under
its Senior Credit Facility. The Indenture governing the Notes (the "Indenture")
permits the Company and the Subsidiary Guarantors to incur additional
indebtedness, including Senior Indebtedness and indebtedness that will rank
pari passu with the New Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Subsidiary Guarantors contained in the
Registration Agreement dated June 24, 1997 (the "Registration Agreement"),
among the Company, the Subsidiary Guarantors and Salomon Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, McDonald & Company Securities,
Inc., First Chicago Capital Markets, Inc., and Schroder Wertheim & Co.
Incorporated (the last five named entities collectively referred to herein as
the "Initial Purchasers"), with respect to the initial sale of the Old Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date (as defined) for the Exchange Offer. In the event the
Company terminates the Exchange Offer and does not accept for exchange any Old
Notes with respect to the Exchange Offer, the Company will promptly return such
Old Notes to the holders thereof. See "The Exchange Offer."
Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. Each of
the Company and the Subsidiary Guarantors has agreed that, starting on the
Expiration Date, and ending on the close of business on the first anniversary
of the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
Prior to the Exchange Offer, there has been no public market for the
Old Notes. If a market for the New Notes should develop, such New Notes could
trade at a discount from their principal amount. The Company currently does not
intend to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system and no active public market
for the New Notes is currently anticipated. There can be no assurance that an
active public market for the New Notes will develop.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1997, or such later date and time to which it may be extended by the Company,
which in no event shall be later than , 1997. The
Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.
SEE "RISK FACTORS" BEGINNING ON PAGE , FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF THE NOTES IN CONNECTION WITH
THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 7
AVAILABLE INFORMATION
The Company and the Subsidiary Guarantors have filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form S-4 (the "Exchange Offer Registration Statement," which term shall
encompass all amendments, exhibits, annexes and schedules thereto) pursuant to
the Securities Act, and the rules and regulations promulgated thereunder,
covering the New Notes being offered hereby. This Prospectus does not contain
all the information set forth in the Exchange Offer Registration Statement. For
further information with respect to the Company, the Subsidiary Guarantors and
the Exchange Offer, reference is made to the Exchange Offer Registration
Statement. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to accurately describe the
material terms so referred to, but are not necessarily a complete description
of the contents of any such contract, agreement or other document. With respect
to each such contract, agreement or other document filed as an exhibit to the
Exchange Offer Registration Statement, reference is made to the exhibit for a
more complete description of the document or matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. The
Exchange Offer Registration Statement, including the exhibits thereto, can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices of the Commission at Seven World Trade Center, Suite 1300,
New York, New York 10048 and at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of such Web site is: http://www.sec.gov.
As a result of the Exchange Offer, the Company will become subject
to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith will be
required to file periodic reports and other information with the Commission. In
the event the Company ceases to be subject to the informational requirements of
the Exchange Act, the Company will be required under the Indenture to continue
to file with the Commission the annual and quarterly reports, information,
documents or other reports, including, without limitation, reports on Forms
10-K, 10-Q and 8-K, which would be required pursuant to the informational
requirements of the Exchange Act. The Company will also furnish such other
reports as may be required by law. In addition, for so long as any of the
Notes are restricted securities within the meaning of Rule 144(a)(3) under the
Securities Act, the Company has agreed to make available to any prospective
purchaser of the Notes or beneficial owner of the Notes, in connection with any
sale thereof, the information required by Rule 144A(d)(4) under the Securities
Act.
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SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements and notes thereto appearing
elsewhere in this Prospectus. For purposes of this Prospectus, the "Company"
shall refer to Oxford Automotive, Inc. ("Oxford Automotive") and all of its
consolidated subsidiaries, unless the context otherwise requires.
THE COMPANY
GENERAL
The Company is a leading Tier 1 or direct supplier of high-quality,
engineered metal components, assemblies and modules used by original equipment
automotive manufacturers ("OEMs"). The Company's core products are complex,
high value-added products, primarily assemblies containing multiple stamped
parts and various welded, hemmed or fastened components. These products which
range from large structural stampings and assemblies, including exposed ("Class
A") surfaces, to smaller complex welded assemblies, are used in manufacturing a
variety of sport utility vehicles ("SUVs"), light and medium trucks, mini-vans,
vans and passenger cars. The Company is the sole source supplier of these
products to its customers. On a pro forma basis, assuming the acquisition of
Lobdell Emery Corporation ("Lobdell") (described below) had occurred on April
1, 1996, the Company would have had net sales of $330.2 million and Adjusted
EBITDA (as defined herein) of $28.2 million for the fiscal year ended March 31,
1997. On a pro forma basis for the fiscal year ended March 31, 1997, assuming
the acquisitions of Lobdell and Howell Industries, Inc., a Michigan corporation
("Howell") (described below) had occurred on April 1, 1996, net sales and
Adjusted EBITDA for the Company would have been $421.7 million and $31.7
million, respectively. The Company had net sales of $92.0 million and Adjusted
EBITDA of $12.0 million for the three months ended June 30, 1997. On a pro
forma basis, assuming the acquisition of Howell had occurred on April 1, 1997,
the Company would have had net sales of $116.6 million and Adjusted EBITDA of
$13.8 million for the three months ended June 30, 1997. Based on pro forma net
sales of $330.2 million, management believes the Company is one of the ten
largest suppliers of stampings to the North American automotive market.
The Company's four largest customers, General Motors Corporation ("GM"), Ford
Motor Company ("Ford"), CAMI (a joint venture of GM and Suzuki Motor Corporation
("Suzuki")) and The Saturn Corporation ("Saturn"), accounted for approximately
56.0%, 33.0%, 3.0%, and 2.8%, respectively of the Company's net sales for the
fiscal year ended March 31, 1997, on a pro forma basis for the Lobdell
acquisition, and 55.4%, 31.0%, 2.7%, and 2.8%, respectively, of the Company's
net sales for the three months ended June 30, 1997. The Company has been
providing products directly to GM and Ford for more than 50 years and has earned
outstanding commercial ratings for its high-quality standards, including GM's
Supplier of the Year and Mark of Excellence Awards, Ford's Q1 Award and CAMI's
President's Award. The Company also sells its products to other Tier 1
suppliers. For the fiscal year ended March 31, 1997, approximately 72.0% of the
Company's net sales, on a pro forma basis assuming the acquisition of Lobdell
occurred on April 1, 1996, were derived from sales of its products manufactured
for SUVs, mini-vans, vans and light trucks. For the three months ended June 30,
1997, approximately 73.0% of the Company's net sales were derived from sales in
this sector. In recent years, SUVs, mini-vans, vans and light trucks have
experienced stronger growth in vehicle production as compared to the passenger
car sector, with a compound annual growth rate ("CAGR") from 1991 to 1996 of
approximately 8.7% as compared to (0.1%) for the passenger car sector. This
sector includes those platforms and models which have strong consumer demand,
such as GM's popular C/K platform (full-size pickups and the
Yukon/Tahoe/Suburban models) and the Ford Ranger, Explorer and Windstar.
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Prior to the acquisition of Howell (described below), the Company
conducted its business through two principal operations, BMG North America
Limited ("BMG") and Lobdell. Since acquiring BMG in October 1995, management of
the Company has implemented significant cost reductions and achieved
manufacturing efficiencies, including manpower reductions consisting of 49
salaried positions (121 to 72) and 78 hourly employees (570 to 492) and
improved materials cost management, which includes purchasing cost savings,
reduction of scrap and inventory costs, and improved scheduling of production.
These actions resulted in a $4.6 million improvement in Adjusted EBITDA from
the fiscal year ended March 31, 1996 to the fiscal year ended March 31, 1997.
The same strategy utilized at BMG was implemented at Lobdell immediately
following its acquisition in January 1997. Since its acquisition of Lobdell,
the Company has achieved cost reductions totaling approximately $13.6 million
on an annual basis. In addition to the cost reductions, the Company has been
able to implement a number of manufacturing policies that have improved
productivity and quality, notwithstanding overall staff reductions.
The strategic combination of BMG, Lobdell, and Howell significantly
strengthens the Company's position as a leading Tier 1 supplier of assemblies
and modules to the OEMs. This combination provides the Company with the
critical mass and capabilities in the areas of design and engineering, sales
and marketing, and product expertise which provide the basis for the Company's
strategy of becoming a fully-integrated, global systems supplier. The Company
has already implemented a successful, focused sales and marketing initiative,
which commenced concurrently with the operational improvements at BMG. As a
result, the Company has been awarded the door assemblies and the side panel
package for the new Saturn Innovate Program (the "Innovate Program"), the new
vehicle which Saturn is launching in 1999 based upon the current Opel Vectra.
Management believes these awards from Saturn will generate approximately $60.0
million of annual net sales beginning with the 1999 model year.
The Company currently operates ten manufacturing facilities which offer the
latest technologies in metal stamping, welding and assembly production
equipment, including fully-automated hydraulic and wide-bed press lines (up to
180 inches), robotic welding cells, robotic hemming and autophoretic corrosion
resistant coating. Since 1992, the Company has invested in excess of $93.0
million in capital investments to support sales growth, expand production
capabilities and improve efficiency and flexibility. The Company's diverse line
of over 300 presses that range up to 2,500 tons and state-of-the-art robotic
weld assembly and hemming equipment are capable of manufacturing a broad
assortment of parts and assemblies ranging from simple stampings to full-size,
Class A door and closure panels. The Company is one of a few independent
suppliers that has the ability to produce large, complex stampings, as well as
the technical expertise and automated assembly capabilities that provide high
value-added modules such as door apertures and assemblies, A-pillars, Class A
surface products and control arms.
The principal executive offices of the Company are located at 2365 Franklin
Road, Bloomfield Hills, Michigan 48302, and its telephone number is (248)
745-9600.
BUSINESS STRATEGY
The principal objective of the Company is to be a leading, full-service,
global Tier 1 supplier of integrated systems based on metal forming and related
manufacturing technologies. Management believes that the Company is well
positioned to benefit from two significant trends in the stamping and metal
forming segments of the automotive industry: outsourcing and consolidation.
Outsourcing of metal stamping has increased in response to competitive
pressures on OEMs to improve quality and reduce capital requirements, labor
costs, overhead and inventory. Consolidation among automotive industry
suppliers has occurred as OEMs have more frequently awarded long-term sole
source contracts to the most capable global suppliers. In addition, OEMs are
increasingly seeking systems suppliers who can provide a complete package of
design, engineering, manufacturing and project management support for an
integrated system (such as a front-end system). The Company intends
4
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to capitalize on these trends through internal development and strategic
acquisitions. The key elements of the Company's strategy include the following:
Provide Full-Service Program Capability. The Company is focused on
developing full-service program capabilities. The Company works with OEMs
throughout the product development process from concept and prototype
development through the design and implementation of manufacturing processes.
The Company believes that its ability to provide the package of design,
engineering, prototyping, tooling, blanking, stamping, assembly, corrosion
resistant coating and custom shipping rack fabrication to its customers creates
a unique capability present in only a limited number of suppliers. The Company
believes this capability will enable it to manage large programs, assist it in
reducing customer program launch time, lower customer costs and increase its
margins.
Supply Complex, High Value-Added Systems. As a result of the Company's
technical design and engineering capabilities and its reputation for
highly-efficient manufacturing operations, the Company is able to secure supply
relationships for complex, high value-added products, primarily assemblies and
modules that contain multiple stamped parts and various welded, hemmed or
fastened components. For example, the Company produces the rear door for GM's
Yukon/Tahoe/Suburban vehicles, the lower control arm for GM's four wheel drive
C/K vehicles, the control arm assemblies for Ford's F-Series pickups and
Chrysler's T-300, the radiator support assembly for GM's W-car (Grand Prix,
Century, Lumina, Monte Carlo and Intrigue) and complex A-pillar assemblies for
the Ford Mustang and the Ford Ranger pickup. These complex products typically
generate higher dollar content per vehicle, as well as higher margins for the
Company as compared to simple, individual stampings. The Company plans to
capitalize on its ability to develop and provide integrated modules and
assemblies to deliver to the OEMs an integrated product, such as a complete
door or front-end system. In addition to doors, radiator supports, and Class A
surface components, the Company believes it has unique expertise with respect
to control arms, which will be further developed as a component part of the
entire drive control system.
Focus on High Growth Vehicle Categories. The Company's sales and marketing
efforts have been, and will continue to be, directed toward sectors of the
automotive market that have experienced strong consumer demand. For the fiscal
year ended March 31, 1997, approximately 72.0% of the Company's net sales on a
pro forma basis for the acquisition of Lobdell were derived from sales of
products manufactured for SUVs, mini-vans, vans and light trucks. For the
three months ended June 30, 1997, approximately 73.0% of the Company's net sales
were derived from sales in this sector. The SUV market alone has been the
fastest growing segment in the North American new automotive sales market with
1991 to 1996 vehicle production growth at a CAGR of approximately 18.3%.
Similarly, the Company's sales to the passenger car market have been, and will
continue to be, directed to the segments with stronger sales growth, including
Saturn cars. For example, the growth in vehicle production in the passenger car
sector has been flat during the past five years while production of Saturn cars
grew from 1992 to 1996 at a CAGR of approximately 9.2%.
Establish a Global Presence. The Company is actively pursuing
strategic acquisitions and joint-venture opportunities in Europe and intends to
pursue opportunities which will allow the Company to establish a presence in
South America, Asia and other markets in order to serve its customers on a
global basis. Several OEMs have announced certain models designed for the world
automobile market ("World Car"). As a result, the OEMs have encouraged their
existing suppliers to establish foreign production support for World Car
programs. This globalization provides access to new customers and technology,
as well as economic cycle diversification. At the request of GM de Mexico, the
Company is in the process of establishing a presence in Mexico. By October 1,
1997, the Company expects to begin manufacturing and assembling components for
business recently awarded by GM de Mexico at the Company's leased facility in
Saltillo, Mexico. The Company expects to have a new leased facility in Silao,
Mexico operational by February 1, 1998.
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Pursue Strategic Acquisitions. In response to the trend in the OEM
market toward "systems suppliers," the Company is focused on making strategic
acquisitions that will enhance the Company's ability to provide integrated
systems (such as a door or front end system) or otherwise leverage its existing
business by providing additional product, manufacturing and service
capabilities. The Company also intends to pursue acquisitions which will expand
its customer base by providing an entree to new customers, including the North
American operations of Asian and European based OEMs. Consistent with this
strategy, the recent acquisition of Howell (as described below) provides an
entree to Chrysler Corporation ("Chrysler"). The Company believes that the
continuing supplier consolidation in the stamping and metal forming segments
may also provide attractive opportunities to acquire high-quality companies at
favorable prices, including businesses which can be improved financially
through overhead elimination, organizational restructuring, plant
reconfiguration, labor contract negotiations and management changes. The
Company will also pursue acquisitions that enable it to achieve a global
presence.
RECENT DEVELOPMENTS
On August 13, 1997, the Company acquired Howell (the "Merger")
pursuant to an Agreement and Plan of Merger (the "Merger Agreement"). Howell
is a Tier 1 manufacturer of high-quality welded subassemblies and detailed
stampings used primarily in suspension system applications in the production of
SUVs, light trucks, mini-vans, vans and passenger cars. Pursuant to the Merger
Agreement, the shareholders of Howell received approximately $23.0 million in
cash. Pursuant to the terms of a supplement to the Indenture, dated as of
August 13, 1997, Howell, a Restricted Subsidiary as defined in the Indenture,
became an additional Subsidiary Guarantor.
For the nine months ended April 30, 1997, Howell had net sales of
$72.4 million and Adjusted EBITDA of $4.2 million. Howell's net sales have
grown from $39.4 million for the fiscal year ended July 31, 1992 to $79.2
million for the fiscal year ended July 31, 1996. On a pro forma basis for the
fiscal year ended March 31, 1997, assuming the acquisitions of Lobdell and
Howell had occurred on April 1, 1996, net sales and Adjusted EBITDA for the
Company would have been $421.7 million and $31.7 million, respectively. On a
pro forma basis for the three months ended June 30, 1997, net sales and
Adjusted EBITDA for the Company would have been $116.6 million and $13.8
million, respectively.
The acquisition of Howell is consistent with the strategic objectives
of the Company. Howell has a significant relationship with Chrysler and has
developed a niche in designing, engineering and manufacturing suspension
control arms in a variety of configurations and variations depending on
drive-train and suspension application. Approximately 54.0% of Howell's net
sales for the nine months ended April 30, 1997, were derived from products used
in the control arm suspension applications. On a pro forma basis, assuming the
acquisitions of Lobdell and Howell had occurred on April 1, 1996, the Company
would have derived approximately 23.0% of its net sales from control arm
applications for fiscal 1997.
Howell's expertise in this area is complementary to the Company's and
will enhance its ability to develop key suspension system components. Further,
Howell's sales are principally in the high-growth vehicle categories of SUVs,
light trucks, mini-vans and vans, the same market targeted by the Company. The
acquisition of Howell has also provided the Company with an entree to Chrysler
and will strengthen the Company's existing relationship with Ford. Sales to
Chrysler and Ford represented 47.0% and 53.0%, respectively, of Howell's net
sales for the nine months ended April 30, 1997. On a pro forma basis for fiscal
1997, assuming the acquisitions of Lobdell and Howell had occurred on April 1,
1996, (i) the SUV, mini-van, van and light truck segment represented
approximately 75.0% of net sales and (ii) the Company's net sales by major
customers would have been approximately as follows: GM 44.0%; Ford 37.0%;
Chrysler 11.0%; CAMI 2.0%, and Saturn 2.0%. On a pro forma basis for the three
months ended June 30, 1997, assuming the acquisition of Howell had occurred
April 1 1997, (i) the SUV, mini-van and light truck segment represented
approximately 78.2% of net sales and (ii) the Company's net sales by major
customers would have been approximately as follows: GM 43.9%, Ford 36.2%,
Chrysler 9.5%, CAMI 2.1%, and Saturn 2.2%.
6
<PAGE> 12
Howell's two manufacturing facilities, located in Masury, Ohio and
Lapeer, Michigan, have received Chrysler's Gold Pentastar Award for the 1996
model year and Ford's Q1 rating. In addition, Howell has achieved certification
as a registrant under the QS-9000 for its facilities.
THE EXCHANGE OFFER
Securities Offered .............. Up to $125.0 million aggregate principal
amount of 10_% Senior Subordinated
Notes Due 2007 (the "New Notes"). The
terms of the New Notes and Old Notes
(collectively, the "Notes") are identical
in all material respects, except for
certain transfer restrictions,
registration rights and certain interest
rate step-up provisions relating to the
Old Notes. See "The New Notes" and "The
Exchange Offer."
The Exchange Offer .............. The New Notes are being offered in
exchange for a like principal
amount of Old Notes. Old Notes
may be exchanged only in integral
multiples of $1,000. The issuance of the
New Notes is intended to satisfy
obligations of the Company and the
Subsidiary Guarantors contained in the
Registration Agreement.
Expiration Date; Withdrawal
of Tender....................... The Exchange Offer will expire at
5:00 p.m. New York City time, on , 1997,
or such later date and time to which it
may be extended by the Company, which in
no event shall be later than , 1997.
The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any
time prior to the Expiration Date. Any
Old Notes not accepted for exchange for
any reason will be returned without
expense to the tendering holder thereof
as promptly as practicable after the
expiration or termination of the
Exchange Offer. See "The Exchange Offer
-- Terms of the Exchange Offer; Period
for Tendering Old Notes" and "--
Withdrawal Rights."
Certain Conditions to the
Exchange Offer.................. The Company's obligation to accept for
exchange, or to issue New Notes in
exchange for, any Old Notes is subject
to certain customary conditions relating
to compliance with any applicable law,
or order of any governmental agency or
any applicable interpretation by the
Staff of the Commission, which may be
waived by the Company in its reasonable
discretion. The Company currently
expects that each of the conditions will
be
7
<PAGE> 13
satisfied and that no waivers
will be necessary. See "The
Exchange Offer -- Certain
Conditions to the Exchange
Offer."
Procedures for Tendering Old Notes....... Each holder of Old Notes
wishing to accept the Exchange
Offer must complete, sign and
date the Letter of Transmittal,
or a facsimile thereof, in
accordance with the
instructions contained herein
and therein, and mail or
otherwise deliver such Letter
of Transmittal, or such
facsimile, together with such
Old Notes and any other
required documentation, to the
Exchange Agent (as defined) at
the address set forth herein.
See "The Exchange Offer --
Procedures for Tendering Old
Notes."
Special Procedures for Beneficial Owners.... Any beneficial owner whose Old
Notes are registered in the
name of a broker, dealer,
commercial bank, trust company
or other nominee and who
wishes to tender such Old
Notes in the Exchange Offer
should contact such registered
holder promptly and instruct
such registered holder to
tender on such beneficial
owner's behalf. If such
beneficial owner wishes to
tender on such owner's own
behalf, such owner must, prior
to completing and executing
the Letter of Transmittal and
delivering his or her Old
Notes, either make appropriate
arrangements to register
ownership of the Old Notes in
such owner's name or obtain a
properly completed bond power
from the registered holder.
The transfer of registered
ownership may take
considerable time and may not
be completed prior to the
Expiration Date.
Guaranteed Delivery Procedures ............ Holders of Old Notes who wish
to tender their Old Notes and
whose Old Notes are not
immediately available or who
cannot deliver their Old Notes,
the Letter of Transmittal or
any other documents required by
the Letter of Transmittal to
the Exchange Agent, prior to
the Expiration Date, must
tender their Notes according to
the guaranteed delivery
procedures set forth in "The
Exchange Offer -- Guaranteed
Delivery Procedures."
Use of Proceeds............................ There will be no proceeds to
the Company from the exchange
of Notes pursuant to the
Exchange Offer.
Exchange Agent............................. First Trust National
Association, is serving as
the Exchange Agent in
connection with the Exchange
Offer.
8
<PAGE> 14
Federal Income Tax Consequences................. The Company belives that
the exchange of Notes pursuant
to the Exchange Offer will
not be a taxable event for
federal income tax purposes.
See "Certain Federal Income
Tax Considerations."
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the
Commission to third parties in unrelated transactions, the Company is of the
view that holders of Old Notes (other than any holder who is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) who
exchange their Old Notes for New Notes pursuant to the Exchange Offer generally
may offer such New Notes for resale, resell such New Notes, and otherwise
transfer such New Notes without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided such New Notes are acquired
in the ordinary course of the holders' business and such holders have no
arrangement with any person to participate in a distribution of such New Notes.
Any holder who tenders in the Exchange Offer with the intention or for the
purpose of participating in a distribution of the New Notes cannot rely on such
interpretation by the Staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Unless an exemption from
registration is otherwise available, any such resale transaction should be
covered by an effective registration statement containing the information
required by the Securities Act. This Prospectus may be used for an offer to
resell, resale or other retransfer of New Notes only as specifically set forth
herein. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution." In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New Notes may not be offered or sold
unless they have been registered or qualified for sale in such jurisdiction or
in compliance with an available exemption from registration or qualification.
The Company has agreed, pursuant to the Registration Agreement and subject to
certain specified limitations therein, to register or qualify the New Notes for
offer or sale under the securities or blue sky laws of such jurisdictions as
any holder of the Notes reasonably requests in writing. If a holder of Old
Notes does not exchange such Old Notes for New Notes pursuant to the Exchange
Offer, such Old Notes will continue to be subject to the restrictions on
transfer contained in the legend thereon. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. See "The Exchange Offer -- Consequences of
Failure to Exchange; Resales of New Notes."
The Old Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the Exchange Offer but prior to its consummation, the
Old Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be eligible for
PORTAL trading.
THE NEW NOTES
The terms of the New Notes are identical in all material respects to
the Old Notes, except for certain transfer restrictions, registration rights
and certain interest rate step-up provisions relating to the Old Notes.
Unlike the New Notes, the Old Notes were not registered under the
Securities Act and were offered in a transaction not involving any public
offering within the meaning of the Securities Act, and are therefore subject to
certain transfer restrictions under the Securities Act.
9
<PAGE> 15
The Old Notes also included certain registration rights relating to
the Exchange Offer Registration Statement that are not applicable to the New
Notes. Pursuant to the Registration Agreement, the Company agreed to, (i) not
later than 45 days after the closing of the sale of the Old Notes on June 24,
1997 (the "Closing Date"), file the Exchange Offer Registration Statement with
the Commission and (ii) cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act not later than 120 days after the
Closing Date. In addition, in the event that applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange Offer,
or if for any other reason the Exchange Offer is not consummated within 150
days after the Closing Date, or in certain other limited circumstances, the
Company has agreed to file a shelf registration statement ("Shelf Registration
Statement") covering resales of the Old Notes or the New Notes, as the case may
be, to use its best efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act, and to keep the Shelf Registration
Statement effective until three years after its effective date (or shorter
period that will terminate when all Old Notes or New Notes, as the case may be,
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement).
The applicable interest rate step-up provisions relating to the Old
Notes are not identical with respect to the New Notes. These provisions
provide as follows: if (i) within 120 days after the Closing Date, the
Exchange Offer Registration Statement has not been declared effective; (ii)
within 150 days after the Closing Date, neither the Registered Exchange Offer
has been consummated nor the Shelf Registration Statement has been declared
effective; or (iii) after either the Exchange Offer Registration Statement or
the Shelf Registration Statement has been declared effective, such Registration
Statement thereafter ceases to be effective or usable (subject to certain
exceptions) in connection with resales of Old Notes or New Notes (each such
event referred to in clauses (i) through (iii), a "Registration Default"),
interest ("Special Interest") will accrue on the Old Notes and the New Notes,
as applicable, (in addition to the stated interest on the Old Notes and the New
Notes) from and including the date on which any such Registration Default shall
occur to but excluding the date on which all Registration Defaults have been
cured. Special Interest will accrue at a rate of 0.25% per annum during the
90-day period immediately following the occurrence of any Registration Default
and shall increase by 0.25% per annum at the end of each subsequent 90-day
period, but in no event shall such rate exceed 1.00% per annum.
Issuer .................................. Oxford Automotive, Inc.
Notes .................................. $125.0 million in aggregate
principal amount of 10 1/8%
Senior Subordinated Notes
Due 2007.
Maturity ................................ June 15, 2007.
Interest Payment Dates................... Each June 15 and December
15, commencing December 15,
1997.
10
<PAGE> 16
Subsidiary Guaranties ............. Like the Old Notes, the New
Notes will be fully and
unconditionally guaranteed on
a joint and several basis, and
on a senior subordinated basis
by each Restricted Subsidiary
of the Company (other than
certain foreign subsidiaries)
that is an obligor or
guarantor of any Bank Credit
Agreement (the "Subsidiary
Guaranties"). See
"Description of the Notes --
Subsidiary Guaranties."
Subordination of Notes and
Subsidiary Guaranties ............. Like the Old Notes, the New
Notes and the Subsidiary
Guaranties will be general
unsecured senior subordinated
obligations of the Company and
the Subsidiary Guarantors, as
applicable. The New Notes and
the Subsidiary Guaranties will
be subordinated in right of
payment to the prior payment
in full of all existing and
future Senior Indebtedness (as
defined) and will rank pari
passu with or senior to all
present and future
subordinated indebtedness of
the Company or the relevant
Subsidiary Guarantors, as
applicable. As of June 30,
1997, the Company had no
outstanding Senior
Indebtedness and the
Subsidiary Guarantors'
outstanding Senior
Indebtedness was approximately
$17.9 million. See
"Description of the Notes --
Subordination."
Sinking Fund ...................... None.
Optional Redemption ............... Like the Old Notes, the New Notes will
be redeemable at the option of the
Company, in whole or in part at any
time on or after June 15, 2002,
at the redemption prices set forth
herein plus accrued and unpaid interest,
if any, to the redemption date. In
addition, at any time prior to June 15,
2000, the Company may redeem, at its
option, up to an aggregate amount of 35%
of the original principal amount of the
Notes with the proceeds of one or more
Public Equity Offerings following which
there is a Public Market at a redemption
price of 110.125% of the principal
amount thereof plus accrued and unpaid
interest, if any, to the redemption
date, provided that at least 65% of the
original aggregate principal amount of
the Notes remains outstanding after each
such redemption. See "Description of
the Notes -- Optional Redemption."
11
<PAGE> 17
Change of Control ................... Upon the occurrence of a
Change of Control, each Holder
of Notes will have the right
to require the Company to
purchase all or a portion of
such Holder's Notes at a price
in cash equal to 101% of the
aggregate principal amount
thereof plus accrued and
unpaid interest, if any, to
the date of purchase. In the
event of a Change of Control,
there can be no assurance that
the Company will have the
financial resources or be
permitted under the terms of
its other indebtedness to
repurchase or redeem the
Notes. See "Description of the
Notes -- Change of Control."
Certain Covenants; Defaults.......... The Indenture contains certain
covenants that, among other things,
limit the ability of the Company
and its Restricted Subsidiaries to
(i) incur additional indebtedness,
(ii) pay dividends or make other
distributions with respect to
Capital Stock (as defined) of the
Company and its Restricted
Subsidiaries, (iii) create certain
liens, (iv) sell material assets of
the Company or its Restricted
Subsidiaries, (v) enter into
certain mergers and consolidations
and (vi) make capital expenditures.
The Indenture also contains certain
events of default including payment
defaults and a default arising upon
an acceleration by the holders of
certain other Indebtedness (as
defined), including the Senior
Credit Facility, because of a
default. See "Description of the
Notes -- Certain Covenants and --
Defaults."
Risk Factors........................ See "Risk Factors" for a
discussion of certain factors that
should be considered in connection
with the Exchange Offer.
SENIOR CREDIT FACILITY
On June 24, 1997, concurrently with the Offering, the Company entered into a
credit agreement with NBD Bank, on behalf of itself and as agent for a
syndicate of other lenders, pursuant to which availability under such facility
is $110.0 million (such credit facility being referred to herein as the "Senior
Credit Facility"). The facility is in the form of a revolving credit line.
Approximately $101.0 million was available under the revolver at June 30, 1997,
reduced for the effect of a Letter of Credit issued for the IRBs (as defined).
The obligations under the Senior Credit Facility are secured by substantially
all the assets of the Subsidiary Guarantors and the Company.
The Senior Credit Facility contains certain customary covenants, including
reporting and other affirmative covenants, financial covenants, and negative
covenants, as well as customary events of default, including non-payment of
principal, violation of covenants, and cross-defaults to certain other
indebtedness, including the indebtedness evidenced by the Notes. See
"Description of Certain Indebtedness and Preferred Stock -- Senior Credit
Facility."
As of June 30, 1997, after giving effect to the Offering, there were no
borrowings under the Senior Credit Facility. See "Capitalization" and
"Description of Certain Indebtedness and Preferred Stock."
12
<PAGE> 18
SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth (i) summary historical financial data of BMG
(the "Predecessor") for the year ended March 31, 1995 and the period from April
1, 1995 through October 27, 1995, (ii) summary historical financial data of the
Company from October 28, 1995 through March 31, 1996, for the year ended March
31, 1997, and for the three months ended June 30, 1996 and 1997, and (iii)
summary pro forma financial data for the year ended March 31, 1997 and for the
three months ended June 30, 1997. The summary historical financial data for
the year ended March 31, 1995, the period April 1, 1995 through October 27,
1995 and the period October 28, 1995 through March 31, 1996 was derived from
the audited consolidated financial statements of the Predecessor and the
Company, which are included elsewhere in this Prospectus, together with
the report of Deloitte & Touche, independent accountants. The summary
historical financial data for the year ended March 31, 1997 was derived from
the audited consolidated financial statements of the Company, which are
included elsewhere in this Prospectus, together with the report of Price
Waterhouse LLP, independent accountants. The summary historical financial data
for the three months ended June 30, 1996 and 1997 were derived from unaudited
interim financial statements, which, in the opinion of management, have been
prepared on the same basis as the audited financial statements and include all
adjustments (all of which are of a normal recurring nature) that are necessary
for a fair presentation of the results for the period. The summary pro forma
statement of operations data and other financial data for the fiscal year ended
March 31, 1997 were prepared to illustrate the effect of the Offering and the
acquisitions of Lobdell and Howell as if each had occurred on April 1, 1996.
The summary pro forma balance sheet data at March 31, 1997 was prepared to
illustrate the effect of the Offering and the acquisition of Howell as if each
had occurred on March 31, 1997. The summary pro forma statement of operations
data and other data for the three months ended June 30, 1997 were prepared to
illustrate the effect of the Offering and the acquisition of Howell, as if they
had occurred on April 1, 1997 and the summary pro forma balance sheet data at
June 30, 1997 was prepared to illustrate the effect of the acquisition of
Howell as if they had occurred on June 30, 1997. The pro forma data does not
purport to be indicative of the results of operations or the financial position
of the Company that would have been obtained if the acquisitions and Offering
had in fact been completed as of such dates or to project the results of
operations or the financial position of the Company for any future date or
period. The following table should be read in conjunction with the "Selected
Consolidated Historical Financial Data," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Pro Forma Combined
Financial Data," and the Consolidated Financial Statements of the Company and
the related notes and other financial information presented elsewhere in this
Prospectus.
13
<PAGE> 19
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------------------------------------- -----------
PREDECESSOR COMPANY
-------------------------- --------------------------------------------
FISCAL YEAR PERIOD PERIOD FISCAL YEAR THREE MONTHS FISCAL YEAR
ENDED APRIL 1, 1995 - OCTOBER 28, 1995 - ENDED ENDED JUNE 30 ENDED
MARCH 31, OCTOBER 27, MARCH 31, MARCH 31, MARCH 31,
1995 1995 1996 1997 1996 1997 1997
----------- ------------- ---------------- ----------- ---- ---- -----------
AUDITED AUDITED AUDITED AUDITED UNAUDITED UNAUDITED UNAUDITED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales . . . . . . . . . . . . $75,097 $49,043 $35,572 $136,861 $21,709 $ 91,960 $421,707
Gross profit . . . . . . . . . . 4,206 2,148 3,948 11,773 1,257 9,298 30,269
Equipment impairment and non-
recurring charges(a) . . . . . -- -- -- 287 -- -- 5,247
Operating income (loss) . . . . . (348) (1,774) 1,713 3,801 554 7,606 3,238
Interest expense . . . . . . . . 1,267 1,048 1,096 3,388 592 1,798 13,727
Other income (expense) . . . . . -- -- -- 2,201 587 37 3,274
Income (loss) before income (1,615) (2,822) 617 2,614 549 5,845 (7,215)
taxes
Provision (benefit) for income
taxes . . . . . . . . . . . . . . (349) (938) 202 1,065 220 2,338 (2,566)
Net income (loss) . . . . . . . . $(1,266) $(1,884) $ 415 $ 1,549 $329 $3,507 $ (4,649)
Balance Sheet Data (end of
period):
Cash and cash equivalents . . . . $ -- $ -- $ -- $ 9,671 $ -- $ 58,883 $ 24,370
Trade accounts receivable,
net . . . . . . . . . . . . . . 9,835 13,312 8,338 47,626 11,335 41,511 61,841
Inventories . . . . . . . . . . . 4,170 4,429 3,719 13,411 2,459 14,623 20,681
Total assets . . . . . . . . . . 41,523 59,770 49,200 243,694 50,303 286,653 306,351
Total debt. . . . . . . . . . . . 12,907 23,233 26,758 99,829 25,833 142,678 141,524
Redeemable preferred stock -- -- -- 39,300 -- 39,635 39,300
Total shareholders' equity 10,833 9,329 935(b) 2,341 1,006 5,459 2,341
Financial Ratios and Other Data:
Depreciation and amortization 1,413 $ 919 $ 687 $ 5,041 772 4,308 19,916
Capital expenditures . . . . . . 4,384 5,111 3,466 3,326 1,203 3,577 19,674
Ratio of earnings to fixed
charges(c) . . . . . . . . . . -- -- 1.5x 1.7x 1.8x 3.6x --
Adjusted EBITDA(d) . . . . . . . 1,065 (855) 2,400 11,330 1,913 11,951 31,675
Gross margin(e) . . . . . . . . 5.60% 4.38% 11.10% 8.60% 5.79% 10.11% 7.18%
Adjusted EBITDA margin(f) . . . . 1.42 NM 6.75 8.28 8.81 13.00 7.51
Ratio of Adjusted EBITDA to
interest expense(g) . . . . . 0.8x NM 2.2x 3.3x 3.2x 6.6x 2.3x
Ratio of net debt to Adjusted
EBITDA(h) . . . . . . . . . . . 12.1 NM 4.7 7.6 2.96 1.7 3.6
<CAPTION>
PRO FORMA
-----------
THREE MONTHS
ENDED JUNE 30,
1997
-------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C>
Statement of Operations Data:
Net sales . . . . . . . . . . . . $116,616
Gross profit . . . . . . . . . . . 11,547
Equipment impairment and non-
recurring charges(a) . . . . . . --
Operating income (loss) . . . . . 8,592
Interest expense . . . . . . . . . 3,404
Other income (expense) . . . . . . 333
Income (loss) before income 5,521
taxes . . . . . . . . . . . . . .
Provision (benefit) for income
taxes . . . . . . . . . . . . . . 2,128
Net income (loss) . . . . . . . . $3,393
Balance Sheet Data (end of
period):
Cash and cash equivalents . . . . 35,638
Trade accounts receivable,
net . . . . . . . . . . . . . . . 56,024
Inventories . . . . . . . . . . . 22,419
Total assets . . . . . . . . . . . 308,034
Total debt . . . . . . . . . . . . 142,678
Redeemable preferred stock . . . . 39,635
Total shareholders' equity . . . . 5,459
Financial Ratios and Other Data:
Depreciation and amortization 4,900
Capital expenditures . . . . . . . 4,493
Ratio of earnings to fixed
charges(c) . . . . . . . . . . . 2.4x
Adjusted EBITDA(d) . . . . . . . . 13,825
Gross margin(e) . . . . . . . . . 9.90%
Adjusted EBITDA margin(f) . . . . 11.86
Ratio of Adjusted EBITDA to
interest expense(g) . . . . . . 4.1x
Ratio of net debt to Adjusted
EBITDA(h) . . . . . . . . . . . 1.9
</TABLE>
14
<PAGE> 20
See Notes to Summary Consolidated Historical and Pro Forma Financial Data on
the following page.
__________________________________
(a) The provision for equipment impairment and non-recurring charges includes:
(i) on a pro forma basis, for the year ended March 31, 1997, a $3.0 million
impairment reserve against certain long-lived assets of Laserweld
International L.L.C. ("Laserweld") a wholly owned indirect subsidiary of
the Company (substantially all of the assets of Laserweld were inactive
at December 31, 1996 and the recorded value exceeded the fair value of such
assets), a $0.5 million provision for liability under the WARN Act, $0.5
million of excess legal and professional fees associated with the marketing
and sale of Lobdell and $1.2 million related to the loss before income
taxes for the discontinuance of the Laserweld and Parallel Group
International ("Parallel") operations and (ii) for the year ended March 31,
1997, the loss before income taxes for the discontinuance of the Laserweld
and Parallel operations of $0.3 million. Management does not anticipate
that these costs will be a part of future operations.
(b) The reduction in equity of $8.4 million from October 27, 1995 to March 31,
1996 is primarily a result of the elimination of Predecessor equity as a
part of the purchase accounting adjustments made upon the acquisition of
the Predecessor.
(c) For purposes of this computation, earnings consist of income (loss)
before income taxes plus fixed charges. Fixed charges consist of
interest on indebtedness plus that portion of rental expense representative
of the interest factor. For fiscal 1995, the Company's earnings were
insufficient to cover fixed charges by $1.6 million. For the period April
1, 1995 to October 27, 1995, the Company's earnings were insufficient to
cover fixed charges by $2.8 million. On a pro forma basis for fiscal 1997,
earnings were insufficient to cover fixed charges by $5.2 million.
(d) Adjusted EBITDA is defined as income (loss) before interest, income taxes,
depreciation and amortization and equipment impairment and non-recurring
charges. For the fiscal year ended March 31, 1997, equipment impairment and
non-recurring charges aggregated $0.3 million and on a pro forma basis, for
the fiscal year ended March 31, 1997, equipment impairment and
non-recurring charges aggregated $5.2 million, as described in Note (a)
above. Adjusted EBITDA should not be construed as a substitute for income
from operations, net income or cash flow from operating activities for the
purpose of analyzing the Company's operating performance, financial
position and cash flows.
(e) Gross margin is defined as gross profit as a percent of net sales for each
of the applicable periods.
(f) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of net
sales for each of the applicable periods.
(g) Defined as the ratio of Adjusted EBITDA to total interest expense.
(h) Defined as the ratio of net debt to Adjusted EBITDA with net debt consisting
of total debt less cash and cash equivalents and unexpended bond proceeds.
15
<PAGE> 21
RISK FACTORS
In evaluating the Exchange Offer, Holders of the Old Notes should carefully
consider the following risk factors, as well as the other information set forth
elsewhere in this Prospectus. The risk factors set forth below are generally
applicable to the Old Notes as well as the New Notes.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS
The Company has, and upon consummation of the Exchange Offer will have,
indebtedness which is substantial in relation to the shareholders' equity, as
well as interest and debt service requirements which are significant compared
to its cash flow from operations. At June 30, 1997, the Company's total
indebtedness was $142.7 million (exclusive of unused commitments under the
Senior Credit Facility of approximately $101.0 million) and the Company had
$39.6 million of preferred stock and $5.5 million of common shareholders'
equity. In addition, to the extent that the Company is required to incur or
assume additional indebtedness in connection with its acquisition strategy, the
Company's interest and debt service requirements will increase. See "Risk
Relating to Acquisitions." The degree to which the Company is leveraged could
have important consequences to Holders of the Notes, including the following:
(i) the Company's ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes may be
impaired; (ii) a substantial portion of the Company's cash flow from operations
must be dedicated to the payment of interest on the Notes and its other
existing indebtedness, thereby reducing the funds available to the Company for
other purposes; (iii) the agreements governing the Company's long-term
indebtedness contain certain restrictive financial and operating covenants;
(iv) certain indebtedness under the Senior Credit Facility will be at variable
rates of interest, which will cause the Company to be vulnerable to increases
in interest rates; (v) all of the indebtedness outstanding under the Senior
Credit Facility is secured by substantially all the assets of the Subsidiary
Guarantors and the Company and will become due prior to the time the principal
on the Notes will become due; (vi) the Company may be hindered in its ability
to adjust rapidly to changing market conditions; and (vii) the Company's
substantial degree of leverage could make it more vulnerable in the event of a
downturn in general economic conditions or in its business. The Indenture
permits the Company and the Subsidiary Guarantors to incur additional
indebtedness, including Senior Indebtedness and indebtedness that will rank
pari passu with the Notes.
The Company's ability to pay interest on the Notes and to satisfy its other
obligations will depend upon its future operating performance, which will be
affected by prevailing economic conditions and financial, business and other
factors, many of which are beyond its control. The Company anticipates that its
operating cash flow, together with available borrowings under the Senior Credit
Facility, will be sufficient to meet its operating expenses, to service
interest requirements on its debt obligations as they become due and to
implement its business strategy. There can be no assurance, however, that the
Company's business will generate sufficient cash flow from operations or that
future borrowings will be available in an amount sufficient to enable the
Company to service its indebtedness, including the Notes, to make anticipated
capital expenditures or to implement its business strategy. Further, the
Company is required to redeem the Lobdell Preferred Stock (as defined) prior to
the time the principal on the Notes will become due and the maximum aggregate
redemption price for such preferred stock, assuming the Company does not
commence a public offering of its common stock prior to June 30, 2000, is $40.9
million, plus any accrued and unpaid dividends to the date of redemption. The
Company's predecessor experienced a net loss of $1.3 million for the year ended
March 31, 1995, experienced a net loss of $1.9 million during the period from
April 1, 1995 through October 27, 1995 and, on a pro forma basis for fiscal
1997, the Company's net loss is $4.6 million. In addition, for fiscal 1995,
the Company's earnings were insufficient to cover fixed charges by $1.6
million. For the period April 1, 1995 to October 27, 1995, the Company's
earnings were insufficient to cover fixed charges by $2.8 million. For fiscal
1997, the Company's earnings exceeded fixed charges by $2.6 million; however,
on a pro forma basis for fiscal 1997, earnings were insufficient to cover fixed
charges by $5.2 million. See "Management's Discussion and Analysis
16
<PAGE> 22
of Financial Condition and Results of Operations -- Liquidity, Capital
Resources and Financial Condition" and "Description of Certain Indebtedness and
Preferred Stock."
The Senior Credit Facility contains certain customary covenants, including
without limitation, reporting and other affirmative covenants; financial
covenants, including ratio of total debt to EBITDA, net worth, fixed charge
coverage ratio, interest coverage ratio (each as defined in and calculated
pursuant to the Senior Credit Facility); and negative covenants, including
restrictions on incurrence of other indebtedness, payment of cash dividends and
other distributions to shareholders, liens in favor of parties other than the
lenders under the Senior Credit Facility, certain guaranties of obligations of
or advances to others, sales of material assets not in the ordinary course of
business, restrictions on mergers and acquisitions, and capital expenditures.
There can be no assurance that these requirements will be met in the future. If
they are not, the holders of the indebtedness under the Senior Credit Facility
would be entitled to declare such indebtedness immediately due and payable or,
if the Company were unable to repay such indebtedness, the holders thereunder
could proceed against the collateral securing the Senior Credit Facility, which
consists of substantially all of the assets of the Company and the Subsidiary
Guarantors. In addition, the Senior Credit Facility contains customary events
of default including non-payment of principal, violation of covenants and
cross-defaults to certain other indebtedness, including the indebtedness
evidenced by the Notes. See "Description of Certain Indebtedness and Preferred
Stock -- Senior Credit Facility."
SUBORDINATION OF NOTES AND THE SUBSIDIARY GUARANTIES; ASSET ENCUMBRANCES;
HOLDING COMPANY STRUCTURE
Like the Old Notes, the New Notes will be subordinated in right of payment
to all present and future Senior Indebtedness of the Company and the Subsidiary
Guarantors, including the principal, premium (if any) and interest with respect
to the obligations outstanding under the Senior Credit Facility. In addition,
the Subsidiary Guaranties will be subordinated in right of payment to all
existing and future Senior Indebtedness of the Subsidiary Guarantors. As of
June 30, 1997, the Company did not have any Senior Indebtedness outstanding
(excluding unused commitments under the Senior Credit Facility) and the
Subsidiary Guarantors had approximately $17.9 million of Senior Indebtedness
outstanding. Consequently, in the event of a bankruptcy, liquidation,
dissolution, reorganization or similar proceeding with respect to the Company
or any Subsidiary Guarantor, assets of the Company or such Subsidiary Guarantor
will be available to pay obligations of the Notes only after all Senior
Indebtedness of the Company or such Subsidiary Guarantor has been paid in full,
and there can be no assurance that there will be sufficient assets to pay
amounts due on all or any of the Notes. See "Description of the Notes --
Subordination."
Like the Old Notes, the New Notes are unsecured and will be effectively
subordinated to any secured indebtedness of the Company or any Subsidiary
Guarantor. The indebtedness outstanding under the Senior Credit Facility will
be secured by liens on substantially all of the assets of the Subsidiary
Guarantors and the Company. The ability of the Company to comply with the
provisions of the Senior Credit Facility may be affected by events beyond the
Company's control. The breach of any such provisions could result in a default
under the Senior Credit Facility, in which case, depending upon the actions
taken by the lenders thereunder or their successors or assignees, such lenders
could elect to declare all amounts borrowed under the Senior Credit Facility,
together with accrued interest, to be due and payable, and the Company could be
prohibited from making payments of interest and principal on the Notes until
the default is cured or all Senior Indebtedness is paid or satisfied in full.
If the Company were unable to repay such borrowings, such lenders could proceed
against the collateral. If the indebtedness under the Senior Credit Facility
were accelerated, there can be no assurance that the assets of the Company and
the Subsidiary Guarantors would be sufficient to repay in full such
indebtedness and the other indebtedness of the Company, including the Notes.
See "Description of Certain Indebtedness and Preferred Stock -- Senior Credit
Facility" and "Description of the Notes -- Subordination."
The Company is a holding company which derives all of its operating income
from its subsidiaries. The Holders of the Notes will have no direct claim
against such subsidiaries other than the claim created by the Subsidiary
Guaranties, which
17
<PAGE> 23
may be subject to legal challenge in the event of the bankruptcy of a
subsidiary. See "Risk Factors -- Fraudulent Conveyance." If such a challenge
were upheld with respect to any such Subsidiary Guarantee, such Subsidiary
Guarantee would be invalidated and unenforceable. To the extent that the
Subsidiary Guarantee is not enforceable, the rights of Holders of the Notes to
participate in any distribution of assets of the Subsidiary Guarantor upon
liquidation, bankruptcy, reorganization or otherwise may, as is the case with
other unsecured creditors of the Company, be subject to prior claims of
creditors of that Subsidiary Guarantor. The Company must rely on dividends and
other payments from its subsidiaries to generate the funds necessary to meet
its obligations, including the payment of principal and interest on the Notes.
The Indenture contains covenants that restrict the ability of the Company's
subsidiaries to enter into any agreement limiting distributions and transfers,
including dividends to the Company. Further, the ability of the Company's
subsidiaries to pay dividends and make other payments are, and may in the
future be, subject to certain statutory, contractual and other restrictions.
See "Description of Certain Indebtedness and Preferred Stock."
CYCLICALITY; THE OEM SUPPLIER INDUSTRY
The OEM supplier industry is highly cyclical and, in large part, impacted by
the strength of the economy generally, by prevailing interest rates and by
other factors which may have an effect on the level of sales of automotive
vehicles. There can be no assurance that the automotive industry for which the
Company supplies components will not experience downturns in the future. An
economic recession may impact substantially leveraged companies, such as the
Company, more than similarly situated companies with less leverage. A decrease
in overall consumer demand for SUVs, light trucks, mini-vans, vans or passenger
cars could have a material adverse effect on the Company's financial condition
and results of operations.
The automotive industry is characterized by a small number of OEMs that are
able to exert considerable pressure on component and system suppliers to reduce
costs, improve quality and provide additional design and engineering
capabilities. In the past, OEMs have generally demanded and received price
reductions and measurable increases in quality by implementing competitive
selection processes, rating programs and various other arrangements. Also,
through increased partnering on platform work, OEMs have generally required
component and system suppliers to provide more design engineering input at
earlier stages of the product development process, the costs of which have, in
some cases, been absorbed by the suppliers. Although the Company, historically,
has regained the loss caused by price reductions to the OEMs through cost
reduction initiatives and assistance from the OEMs, there can be no assurance
that future price reductions, increased quality standards or additional
engineering capabilities required by OEMs will not have a material adverse
effect on the financial condition or results of operations of the Company.
Further, although the general trend of the OEMs is to outsource component
manufacturing, the OEMs have, from time to time, brought their stamping work
back in-house. There can be no assurance that the OEMs may not in-source some
of the jobs currently performed by the Company.
Many OEMs and their Tier 1 suppliers are unionized. Work stoppages and
slowdowns experienced by OEMs and their Tier 1 suppliers, as a result of labor
disputes, could have a material adverse effect on the Company's financial
condition or results of operations.
DEPENDENCE ON PRINCIPAL CUSTOMERS
Substantially all of the Company's sales for fiscal 1997 and the three
months ended June 30, 1997 were to GM and Ford. Although the Company has
ongoing supply relationships with its principal customers and is a long-term
supplier to GM and Ford, there can be no assurance that sales to GM and Ford
will continue at the same level. Furthermore, continuation of these
relationships is dependent upon the customers' satisfaction with the price,
quality and delivery of the Company's products. In addition, the Company's
agreements to produce parts are assigned to specific models or product lines of
its customers. Accordingly, the Company's business, and estimates for future
business, are dependent upon consumer demand for the specific models and
product lines that incorporate the Company's parts. The Company's arrangements
with the OEMs are
18
<PAGE> 24
typically in the form of purchase orders that may be canceled by the OEMs.
However, the Company believes that cancellation of purchase orders is rare,
due, in part, to the OEM production interruptions likely to be caused by
changing suppliers. A significant decrease in sales of vehicles using the
Company's products or the loss by the Company of the right to supply any of
such products to its customers would have a material adverse effect on the
Company's financial condition and results of operations. The loss of GM,
Ford, or with the acquisition of Howell, Chrysler as a customer would have a
material adverse effect on the Company. In addition, the delay or cancellation
of material orders from, or design, development, delivery or product projects
at, GM, Ford, or Chrysler could have a material adverse effect on the Company.
UNIONIZED WORKFORCE
Substantially all employees of the Company are covered by collective
bargaining agreements with either the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America ("UAW"), United
Steelworkers of America ("USW"), International Brotherhood of Teamsters
("Teamsters") or the National Automobile Aerospace, Transportation and General
Workers Union of Canada ("CAW"). The Company has not experienced any work
stoppages in the last ten years and considers its relationship with its
employees to be good. Strikes or work stoppages and the resultant adverse
impact on its relationship with the OEMs could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company recently negotiated a new agreement with the CAW at the Cambridge,
Ontario facility which will expire on September 30, 2000. The Company's
agreement with the UAW at the Argos, Indiana facility will expire on March 31,
1998. While the outcome, including the terms of the new UAW contract and its
impact on the future results of the Company's operations cannot be predicted,
management does not believe that the financial terms of the new contract will
have a material adverse effect on the Company. However, there can be no
assurance that the Company will be successful in its contract negotiations.
FRAUDULENT CONVEYANCE
If a court in a lawsuit brought by an unpaid creditor or representative of
creditors, such as a trustee in bankruptcy or the Company as a
debtor-in-possession, were to find under relevant federal or state fraudulent
conveyance statutes that the Company did not receive fair consideration or
reasonably equivalent value for incurring the indebtedness, including the
Notes, and that, at the time of such incurrence, the Company (i) was insolvent,
(ii) was rendered insolvent by reason of such incurrence or grant, (iii) was
engaged in a business or transaction for which the assets remaining with the
Company constituted unreasonably small capital or (iv) intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as
they matured, then such court, subject to applicable statutes of limitation,
could void the Company's obligations under the Notes, recover payments made
under the Notes, subordinate the Notes to other indebtedness of the Company or
take other action detrimental to the Holders of the Notes.
The measure of insolvency for these purposes will depend upon the governing
law of the relevant jurisdiction. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than the fair value of all of that company's property or if the present
fair salable value of that company's assets is less than the amount that will
be required to pay its probable liability on its existing debts as they become
absolute and matured or if the Company is not able to pay its debts as they
become due. Moreover, regardless of solvency, a court could void an incurrence
of indebtedness, including the Notes, if it determined that such transaction
was made with the intent to hinder, delay or defraud creditors. In addition, a
court could subordinate the indebtedness, including the Notes, to the claims of
all existing and future creditors on similar grounds. The Company believes
that, after giving effect to the Offering, the Company (i) has not been
rendered insolvent by the incurrence of indebtedness in connection with the
Offering, (ii) is in possession of sufficient capital to run its business
effectively and (iii) is incurring debts within its ability to pay as the same
mature or become due.
19
<PAGE> 25
There can be no assurance as to what standard a court would apply in order
to determine whether the Company was "insolvent" upon the sale of the Old Notes
or that, regardless of the method of valuation, a court would not determine
that the Company was insolvent upon consummation of the sale of the Old Notes.
In addition, the Subsidiary Guaranties may be subject to review under
relevant federal and state fraudulent conveyance and similar statutes in a
bankruptcy or reorganization case or a lawsuit brought by or on behalf of
creditors of any of the Subsidiary Guarantors. In such a case, the analysis set
forth above would generally apply, except that the Subsidiary Guaranties could
also be subject to the claim that, since the Subsidiary Guaranties were
incurred for the benefit of the Company (and only indirectly for the benefit of
the Subsidiary Guarantors), the obligations of the Subsidiary Guarantors
thereunder were incurred for less than reasonably equivalent value or fair
consideration. A court could void the Subsidiary Guarantors' obligation under
the Subsidiary Guaranties, recover payments made under the Subsidiary
Guaranties, subordinate the Subsidiary Guaranties to other indebtedness of a
Subsidiary Guarantor or take other action detrimental to the Holders of the
Notes.
CONTROL BY PRINCIPAL SHAREHOLDER
Selwyn Isakow (the "Principal Shareholder") beneficially owns 48.9% of the
Company's outstanding shares and exercises voting control over those shares not
owned by him, including shares held by the directors and officers of the
Company. Circumstances may occur in which the interests of the Principal
Shareholder could be in conflict with the interests of the Holders of the
Notes. For example, if the Company encounters financial difficulties or is
unable to pay certain of its debts as they mature, the interests of the
Principal Shareholder might conflict with those of the Holders of the Notes. In
addition, the Principal Shareholder may have an interest in pursuing
acquisitions, divestitures or other transactions that, in his judgment, could
enhance his equity investment, even though such transactions might involve
risks to the Holders of the Notes. See "Principal Shareholders."
RISK RELATING TO ACQUISITIONS
To expand its markets and take advantage of the consolidation trend in the
automotive parts industry, the Company's business strategy includes growth
through acquisitions. The ability of the Company to successfully implement its
acquisition strategy depends upon a number of factors. There can be no
assurance that the Company will be able to consummate acquisitions in the
future on terms acceptable to the Company or to integrate any new acquisitions
(including Howell) successfully into its operations and achieve cost savings
from such integration. To the extent that any future acquisitions require the
incurrence or assumption of additional indebtedness, the Company's interest and
debt service requirements will increase, and the Company's increased leverage
could have important consequences to Holders of the Notes. In addition, the
Company is pursuing acquisitions and strategic alliances in Europe and intends
to pursue such acquisitions and alliances in South America, Asia and other
markets. The Company is also continually investigating opportunities for
domestic acquisitions of other OEM suppliers. There can be no assurance that
these acquisitions or strategic alliances will be successful. See "Risk Factors
- -- Substantial Leverage and Debt Service Obligations," and "Business --
Business Strategy."
COMPETITION
The motor vehicle parts industry in which the Company operates is fragmented
and competitive. The Company's competitors include divisions or subsidiaries of
companies that are larger and have substantially greater resources than the
Company as well as divisions of OEMs with internal stamping and assembly
operations. There can be no assurance that the Company's products will be able
to compete successfully with those of its competitors. See "Business --
Competition."
ENVIRONMENTAL RISKS
20
<PAGE> 26
The Company's operations and properties are subject to federal, state,
local and foreign laws, regulations and ordinances relating to the use, storage,
handling, generation, treatment, emission, release, discharge and disposal of
certain materials, substances and wastes. In many jurisdictions these laws are
complex and change frequently. Such laws, including but not limited to the
Comprehensive Environmental Response, Compensation & Liability Act ("CERCLA" or
"Superfund") may impose joint and several liability and apply to remediation of
contamination at properties presently or formerly owned or operated by an entity
or its predecessors, as well as to conditions at properties at which wastes or
other contamination attributable to an entity or its predecessors have been sent
or otherwise come to be located. The nature of the Company's operations exposes
it to the risk of liabilities or claims with respect to environmental matters,
including off-site disposal matters, and there can be no assurance that material
costs will not be incurred in connection with such liabilities or claims.
Based upon the Company's experience to date, the Company believes that the
future cost of compliance with existing environmental laws, regulations and
ordinances (or liability for known environmental claims) will not have a
material adverse effect on the Company's business, financial condition and
results of operations. However, future events, such as changes in existing laws
and regulations or their interpretation, may give rise to additional compliance
costs or liabilities that could have a material adverse effect on the Company's
business, financial condition and results of operations. Compliance with more
stringent laws or regulations, as well as more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws,
may require additional expenditures by the Company that may be material. See
"Business -- Regulatory Matters and -- Legal Proceedings."
CHANGE OF CONTROL
Upon a Change of Control, each Holder of the Notes will have the right to
require the Company to repurchase all or any part of such Notes at a price equal
to 101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of repurchase. The occurrence of a Change of Control may
constitute a default under the Senior Credit Facility. In addition, the Senior
Credit Facility will prohibit the purchase of the Notes by the Company in the
event of a default thereunder, unless and until such time as the indebtedness
under the Senior Credit Facility is repaid in full. The Company's failure to
purchase the Notes would result in a default under the Indenture. The inability
to repay the indebtedness under the Senior Credit Facility, if accelerated,
would also constitute an event of default under the Indenture, which could have
adverse consequences for the Company and the Holders of the Notes. In the event
of a Change of Control, there can be no assurance the Company would have
sufficient financial resources available to satisfy all of its obligations under
the Senior Credit Facility and the Notes. See "Description of Certain
Indebtedness and Preferred Stock -- Senior Credit Facility."
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemption from, or in
transactions not subject to, the registration requirements of, the Securities
Act and applicable state laws, or pursuant to an exemption therefrom. Subject
to the obligation by the Company to file a shelf registration statement covering
resales of Old Notes in certain limited circumstances, the Company does not
intend to register the Old Notes under the Securities Act and, after
consummation of the Exchange Offer, will not be obligated to do so. In
addition, any holder of Old Notes who tenders in the Exchange Offer for the
purpose of participating in a distribution of the New Notes may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Additionally, as a result of the
Exchange Offer, it is expected that a substantial decrease in the aggregate
principal amount of Old Notes outstanding will occur. As a result, it is
unlikely that a liquid trading market will exist for the Old Notes at any time.
This lack of liquidity will make transactions more difficult and may reduce the
trading price of the Old Notes. See "The Exchange Offer."
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<PAGE> 27
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES
The New Notes are new securities and there is currently no established
market for the New Notes. Accordingly, there can be no assurance as to the
liquidity of any markets that may develop for the New Notes, the ability of
holders to sell the New Notes or the price at which holders would be able to
sell the New Notes. Future trading prices of the New Notes will depend on many
factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities.
Historically, the market for securities similar to the New Notes, including
non-investment grade debt, has been subject to disruptions that have caused
substantial volatility in the prices of such securities. There can be no
assurance that any market for the New Notes, if such market develops, will not
be subject to similar disruptions. The Initial Purchasers have advised the
Company that they currently intend to make a market in the New Notes offered
hereby. However, the Initial Purchasers are not obligated to do so and any
market making may be discontinued at any time without notice. The Old Notes
currently are eligible for trading by qualified buyers in the Private
Offerings, Resale and Trading through Automated Linkages (PORTAL) Market. The
Company and the Subsidiary Guarantors do not intend to apply for listing of the
New Notes on any national securities exchange or for their quotation through
the National Association of Securities Dealers Automated Quotation System.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's and the
Subsidiary Guarantors' obligations under the Registration Agreement. The
Company will not receive any cash proceeds from the issuance of the New Notes
in the Exchange Offer. In consideration for issuing the New Notes as
contemplated in this Prospectus, the Company will receive Old Notes in like
principal amount. The form and terms of the New Notes are identical in all
material respects to the form and terms of the Old Notes, except for certain
transfer restrictions and registration rights relating to the Old Notes and
except for certain provisions providing for an increase in the interest rate on
the Old Notes under certain circumstances relating to the timing of the
Exchange Offer. The Old Notes surrendered in exchange for the New Notes will
be retired and canceled and cannot be reissued. Accordingly, issuance of the
New Notes will not result in any increase in the outstanding debt of the
Company. The net proceeds to the Company from the sale of the Old Notes were
approximately $120.7 million (after the deduction of the discount to the
Initial Purchasers and estimated expenses incurred in connection with the
Offering and related transactions of approximately $4.1 million). The Company
used approximately $83.1 million of the net proceeds to refinance existing
indebtedness and approximately $23.2 million in connection with the acquisition
of Howell with the remaining $14.4 million for working capital and general
corporate purposes, which may include other acquisitions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity, Capital Resources and Financial Condition."
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
June 30, 1997. This table should be read in conjunction with the unaudited
"Pro Forma Combined Consolidated Financial Data," "Selected Consolidated
Historical Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related notes thereto included elsewhere in this Prospectus. See also
"Description of Certain Indebtedness and Preferred Stock."
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<PAGE> 28
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
(IN THOUSANDS)
<S> <C>
Cash and cash equivalents (a) $ 58,883
========
Long-term debt (including current portion):
Senior Credit Facility (b) --
Lewis Emery 2,441
Industrial Revenue Bonds 8,200
EDC Tooling 4,325
IRDP Loan 457
Mortgage-BMG 2,441
10 1/8% Senior Subordinated Notes Due 2007 (c) 124,814
--------
Total debt 142,678
--------
Redeemable preferred stock (d)
Series A 36,305
Series B 3,330
--------
Total redeemable preferred stock 39,635
--------
Shareholders' equity:
Common stock (400,000 shares authorized; 309,750 issued
and outstanding) 1,050
Foreign currency translation adjustment (82)
Reduction in equity for minimum pension liability (253)
Retained earnings 4,744
--------
Total shareholders' equity 5,459
--------
Total capitalization $187,772
========
</TABLE>
- -------------
(a) Effective August 13, 1997, the Company acquired all of the issued and
outstanding shares of common stock of Howell Industries, Inc.
Approximately $23.2 million of bond proceeds were used to fund the
acquisition.
(b) Concurrently with the issuance of the Old Notes, the Company entered into
the Senior Credit Facility pursuant to which up to $110.0 million is
available. On June 30, 1997, the Company had no borrowings under the
Senior Credit Facility and availability was approximately $101.0 million.
See "Description of Certain Indebtedness and Preferred Stock."
(c) Notes subject to the Exchange Offer.
(d) In connection with the acquisition of Lobdell, redeemable preferred
stock was issued with a face value of $50.7 million, of which $10.0
million was placed in escrow pending final determination of the purchase
price. The Company and the preferred shareholders of Lobdell
have settled certain claims relating to the acquisition which has
resulted in the cancellation of 60,002 shares of Lobdell Series A
Preferred Stock and 49,938 shares of Lobdell Series B Preferred Stock,
which represented all of the outstanding Lobdell Series B Preferred
Stock. See Notes 3 and 17 of the "Oxford Automotive, Inc. Notes to
Consolidated Financial Statements" for further discussion regarding the
carrying value of the redeemable preferred stock and additional terms
and conditions.
PRO FORMA COMBINED FINANCIAL DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
The unaudited pro forma combined balance sheet as of June 30, 1997 (the
"Unaudited Pro Forma Balance Sheet") gives pro forma effect to the acquisition
of Howell as if it had occurred on June 30, 1997. The acquisition of Howell is
23
<PAGE> 29
accounted for by the purchase method of accounting pursuant to which the
purchase price is allocated among the acquired tangible and intangible assets
and assumed liabilities in accordance with estimates of their fair values on
the date of acquisition. The pro forma adjustments represent management's
preliminary determination of purchase accounting adjustments and are based upon
available information and certain assumptions that the Company believes to be
reasonable under the circumstances. Consequently, the amounts reflected in the
Unaudited Pro Forma Balance Sheet are subject to change and the final values
may differ substantially from these amounts. Management does not expect that
differences between the preliminary and final purchase price allocation will
have a material impact on the Company's financial position. The Unaudited Pro
Forma Balance Sheet does not purport to be indicative of the financial position
of the Company had such transactions actually been completed as of the assumed
dates and for the periods presented, or which may be obtained in the future.
The unaudited pro forma combined statement of operations for the year ended
March 31, 1997 gives pro forma effect to the Offering and the acquisitions of
Lobdell and Howell as if they had occurred on April 1, 1996 and includes the
effect of the following adjustments as if they were realized during the
applicable period: (i) reductions in cost of sales through labor and fringe
benefit reductions, (ii) reductions in selling, general and administrative
labor, professional fees and other non-recurring items achieved as a direct
result of the acquisition of Lobdell and (iii) net increase in interest expense
to reflect the issuance of the Old Notes. The unaudited pro forma combined
statement of operations for the three months ended June 30, 1997 (together with
the statement for the year ended March 31, 1997, the "Unaudited Pro Forma
Statements of Operations") gives pro forma effect to the Offering and the
acquisition of Howell as if they had occurred on April 1, 1997. As the
acquisition of Howell was not completed until August 13, 1997, the Unaudited Pro
Forma Statements of Operations do not include any amount for anticipated savings
as a result of cost reductions expected to be implemented by the Company with
respect to the operations of Howell. The Unaudited Pro Forma Statements of
Operations do not purport to be indicative of the results of operations of the
Company had such transactions actually been completed as of the assumed dates
and for the periods presented, or which may be obtained in the future.
24
<PAGE> 30
UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF THE PERIOD ENDED
<TABLE>
<CAPTION>
JUNE 30, 1997 JUNE 30, 1997 PRO FORMA PRO FORMA
COMPANY HOWELL (a) ADJUSTMENTS COMBINED
------- ------------ ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents................. $ 58,883 $ 1,163 ($24,408)(b)(c) $ 35,638
Trade accounts receivable, net............ 41,511 14,513 -- 56,024
Inventories............................... 14,623 6,290 1,506(c) 22,419
Reimbursable tooling...................... 5,545 2,224 -- 7,769
Refundable income taxes................... 1,212 -- -- 1,212
Prepaid expenses and other current
assets.................................. 794 1,266 (185)(c) 1,875
Deferred income taxes..................... 4,364 59 875 (c) 5,298
-------- ------- --------- --------
Total current assets.................... 126,932 25,515 (22,212) 130,235
Unexpended bond proceeds.................. 3,991 -- -- 3,991
Deferred income taxes..................... 4,057 -- -- 4,057
Property, plant and equipment,
net...................................... 146,291 9,761 6,425(c) 162,477
Goodwill.................................. -- -- 1,042(c) 1,042
Other noncurrent assets................... 5,382 -- 850(c) 6,232
-------- ------- --------- --------
Total assets............................ $286,653 $35,276 ($13,895) $308,034
======== ======= ========= ========
Trade accounts payable.................... $ 27,398 $ 8,726 $ -- $ 36,124
Accrued expenses and other
liabilities............................. 14,287 4,858 -- 19,145
Restructuring reserve..................... 6,303 47 3,519(c) 9,869
Current portion of long-term debt......... 4,761 -- -- 4,761
-------- ------- --------- --------
Total current liabilities............... 52,749 13,631 3,519 69,899
Deferred income taxes..................... 10,488 124 3,172(c) 13,784
Pension liability......................... 4,205 -- 425(c) 4,630
Postretirement medical benefits........... 34,013 -- -- 34,013
Restructuring reserve..................... -- 120 -- 120
Other noncurrent liabilities.............. 2,187 390 -- 2,577
Long-term debt............................ 137,917 -- -- 137,917
-------- ------- --------- --------
Total liabilities....................... 241,559 14,265 7,116 262,940
-------- ------- --------- --------
Redeemable Series A preferred
stock................................... 36,290 -- -- 36,290
Redeemable Series B preferred
stock................................... 3,345 -- -- 3,345
Total shareholders' equity ............. 5,459 21,011 (21,011) 5,459
-------- ------- --------- --------
Total liabilities and
shareholders' equity.................... $286,653 $35,276 ($13,895) $308,034
======== ======= ========= ========
</TABLE>
- --------------
See accompanying Notes to Unaudited Pro Forma Combined Balance Sheet.
25
<PAGE> 31
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) Represents the adjustments for the Howell acquisition as if it had
occurred on June 30, 1997. The June 30, 1997 balance sheet for Howell was
derived from Howell's internal financial statements.
(b) Reflects the estimated sources and uses of funds for the Offering and the
acquisition of Howell as if the acquisition had occurred on June 30, 1997:
<TABLE>
<S> <C>
Use of Funds:
Acquisition of Howell:
Utilization of Bond Proceeds...................................... $23,245
Utilization of Howell Cash and Equivalents........................ 1,163
-------
Total Uses ....................................................... $24,408
=======
</TABLE>
(c) The acquisition of Howell will be accounted for by the purchase method of
accounting, pursuant to which the purchase price is allocated among the
acquired tangible and intangible assets and assumed liabilities in
accordance with their estimated fair market values on the date of
acquisition. The estimated purchase price and preliminary adjustments to
historical book value of Howell as a result of the transaction are as
follows:
<TABLE>
<S> <C>
Decrease in cash for payments made at closing............... $ (1,163)
Write off of LIFO inventory reserve......................... 1,506
Write off of prepaid assets................................. (185)
Increase in deferred tax asset for restructuring and pension
reserves.................................................. 875
Increase in property plant and equipment to estimated fair
value..................................................... 6,425
Estimated goodwill.......................................... 1,042
Provision for acquisition fees and expenses................. 850
--------
Net increase in assets...................................... $ 9,350
========
Reserve for plant restructuring............................. $ 3,519
Increase in deferred tax liability.......................... 3,172
Increase in pension reserve................................. 425
Proceeds from Offering used to finance acquisition.......... 23,245
Elimination of retained earnings as a result of purchase
accounting................................................ (21,011)
--------
Net increase in liabilities and shareholders' equity........ $ 9,350
========
</TABLE>
26
<PAGE> 32
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
ADJUSTMENTS FOR LOBDELL ACQUISITION
-----------------------------------
PRO FORMA COMPANY
COMPANY(a) LOBDELL(b) ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
PERIOD
APRIL 1, 1996
YEAR ENDED THROUGH YEAR ENDED YEAR ENDED
MARCH 31, 1997 JANUARY 10, 1997 MARCH 31, 1997 MARCH 31, 1997
-------------- ---------------- -------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales........................................ $ 136,861 $ 193,303 $ -- $ 330,164
Cost of sales.................................... 125,088 186,707 (6,152)(e) 305,643
--------- --------- -------- ---------
Gross profit..................................... 11,773 6,596 6,152 24,521
Selling, general and
administrative................................. 7,685 12,398 (2,881)(g) 17,202
Equipment impairment and
non-recurring charges.......................... 287 4,960 -- 5,247(i)
--------- --------- -------- ---------
Operating Income (loss).......................... 3,801 (10,762) 9,033 2,072
Interest expense................................. 3,388 2,729 5,251(j) 11,368
Other Income (expense)........................... 2,201 674 -- 2,875
--------- --------- -------- ---------
Income (loss) before income
taxes.......................................... 2,614 (12,817) 3,782 (6,421)
Provision (benefit) for income
taxes.......................................... 1,065 (4,728) 1,513(l) (2,150)
--------- --------- -------- ---------
Net income (loss)................................ $ 1,549 $ (8,089) $ 2,269 $ (4,271)
Financial Ratios and Other Data:
Depreciation and amortization.................... $ 5,041 $ 11,635 $ 1,322 $ 17,998
Capital expenditures............................. 3,326 12,862 -- 16,188
Ratio of earnings to fixed
charges(n)..................................... 1.7x NM NM --
Adjusted EBITDA(o)............................... 11,330 6,507 10,355 28,192
Ratio of Adjusted EBITDA to
interest expense(p)............................ 2.5x
Ratio of net debt to Adjusted
EBITDA(q)...................................... 3.2
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Statement of Operations.
<TABLE>
<CAPTION>
ADJUSTMENTS FOR HOWELL ACQUISITION
--------------------------------------------
PRO FORMA HOWELL PRO FORMA
HOWELL(c) ADJUSTMENTS PRO FORMA(d) COMBINED
--------- ----------- ------------ --------
PERIOD
MAY 1, 1996
THROUGH YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, 1997 MARCH 31, 1997 MARCH 31, 1997 MARCH 31, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales................................... $ 91,543 $ -- $91,543 $ 421,707
Cost of sales............................... 85,477 318 (f) 85,795 391,438
-------- ------- ------- ---------
Gross profit................................ 6,066 (318) 5,748 30,269
Selling, general and
administrative............................ 4,440 142 (h) 4,582 21,784
Equipment impairment and
non-recurring charges..................... -- -- -- 5,247
-------- ------- ------- ---------
Operating Income (loss)..................... 1,626 (460) 1,166 3,238
Interest expense............................ 5 2,354 (k) 2,359 13,727
Other Income (expense)...................... 399 -- 399 3,274
-------- ------- ------- ---------
Income (loss) before income
taxes..................................... 2,020 (2,814) (794) (7,215)
Provision (benefit) for income
taxes..................................... 710 (1,126)(m) (416) (2,566)
-------- ------- ------- ---------
Net income (loss)........................... $ 1,310 $(1,688) $ (378) $ (4,649)
======== ======= ======= =========
Financial Ratios and Other Data:
Depreciation and amortization............... $ 1,458 $ 460 $ 1,918 $ 19,916
Capital expenditures........................ 3,486 -- 3,486 19,674
Ratio of earnings to fixed
charges(n)................................ 16.9x NM NM --
Adjusted EBITDA(o).......................... 3,483 -- 3,483 31,675
Ratio of Adjusted EBITDA to
interest expense(p)....................... 2.3x
Ratio of net debt to Adjusted
EBITDA (q) ............................... 3.6
</TABLE>
27
<PAGE> 33
<TABLE>
<CAPTION>
ADJUSTMENTS FOR HOWELL ACQUISITION
------------------------------------------------
PRO FORMA COMPANY PRO FORMA
COMPANY ADJUSTMENTS PRO FORMA HOWELL ADJUSTMENTS
------------- ----------- --------- ------------ -------------
THREE MONTHS THREE MONTHS THREE MONTHS
ENDED ENDED ENDED
JUNE 30, 1997 JUNE 30, 1997 JUNE 30, 1997
------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $91,960 $91,960 $24,656 $ --
Cost of sales 82,662 82,662 22,327 80 (f)
------- ------- ------- ------- ------
Gross profit 9,298 9,298 2,329 (80)
Selling, general and administrative 1,692 $ 92 (r) 1,784 1,135 36 (h)
Equipment impairment and non-recurring
charges -- -- -- -- --
------- ------- ------- ------- ------
Operating Income (loss) 7,606 (92) 7,514 1,194 (116)
Interest expense 1,798 1,037 (j) 2,835 (19) 588 (k)
Other Income (expense) 37 -- 37 296 --
------- ------- ------- -------- -----
Income (loss) before income taxes 5,845 (1,129) 4,716 1,509 (704)
Provision (benefit) for income taxes 2,338 (452) 1,886 524 (282)
------- ------- ------- -------- -----
Net income (loss) $ 3,507 $ (677) $ 2,830 $ 985 $(422)
Financial Ratios and Other Data:
Depreciation and amortization $ 4,308 $ 92 $ 4,400 $ 384 $ 116
Capital expenditures 3,577 -- 3,577 916
Ratio of earnings to fixed charges (n) 3.6x 151.9x NM
Adjusted EBITDA (o) 11,951 -- 11,951 1,874
Ratio of Adjusted EBITDA to interest
expense (p) 6.6x
Ratio of net debt to Adjusted
EBITDA (q) 1.7
</TABLE>
<TABLE>
<CAPTION>
HOWELL PRO FORMA
PRO FORMA COMBINED
-------------- ------------
THREE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 1997 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Net sales $24,656 $116,616
Cost of sales 22,407 105,069
-------- --------
Gross profit 2,249 11,547
Selling, general and administrative 1,171 2,955
Equipment impairment and non-recurring
charges -- --
------- --------
Operating Income (loss) 1,078 8,592
Interest expense 569 3,404
Other Income (expense) 296 333
------ --------
Income (loss) before income taxes 805 5,521
Provision (benefit) for income taxes 242 2,128
------ --------
Net income (loss) $ 563 $ 3,393
Financial Ratios and Other Data:
Depreciation and amortization $ 500 $ 4,900
Capital expenditures 916 4,493
Ratio of earnings to fixed charges (n) NM 2.4
Adjusted EBITDA (o) 1,874 13,825
Ratio of Adjusted EBITDA to interest
expense (p) 4.1x
Ratio of net debt to Adjusted
EBITDA (q) 1.9
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Statement of Operations.
28
<PAGE> 34
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) Statement of Operations Data for the Company for the year ended March 31,
1997 includes operating data for Lobdell for the period subsequent to
acquisition (January 11, 1997 to March 31, 1997).
(b) Statement of Operations Data for Lobdell for the period prior to
acquisition (April 1, 1996 to January 10, 1997).
(c) Represents the adjustments for the Howell acquisition as if it had
occurred on April 1, 1996. For purposes of the Unaudited Pro Forma
Statement of Operations, it has been assumed that the results of
operations of Howell for the twelve months ended April 30, 1997 would have
been comparable to the twelve months ended March 31, 1997. The Statement
of Operations Data for the twelve months ended April 30, 1997 was derived
from Howell's filings with the SEC under the Exchange Act.
(d) As the acquisition of Howell has not been completed, the Unaudited Pro
Forma Statement of Operations does not include any amount of anticipated
cost reductions expected to be implemented by the Company upon the
acquisition of Howell.
(e) Represents the following cost changes as they relate to cost of sales:
Cost savings the Company would have realized
from the reduction in direct and indirect
hourly and salaried employees in connection
with the acquisition of Lobdell. Prior to the
acquisition of Lobdell, the Company and
Lobdell formulated a plan to reduce the
number of employees (the "Workforce Reduction
Plan") at Lobdell. Such plan was initially
implemented by Lobdell in October 1996 and
was continued by the Company subsequent to
the acquisition of Lobdell. The Workforce
Reduction Plan was a substantive factor in
the Company's ultimate decision to acquire
Lobdell in addition to its determination of
the purchase price. The Company believes the
cost savings it has achieved as a result of
the Workforce Reduction Plan have been
achieved without otherwise effecting or
impairing its net sales and believes such
cost savings are permanent in nature. This
was accomplished by creating more efficient
manufacturing and production processes as
well as eliminating employees performing
duplicate functions. As of the date of
acquisition (January 10, 1997), approximately
60% of the employees covered by the Workforce
Reduction Plan had been terminated and
approximately 90% of the employees covered by
the Workforce Reduction Plan had been
terminated by January 31, 1997......................... $(6,501)
29
<PAGE> 35
In accordance with the purchase method of accounting, the
Company recognized Lobdell's unfunded Accumulated
Postretirement Benefit Obligation ("APBO"), which included
Lobdell's unrecognized transition obligation of
approximately $11,500, at January 10, 1997. Accordingly,
this adjustment reflects the decrease in net periodic
postretirement benefit cost, from April 1, 1996 through
January 10, 1997, had Lobdell's unfunded APBO been
recognized at the beginning of the fiscal year.............. (564)
Increased depreciation expense as a result of the write up
of property, plant and equipment to fair market value as a
part of the acquisition of Lobdell.......................... 913
-------
$(6,152)
=======
(f) Represents increased depreciation expense as a result of the write up of
property, plant and equipment to fair market value as a part of the
purchase accounting adjustments relating to the acquisition of
Howell.
(g) Represents the following changes as they relate to selling, general and
administrative expenses:
Cost savings the Company would have realized from the
reduction in selling and administrative staff as a result of
the acquisition and the Workforce Reduction Plan. See Note
(e).......................................................... $(2,920)
Elimination of commissions paid by Lobdell to Grace Emery
Sales Corporation ("GESC"), a related Domestic International
Sales Corporation. These amounts ultimately represented
dividends paid to the prior shareholders of Lobdell. On a
pro forma basis, assuming the acquisition of Lobdell on
April 1, 1996, GESC was dissolved thereby eliminating the
commission payment.......................................... (370)
Amortization of bond acquisition fees ...................... 409
-------
$(2,881)
=======
(h) Represents amortization of acquisition expenses and goodwill generated by
the acquisition.
(i) The provision for equipment impairment and non-recurring charges
includes: (i) on a pro forma basis, for the year ended March 31, 1997, a
$3,000 impairment reserve against certain long-lived assets of Laserweld,
a $540 provision for liability under the WARN Act, $500 of excess legal
and professional fees associated with the marketing and sale of Lobdell
and $1,207 related to the loss before income tax for the discontinuance of
the Laserweld and Parallel operations and (ii) for the year ended March
31, 1997, the loss before income tax for the discontinuance of the
Laserweld and Parallel operations of $287. Management does not anticipate
that these costs will be a part of future operations.
(j) Represents the net effect on interest expense as a result of (1) the
elimination of historical interest expense after the repayment of the
existing senior bank credit facilities and other outstanding debt, using
proceeds from the Offering and
30
<PAGE> 36
(2) the Offering, using an interest rate of 10.125% per annum. This amount
excludes interest on the portion of the proceeds of the Offering used for
the Howell acquisition. See Note (k).
(k) Represents the net effect on interest expense as a result of the use of
proceeds from the Offering for the acquisition of Howell of $23,245.
Interest expense is calculated using an interest rate of 10.125% per
annum. See Note (j).
(l) Represents the estimated income tax effect of the Company's pro forma
adjustments using an effective tax rate of 40%.
(m) Represents the estimated income tax effect of the Howell pro forma
adjustment using an effective rate of 40%.
(n) For purposes of this computation, earnings consist of income (loss)
before income taxes plus fixed charges. Fixed charges consist of
interest on indebtedness plus that portion of rental expense representative
of the interest factor. For fiscal 1995, the Company's earnings were
insufficient to cover fixed charges by $1.6 million. For the period April
1, 1995 to October 27, 1995, the Company's earnings were insufficient to
cover fixed charges by $2.8 million. On a pro forma basis, for the Lobdell
acquisition only, for fiscal 1997, earnings were insufficient to cover
fixed charges by 6.4 million. On a pro forma basis for the Lobdell and
Howell acquisitions for fiscal 1997, earnings were insufficient to cover
fixed charges by $5.2 million.
(o) Adjusted EBITDA is defined as income (loss) before interest, income
taxes, depreciation and amortization and equipment impairment and
non-recurring charges. For the fiscal year ended March 31, 1997, equipment
impairment and non-recurring charges aggregated $287 and on a pro forma
basis, for the fiscal year ended March 31, 1997, equipment impairment and
non-recurring charges aggregated $5,247, as described in Note (i) above.
Adjusted EBITDA should not be construed as a substitute for income from
operations, net income or cash flow from operating activities for the
purpose of analyzing the Company's operating performance, financial
position and cash flows.
(p) Defined as the ratio of Adjusted EBITDA to total interest expense.
(q) Ratio of net debt to Adjusted EBITDA with net debt consisting of total
debt less cash and cash equivalents and unexpended bond proceeds.
(r) Represents amortization of bond acquisition fees ............... $ 92
=====
31
<PAGE> 37
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following table sets forth (i) the selected consolidated historical
financial data of the Predecessor for the years ended March 31, 1993 and 1994
which were derived from the audited consolidated financial statements of the
Predecessor, (ii) selected consolidated historical financial data of the
Predecessor for the year ended March 31, 1995 and the period from April 1, 1995
through October 27, 1995, (iii) selected consolidated historical financial data
of the Company from October 28, 1995 through March 31, 1996 and the year ended
March 31, 1997, and (iv) selected consolidated historical financial data of the
Company for the three months ended June 30, 1996 and 1997. The selected
consolidated historical financial data for the year ended March 31, 1995; the
period April 1, 1995 through October 27, 1995; and the period October 28, 1995
through March 31, 1996 was derived from the audited consolidated financial
statements of the Predecessor and the Company, which are included elsewhere in
this Prospectus, together with the report of Deloitte & Touche, independent
accountants. The selected consolidated historical financial data for the year
ended March 31, 1997 was derived from the audited consolidated financial
statements of the Company, which are included elsewhere in this Prospectus,
together with the report of Price Waterhouse LLP, independent accountants. The
selected consolidated historical financial data for the three months ended June
30, 1996 and 1997 were derived from unaudited interim financial statements
which, in the opinion of management, have been prepared on the same basis as
the audited financial statements and include all adjustments (all of which are
of a normal recurring nature) that are necessary for a fair presentation of the
results for the period. The following table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Pro Forma Combined Financial Data," and the Consolidated
Financial Statements of the Company and the related notes and other financial
information presented elsewhere in this Prospectus.
32
<PAGE> 38
<TABLE>
<CAPTION>
HISTORICAL
----------
PREDECESSOR
----------------------------------------------------
APRIL 1,
1995 -
MARCH 31, MARCH 31, MARCH 31, OCTOBER 27,
1993(a) 1994(a) 1995 1995
---------- ----------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net sales . . . . . . . . . . . . . . . $ 65,169 $ 65,182 $ 75,097 $ 49,043
Gross profit . . . . . . . . . . . . . 5,970 5,955 4,206 2,148
Selling, general and
administrative . . . . . . . . . . . 1,889 2,164 4,554 3,922
Equipment impairment and non-
recurring charges(b) . . . . . . . . -- -- -- --
-------- ------- ------- --------
Operating income (loss) . . . . . . . . 4,081 3,791 (348) (1,774)
Interest expense . . . . . . . . . . . 1,904 1,658 1,267 1,048
Other income (expense) . . . . . . . . -- -- -- --
Income (loss) before income
taxes . . . . . . . . . . . . . . . . 2,177 2,133 (1,615) (2,822)
Provision (benefit) for income
taxes . . . . . . . . . . . . . . . . 56 706 (349) (938)
-------- ------- ------- --------
Net income (loss) . . . . . . . . . . . $ 2,121 $ 1,427 $(1,266) $(1,884)
======== ======= ======= =======
Balance Sheet Data (end of period):
Cash and cash equivalents . . . . . . . $ 1,683 $ 4,261 $ -- $ --
Accounts receivable . . . . . . . . . . 10,256 7,936 9,835 13,312
Inventories . . . . . . . . . . . . . . 3,205 3,542 4,170 4,429
Total assets . . . . . . . . . . . . . 39,727 36,127 41,523 59,770
Total debt . . . . . . . . . . . . . . 15,595 13,396 12,907 23,233
Redeemable preferred stock . . . . . . -- -- -- --
Total shareholders equity . . . . . . . 12,590 12,406 10,833 9,329
Other Data:
Depreciation and amortization . . . . . $ 1,825 $ 1,747 $ 1,413 $ 919
Capital expenditures . . . . . . . . . 870 920 4,384 5,111
Ratio of earnings to fixed
charges(d). . . . . . . . . . . . . . 2.1x 2.2x -- --
Adjusted EBITDA(e) . . . . . . . . . . 5,906 5,538 1,065 (855)
Gross margin(f) . . . . . . . . . . . . 9.16% 9.14% 5.60% 4.38%
Adjusted EBITDA margin(g) . . . . . . . 9.06 8.50 1.42 NM
<CAPTION>
HISTORICAL
----------
COMPANY
--------------------------------------------------------
OCTOBER 28, THREE MONTHS
1995 - ENDED JUNE 30
MARCH 31, MARCH 31, ----------------
1996 1997 1996 1997
----------- ----------- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net sales . . . . . . . . . . . . . . . $ 35,572 $ 136,861 $ 21,709 $ 91,960
Gross profit . . . . . . . . . . . . . 3,948 11,773 1,257 9,298
Selling, general and
administrative . . . . . . . . . . . 2,235 7,685 703 1,692
Equipment impairment and non-
recurring charges(b) . . . . . . . . -- 287 -- --
-------- --------- -------- ---------
Operating income (loss) . . . . . . . . 1,713 3,801 554 7,606
Interest expense . . . . . . . . . . . 1,096 3,388 592 1,798
Other income (expense) . . . . . . . . -- 2,201 587 37
Income (loss) before income
taxes . . . . . . . . . . . . . . . . 617 2,614 549 5,845
Provision (benefit) for income
taxes . . . . . . . . . . . . . . . . 202 1,065 220 2,338
-------- --------- -------- ---------
Net income (loss) . . . . . . . . . . . $ 415 $ 1,549 $ 329 $ 3,507
======== ========= ======== =========
Balance Sheet Data (end of period):. .
Cash and cash equivalents . . . . . . . $ -- $ 9,671 $ -- $ 58,883
Accounts receivable . . . . . . . . . . 8,338 47,626 11,335 41,511
Inventories . . . . . . . . . . . . . . 3,719 13,411 2,459 14,623
Total assets . . . . . . . . . . . . . 49,200 243,694 50,304 286,653
Total debt . . . . . . . . . . . . . . 26,758 99,829 25,833 142,678
Redeemable preferred stock . . . . . . -- 39,300 -- 39,635
Total shareholders equity . . . . . . . 935(c) 2,341 1,006 5,459
Other Data:
Depreciation and amortization . . . . . $ 687 $ 5,041 $ 772 $ 4,308
Capital expenditures . . . . . . . . . 3,466 3,326 1,203 3,577
Ratio of earnings to fixed
charges(d). . . . . . . . . . . . . . 1.5x 1.7x 1.8x 3.6x
Adjusted EBITDA(e) . . . . . . . . . . 2,400 11,330 1,913 11,951
Gross margin(f) . . . . . . . . . . . . 11.10% 8.60% 5.79% 10.11%
Adjusted EBITDA margin(g) . . . . . . . 6.75 8.28 8.81% 13.00%
</TABLE>
See Notes to Selected Consolidated Historical Financial Data.
33
<PAGE> 39
_______________________________
(a) Reflects the audited financial statements of the Predecessor
prepared in accordance with Canadian generally accepted accounting
principals, with Canadian dollars being converted to a U.S. dollar
equivalent using average Canadian to U.S. foreign currency exchange
rates of 1.2326 and 1.3810, respectively, for the periods ended March
31, 1993 and March 31, 1994.
(b) This provision includes income before taxes for the discontinuance of
Laserweld and Parallel. Management does not anticipate that these costs
will be a part of future operations.
(c) The reduction in equity of $8.4 million from October 27, 1995 to
March 31, 1996, is primarily a result of the elimination of
the Predecessor's equity as a part of the purchase accounting
adjustments made upon the acquisition of the Predecessor on October 27,
1995.
(d) For purposes of this computation, earnings consist of income (loss)
before income taxes plus fixed charges. Fixed charges consist of
interest on indebtedness plus that portion of rental expense
representative of the interest factor. For fiscal 1995, the Company's
earnings were insufficient to cover fixed charges by $1.6 million. For
the period April 1, 1995 to October 27, 1995, the Company's earnings
were insufficient to cover fixed charges by $2.8 million.
(e) Adjusted EBITDA is defined as income (loss) before interest, income
taxes, depreciation and amortization and equipment impairment and non-
recurring charges. For the fiscal year ended March 31, 1997, equipment
impairment and non-recurring charges aggregated $0.3 million. Adjusted
EBITDA should not be construed as a substitute for income from
operations, net income or cash flow from operating activities for the
purpose of analyzing the Company's operating performance, financial
position and cash flows.
(f) Gross margin is defined as gross profit as a percent of net sales for
each of the applicable periods.
(g) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of net
sales for each of the applicable periods.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial condition
and results of operations should be read in conjunction with the "Pro Forma
Combined Financial Data" and the Consolidated Financial Statements of the
Company and notes thereto included elsewhere in this Prospectus. The historical
information for the fiscal year ended March 31, 1997 includes the Lobdell
results of operations for the period subsequent to its acquisition. For
comparative purposes, the financial information for the fiscal year ended March
31, 1996 represents the combination of the results of operations for the
Predecessor for the period from April 1, 1995 to October 27, 1995 together with
the results of operations of the Company from October 28, 1995 through March 31,
1996 (the period subsequent to the acquisition of the Predecessor by the
Company). The financial statements of the Predecessor and the Company in the two
combined periods are not comparable in certain respects due to differences
between the cost basis of certain assets held by the Company versus that of the
Predecessor, resulting in reduced depreciation and amortization charges
subsequent to October 27, 1995, changes in accounting policies and the recording
of certain liabilities at the date of acquisition in connection with the
purchase of the Predecessor by the Company. Accordingly, the combination of
these two periods does not purport to represent what the results of operations
of the Company would have been on a pro forma basis had it acquired the
Predecessor on April 1, 1995.
The June 30, 1997, financial information includes the results of operations
for Lobdell, which was acquired on January 10, 1997 and accounted for using the
purchase method of accounting. Therefore, the statement of operations for the
three months ended June 30, 1996 does not include the operating results of
Lobdell or its subsidiaries.
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996
Net Sales -- Net sales were $92.0 million for three the months ended June
30, 1997, an increase of $70.3 million as compared to $21.7 million for the same
period during the prior year. The increase primarily reflects not only the
Lobdell acquisition, but also the continued strength of the Company's largest
sales segment, SUVs and light trucks. The sales growth was slightly offset by
the impact of the GM Pontiac, Michigan truck assembly plant strike.
Gross Profit -- Gross profit increased to $9.3 million or 10.1% of net
sales for the three months ended June 30, 1997 as compared to $1.3 million or
5.8% of net sales for the prior year. The increase in margins was the result
of higher margins on the incremental Lobdell sales as well as extensive cost
reduction programs and operational efficiencies implemented since the
acquisition of Lobdell. These programs included significant reductions in both
hourly and salaried employees, elimination of excessive overtime and premium
freight and improvements in material handling, production scheduling, and
maintenance programs.
Operating Income -- Operating Income increased to $7.6 million or 8.3%
of net sales for the three months ended June 30, 1997 as compared to $0.6
million or 2.6% of net sales for the prior year. The increase is a direct
result of the Lobdell acquisition and improved gross margin as explained above,
the leveraging of administrative costs over a much larger sales base and a
focus on efficient management.
Net Interest Expense -- Net interest expense was $1.8 million for the
three months ended June 30, 1997, an increase of $1.2 million, as compared to
$0.6 million for the same period last year. The increase was primarily due to
the financing of the Lobdell acquisition on January 10, 1997 ($54.0 million
term debt and assumption of additional subsidiary debt) and the effect of the
issuance of the Notes on June 24, 1997. While the amount of expense increased
from last year, interest expense as a percentage of net sales actually
decreased to 2.0% from the prior year's 2.7%. Interest income increased because
of the investment of unused Note proceeds after issuance and the inclusion of
income on the unexpended IRBs (as defined) proceeds.
Net Income -- Net income was $3.5 million for the three months ended June
30, 1997, an increase of $3.2 million as compared to $0.3 million for the
same period during the prior year. This is the result of the increased margins
on greater net sales and the overall effectiveness of the Company's
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<PAGE> 41
operational, procedural and management policies. Income taxes for each of the
three month ending periods were computed using an effective income tax rate of
40%.
Adjusted EBITDA -- Adjusted EBITDA was $12.0 million for the three
months ended June 30, 1997, an increase of $10.1 million as compared to $1.9
million for the same period during the prior year. The increase reflects the
operating income improvements discussed above, combined with the Company's
absorption of higher depreciation associated with the Lobdell operations.
Including the three months ended June 30, 1997 for Howell, Adjusted EBITDA would
increase to $13.8 million.
Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31, 1996
Net Sales -- Net sales for the year ended March 31, 1997 were $136.9
million, including the net sales of Lobdell from January 10, 1997 (the
"Acquisition Date") through March 31, 1997. This was an increase of $52.3
million or 61.8% as compared to net sales for the fiscal year ended March 31,
1996 of $84.6 million. The increase was due principally to the acquisition of
Lobdell and was partially offset by lower sales volume due to model changeovers.
On a pro forma basis, if Lobdell net sales were included with that of the
Company for the entire fiscal year ended March 31, 1997, net sales would have
been $330.2 million, an increase of $245.6 million as compared to the prior
year, and if Howell net sales were also included for fiscal 1997, net sales
would have been $421.7 million, an increase of $337.1 million as compared to the
prior year.
Gross Profit -- Gross profit was $11.8 million or 8.6% of net sales for the
year ended March 31, 1997 as compared to $6.1 million or 7.2% of net sales for
the year ended March 31, 1996. This represents an increase of $5.7 million, or
93.4% as compared to the prior year. The increase was primarily a result of
higher margins on Lobdell sales for the eighty day period from the Acquisition
Date through March 31, 1997. Gross profit also increased due to (i) workforce
reductions, (ii) improved materials cost management which resulted in lower raw
material costs and (iii) strong sales in the light truck and SUV markets, the
Company's largest sales segments and those which produce its highest margins.
The increased gross profit was partially offset by costs associated with the
production launch of the Saturn Coupe stampings.
On a pro forma basis with Lobdell and Howell included for the entire
fiscal year, gross profit for the fiscal year ended March 31, 1997 would have
been $24.5 million or 7.4% on net sales of $330.2 million and $30.3 million or
7.2% on net sales of $421.7 million, respectively. On a pro forma basis, the
Company's gross margin was lower due to operational inefficiencies existing at
Lobdell prior to acquisition and lower margins experienced by Howell.
Subsequent to the acquisition, actions taken to correct those inefficiencies
improved the Company's gross margin as reflected in the historical results for
the year ended March 31, 1997 where the acquisition of Lobdell is included only
for the period subsequent to the Acquisition Date.
Selling, General and Administrative Expenses ("SG&A") -- SG&A expenses were
$7.7 million or 5.6% of net sales for the year ended March 31, 1997 as compared
to $6.2 million or 7.3% of net sales for the year ended March 31, 1996. The
decrease as a percentage of net sales was a result of efficiencies and cost
reduction programs undertaken by Company management. Specifically, the reduction
in SG&A expenses as a percentage of net sales resulted from a restructuring of
the sales and product engineering functions into customer focused business
units.
Operating Income -- Income from operations was $3.8 million or 2.8% of net
sales for the year ended March 31, 1997 as compared to a deficit of $0.1 million
for the year ended March 31, 1996. The improvement of $3.9 million was a result
of improved gross profit of $5.7 million, partially offset by increased SG&A
expenses of $1.5 million.
Other Income -- Other income for the year ended March 31, 1997 was $2.2
million or 1.6% of net sales due primarily to foreign currency exchange
transactions. No significant other income was earned for the year ended March
31, 1996.
Interest Expense -- Interest expense for the year ended March 31, 1997 was
$3.4 million or 2.5% of net sales, an increase of $1.3 million over the interest
expense for the year ended March 31, 1996. While interest expense for both
periods remained constant at 2.5% of net sales, the increase of $1.3 million was
a result of variations in base lending rates and additional borrowings resulting
from the acquisition of Lobdell.
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Income Tax -- Income tax expense was $1.1 million or 0.8% of net sales for
the period ended March 31, 1997 as compared to a benefit of $0.7 million or 0.8%
of net sales for the year ended March 31, 1996. The increased income tax expense
of $1.8 million is a result of the $4.8 million increase in income before taxes
for the year ended March 31, 1997 as compared to the previous year.
Net Income -- Net income was $1.5 million or 1.1% of net sales for the year
ended March 31, 1997 as compared to a loss of $1.5 million or 1.8% of net sales
for the year ended March 31, 1996. The improvement of $3.0 million was a result
of improved operating income of $3.9 million and increased other income of $2.2
million. The increase in net income was partially offset by increased interest
expense and income taxes of $1.3 million and $1.8 million, respectively.
Adjusted EBITDA -- Adjusted EBITDA was $11.3 million or 8.3% of net sales
for the year ended March 31, 1997. This represented an increase of $9.8 million
over Adjusted EBITDA of $1.5 million or 1.8% of net sales for the year ended
March 31, 1996. The increase was a result of: (i) a $5.7 million improvement in
gross profit, (ii) an increase in other income of $2.2 million and (iii) $3.4
million in additional depreciation. This increase was partially offset by a
$1.5 million increase in SG&A expenses. On a pro forma basis with Lobdell
included for the entire fiscal year, Adjusted EBITDA for the year ended March
31, 1997 was $28.2 million or 8.5% of net sales, an increase of $26.7 million as
compared to the prior year. On a pro forma basis with Lobdell and Howell
included for the entire fiscal year, Adjusted EBITDA for the year ended March
31, 1997 was $31.7 million or 7.5% of net sales, an increase of $30.2 million as
compared to the prior year.
Fiscal Year Ended March 31, 1996 Compared to Fiscal Year Ended March 31, 1995
Net Sales -- Net sales for the year ended March 31, 1996 were $84.6
million, an increase of $9.5 million or 12.6% from $75.1 million in the year
ended March 31, 1995. The increase was due principally to the continued growth
of the light truck and SUV market segments, specifically the production launch
of the K-truck control arm for GM's full size, four wheel drive light trucks and
SUVs.
Gross Profit -- Gross profit was $6.1 million, or 7.2% of net sales, for
the year ended March 31, 1996 as compared to $4.2 million, or 5.6% of net sales,
for the year ended March 31, 1995. This represented an increase of $1.9 million,
or 45.2% as compared to the prior year. The increase in gross profit was a
result of actions taken by management subsequent to the acquisition of the
Predecessor pursuant to which certain manufacturing processes were implemented
to improve efficiency in the production of the GM light truck and SUV control
arms. The improvement in manufacturing was combined with a reduction in the
salary and hourly workforce based upon the implementation of a comprehensive
business plan designed to reduce costs.
Selling, General and Administrative Expenses -- SG&A expenses were $6.2
million or 7.3% of net sales for the year ended March 31, 1996 as compared to
$4.6 million, or 6.1% of net sales, for the year ended March 31, 1995. The
increase was a result of the creation of an in-house sales and engineering team
dedicated to the development of new business. The Predecessor's sales were
primarily handled by a manufacturer's representative firm.
Operating Income -- Income from operations was a deficit of $0.1 million
for the year ended March 31, 1996 as compared to a deficit of $0.3 million for
the year ended March 31, 1995. The improvement of $0.2 million was a result of
increased gross profit and continued strong sales of light trucks and SUVs. The
increase was partially offset by increased SG&A expenses related to the creation
of an in-house sales and engineering group.
Interest Expense -- Interest expense was $2.1 million or 2.5% of net sales
for the year ended March 31, 1996 as compared to $1.3 million or 1.7% of net
sales for the year ended March 31, 1995. The increase of $0.8 million was a
result of increased debt related to the acquisition of the Predecessor by the
Company.
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Income Tax -- Income tax was a benefit of $0.7 million or 0.8% of net sales
for the period ended March 31, 1996 as compared to a benefit of $0.3 million or
0.4% of net sales for the year ended March 31, 1995. The increased benefit of
$0.4 million was primarily the result of the increased loss before taxes for the
year ended March 31, 1996 and changes in the effective tax rate.
Net Income -- The Company had a net loss of $1.5 million or 1.8% of net
sales for the period ended March 31, 1996 as compared to a net loss of $1.3
million or 1.7% of net sales for the year ended March 31, 1995. The increased
loss of $0.2 million was a result of increased SG&A and interest expense of $1.6
million and $0.8 million, respectively, and was partially offset by improved
gross profit.
Adjusted EBITDA -- Adjusted EBITDA was $1.5 million or 1.8% of net sales
for the year ended March 31, 1996 as compared to $1.1 million, or 1.5% of net
sales for the year ended March 31, 1995. The increase of $0.4 million as
compared to the prior year was primarily a result of improved gross profit of
$1.9 million and $0.2 million in additional depreciation. The increase was
partially offset by increased SG&A expenses of $1.6 million.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
Net income adjusted for non-cash charges generated approximately $8.5
million of cash for the year ended March 31, 1997 and $8.1 million for the three
months ended June 30, 1997. Offsetting the increase in cash for fiscal 1997 was
a net increase in accounts receivable, customer tooling and other noncurrent
assets of $7.0 million, a decrease in accrued employee compensation of $6.0
million and other working capital requirements of $3.3 million, resulting in a
use of cash from operating activities of $7.8 million for the year ended March
31, 1997. During fiscal 1997, the Company used approximately $12.3 million for
investing activities including transaction related expenses incurred in
connection with the acquisition of Lobdell and the purchase of property and
equipment. These cash requirements were funded by approximately $29.8 million in
borrowings.
For the three months ended June 30, 1997, cash increased $49.2 million.
Excluding the net proceeds of the Notes, cash increased by $11.6 million during
the period. The increase was substantially a result of increased net income
exclusive of depreciation and amortization, and a level working capital position
resulting from decreases in both accounts receivable and trade accounts payable.
Cash of $3.5 million was used for capital expenditures during the period,
primarily to fulfill existing commitments from the prior year.
The Company has $110.0 million available under the Senior Credit Facility.
At June 30, 1997, the Company had no borrowings outstanding under this line and
$8.5 million in outstanding letters of credit to support the IRBs.
During the quarter, the Company received net proceeds from the Notes, after
payment of approximately $83.1 million to refinance existing indebtedness and
approximately $4.3 million in issuance costs, of $37.6 million. The Company
used approximately $23.2 million toward the acquisition of Howell and related
expenses. The Company neither incurred nor assumed any indebtedness in
addition to the Notes in connection with the acquisition of Howell. The
remainder of the proceeds will be used for general corporate purposes, which
may include other acquisitions.
Capital expenditures were $3.3 million, or 2.4% of net sales for the year
ending March 31, 1997 as compared to $8.6 million, or 10.2% of net sales for the
year ending March 31, 1996. The decrease of $5.3 million or 61.6%, was due
primarily to the timing of capital expenditures relating to major production
launches, specifically the production launch of the Saturn Coupe stampings in
fiscal 1996. On a pro forma basis including Lobdell for the full year, capital
expenditures were $16.2 million or 4.9% of net sales for fiscal 1997 and
principally consisted of investments to support new business (primarily the
press line for the Saturn Coupe and expansion of K-truck control arm capacity),
laser welding equipment, press equipment, safety and maintenance equipment,
robotic automation and other productivity improvement expenditures, and other
items including computers, welding equipment, vehicles and paint equipment. In
addition, on a pro forma basis for Lobdell and the acquisition of Howell the
Company would have had capital expenditures of $19.6 million or 4.6% of net
sales for fiscal 1997.
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Capital expenditures were $3.5 million, or 3.8% of net sales for the
three months ended June 30, 1997 as compared to $1.2 million, or 5.5% of net
sales for the three months ended June 30, 1996. The increase was primarily the
result of expenditures relating to the final payments on certain laser
welding equipment acquired the prior year.
For the remainder of fiscal 1998, the Company's capital expenditures are
expected to be $16.4 million; consisting of a $6.2 million investment to support
new business (primarily the Innovate Program); $3.0 million related to the start
up of the Mexican operations; $2.0 million for the purchase of scrap handling
systems; $0.7 million for robotic automation upgrades; $1.2 million for press
rebuilds; $1.8 million in productivity automation equipment; and $1.5 million in
other expenditures including health and maintenance items, welders and water
pre-treatment system.
The Company has available net operating loss carry forwards at March 31,
1997 and June 30, 1997 for Canadian income taxes. These net operating loss carry
forwards have future Canadian tax benefits of approximately $2.9 million. The
Canadian net operating losses can be carried forward indefinitely. The Company
also has Alternative Minimum Tax Credit carry forwards at March 31, 1997 and
June 30, 1997 applicable to U.S. taxes for $3.0 million, which can be carried
forward indefinitely.
The Company believes that cash generated from operations, together with
amounts available under the Senior Credit Facility and unused portions of the
proceeds from the Offering, will be adequate to meet its debt service
requirements, capital expenditures and working capital needs for the foreseeable
future, although no assurance can be given in this regard. The Company's future
operating performance and ability to service or refinance the Notes and to
extend or refinance its other indebtedness will be subject to future economic
conditions and to financial, business and other factors that are beyond the
Company's control.
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THE EXCHANGE OFFER
Pursuant to the Registration Agreement, the Company agreed (i) to file a
registration statement with respect to a registered offer to exchange the Old
Notes for the New Notes, which will have terms substantially identical in all
material respects to the Old Notes (except that the New Notes will not contain
terms with respect to transfer restrictions, registration rights and certain
interest rate step-up provisions) within 45 days after the date of original
issuance of the Old Notes, and (ii) to use reasonable best efforts to cause such
registration statement to become effective under the Securities Act at the
earliest possible time but in any event no later than 120 days after issuance of
the Old Notes. The interest rate step-up provisions provide that special
interest will accrue on the Notes (in addition to the stated interest on the
Notes) at a rate of 0.25% per annum during the 90-day period immediately
following the occurrence of certain registration defaults relating to the
registration of the New Notes, such as the failure of the registration statement
with respect to the Exchange Offer not becoming effective within 120 days after
the issuance of the Old Notes, and shall increase by 0.25% per annum at the end
of each subsequent 90- day period, but in no event shall such rate exceed 1.00%
per annum. In the event that applicable law or interpretations of the Staff of
the Commission do not permit the Company to file the registration statement
containing this Prospectus or to effect the Exchange Offer, or if certain
holders of the Old Notes notify the Company that they are prohibited by law or
Commission policy from participating in the Exchange Offer, or subject to other
restrictions, the Company will use its reasonable best efforts to cause to
become effective the shelf registration statement with respect to the resale of
the Old Notes and to keep the shelf registration statement effective until the
earlier of three years following the date the shelf registration statement is
declared effective by the Commission and such time as all the Notes have been
sold thereunder. Holders of Old Notes do not have any appraisal or dissenters'
rights in connection with the Exchange Offer.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on__________________, 1997; provided, however, that if the
Company has extended the period of time for which the Exchange Offer is open,
which in no event shall be later than _____________________, 1997, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this Prospectus, $125.0 million aggregate principal
amount of the Old Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about ,
1997 to all holders of Old Notes known to the Company. The Company's obligation
to accept Old Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth under "-- Certain Conditions to the Exchange
Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for any exchange of any Old Notes, by giving written
notice of such extension to the holders thereof. During any such extension, all
Old Notes previously tendered will remain subject to the Exchange Offer and may
be accepted for exchange by the Company. Any Old Notes not accepted for exchange
for any reason will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "-- Certain Conditions to the Exchange Offer." The Company
will give written notice of any extension, amendment, non-acceptance or
termination to the holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
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PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to First Trust National Association,
(the "Exchange Agent") at one of the addresses set forth below under "Exchange
Agent" on or prior to the Expiration Date. In addition, either (i) certificates
for such Old Notes must be received by the Exchange Agent along with the Letter
of Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder of Old Notes to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of Transmittal and delivering
such owner's Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such owner's name or obtain a properly completed
bond power from the registered holder of Old Notes. The transfer of registered
ownership may take considerable time and may not be able to be completed prior
to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instruction" or "Special
Delivery Instructions" on the Letter of Transmittal, or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or an eligible guarantor
institution within the meaning of Rule 17Ad-15 under the Exchange Act which is a
member of one of the recognized signature guarantee programs identified in the
Letter of Transmittal (collectively, "Eligible Institutions"). If Old Notes are
registered in the name of a person other than a signer of the Letter of
Transmittal, the Old Notes surrendered for exchange must be endorsed by, or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by, the registered holder with the signature thereon guaranteed by an
Eligible Institution. If the Letter of Transmittal or any Old Notes or powers
of attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who
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<PAGE> 47
seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer as to any particular Old Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of Old
Notes for exchange must be cured within such reasonable period of time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall any
of them incur any liability for failure to give such notification.
In connection with the tender of the Old Notes, each broker-dealer holder
will represent to the Company in writing that, among other things, the New Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the holder and any beneficial holder, that neither the
holder nor any such beneficial holder has an arrangement or understanding with
any person to participate in the distribution of such New Notes and that neither
the holder nor any such other person is an "affiliate," as defined under Rule
405 of the Securities Act, of the Company. If the holder is not a broker-dealer,
the holder must represent that it is not engaged in nor does it intend to engage
in a distribution of the New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Company has given oral and written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "Exchange Agent" on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book- entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, and (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly competed and
duly executed Notice of Guaranteed Delivery, substantially in the form provided
by the
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<PAGE> 48
Company (by telegram, telex, facsimile, mail or hand delivery), setting forth
the name and address of the holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the Expiration
Date, the certificates for all physically tendered Old Notes, in proper form
for transfer, or a confirmation of book- entry transfer of such Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation"), as the case may be, a properly completed and duly executed
Letter of Transmittal and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the business day prior to the Expiration Date. For a
withdrawal to be effective, a written notice of withdrawal must be received by
the Exchange Agent at one of the addresses set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn
(including the principal amount of such Old Notes), and (where certificates for
Old Notes have been transmitted) specify the name in which such Old Notes are
registered, if different from that of the withdrawing holder. If certificates
for Old Notes have been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing holder must
also submit the serial numbers of the particular certificates to be withdrawn
and a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer described above,
any notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book entry transfer
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility for the Old Notes) as soon as practicable
after withdrawal, rejection of tender or termination of the Exchange Offer.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if, at any time
before the acceptance of such Old Notes for exchange or the exchange of New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the Staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of
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<PAGE> 49
1939, as amended (the "TIA"). In any such event the Company is required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.
EXCHANGE AGENT
First Trust National Association, has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters of Transmittal should be directed
to the Exchange Agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent addressed as follows.
<TABLE>
<S><C>
By Hand (New York depository only) By Hand (all others) By Registered, Certified or Overnight Mail:
First Trust of New York First Trust National Association First Trust National Association
100 Wall Street, 20th Floor Fourth Floor - Bond Drop Window Attn.: Specialized Finance
New York, NY 10005 180 East Fifth Street 180 East Fifth Street
Attn.: Cathy Donohue St. Paul, MN 55101 St. Paul, MN 55101
By First Class Mail: By Facsimile: By Telephone
First Trust National Association (612) 244-1537 (800) 934-6802 Bondholder Services
P.O. Box 64485 (For Eligible Institutions Only)
St. Paul, MN 55101
</TABLE>
DELIVERY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old
Notes, which is the principal amount as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized. The expenses of the Exchange Offer will
be capitalized for accounting purposes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance
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<PAGE> 50
of the Old Notes pursuant to the exemptions from, or in transactions not
subject to, the registration requirements of, the Securities Act and applicable
state securities law. Old Notes not exchanged pursuant to the Exchange Offer
will continue to accrue interest at 10 1/8% per annum and will otherwise remain
outstanding in accordance with their terms. In general, the Old Notes may not
be offered or sold unless registered under the Securities Act, except pursuant
to an exemption from, or in a transaction not subject to, the Securities Act
and applicable state securities laws. The Company does not currently anticipate
that it will register the Old Notes under the Securities Act. However if (i)
the Initial Purchasers so request with respect to Old Notes held by them
following consummation of the Exchange Offer, or (ii) any holder of Old Notes
is not eligible to participate in the Exchange Offer because, for example, such
holder is an affiliate of the Company, does not acquire the New Notes in the
ordinary course of business or has an arrangement to participate in the
distribution of the New Notes, or (iii) any holder of Old Notes that
participates in the Exchange Offer does not receive freely tradable New Notes
in exchange for Old Notes, the Company is obligated to file a shelf
registration statement on the appropriate form under the Securities Act
relating to the Old Notes held by such persons.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes. If any
holder has any arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such holder (i)
could not rely on the applicable interpretations of the staff of the Commission,
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction. A
broker-dealer who holds Old Notes that were acquired for its own account as a
result of market-making or other trading activities may be deemed to be an
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of New Notes. Each such broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge in the Letter of Transmittal that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Agreement and subject to certain specified
limitations therein, to register or qualify the New Notes for offer or sale
under the securities or blue sky laws of such jurisdictions as any holder of the
Notes reasonably requests in writing.
BUSINESS
GENERAL
The Company is a leading Tier 1or direct supplier of high-quality,
engineered metal components, assemblies and modules used by OEMs. The Company's
core products are complex, high value-added products, primarily assemblies
containing multiple stamped parts and various welded, hemmed or fastened
components. These products which range from large structural stampings and
assemblies, including exposed Class A surfaces, to smaller complex welded
assemblies, are used in manufacturing of a variety of SUVs, light and medium
trucks, mini-vans, vans and passenger cars. The Company is the sole source
supplier of these products to its customers. On a pro forma basis, assuming the
acquisition of Lobdell had occurred on April 1, 1996, the Company would have had
net sales of $330.2 million and Adjusted EBITDA of $28.2 million (adjusted for
non- recurring items) for the fiscal year ended March 31, 1997. On a pro forma
basis for the fiscal year ended March 31, 1997, assuming the acquisitions of
Lobdell and Howell had occurred on April 1, 1996, net sales and Adjusted EBITDA
for the Company would have been $421.7 million and $31.7 million, respectively.
The Company had net sales of $92.0 million and
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Adjusted EBITDA of $12.0 million for the three months ended June 30, 1997. On
a pro forma basis, assuming the acquisition of Howell had occurred on April 1,
1997, the Company would have had net sales of $116.6 million and Adjusted
EBITDA of $13.8 million for the three months ended June 30, 1997. Based on pro
forma net sales of $330.2 million, management believes the Company is one of
the ten largest suppliers of stampings to the North American automotive market.
The Company's four largest customers, GM, Ford, CAMI and Saturn, accounted
for approximately 56.0%, 33.0%, 3.0%, and 2.8%, respectively, of the Company's
net sales for the fiscal year ended March 31, 1997, on a pro forma basis for the
Lobdell acquisition, and 55.4%, 31.0%, 2.7%, and 2.8%, respectively, of the
Company's net sales for the three months ended June 30, 1997. The Company has
been providing products directly to GM and Ford for more than 50 years and has
earned outstanding commercial ratings for its high-quality standards, including
GM's Supplier of the Year and Mark of Excellence Awards, Ford's Q1 Award, and
CAMI's President's Award. The Company also sells its products to other Tier 1
suppliers. For the fiscal year ended March 31, 1997, approximately 72.0% of the
Company's net sales, on a pro forma basis, were derived from sales of its
products manufactured for SUVs, mini-vans, vans and light trucks. For the three
months ended June 30, 1997, approximately 73.0% of the Company's net sales were
derived from sales in this sector. In recent years, SUVs, mini-vans, vans and
light trucks have experienced stronger growth in vehicle production as compared
to the passenger car sector, with a CAGR from 1991 to 1996 of approximately 8.7%
as compared to (0.1%) for the passenger car sector. This sector includes those
platforms and models which have strong consumer demand, such as GM's popular C/K
platform (full-size pickups and the Yukon/Tahoe/Suburban models) and the Ford
Ranger, Explorer and Windstar. See Note 15 of the Oxford Automotive, Inc. Notes
to Consolidated Financial Statements for a description of the Company's domestic
and export sales.
Prior to the acquisition of Howell, the Company conducted its business
through two principal operations, BMG and Lobdell. Since acquiring BMG in
October 1995, management of the Company has implemented significant cost
reductions and achieved manufacturing efficiencies, including manpower
reductions consisting of 49 salaried positions (121 to 72) and 78 hourly
employees (570 to 492) and improved materials cost management, which includes
purchasing cost savings, reduction of scrap and inventory costs, and improved
scheduling of production. These actions resulted in a $4.6 million improvement
in Adjusted EBITDA from the fiscal year ended March 31, 1996 to the fiscal year
ended March 31, 1997. The same strategy utilized at BMG was implemented at
Lobdell immediately following its acquisition in January 1997. Since its
acquisition of Lobdell, the Company has achieved cost reductions totaling $13.6
million on an annual basis. In addition to the cost reductions, the Company has
been able to implement a number of manufacturing policies that have improved
productivity and quality, notwithstanding overall staff reductions.
The strategic combination of BMG, Lobdell, and Howell significantly
strengthens the Company's position as a leading Tier 1 supplier of assemblies
and modules to the OEMs. This combination provides the Company with the critical
mass and capabilities in the areas of design and engineering, sales and
marketing, and product expertise which provide the basis for the Company's
strategy of becoming a fully-integrated, global systems supplier. The Company
has already implemented a successful, focused sales and marketing initiative,
which commenced concurrently with the operational improvements at BMG. As a
result, the Company has been awarded the door assemblies and the side panel
package for the Innovate Program. Management believes these awards from Saturn
will generate approximately $60.0 million of annual net sales beginning with the
1999 model year.
The Company currently operates ten manufacturing facilities which offer the
latest technologies in metal stamping, welding and assembly production
equipment, including fully-automated hydraulic and wide-bed press lines (up to
180 inches), robotic welding cells, robotic hemming and autophoretic corrosion
resistant coating. Since 1992, the Company has invested in excess of $93.0
million in capital investments to support sales growth, expand production
capabilities and improve efficiency and flexibility. The Company's diverse line
of over 300 presses that range up to 2,500 tons and state-of-the-art robotic
weld assembly and hemming equipment are capable of manufacturing a broad
assortment of parts and assemblies ranging from simple stampings to full-size,
Class A door and closure panels. The Company is one of a few independent
suppliers that has the ability to produce large, complex stampings, as well as
the technical expertise and automated assembly capabilities that provide high
value-added modules such as door apertures and assemblies, A-pillars, Class A
surface products and control arms.
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BUSINESS STRATEGY
The principal objective of the Company is to be a leading, full-service,
global Tier 1 supplier of integrated systems based on metal forming and related
manufacturing technologies. Management believes that the Company is well
positioned to benefit from two significant trends in the stamping and metal
forming segments of the automotive industry: outsourcing and consolidation.
Outsourcing of metal stamping has increased in response to competitive pressures
on OEMs to improve quality and reduce capital requirements, labor costs,
overhead and inventory. Consolidation among automotive industry suppliers has
occurred as OEMs have more frequently awarded long-term sole source contracts to
the most capable global suppliers. In addition, OEMs are increasingly seeking
systems suppliers who can provide a complete package of design, engineering,
manufacturing and project management support for an integrated system (such as a
front-end system). The Company intends to capitalize on these trends through
internal development and strategic acquisitions. The key elements of the
Company's strategy include the following:
Provide Full-Service Program Capability. The Company is focused on
developing full-service program capabilities. The Company works with OEMs
throughout the product development process from concept and prototype
development through the design and implementation of manufacturing processes.
The Company believes that its ability to provide the package of design,
engineering, prototyping, tooling, blanking, stamping, assembly, corrosion
resistant coating and custom shipping rack fabrication to its customers creates
a unique capability present in only a limited number of suppliers. The Company
believes this capability will enable it to manage large programs, assist it in
reducing customer program launch time, lower customer costs and increase its
margins.
Supply Complex, High Value-Added Systems. As a result of the Company's
technical design and engineering capabilities and its reputation for
highly-efficient manufacturing operations, the Company is able to secure supply
relationships for complex, high value-added products, primarily assemblies and
modules that contain multiple stamped parts and various welded, hemmed or
fastened components. For example, the Company produces the rear door for GM's
Yukon/Tahoe/Suburban vehicles, the lower control arm for GM's four wheel drive
C/K vehicles, the control arm assemblies for Ford's F-Series pickups and
Chrysler's T-300, the radiator support assembly for GM's W-car (Grand Prix,
Century, Lumina, Monte Carlo and Intrigue), and complex A-pillar assemblies for
the Ford Mustang and the Ford Ranger pickup. These complex products typically
generate higher dollar content per vehicle as well as higher margins for the
Company as compared to simple, individual stampings. The Company plans to
capitalize on its ability to develop and provide integrated modules and
assemblies to deliver to the OEMs an integrated product such as a complete door
or front-end system. In addition to doors, radiator supports and Class A surface
components, the Company believes it has unique expertise with respect to control
arms, which will be further developed as a component part of the entire drive
control system.
Focus on High Growth Vehicle Categories. The Company's sales and marketing
efforts have been, and will continue to be, directed toward sectors of the
automotive market that have experienced strong consumer demand. For the fiscal
year ended March 31, 1997, approximately 72.0% of the Company's net sales on a
pro forma basis for the acquisition of Lobdell were derived from sales of
products manufactured for SUVs, mini-vans, vans and light trucks. For the three
months ended June 30, 1997, approximately 73.0% of the Company's net sales were
derived from sales in this sector. The SUV market alone has been the fastest
growing segment in the North American new automotive sales market with 1991 to
1996 vehicle production growth at a CAGR of approximately 18.3%. Similarly, the
Company's sales to the passenger car market have been, and will continue to be,
directed to the segments with stronger sales growth, including Saturn cars. For
example, the growth in vehicle production in the passenger car sector has been
flat during the past five years while production of Saturn cars grew from 1992
to 1996 at a CAGR of approximately 9.2%.
Establish a Global Presence. The Company is actively pursuing strategic
acquisitions and joint-venture opportunities in Europe and intends to pursue
opportunities which will allow the Company to establish a presence in South
America, Asia and other markets in order to serve its customers on a global
basis. Several OEMs have announced certain models designed for the World Car. As
a result, the OEMs have encouraged their existing suppliers to establish foreign
production support for
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World Car programs. This globalization provides access to new customers and
technology, as well as economic cycle diversification. At the request of GM de
Mexico, the Company is in the process of establishing a presence in Mexico. By
October 1, 1997, the Company expects to begin manufacturing and assembling
components for business recently awarded by GM de Mexico at the Company's
leased facility in Saltillo, Mexico. The Company expects to have a new leased
facility in Silao, Mexico operational by February 1, 1998.
Pursue Strategic Acquisitions. In response to the trend in the OEM market
toward "systems suppliers," the Company is focused on making strategic
acquisitions that will enhance the Company's ability to provide integrated
systems (such as a door or front end systems) or otherwise leverage its existing
business by providing additional product, manufacturing and service
capabilities. The Company also intends to pursue acquisitions which will expand
its customer base by providing an entree to new customers, including the North
American operations of Asian and European based OEMs. Consistent with this
strategy, the recent acquisition of Howell provides an entree to Chrysler. The
Company believes that the continuing supplier consolidation in the stamping and
metal forming segments may also provide attractive opportunities to acquire
high- quality companies at favorable prices, including businesses which can be
improved financially through overhead elimination, organizational restructuring,
plant reconfiguration, labor contract negotiations and management changes. The
Company will also pursue acquisitions that enable it to achieve a global
presence.
RECENT DEVELOPMENTS
On August 13, 1997, the Company acquired Howell pursuant to the Merger
Agreement. Howell is a Tier 1 manufacturer of high-quality welded subassemblies
and detailed stampings used primarily in suspension system applications in the
production of SUVs, light trucks, mini-vans, vans and passenger cars. Pursuant
to the Merger Agreement, the shareholders of Howell received approximately $23.2
million in cash. Pursuant to the terms of a supplement to the Indenture, dated
as of August 13, 1997, Howell, a Restricted Subsidiary as defined in the
Indenture, became an additional Subsidiary Guarantor.
For the nine months ended April 30, 1997, Howell had net sales of $72.4
million and Adjusted EBITDA of $4.2 million. Howell's net sales have grown from
$39.4 million for the fiscal year ended July 31, 1992 to $79.2 million for the
fiscal year ended July 31, 1996. On a pro forma basis for fiscal 1997, assuming
the acquisitions of Lobdell and Howell had occurred on April 1, 1996, net sales
and Adjusted EBITDA for the Company would have been $421.7 million and $31.7
million, respectively. On a pro forma basis for the three months ended June 30,
1997, net sales and Adjusted EBITDA for the Company would have been $116.6
million and $13.8 million, respectively.
The acquisition of Howell is consistent with the strategic objectives of
the Company. Howell has a significant relationship with Chrysler and has
developed a niche in designing, engineering and manufacturing suspension control
arms in a variety of configurations and variations depending on drive-train and
suspension application. Approximately 54.0% of Howell's net sales for the nine
months ended April 30, 1997, were derived from acquisitions products used in the
control arm suspension applications. On a pro forma basis assuming the
acquisitions of Lobdell and Howell had occurred on April 1, 1996, the Company
would have derived approximately 23.0% of its net sales from suspension
applications for fiscal 1997.
Howell's expertise in this area is complementary to the Company's and will
enhance its ability to develop key suspension system components. Further,
Howell's sales are principally in the high-growth vehicle categories of SUVs,
light trucks, mini-vans and vans, the same market targeted by the Company. The
acquisition of Howell has also provided the Company an entree to Chrysler and
will strengthen the Company's existing relationship with Ford. Sales to Chrysler
and Ford represented 47.0% and 53.0%, respectively, of Howell's net sales for
the nine months ended April 30, 1997. On a pro forma basis for fiscal 1997,
including the full year effect of Lobdell and Howell, (i) the SUV, mini-van, van
and light truck segment represented approximately 75.0% of net sales and (ii)
the Company's net sales by major customers would have been approximately as
follows: GM 44.0%; Ford 37.0%; Chrysler 11.0%; CAMI 2.0%, and Saturn 2.0%. On a
pro forma basis for the three months ended June 30, 1997, assuming the
acquisition of Howell had occurred April 1 1997, (i) the SUV, mini-van and light
truck
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segment represented approximately 78.2% of net sales and (ii) the Company's net
sales by major customers would have been approximately as follows: GM 43.9%,
Ford 36.2%, Chrysler 9.5%, CAMI 2.1%, and Saturn 2.2%.
Howell's two manufacturing facilities, located in Masury, Ohio and Lapeer,
Michigan, have received Chrysler's Gold Pentastar Award for the 1996 model year
and Ford's Q1 rating. In addition, Howell has achieved certification as a
registrant under the QS-9000 program for its facilities.
INDUSTRY TRENDS
The OEM market to which the Company sells its products consists of the
design, engineering, development, production and sale of parts, components,
assemblies and modules or systems (several components assembled together) for
use in the manufacture of new motor vehicles. The Company's performance, growth
and strategic plan are directly related to certain trends within the OEM market.
Since the 1980s, Chrysler, Ford and GM have each been substantially reducing the
number of suppliers that may bid for awards and outsourcing an increasing
percentage of their production requirements. As a result of these trends, the
OEMs are focusing on the development of long-term, sole source relationships
with suppliers who can provide more complex parts, as well as complete
subassemblies and modules on a just-in-time basis while at the same time meeting
strict quality requirements. These requirements are accelerating the trend
toward consolidation of the OEMs supplier base as those suppliers who lack the
capital and production expertise to meet the OEMs needs, either cease to operate
or are merged with larger suppliers. OEMs benefit from outsourcing because
outside suppliers generally have significantly lower cost structures and, as
described below, suppliers can assist in shortening development periods for new
products.
In addition to consolidation and outsourcing, suppliers are participating
earlier in the design and engineering process, providing research, as well as
product development, product testing/validation, prototyping and tooling. OEMs
generally expect Tier 1 suppliers to (i) participate in the design and
engineering of complex assemblies, (ii) develop the required manufacturing
process to deliver these assemblies on a just-in-time basis, and (iii) assume
responsibility for quality control. This results in shorter development times
for new products, as well as higher quality and lower parts costs.
While the focus today by the OEMs is on quality, cost and service, the
Company believes that the focus for the future will be on global capabilities,
innovation and ability to provide value-added products and systems. The OEMs
have been very successful in making high-quality and low cost a minimum
requirement to remain in the industry, as opposed to a competitive advantage for
certain suppliers.
These evolving requirements can best be addressed by suppliers with
sufficient resources to meet such demands. For full-service suppliers such as
the Company, this environment provides an opportunity to grow by obtaining
business previously provided by other suppliers who can no longer meet the
current or future requirements and expectations of the OEMs and by acquisitions
that further enhance product manufacturing and service capabilities. Although
the requirements of the OEMs have already resulted in significant consolidation
of component suppliers in many product segments, the Company believes that many
opportunities exist for further consolidation within the Company's stamping and
metal forming segment.
PRODUCTS
The Company generates the majority of its net sales from large, complex,
high value-added products, primarily assemblies that generally consist of
multiple parts, which the Company stamps and combines with various welded or
fastened components. The Company is the sole source supplier of these complex
modules and assemblies. These products include unexposed components and
assemblies that are intrinsic to the structural integrity of the vehicle such as
A-pillars, radiator supports, floor pans, toe-to-dash panels, frame and
suspension components and reinforcements. In addition to unexposed components
and assemblies, the Company has the capability and expertise to produce Class A
surfaces such as door assemblies, door apertures, rocker panels, fuel filler
doors, and box side outers, which require virtually flawless finishes and more
stringent customer requirements than unexposed assemblies. These products
require superior engineering and automated manufacturing and assembly
capabilities due to their complexity and high volume requirements.
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<PAGE> 55
While the Company has the capability to produce small stampings, such as
brackets and braces, it focuses on more complex and larger components and
assemblies which typically generate higher dollar content per vehicle as well as
higher margins for the Company. These assemblies, such as the A, B and C
pillars, control arms, door assemblies, door apertures, deck lids and radiator
supports require larger, high tonnage, wide-bed, fully-automated press
capabilities, complex automated weld and hemming assembly, autophoretic
corrosion resistant coating, machining, and automated assembly of purchased
components. The Company was recently awarded the door assembly and side panel
packages for the Innovate Program that are expected to generate approximately
$60.0 million per annum in net sales over a four to five year model life cycle
beginning in 1999. In addition, the Company has been awarded approximately $3.4
million in new business from GM de Mexico providing blanks and assembling floor
assemblies. The floor assemblies program commenced in September and the Company
expects to begin providing blanks starting in the fourth quarter of fiscal 1998.
In addition to these products and services, the Company designs,
fabricates, paints and assembles custom shipping containers and racks for the
automotive industry. These custom racks and containers are typically designed
for specific components and assemblies and are sold both to OEMs as well as Tier
1 and Tier 2 suppliers. Rack sales for fiscal 1997 were approximately $7.8
million on a pro forma basis for the acquisition of Lobdell. Rack sales for the
three months ended June 30, 1997 were approximately $0.5 million.
The chart below details by major customer the Company's major products, the
type of vehicle and the model/platform for which they are produced:
<TABLE>
<CAPTION>
CUSTOMER COMPONENT TYPE MODEL/PLATFORM
-------- --------- ---- --------------
<S> <C> <C> <C>
General Motors Door Assemblies Sport Utility Suburban/Yukon/Tahoe
Door Apertures Suburban/Yukon/Tahoe
Rocker Panels Suburban/Yukon/Tahoe
Lower Control Arms Suburban/Yukon/Tahoe
Door Apertures Light Trucks C/K Full Size Crewcab
Pickup
Lower Control Arms C/K Full Size Four Wheel
Drive
Rocker Panels C/K Full Size Crewcab
Pickup
A-Pillar Inners Mini-Vans Safari/Astro
Struts Safari/Astro
Lower Control Arms Safari/Astro
Toe-to-Dash Panel Medium Duty Commercial Chassis
Floor Assembly Kodiak
Fuel Straps Kodiak
Raised Roof Panel Kodiak
Radiator Supports Passenger Grand Prix, Regal,
Intrigue, Monte
Carlo, Lumina
Floor Panels Corvette/EVI
Wheel Houses EVI
Door Beams Grand Am, Achieva
Sun Roof Assembly Malibu, Cutlass
Saturn Deck Lid Passenger Sport Coupe
Pillar Reinforcement Sport Coupe
Inner Door Panel Sport Coupe
Window Frame
Reinforcement Sport Coupe
Body Side Inners Innovate (1999 Launch)
Door Assemblies Innovate (1999 Launch)
Shelf Panel Innovate (1999 Launch)
Wheel House Inner Innovate (1999 Launch)
</TABLE>
50
<PAGE> 56
<TABLE>
<S> <C> <C> <C>
Ford Rear Floor Reinforcement Sport Utility Explorer/Mountaineer
Reinforced Center Body
Pillar Explorer/Mountaineer
Rear Seat Back/Floor
Assembly Explorer/Mountaineer
B-Pillar Assembly Explorer/Mountaineer
Control Arms Expedition/Navigator
A-Pillar Assemblies Light Trucks Ranger/Mazda
Upper/Lower Back Panels Ranger/Mazda
Back Panel Inside Upper Ranger/Mazda
Roof Panel Assembly Ranger/Mazda
Windshield Header Ranger/Mazda
Box Side Outers Mazda
Control Arms F-Series
Load Floors F-Series (250/350
Supercab)
Rear Floor Cargo Vans/Mini-Vans Windstar
Assemblies
Dash Panels Windstar
Rear Crossmembers Econoline
Cowl Side Windstar/Econoline/Aerostar
Radiator Supports Windstar (1999 Model)
Roof Rails Econoline
A-Pillar Inners Econoline
Floor Pans Econoline/Windstar
Shock Towers Econoline
Fuel Filler Doors Econoline
Ford Control Arms-Front Passenger Cars Contour/Mystique/Mondeo
& Rear (Europe)
Rear Suspension Bar Contour/Mystique/Mondeo
Assembly (Europe)
A-Pillar Assemblies Mustang/Thunderbird/Cougar/
Mark VIII
Pillar Inners Town Car
Frame Rails Mustang
CAMI Rear Bumper Sport Utility Geo Tracker/Suzuki Sidekick
Side Frame Member Geo Tracker/Suzuki Sidekick
(Front/Rear)
Door Inner Reinforcement Geo Tracker/Suzuki Sidekick
Floor Bar Geo Tracker/Suzuki Sidekick
Various Underbody Geo Tracker/Suzuki Sidekick
Components
Rear Cross Members Passenger Cars Geo Metro/Suzuki Swift
Side Sill Geo Metro/Suzuki Swift
Dash Panel Geo Metro/Suzuki Swift
Chrysler Control Arms Sport Utility Jeep Cherokee
Control Arms Light Trucks T-300
</TABLE>
The Company has received purchase orders for production commencing after the
current model year, which production typically continues through the products
lifecycle and is subject to the volume requirements of customers, for the
following major products: (i) the new Saturn Innovate Program, which management
believes will generate approximately $60.0 million of annual net sales beginning
with the 1999 model year; and (ii) the 1999 Ford Windstar-radiator support,
which management believes will generate approximately $7.2 million of annual
net sales.
DESIGN AND ADVANCED ENGINEERING
The Company strives to maintain a technological advantage through investment in
product development and advanced engineering capabilities that utilize
structured program management techniques in an effort to exceed the customer's
expectations for value and service. The Company's engineering staff encompasses
such disciplines as program
51
<PAGE> 57
management, computer aided design ("CAD"), advanced engineering, manufacturing
feasibility, and tooling and process development. Responsibilities of the
Company's engineers include (i) design, (ii) initial prototype development,
(iii) design and implementation of manufacturing processes, (iv) production
feasibility and improvement, and (v) data management.
As the Company's customers continue to outsource larger assembled systems
which must be designed at earlier stages of vehicle development rather than the
smaller parts which are attached to them, the Company is increasingly required
to utilize advanced engineering resources early in the planning process.
Advanced engineering resources create improved engineering design, CAD
feasibility studies, working prototypes and testing programs to meet customer
specifications. Given this increased demand for early involvement in the design
and engineering aspects of production development, the Company established a
new technical center which houses its engineering and design group. The Company
utilizes structured program management based on the Automotive Industry Action
Group sanctioned Advanced Part Quality Planning principles to ensure part
quality in all phases of design and manufacturing. The Company has established
a data management and CAD department which is able to support all major
customer systems. The Company provides "gray box" engineering capabilities in
which the customer has principal design responsibility while the Company's
engineers work closely with the customer in designing the specifications of the
product material, the part to be produced and the tooling required to produce
the finished product. The Company is also on-line with all major customers
which accelerates the process of design changes.
The Company's design and advanced engineering expertise is an important
differentiating factor in maintaining its relationships with and obtaining new
business from Ford and GM and, in management's judgment, was an essential
factor in winning the Innovate Program business.
CUSTOMERS AND MARKETING
The Company supplies its products on a long-term preferred and sole source
basis, primarily to GM (56.0%), Ford (33.0%), CAMI (3.0%), and Saturn (2.8%)
(percentages are approximates of net sales for the fiscal year ended as of March
31, 1997 on a pro forma basis for the Lobdell acquisition), with the remaining
net sales comprised of sales primarily to other automotive suppliers. Through
the acquisition of Howell, Chrysler has also become a significant customer of
the Company. The Company has been providing products directly to
GM and Ford for more than 50 years. The Company has been shipping products to GM
de Mexico from its operations in the United States for several years, and during
1997, at the request of GM de Mexico, the Company will begin manufacturing and
assembling components for GM de Mexico from facilities to be established in
Mexico. The Company believes its presence in Mexico is strategically important
and may lead to several significant new opportunities with GM de Mexico and
other OEMs doing business in Mexico. The Company maintains very strong
relationships with its customers and continually strives to exceed customer
expectations and anticipate customer needs. This approach has enabled the
Company to maintain its status as a long-term supplier with each of its major
customers and as part of a limited group of preferred suppliers invited to bid
for platform work.
With the efforts by the OEMs to reduce the product development cycle time,
top suppliers are increasingly included in the early design and development
stages. For example, the Company obtains many of its new orders through a
presourcing process by which the customer invites one or a few preferred
suppliers to manufacture and design a component, assembly or module that meets
certain price, timing and functional parameters. Upon selection at the
development stage, the Company and the customer typically agree to cooperate in
developing the product to meet the specified parameters. Upon completion of the
development stage and the award of the manufacturing business, the Company
receives a blanket purchase order for those components, assemblies or modules
for the life of a vehicle model or platform, which typically range from five to
seven years. Consequently, the key success factors for OEM suppliers now
include total program management that encompasses state-of-the-art design,
manufacture and delivery of high quality products at competitive prices.
The Company believes that the advanced engineering and sales organization at
the Company's technical center offers services few other suppliers have
available for their customers. The group's primary activities are: (i)
Quoting/Cost
52
<PAGE> 58
Estimating; (ii) Assembly/Automation; (iii) CAD Design and Data Control; (iv)
Tool Process/Design; and (v) Program Management. The sales group is divided
into customer oriented business units, each with a business unit manager
responsible for all facets of customer needs, as well as strategies for growing
their particular customer base. The entire group is dedicated to advanced
technical development and servicing a multitude of customers' needs as one
team.
MANUFACTURING AND FACILITIES
The Company's corporate headquarters, engineering, technical center and
sales offices are currently located in Bloomfield Hills, a suburb of Detroit,
Michigan, close to its core of automotive customers. The Company's ten
manufacturing plants are strategically located in Michigan, Ohio, Indiana,
Tennessee, and Ontario, Canada near OEM manufacturing sites. These
manufacturing plants aggregate approximately 2.1 million square feet in size
and are all Company-owned. In addition, the Company currently leases and
intends to lease additional manufacturing and assembly facilities in Mexico in
connection with the recent award of business from GM de Mexico.
The Company operates over 300 presses ranging from under 100 ton to 2,500
ton capabilities. The Company is capable of producing components and assemblies
from the smallest brackets to full-size, Class A door and closure panels with
its unique wide-bed (180 inch), automated press lines. Production systems
include oil feeders, welding robots, pick and place robots and other
state-of-the-art automation, as well as autophoretic corrosion resistant
coating systems.
As OEMs have increased quality standards and implemented just-in-time and
sequenced delivery/inventory management methods, the consistency of quality, as
well as the timeliness and reliability of shipments by OEM suppliers, have
become crucial in meeting logistical demands of the OEMs and reducing operating
costs of the supplier. The Company has responded by developing and adopting
manufacturing practices that seek to maximize quality and eliminate waste and
inefficiency in its own operations and in those of its customers. The Company's
manufacturing and engineering capabilities enable it to design and build
high-quality, efficient manufacturing systems, processes and equipment. The
Company has invested heavily in its commitment to quality through education of
employees and implementation of cost management and control systems from the
plant floor up.
All suppliers are required to meet numerous quality standards in order to
qualify as a preferred and long-term supplier to the OEM's. The QS-9000
standards were developed by international and domestic automobile and truck
manufacturers to ensure that their suppliers meet consistent quality standards
that can be independently audited. The QS-9000 standards provided for the
standardization and documentation of a suppliers's policies and procedures to
improve supplier efficiencies. Ford, GM and Chrysler require that all suppliers
be certified QS-9000 by the end of 1997 and the Company is scheduled to meet
that requirement.
In addition to the QS-9000 standard, each OEM maintains its own
certification or award system for preferred suppliers based on the
supplier's demonstrated quality, delivery and certain commercial
considerations. Ford requires that all suppliers receive its Q1 rating in
order to quote for new business. GM's Supplier of the Year Award provides
certain competitive advantages to the recipients but is not a requirement for
current GM suppliers to bid on new business. Chrysler allows suppliers who
have received its Gold Pentastar Award to retain any current business when it
is replaced by a new model without competitive bidding. Other OEM's maintain
various award programs for their suppliers that recognize outstanding
performance by the supplier. The Company has received Chrysler's Gold
Pentastar Award for each of its facilities that have Chrysler as a customer.
The Company has the Q1 rating from Ford at 6 of the 7 plants that have Ford as
a customer. Since the acquisition of Lobdell, the Company has initiated steps
necessary to obtain the Q1 rating at the seventh plant, which management
expects to obtain by November 1997.
As part of its full-service supplier development program, the Company is
also undergoing the process of becoming certified by Ford as a Full-Service
Supplier. This certification process, conducted by Ford, ensures that a
Full-Service Supplier meets various Ford requirements relating to quality
standards. The Company expects to be certified by Ford during 1997.
A summary of the Company's major facilities is set forth below:
<TABLE>
<CAPTION>
SIZE
FACILITY (SQ. FT.) EXPERTISE PRIMARY PRODUCTS
- -------- --------- --------- ----------------
<S> <C> <C> <C>
Alma, Michigan 389,000 Class A surfaces, large Radiator Supports,
stampings and complex A-Pillars, Floor Pans, Frame
stampings and assemblies Rails, Deck Lids
Argos, Indiana 386,000 Class A surfaces, large Door Assemblies, Apertures,
panels, complex stampings Floor Panels, Roofs,
</TABLE>
53
<PAGE> 59
<TABLE>
<S> <C> <C> <C>
and assemblies A-Pillars
Corydon, Indiana 200,000 Difficult draw forming Radiator Supports,
and complex stampings A-Pillars, Cowl Sides
and assemblies
Greencastle, 214,000 Large stampings, complex Radiator Supports,
Indiana stampings and A-Pillars, Seat Backs,
assemblies, Control Arms
autophoretic corrosion
resistant coating
Winchester, 185,000 High strength, low-alloy Rocker Panels, various
Indiana material, deep draw structural components
forming and complex
stampings and
assemblies
Cambridge, 290,000 Complex assemblies and Radiator Supports,
Ontario large stampings Control Arms, Door Inners,
A-Pillars
Delhi, Ontario 115,000 High strength, low-alloy Rocker Panels, Control
material, complex Arms, Cross Members
stampings
and assemblies
Athens, Tennessee 100,000 Welding, painting and Structural steel
assembly shipping racks and
containers
Masury, Ohio 150,000 Complex assemblies and Control Arms, Cross
stampings Members, various structural
components
Lapeer, Michigan 85,000 Complex assemblies and Control Arms, Cross
stampings Members, various structural
components
Bloomfield Hills, Executive Offices,
Michigan(1) Sales, Marketing and
Advanced Engineering
</TABLE>
_________________
(1) All properties above are owned, with the exception of the Bloomfield Hills
office. This office is leased for a five-year term ending July 31, 2000 and
requires a monthly rent of $8,580. The Company expects to relocate its
Executive, Sales, Marketing and Engineering Staffs to approximately 22,700
square feet of office space located in Troy, Michigan. This office will be
leased for a five-year term commencing when certain leasehold improvements
are completed and will require a monthly rent of $23,646. The Company
expects to complete this relocation by November 1997. In addition, certain
of the Company's management staff is located at leased office space in
Southfield, Michigan.
RAW MATERIALS
The cost of raw materials represented approximately 53.0% of net sales of
the Company for the fiscal year ended March 31, 1997 on a pro forma basis for
the Lobdell acquisition and approximately 51.8% of net sales of the Company for
the three months ended June 30, 1997. On an annual basis, steel represents
approximately 77.0% of total raw materials purchases. The Company expects to
purchase nearly 378,000 tons of steel in fiscal 1998 for use in its
production. The remaining 23.0% of raw materials purchases is represented by
various purchased parts such as forgings, bushings, ball joints, isolators,
corrosion resistant coating, and various fasteners.
The Company participates in steel purchase programs through Ford, GM and
Chrysler wherein the steel is purchased by the OEM from the steel mill and sold
to the Company at a negotiated price. These purchase programs effectively
neutralize the exposure to steel price increases, as any price increases from
the steel mills are either absorbed by the OEM prior to the Company's purchase
of the steel or such increases are reflected in the Company's purchase of the
steel and passed back to the OEM in the product pricing. The Company currently
participates in such a steel purchase program with Ford and Chrysler for
substantially all of its Ford and Chrysler steel requirements and its Canadian
operations participate in such a program with GM. The Company expects that
substantially all of its additional GM steel requirements, which are currently
covered by
54
<PAGE> 60
annual steel contracts that expire upon the consummation of the GM steel
purchase program, will be covered by the GM steel purchase program by December
1997.
COMPETITION
The market for the Company's products is characterized by strong competition
from both captive OEM suppliers and external, non-captive suppliers. The
Company competes with a limited number of competitors that have the physical
assets and technical resources to produce large bed stampings, complex parts
and subassemblies of multiple parts. The Company's largest competitors include
The Budd Company, a subsidiary of Thyssen AG; Magna International Inc.; Tower
Automotive, Inc.; Aetna Industries, Inc.; Ogihara America Corp., a subsidiary
of Marubeni Corp.; Midway Products Corporation; Active Tool & Manufacturing
Co., Inc.; A.G. Simpson Automotive, Inc.; Mayflower Vehicle Systems Inc.; L&W
Engineering; National Automotive Radiator Manufacturing Company; and divisions
of OEMs with internal stamping and assembly operations.
The Company competes for business at the beginning of the development for
new model platforms, as well as the redesign of current models. This process
can begin from two to five years prior to the introduction of the new model.
After the customer awards a program, that supplier is generally designated as
the sole source supplier for the life of that program, which typically lasts 4
to 5 years for passenger cars and up to 10 years for trucks (particularly for
unexposed structural components and assemblies).
EMPLOYEES
At August 30, 1997, the Company employed approximately 2,600 persons in the
United States and Canada, approximately 560 of whom are employed on a salaried
basis and the balance of whom are hourly employees. Substantially all of the
hourly employees are represented by unions. In the United States, substantially
all of the Company's hourly workers are represented by the UAW, USW and
Teamsters through collective bargaining agreements with eight local unions.
These individual agreements which are from three to five years in length expire
over the period March 1998 through September 2000. The agreement with the UAW
for the Argos, Indiana facility is currently scheduled to expire on March 31,
1998 and the Company expects to enter into early negotiations regarding the UAW
contract at the Argos plant. As of June 30, 1997, substantially all of the
Company's hourly Canadian employees were represented by the CAW. The Company
recently negotiated a new agreement with the CAW for the Cambridge, Ontario
facility which is scheduled to expire on September 30, 2000.
The Company has not experienced any organized work stoppages at any time
during the past ten years. At the present time, the Company believes that its
relations with its employees are good.
REGULATORY MATTERS
The Company's facilities and operations are subject to a wide variety of
federal, state, local, and foreign environmental laws, regulations, and
ordinances, including those related to air emissions, wastewater discharges,
and chemical and hazardous waste management and disposal ("Environmental
Laws"). The Company's operations also are governed by laws relating to
workplace safety and worker health, primarily the Occupational Safety and
Health Act, and foreign counterparts to such laws. In many jurisdictions, these
laws are complex and change frequently. The nature of the Company's operations
exposes it to risks of liabilities or claims with respect to environmental and
worker health and safety matters. At March 31, 1997, the Company has a
liability of approximately $880,000 recorded for estimated costs of known
environmental matters. There can be no assurance that material costs will not
be incurred in connection with such liabilities or claims. See Note 14 to
Oxford Automotive, Inc. Notes to Consolidated Financial Statements.
Based on the Company's experience to date, the Company believes that the
future cost of compliance with existing Environmental Laws (or liability for
known environmental claims) will not have a material adverse effect on the
Company's
55
<PAGE> 61
business, financial condition or results of operations. However, future events,
such as changes in existing Environmental Laws or their interpretation, may
give rise to additional compliance costs or liabilities that could have a
material adverse effect on the Company's business, financial condition or
results of operations. Compliance with more stringent Environmental Laws, as
well as more vigorous enforcement policies of regulatory agencies or stricter
or different interpretations of existing Environmental Laws, may require
additional expenditures by the Company that may be material.
Certain Environmental Laws hold current owners or operators of land or
businesses liable for their own and for previous owners' or operators' releases
of hazardous or toxic substances, materials or wastes, pollutants or
contaminants, including petroleum and petroleum products ("Hazardous
Substances"). Certain laws, including but not limited to CERCLA, may impose
joint and several liability on responsible parties. Because of the Company's
operations, the long history of industrial uses at some of its facilities, the
operations of predecessor owners or operators of certain of the businesses, and
the use, production, and releases of Hazardous Substances at these sites, the
Company is affected by such liability provisions of the Environmental Laws.
Several of the Company's facilities have experienced some level of regulatory
scrutiny in the past and are or may be subject to further regulatory
inspections, future requests for investigation or liability for past disposal
practices.
The Company's Alma, Michigan plant is listed on the Michigan Department of
Environmental Quality ("MDEQ") list of Michigan Sites of Environmental
Contamination. Based on filings with the MDEQ by the current owner of the
petroleum refinery which adjoins the Alma Plant property, the refinery has been
determined by the MDEQ to be the source of certain contamination existing in
the eastern area of the Alma plant property. While the Company is currently
conducting certain remedial activity at its Alma plant in connection with this
contamination, the Company may have claims against the refinery owner relating
to this contamination. While the Company does not expect to incur significant
future costs in connection with this matter, the Company cannot guarantee that
such future costs will not be material.
The Resource Conservation and Recovery Act and the regulations thereunder
("RCRA") regulates the generation, treatment and disposal of hazardous wastes.
In the mid-1980s, the Company, through Lobdell, entered into a Consent
Agreement and Final Order with the United States Environmental Protection
Agency (the "EPA") relating to the final closure of a surface water impoundment
area at the Alma plant under RCRA. The Company has remediated the impoundment
soils and sediments and is now implementing a groundwater monitoring program
with EPA approval under RCRA. In addition, the Company is conducting
groundwater monitoring in a separate section of the Alma plant at which
contaminants have been detected by the Company's consultants. Both of these
programs may be affected by the suspected contamination from the petroleum
refinery described above. While future groundwater remediation costs, if any,
are not expected to be material, the Company cannot predict such costs with
certainty and no guarantee can be made that these costs will not be material.
The Company has been named as a potentially responsible party, along with
several other companies, in connection with a former disposal facility located
in the St. Louis, Michigan area. The Company and certain other named parties,
in cooperation with the State of Michigan, currently are undertaking a remedy
for which they are sharing costs. Groundwater at the site is currently being
monitored and while the costs of groundwater remediation, if any, are not
expected to be material, the Company cannot accurately estimate such costs at
this time. See "Risk Factors -- Environmental Risks and -- Legal Proceedings."
LEGAL PROCEEDINGS
In June 1994, Wilkie Brothers Conveyors, Inc. ("Wilkie") filed a civil
action against Howell in the Michigan Circuit Court for the County of St. Clair
to recover past and future response costs and for declaratory relief in
connection with alleged environmental contamination at a plant formerly owned
by Howell in Marysville, Michigan. Howell sold the plant to plaintiff in 1984.
In September 1995, the City of Marysville filed a civil action against Howell
and Wilkie in the Michigan Circuit Court for the County of St. Clair to require
Howell and Wilkie to take certain clean-up and remediation actions in
connection with contamination at the plant. In 1996, Howell agreed to pay
$575,000 in settlement of the litigation relating to this facility, subject to
governmental approvals. The Company has been advised that the settlement has
been approved and the required consent decree will be filed prior to September
30, 1997.
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<PAGE> 62
The Company is also subject to various claims, lawsuits and administrative
proceedings related to matters arising in the normal course of business. In the
opinion of management, after reviewing the information which is currently
available with respect to such matters and consulting with legal counsel, any
liability which may ultimately be incurred with respect to these matters will
not materially affect the financial position of the Company.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each of the
directors and executive officers of Oxford Automotive. Each director of Oxford
Automotive will hold office until the next annual meeting of shareholders or
until his successor has been elected and qualified. Officers of Oxford
Automotive serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Selwyn Isakow................ 45 Chairman of the Board of Directors
Rex E. Schlaybaugh, Jr....... 48 Vice Chairman of the Board of Directors
and Secretary
Steven M. Abelman............. 46 Director, President and Chief Executive
Officer
Manfred J. Walt............... 44 Director
Donald C. Campion............. 49 Senior Vice President-Chief Financial
Officer
Larry C. Cornwall............. 50 Senior Vice President-Sales and
Engineering
John H. Ferguson.............. 49 Vice President-Financial Operations and
Assistant Secretary
</TABLE>
Selwyn Isakow, Chairman of the Board of Directors. Mr. Isakow has been the
President and a director of Oxford Automotive since its inception in 1995 and
was appointed Chairman of the Board in May 1997. Since 1985, Mr. Isakow has
been the President of The Oxford Investment Group, Inc. ("Oxford Investment"),
a private investment and corporate development company that acquires majority
equity positions on behalf of its principals in industrial products
manufacturing, financial services, niche distribution and other selected
companies. Mr. Isakow generally serves as Chairman of the Board and a director
of all such portfolio companies. Mr. Isakow is also a director of Champion
Enterprises, Inc. and Ramco Gershenson Properties Trust, and serves on the
boards of numerous community organizations. From 1982 to 1985, Mr. Isakow was
the Executive Vice President of Comerica Incorporated, a regional bank holding
company, and from 1978 to 1982, was a principal at Booz, Allen and Hamilton,
management consultants.
Rex E. Schlaybaugh, Jr., Vice Chairman of the Board of Directors and
Secretary. Mr. Schlaybaugh has been the Secretary and a director of Oxford
Automotive since its inception in 1995 and was appointed Vice Chairman of the
Board in May 1997. Mr. Schlaybaugh was appointed the Vice Chairman of Oxford
Investment in May 1997. Mr. Schlaybaugh has been a member of the firm of Dykema
Gossett PLLC since 1985. Mr. Schlaybaugh is also a director of certain other
portfolio companies of Oxford Investment. Mr. Schlaybaugh is currently the
Chairman of the Board of Trustees of Oakland University.
Steven M. Abelman, Director, President and Chief Executive Officer. Mr.
Abelman was appointed President and Chief Executive Officer of Oxford
Automotive in May 1997. Prior to joining Oxford Automotive, Mr. Abelman was
Deputy Chief
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<PAGE> 63
Executive Officer of Bundy North America ("Bundy"), an automotive supplier of
brake and fuel delivery systems, from February 1996 until May 1997 and prior to
that he was President of Bundy from September 1995 until February 1996. From
December 1991 to September 1995, Mr. Abelman was Vice President and General
Manager of Augat Wiring Systems, a manufacturer of automotive wiring systems
and components.
Manfred J. Walt, Director. Mr. Walt has been a director of Oxford Automotive
since May 1997. Mr. Walt has been the Managing Partner-Financial Services of
the Edper Group Limited ("Edper"), a diversified Canadian Merchant Bank with
operations in natural resources, power generating, financial services and real
estate, since 1989. From 1980 to 1989, Mr. Walt served in various capacities
with Edper. Mr. Walt is the Chairman of Consolidated Canadian Express Limited
and Consolidated Enfield Limited, merchant banking affiliates of Edper.
Donald C. Campion, Senior Vice President-Chief Financial Officer. Mr.
Campion was appointed Senior Vice President- Chief Financial Officer of Oxford
Automotive in July 1997. From June 1996 to March 1997, Mr. Campion was the
Senior Vice President and Chief Financial Officer at Delco Electronics
Corporation. From November 1993 to May 1996, Mr. Campion was the Chief
Financial Officer for the services parts division of GM, and from August 1992
to October 1993 was the Financial Director of Performance Analysis for the
North American Operations of GM.
Larry C. Cornwall, Senior Vice President-Sales and Engineering. Mr. Cornwall
was appointed Vice President-Sales and Engineering of Oxford Automotive
in May 1997. From October 1995 to May 1997, Mr. Cornwall was the Senior Vice
President-Sales and Engineering at BMG. From 1991 to 1995, Mr. Cornwall was
Vice President of Sales and Engineering at Veltri International, an automotive
stamper.
John H. Ferguson, Vice President-Financial Operations and Assistant
Secretary. Mr. Ferguson was appointed as a Vice President-Financial Operations
and Assistant Secretary of Oxford Automotive in May 1997. Mr. Ferguson is also
the Chief Financial Officer of BMG, a position he has held since April 1996.
Prior to that time, Mr. Ferguson was with Bundy, where he acted as Group Plant
Manager from 1994 to 1996 and as Corporate Controller from 1992 to 1994. From
1984 to 1992, Mr. Ferguson held several positions with GenCorp. Inc., an
automotive tire supplier, including Controller of the Automotive Products
Group.
Certain of the officers and directors of Oxford Automotive are also
directors or officers of Oxford Automotive subsidiaries.
BOARD COMMITTEES
In the past, the Company has not maintained any committees of the Board of
Directors. On August 4, 1997, the Board of Directors established an Audit
Committee and a Compensation Committee.
The Audit Committee will be responsible for reviewing with management the
financial controls and accounting and reporting activities of the Company. The
Audit Committee will review the qualifications of the Company's independent
auditors, make recommendations to the Board of Directors regarding the
selection of independent auditors, review the scope, fees and results of any
audit and review non-audit services and related fees. The Audit Committee
consists of Messrs. Schlaybaugh and Walt.
The Compensation Committee will be responsible for the administration of
all salary and incentive compensation plans for the officers and key employees
of the Company, including bonuses. Salaries and bonuses will be reviewed by
the Compensation Committee and will be adjusted in light of performance of the
Company, the responsibilities of each of the Company's officers in meeting
corporate performance objectives and other factors, such as length of service
and subjective assessments. The Compensation Committee consists of Messrs.
Isakow and Walt.
DIRECTOR COMPENSATION AND ARRANGEMENTS
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<PAGE> 64
Directors do not currently receive compensation for their services as
directors. However, the Company intends to pay fees to its non-employee
directors and to reimburse the out-of-pocket expenses related to directors'
attendance at each Board and committee meeting. In addition, the Company may
elect to adopt a non-employee director option plan or other similar plan to
provide for grants of stock options or other benefits as a means of attracting
and retaining highly qualified independent directors for the Company. Members
of the Board of Directors are elected pursuant to certain shareholder
agreements by and among the Company and certain of its shareholders. See
"Principal Shareholders -- Shareholder Agreements."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee prior to August 4, 1997.
Accordingly, all determinations with respect to executive compensation were
made by the Board of Directors. Pursuant to the terms of the Indenture, the
Company is not permitted to enter into any transaction (including employee
compensation arrangements) with any Affiliate (as defined) unless the
transaction is arm's length and, if the transaction involves amounts in excess
of $1 million in any one year, the terms of the transaction are set forth in
writing and approved by a majority of the disinterested members of the Board of
Directors. For similar transactions in excess of $5 million in any one year,
an opinion of a recognized investment banking firm that such transaction is
fair, from a financial standpoint, is also required. See "Description of the
Notes -- Certain Covenants." During the last completed fiscal year, Messrs.
Isakow and Schlaybaugh participated in deliberations of the Company's Board of
Directors concerning executive officers compensation. See "Certain
Transactions."
EXECUTIVE COMPENSATION
The following table sets forth certain information as to the compensation
earned by the Company's Chief Executive Officer and the Company's four other
most highly paid officers (the "Named Executive Officers") for the last three
fiscal years.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND TITLE YEAR SALARY BONUS COMPENSATION COMPENSATION
-------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Selwyn Isakow, Chairman(2).... 1997 $ ---- $ ---- $ ---- $ ----
Donald C. Campion, Senior
Vice President-Chief
Financial Officer (3)........ 1997 ---- ---- ---- ----
Larry C. Cornwall,
Senior Vice President-Sales
and Engineering (4).......... 1997 124,196 ---- ---- ----
1996 31,504 24,200
John H. Ferguson, Vice
President-Financial Operations
and Assistant Secretary (5).. 1997 101,250 ---- ---- ----
</TABLE>
- ----------
(1) The Company was formed in October 1995 and, other than as disclosed in the
table above, executive officers of the Company have not received any
compensation.
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<PAGE> 65
(2) Mr. Isakow was the President of the Company from its inception until May
1997, during which time he did not receive any compensation from the
Company. Steven M. Abelman was appointed President and Chief Executive
Officer in May 1997. See "-- Employment Agreements."
(3) Mr. Campion was appointed Senior Vice President-Chief Financial Officer of
Oxford Automotive in July 1997. See "--Employment Agreements."
(4) Mr. Cornwall joined the Company in October 1995 and received compensation
from the Company for a full fiscal year only in 1997.
(5) Mr. Ferguson joined the Company in April 1996 and thus did not receive
compensation from the Company for the full 1997 fiscal year.
EMPLOYMENT AGREEMENTS
As of May 1, 1997, Oxford Automotive and Steven M. Abelman entered into an
Employment and Noncompetition Agreement. The agreement provides that Mr.
Abelman will serve as President and Chief Executive Officer of Oxford
Automotive on an "at-will" basis. The agreement provides that Mr. Abelman will
receive an annual salary of $250,000, will be eligible to receive a bonus of up
to 60% of his salary as determined by the Board of Directors of Oxford
Automotive, and will be entitled to certain fringe benefits. Mr. Abelman has
also agreed not to compete with the Company during the period of his employment
and for two years following the termination of his employment. Upon the
termination of his employment without cause, Mr. Abelman is entitled to
severance payments equal to (a) his annual base salary, if such termination is
prior to May 1, 1999 or (b) 1.5 times his annual base salary, if such
termination is after May 1, 1999.
On November 24, 1995, BMG and Larry C. Cornwall entered into an Employment
Agreement. The agreement provides that Mr. Cornwall will serve as Senior Vice
President-Sales and Marketing of BMG on an "at-will" basis. Mr. Cornwall has
subsequently been appointed as Senior Vice President-Sales and Engineering of
Oxford Automotive. The agreement provides that Mr. Cornwall will receive an
annual salary of $120,000, will be eligible to receive a bonus of up to 50% of
his salary as determined by the Board of Directors of BMG, will be eligible to
participate in the Company's profit sharing plan, and will be entitled to
certain fringe benefits. Upon the termination of the agreement, Mr. Cornwall
will be entitled to continue to receive his base salary for the longer of three
months or the Canadian statutory requirement.
As of July 21, 1997, Oxford Automotive and Donald C. Campion entered into an
Employment and Noncompetition Agreement. The agreement provides that Mr.
Campion will serve as Senior Vice President-Chief Financial Officer of Oxford
Automotive on an "at-will" basis. The agreement provides that Mr. Campion will
receive an annual salary of $210,000, will be eligible to receive a bonus of up
to 50% of his salary as determined by the Board of Directors of Oxford
Automotive, and will be entitled to certain fringe benefits. Mr. Campion has
also agreed not to compete with the Company during the period of his employment
and for two years following the termination of his employment. Upon
termination of his employment without cause, Mr. Campion is entitled to a
severance payment of 50% of his annual base salary, payable over six months,
plus the continuation of certain benefits during this six-month period.
See also "Certain Transactions -- Management Agreements."
PRINCIPAL SHAREHOLDERS
As of August 31, 1997, there were 309,750 issued and outstanding shares of
the Common Stock, without par value, of the Company (the "Common Stock"). The
following table sets forth information as of August 31, 1997 with respect to
the Common Stock beneficially owned by each director of the Company, the Named
Executive Officers, all directors and executive officers of the Company as a
group, and by other holders known to the Company as having beneficial ownership
60
<PAGE> 66
of more than 5% of the Common Stock. Selwyn Isakow and the Company's other
shareholders have entered into certain agreements, each of which contain
substantially identical terms, the result of which gives Mr. Isakow voting
control of 100% of the Company's Common Stock, except under certain
circumstances. See "-- Shareholder Agreements." Unless otherwise specified, the
address for each person is 2000 North Woodward Avenue, Suite 130, Bloomfield
Hills, Michigan 48304.
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OF OF
OWNER SHARES CLASS
----- ------ -----
<S> <C> <C>
Selwyn Isakow (1) . . . . . . . . . 151,474 48.9%
Robert H. Orley . . . . . . . . . . 23,180 7.5%
Rex E. Schlaybaugh, Jr. . . . . . . 12,900 4.2%
Steven M. Abelman (2) . . . . . . . 12,326 4.0%
2365 Franklin Road
Bloomfield Hills, MI 48203
Manfred J. Walt . . . . . . . . . . 1,500 *
Suite 4440 BCE Place
181 Bay Street
Toronto, Ontario, Canada M5J
2T3
Donald C. Campion (2) . . . . . . 4,000 1.3%
2365 Franklin Road
Bloomfield Hills, MI 48203
John H. Ferguson . . . . . . . . . 6,180 2.0%
2365 Franklin Road
Bloomfield Hills, MI 48203
Larry C. Cornwall . . . . . . . . . 7,000 2.3%
2365 Franklin Road
Bloomfield Hills, MI 48203
Gregg L. Orley . . . . . . . . . . 21,840 7.1%
All directors and officers as
a group (7 persons) (1)(2). . . . . 195,380 63.1%
</TABLE>
- ------------------------------
*Less than 1.0%
(1) Includes 135,874 shares owned by Hilsel Investment Company Limited
Partnership, of which Tridec Management, Inc. is General Partner. Mr.
Isakow is the President and a shareholder of Tridec Management, Inc. In
addition, Mr. Isakow may be deemed to be the beneficial owner of all of the
outstanding shares of Common Stock as a result of certain voting power over
such shares pursuant to the shareholder agreements described below and
certain purchase options that may be exercised by Mr. Isakow with respect
to 60,470 outstanding shares of Common Stock.
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<PAGE> 67
(2) Each of Mr. Abelman's and Mr. Campion's Employment and Noncompetition
Agreement with Oxford Automotive provides Oxford Automotive with the right
to repurchase their respective shares of Common Stock if their employment
is terminated for any reason.
SHAREHOLDER AGREEMENTS
Each holder of Common Stock is a party to a shareholder agreement which
provides for certain restrictions on transfer by shareholders and grants
certain other shareholders the option to purchase the shares of a shareholder
upon his death. Each surviving shareholder has the right to exercise this
option within 30 days of the death of a shareholder. The exercising
shareholders will divide the deceased shareholder's shares as they agree or, if
they are not able to agree, pro rata. If the exercising shareholders are not
able to agree on a purchase price with the estate of the deceased shareholder,
then the per share purchase price shall be the per share value of the Company
based on the greater of the value of the Company as a going concern or on a
liquidation basis, as determined by an independent appraisal. The purchase
price shall be paid by an initial cash payment of up to 20% of the purchase
price with the balance paid pursuant to a five-year, unsecured promissory note
bearing interest at the prime rate. The agreements also provide that each
shareholder will grant a proxy to Mr. Isakow to vote all of the shareholder's
shares at any meeting of the Company; provided, however, that if holders of
shares having a majority in interest of the shares of Common Stock determine
that it is in the best interest of all of the shareholders to sell all or
substantially all of the assets of the Company or to cause the Company to merge
or consolidate with or into another corporation, Mr. Isakow shall exercise the
proxies provided to him consistent with that decision. As a result, except as
described above, Mr. Isakow has voting control of 100% of the Company's Common
Stock.
CERTAIN TRANSACTIONS
MANAGEMENT AGREEMENTS
Oxford Investment is a private investment and corporate development company
which is controlled by Mr. Isakow. At the time the Company acquired Lobdell,
Oxford Investment and Lobdell entered into an agreement (the "Lobdell
Agreement") whereby Oxford Investment agreed to perform various consulting,
management, and advisory services on behalf of Lobdell with respect to all
matters relating to or affecting Lobdell's business. Lobdell paid Oxford
Investment an investment banking fee of $300,000 on the date the Company
acquired Lobdell and paid Oxford Investment a management fee of $300,000 per
year. This agreement was terminated upon completion of the Offering. At the
time the Company acquired BMG, Oxford Investment and BMG entered into an
agreement (the "BMG Agreement") whereby Oxford Investment agreed to perform
certain management services for BMG. BMG paid Oxford Investment an investment
banking fee of $200,000 on the date the Company acquired BMG and paid Oxford
Investment a management fee of $200,000 per year. This agreement was also
terminated upon completion of the Offering. Mr. Schlaybaugh is the Vice
Chairman of Oxford Investment.
The Company entered into a new management agreement with Oxford Investment
upon the termination of the Lobdell Agreement and the BMG Agreement. Pursuant
to the terms of this management agreement, Oxford Investment will perform
various consulting, management and financial advisory services on behalf of the
Company. The Company will pay Oxford Investment a monthly management fee of
$83,334 and will pay an investment banking fee, for acquisitions of $2.5
million or more, of 1.0% or 1.25% (for acquisitions outside of North America)
of the aggregate acquisition cost for advice and assistance in connection with
such acquisition, with a minimum fee of $200,000. No investment banking fee
will be paid to Oxford Investment in connection with acquisitions for aggregate
consideration of less than $2.5 million. The initial term of the agreement will
end on December 31, 2001, but will automatically extend for additional one-year
periods thereafter unless either party terminates the agreement. In addition,
pursuant to the management agreement, Oxford Investment will license to the
Company the name "Oxford Automotive" which is owned by Oxford Investment.
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<PAGE> 68
OTHER TRANSACTIONS
As of March 31, 1997, Mr. Abelman issued a note to the Company in connection
with his acquisition of shares of the Company's Common Stock. The principal
amount of the note was $130,000 and the note bears interest at the prime rate
plus 1.0%, which rate is adjusted on March 31 of each year to reflect the then
current prime rate. Principal and interest on the note is payable in equal
annual installments with interest on the unpaid principal, with the final
payment due May 31, 2002.
As of March 31, 1997, the Company issued a subordinated demand note to Mr.
Robert H. Orley in connection with the redemption of certain shares of the
Company's Common Stock. The principal amount of the note was $108,203 and was
paid in full subsequent to March 31, 1997.
RPI, Inc. ("RPI"), a Michigan corporation controlled by the shareholders
of the Company, issued demand notes to Lobdell in the principal amounts of
$250,000, $100,000, $150,000, $200,000, and $300,000, respectively, on May 2,
1997, May 21, 1997, June 6, 1997, June 30, 1997, and July 11, 1997, each bearing
interest at the prime rate plus 1.0% per annum. The notes were issued in
connection with ongoing discussions between RPI and the Company regarding a
possible merger or other similar transaction pursuant to which RPI has agreed
to deal exclusively with the Company and its affiliates until December 31, 1997.
The Company has no immediate plans to demand payment under these notes. The
Company has agreed to extend credit to RPI up to a maximum of $1.7 million,
including the notes referenced above, in accordance with the restrictions on
affiliate transactions set forth in the Indenture.
LEGAL
Rex E. Schlaybaugh, Jr. is a shareholder, the Vice Chairman of the Board and
a director of the Company. Dykema Gossett PLLC, of which Mr. Schlaybaugh is a
member, has performed legal services for the Company since its inception,
including services performed in connection with this Offering. The Company
expects to continue to retain the firm as general counsel after the Exchange
Offer.
DESCRIPTION OF CERTAIN
INDEBTEDNESS AND PREFERRED STOCK
SENIOR CREDIT FACILITY
General. In connection with the Offering, on June 24, 1997, the Company
entered into a credit agreement with NBD Bank, on behalf of itself and as agent
for a syndicate of other lenders, providing for up to $110.0 million (the
"Commitment Amount") of revolving credit availability including the issuance of
letters of credit (the "Senior Credit Facility"). The Company and each
principal operating subsidiary (the "Senior Credit Obligors") are parties to or
guarantors of the Senior Credit Facility. The obligations under the Senior
Credit Facility (the "Obligations") are secured by a first lien on
substantially all the assets of the Senior Credit Obligors. The Obligations and
guaranties of the Senior Credit Obligors (the "Senior Credit Guaranties") will
rank senior to all other indebtedness of the Company, including the Notes.
Availability under the revolver at June 30, 1997 was approximately $101.0
million, reduced for the effect of a Letter of Credit issued for the IRB's (as
defined). Funds under the Senior Credit Facility are available for general
corporate purposes (including acquisitions) and letters of credit.
Interest Rates. Interest on outstanding borrowings under the Senior Credit
Facility is payable monthly and accrues at an annual rate equal to (a) the
Applicable Margin (as defined in the Senior Credit Facility) plus either (i)
the higher of the Prime Rate (as defined in the Senior Credit Facility) or 0.5%
over the Federal Funds Rate or (ii) with respect to Canadian based borrowings,
the higher of the prime rate of First Chicago NBD Bank, Canada or 0.5% over the
BA Rate (the one month bankers' acceptance rates, as further defined in the
Senior Credit Facility), or (b) the London Interbank Offered Rate plus
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<PAGE> 69
the Applicable Margin (a "LIBOR-based Rate") or, with respect to Canadian based
borrowings, the BA Rate. The Applicable Margin will be based upon the Company's
trailing four quarter Ratio of Total Debt to EBITDA (as defined in the Senior
Credit Facility) as follows:
<TABLE>
<CAPTION>
RATIO OF TOTAL APPLICABLE
FUNDED MARGIN
DEBT TO EBITDA PRIME/LIBOR
-------------- -----------------
<S> <C>
> 5.00 .75% / 2.25%
4.51 -- 5.00 .50% / 2.00%
3.76 -- 4.50 .25% / 1.75%
3.01 -- 3.75 0% / 1.50%
<= 3.00 0% / 1.25%
</TABLE>
Maturity and Optional Prepayments. All borrowings under the Senior Credit
Facility mature in June 2003, and the aggregate principal amount outstanding
may not exceed the Commitment Amount at any time. Borrowings under the Senior
Credit Facility may be prepaid at any time without premium or penalty, except
that any prepayment of a LIBOR-based Rate loan that is made prior to the end of
the applicable interest period shall be subject to reimbursement of breakage
costs.
Covenants. The Senior Credit Facility contains certain customary covenants,
including without limitation, reporting and other affirmative covenants;
financial covenants including: ratios of total debt to EBITDA beginning at not
greater than 5.50 to 1.00 and decreasing to not greater than 4.50 to 1.00
after June 30, 1999; net worth of not less than $35.4 million plus a percentage
of the Company's net income plus any proceeds from the issuance of capital
stock; fixed charge coverage ratio beginning at not less than 1.45 to 1.00 and
increasing to not less than 1.60 to 1.00 after March 31, 1998; and interest
coverage ratio beginning at not less than 2.00 to 1.00 and increasing to not
less than 2.25 to 1.00 after March 31, 1999 (each as defined in and calculated
pursuant to the Senior Credit Facility); and negative covenants, including:
restrictions on incurrence of indebtedness (other than as provided for in the
Senior Credit Facility, purchase money debt, the Notes, tooling debt, and
guaranties of certain other debt not to exceed $30.0 million), payment of cash
dividends and other distributions to shareholders, liens in favor of parties
other than the lenders under the Senior Credit Facility, certain guaranties of
obligations of or advances to others, sales of material assets not in the
ordinary course of business, restrictions on mergers and acquisitions, and
capital expenditures (each as defined in and calculated pursuant to the Senior
Credit Facility). The Company remained in compliance with its covenants
following the acquisition of Howell.
Events of Default. The Senior Credit Facility contains customary events of
default including non-payment of principal, interest or fees; violation of
covenants; inaccuracy of representations or warranties; cross-defaults to
certain other indebtedness, including the indebtedness evidenced by the Notes,
and bankruptcy.
Fees. The Company will pay, on a quarterly basis, a per annum fee on the
unused Commitment Amount ranging from 0.25% to 0.50% and letter of credit fees
ranging from 1.25% to 2.25%, in each case based on certain financial ratios of
the Company.
BMG INDEBTEDNESS
The Canadian Department of Regional Industrial Expansion has provided a term
loan (the "IRDP Loan") to BMG, bearing interest at 6% with a final maturity
date of September 1, 2002. The IRDP Loan is unsecured. As of June 30, 1997,
$0.5 million was outstanding with respect to the IRDP Loan.
The Export Development Corporation of Canada ("EDC") has provided a tooling
line facility to BMG (the "EDC Facility"), bearing interest at a fixed rate of
7.36%. The EDC Facility is secured by tooling at BMG relating to specific
Saturn contracts and has a final maturity of September 30, 1999. As of June
30, 1997, $4.3 million was outstanding with respect to the EDC Facility.
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<PAGE> 70
LOBDELL INDEBTEDNESS
Lobdell, through Lewis Emery Capital Corporation, its wholly-owned
subsidiary, has been provided with a term loan facility from NBD Bank (the "LE
Loan"), bearing interest at 0.625% over 90-day LIBOR with a final maturity date
of October 1, 1998. This loan is collateralized by a purchase order from Ford,
which allows for recovery of the term-debt principal and interest,
administrative costs and a predetermined markup. As of June 30, 1997, $2.4
million was outstanding with respect to the LE Loan.
Lobdell, through its subsidiary Creative Fabrication Corporation
("Creative"), is financially obligated to the County of McMinn, Tennessee
pursuant to certain revenue bonds issued on behalf of Creative. On September
27, 1995, the Industrial Development Board of the County of McMinn issued $8.5
million of its Industrial Development Revenue Bonds ("IRBs") for the purpose of
lending the proceeds from the sale of the IRBs to Creative. The IRBs bear
interest at a variable rate which was 5.55% at June 30, 1997. The IRBs are
collateralized by a letter of credit issued by NBD Bank for the benefit of the
trustee under the indenture relating to the IRBs and by a mortgage on the
Creative facilities located in Tennessee and are guaranteed by Lobdell.
Creative is prohibited from paying, declaring or authorizing any dividend if
there is an event of default under the IRB documents. The IRBs mature in
September 2010. As of June 30, 1997, $8.2 million principal amount of IRBs
were outstanding.
PREFERRED STOCK OF LOBDELL
In connection with the Company's acquisition of Lobdell, Lobdell issued
457,541 shares of its Series A $3.00 Cumulative Preferred Stock ( the "Series A
Preferred Stock") and 49,938 shares of its Series B Preferred Stock (the
"Series B Preferred Stock" and together with the Series A Preferred Stock the
"Lobdell Preferred Stock"), each having a stated value of $100 per share, and
all of which are outstanding. Generally, except as required by law, the holders
of Lobdell Preferred Stock have no voting rights. However, the holders of
Series A Preferred Stock, voting as a separate class, are entitled to elect (i)
one director of Lobdell, and (ii) if Lobdell fails to pay three consecutive
semi-annual dividend payments to the holders of Series A Preferred Stock, one
additional director until the payment default is cured. Dividends on the Series
A Preferred Stock accrue annually at the rate of $3.00 per share and are
cumulative, whether or not earned or declared. Lobdell may not declare or pay
any dividend or other distribution, other than in Lobdell Common Stock or other
stock junior to the Lobdell Preferred Stock ("Junior Stock"), with respect to
any Junior Stock unless all accrued, unpaid and current dividends with respect
to the Series A Preferred Stock have either been paid or sufficient funds have
been set apart for such payment. The Series B Preferred Stock is not entitled
to receive any dividends. The Lobdell Preferred Stock has certain liquidation
preferences and the Series A Preferred Stock and Series B Preferred Stock rank
on a parity as to the receipt of such liquidation payments.
The Lobdell Preferred Stock is mandatorily redeemable by Lobdell on December
31, 2006 at a price per share of $100, plus, with respect to the Series A
Preferred Stock, accrued and unpaid dividends to the date of redemption.
However, if the Company does not commence a public offering of its common stock
pursuant to a firm commitment underwritten offering prior to June 30, 2006, the
payment for the shares of Series A Preferred Stock to be redeemed will be $103
per share, plus accrued and unpaid dividends to the date of redemption. In
addition, at the option of the holders of Series A Preferred Stock, if the
Company does not commence such a public offering of its common stock on or
before December 31, 2001, Lobdell must redeem on December 31 of each year
commencing with 2002 up to 20% of the aggregate number of shares of Series A
Preferred Stock held by any such holder immediately prior to December 31, 2002.
The Subsidiary Guaranty of Lobdell ranks senior to the Lobdell Preferred Stock.
See "Description of the Notes -- Subsidiary Guaranties."
In connection with the acquisition of Lobdell by the Company, the Company
has agreed to exchange its common stock for the shares of Series A Preferred
Stock upon the initial public offering ("Initial Public Offering") of its
common stock to the public which is exclusively for cash, subject to an
effective registration statement and underwritten on a firm commitment basis by
one or more underwriters. The holders of Series A Preferred Stock have the
right to exchange up to 50% or some lesser portion of their shares of Series A
Preferred Stock (the "Election Amount") for a number of shares of Company
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<PAGE> 71
common stock equal to (i) the Election Amount, multiplied by (ii) the Exchange
Ratio (the number equal to the redemption value of a share of Series A
Preferred Stock, divided by the price per share to the public of Company common
stock in the Initial Public Offering); provided, however, that, in the
aggregate, holders of Series A Preferred Stock may not receive more than 25% of
the number of shares of Company common stock registered pursuant to the Initial
Public Offering.
Pursuant to the acquisition of Lobdell, the Company obtained various
indemnities for certain purchase price adjustments arising out of a closing
balance sheet and for claims relating to representations and warranties made by
the former common shareholders of Lobdell in connection with the acquisition.
At the closing of such acquisition, 100,000 shares of Series A Preferred Stock
were placed with an escrow agent to fund indemnification claims of the Company.
The Company and the preferred shareholders of Lobdell have settled certain
purchase price adjustments relating to a shareholder's equity adjustment
arising out of the closing balance sheet which has resulted in the cancellation
of 60,002 shares of the escrowed Series A Preferred Stock and 49,938 shares of
Series B Preferred Stock, which represented all of the outstanding Series B
Preferred Stock. The remaining 39,998 shares of escrowed Series A Preferred
Stock were released to the preferred shareholders of Lobdell.
DESCRIPTION OF THE NOTES
GENERAL
The Old Notes were issued under an Indenture (the "Indenture") dated as of
June 15, 1997, among the Company, the Subsidiary Guarantors and First Trust
National Association, as Trustee (the "Trustee"). The terms of the Indenture
apply to the Old Notes and to the New Notes to be issued in exchange therefor
pursuant to the Exchange Offer (all such Notes are referred to herein
collectively as the "Notes").
The following is a summary of certain provisions of the Indenture and the
Notes, a copy of which Indenture and the form of Notes is available upon
request to the Company. The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Indenture, including
the definitions of certain terms therein and those terms made a part thereof by
the Trust Indenture Act of 1939, as amended. Capitalized terms used herein and
not otherwise defined have the meanings set forth in the section "-- Certain
Definitions." As used in this section, the term "Company" refers to Oxford
Automotive, Inc.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company, which, unless otherwise provided by the Company, will be the offices
of the Trustee. At the option of the Company, payment of interest may be made
by check mailed to the addresses of the Holders as such addresses appear in the
Note register.
The Notes are issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF THE NOTES
The Notes are unsecured senior subordinated obligations of the Company,
limited to $160.0 million aggregate principal amount (of which $125.0 million
were issued in the Offering), and will mature on June 15, 2007. The Notes bear
interest at the rate per annum shown on the cover page hereof from June 24,
1997, or from the most recent date to which interest has been paid or provided
for, payable semi-annually to Holders of record at the close of business on the
June 1 or December 1 immediately preceding the interest payment date on June 15
and December 15 of each year, commencing December 15, 1997. The Company will
pay interest on overdue principal at 1% per annum in excess of such rate, and
it will pay interest on overdue installments of interest at such higher rate to
the extent lawful.
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<PAGE> 72
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes are not redeemable
at the option of the Company prior to June 15, 2002. Thereafter, the Notes are
redeemable, at the Company's option, in whole or in part, at any time or from
time to time, upon not less than 30 nor more than 60 days' prior notice mailed
by first-class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), if redeemed during the 12-month period commencing on
June 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2002 . . . . . 105.063%
2003 . . . . . 103.375
2004 . . . . . 101.688
2005 and 100.000
thereafter
</TABLE>
In addition, at any time and from time to time prior to June 15, 2000, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Notes with the proceeds of one or more Public Equity Offerings following
which there is a Public Market, at a redemption price (expressed as a
percentage of principal amount) of 110.125% plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least 65% of the original aggregate
principal amount of the Notes must remain outstanding after each such
redemption.
SELECTION
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate,
although no Note of $1,000 in original principal amount or less will be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note.
SUBSIDIARY GUARANTIES
Each of BMG, BMG Holdings, Inc., an Ontario corporation, Lobdell, Howell,
Winchester Fabrication Corporation, a Michigan corporation, Creative
Fabrication Corporation, a Tennessee corporation, Parallel Group International,
Inc., an Indiana corporation, Laserweld International, L.L.C., an Indiana
limited liability company, Concept Management Corporation, a Michigan
corporation, and Lewis Emery Capital Corporation, a Michigan corporation (each
a "Subsidiary Guarantor"), irrevocably and unconditionally Guarantee, jointly
and severally, as primary obligors and not merely as sureties, on an unsecured
senior subordinated basis the performance and punctual payment when due,
whether at Stated Maturity, by acceleration or otherwise, of all obligations of
the Company under the Indenture and the Notes, whether for payment of principal
of or interest on the Notes, expenses, indemnification or otherwise (all such
obligations guaranteed by the Subsidiary Guarantors being herein called the
"Guaranteed Obligations"). The Subsidiary Guarantors agree to pay, in addition
to the amount stated above, any and all expenses (including reasonable counsel
fees and expenses) incurred by the Trustee or the Holders in enforcing any
rights under the Subsidiary Guaranties. Each Subsidiary Guaranty will be
limited in amount to an amount not to exceed the maximum amount that can be
guaranteed by the applicable Subsidiary Guarantor without rendering such
Subsidiary Guaranty voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally. After the Issue Date, the Company will cause each
Restricted Subsidiary that becomes an obligor or guarantor with respect to any
of the obligations under one or more of the Bank Credit
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Agreements to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Restricted Subsidiary will Guarantee payment of the
Notes. See "Certain Covenants -- Future Subsidiary Guarantors" below.
Each Subsidiary Guaranty is a continuing guarantee and shall (a) remain in
full force and effect until payment in full of all the Guaranteed Obligations,
(b) be binding upon each Subsidiary Guarantor and (c) inure to the benefit of
and be enforceable by the Trustee, the Holders and their successors,
transferees and assigns. A Subsidiary Guaranty will be released upon the sale
of all the capital stock, or all or substantially all of the assets, of the
applicable Subsidiary Guarantor if such sale is made in compliance with the
Indenture.
SUBORDINATION
The indebtedness evidenced by the Notes and the Subsidiary Guaranties
represents senior subordinated obligations of the Company and the Subsidiary
Guarantors, as the case may be. The payment of the principal of, premium (if
any) and interest on the Notes, the payment of any Subsidiary Guaranty and all
other Obligations under or in connection with the Notes, the Subsidiary
Guaranties, the Indenture and/or any related agreements, documents or
instruments are subordinate in right of payment, as set forth in the Indenture,
to the prior payment in full of all Senior Indebtedness of the Company or the
relevant Subsidiary Guarantor, as the case may be, whether outstanding on the
Issue Date or thereafter incurred, including all Obligations of the Company and
such Subsidiary Guarantor under the Senior Credit Facility. The Notes and the
Subsidiary Guaranties are also effectively subordinated to any Secured
Indebtedness of the Company and the Subsidiary Guarantors to the extent of the
value of the assets securing such Indebtedness and to any liabilities of
Subsidiaries other than the Subsidiary Guarantors.
As of June 30, 1997, (i) the Company had no outstanding Senior Indebtedness
(excluding unused commitments under the Senior Credit Facility) and (ii) Senior
Indebtedness of the Subsidiary Guarantors was approximately $17.9 million.
Although the Indenture contains limitations on the amount of additional
Indebtedness that the Company and its Restricted Subsidiaries may incur, under
certain circumstances the amount of such Indebtedness could be substantial and,
in any case, such Indebtedness may be Senior Indebtedness. See "Certain
Covenants -- Limitation on Indebtedness."
Only Indebtedness of the Company or a Subsidiary Guarantor that is Senior
Indebtedness will rank senior to the Notes and the relevant Subsidiary Guaranty
in accordance with the provisions of the Indenture. The Notes and each
Subsidiary Guaranty will in all respects rank pari passu with all other senior
subordinated Indebtedness of the Company and the relevant Subsidiary Guarantor,
respectively. The Company and each Subsidiary Guarantor has agreed in the
Indenture that it will not Incur, directly or indirectly, any Indebtedness that
is subordinate or junior in ranking in right of payment to its Senior
Indebtedness unless such Indebtedness is pari passu with or is expressly
subordinated in right of payment to the Notes. Unsecured Indebtedness is not
deemed to be subordinated or junior merely because it is unsecured.
The Company may not pay, directly or indirectly, principal of, premium (if
any) or interest on, the Notes or any other Obligations under or in connection
with the Notes, the Indenture and/or any related agreements, documents or
instruments or make any deposit pursuant to the provisions described under "--
Defeasance" below and may not repurchase, redeem or otherwise retire any Notes
(collectively, "pay the Subordinated Debt") if (i) any Senior Indebtedness is
not paid when due or (ii) any other default on any such Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, the default has been cured or
waived and any such acceleration has been rescinded or such Senior Indebtedness
has been paid in full in cash. However, the Company may pay the Subordinated
Debt without regard to the foregoing if the Company and the Trustee receive
written notice approving such payment from the Representative of the Senior
Indebtedness with respect to which either of the events set forth in clause (i)
or (ii) of the immediately preceding sentence has occurred and is continuing.
During the continuance of any default (other than a default described in
clauses (i) and (ii) of the second preceding sentence) with respect to any
Senior Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
the Company may not pay the Subordinated Debt for a period (a "Payment Blockage
Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written
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notice (a "Blockage Notice") of such default from the Representative of the
holders of such Designated Senior Indebtedness specifying an election to effect
a Payment Blockage Period and ending 180 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice has been waived in
writing or (iii) because such Designated Senior Indebtedness has been repaid in
full in cash). Notwithstanding the provisions described in the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders has accelerated the maturity of such
Designated Senior Indebtedness, the Company may resume payments on the Notes
after the end of such Payment Blockage Period. The Notes shall not be subject
to more than one Payment Blockage Period in any consecutive 360-day period,
irrespective of the number of such nonpayment defaults with respect to
Designated Senior Indebtedness during such period.
Upon any payment or distribution of the assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon a total
or partial liquidation or dissolution or reorganization of or similar
proceeding relating to the Company or its property or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding, the holders of
Senior Indebtedness will be entitled to receive payment in full in cash of such
Senior Indebtedness before the Noteholders are entitled to receive any payment,
and, until the Senior Indebtedness is paid in full in cash, any payment or
distribution to which Noteholders would be entitled but for the subordination
provisions of the Indenture will be made to holders of such Senior Indebtedness
as their interests may appear. If a payment or distribution is made to
Noteholders that, due to the subordination provisions, should not have been
made to them, such Noteholders are required to hold it in trust for the holders
of Senior Indebtedness and pay it over to them as their interests may appear.
The obligations of a Subsidiary Guarantor under its Subsidiary Guaranty are
senior subordinated obligations. As such, the rights of Noteholders to receive
payment by a Subsidiary Guarantor pursuant to its Subsidiary Guaranty will be
subordinated in right of payment to the rights of holders of Senior
Indebtedness of such Subsidiary Guarantor. The terms of the subordination
provisions described above with respect to the Company's obligations under the
Notes apply equally to a Subsidiary Guarantor and the obligations of such
Subsidiary Guarantor under its Subsidiary Guaranty.
By reason of the subordination provisions contained in the Indenture, in the
event of insolvency, creditors of the Company or a Subsidiary Guarantor who are
holders of Senior Indebtedness of the Company or a Subsidiary Guarantor, as the
case may be, may recover more, ratably, than the Noteholders, and creditors of
the Company who are not holders of Senior Indebtedness may recover less,
ratably, than holders of Senior Indebtedness and may recover more, ratably,
than the Noteholders.
The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government Obligations held in
trust by the Trustee for the payment of principal of and interest on the Notes
pursuant to and in accordance with the provisions described under "--
Defeasance."
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have the right
to require that the Company repurchase all or a portion of such Holder's Notes
at a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), in accordance with the provisions of
the next paragraph.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's Notes at a purchase price in cash equal to 101% of
the principal amount outstanding at the repurchase date plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant interest
payment date); (2) the circumstances and relevant facts and relevant financial
information regarding such Change of Control; (3) the repurchase date (which
shall be no earlier than 30 days nor
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later than 60 days from the date such notice is mailed); and (4) the
instructions determined by the Company, consistent with the covenant described
hereunder, that a Holder must follow in order to have its Notes repurchased.
The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to the covenant described
hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
the Company shall comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
The occurrence of certain of the events which would constitute a Change of
Control would constitute a default under the Senior Credit Facility. Future
Senior Indebtedness of the Company may contain prohibitions of certain events
which would constitute a Change of Control or require such Senior Indebtedness
to be repurchased upon a Change of Control. Moreover, the exercise by the
Holders of their right to require the Company to repurchase the Notes could
cause a default under such Senior Indebtedness, even if the Change of Control
itself does not, due to the financial effect of such repurchase on the Company.
Finally, the Company's ability to pay cash to the Holders upon a repurchase may
be limited by the Company's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
repurchases required in connection with a Change of Control. The Company's
failure to purchase the Notes in connection with a Change in Control would
result in a default under the Indenture which would, in turn, constitute a
default under the Senior Credit Facility. In such circumstances, the
subordination provisions in the Indenture would likely restrict payment to the
Holders of the Notes.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Old Notes have been issued and the New Notes
will initially be issued in the form of a Global Note. The Global Note will be
deposited with, or on behalf of, the Depository and registered in the name of
the Depository or its nominee. Except as set forth below, the Global Note may
be transferred, in whole and not in part, only to the Depository or another
nominee of the Depository. Investors may hold their beneficial interests in
the Global Note directly through the Depository if they have an account with
the Depository or indirectly through organizations which have accounts with the
Depository.
New Notes issued in exchange for Old Notes that were (i) originally issued
to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act) who are not qualified institutional buyers
("QIBs") or (ii) issued as described below under "-- Certificated Notes" will
be issued in definitive form. Upon the transfer of a Note in definitive form,
such Note will, unless the Global Note has previously been exchanged for Notes
in definitive form, be exchanged for an interest in the Global Note
representing the principal amount of Notes being, transferred.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company and organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and "a clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934 (the "Exchange Act"). The Depository was created to hold securities
of institutions that have accounts with the Depository ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depository's participants include
securities brokers and dealers (which may include the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to the Depository's book-entry system is also available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.
Upon the issuance of a Global Note, the Depository will credit, on its
book-entry registration and transfer system, the principal amount of the Notes
represented by such Global Note to the accounts of participants. The accounts
to be credited
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shall be designated by the Initial Purchasers of such Notes. Ownership of
beneficial interests in the Global Note will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depository (with respect to participants' interest) and such participants (with
respect to the owners of beneficial interests in the Global Note other than
participants). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to transfer or
pledge beneficial interests in a Global Note.
So long as the Depository, or its nominee, is the registered holder and
owner of such Global Note, the Depository or such nominee, as the case may be,
will be considered the sole legal owner and holder of the related Notes for all
purposes of such Notes and the Indenture. Except as set forth below, owners of
beneficial interests in a Global Note will not be entitled to have the Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of certificated Notes in definitive
form and will not be considered to be the owners or holders of any Notes under
such Global Note. The Company understands that under existing industry
practice, in the event an owner of a beneficial interest in a Global Note
desires to take any action that the Depository, as the holder of a Global Note,
is entitled to take, the Depository would authorize the participants to take
such action, and that the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of principal of and interest on Notes represented by a Global Note
registered in the name of and held by the Depository or its nominee will be
made to the Depository or its nominee, as the case may be, as the registered
owner and holder of such Global Note.
The Company expects that the Depository or its nominee, upon receipt of any
payment of principal of or interest on a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records
of the Depository or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in a Global Note held through
such participants will be governed by standing instructions and customary
practices and will be the responsibility of such participants. The Company will
not have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in a Global
Note for any Note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between the Depository and its participants or the relationship
between such participants and the owners of beneficial interests in such Global
Note owned through such participants.
Unless and until it is exchanged in whole or in part for certificated Notes
in definitive form, a Global Note may not be transferred except as a whole by
the Depository to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of the
Depository, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trustee nor the Company will have any responsibility for the performance by the
Depository or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTIFICATED NOTES
The Notes represented by a Global Note are exchangeable for certificated
Notes in definitive form of like tenor as such Notes in denominations of
U.S.$1,000 and integral multiples thereof if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such
Global Note or if at any time the Depository ceases to be a clearing agency
registered under the Exchange Act, (ii) the Company in its discretion at any
time determines not to have all of the
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Notes represented by a Global Note or (iii) a default entitling the holders of
the Notes to accelerate the maturity thereof has occurred and is continuing.
Any Note that is exchangeable pursuant to the preceding sentence is
exchangeable for certificated Notes issuable in authorized denominations and
registered in such names as the Depository shall direct. Subject to the
foregoing, a Global Note is not exchangeable, except for a Global Note of the
same aggregate denomination to be registered in the name of the Depository or
its nominee.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) The Company shall not, and shall not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness
unless, immediately after giving effect to such Incurrence, the Consolidated
Coverage Ratio exceeds 2.00 to 1 if such Indebtedness is Incurred prior to June
15, 1999 or 2.25 to 1 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur any or all of the following Indebtedness: (1)
Indebtedness and other Obligations Incurred pursuant to the Bank Credit
Agreements; provided, however, that, after giving effect to any such
Incurrence, the aggregate principal amount of such Indebtedness and other
Obligations then outstanding does not exceed the greater of (i) $110 million
and (ii) the sum of (x) 60% of the net book value of the inventory of the
Company and its Restricted Subsidiaries, and (y) 90% of the net book value of
the accounts receivable of the Company and its Restricted Subsidiaries, in each
case determined in accordance with GAAP, and (z) $70 million; (2) Indebtedness
represented by the Notes issued in the Offering (and the New Notes); (3)
Indebtedness outstanding on the Issue Date (other than Indebtedness described
in clause (1) of this paragraph), including, without limitation, the Existing
Preferred Stock; (4) Indebtedness of the Company owed to and held by any Wholly
Owned Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or a Wholly Owned Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Stock which results in any such
Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or a Wholly
Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Indebtedness by the issuer thereof; (5) Refinancing Indebtedness in
respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to
clause (1), (2), (3) or this clause (5); (6) Indebtedness in respect of
performance bonds, bankers' acceptances, letters of credit and surety or appeal
bonds entered into by the Company and the Restricted Subsidiaries in the
ordinary course of their business; (7) Hedging Obligations consisting of
Interest Rate Agreements and Currency Agreements entered into in the ordinary
course of business and not for the purpose of speculation; provided, however,
that, in the case of Currency Agreements and Interest Rate Agreements, such
Currency Agreements and Interest Rate Agreements do not increase the
Indebtedness of the Company outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable thereunder; (8) Purchase Money
Indebtedness and Capital Lease Obligations Incurred to finance the acquisition
or improvement by the Company or a Restricted Subsidiary of any assets in the
ordinary course of business and which do not exceed $15 million in the
aggregate at any time outstanding; (9) Indebtedness and other Obligations
represented by the Subsidiary Guaranties and Guarantees of Indebtedness
Incurred pursuant to the Bank Credit Agreements; (10) Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business, provided
that such Indebtedness is extinguished within five business days of Incurrence;
(11) Indebtedness of the Company and its Restricted Subsidiaries arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, in any case Incurred in connection with the disposition of
any assets of the Company or any Restricted Subsidiary (other than Guarantees
of Indebtedness Incurred by any Person acquiring all or any portion of such
assets for the purpose of financing such acquisition), in a principal amount
not to exceed the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition; (12) Tooling
Indebtedness; and (13) Indebtedness in an aggregate principal amount which,
together with all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by clauses (1) through (12) above or paragraph (a)),
does not exceed $20 million.
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(c) Notwithstanding the foregoing, the Company shall not, and shall not
permit any Restricted Subsidiary to, Incur any Indebtedness pursuant to the
foregoing paragraph (b) if the proceeds thereof are used, directly or
indirectly, to Refinance (i) any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Notes and the Subsidiary Guaranties,
as applicable, to at least the same extent as such Subordinated Obligations or
(ii) any Senior Subordinated Indebtedness unless such Indebtedness shall be
Senior Subordinated Indebtedness or shall be subordinated to the Notes and the
Subsidiary Guaranties, as applicable.
(d) For purposes of determining compliance with the foregoing covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one
of the types of Indebtedness described above, the Company, in its sole
discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses
and (ii) an item of Indebtedness may be divided and classified in more than one
of the types of Indebtedness described above.
(e) Notwithstanding paragraphs (a) and (b) above, the Company shall not, and
shall not permit any Subsidiary Guarantor to, Incur (i) any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness of the Company or such Subsidiary Guarantor, as applicable,
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness or (ii)
any Secured Indebtedness that is not Senior Indebtedness of the Company or such
Subsidiary Guarantor, as applicable, unless contemporaneously therewith
effective provision is made to secure the Notes or the Subsidiary Guaranty, as
applicable, equally and ratably with such Secured Indebtedness for so long as
such Secured Indebtedness is secured by a Lien.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to make a Restricted
Payment if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default shall have occurred and be continuing (or
would result therefrom); (2) the Company is not able to Incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of the covenant described under
"-- Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted
Payment together with all other Restricted Payments (the amount of any payments
made in property other than cash to be valued at the fair market value of such
property, as determined in good faith by the Board of Directors) declared or
made since the Issue Date would exceed the sum of: (A) 50% of the Consolidated
Net Income accrued during the period (treated as one accounting period) from
the beginning of the fiscal quarter immediately following the fiscal quarter
during which the Notes are originally issued to the end of the most recent
fiscal quarter prior to the date of such Restricted Payment for which financial
statements are available (or, in case such Consolidated Net Income accrued
during such period (treated as one accounting period) shall be a deficit, minus
100% of such deficit); (B) the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Company); (C) the amount by which Indebtedness of the Company
or its Restricted Subsidiaries is reduced on the Company's balance sheet upon
the conversion or exchange (other than by a Subsidiary of the Company)
subsequent to the Issue Date, of any Indebtedness of the Company or its
Restricted Subsidiaries convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of any cash, or the
fair value of any other property, distributed by the Company or any Restricted
Subsidiary upon such conversion or exchange); (D) an amount equal to the sum of
(i) the net reduction in Investments in Unrestricted Subsidiaries resulting
from dividends, repayments of loans or advances or other transfers of assets
subsequent to the Issue Date, in each case to the Company or any Restricted
Subsidiary from Unrestricted Subsidiaries, and (ii) the portion (proportionate
to the Company's equity interest in such Subsidiary) of the fair market value
of the net assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made (and treated as a Restricted Payment) by
the Company or any Restricted Subsidiary in such Unrestricted Subsidiary; and
(E) $5 million.
(b) The provisions of the foregoing paragraph (a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company or any Restricted Subsidiary made in exchange for, or out of the
proceeds of the
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substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of the Company); provided, however, that (A) such purchase or redemption shall
be excluded from the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale shall be excluded from the calculation of
amounts under clause (3)(B) of paragraph (a) above; (ii) any purchase or
redemption of (A) Subordinated Obligations of the Company made in exchange for,
or out of the proceeds of the substantially concurrent sale of, Indebtedness of
the Company which is permitted to be Incurred pursuant to paragraphs (b) and
(c) of the covenant described under "-- Limitation on Indebtedness" or (B)
Subordinated Obligations of a Restricted Subsidiary made in exchange for, or
out of the proceeds of the substantially concurrent sale of, Indebtedness of
such Restricted Subsidiary or the Company which is permitted to be Incurred
pursuant to paragraphs (b) and (c) of the covenant described under "--
Limitation on Indebtedness"; provided, however, that such purchase or
redemption shall be excluded from the calculation of the amount of Restricted
Payments; (iii) any purchase or redemption of (A) Disqualified Stock of the
Company made in exchange for, or out of the proceeds of the substantially
concurrent sale of, Disqualified Stock of the Company or (B) Disqualified Stock
of a Restricted Subsidiary made in exchange for, or out of the proceeds of the
substantially concurrent sale of, Disqualified Stock of such Restricted
Subsidiary or the Company; provided, however, that (1) at the time of such
exchange, no Default or Event of Default shall have occurred and be continuing
or would result therefrom and (2) such purchase or redemption will be excluded
from the calculation of the amount of Restricted Payments; (iv) dividends paid
within 60 days after the date of declaration thereof if at such date of
declaration such dividend would have complied with this covenant; provided,
however, that at the time of payment of such dividend, no other Default shall
have occurred and be continuing (or would result therefrom); provided, further,
however, that such dividend shall be included in the calculation of the amount
of Restricted Payments; (v) the repurchase of shares of, or options to purchase
shares of, Capital Stock of the Company or any of its Subsidiaries from
officers, former officers employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted transferees
of such employees, former employees, directors or former directors), pursuant
to the terms of the agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell, or are granted the option to purchase or sell,
shares of such common stock; provided, however, that the aggregate amount of
such repurchases shall not exceed $2.5 million in any one year and $5.0 million
in the aggregate; provided, further, however, that (1) at the time of such
repurchase, no Default or Event of Default shall have occurred and be
continuing or would result therefrom and (2) all such repurchases shall be
included in the calculation of the amount of Restricted Payments; or (vi)
dividends and redemptions required to be made with respect to the Existing
Preferred Stock; provided, however, that (1) at the time of any such dividend
or redemption, no Default or Event of Default shall have occurred and be
continuing or would result therefrom and (2) all such dividends and redemptions
shall be included in the calculation of the amount of Restricted Payments.
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary (a) to pay dividends or make any other distributions on its Capital
Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to
the Company, (b) to make any loans or advances to the Company or (c) transfer
any of its property or assets to the Company, except: (i) any encumbrance or
restriction pursuant to an agreement in effect at or entered into on the Issue
Date; (ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by
such Restricted Subsidiary which was entered into on or prior to the date on
which such Restricted Subsidiary was acquired by the Company (other than as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company) and outstanding on such date; (iii)
any encumbrance or restriction pursuant to an agreement effecting a Refinancing
of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or
(ii) of this covenant (or effecting a Refinancing of such Refinancing
Indebtedness pursuant to this clause (iii)) or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this covenant or this clause
(iii); provided, however, that the encumbrances and restrictions with respect
to such Restricted Subsidiary contained in any such refinancing agreement or
amendment are no more restrictive in any material respect than the encumbrances
and restrictions with respect to such Restricted Subsidiary contained in such
agreements; (iv) any such encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold interests to the extent
such provisions restrict the transfer of the lease or the property leased
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thereunder; (v) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness (other than Tooling
Indebtedness) of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements or
mortgages; (vi) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; and (vii) any restriction
imposed by applicable law.
Limitation on Sales of Assets and Subsidiary Stock. The Company shall not,
and shall not permit any Restricted Subsidiary to, consummate any Asset
Disposition unless the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash consideration), as
determined in good faith by the Board of Directors, of the shares and assets
subject to such Asset Disposition and at least 75% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form
of cash or cash equivalents. For the purposes of this covenant, the following
are deemed to be cash and cash equivalents: (x) the assumption of Indebtedness
of the Company or any Restricted Subsidiary and the release of the Company or
such Restricted Subsidiary from all liability on such Indebtedness in
connection with such Asset Disposition and (y) securities received by the
Company or any Restricted Subsidiary from the transferee that are immediately
converted by the Company or such Restricted Subsidiary into cash.
With respect to any Asset Disposition occurring on or after the Issue Date
from which the Company or any Restricted Subsidiary receives Net Available
Cash, the Company or such Restricted Subsidiary shall (i) within 360 days after
the date such Net Available Cash is received and to the extent the Company or
such Restricted Subsidiary elects (or is required by the terms of any Senior
Indebtedness) to (A) apply an amount equal to such Net Available Cash to
prepay, repay or purchase Senior Indebtedness of the Company or such Restricted
Subsidiary, in each case owing to a Person other than the Company or any
Affiliate of the Company, or (B) invest an equal amount, or the amount not so
applied pursuant to clause (A), in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary) and (ii) apply
such excess Net Available Cash (to the extent not applied pursuant to clause
(i)) as provided in the following paragraphs of the covenant described
hereunder; provided, however, that in connection with any prepayment, repayment
or purchase of Senior Indebtedness pursuant to clause (A) above, the Company or
such Restricted Subsidiary shall retire such Senior Indebtedness and shall
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased. The
amount of Net Available Cash required to be applied pursuant to clause (ii)
above and not theretofore so applied shall constitute "Excess Proceeds."
Pending application of Net Available Cash pursuant to this provision, such Net
Available Cash shall be invested in Temporary Cash Investments.
If at any time the aggregate amount of Excess Proceeds not theretofore
subject to an Excess Proceeds Offer (as defined below) totals at least $5
million, the Company shall, not later than 30 days after the end of the period
during which the Company is required to apply such Excess Proceeds pursuant to
clause (i) of the immediately preceding paragraph (or, if the Company so
elects, at any time within such period), make an offer (an "Excess Proceeds
Offer") to purchase from the Holders on a pro rata basis an aggregate principal
amount of Notes equal to the Excess Proceeds (rounded down to the nearest
multiple of $1,000) on such date, at a purchase price equal to 100% of the
principal amount of such Notes, plus, in each case, accrued interest (if any)
to the date of purchase (the "Excess Proceeds Payment"). Upon completion of an
Excess Proceeds Offer the amount of Excess Proceeds remaining after application
pursuant to such Excess Proceeds Offer, (including payment of the purchase
price for Notes duly tendered) may be used by the Company for any corporate
purpose (to the extent not otherwise prohibited by the Indenture).
The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
thereunder in the event that such Excess Proceeds are received by the Company
under the covenant described hereunder and the Company is required to
repurchase Notes as described above. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of the covenant
described hereunder, the
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Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
Limitation on Affiliate Transactions. (a) The Company shall not, and shall
not permit any Restricted Subsidiary to, enter into or permit to exist any
transaction or series of related transactions (including the purchase, sale,
lease or exchange of any property, employee compensation arrangements or the
rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless the terms thereof (1) are no less favorable to the Company
or such Restricted Subsidiary than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not such an
Affiliate, (2) if such Affiliate Transaction (or series of related Affiliate
Transactions) involve aggregate payments in an amount in excess of $1 million
in any one year, (i) are set forth in writing, (ii) comply with clause (1) and
(iii) have been approved by a majority of the disinterested members of the
Board of Directors and (3) if such Affiliate Transaction (or series of related
Affiliate Transactions) involve aggregate payments in an amount in excess of $5
million in any one year, (i) comply with clause (2) and (ii) have been
determined by a nationally recognized investment banking firm to be fair, from
a financial standpoint, to the Company and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the covenant described
under "-- Limitation on Restricted Payments," (ii) any issuance of securities,
or other payments, awards or grants in cash, securities or otherwise, pursuant
to, or the funding of, employment arrangements, stock options and stock
ownership plans in the ordinary course of business and approved by the Board of
Directors, (iii) the grant of stock options or similar rights to employees and
directors of the Company in the ordinary course of business and pursuant to
plans approved by the Board of Directors, (iv) loans or advances to employees
in the ordinary course of business of the Company or its Restricted
Subsidiaries, (v) fees, compensation or employee benefit arrangements paid to
and indemnity provided for the benefit of directors, officers or employees of
the Company or any Subsidiary in the ordinary course of business, (vi) payments
made to The Oxford Investment Group, Inc. for (x) management and consulting
services in an aggregate amount not to exceed $1,000,000 in any one year and
(y) investment banking services in connection with acquisition of assets or
businesses, by the Company or any Subsidiary not to exceed the greater of (A)
1.25% of the purchase price paid by the Company or such Subsidiary for the
assets or business acquired (including Indebtedness assumed by the Company or
such Subsidiary as part of such acquisition) and (B) $200,000; or (vii) any
Affiliate Transaction between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries in the ordinary course of business (so long as
the other stockholders of any participating Restricted Subsidiaries which are
not Wholly Owned Restricted Subsidiaries are not themselves Affiliates of the
Company).
Limitation on the Issuance or Sale of Capital Stock of Restricted
Subsidiaries. The Company shall not (i) sell, pledge, hypothecate or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary (other than
pledges of Capital Stock securing Senior Indebtedness) or (ii) permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock other than (A) to the Company or a
Wholly Owned Subsidiary, (B) directors' qualifying shares, (C) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary or (D) the issuance of Preferred
Stock by any Subsidiary Guarantor as partial payment for the acquisition by
such Subsidiary Guarantor of Additional Assets. Notwithstanding the foregoing,
the Company may sell, and may permit a Restricted Subsidiary to issue and sell,
up to 20% of the outstanding Common Stock of a Restricted Subsidiary to
officers and employees of such Restricted Subsidiary. The proceeds of any sale
of such Capital Stock permitted hereby will be treated as Net Available Cash
from an Asset Disposition and must be applied in accordance with the terms of
the covenant described under "-- Limitation on Sales of Assets and Subsidiary
Stock."
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any
Lien of any nature whatsoever on any property of the Company or any Restricted
Subsidiary (including Capital Stock of a Restricted Subsidiary), whether owned
at the Issue Date or thereafter acquired, which secures Indebtedness that ranks
pari passu with or is subordinated to the Notes or the Subsidiary Guaranties
unless (i) if such Lien secures Indebtedness that ranks pari passu with the
Notes and the Subsidiary Guaranties, the Notes are secured on an equal and
ratable basis with the obligation so secured until such time as such obligation
is no longer secured by a Lien or (ii) if such Lien
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secures Indebtedness that is subordinated to the Notes and the Subsidiary
Guaranties, such Lien shall be subordinated to a Lien granted to the Holders on
the same collateral as that securing such Lien to the same extent as such
subordinated Indebtedness is subordinated to the Note and the Subsidiary
Guaranties.
Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
related transactions, all or substantially all its assets to, any Person,
unless: (i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction on
a pro forma basis (and treating any Indebtedness which becomes an obligation of
the Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at the time
of such transaction), no Default shall have occurred and be continuing; (iii)
except in the case of a merger the sole purpose of which is to change the
Company's jurisdiction of incorporation, immediately after giving effect to
such transaction on a pro forma basis, the Successor Company would be able to
Incur an additional $1.00 of Indebtedness pursuant to paragraph (a) of the
covenant described under "-- Limitation on Indebtedness"; (iv) immediately
after giving effect to such transaction on a pro forma basis, the Successor
Company shall have Consolidated Net Worth in an amount that is not less than
the Consolidated Net Worth of the Company immediately prior to such
transaction; and (v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. Notwithstanding the foregoing clauses (ii), (iii)
and (iv), any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Notes.
The Company shall not permit any Subsidiary Guarantor to consolidate with or
merge with or into, or convey, transfer or lease, in one transaction or a
series of transactions, all or substantially all its assets to, any Person,
unless: (i) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and the
Successor Company (if not such Subsidiary) shall expressly assume, by a
Guaranty Agreement, in form satisfactory to the Trustee, all the obligations of
such Subsidiary under its Subsidiary Guaranty; (ii) immediately after giving
effect to such transaction on a pro forma basis (and treating any Indebtedness
which becomes an obligation of the resulting, surviving or transferee Person as
a result of such transaction as having been Incurred by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(iii) the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement comply with the Indenture. The provisions
of clauses (i) and (iii) above shall not apply to any transactions which
constitute an Asset Disposition if the Company has complied with the applicable
provisions of the covenant described under "-- Limitation on Sales of Assets
and Subsidiary Stock" above.
Future Guarantors. The Company shall cause each Restricted Subsidiary that
at any time becomes an obligor or guarantor with respect to any obligations
under one or more Bank Credit Agreements to execute and deliver to the Trustee
a supplemental indenture pursuant to which such Restricted Subsidiary will
Guarantee payment of the Notes on the same terms and conditions as those set
forth in the Indenture. Each Subsidiary Guaranty will be limited in amount to
an amount not to exceed the maximum amount that can be Guaranteed by the
applicable Subsidiary Guarantor without rendering such Subsidiary Guaranty
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally.
SEC Reports. Until such time as the Company shall become subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall provide the Trustee, the Initial Purchasers, the Noteholders and
prospective
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Noteholders (upon request) with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections,
such information, documents and other reports to be so provided at the times
specified for the filing of such information, documents and reports under such
Sections. Thereafter, notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC and provide the Trustee and
Noteholders and prospective Noteholders (upon request) with such annual reports
and such information, documents and other reports as are specified in such
Sections and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections; provided, however, that the Company shall not be required to
file any report, document or other information with the SEC if the SEC does not
permit such filing.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Notes when due (whether or not such payment is
prohibited by the provisions described under "Subordination" above), continued
for 30 days, (ii) a default in the payment of principal of any Note when due at
its Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise (whether or not such payment is prohibited by the
provisions described under "Subordination" above), (iii) the failure by the
Company, to comply for 30 days after notice with any of its obligations under
the covenants described under "-- Limitation on Indebtedness," "-- Limitation
on Restricted Payments," "Limitation on Sales of Assets and Subsidiary Stock,"
and "Merger, Consolidation and Sale of Assets", (iv) the failure by the Company
to comply for 60 days after notice with its other agreements contained in the
Indenture, (v) Indebtedness of the Company or any Restricted Subsidiary is not
paid within any applicable grace period after final maturity or is accelerated
by the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $5 million (the "cross-acceleration
provision"), (vi) certain events of bankruptcy, insolvency or reorganization of
the Company or a Significant Subsidiary (the "bankruptcy provisions"), (vii)
any judgment or decree for the payment of money in excess of $5 million is
rendered against the Company or a Restricted Subsidiary, remains outstanding
following such judgment and is not discharged, waived or stayed within 60 days
after entry of such judgment or decree (the "judgment default provision"), or
(viii) a Subsidiary Guaranty ceases to be in full force and effect (other than
in accordance with the terms of such Subsidiary Guaranty) or a Subsidiary
Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty.
However, a default under clause (iii) or (iv) will not constitute an Event of
Default until the Trustee or the Holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iii) and (iv) hereof
after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders of the Notes. Under certain
circumstances, the Holders of a majority in principal amount of the outstanding
Notes may rescind any such acceleration with respect to the Notes and its
consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) the
Holders of a majority in principal amount of the outstanding
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Notes have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Notes are given the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that
conflicts with law or the Indenture or that the Trustee determines is unduly
prejudicial to the rights of any other Holder or that would involve the Trustee
in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of or interest on any Note, the Trustee may withhold
notice if and so long as a committee of its trust officers determines that
withholding notice is not opposed to the interest of the Holders. In addition,
the Company is required to deliver to the Trustee, within 120 days after the
end of each fiscal year, a certificate indicating whether the signers thereof
know of any Default that occurred during the previous year. The Company also is
required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any event which would constitute certain Defaults,
their status and what action the Company is taking or proposes to take in
respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Notes) and any past default or compliance with any provisions may also be
waived with the consent of the Holders of a majority in principal amount of the
Notes then outstanding. However, without the consent of each Holder of an
outstanding Note affected thereby, no amendment may, among other things, (i)
reduce the amount of Notes whose Holders must consent to an amendment, (ii)
reduce the rate of or extend the time for payment of interest on any Note,
(iii) reduce the principal of or extend the Stated Maturity of any Note, (iv)
reduce the premium payable upon the redemption of any Note or change the time
at which any Note may be redeemed as described under "-- Optional Redemption"
above, (v) make any Note payable in money other than that stated in the Note,
(vi) impair the right of any Holder to institute suit for the enforcement of
any payment on or with respect to such Holder's Notes or any Subsidiary
Guaranty, (vii) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions or (viii) make any change to the
subordination provisions of the Indenture that would adversely affect the
Noteholders.
Without the consent of any Holder, the Company and Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of the obligations of the Company
under the Indenture, to provide for uncertificated Notes in addition to or in
place of certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code), to add guarantees with respect to the Notes, to release Subsidiary
Guarantors when permitted by the Indenture, to secure the Notes, to add to the
covenants of the Company for the benefit of the Holders or to surrender any
right or power conferred upon the Company, to make any change that does not
adversely affect the rights of any Holder or to comply with any requirement of
the SEC in connection with the qualification of the Indenture under the Trust
Indenture Act. However, no amendment may be made to the subordination
provisions of the Indenture that adversely affects the rights of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or their Representative) consents to such change.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to Holders a notice briefly describing such amendment.
However, the failure to give such notice to all Holders, or any defect therein,
will not impair or affect the validity of the amendment.
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TRANSFER
Certificated Notes will be issued in registered form and will be
transferable only upon the surrender of the Notes being transferred for
registration of transfer. The Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge payable in connection
with certain transfers and exchanges.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under "-- Change
of Control" and under the covenants described under "-- Certain Covenants"
(other than the covenant described under "-- Merger and Consolidation"), the
operation of the cross-acceleration provision, the bankruptcy provisions with
respect to Significant Subsidiaries and the judgment default provision
described under "-- Defaults" above and the limitations contained in clauses
(iii) and (iv) under "Certain Covenants -- Merger and Consolidation" above
("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iii) (but only with respect to clauses
(iii) or (iv) under "Certain Covenants -- Merger and Consolidation as it
relates to the failure to comply with such covenants), (iv), (v), (vi) or (vii)
under "-- Defaults" above or because of the failure of the Company to comply
with clause (iii) or (iv) under "Certain Covenants -- Merger and Consolidation"
above. If the Company exercises its legal defeasance option or its covenant
defeasance option, each Subsidiary Guarantor will be released from all of its
obligations with respect to its Subsidiary Guaranty.
In order to exercise either defeasance option, (a) such defeasance must not
result in a breach of, or otherwise constitute a default under any agreement or
investment with respect to any Senior Indebtedness, and no default may exist
under any Indebtedness and (b) the Company must irrevocably deposit in trust
(the "defeasance trust") with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Notes to redemption or
maturity, as the case may be, and must comply with certain other conditions,
including delivery to the Trustee of an Opinion of Counsel to the effect that
holders of the Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance and will be subject to
Federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred.
CONCERNING THE TRUSTEE
First Trust National Association is the Trustee under the Indenture and has
been appointed by the Company as Registrar and Paying Agent with regard to the
Notes.
The Holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that if an Event of Default occurs
(and is not cured), the Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any Holder of
Notes, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense and then
only to the extent required by the terms of the Indenture.
GOVERNING LAW
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The Indenture provides that it and the Notes are governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; or (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; provided, however, that any such Restricted Subsidiary is primarily
engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "Certain Covenants -- Limitation on
Restricted Payments," "Certain Covenants -- Limitation on Affiliate
Transactions" and "Certain Covenants -- Limitations on Sales of Assets and
Subsidiary Stock" only, "Affiliate" shall also mean any beneficial owner of
Capital Stock representing 10% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of the Company or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by the Company or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders), (ii) all or substantially all the assets of any
division, business segment or comparable line of business of the Company or any
Restricted Subsidiary or (iii) any other assets of the Company or any
Restricted Subsidiary outside of the ordinary course of business of the Company
or such Restricted Subsidiary. Notwithstanding the foregoing, the term "Asset
Disposition" shall not include (x) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary, (y) for purposes of the covenant described under "Certain Covenants
- -- Limitation on Sales of Assets and Subsidiary Stock", a disposition that
constitutes a Permitted Investment or a Restricted Payment permitted by the
covenant described under "Certain Covenants -- Limitation on Restricted
Payments", and (z) a disposition of assets having a fair market value of less
than $1 million.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (ii) the sum of all such payments.
"Bank Credit Agreements" means the Senior Credit Facility and any other bank
credit agreement or similar facility entered into in the future by the Company
or any Restricted Subsidiary as any of the same may be amended, waived,
modified, Refinanced or replaced from time to time (except to the extent that
any such amendment, waiver, modification, replacement or Refinancing would be
prohibited by the terms of the Indenture).
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"Bank Indebtedness" means any and all present and future amounts payable
under or in respect of the Bank Credit Agreements, including principal, premium
(if any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization, whether or not a claim for
post-filing interest is allowed in such proceedings), fees, charges, expenses,
reimbursement obligations, Guarantees and all other amounts and other
Obligations payable thereunder or in respect thereof at any time.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined
in accordance with GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause such person or group
shall be deemed to have "beneficial ownership" of all shares that any such
person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 40% of the total voting power of the Voting Stock of the Company;
provided, however, that such event shall not be deemed to be a Change of
Control so long as the Permitted Holders beneficially own, directly or
indirectly, in the aggregate a greater percentage of the total voting power of
the Voting Stock of the Company than such other person or group;
(ii) after the first public offering of common stock of the Company, during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors (together with any new directors
whose election by such Board of Directors or whose nomination for election by
the shareholders of the Company was approved by a majority vote of the
directors of the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office; or
(iii) the merger or consolidation of the Company with or into another Person
or the merger of another Person with or into the Company, or the sale of all or
substantially all the assets of the Company to another Person (other than a
Person that is controlled by the Permitted Holders), and, in the case of any
such merger or consolidation, the securities of the Company that are
outstanding immediately prior to such transaction and which represent 100% of
the aggregate voting power of the Voting Stock of the Company are changed into
or exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition to
any other consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days (or, if less, the
number of days after the end of such fiscal quarter as the consolidated
financial statements of the Company shall be available) prior to the date of
such determination (determined, for the first three fiscal quarters ending
subsequent to the Issue Date, by annualizing such quarters to the extent
completed) to (ii) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that (1) if the Company or any Restricted Subsidiary has
Incurred any Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period (except that, in
the case of Indebtedness used to finance working capital needs incurred under a
revolving credit or similar arrangement, the amount thereof shall be deemed to
be the average daily balance of such Indebtedness during such
four-fiscal-quarter period), (2) if since the beginning of such period the
Company or any Restricted Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the
EBITDA (if negative) directly attributable thereto for such period, and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased, assumed by a third person (to the extent the Company and its
Restricted Subsidiaries are no longer liable for such Indebtedness) or
otherwise discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale), (3) if since the beginning of such period the Company shall have
consummated a Public Equity Offering following which there is a Public Market,
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its Restricted
Subsidiaries in connection with such Public Equity Offering for such period,
(4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or
an acquisition of assets, which acquisition constitutes all or substantially
all of an operating unit of a business, including any such Investment or
acquisition occurring in connection with a transaction requiring a calculation
to be made hereunder, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition occurred
on the first day of such period and (5) if since the beginning of such period
any Person (that subsequently became a Restricted Subsidiary or was merged with
or into the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition, any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
above if made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Asset Disposition, Investment
or acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income, earnings or expense relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be prepared
in accordance with Article 11 of Regulation S-X promulgated by the Commission
as determined in good faith by a responsible financial or accounting Officer of
the Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated
as if the rate in effect on the date of determination had been the applicable
rate for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the
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Company or its Restricted Subsidiaries, (i) interest expense attributable
to Capital Lease Obligations, (ii) amortization of debt discount, (iii)
capitalized interest, (iv) non-cash interest expenses, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs associated with Hedging
Obligations (including amortization of fees), (vii) Preferred Stock dividends
in respect of all Preferred Stock held by Persons other than the Company or a
Wholly Owned Subsidiary, and (viii) interest actually paid on any Indebtedness
of any other Person that is Guaranteed by the Company or any Restricted
Subsidiary. Notwithstanding the foregoing, net interest expense attributable to
Tooling Indebtedness shall not be included in Consolidated Interest Expense
except to the extent such expense would be included in interest expense in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income (or loss)
of any Person if such Person is not a Restricted Subsidiary, except that
subject to the exclusion contained in clause (iv) below, the Company's equity
in the net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to the Company or a Restricted Subsidiary as
a dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below); (ii) for purposes of subclause (a)(3)(A) of the covenant
described under "Certain Covenants -- Limitation on Restricted Payments" only,
any net income (or loss) of any Person acquired by the Company or a Subsidiary
in a pooling of interests transaction for any period prior to the date of such
acquisition; (iii) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject to
the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash that could have
been distributed by such Restricted Subsidiary consistent with such restriction
during such period to the Company or another Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation contained
in this clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income; (iv) any gain (or loss) realized upon the sale or
other disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (or loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) extraordinary gains or losses; and (vi) the cumulative effect of a change
in accounting principles. Notwithstanding the foregoing, for the purposes of
the covenant described under "Certain Covenants--Limitation on Restricted
Payments" only, there shall be excluded from Consolidated Net Income any
dividends, repayments of loans or advances or other transfers of assets from
Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the
extent such dividends, repayments or transfers increase the amount of
Restricted Payments permitted under such covenant pursuant to clause (a)(3)(D)
thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of
any action for the purpose of which the determination is being made, as (i) the
par or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii)
any retained earnings or earned surplus less (A) any accumulated deficit and
(B) any amounts attributable to Disqualified Stock.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of
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determination, the holders thereof are committed to lend up to, at least $10
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable, at the option of the holder
thereof, for Indebtedness or Disqualified Stock or (iii) is redeemable at the
option of the holder thereof, in whole or in part, in each case on or prior to
the first anniversary of the Stated Maturity of the Notes.
"EBITDA" for any period means the sum of Consolidated Net Income plus
Consolidated Interest Expense plus, without duplication, the following to the
extent deducted in calculating such Consolidated Net Income: (i) income tax
expense (including Michigan Single Business Tax expense), (ii) depreciation
expense, (iii) amortization expense and (iv) all other non-cash items reducing
Consolidated Net Income (other than items that will require cash payments and
for which an accrual or reserve is, or is required by GAAP to be, made), less
all non-cash items increasing Consolidated Net Income, in each case for such
period. Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization of, a Subsidiary of
the Company shall be added to Consolidated Net Income to compute EBITDA only to
the extent (and in the same proportion) that the net income of such Subsidiary
was included in calculating Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Preferred Stock" means the Series A $3.00 cumulative Preferred
Stock issued by Lobdell and the Series B Preferred Stock issued by Lobdell in
the aggregate amount of $50.7 million, less any shares of such preferred stock
repurchased, redeemed or canceled subsequent to the Issue Date, as the terms of
such preferred stock shall exist as of the Issue Date.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board and (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise) or (ii) entered into for
the purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing
any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary; provided,
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further, however, that in the case of a discount security, neither the accrual
of interest nor the accretion of original issue discount shall be considered an
Incurrence of Indebtedness, but the entire face amount of such security shall
be deemed Incurred upon the issuance of such security. The term "Incurrence"
when used as a noun shall have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property or
services, all conditional sale obligations of such Person and all obligations
of such Person under any title retention agreement (but excluding trade
accounts payables arising in the ordinary course of business and which are not
more than 90 days past due and not in dispute), which purchase price or
obligation is due more than six months after the date of placing such property
in service or taking delivery and title thereto or the completion of such
services (provided that, in the case of obligations of an acquired Person
assumed in connection with an acquisition of such Person, such obligations
would constitute Indebtedness of such Person); (iv) all obligations of such
Person for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations with respect
to letters of credit securing obligations (other than obligations described in
(i) through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the tenth
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit); (v) the amount of all obligations
of such Person with respect to the redemption, repayment or other repurchase of
any Disqualified Stock or, with respect to any Subsidiary of such Person, any
Preferred Stock (but excluding, in each case, any accrued dividends); (vi) all
obligations of the type referred to in clauses (i) through (v) of other Persons
and all dividends of other Persons for the payment of which, in either case,
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any Guarantee; (vii) all
obligations of the type referred to in clauses (i) through (vi) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured; and (viii) to the extent not otherwise
included in this definition, Hedging Obligations of such Person. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations as described above at such date;
provided, however, that the amount outstanding at any time of any Indebtedness
issued with original issue discount shall be deemed to be the face amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in
interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under "Certain Covenants -- Limitation on Restricted
Payments," (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an
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Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors.
"Issue Date" means the date on which the Notes are originally issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments
received by the Company or any of its Subsidiaries therefrom (including any
cash payments received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring Person of Indebtedness or other obligations relating to such
properties or assets or received in any other noncash form) in each case net of
(i) all legal, title and recording tax expenses, commissions and other fees and
expenses incurred, and all Federal, state, provincial, foreign and local taxes
required to be paid or accrued as a liability under GAAP, as a consequence of
such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
Joint Ventures as a result of such Asset Disposition and (iv) the deduction of
appropriate amounts provided by the seller as a reserve, in accordance with
GAAP, against any liabilities associated with the property or other assets
disposed in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition, including without
limitation liabilities under any indemnification obligations associated with
such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys fees,
accountants fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Obligations" means all present and future obligations for principal,
premium, interest (including, without limitation, any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law), penalties, fees, indemnifications,
reimbursements (including, without limitation, all reimbursement and other
obligation pursuant to any letters of credit, bankers acceptances or similar
instruments or documents), damages and other liabilities payable under the
documentation at any time governing any indebtedness.
"Permitted Holders" means (i) any of Selwyn Isakow, his spouse and any of
his lineal descendants and their respective spouses (collectively, the "Isakow
Family") whether acting in their own name or as one or as a majority of persons
having the power to exercise the voting rights attached to, or having
investment power over, shares held by others, (ii) any controlled Affiliate of
any member of the Isakow Family, and (iii) any trust solely for the benefit of
one or more members of the Isakow Family (whether or not any member of the
Isakow Family is a trustee of such trust).
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) the Company, (ii) a Restricted Subsidiary or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (iii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business
is a Related
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Business; (iv) Temporary Cash Investments; (v) receivables owing to the Company
or any Restricted Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems reasonable under
the circumstances; (vi) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (vii) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary; (viii) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments; (ix) Persons other
than Restricted Subsidiaries that are primarily engaged in a Related Business,
in an aggregate amount not to exceed $15 million (to the extent utilized for an
Investment, such amount will be reinstated to the extent that the Company or
any Restricted Subsidiary receives dividends, repayments of loans or other
transfers of assets as a return of such Investment); (x) any Person to the
extent such Investment is received in exchange for the transfer to such Person
of the assets owned as of the Issue Date by Laserweld International L.L.C.; and
(xi) any Person to the extent such Investment represents the non-cash portion
of the consideration received for an Asset Disposition as permitted pursuant to
the covenant described under "Certain Covenants -- Limitation on Sales of
Assets and Subsidiary Stock."
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Public Market" means any time after (i) a Public Equity Offering has been
consummated and (ii) at least 10% of the total issued and outstanding common
stock of the Company has been distributed by means of an effective registration
statement under the Securities Act or sales pursuant to Rule 144 under the
Securities Act.
"Purchase Money Indebtedness" mean Indebtedness (i) consisting of the
deferred purchase price of property, conditional sale obligations, obligations
under any title retention agreement, other purchase money obligations and
obligations in respect of industrial revenue bonds or similar Indebtedness, in
each case where the maturity of such Indebtedness does not exceed the
anticipated useful life of the asset being financed, and (ii) incurred to
finance the acquisition by the Company or a Restricted Subsidiary of such
asset, including additions and improvements; provided, however, that any Lien
arising in connection with any such Indebtedness shall be limited to the
specified asset being financed or, in the case of real property or fixtures,
including additions and improvements, the real property on which such asset is
attached; and provided, further, however, that such Indebtedness is Incurred
within 90 days after such acquisition of such asset by the Company or
Restricted Subsidiary.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced"
and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with the Indenture; provided, however, that (i)
such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced,
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(ii) such Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being Refinanced and (iii) such Refinancing
Indebtedness has an aggregate principal amount (or if Incurred with original
issue discount, an aggregate issue price) that is equal to or less than the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus fees and
expenses, including any premium and defeasance costs) under the Indebtedness
being Refinanced; provided further, however, that Refinancing Indebtedness
shall not include (x) Indebtedness of a Subsidiary that Refinances Indebtedness
of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary
that Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or complementary
(as determined in good faith by the Board of Directors) to the businesses of
the Company and the Restricted Subsidiaries on the Issue Date.
"Representative" means any trustee, agent or representative (if any) for
an issue of Senior Indebtedness of the Company.
"Restricted Payment" means, with respect to any Person, (i) the
declaration or payment of any dividends or any other distributions on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the
holders of its Capital Stock, except dividends or distributions payable solely
in its Capital Stock (other than Disqualified Stock) and except dividends or
distributions payable solely to the Company or a Restricted Subsidiary (and, if
such Restricted Subsidiary is not wholly owned, to its other shareholders on a
pro rata basis or on a basis that results in the receipt by the Company or a
Restricted Subsidiary of dividends or distributions of greater value than it
would receive on a pro rata basis), (ii) the purchase, redemption or other
acquisition or retirement for value of any Capital Stock of the Company held by
any Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Company (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than into Capital
Stock of the Company that is not Disqualified Stock), (iii) the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment of any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) the making of any Investment in any Person (other than a Permitted
Investment).
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary. As of the Issue Date, the following Subsidiaries of
the Company were Restricted Subsidiaries: Lobdell Emery Corporation, BMG North
America Limited, Winchester Fabrication Corporation, Creative Fabrication
Corporation, Parallel Group International, Inc., Laserweld International,
L.L.C., Concept Management Corporation, Lewis Emery Capital Corporation and BMG
Holdings, Inc.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien. "Secured Indebtedness" of any Subsidiary Guarantor has a correlative
meaning.
"Senior Credit Facility" means the credit agreement dated as of the Issue
Date, between the Company, the lenders and other persons party thereto and NBD
Bank, as Agent, together with the related documents thereto executed at any
time (including, without limitation, any guarantee agreements, security
agreements and other collateral documents) and the credit facilities
thereunder, in each case as such documents may be amended (including, without
limitation, any amendment and restatement thereof), supplemented or otherwise
modified from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including, without
limitation, increasing the amount of available
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borrowings thereunder (provided that such increase in borrowings is permitted
by the covenant described under "Certain Covenants -- Limitation on
Indebtedness") or adding subsidiaries as additional borrowers or guarantors
thereunder).
"Senior Indebtedness" of the Company means (i) all Bank Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter Incurred,
including the Guarantees by the Company of all Bank Indebtedness, and (ii)
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company
whether or not a claim for post-filing interest is allowed in such proceeding)
in respect of (A) indebtedness of the Company for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which the Company is responsible or liable unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the Notes; provided, however, that Senior Indebtedness shall not
include (1) any obligation of the Company to any Subsidiary, (2) any liability
for Federal, state, local or other taxes owed or owing by the Company, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness of the Company (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect
(other than as a result of the Indebtedness being unsecured) to any other
Indebtedness or other obligation of the Company, including any Senior
Subordinated Indebtedness and any Subordinated Obligations, (5) any obligations
with respect to any Capital Stock or (6) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of the Indenture. "Senior
Indebtedness" of any Subsidiary Guarantor has a correlative meaning.
"Senior Subordinated Indebtedness" of the Company means the Notes and any
other Obligations under or in connection with the Notes, the Indenture and/or
any related agreements, documents or instruments, whether now owing or
hereafter incurred or owing and any other Indebtedness of the Company that
specifically provides that such Indebtedness is to rank pari passu with the
Notes in right of payment and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness. "Senior Subordinated Indebtedness" of any Subsidiary
Guarantor has a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement to that
effect. "Subordinated Obligation" of any Subsidiary Guarantor has a correlative
meaning.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guaranty" means the Guarantee by a Subsidiary Guarantor of the
Company's obligations with respect to the Notes.
"Subsidiary Guarantor" means each Subsidiary designated as such on the
signature pages of the Indenture and any other Subsidiary that has issued a
Subsidiary Guaranty.
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"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50,000,000 (or the
foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by an registered broker
dealer or mutual fund distributor, (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clause (i) above entered into with a bank meeting the qualifications described
in clause (ii) above, (iv) investments in commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws of the
United States of America, any State thereof or the District of Columbia or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Group, and (v) investments in securities with maturities of
six months or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
Standard & Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"Tooling Indebtedness" means all present and future Indebtedness of the
Company or any Restricted Subsidiary the proceeds of which are utilized to
finance dies, molds, tooling and similar items (collectively "Tooling") for
which the sales of such Tooling is covered under specific written purchase
orders or agreements between the Company or any Restricted Subsidiary and the
purchaser of such Tooling.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if
such Subsidiary has assets greater than $1,000, such designation would be
permitted under the covenant described under "Certain Covenants -- Limitation
on Restricted Payments." The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness under paragraph (a) of the covenant described under
"Certain Covenants -- Limitation on Indebtedness" and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors
shall be notified by the Company to the Trustee by promptly filing with the
Trustee a copy of the board resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the
Company and/or one or more Wholly Owned Subsidiaries.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the certain United States federal
income tax consequences of the Exchange Offer to a holder of Old Notes that is
an individual citizen or resident of the United States or a United States
corporation that purchased the Old Notes pursuant to their original issue (a
"U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. The following relates only to the
Old Notes, and the New Notes received therefor, that are held as "capital
assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does
not discuss state, local, or foreign tax consequences, nor does it discuss tax
consequences to categories of holders that are subject to special rules, such
as foreign persons, tax-exempt organizations, insurance companies, banks, and
dealers in stocks and securities. Tax consequences may vary depending on the
particular status of an investor. No rulings will be sought from the Internal
Revenue Service with respect to the federal income tax consequences of the
Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE OLD NOTES
FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS
PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE OLD NOTES FOR NEW
NOTES.
MARKET DISCOUNT
A U.S. Holder of a Note, other than an initial Holder, will be
treated as holding the Note at a market discount (a "Market Discount Note")
if the amount for which such U.S. Holder purchased the Note is less than the
Note's principal amount, subject to a de minimis rule.
In general, any partial payment of principal on, or gain recognized
on the maturity or disposition of, a Market Discount Note will be treated as
ordinary income to the extent that such gain does not exceed the accrued
market discount on such Note. Alternatively, a U.S. Holder of a Market
Discount Note may elect to include market discount in income currently over the
life of the Market Discount Note. Such an election applies to all debt
instruments with market discount acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the Internal Revenue Service.
Market discount accrues on a straight-line basis, unless the U.S.
Holder elects to accrue such discount on a constant yield to maturity basis.
Such an election is applicable only to the Note with respect to which it is
made and is irrevocable. A U.S. Holder of a Market Discount Note that does not
elect to include market discount in income currently, generally will be
required to defer deductions for interest on borrowings allocable to such Note,
in an amount not exceeding the accrued market discount on such Note, until the
maturity or disposition of such Note.
THE EXCHANGE OFFER
The exchange of Old Notes pursuant to the Exchange Offer should be treated
as a continuation of the corresponding Old Notes because the terms of the New
Notes are not materially different from the terms of the Old Notes.
Accordingly, it is the Company's belief that such exchange will not constitute
a taxable event to U.S. Holders and, therefore, (i) no gain or loss should be
realized by a U.S. Holder upon receipt of a New Note, (ii) the holding period
of the New Note should include the holding period of the Old Note exchanged
therefor and (iii) the adjusted tax basis of the New Note should be the same as
the adjusted tax basis of the Old Note exchanged therefor immediately before
the exchange.
STATED INTEREST
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Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes. The Notes are not considered to have been issued with
original issue discount for federal income tax purposes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or
retirement of a Note in an amount equal to the difference between the amount
realized on the sale, exchange or retirement and the tax basis of the Note.
Gain or loss recognized on the sale, exchange or retirement of a Note
(excluding amounts received in respect of accrued interest, which will be
taxable as ordinary interest income) generally will be capital gain or loss and
will be long-term capital gain or loss if the Note was held for more than one
year.
BACKUP WITHHOLDING
Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number
or other taxpayer identification number in the specified manner and in certain
other circumstances. Any amount withheld from a payment to a U.S. Holder under
the backup withholding rules is allowable as a credit against such U.S.
Holder's federal income tax liability, provided that the required information
is furnished to the IRS. Corporations and certain other entities described in
the Code and Treasury regulations are exempt from backup withholding if their
exempt status is properly established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Each of the Company and the Subsidiary Guarantors has
agreed that, starting on the Expiration Date and ending on the close of
business on the first anniversary of the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1997 (90
days after the date of this Prospectus), all dealers effecting transactions in
the New Notes may be required to deliver a prospectus.
Neither the Company nor any of the Subsidiary Guarantors will receive any
proceeds from any sale of New Notes by broker-dealers. New Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the New Notes or
a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer or the purchasers of any
such New Notes. Any broker-dealer that resells New Notes that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
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For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company and each of the Subsidiary Guarantors
have agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Old Notes) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Old Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Dykema Gossett PLLC, Bloomfield Hills, Michigan. Rex E. Schlaybaugh,
Jr. is a shareholder, the Vice Chairman of the Board and a director of the
Company. Mr. Schlaybaugh is a member of Dykema Gossett PLLC. Certain matters
relating to the Subsidiary Guaranties and the application of Ontario law to
them will be passed upon for the Company by Fasken Campbell Godfrey, Toronto,
Ontario.
EXPERTS
On March 28, 1997, Price Waterhouse LLP, independent auditors, were
selected by the Board of Directors to audit the financial statements of the
Company for the fiscal year ended March 31, 1997. On March 28, 1997, the
Company dismissed its principal accountant, Deloitte & Touche, upon the
recommendation of the Company's Board of Directors. There were no
disagreements with Deloitte & Touche and the Company during the two most recent
fiscal years and subsequent interim periods preceding such dismissal on any
matter of accounting principles or practices, financial statement disclosures
or auditing scope or procedure. The reports of Price Waterhouse LLP and
Deloitte & Touche on the financial statements for each of the past two years
have not contained an adverse opinion, disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
The consolidated financial statements of the Company as of and for the
year ended March 31, 1997 included in this Prospectus have been so included in
reliance on the report of Price Waterhouse LLP, independent auditors, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of the Company as of March 31, 1996
and for the period from October 28, 1995 through March 31, 1996 appearing in
this Prospectus and the related financial statement schedule included in the
Exchange Offer Registration Statement have been audited by Deloitte & Touche,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The consolidated financial statements of BMG North America Limited
(Predecessor) for the period from April 1, 1995 through October 27, 1995 and
for the year ended March 31, 1995 appearing in this Prospectus and the related
financial statement schedule included in the Exchange Offer Registration
Statement have been audited by Deloitte & Touche, independent auditors, as
stated in their report appearing herein, and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Lobdell Emery Corporation as of
December 31, 1996 and 1995 and for each year in the three-year period ended
December 31, 1996 included in this Prospectus have been so included in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OXFORD AUTOMOTIVE, INC.
Report of Independent Accountants................................... F-2
Independent Auditors' Report........................................ F-3
Consolidated Balance Sheets as of March 31, 1997, 1996 and
June 30, 1997 (Unaudited)......................................... F-4
Consolidated Statements of Operations for the year ended
March 31, 1997, the period from October 28, 1995
through March 31, 1996 and the three months ended June 30,
1997 and 1996 (Unaudited) for the Company; and for the period from
April 1, 1995 through October 27, 1995 and for the
year ended March 31, 1995 for the Predecessor..................... F-5
Consolidated Statement of Changes in Shareholders' Equity
for the year ended March 31, 1997, the period from
October 28, 1995 through March 31, 1996 and the three
months ended June 30, 1997 (Unaudited) for the Company; and for the
period from April 1, 1995 through October 27, 1995 and the
year ended March 31, 1995 for the Predecessor.................... F-6
Consolidated Statements of Cash Flows for the year ended
March 31, 1997, the period from October 28, 1995 through
March 31, 1996 and the three months ended June 30, 1997 and 1996
(Unaudited) for the Company; and for the period from
April 1, 1995 through October 27, 1995 and for the year
ended March 31, 1995 for the Predecessor.......................... F-7
Notes to Consolidated Financial Statements.......................... F-8
LOBDELL EMERY CORPORATION
Report of Independent Accountants................................... F-24
Consolidated Balance Sheets as of December 31, 1996 and
1995.............................................................. F-25
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994.................................. F-26
Consolidated Statement of Changes in Shareholders' Equity
for the years ended December 31, 1996, 1995 and 1994.............. F-27
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.................................. F-28
Notes to Consolidated Financial Statements.......................... F-29
</TABLE>
F-1
<PAGE> 101
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Oxford Automotive, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Oxford Automotive, Inc. and its subsidiaries (the Company) at March 31, 1997 and
the result of their operations and their cash flows for the year ended March 31,
1997 in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
The financial statements of the Company as of March 31, 1996 and for the
period from October 28, 1995 through March 31, 1996 and the financial statements
of BMG North America Limited (the Predecessor) for the period from April 1, 1995
through October 27, 1995 and for the year ended March 31, 1995 were audited by
other independent accountants whose report dated May 21, 1996 expressed an
unqualified opinion on those statements.
PRICE WATERHOUSE LLP
Detroit, Michigan
May 19, 1997
F-2
<PAGE> 102
INDEPENDENT AUDITORS' REPORT
To the Directors of
Oxford Automotive, Inc. and BMG North America Limited
We have audited the consolidated balance sheet of Oxford Automotive, Inc.
as at March 31, 1996 and the consolidated statements of operations, changes in
shareholders' equity and cash flows for the period from October 28, 1995 to
March 31, 1996 for Oxford Automotive, Inc. and the consolidated statements of
operations, changes in shareholders' equity and cash flows for the period from
April 1, 1995 to October 27, 1995 and for the year ended March 31, 1995 for BMG
North America Limited. These financial statements are the responsibility of the
management of Oxford Automotive Inc. and BMG North America Limited. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of Oxford Automotive, Inc., as at
March 30, 1996 and the results of its operations and its cash flows for the
period from October 28, 1995 to March 31, 1996 and the results of BMG North
America Limited's operations and its cash flows for the period from April 1,
1995 to October 27, 1995 and for the year ended March 31, 1995 in accordance
with U.S. generally accepted accounting principles.
Deloitte & Touche
Chartered Accountants
Kitchener, Ontario
May 21, 1996
F-3
<PAGE> 103
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
------------------- -------------------
1997 1997 1996
---- ---- ----
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 58,883 $ 9,671 $ --
Trade receivables -- less allowance of $1,272 at June 30,
1997 and March 31, 1997 and $39 at March 31, 1996......... 41,511 47,626 8,338
Inventories............................................... 14,623 13,411 3,719
Refundable income taxes................................... 1,212 1,641
Reimbursable tooling...................................... 5,545 4,968 3,298
Deferred income taxes..................................... 4,364 4,633
Prepaid expenses and other current assets................. 794 1,354 1,181
-------- -------- -------
Total current assets................................... 126,932 83,304 16,536
Unexpended bond proceeds.................................... 3,991 3,937
Other noncurrent assets..................................... 5,382 4,588 6,734
Deferred income taxes....................................... 4,057 5,087 6,139
Property, plant and equipment, net.......................... 146,291 146,778 19,791
-------- -------- -------
TOTAL ASSETS........................................... $286,653 $243,694 $49,200
======== ======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable.................................... $ 27,398 $ 31,421 $14,570
Employee compensation..................................... 7,336 4,986 1,883
Restructuring reserve..................................... 6,303 7,050 608
Accrued expenses and other current liabilities............ 6,951 9,040 3,299
Current portion of borrowings............................. 4,761 24,274 11,258
-------- -------- -------
Total current liabilities.............................. 52,749 76,771 31,618
Pension liability........................................... 4,205 3,631 1,080
Postretirement medical benefits liability................... 34,013 33,467
Deferred income taxes....................................... 10,488 10,442
Other noncurrent liabilities................................ 2,187 2,187 67
Long-term borrowings -- less current portion................ 137,917 75,555 15,500
-------- -------- -------
Total liabilities...................................... 241,559 202,053 48,265
-------- -------- -------
Commitments and contingent liabilities (Note 14)
Redeemable Series A $3.00 Cumulative Preferred Stock, $100
stated value -- 457,541 shares authorized, issued and
outstanding (Notes 3 and 12).............................. 36,305 36,012
-------- -------- -------
Redeemable Series B Preferred Stock, $100 stated value --
49,938 shares authorized, issued and outstanding (Notes 3
and 12)................................................... 3,330 3,288
-------- -------- -------
Shareholders' equity
Common stock, 400,000 shares authorized; 309,750 issued
and outstanding at June 30, 1997 and March 31, 1997 and
75,000, issued and outstanding at March 31, 1996....... 1,050 1,050 750
Foreign currency translation adjustment................... (82) (28) 5
Retained earnings......................................... 4,744 1,572 415
Equity adjustment for minimum pension liability........... (253) (253) (235)
-------- -------- -------
5,459 2,341 935
-------- -------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $286,653 $243,694 $49,200
======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 104
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------- --------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 28, 1995 APRIL 1, 1995
THREE MONTHS ENDED THROUGH THROUGH YEAR ENDED
JUNE 30, YEAR ENDED MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995
1997 1996 MARCH 31, 1997
---- ---- -------------- ---------------- -------------- ---------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net sales............................ $ 91,960 $21,709 $136,861 $35,572 $49,043 $75,097
Cost of sales........................ 82,662 20,452 125,375 31,624 46,895 70,891
-------- ------- -------- ------- ------- -------
Gross profit....................... 9,298 1,257 11,486 3,948 2,148 4,206
Selling, general and
administrative..................... 1,692 703 7,685 2,235 3,922 4,554
-------- ------- ------- ------- ------- -------
Operating income (loss)............ 7,606 554 3,801 1,713 (1,774) (348)
Other income (expense)
Interest expense................... (1,798) (592) (3,388) (1,096) (1,048) (1,267)
Other income....................... 37 587 2,201
-------- ------- ------- ------- ------- -------
Income (loss) before (provision)
benefit for income taxes........... 5,845 549 2,614 617 (2,822) (1,615)
(Provision) benefit for income
taxes.............................. 2,338 220 (1,065) (202) 938 349
-------- ------- ------- ------- ------- -------
Net income (loss).................... 3,507 329 1,549 415 $(1,884) $(1,266)
======= =======
Accrued dividends and accretion on
redeemable preferred stock......... 335 -- 300 --
-------- ------- ------- -------
Net income applicable to common
stock.............................. $ 3,172 $ 329 $ 1,249 $ 415
======== ======= ======= =======
Net income per share................. $ 10.24 4.34 $ 9.37 $ 9.10
======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 105
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------------------------------------
FOREIGN EQUITY
CURRENCY RETAINED ADJUSTMENT FOR
COMMON TRANSLATION EARNINGS MINIMUM PENSION
STOCK ADJUSTMENT (DEFICIT) LIABILITY TOTAL
------ ----------- --------- --------------- -----
<S> <C> <C> <C> <C> <C>
Balances at April 1, 1994............... $14,609 $ -- $(2,203) $ -- $12,406
Net (loss).............................. (1,266) (1,266)
Foreign currency translation
adjustments........................... (186) 40 (146)
Issuance of common stock, net of
redemptions........................... (161) (161)
------- ----- ------- ----- -------
Balances at March 31, 1995.............. 14,262 40 (3,469) -- 10,833
Net (loss).............................. (1,884) (1,884)
Foreign currency translation
adjustments........................... 575 (155) 420
Issuance of common stock, net of
redemptions........................... (40) (40)
------- ----- ------- ----- -------
Balances at October 27, 1995............ $14,797 $(115) $(5,353) $ -- $ 9,329
======= ===== ======= ===== =======
<CAPTION>
COMPANY
-----------------------------------------------------------------
FOREIGN EQUITY
CURRENCY RETAINED ADJUSTMENT FOR
COMMON TRANSLATION EARNINGS MINIMUM PENSION
STOCK ADJUSTMENT (DEFICIT) LIABILITY TOTAL
------- ----------- --------- --------------- -------
<S> <C> <C> <C> <C> <C>
Balances at October 28, 1995............ $ 750 $ -- $ -- $ -- $ 750
Net income............................ 415 415
Foreign currency translation
adjustments........................ 5 5
Equity adjustment for minimum pension
liability.......................... (235) (235)
------- ----- ------- ----- -------
Balances at March 31, 1996.............. 750 5 415 (235) 935
Net income............................ 1,549 1,549
Foreign currency translation
adjustments........................ (33) (33)
Equity adjustment for minimum pension
liability.......................... (18) (18)
Accrued dividends and accretion of
redeemable preferred stock......... (300) (300)
Issuance of common stock, net of
redemptions........................ 300 (92) 208
------- ----- ------- ----- -------
Balances at March 31, 1997.............. $ 1,050 $ (28) $ 1,572 $(253) $ 2,341
Net income.............................. 3,507 3,507
Foreign currency translation
adjustment ........................ (54) (54)
Accrued dividends and
accretion of redeemable
preferred stock.................... (335) (335)
-----------------------------------------------------------------
Balances at June 30, 1997 (unaudited)... $ 1,050 $ (82) $ 4,744 $(253) $ 5,459
=================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 106
OXFORD AUTOMOTIVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
---------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
THREE MONTHS OCTOBER 28, 1995 APRIL 1, 1995
ENDED JUNE 30, YEAR ENDED THROUGH THROUGH YEAR ENDED
1997 1996 MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995
---- ---- -------------- ---------------------------------- --------------
(unaudited)
OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)........................ 3,507 329 $ 1,549 $ 415 $ (1,884) $(1,266)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities
Depreciation and amortization.......... 4,308 772 5,041 687 919 1,413
Deferred income taxes.................. 315 (324) 2,136 230 (1,036) (385)
Gain on sale of equipment.............. (62) (195) (2) (14)
Changes in operating assets and
liabilities affecting cash
Trade receivables.................... 6,115 (3,045) (8,953) 6,617 (3,311) (2,286)
Inventories.......................... (1,212) 1,260 (299) (277) (259) (635)
Reimbursable tooling................. (577) (525) (1,601) 1,824 (760) (3,170)
Prepaid expenses and other assets.... 498 1,808 129 1,592 (1,768) (553)
Other noncurrent assets.............. 3,544
Trade accounts payable............... (4,023) 1,799 (605) (6,501) 6,417 7,314
Employee compensation................ (6,072) 309 (493) (25)
Restructuring reserve................ (747) (196) (398)
Accrued expenses and other
liabilities........................ 261 (127) (1,885) (1,716) 3,504 110
Income taxes payable/refundable...... 429 (199)
Other noncurrent liabilities......... 1,120 193 (39)
------- ------- -------- -------- -------- -------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES............ 9,932 1,944 (7,847) 3,178 1,329 503
------- ------- -------- -------- -------- -------
INVESTING ACTIVITIES
Purchase of business, net of cash
acquired............................... (9,309) (1,983)
Purchase of property, plant and
equipment.............................. (3,515) (1,203) (3,326) (3,466) (5,111) (4,384)
Proceeds from sale of equipment.......... 341 33 11 26
------- ------- -------- -------- -------- -------
NET CASH USED IN INVESTING
ACTIVITIES...................... (3,515) (1,203) (12,294) (5,416) (5,100) (4,358)
------- ------- -------- -------- -------- -------
FINANCING ACTIVITIES
Issuance of share capital................ 300 750
Proceeds from borrowing arrangements..... 124,814 78,823 23,814 921
Principal payments on borrowing
arrangements........................... (81,965) (483) (49,186) (16,482) (7,477) (1,182)
Redemption and retirement of common
stock.................................. (92) (40) (161)
Obligation under capital lease -- net.... (6) (3) 76
------- ------- -------- -------- -------- -------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES............ 42,849 (483) 29,845 8,076 (6,599) (1,267)
------- ------- -------- -------- -------- -------
Effect of exchange rate changes on
cash................................... (54) (258) (33)
------- ------- -------- -------- -------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ 49,212 -- 9,671 5,838 (10,370) (5,122)
Cash and cash equivalents at beginning of
period................................. 9,671 -- (11,238) (868) 4,254
------- ------- -------- -------- -------- -------
Cash and cash equivalents at end of
period................................. $58,883 $ -- $ 9,671 $ (5,400) $(11,238) $ (868)
======= ======= ======== ======== ======== =======
Cash paid for interest................... $ 1,800 $ 276 $ 3,033 $ 1,096 $ 1,048 $ 1,267
======= ======= ======== ======== ======== =======
Cash paid for income taxes............... $ 383 $ 39 $ -- $ 42 $ 79 $ 113
======= ======= ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE> 107
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
NOTE 1. NATURE OF OPERATIONS
Oxford Automotive, Inc. (the Company) is a full-service supplier of metal
stampings and welded assemblies used as original equipment components primarily
by North American original equipment automotive manufacturers. The Company's
products are used in a wide variety of sport utility vehicles, light and medium
trucks, vans and passenger cars. The Company primarily operates from seven
plants located in the United States and Canada. The Company's hourly workforce
is represented by various locals of the United Auto Workers.
Net sales to the Company's two primary customers as a percentage of total
sales are as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
---------------------------------- ----------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 28, 1995 APRIL 1, 1995
YEAR ENDED THROUGH THROUGH YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995
-------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Ford Motor Company................. 17% -- -- --
General Motors Corporation......... 62% 67% 69% 70%
</TABLE>
Accounts receivable from Ford Motor Company and General Motors Corporation
represent approximately 30% and 60%, respectively, of the March 31, 1997
accounts receivable balance.
Although the Company is directly affected by the economic well being of the
automotive industry and customers referred to above, management does not believe
significant credit risk exists at March 31, 1997. The Company does not require
collateral to reduce such risk and historically has not experienced significant
losses related to receivables from individual customers or groups of customers
in the automotive industry.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements for the period from April 1, 1995 through October
27, 1995 and for the year ended March 31, 1995 are those of BMG North America
Limited (the Predecessor), which was acquired by Oxford Automotive, Inc.
(formerly BMG-MI, Inc.) on October 28, 1995, as discussed further in Note 3.
The consolidated financial statements as of March 31, 1997 and 1996 and for
the year ended March 31, 1997 and for the period from October 28, 1995 through
March 31, 1996 are those of the Company and its subsidiaries. The financial
statements of the Company and Predecessor are not comparable in certain respects
due to differences between the cost bases of certain assets held by the Company
versus that of the Predecessor, resulting in reduced depreciation and
amortization charges subsequent to October 27, 1995, changes in accounting
policies and the recording of certain liabilities at the date of acquisition in
connection with the purchase of the Predecessor by the Company, as well as the
Company's acquisition of Lobdell Emery Corporation and its wholly-owned
subsidiaries on January 10, 1997, as discussed further in Note 3.
Principles of Consolidation
The consolidated financial statements of the Company include the accounts
of Oxford Automotive, Inc. and its wholly-owned subsidiaries, BMG Holdings, Inc.
and Lobdell Emery Corporation. The accounts of BMG Holdings, Inc. (BMGH) consist
of BMGH and its wholly-owned subsidiaries, BMG North America Limited (BMGNA) and
BMGNA's two wholly-owned subsidiaries, 829500 Ontario Limited and 976459 Ontario
Limited. The accounts of Lobdell Emery Corporation (Lobdell) consist of Lobdell
and its wholly-owned subsidiaries, Lewis Emery Capital Corporation (Lewis),
Concept Management Corporation and subsidiaries (Concept), Laserweld
International (Laserweld) and Parallel Group International (Parallel). Concept
F-8
<PAGE> 108
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Management Corporation also includes the accounts of its wholly-owned
subsidiaries, Winchester Fabrication Corporation (Winchester) and Creative
Fabrication Corporation (Creative). Intercompany accounts and transactions have
been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized by the Company upon shipment of product to the
customer.
Financial Instruments
At March 31, 1997 and 1996, the carrying amount of financial instruments
such as cash and cash equivalents, trade receivables and payables and unexpended
bond proceeds, approximated their fair values. The carrying amount of the
long-term customer receivables and borrowings at March 31, 1997 and 1996,
approximated their fair values based on the variable interest rates available to
the Company for similar arrangements.
Cash Equivalents
The Company considers all highly-liquid investments with maturity of three
months or less when purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is principally
determined by the last-in, first-out (LIFO) method for the Company's United
States operations and by the first-in first-out (FIFO) method for the Company's
Canadian operations.
Reimbursable Tooling
Reimbursable tooling represents net costs incurred on tooling projects for
which the Company expects to be reimbursed by customers. Ongoing estimates of
total costs to be incurred on each tooling project are made by management and
losses, if any, are recorded when known. Under certain tooling projects,
billings exceed costs incurred and the related tooling gain is recognized upon
acceptance of the tooling by the customer. Certain of the Company's tooling
costs are financed through lending institutions and are reimbursed by vendors on
a piece price basis. These tooling assets are classified as either accounts
receivable ($3,695 and $1,809 at March 31, 1997 and 1996, respectively), other
noncurrent assets ($3,800 and $6,734 at March 31, 1997 and 1996, respectively)
or equipment depending upon the ultimate title holder of the tooling assets.
Unexpended Bond Proceeds
Unexpended bond proceeds in the accompanying consolidated balance sheet
represent unexpended proceeds from the issuance of industrial development
revenue bonds by Creative as discussed in Note 7, and are invested in allowable
money market accounts and commercial paper with a maturity of 30 days or less.
F-9
<PAGE> 109
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Property, Plant and Equipment
Property, plant and equipment are stated on the basis of cost and include
expenditures for improvements which materially increase the useful lives of
existing assets. Expenditures for normal repair and maintenance are charged to
operations as incurred. For federal income tax purposes, depreciation is
computed using accelerated and straight-line methods. For financial reporting
purposes, depreciation is computed principally using the straight-line method
over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Land improvements........................................... 15
Buildings................................................... 30-40
Machinery and equipment..................................... 3-20
</TABLE>
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". This Statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by the Company be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable. The Company recognizes impairment losses for assets or groups of
assets where the sum of the estimated future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the related asset
or group of assets. The amount of the impairment loss recognized is the excess
of the carrying amount over the fair value of the asset or group of assets
being measured.
Environmental Compliance and Remediation
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations which do not contribute to current or future revenue
generation are expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable and the costs can be reasonably estimated.
Estimated costs are based upon enacted laws and regulations, existing technology
and the most probable method of remediation. The costs determined are not
discounted and exclude the effects of inflation and other social and economic
factors.
Income Taxes
Deferred taxes are provided to give recognition to the effect of expected
future tax consequences of temporary differences between the carrying amounts
for financial reporting purposes and the tax bases for income tax purposes of
assets and liabilities.
Foreign Exchange Contracts
Gains and losses of foreign currency firm commitment hedges are deferred
and included in the basis of the transactions underlying the commitments. During
fiscal 1997, the Company recognized a gain of approximately $2,000 related to
certain foreign currency exchange transactions terminated during the year. The
gain is included as a component of other income in the accompanying March 31,
1997 statement of operations. Had the foreign currency exchange transactions not
been terminated, the recognized gain would normally have been recorded as a
component of sales.
Foreign Currency Translation
The foreign currency financial statements of BMGH, where the local currency
is the functional currency, are translated using exchange rates in effect at
period end for assets and liabilities and at weighted average
F-10
<PAGE> 110
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
exchange rates during the period for operating statement accounts. The resulting
foreign currency translation adjustments are recorded as a separate component of
shareholders' equity. Exchange gains and losses resulting from foreign currency
transactions are included in operating results during the period in which they
occur.
Per Share Amounts
Predecessor period per share amounts have not been presented as the
Company's capital structure is not comparable to that of the Predecessor.
Reclassifications
Certain amounts from the prior year have been reclassified to conform with
the current year presentation.
NOTE 3. ACQUISITIONS
On October 28, 1995, the Company acquired all of the outstanding common
stock of the Predecessor for $700 canadian. The acquisition was financed through
three promissory notes aggregating $600 canadian. The acquisition has been
recorded in accordance with the purchase method of accounting. Accordingly,
the purchase price plus direct cost of the acquisition have been allocated to
the assets acquired and liabilities assumed based on their estimated fair
values at the date of acquisition.
On January 10, 1997, pursuant to an Agreement and Plan of Merger among
Lobdell Emery Corporation, certain shareholders of Lobdell Emery Corporation,
BMG-MI, Inc. and L-E Acquisition, Inc. as amended (the Agreement), certain
Lobdell Emery Corporation shareholders and option holders had their respective
shares and options redeemed for cash of approximately $8,500 and all outstanding
shares of common stock of Lobdell Emery Corporation (Oldco) were exchanged for
shares of preferred stock of L-E Acquisition, Inc. with a face value of
approximately $40,700. In addition, approximately $3,500 of expenses incurred by
Oldco were reimbursed by L-E Acquisition, Inc. Subsequent to the exchange of
Oldco's common stock for preferred stock, L-E Acquisition, Inc. was merged with
and into Lobdell Emery Corporation (Newco).
The acquisition was financed through the issuance of preferred stock
described in Note 12 and the term loan described in Note 7. The acquisition has
been recorded in accordance with the purchase method of accounting. Accordingly,
the purchase price plus direct cost of the acquisition have been allocated to
the assets acquired and liabilities assumed based on their estimated fair values
at the date of acquisition.
The fair market value of assets acquired and liabilities assumed, without
giving effect to the settlement described in Note 17, is summarized as follows:
<TABLE>
<S> <C>
Current assets....................... $56,993
Property, plant and equipment........ 128,893
Noncurrent assets.................... 9,953
Current liabilities.................. (50,028)
Long-term liabilities................ (106,811)
-------
Fair value of preferred stock........ 39,000
Discount on preferred stock.......... 1,700
-------
Stated value of preferred stock...... $40,700
=======
</TABLE>
In accordance with the purchase method of accounting, Lobdell's operating
results have been included with those of the Company since the date of
acquisition.
The Agreement provides for a purchase price adjustment, depending on net
worth on January 10, 1997, to the face value of Series A Preferred Stock, not to
exceed $10,000, issued by the Company to the former shareholders of Lobdell in
connection with the acquisition. The Company and former shareholders of Lobdell
are currently in negotiations as to the purchase price adjustment related to net
worth with 100,000 shares of issued Series A Preferred Stock held in escrow. The
Company expects the entire 100,000 shares ($10,000) will be returned to the
Company and canceled in accordance with the Agreement. Any adjustment to the
purchase price resulting from the aforementioned negotiations will be allocated
to the assets acquired or goodwill.
F-11
<PAGE> 111
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3. ACQUISITIONS -- (CONTINUED)
The following unaudited pro forma consolidated results of operations have
been prepared as if the acquisition of Lobdell had occurred at the beginning of
fiscal 1997 and 1996.
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 28, 1995
YEAR ENDED THROUGH
MARCH 31, 1997 MARCH 31, 1996
-------------- ----------------
<S> <C> <C>
Net sales................................................... $ 330,164 $ 150,776
Net loss.................................................... $ (7,090) $ (938)
Net loss applicable to common stock......................... $ (8,460) $ (2,308)
Net loss per share from continuing operations............... $ (27.32) $ (7.45)
</TABLE>
The pro forma information is not intended to be a projection of future
results.
The pro forma information included above includes adjustments for increased
depreciation expense, net of the related tax benefit of $550 and $290 for the
year ended March 31, 1997 and for the period from October 28, 1995 through March
31, 1996, respectively.
NOTE 4. INVENTORIES
Inventories are comprised of the following at March 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Raw materials............................................... $ 5,688 $1,557
Finished goods and work-in-process.......................... 7,994 2,162
------- ------
13,682 3,719
LIFO and other reserves..................................... (271)
------- ------
$13,411 $3,719
======= ======
</TABLE>
The Company does not separately identify finished goods from
work-in-process.
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at March 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Land and land improvements.................................. $ 5,073 $ 779
Buildings................................................... 24,697 3,171
Machinery and equipment..................................... 117,535 7,394
Construction-in-process..................................... 4,393 8,914
-------- -------
151,698 20,258
Less -- accumulated depreciation............................ (4,920) (467)
-------- -------
$146,778 $19,791
======== =======
</TABLE>
F-12
<PAGE> 112
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities are comprised of the
following at March 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Accrued workers' compensation............................... $3,071 $ 544
Accrued property taxes...................................... 2,350
Accrued medical benefits.................................... 1,827
Foreign exchange gain....................................... 1,975
Other....................................................... 1,792 780
------ ------
$9,040 $3,299
====== ======
</TABLE>
NOTE 7. BORROWING ARRANGEMENTS
Borrowings consist of the following at March 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
BANK SYNDICATE -- TERM LOAN, LOBDELL EMERY CORPORATION
Interest at variable spread over prime (7.44% at March 31,
1997). Quarterly principal payments ranging from
$1,250-$2,750 plus interest, with $13,750 due December 31,
2001...................................................... $ 52,750 $ --
BANK SYNDICATE -- REVOLVING CREDIT LINE, LOBDELL EMERY
CORPORATION
Interest at variable spread over prime (9% at March 31,
1997), matures January 10, 2002........................... 1,250
INDUSTRIAL DEVELOPMENT REVENUE BONDS, CREATIVE
$8,500 issued September 27, 1995, floating rate interest
(3.6% at March 31, 1997). Quarterly principal payments
based on graduated maturity schedule. Backed by NBD Bank
letter of credit.......................................... 8,300
BANK SYNDICATE -- TERM LOAN, BMGNA
Interest at prime rate plus 1.25% (6% at March 31, 1997).
Quarterly payments of $755 plus interest, matures February
28, 2002.................................................. 14,447
REVOLVING CREDIT LINE, BMGNA
Interest at prime rate plus 1.25% (6% at March 31, 1997),
matures February 28, 2002................................. 10,376
BANK -- TERM LOAN, LEWIS
Interest at .625% over 90-day LIBOR (6.19% at March 31,
1997). Quarterly principal payments of approximately $400,
matures October 1, 1998................................... 2,833
NATIONS BANK -- SATURN TOOLING, BMGNA
Interest at a variable spread over prime (8.71% at March 31,
1997). Payments based on parts shipped, matures November
30, 1998.................................................. 1,380 7,047
EDC TOOLING LOAN, BMGNA
Interest at a fixed rate of 7.36%. Payments based on parts
shipped, matures September 30, 1999....................... 5,110
CCFL LOAN, BMGNA
Interest at 11.11%. Monthly principal payments of $21,
matures October 31, 2000.................................. 2,475 2,768
</TABLE>
F-13
<PAGE> 113
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7. BORROWING ARRANGEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
IRDP LOAN, BMGNA
Interest at 6%. Monthly principal payments of $7 to October
31, 2000 and $11 thereafter, matures September 1, 2002.... 467 534
TERM LOAN, BMGNA
Interest at Canadian Index Rate plus 3% or Canadian Banker's
Acceptance Rate plus 3.95%. Quarterly principal payments
based on graduated schedule, repaid in full during fiscal
1997...................................................... 7,765
REVOLVING CREDIT LINE, BMGNA
Interest at Canadian Banker's Acceptance Rate plus 3.7%,
repaid in full during fiscal 1997......................... 2,803
BANK LOAN, BMGNA
Interest at either the Canadian Index Rate plus 2.5% or BA
rate plus 3.45%, repaid in full during fiscal 1997........ 2,650
TOOLING LINE, BMGNA
Interest at the Canadian Index Rate plus 3% or the Canadian
Banker's Acceptance Rate plus 3.95%, repaid in full during
fiscal 1997............................................... 2,750
SERIES A PROMISSORY NOTE, BMGH
Interest at 7%, matures October 26, 2001.................... 441 441
-------- --------
Total.................................................. 99,829 26,758
Less -- current portion of long-term borrowings............. (24,274) (11,258)
-------- --------
Long-term borrowings -- less current portion................ $ 75,555 $ 15,500
======== ========
</TABLE>
On January 10, 1997, Lobdell entered into a credit agreement with a
syndicate of banks (the Lobdell Credit Agreement), under which Lobdell may
borrow up to $110,000, including a term loan of $54,000, a revolving credit line
of $38,000, a capital expenditure note of $18,000 and a swingline note of
$3,000. At March 31, 1997, no borrowings were outstanding under the capital
expenditure note or swingline note.
The terms of the Lobdell Credit Agreement contain, among other provisions,
requirements for maintaining defined levels of tangible net worth, funded debt
to cash flows and cash flow coverage. The Lobdell Credit Agreement also contains
certain restrictions on the payment of dividends. Quarterly commitment fees
ranging from .25% to .40% are required to be paid on the unused amounts of the
revolving credit line and the capital expenditure note. Borrowings are secured
by substantially all assets of Lobdell. At March 31, 1997, borrowings supported
by the combined lines of credit totaled $1,250, leaving $54,750 unused and
available.
The proceeds of the industrial development revenue bonds were used to
finance the real and personal property of Creative. These bonds are backed by an
NBD letter of credit, which carries a rate of 1.50% and is collateralized by
substantially all assets of Creative. The letter of credit reimbursement
agreement includes covenants requiring minimum tangible capital, debt service
coverage and limitations on other indebtedness.
On February 11, 1997, BMGNA entered into a credit agreement with a
syndicate of banks (the BMGNA Credit Agreement) under which BMGNA may borrow up
to $46,000, including a term loan of $20,000, a revolving credit line of
$23,000, a capital expenditure note of $3,000 and a swingline note of $3,000. At
March 31, 1997, no borrowings were outstanding under the revolving credit line,
capital expenditure note or swingline note.
F-14
<PAGE> 114
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7. BORROWING ARRANGEMENTS -- (CONTINUED)
The terms of the BMGNA Credit Agreement contain, among other provisions,
requirements for maintaining defined levels of tangible net worth, funded debt
to cash flows and cash flow coverage. The BMGNA Credit Agreement also contains
certain restrictions on the payment of dividends. Quarterly commitment fees
ranging from .35% to .50% are required to be paid on the unused amounts of the
revolving credit line and the capital expenditure note. Borrowings are secured
by substantially all assets of BMGNA.
The Bank -- term loan, Lewis, Nations Bank -- Saturn tooling, BMGNA and EDC
tooling loan, BMGNA are used to finance customer tooling. These loans are
collateralized by either a customer purchase order or the tooling assets.
The CCFL loan represents a term loan payable through October 31, 2000 which
is secured by substantially all the assets of BMGNA.
Aggregate maturities of long-term borrowings at March 31, 1997 are as
follows:
<TABLE>
<S> <C>
1998........................................................ $24,274
1999........................................................ 14,886
2000........................................................ 13,687
2001........................................................ 16,975
2002........................................................ 27,206
Thereafter.................................................. 2,801
-------
$99,829
=======
</TABLE>
NOTE 8. INCOME TAXES
The Company's income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
--------------------------------- ---------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 28, 1995 APRIL 1, 1995
YEAR ENDED THROUGH THROUGH YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995
-------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Current
Federal.......................... $ (821) $ -- $ -- $ --
State............................ (124)
Foreign.......................... 34 46 49
------ ------ ------- -----
(945) 34 46 49
------ ------ ------- -----
Deferred
Federal.......................... 899
State............................ 137
Foreign.......................... 974 168 (984) (398)
------ ------ ------- -----
2,010 168 (984) (398)
------ ------ ------- -----
$1,065 $202 $(938) $(349)
====== ====== ======= =====
</TABLE>
F-15
<PAGE> 115
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8. INCOME TAXES -- (CONTINUED)
The difference between the statutory rate and the Company's effective rate
was as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
---------------------------------- ----------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 28, 1995 APRIL 1, 1995
YEAR ENDED THROUGH THROUGH YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995
-------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Statutory rate....................... 34.0% 36.0% 36.0% 36.0%
Foreign rates varying from 34%....... 1.8
Large corporation tax................ (2.8) (1.6) (3.1)
State taxes, net of federal
benefit............................ .3
Nondeductible items.................. 4.1 (.5) (1.2) (11.3)
Other................................ .5
---- ----- ----- -----
Effective income tax rate............ 40.7% 32.7% 33.2% 21.6%
==== ===== ===== =====
</TABLE>
Significant components of the Company's deferred tax assets and
(liabilities) are as follows at March 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Deferred tax liabilities
Tax depreciation in excess of book........................ $(30,065) $ --
Inventory reserve......................................... (1,292)
-------- ------
Gross deferred tax liabilities.............................. (31,357)
-------- ------
Deferred tax assets
Postretirement medical benefits........................... 13,387
Impairment reserve........................................ 1,200
Workers' compensation..................................... 1,089
Medical benefits accrual.................................. 702
Allowance for bad debts................................... 502
AMT credit carryforward................................... 3,000
Pension benefits.......................................... 1,606 498
Net operating loss carryforwards.......................... 2,905 3,066
Book depreciation in excess of tax........................ 989
Restructuring reserve..................................... 3,927 311
Foreign exchange.......................................... 46 696
Other..................................................... 2,471 579
-------- ------
Gross deferred tax assets................................. 30,835 6,139
-------- ------
Valuation allowance......................................... (200)
-------- ------
Net deferred tax asset (liability).......................... $ (722) $6,139
======== ======
</TABLE>
A valuation allowance is provided on the tax benefits otherwise associated
with certain tax attributes unless it is considered more likely than not that
the benefit will be realized.
The Company has net operating loss carryforwards for Canadian income tax
purposes with potential future tax benefits of approximately $2,900 at March 31,
1997. The Canadian net operating losses have the ability to be carried forward
indefinitely. In addition, the Company has Alternative Minimum Tax credit
carryforwards aggregating $3,000 at March 31, 1997, which can be carried forward
indefinitely.
F-16
<PAGE> 116
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8. INCOME TAXES -- (CONTINUED)
The Company has net operating loss carryforwards with a potential future
tax benefit of approximately $150 for state income tax purposes and Tennessee
Jobs Tax Credit carryforwards of approximately $200 at March 31, 1997, both of
which expire during the years 2010 and 2011.
NOTE 9. RESTRUCTURING RESERVES
In connection with the acquisition of Lobdell described in Note 3,
management began to formulate and assess a plan to exit certain activities of
Lobdell and accordingly established certain restructuring reserves aggregating
$7,050 in Lobdell's opening balance sheet. Currently, management's restructuring
plan includes the sale of certain subsidiaries, closure of a Lobdell owned
manufacturing facility and sale of the current Lobdell owned corporate offices.
Included in the restructuring reserves at March 31, 1997 are severance and
benefits for employees to be relocated and terminated ($5,052) and other
restructuring related costs ($1,998). The effect of these initiatives is
currently expected to result in the termination of approximately 250 employee
positions.
Management continues to assess the future manufacturing capacity and
corporate office requirements of the Company and expects to complete its
assessment and finalization of the restructuring plan within one year of the
acquisition date of Lobdell.
As noted above, in connection with the Company's restructuring activities,
certain employees of Lobdell were terminated. The termination of certain of
these employees resulted in a postretirement medical benefit curtailment gain of
$957 which, in accordance with the purchase method of accounting, was treated as
a reduction in liabilities assumed at the acquisition date. Accordingly, no
postemployment medical benefit curtailment gain has been recognized in the
Company's statement of operations for the year ended March 31, 1997.
NOTE 10. BENEFIT PLANS
The Company sponsors eight noncontributory plans and one contributory
defined benefit pension plan covering substantially all employees meeting the
age and length of service requirements as specified in the plans. The plan
covering salaried employees provides pension benefits that are based on a
percentage of the employee's average monthly compensation during the five
highest consecutive years out of their last ten years, and their years of
credited service up to a maximum of 30 years. The hourly plans do not provide
for increases in future compensation levels. The Company's funding policy for
this plan is to make contributions in amounts sufficient to annually fund the
plan's current service cost and the initial past service cost, plus interest,
over a period of 30 years. Plans covering hourly employees generally provide
benefits of stated amounts based on their unique labor agreements for each year
of service. The Company's funding policy for these plans is to make at least the
minimum annual contributions required by applicable regulations.
F-17
<PAGE> 117
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10. BENEFIT PLANS -- (CONTINUED)
The following table sets forth the plans' funded status and amounts
recognized on the Company's balance sheets at March 31:
<TABLE>
<CAPTION>
OVERFUNDED PLANS UNDERFUNDED PLANS
------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation
Vested benefits.................................... $ 17,573 $ 2,376 $ 34,106 $ 11,539
Nonvested benefits................................. 1,170 74 1,853 356
-------- ------- -------- --------
18,743 2,450 35,959 11,895
Effect of projected future compensation levels....... 4,060 1,285
-------- ------- -------- --------
Projected benefit obligation for service rendered.... 22,803 3,735 35,959 11,895
Plan assets at fair value (primarily U.S. government
securities, bonds and notes and mutual funds)...... (22,854) (4,155) (32,280) (10,525)
-------- ------- -------- --------
Plan assets less (greater) than projected benefit
obligation......................................... (51) (420) 3,679 1,370
Unrecognized net loss, including asset gains/losses
not yet reflected in market values................. 10 (21)
Unrecognized prior service cost...................... (20)
Unrecognized net obligation being recognized over
15-20 years........................................ 15
Experience gains (losses)............................ (61) 125 (392) (363)
Adjustment required to recognize minimum liability... 472 368
-------- ------- -------- --------
(Prepaid) accrued pension cost....................... $ (87) $ (295) $ 3,718 $ 1,375
======== ======= ======== ========
</TABLE>
The minimum pension liability in excess of the allowable intangible asset
has been recorded as a separate component of equity, net of tax.
F-18
<PAGE> 118
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10. BENEFIT PLANS -- (CONTINUED)
Net periodic pension cost for each year and the actuarial assumptions used
in determining the projected benefit obligation were as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
---------------------------------- ----------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 28, 1995 APRIL 1, 1995
YEAR ENDED THROUGH THROUGH YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996 OCTOBER 27, 1995 MARCH 31, 1995
-------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Service cost......................... $ 1,074 $ 266 $ 344 $ 519
Interest cost........................ 2,127 530 697 1,005
Expected return on assets............ (2,138) (425) (533) (847)
Net amortization and deferral........ 15 60 36
------- ------- ------- ------
Net periodic pension cost............ $ 1,078 $ 371 $ 568 $ 713
======= ======= ======= ======
Discount rate
Lobdell............................ 7.75% -- -- --
BMGH............................... 8.00% 8.50% 8.75% 9.50%
Expected return on assets
Lobdell............................ 9.00% -- -- --
BMGH............................... 8.50% 8.50% 7.50% 7.50%
Salary progression
Lobdell............................ 4.50% -- -- --
BMGH............................... 5.50% 5.50% 5.50% 5.50%
</TABLE>
The Company sponsors five defined contribution 401(k) plans. The Salaried
Employees' Retirement Savings Plan covers all salaried employees of Lobdell and
Winchester. The Alma Hourly Employees' Retirement Savings Plan, the Argos Hourly
Employees' Retirement Savings Plan, the Creative Fabrication Corporation and the
Greencastle Hourly Employees' Plan cover all eligible hourly employees at the
respective locations. The Company generally contributes 25% of the first 6% of
the base compensation that a participant contributes to the plans.
NOTE 11. POSTRETIREMENT MEDICAL BENEFITS
In addition to the Company's defined benefit pension plans, Lobdell
sponsors unfunded defined benefit medical plans that provide postretirement
medical benefits to certain full-time employees meeting the age, length of
service and contractual requirements as specified in the plans. The plan
covering salaried employees is a contributory plan providing medical benefits to
those hired before July 1, 1993. The percentage of cost paid by the retiree
currently ranges from 10% for 30 or more years of service at retirement to 55%
for 15 years of service at retirement, with Company contributions commencing
upon attainment of age 62. Those retiring with less than 15 years of service and
those hired after June 30, 1993 may participate in the plan at their own cost.
The plan is currently noncontributory for those employees who retired prior to
July 1, 1993. The plans covering hourly employees provide medical benefit plan
options that are similar to those offered to active hourly employees, with
Lobdell contributions limited either to that available under traditional
coverage for Alma hourly retirees or to 87% of the total applicable premium for
Greencastle retirees.
F-19
<PAGE> 119
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11. POSTRETIREMENT MEDICAL BENEFITS -- (CONTINUED)
The following table presents the plan's funded status reconciled with
amounts recognized in the Company's balance sheet.
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
Accumulated postretirement benefit obligation
Retirees.................................................. $14,479
Full eligible active plan participants.................... 4,287
Other active plan participants............................ 13,510
-------
Total unfunded obligation................................. 32,276
Unrecognized gain........................................... 1,191
-------
Postretirement medical benefits liability................... $33,467
=======
</TABLE>
Net periodic postretirement benefit cost for the period from January 10,
1997 to March 31, 1997 included the following components:
<TABLE>
<S> <C>
Service cost -- benefits earned during the period........... $272
Interest cost on the accumulated postretirement benefit
obligation................................................ 623
----
Net periodic postretirement benefit cost.................... $895
====
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75%. The weighted average annual assumed
rate of increase in the per capita cost of covered benefits (i.e., healthcare
cost trend rate) is 8.8% in 1997 trending to 6.5% in 2008 and thereafter for
retirees less than 65 years of age. For retirees 65 years of age and over, the
rate is 8.5% in 1997 trending to 6.5% in 2008 and thereafter. The healthcare
cost trend rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed healthcare cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of March 31, 1997 by approximately $4,624 and net periodic
postretirement benefit cost for the period from January 10, 1997 to March 31,
1997 by approximately $140.
NOTE 12. REDEEMABLE PREFERRED STOCK
In connection with the acquisition of Lobdell described in Note 3,
redeemable preferred stock with a face value of $50,748 was issued. Redeemable
preferred stock with a face value of $40,748 was delivered to the former
shareholders of Lobdell on January 10, 1997. The remaining redeemable preferred
stock with a face value of $10,000 was placed in escrow pending final
determination of the purchase price. The preferred stock issuance consisted of
457,541 shares of Series A $3.00 Cumulative Preferred Stock (Series A Preferred)
and 49,938 shares of Series B Preferred Stock (Series B Preferred). The annual
dividend on the Series A Preferred is $3.00 per share, payable semi-annually.
Dividends on the Series A Preferred are cumulative, but do not bear interest.
The Series B Preferred does not provide for dividends or interest.
Under the terms of the issuance of the Series A Preferred and the Series B
Preferred (Stock Agreement), the holders of the Series A Preferred and Series B
Preferred maintain limited voting rights. Holders are entitled to vote on any
provisions that would adversely affect the rights or privileges of the Series A
Preferred or Series B Preferred holders or management's plans to issue any
equity securities that would rank prior to the Series A Preferred. Holders of
the Series A Preferred are entitled to elect at least one director of Lobdell,
which, under certain provisions of the Stock Agreement, may increase to two.
F-20
<PAGE> 120
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 12. REDEEMABLE PREFERRED STOCK -- (CONTINUED)
Lobdell is required to redeem all shares of Series A Preferred and Series B
Preferred on December 31, 2006 at a price of $100 per share, plus all declared
or accumulated but unpaid dividends on the Series A Preferred. If Oxford does
not commence an initial public offering of common stock (IPO) prior to June 30,
2006, then the redemption price of the Series A Preferred is $103 per share. If
an IPO does not occur by December 31, 2001, each holder of Series A Preferred
has the option to redeem annually a maximum of 20 percent of the shares held at
a price of $100 per share on each December 31, beginning in 2002.
Series A Preferred and Series B Preferred holders are not allowed to
transfer, sell or assign the shares prior to February 1, 1999. Subsequent to
that date, Lobdell has the right of first refusal to purchase any of the shares
transferred, sold or assigned by a holder of Series A Preferred or Series B
Preferred.
Holders of Series A Preferred are entitled to convert their shares to
Oxford common stock issued in connection with an IPO. Individual Series A
Preferred holders may convert a maximum of 50% of their shares, but the total of
all Series A Preferred shares converted may not exceed 25% of the total Series A
Preferred shares outstanding.
The Series B Preferred shares have been discounted, as the redemption price
of $100 per share was greater than the fair value of the shares at issuance. The
recorded value will be accreted to the redemption value at the time redemption
first becomes available.
The Series A Preferred and Series B Preferred have been included in the
accompanying consolidated balance sheet at their respective fair values at the
date of issuance of $35,754 and $3,246, respectively, and have been adjusted for
accrued dividends and accretion of $258 and $42 respectively.
NOTE 13. RELATED PARTY TRANSACTIONS
The Company is charged a fee by a related party, The Oxford Investment
Group, Inc., for consulting, finance and management services. Fees charged to
the Company by The Oxford Investment Group, Inc. approximated $275 for the year
ended March 31, 1997. In connection with the acquisitions of BMGNA and Lobdell,
investment banking fees of $200 and $300, respectively, were paid to The Oxford
Investment Group, Inc.
NOTE 14. COMMITMENTS AND CONTINGENCIES
Operating Leases
As of March 31, 1997, the Company had long-term operating leases covering
certain machinery and equipment. The minimum rental commitments under
noncancellable operating leases with lease terms in excess of one year are as
follows as of March 31, 1997:
<TABLE>
<S> <C>
1998........................................................ $ 4,695
1999........................................................ 2,813
2000........................................................ 3,159
2001........................................................ 1,140
2002........................................................ 3,088
-------
$14,895
=======
</TABLE>
Environmental Matters
The Company is subject to federal, state and local laws and regulations
which govern environmental matters. These laws regulate the discharge of
materials into the environment and may require the Company to remove or mitigate
the environmental effects of the disposal or release of petroleum or chemical
substances.
F-21
<PAGE> 121
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 14. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
The Company has identified several environmental matters resulting from prior
operations. Due to the relatively early stage of investigation of certain of
these identified matters as well as potential indemnification by other
potentially responsible parties, management is unable to reasonably estimate the
ultimate cost of remediating certain of these identified environmental matters.
At March 31, 1997, the Company has a liability of approximately $880 recorded
for estimated costs of known environmental matters.
General
The Company is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of business. In
the opinion of management, after reviewing the information which is currently
available with respect to such matters and consulting with legal counsel, any
liability which may ultimately be incurred with respect to these matters will
not materially affect the financial position, results of operations or cash
flows of the Company.
NOTE 15. Segment Information
The Company operates in one industry segment and all sales are to
unaffiliated customers. Net sales by geographic area, identifiable assets by
geographic area and net export sales by geographic area are as follows:
<TABLE>
<CAPTION>
Company Predecessor
--------------------------------------------------------------------------------------
Period From Period From
October 28, 1995 April 1, 1995
Year Ended Through Through Year Ended
March 31, 1997 March 31, 1996 October 27, 1995 March 31, 1995
<S> <C> <C> <C> <C>
NET SALES
United States................ $ 54,660 $ - $ - $ -
Canada....................... 82,201 35,572 49,043 75,097
----------------------------------------------------------------------------
$136,861 $35,572 $49,043 $75,097
============================================================================
OPERATING INCOME (LOSS)
United States................ $ 1,101 $ - $ - $ -
Canada....................... 2,700 1,713 ( 1,774) ( 348)
----------------------------------------------------------------------------
$ 3,801 $ 1,713 ($ 1,774) ($ 348)
=============================================================================
IDENTIFIABLE ASSETS
United States................ $189,308 $ -
Canada....................... 57,153 49,200
--------------------------------
$246,461 $49,200
================================
NET EXPORT SALES
United States................ $ - $ - $25,397 $37,620
Canada....................... 41,846 16,476
Mexico....................... 13,573 1,366 664 33
Other........................ 2,120
-----------------------------------------------------------------------------
$ 57,539 $17,842 $26,061 $37,653
=============================================================================
</TABLE>
NOTE 16. SUBSEQUENT EVENT
On May 21, 1997, the Company signed a definitive Agreement and Plan of
Merger (the Merger Agreement) pursuant to which it will acquire (the Merger)
Howell Industries, Inc., a Michigan corporation (Howell).
Howell is a manufacturer of high-quality welded subassemblies and detailed
stampings used as OEM components, primarily in suspension system applications,
in the production of light trucks, SUVs, mini-vans, vans and passenger cars.
Pursuant to the Merger Agreement, the shareholders of Howell will receive
approximately $23,400 in cash. The Company also executed a Shareholder Agreement
pursuant to which it has received from the principal shareholder an option to
purchase its shares, which constitute approximately 32.6% of the issued and
outstanding shares of common stock of Howell (the Shares), at any time prior to
December 31, 1997, together with its agreement to vote all such Shares in favor
of the Merger.
The acquisition will be accounted for by the purchase method. Accordingly,
the results of operations of the acquired company will be included with those of
the Company for periods subsequent to the date of acquisition. Howell had net
sales of $79,211 and net income of $475 for the year ended July 31, 1996.
The unaudited pro forma combined condensed balance sheet of the Company and
Howell as of March 31, 1997 after giving effect to certain pro forma adjustments
is as follows:
ASSETS
Current assets.............................................. $108,419
Property and equipment, net................................. 162,664
Other assets................................................ 14,462
Goodwill.................................................... 2,013
--------
$287,558
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities......................................... $ 94,097
Other liabilities........................................... 151,820
Redeemable preferred stock.................................. 39,300
Shareholders' equity........................................ 2,341
--------
$287,558
========
F-22
<PAGE> 122
OXFORD AUTOMOTIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The unaudited pro forma combined results of operations of the Company
(including Lobdell from January 11, 1997 through March 31, 1997) and Howell for
the year ended March 31, 1997 after giving effect to certain pro forma
adjustments are as follows:
<TABLE>
<S> <C>
Net sales................................................... $228,404
========
Net income.................................................. $ 1,158
========
Net income applicable to common shares...................... $ 858
========
Net income per common share................................. $ 6.44
========
</TABLE>
The foregoing unaudited pro forma results of operations reflect adjustments
for additional interest expense related to the financing of the acquisition and
the additional depreciation expense, as a result of the write-up of property,
plant and equipment, net of the related tax benefit.
NOTE 17. EVENT (UNAUDITED) SUBSEQUENT TO MAY 19, 1997
On July 15, 1997, the Company entered into a Settlement Agreement and
Mutual Release with the preferred shareholders of Lobdell (the Settlement
Agreement). Pursuant to the Settlement Agreement, 60,002 shares of escrowed
Series A Preferred Stock and 49,938 shares of Series B Preferred Stock, which
represented all of the outstanding Series B Preferred Stock, were canceled. The
remaining 39,998 shares of escrowed Series A Preferred Stock were released to
the preferred shareholders of Lobdell.
The effect of the aforementioned settlement will be recorded by the Company
in the second quarter of fiscal 1998 and will increase property, plant and
equipment $956, increase noncurrent deferred tax liabilities $319, increase
Redeemable Series A $3.00 Cumulative Preferred Stock $4,000 and decrease
Redeemable Series B Preferred Stock $3,363.
NOTE 18. INTERIM DATA (UNAUDITED)
The accompanying balance sheet as of June 30, 1997 and the unaudited
consolidated statements of operations and cash flows for the three month
periods ended June 30, 1997 and 1996 include all adjustments, consisting of
normal recurring adjustments, which in the opinion of management are necessary
for the fair presentation of the financial position, results of operations and
cash flows. The results of operations for any interim period are not
necessarily indicative of the results of operations for a full year.
Inventories are stated at lower of cost or market and consist of the following
at June 30, 1997:
<TABLE>
<S><C>
Raw materials.............................. $ 5,403
Finished goods and work-in-process......... 9,491
-------
Total.............................. 14,894
Less allowance for obsolescence and lower
of cost or market......................... (271)
-------
Net........................ $14,623
=======
</TABLE>
F-23
<PAGE> 123
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Lobdell Emery Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in shareholders'
equity and of cash flows after the restatement discussed in Note 16 present
fairly, in all material respects, the financial position of Lobdell Emery
Corporation and its subsidiaries (the Corporation) at December 31, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Corporation's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As described in Note 15, on January 10, 1997 all of the outstanding shares
of common stock of the Corporation were sold to L-E Acquisition, Inc.
Price Waterhouse LLP
Detroit, Michigan
May 19, 1997
F-24
<PAGE> 124
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE-RELATED DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 278 $ 716
Trade receivables -- less allowance of $1,254 and $500,
respectively........................................... 28,769 32,514
Inventories............................................... 6,083 10,212
Income taxes receivable................................... 1,282
Reimbursable tooling...................................... 47 407
Deferred income taxes..................................... 3,081 3,038
Prepaid expenses and other current assets................. 191 827
-------- --------
Total current assets................................. 39,731 47,714
-------- --------
Advance under shareholders' redemption agreement............ 1,542
Unexpended bond proceeds.................................... 3,886 4,508
Intangible pension asset.................................... 3,216 2,113
Other noncurrent assets..................................... 2,483 3,825
Deferred income taxes....................................... 2,531
Property, plant and equipment, net.......................... 72,804 72,503
-------- --------
TOTAL ASSETS......................................... $126,193 $130,663
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable.................................... $ 15,114 $ 11,627
Employee compensation..................................... 5,156 4,614
Accrued expenses and other current liabilities............ 6,511 6,516
Current portion of long-term borrowings................... 2,200 7,169
-------- --------
Total current liabilities............................ 28,981 29,926
-------- --------
Pension liability........................................... 1,855 1,627
Postretirement medical benefits liability................... 19,639 16,889
Deferred income taxes....................................... 1,180
Other noncurrent liabilities................................ 1,950 1,739
-------- --------
23,444 21,435
-------- --------
Long-term borrowings -- less current portion................ 41,134 39,097
-------- --------
Total liabilities.................................... 93,559 90,458
-------- --------
Commitments and contingent liabilities (Note 13)
Redeemable Common stock, Class B nonvoting, $1 par value,
outstanding 137,112 shares (Note 11)...................... 1,800 1,297
-------- --------
Shareholders' equity
Common stock, Class A voting, $1 par value, authorized
540,000 shares, outstanding 478,255 shares............. 478 478
Common stock, Class B nonvoting, $1 par value authorized
5,400,000 shares; outstanding 3,430,623 shares......... 3,431 3,431
Retained earnings......................................... 27,376 35,730
Equity adjustment for minimum pension liability........... (451) (731)
-------- --------
30,834 38,908
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $126,193 $130,663
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-25
<PAGE> 125
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales................................................... $253,997 $269,260 $270,062
Cost of sales............................................... 244,129 252,671 252,275
-------- -------- --------
Gross profit................................................ 9,868 16,589 17,787
Selling, general and administrative......................... 16,395 14,949 14,438
Equipment impairment........................................ 3,000
-------- -------- --------
Operating income (loss)................................... (9,527) 1,640 3,349
Other income (expense)
Interest expense.......................................... (3,557) (3,448) (2,799)
Other income.............................................. 664 744 366
-------- -------- --------
Income (loss) before benefit (provision) for income taxes... (12,420) (1,064) 916
Benefit (provision) for income taxes........................ 4,569 264 (442)
-------- -------- --------
Income (loss) before cumulative effect of accounting
change.................................................... (7,851) (800) 474
Cumulative effect of accounting change -- post-employment
benefits, net of income tax benefit ($.12 per share)...... (510)
-------- -------- --------
Net loss.................................................... $ (7,851) $ (800) $ (36)
======== ======== ========
Net loss per share.......................................... $ (1.94) $ (.19) $ (.01)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-26
<PAGE> 126
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE RELATED DATA)
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
CLASS A CLASS B RETAINED FOR MINIMUM
VOTING NONVOTING EARNINGS PENSION LIABILITY TOTAL
------- --------- -------- ----------------- -----
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1994................ $478 $3,427 $36,715 $ -- $40,620
Net loss for 1994........................ (36) (36)
Stock option activity.................... 4 70 74
Dividends ($.06 per share)............... (257) (257)
Accretion of redeemable common stock..... (63) (63)
Minimum pension liability adjustment..... (492) (492)
---- ------ ------- ------- -------
Balances at December 31, 1994.............. 478 3,431 36,429 (492) 39,846
Net loss for 1995........................ (800) (800)
Stock option activity.................... 213 213
Dividends ($.03 per share)............... (124) (124)
Accretion of redeemable common stock..... 12 12
Minimum pension liability adjustment..... (239) (239)
---- ------ ------- ------- -------
Balances at December 31, 1995.............. 478 3,431 35,730 (731) 38,908
Net loss for 1996........................ (7,851) (7,851)
Accretion of redeemable common stock..... (503) (503)
Minimum pension liability adjustment..... 280 280
---- ------ ------- ------- -------
Balances at December 31, 1996.............. $478 $3,431 $27,376 $(451) $30,834
==== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-27
<PAGE> 127
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $ (7,851) $ (800) $ (36)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation.............................................. 13,746 12,486 12,045
Deferred income taxes..................................... (3,922) (1,332) (1,395)
Pension liability......................................... (2,230) 657 159
Postretirement medical benefits liability................. 2,750 2,245 2,923
Equipment impairment...................................... 3,000
Loss (Gain) on sale of equipment.......................... (23) (34) 68
Changes in operating assets and liabilities affecting cash
Trade receivables......................................... 3,745 (644) (4,397)
Inventories............................................... 4,129 (1,594) (66)
Income taxes receivable/payable........................... (1,601) 290 (1,569)
Reimbursable tooling...................................... 360 (386) (483)
Prepaid expenses and other current assets................. 635 (649) 60
Advance under shareholders' redemption agreement.......... (1,542) 500 113
Other noncurrent assets................................... 3,456 (2,948) 1,619
Trade accounts payable.................................... 3,487 (1,769) (961)
Employee compensation..................................... 542 554 72
Accrued expenses and other current liabilities............ (5) 1,241 219
Other noncurrent liabilities.............................. 220 9 850
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES............ 18,896 7,826 9,221
-------- -------- --------
INVESTING ACTIVITIES
Acquisitions of property, plant and equipment............... (16,439) (14,917) (8,696)
Proceeds from sale of equipment............................. 37 276 175
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES................ (16,402) (14,641) (8,521)
FINANCING ACTIVITIES
Proceeds from long-term borrowing arrangements.............. 25,000 8,500 27,020
Principal payments on long-term borrowing arrangements...... (23,932) (5,618) (32,831)
Net borrowings (payments) under lines of credit............. (4,000) 5,350 5,550
Proceeds from exercise of stock options..................... 213 74
Dividends................................................... (124) (257)
Redemption and retirement of redeemable common stock........ (1,581) (903)
-------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES................ (2,932) 6,740 (1,347)
-------- -------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS................... (438) (75) (647)
Cash and cash equivalents at beginning of year.............. 716 791 1,438
-------- -------- --------
Cash and cash equivalents at end of year.................... $ 278 $ 716 $ 791
======== ======== ========
Cash paid for interest...................................... $ 3,774 $ 3,411 $ 2,732
======== ======== ========
Cash paid for income taxes.................................. $ 963 $ 291 $ 3,067
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-28
<PAGE> 128
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLAR AMOUNTS IN THOUSANDS)
NOTE 1. NATURE OF OPERATIONS
Lobdell Emery Corporation (the Corporation) is a full-service supplier of
metal stampings and welded assemblies used as original equipment components
primarily by North American original equipment automotive manufacturers. The
Corporation's products are used in a wide variety of sport utility vehicles,
light and medium trucks, vans and passenger cars. The Corporation primarily
operates from five plants located in the Midwest which account for approximately
98% of the Corporation's sales for the year ended December 31, 1996. The
Corporation's hourly workforce is represented by various locals of the United
Auto Workers.
Sales to the Corporation's two primary customers as a percentage of total
sales approximated the following for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Ford Motor Company.......................................... 43% 52% 64%
General Motors Corporation.................................. 49% 40% 29%
</TABLE>
Accounts receivable from Ford Motor Company and General Motors Corporation
represent approximately 47% and 49%, respectively, of the December 31, 1996
accounts receivable balance.
Although the Corporation is directly affected by the economic well being of
the automotive industry and customers referred to above, management does not
believe significant credit risk exists at December 31, 1996. The Corporation
does not require collateral to reduce such risk and historically has not
experienced significant losses related to receivables from individual customers
or groups of customers in the automotive industry.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated balance sheets include the accounts of Lobdell Emery
Corporation and its wholly-owned subsidiaries, Lewis Emery Capital Corporation
(Lewis), Concept Management Corporation and subsidiaries (Concept), Laserweld
International (Laserweld) and Parallel Group International (Parallel). Concept
Management Corporation also includes the accounts of its wholly-owned
subsidiaries, Winchester Fabrication Corporation (Winchester) and Creative
Fabrication Corporation (Creative). Intercompany accounts and transactions have
been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized by the Corporation upon shipment of product to the
customer.
Financial Instruments
At December 31, 1996, the carrying amount of financial instruments such as
cash and cash equivalents, trade receivables and payables and unexpended bond
proceeds, approximated their fair values. The carrying
F-29
<PAGE> 129
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
amount of the long-term customer receivables and borrowings at December 31,
1996, approximated their fair values based on the variable interest rates
available to the Corporation for similar arrangements.
Cash Equivalents
The Corporation considers all highly-liquid investments with maturity of
three months or less when purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is principally
determined by the last-in, first-out (LIFO) method.
Unexpended Bond Proceeds
Unexpended bond proceeds in the accompanying consolidated balance sheets
represent unexpended proceeds from the issuance of industrial development
revenue bonds by Creative as discussed in Note 6, and are invested in allowable
money market accounts and commercial paper with a maturity of 90 days or less.
Property, Plant and Equipment
Property, plant and equipment are stated on the basis of historical cost
and include expenditures for improvements which materially increase the useful
lives of existing assets. Expenditures for normal repair and maintenance are
charged to operations as incurred. For federal income tax purposes, depreciation
is computed using accelerated and straight-line methods. For financial reporting
purposes, depreciation is computed principally using the straight-line method
over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Land improvements........................................... 15
Buildings................................................... 30
Machinery and equipment..................................... 3-10
</TABLE>
At December 31, 1996, the Corporation had a machine in process at a vendor
location. The aggregate cost of the machine will be $5,300, for which the
Corporation has recorded approximately $2,700 in the accompanying consolidated
balance sheet. The remaining $2,600 will be recorded by the Corporation upon
final technical approval of the machine.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," the Corporation established an impairment
reserve against certain of the assets of Laserweld in the amount of $3,000 at
December 31, 1996. The reserve represents the difference between the fair value
of the Laserweld assets, based primarily on a recent independent appraisal, and
the cost of such assets.
Environmental Compliance and Remediation
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations which do not contribute to current or future revenue
generation are expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable and the costs can be reasonably estimated.
Estimated costs are based upon
F-30
<PAGE> 130
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
enacted laws and regulations, existing technology and the most probable method
of remediation. The costs determined are not discounted and exclude the effects
of inflation and other social and economic factors.
Income Taxes
Deferred taxes are provided to give recognition to the effect of expected
future tax consequences of temporary differences between the carrying amounts
for financial reporting purposes and the tax bases for income tax purposes of
assets and liabilities.
Reimbursable Tooling
Reimbursable tooling represents net costs incurred on tooling projects for
which the Corporation expects to be reimbursed by customers. Ongoing estimates
of total costs to be incurred on each tooling project are made by management and
losses, if any, are recorded when known. Under certain tooling projects,
billings exceed costs incurred and the related tooling gain is recognized upon
acceptance of the tooling by the customer.
At December 31, 1996, approximately $2,800 of reimbursable tooling was in
process at various vendor locations. These amounts, which have not been recorded
in the accompanying consolidated balance sheet, will be recorded and paid upon
the Corporation's receipt of payment from the owners of the tooling.
Net Loss Per Share
Net loss per share is determined by dividing net loss by the weighted
average number of common shares outstanding during the period.
Reclassifications
Certain amounts from the prior year have been reclassified to conform with
the current year presentation.
NOTE 3. INVENTORIES
Inventories are comprised of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials............................................... $ 3,851 $ 3,861
Finished goods and work-in-process.......................... 5,278 10,177
------- -------
9,129 14,038
LIFO reserve................................................ (3,046) (3,826)
------- -------
$ 6,083 $10,212
======= =======
</TABLE>
The Corporation does not separately identify finished goods from
work-in-process.
During 1996, inventory quantities were reduced. This reduction resulted in
a liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years as compared with the cost of 1996 purchases, the effect of which
increased net income by approximately $300.
F-31
<PAGE> 131
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at December
31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land and land improvements............................. $ 11,130 $ 10,760
Buildings.............................................. 33,515 32,801
Machinery and equipment, net of impairment reserve of
$3,000 in 1996....................................... 137,914 127,389
Construction-in-process................................ 6,495 5,216
--------- ---------
189,054 176,166
Less -- accumulated depreciation....................... (116,250) (103,663)
--------- ---------
$ 72,804 $ 72,503
========= =========
</TABLE>
NOTE 5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities are comprised of the
following at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Accrued workers' compensation............................... $2,438 $2,438
Accrued property taxes...................................... 1,950 1,622
Accrued medical benefits.................................... 1,816 1,615
Other....................................................... 307 841
------ ------
$6,511 $6,516
====== ======
</TABLE>
NOTE 6. BORROWING ARRANGEMENTS
Borrowings consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
BANK SYNDICATE -- TERM LOAN, LOBDELL EMERY CORPORATION
Interest at variable spread over prime (8.25% at December
31, 1996). Quarterly principal payments of $893 plus
interest, matures September 12, 1999...................... $24,107 $21,230
BANK -- TERM LOAN, LEWIS
Interest at .625% over 90-day LIBOR (6.19% at December 31,
1996). Quarterly principal payments of approximately $400,
matures October 1, 1998................................... 3,227 4,936
BANK SYNDICATE -- REVOLVING CREDIT LINE, LOBDELL EMERY
CORPORATION
Interest at variable spread over prime (8.25% at December
31, 1996)................................................. 7,600 11,600
INDUSTRIAL DEVELOPMENT REVENUE BONDS -- CREATIVE
$8,500 issued September 27, 1995, floating rate interest
(4.35% at December 31, 1996). Quarterly principal payments
based on graduated maturity schedule. Backed by NBD Bank
letter of credit.......................................... 8,400 8,500
------- -------
Total.................................................. 43,334 46,266
Less -- current portion of long-term borrowings............. (2,200) (7,169)
------- -------
Long-term borrowings -- less current portion................ $41,134 $39,097
======= =======
</TABLE>
F-32
<PAGE> 132
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 6. BORROWING ARRANGEMENTS -- (CONTINUED)
Subsequent to December 31, 1996, the Bank syndicate term loan and revolving
credit line were paid in full, with accrued interest, in connection with the
merger described in Note 15. These borrowings were replaced with a $54,000 term
loan, $38,000 revolving line of credit and $3,000 swing line of credit, each
expiring on January 10, 2002. Accordingly, these amounts are classified as
long-term borrowings at December 31, 1996. The term loan bears interest at a
variable spread over 90-day LIBOR, and the revolving and swing lines of credit
bear interest at a variable spread over the prime rate. The Corporation also
entered into an $18,000 capital expenditure line of credit that expires on
January 10, 2002. The agreements contain various financial and other covenants.
Borrowings are secured by substantially all of the assets of the Corporation.
The proceeds of the Lewis term debt were used to finance customer tooling.
The debt is collateralized by a customer purchase order which allows for
recovery of the term-debt principal and interest, administrative cost and a
predetermined markup.
The proceeds of the industrial development revenue bonds were used to
finance the real and personal property of Creative. These bonds are backed by an
NBD Bank letter of credit, which carries a rate of .8% and is collateralized by
substantially all assets of Creative. The letter of credit reimbursement
agreement includes covenants requiring minimum tangible capital, debt service
coverage and limitations on other indebtedness.
NOTE 7. STOCK OPTION PLAN
The Corporation adopted a stock option plan in 1990 which provides for the
granting of discretionary and nondiscretionary options, alternative stock
appreciation rights, cash payment rights, incentive stock options, or a
combination thereof. Each option granted under the plan is for a unit consisting
of one share of Class A and ten shares of Class B common stock. During the years
ended December 31, 1995 and 1994 the Corporation recorded compensation expense
of $213 and $70, respectively. No options were granted or exercised during the
year ended December 31, 1996. Subsequent to December 31, 1996 and in connection
with the merger described in Note 15, all of the outstanding stock options were
canceled. The costs incurred by the Corporation in connection with the
cancellation of the outstanding stock options were reimbursed by L-E
Acquisition, Inc. at close. In accordance with Emerging Issues Task Force Issue
No. 85-45, "Business Combinations: Settlement of Stock Options and Awards," the
Corporation has treated the reimbursement as a credit to compensation expense
recognized in connection with the cancellation of the aforementioned stock
options. The disclosures required under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," have been omitted
as all outstanding stock options were canceled subsequent to December 31, 1996.
Because the acquiring company (see Note 15) has no stock option plan, the
Corporation's management does not believe such disclosure to be relevant to the
users of the consolidated financial statements.
F-33
<PAGE> 133
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 8. INCOME TAXES
The Corporation's benefit for income taxes consists of the following for
the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current
Federal....................................... $ (647) $ 399 $ 1,425
State......................................... 371 375
------- ------- -------
(647) 770 1,800
------- ------- -------
Deferred
Federal....................................... (3,405) (869) (1,206)
State......................................... (517) (165) (152)
------- ------- -------
(3,922) (1,034) (1,358)
------- ------- -------
$(4,569) $ (264) $ 442
======= ======= =======
</TABLE>
A reconciliation between the Corporation's income tax provision (benefit)
and the amount computed by applying the statutory income tax rate to income
before income taxes is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory rate...................................... $(4,223) $(362) $311
State taxes, net of federal benefit................. (517) 136 147
Nondeductible items................................. 212 104 76
Other............................................... (41) (142) (92)
------- ----- ----
Provision (benefit) for income taxes................ $(4,569) $(264) $442
======= ===== ====
</TABLE>
F-34
<PAGE> 134
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 8. INCOME TAXES -- (CONTINUED)
Significant components of the Corporation's deferred tax assets and
(liabilities) are as follows at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax liabilities
Tax depreciation in excess of book........................ $(8,312) $(8,619)
Prepaid pension asset..................................... (427) (574)
------- -------
Gross deferred tax liabilities.............................. (8,739) (9,193)
------- -------
Deferred tax assets
Postretirement medical benefits........................... 7,463 6,418
Equipment impairment reserve.............................. 1,140
Workers' compensation..................................... 926 927
Medical benefits accrual.................................. 687 611
Allowance for bad debts................................... 477 190
Environmental reserves.................................... 334 334
Postemployment benefits................................... 323 323
AMT credit carryforward................................... 1,871 1,708
Other..................................................... 1,330 540
------- -------
Gross deferred tax assets................................... 14,551 11,051
------- -------
Valuation allowance......................................... (200)
------- -------
Net deferred tax asset...................................... $ 5,612 $ 1,858
======= =======
</TABLE>
A valuation allowance is provided on the tax benefits otherwise associated
with certain tax attributes unless it is considered more likely than not that
the benefit will be realized.
The Corporation has net operating loss carryforwards for state income tax
purposes with potential future tax benefits of approximately $150 at December
31, 1996, which expire during the years 2010 and 2011.
The Corporation has Tennessee Jobs Tax Credit carryforwards of
approximately $200 at December 31, 1996, which expire during the years 2010 and
2011.
NOTE 9. BENEFIT PLANS
The Corporation sponsors six noncontributory-defined benefit pension plans
covering substantially all employees meeting the age and length of service
requirements as specified in the plans. The plan covering salaried employees
provides pension benefits that are based on a percentage of the employee's
average monthly compensation during the five highest consecutive years out of
their last ten years, and their years of credited service up to a maximum of 30
years. The Corporation's hourly pension plans do not provide for increases in
future compensation levels. The Corporation's funding policy for this plan is to
make contributions in amounts sufficient to annually fund the plan's current
service cost and the initial past service cost, plus interest, over a period of
30 years. Plans covering hourly employees generally provide benefits of stated
amounts based on their unique labor agreements for each year of service. The
Corporation's funding policy for these plans is to make at least the minimum
annual contributions required by applicable regulations.
F-35
<PAGE> 135
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 9. BENEFIT PLANS -- (CONTINUED)
The following table sets forth the plans' funded status and amounts
recognized on the Corporation's balance sheet at December 31:
<TABLE>
<CAPTION>
1996 1995
------------------------- -------------------------
OVERFUNDED UNDERFUNDED OVERFUNDED UNDERFUNDED
PLANS PLANS PLANS PLANS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits................................ $ 14,784 $ 21,270 $ 13,718 $ 18,926
Nonvested benefits............................. 1,174 1,468 1,143 1,597
-------- -------- -------- --------
15,958 22,738 14,861 20,523
Effect of projected future compensation levels... 3,278 2,866
-------- -------- -------- --------
Projected benefit obligation for service
rendered....................................... 19,236 22,738 17,727 20,523
Plan assets at fair value (primarily U.S.
government securities, bonds and notes and
mutual funds).................................. (18,857) (19,656) (17,092) (17,477)
-------- -------- -------- --------
Plan assets less than projected benefit
obligation..................................... 379 3,082 635 3,046
Unrecognized net loss............................ (2,080) (865) (2,612) (1,353)
Unrecognized prior service cost.................. 174 (2,757) 227 (1,572)
Unrecognized net obligation being recognized over
15-20 years.................................... 300 (346) 350 (426)
Adjustment required to recognize minimum
liability...................................... 3,968 3,332
-------- -------- -------- --------
(Prepaid) accrued pension cost................... $ (1,227) $ 3,082 $ (1,400) $ 3,027
======== ======== ======== ========
</TABLE>
The minimum pension liability in excess of the allowable intangible asset
of $751 and $1,218 at December 31, 1996 and 1995, respectively, has been
recorded as a separate component of equity, net of tax.
Net periodic pension cost included the following components for the year
ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost.................................... $ 1,100 $ 857 $ 1,142
Interest cost................................... 2,800 2,641 2,418
Actual return on plan assets.................... (4,322) (5,867) (232)
Net amortization and deferral................... 1,560 3,606 (1,993)
------- ------- -------
Net periodic pension cost....................... $ 1,138 $ 1,237 $ 1,335
======= ======= =======
</TABLE>
Actuarial assumptions used in determining the projected benefit obligation
are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................. 7.5% 7.5% 8.5%
Rate of increase in future compensation................... 4.5% 4.5% 4.5%
Expected long-term rate of return on assets............... 9.0% 9.0% 8.0%
</TABLE>
The Corporation sponsors a Supplemental Employee Retirement Plan (SERP)
which covers three key officers of the Corporation. At December 31, 1996, the
Corporation has accrued a liability of $217 related to the SERP.
The Corporation sponsors five defined contribution 401(k) plans. The
Salaried Employees' Retirement Savings Plan covers all salaried employees of the
Corporation and Winchester. The Alma Hourly Employees'
F-36
<PAGE> 136
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 9. BENEFIT PLANS -- (CONTINUED)
Retirement Savings Plan, the Argos Hourly Employees' Retirement Savings Plan,
the Creative Fabrication Corporation and the Greencastle Hourly Employees' Plan
cover all eligible hourly employees at the respective locations. The Corporation
generally contributes 25% of the first 6% of the base compensation that a
participant contributes to the plans.
NOTE 10. POSTRETIREMENT MEDICAL BENEFITS
In addition to the Corporation's defined benefit pension plans, the
Corporation sponsors unfunded defined benefit medical plans that provide
postretirement medical benefits to certain full-time employees meeting the age,
length of service and contractual requirements as specified in the plans. The
plan covering salaried employees is a contributory plan providing medical
benefits to those hired before July 1, 1993. The percentage of cost paid by the
retiree currently ranges from 10% for 30 or more years of service at retirement
to 55% for 15 years of service at retirement, with Corporation contributions
commencing upon attainment of age 62. Those retiring with less than 15 years of
service and those hired after June 30, 1993 may participate in the plan at their
own cost. The plan is currently noncontributory for those employees who retired
prior to July 1, 1993. The plans covering hourly employees provide medical
benefit plan options that are similar to those offered to active hourly
employees, with Corporation contributions limited either to that available under
traditional coverage for Alma hourly retirees or to 87% of the total applicable
premium for Greencastle retirees.
The following table presents the plans' funded status reconciled with
amounts recognized in the Corporation's balance sheets at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees............................................... $ 14,420 $ 13,132
Full eligible active plan participants................. 4,767 4,408
Other active plan participants......................... 14,613 12,931
-------- --------
Total unfunded obligation......................... 33,800 30,471
Unrecognized loss........................................ (2,618) (1,481)
Unrecognized transition obligation....................... (11,543) (12,101)
-------- --------
Postretirement medical benefits liability................ $ 19,639 $ 16,889
======== ========
</TABLE>
Net periodic postretirement benefit cost included the following components
for the year ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost.......................................... $ 947 $ 785 $1,088
Interest cost......................................... 2,216 2,010 2,238
Amortization of transition obligation prior losses.... 722 643 997
------ ------ ------
Net periodic postretirement benefit cost.............. $3,885 $3,438 $4,323
====== ====== ======
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1996 and 1995. The weighted
average annual assumed rate of increase in the per capita cost of covered
benefits (i.e., healthcare cost trend rate) is 9.2% in 1997 trending to 6.5% in
2008 and thereafter for retirees less than 65 years of age. For retirees 65
years of age and over, the rate is 8.9% in 1997 trending to 6.5% in 2008 and
thereafter. The healthcare cost trend rate assumption has a significant effect
on the amounts reported. For example, increasing the assumed healthcare cost
trend rates by one percentage
F-37
<PAGE> 137
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 10. POSTRETIREMENT MEDICAL BENEFITS -- (CONTINUED)
point in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1996 and net periodic postretirement benefit cost
for the year then ended by approximately $4,861 and $496, respectively.
NOTE 11. SHAREHOLDERS' REDEMPTION AGREEMENT AND REDEEMABLE COMMON STOCK
Due to the death of a major shareholder, the Corporation entered into an
agreement in December, 1988, providing for the redemption from the estate of any
class of common stock. The Corporation shall purchase for cash certain shares of
common stock as required each year, for the payment by the estate of federal and
state taxes and other miscellaneous expenses allowed by Internal Revenue Code
Section 6166. The redemption price is based upon the fair value, as previously
determined by an independent appraisal at the date of death, adjusted for
subsequent increases or decreases in book value as defined in the agreement.
Subsequent to December 31, 1996 and in connection with the merger as described
in Note 15, a portion of the common stock owned by the estate will be redeemed
to cover payment of remaining taxes and administrative expenses. Prior to the
merger, $1,542 was advanced to the estate to effectuate a release of an Internal
Revenue Service lien. Common shares that are redeemable under that terms of the
agreement have been recorded in the consolidated balance sheets as Redeemable
Common Stock. During the years ended December 31, 1995 and 1994, the Company
redeemed 165,555 shares and 96,597 shares, respectively, at a per share price of
$9.55 and $9.34, respectively. The redeemable common stock has been accreted to
its redemption value in each of the accompanying consolidated balance sheets.
NOTE 12. LEWIS EMERY CAPITAL CORPORATION
Lewis was established in order to facilitate the financing of a tooling
project for Ford Motor Company (Ford). In 1993, Lewis signed a contract to
finance $8,500 of tooling. The transaction was financed with proceeds from the
term loan described in Note 6. The receivable from Ford is due in 20 quarterly
installments through October 1998.
NOTE 13. COMMITMENTS AND CONTINGENCIES
Operating Leases
As of December 31, 1996, the Corporation had long-term operating leases
covering certain machinery and equipment. The minimum rental commitments under
noncancellable operating leases with lease terms in excess of one year are as
follows as of December 31, 1996:
<TABLE>
<S> <C>
1997........................................................ $ 4,690
1998........................................................ 3,241
1999........................................................ 3,367
2000........................................................ 1,178
2001........................................................ 3,355
-------
$15,831
=======
</TABLE>
Environmental Matters
The Corporation is subject to federal, state and local laws and regulations
which govern environmental matters. These laws regulate the discharge of
materials into the environment and may require the Corporation to remove or
mitigate the environmental effects of the disposal or release of petroleum or
chemical substances. The Corporation has identified several environmental
matters resulting from prior operations. Due to the relatively early stage of
investigation of certain of these identified matters as well as potential
indemnification
F-38
<PAGE> 138
LOBDELL EMERY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
NOTE 13. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
by other potentially responsible parties, management is unable to reasonably
estimate the ultimate cost of remediating certain of these identified
environmental matters. At December 31, 1996 and 1995, the Corporation has a
liability of approximately $880 recorded for estimated costs of known
environmental matters.
General
The Corporation is subject to various claims, lawsuits and administrative
proceedings related to matters arising out of the normal course of business. In
the opinion of management, after reviewing the information which is currently
available with respect to such matters and consulting with legal counsel, any
liability which may ultimately be incurred with respect to these matters will
not materially affect the financial position of the Corporation.
NOTE 14. RELATED-PARTY TRANSACTION
During 1996, the Corporation paid sales commissions, based upon qualified
foreign sales to Grace Emery Sales Corporation, a Domestic International Sales
Corporation (DISC) owned by the shareholders of the Corporation. Commissions
payable to the DISC are subject to certain restrictions. Commissions were $369,
$521 and $772 in 1996, 1995 and 1994, respectively.
NOTE 15. SUBSEQUENT EVENT
On January 10, 1997, pursuant to an Agreement and Plan of Merger among
Lobdell Emery Corporation, certain shareholders of Lobdell Emery Corporation,
BMG-MI, Inc. and L-E Acquisition, Inc. as amended, certain Lobdell Emery
Corporation shareholders and option holders had their respective shares and
options redeemed for cash of approximately $8,500 and all outstanding shares of
common stock of Lobdell Emery Corporation (Oldco) were exchanged for shares of
preferred stock of L-E Acquisition, Inc. with a face value of approximately
$40,800. In addition, approximately $3,500 of expenses incurred by the
Corporation were reimbursed by L-E Acquisition, Inc. Subsequent to the exchange
of Oldco's common stock for preferred stock, L-E Acquisition, Inc. was merged
with and into Lobdell Emery Corporation (Newco).
NOTE 16. RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS
The Corporation's management has restated the consolidated financial
statements for periods prior to December 31, 1996. The consolidated financial
statements have been restated to correct the misstatement of certain assets and
liabilities including accounts receivable, accrued employee benefit related
costs and accrued environmental costs, net of related tax benefits. The effect
of the restatement was to decrease retained earnings at January 1, 1994 by
$1,987, decrease net loss by $36 ($.01 per share) for the year ended December
31, 1995, and increase net loss by $647 ($.15 per share) for the year ended
December 31, 1994.
F-39
<PAGE> 139
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
_______________
TABLE OF CONTENTS PAGE
----
Available Information...................................... 2
Summary.................................................... 3
Risk Factors............................................... 16
Use of Proceeds............................................ 22
Capitalization............................................. 22
Pro Forma Combined Financial Data.......................... 23
Selected Consolidated Historical
Financial Data........................................ 32
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................ 35
The Exchange Offer......................................... 40
Business................................................... 45
Management................................................. 57
Principal Shareholders..................................... 60
Certain Transactions....................................... 62
Description of Certain Indebtedness and
Preferred Stock....................................... 63
Description of the Notes................................... 66
Certain Federal Income Tax Considerations.................. 92
Plan of Distribution....................................... 93
Legal Matters.............................................. 94
Experts.................................................... 94
Index to Consolidated Financial Statements................. F-1
$125,000,000
OXFORD AUTOMOTIVE, INC.
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
[OXFORD AUTOMOTIVE LOGO]
OFFER TO EXCHANGE
10 1/8% SENIOR SUBORDINATED NOTES DUE 2007
PROSPECTUS
DATED , 1997
<PAGE> 140
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. A list of exhibits included as part of this Registration
Statement is set forth in the Exhibit Index which immediately precedes
such exhibits and is incorporated herein by reference.
(b) Financial Statement Schedules.
Previously filed.
II-1
<PAGE> 141
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Amendment No. 1 to this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Bloomfield Hills and State of Michigan on September
18, 1997.
OXFORD AUTOMOTIVE, INC.
By:/s/ Steven M. Abelman
-------------------------------------
Steven M. Abelman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Selwyn Isakow Chairman of the Board and Director
- ---------------------------
Selwyn Isakow
/s/ Rex E. Schlaybaugh, Jr. Vice Chairman of the Board and Director
- ---------------------------
Rex E. Schlaybaugh, Jr.
/s/ Steven M. Abelman President, Chief Executive Officer and Director
- ---------------------------
Steven M. Abelman
/s/ Donald C. Campion Senior Vice President-Chief Financial Officer
- --------------------------- (Principal Accounting and Financial Officer)
Donald C. Campion
* Director
- ---------------------------
Manfred J. Walt
*By: /s/ Rex E. Schlaybaugh, Jr.
Rex E. Schlaybaugh, Jr., Attorney-In-Fact
II-2
<PAGE> 142
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Amendment No. 1 to this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Bloomfield Hills and State of Michigan on
September 18, 1997.
LOBDELL EMERY CORPORATION
By: /s/ Steven M. Abelman
-------------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and
Donald C. Campion Director
/s/ John H. Ferguson Director
- ---------------------
John H. Ferguson
Director
- ---------------------
D. Kennedy Fesenmyer
II-3
<PAGE> 143
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
BMG NORTH AMERICA LIMITED
By:/s/ Steven M. Abelman
------------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer)
- ------------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President, Chief Financial Officer, and Treasurer
- ------------------------ (Principal Accounting and Financial Officer)
Donald C. Campion
/s/ * Director
- ------------------------
Lawrence C. Cornwall
/s/ Selwyn Isakow Director
- ------------------------
Selwyn Isakow
Director
- ------------------------
James W. Robinson
* Director
- ------------------------
Manfred J. Walt
- ------------------------ Director
Donald Holton
*By: /s/ Rex E. Schlaybaugh, Jr.
Rex E. Schlaybaugh, Jr., Attorney-In-Fact
II-4
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
BMG HOLDINGS, INC.
By: /s/ Steven M. Abelman
-----------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer)
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President, Chief Financial Officer and Treasurer
- --------------------- (Principal Accounting and Financial Officer)
Donald C. Campion
/s/ Selwyn Isakow Director
- ---------------------
Selwyn Isakow
Director
- ---------------------
James W. Robinson
* Director
- ---------------------
Manfred J. Walt
*By: /s/ Rex E. Schlaybaugh, Jr.
Rex E. Schlaybaugh, Jr., Attorney-In-Fact
II-5
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
WINCHESTER FABRICATION CORPORATION
By: /s/ Steven M. Abelman
----------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and Director
Donald C. Campion
/s/ John H. Ferguson Director
- --------------------
John H. Ferguson
II-6
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
CREATIVE FABRICATION CORPORATION
By: /s/ Steven M. Abelman
---------------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and Director
Donald C. Campion
/s/ John H. Ferguson Director
- ---------------------
John H. Ferguson
II-7
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
PARALLEL GROUP INTERNATIONAL, INC.
By: /s/ Steven M. Abelman
-----------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and Director
Donald C. Campion
/s/ John H. Ferguson Director
- ---------------------
John H. Ferguson
II-8
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
LASERWELD INTERNATIONAL, L.L.C.
By: Lobdell Emery Corporation, its sole member
By: /s/ Steven M. Abelman
-----------------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- --------------------- of Lobdell Emery Corporation
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and
Donald C. Campion Director of Lobdell Emery Corporation
/s/ John H. Ferguson Director of Lobdell Emery Corporation
- --------------------
John H. Ferguson
II-9
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
CONCEPT MANAGEMENT CORPORATION
By: /s/ Steven M. Abelman
-----------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and Director
Donald C. Campion
/s/ John H. Ferguson Director
- ---------------------
John H. Ferguson
II-10
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
LEWIS EMERY CAPITAL CORPORATION
By: /s/ Steven M. Abelman
-----------------------------------
Steven M. Abelman, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and Director
Donald C. Campion
/s/ John H. Ferguson Director
- ---------------------
John H. Ferguson
II-11
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of Bloomfield Hills and State of Michigan on September 18, 1997.
HOWELL INDUSTRIES, INC.
By: /s/ Steven M. Abelman
-------------------------------------
Steven M. Abelman, President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Selwyn
Isakow and Rex E. Schlaybaugh, Jr., and each of them, his attorneys-in-fact
for him in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all that each of said attorneys-in-fact
and agents, or his substitute or substitutes, may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities indicated on September 18, 1997.
SIGNATURE TITLE
--------- -----
/s/ Steven M. Abelman President (Principal Executive Officer) and Director
- ---------------------
Steven M. Abelman
/s/ Donald C. Campion Vice President-Chief Financial Officer, Treasurer
- --------------------- (Principal Accounting and Financial Officer) and Director
Donald C. Campion
/s/ John H. Ferguson Director
- ---------------------
John H. Ferguson
II-12
<PAGE> 152
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.3 Agreement and Plan of Merger dated as of November 14, 1996,
by and between Lobdell Emery Corporation, BMG-MI, Inc. (now
known as "Oxford Automotive, Inc."), L-E Acquisition, Inc.,
the Shareholders of Lobdell Emery Corporation, and D. Kennedy
Fesenmyer, as Shareholders' Agent. The Agreement and Plan of
Merger does not contain the Disclosure Schedules which include
routine background information relating to the parties. The
registrant will furnish supplementally a copy of the omitted
material to the Commission upon request (previously filed as
Exhibit 10.10 to the Registration Statement on Form S-4,
Registration No. 333-32975).
2.4 Amendment to Agreement and Plan of Merger, dated December 27, 1996
by and among Lobdell Emery Corporation, BMG-MI, Inc. (now known as
"Oxford Automotive, Inc."), L-E Acquisition, Inc., D. Kennedy
Fesenmyer, as Shareholders' Agent, and Lobdell Holdings, Inc.
(previously filed as Exhibit 10.11 to the Registration Statement on
Form S-4, Registration No. 333-32975)
2.5 Agreement and Plan of Merger, dated as of January 8, 1997 among
Lobdell Holdings, Inc. and BMG-MI, Inc. (now known as "Oxford
Automotive, Inc."). The Agreement and Plan of Merger does not
contain the Disclosure Schedules which include routine
background information relating to the parties. The
registrant will furnish supplementally a copy of the omitted
material to the Commission upon request (previously filed as
Exhibit 10.12 to the Registration Statement on Form S-4,
Registration No. 333-32975).
3.20 Restated Articles of Incorporation of Howell Industries, Inc.
3.21 Bylaws of Howell Industries, Inc.
4.2 Credit Agreement between the Company and NBD Bank, as agent, dated
June 24, 1997
4.3 Security Agreement between the Company and NBD Bank, as agent, dated
June 24, 1997
4.4 Security Agreement between 829500 Ontario Limited and NBD Bank, as
agent, dated June 24, 1997
4.5 Security Agreement between 976459 Ontario Limited and NBD Bank, as
agent, dated June 24, 1997
4.6 Security Agreement between BMG Holdings, Inc. and NBD Bank, as
agent, dated June 24, 1997
4.7 Security Agreement between BMG North America Limited Inc. and NBD
Bank, as agent, dated June 24, 1997
4.8 Security Agreement among Lobdell Emery and its subsidiaries and
NBD Bank, as agent, dated June 24, 1997
4.12 Pledge Agreement and Irrevocable Proxy between the Company and NBD
Bank, as agent, dated June 24, 1997
4.13 Pledge Agreement and Irrevocable Proxy between Lobdell Emery and NBD
Bank, as agent, dated June 24, 1997
4.14 Pledge Agreement and Irrevocable Proxy between Concept Management
Corporation and NBD Bank, as agent, dated June 24, 1997
4.17 Supplemental Indenture dated as of August 15, 1997 among Howell
Industries, Inc., Oxford Automotive, Inc., First Trust National
Association and the Subsidiary Guarantors
16 Letter re Change in Certifying Accountant
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Deloitte & Touche
27 Financial Data Schedule
II-13
<PAGE> 1
EXHIBIT 3.20
MICHIGAN DEPARTMENT OF COMMERCE
CORPORATION AND SECURITIES BUREAU
RESTATED ARTICLES OF INCORPORATION
For Use by Domestic Profit Corporations
Pursuant to the provisions of Act 284, Public Acts of 1972, as amended,
the undersigned corporation executes the following Articles:
1. The present name of the corporation is:
Howell Industries, Inc.
2. The corporation identification number (CID) assigned by the Bureau is:
184-966
3. All former names of the corporation are:
Detroit Macoid Corporation
Macoid Industries, Inc.
4. The date of filing the original Articles of Incorporation was:
July 9, 1934
The following Restates Articles of Incorporation supersede the Articles of
Incorporation as amended and shall be the Articles of Incorporation for the
corporation:
ARTICLE I
The name of the corporation is:
Howell Industries, Inc.
ARTICLE II
The purpose or purposes for which the corporation is organized are:
To manufacture, purchase, distribute, compound, sell at retail and
wholesale and generally deal in plastic materials and plastic products.
To manufacture, purchase or otherwise acquire goods, wares,
merchandise, and personal property of every class and description, and to
hold, own, sell or otherwise dispose of, trade, deal in and deal with the
same.
To buy, sell, deal in, lease, hold or improve real estate, and the
fixtures and personal property incidental thereto or connected therewith,
and with that end in view, to acquire by purchase, lease, hire, or
otherwise, lands, tenements, hereditaments, or any interest therein, and
to improve the same, and generally to hold, manage, deal with, and
improve the property of the corporation; and to sell, lease, mortgage,
pledge or otherwise dispose of the lands, tenements and hereditaments or
other property of the corporation.
<PAGE> 2
To borrow or raise moneys for any of the purposes of the corporation
and from time to time, without limit as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable and non-negotiable
instruments and evidences of indebtedness, and to secure the payment of
any thereof and of the interest thereon by mortgage, pledge, conveyance
or assignment in trust of the whole or any part of the property of the
corporation, whether at the time owned or thereafter acquired, and to
sell, pledge, or otherwise dispose of such bonds or other obligations of
the corporation for its corporate purposes.
In general, to carry on any business in connection therewith and
incidental thereto not forbidden by the laws of the State of Michigan,
and with all the powers conferred upon corporations by the laws of the
State of Michigan.
ARTICLE III
The total authorized capital stock is:
1. Common Shares N/A Par Value Per Share $
---------- -----
Preferred Shares 250,000 Par Value Per Share $ 1.00
---------- -----
and/or shares without par value as follows:
2. Common Shares 2,500,000 Stated Value Per Share $ 1.87
----------- -----
Preferred Shares N/A Stated Value Per Share $
----------- -----
3. A statement of all or any of the relative rights, preferences and
limitations of the shares of each of class is as follows:
The holders of shares of Common Stock, and the holders of shares of
Preferred Stock, shall be entitled to one (1) vote for each share held
without distinction between classes except as required by law.
All shares of Preferred Stock shall be identical, except that the
Board of Directors shall have authority to divide the shares of Preferred
Stock into series and fix from time to time before issuance, the number
of shares to be included in any series and the designation, relative
rights, preferences and limitations of all shares of such series. The
authority of the Board of Directors with respect to each series shall
include the determination of any or all of the following, and the shares
of each series may vary from the shares of any other series in the
following respects:
(a) the number of shares constituting such series and the
designation thereof to distinguish the shares of such series from
the shares of all other series;
(b) the rate of dividend and the extent of further
participation in dividend distribution, if any;
(c) the price at and the terms and conditions on which the
shares are redeemable;
(d) the amount payable upon shares in event of voluntary or
involuntary liquidation;
(e) the terms and conditions upon which the shares are
convertible into other classes of stock of the corporation, if such
shares are to be convertible.
2
<PAGE> 3
Dividends on all outstanding shares of Preferred Stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of Common
Stock with respect to the same dividend period.
In the event of voluntary or involuntary dissolution, liquidation,
or winding up of the corporation, the holders of shares of the Preferred
Stock of each series shall be entitled to be paid from the assets of the
corporation such amounts as shall have been fixed and determined by the
Board of Directors when such shares of Preferred Stock are issued, plus
an amount equivalent to all dividends accrued thereon, before any amount
shall be paid to the holders of Common Stock.
Each share of Common Stock shall be equal in all respects to all
other shares of Common Stock.
No holders of shares of capital stock shall be entitled as such as a
matter of right to subscribe for or purchase any part of any new or
additional issue of stock, or securities convertible into stock, of any
class whatsoever, whether now or hereafter authorized and whether issued
for cash, property, services, by way of dividends or otherwise.
ARTICLE IV
1. The address of the current registered office is:
2365 Franklin Road
Bloomfield Hills, Michigan 48302
2. The mailing address of the current registered office if different than
above:
N/A
3. The name of the current resident agent is:
Clifford C. Suing
ARTICLE V
The term of existence of the corporation is perpetual.
ARTICLE VI
When a compromise or arrangement or a plan of reorganization of this
corporation is proposed between this corporation and its creditors or any class
of them or between this corporation and its shareholders or any class of them,
a court of equity jurisdiction within the state, on application of this
corporation or of a creditor or shareholder thereof, or on application of a
receiver appointed for the corporation, may order a meeting of the creditors or
class of creditors or of the shareholders or class of shareholders to be
affected by the proposed compromise or arrangement or reorganization, to be
summoned in such manner as the court directs. If a majority in number
representing 3/4 in value of the creditors or class of creditors, or of the
shareholders or class of shareholders to be affected by the proposed compromise
or arrangement or a reorganization, agree to a compromise or arrangement or a
reorganization of this corporation as a consequence of the compromise or
arrangement, the compromise or arrangement and the reorganization, if
sanctioned by the court to which the application has been made, shall be
binding on all the creditors or class of creditors, or on all the shareholders
or class of shareholders and also on this corporation.
3
<PAGE> 4
ARTICLE VII
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of the
director's fiduciary duty. However, this Article shall not eliminate or limit
the liability of a director for any of the following.
(1) A breach of the director's duty of loyalty to the corporation or
its shareholders.
(2) Acts or omissions not in good faith or that involve intentional
misconduct or knowing violation of law.
(3) A violation of Section 551(1) of the Michigan Business
Corporation Act.
(4) A transaction from which the director derived an improper
personal benefit.
(5) An act or omission occurring before March 1, 1987.
Any repeal or modification of this Article VI by the shareholders of the
corporation shall not adversely affect any right or protection of any director
of the corporation existing at the time of, or for or with respect to, any acts
or omissions occurring before such repeal or modification.
These Restated Articles of Incorporation were duly adopted on the 23rd day
of September, 1988, in accordance with the provisions of Section 642 of the Act
and were duly adopted by the Board of Directors without a vote of the
shareholders. These Restated Articles of Incorporation only restate and
integrate and do not further amend the provisions of the Articles of
Incorporation as heretofore amended and there is no material discrepancy
between those provisions and the provisions of these Restated Articles.
Signed this ____ day of September, 1988.
By: _______________________________
_______________________________
(Print or type name and title)
4
<PAGE> 1
EXHIBIT 3.21
BY-LAWS
OF
HOWELL INDUSTRIES, INC.
a Michigan corporation
ARTICLE I
OFFICES
Section 1. The registered office of the corporation shall be located at
17515 West Nine Mile Road, in the City of Southfield, County of Oakland, and
State of Michigan, or such other place as may be designated as the registered
office by the Board of Directors.
Section 2. The Corporation may also have offices or branches at such other
places, both within and without the State of Michigan, as the Board of
Directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders shall be held at the
registered office of the corporation, or at such other place either within or
without the State of Michigan as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
Section 2. Annual meetings of shareholders shall be held on the fourth
Tuesday in November of each year if not a legal holiday in the state in which
the meeting shall be held, and if a legal holiday, then on the next secular day
following, at such time as determined by the Board of Directors, or at such
other date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. At the annual meeting, the
shareholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting. If the annual meeting is not
held on the date designated therefor, the Board of Directors shall cause the
meeting to be held as soon thereafter as convenient.
<PAGE> 2
Section 3. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the chairman of the board or president, and
shall be called by the chairman of the board or president at the request in
writing of a majority of the Board of Directors or at the request in writing of
the holders of not less than ten percent (10%) of all the shares entitled to
vote at a meeting. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. The officer or agent who has charge of the stock ledger or
stock transfer books for shares of the corporation shall make and certify a
complete list of the shareholders entitled to vote at a shareholders' meeting,
or any adjournment thereof. The list shall be arranged in alphabetical order
within each class and series and show the address of each shareholder and the
number of shares registered in the name of each shareholder. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any shareholder who is present.
Section 5. Except as may be provided by statute, written notice of an
annual or special meeting of shareholders stating the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called, shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting, to each shareholder of record entitled to vote at such meeting.
Section 6. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise expressly required by statute or by the Articles
of Incorporation. All shareholders present in person or represented by proxy
at such meeting may continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum. If,
however, such quorum shall not be initially present at any meeting of the
shareholders, a majority of the shareholders entitled to vote thereat shall
nevertheless have power to adjourn the meeting from time to time and to another
place, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting, at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified. If the adjournment
is for more than sixty (60) days, or if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the meeting.
Section 7. When an action other than the election of directors is to be
taken by vote of the shareholders, it shall be authorized by a majority of the
votes cast by the holders of shares entitled to vote thereon, unless a greater
plurality is required by express requirement of the statutes or of the Articles
of Incorporation, in which case such express provision shall govern and control
the decision of such question. Except as otherwise expressly required by the
Articles of Incorporation, directors shall be elected by a plurality of the
votes cast at an election.
2
<PAGE> 3
Section 8. Each shareholder shall at every meeting of the shareholders be
entitled to one (1) vote in person or by proxy for each share of the capital
stock having voting power held by such shareholder except as otherwise
expressly required in the Articles of Incorporation. A vote may be cast either
orally or in writing. Each proxy shall be in writing and signed by the
shareholder or his authorized agent or representative. A proxy is not valid
after the expiration of three (3) years from its date unless otherwise provided
in the proxy. All questions regarding the qualification of voters, the
validity of proxies and the acceptance or rejection of votes shall be decided
by the presiding officer of the meeting.
Section 9. To the extent permitted by the Articles of Incorporation, any
action required or permitted to be taken at any annual or special meeting of
shareholders of the corporation, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take the
action at a meeting at which all shares entitled to vote thereon were present
and voted.
Section 10. Any action required or permitted to be taken at an annual or
special meeting of shareholders of the corporation may be taken without a
meeting, without prior notice and without a vote, if all the shareholders
entitled to vote thereon consent thereto in writing.
Section 11. Attendance of a person at a meeting of shareholders in person
or by proxy constitutes a waiver of notice of the meeting except where the
shareholder attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
its Board of Directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by these By-Laws directed or required to be exercised or
done by the shareholders.
Section 2. The number of directors which shall constitute the whole board
shall be not less than three nor more than seven. Within the limits above
specified, the number of directors shall be determined from time to time by
resolution of the Board of Directors. The directors shall be elected at the
annual meeting of the shareholders, except as provided in Sections 3 and 5 of
this Article, and each director elected shall hold office until his successor
is elected and qualified or until his resignation or removal. Directors need
not be shareholders or officers of the corporation.
Section 3. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by the affirmative
vote of a majority of the directors
3
<PAGE> 4
then in office, though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until the next annual election of
directors by the shareholders and until their successors are duly elected and
qualified, or until their resignation or removal.
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Michigan.
Unless otherwise restricted by the Articles of Incorporation, members of the
Board of Directors, or any committee designated by the Board, may participate
in a meeting of the Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this section shall constitute presence in person at such meeting.
Section 5. The first meeting of each newly elected Board of Directors
shall be held promptly following the annual meeting of shareholders on the date
thereof. No notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a quorum shall
be present. In the event such meeting is not so held, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
Section 6. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board or by the chairman of the board or president. Any notice given of
a regular meeting need not specify the business to be transacted or the purpose
of the meeting.
Section 7. Special meetings of the Board may be called by the chairman of
the board or president on two (2) days' notice to each director by mail or
twenty-four (24) hours' notice either personally, by telephone or by telegram;
special meetings shall be called by the chairman of the board or president in
like manner and on like notice on the written request of two (2) directors.
The notice need not specify the business to be transacted or the purpose of the
special meeting. The notice shall specify the place of the special meeting.
Section 8. At all meetings of the Board or a committee thereof, one-third
(1/3) of the directors then in office or members of such committee, but not
less than two (if there are at least two members of the Board or such
committee) shall constitute a quorum for the transaction of business. The act
of a majority of the members present at any meeting at which there is a quorum
shall be the act of the Board of Directors or the committee, unless the vote of
a larger number is specifically required by statute, by the Articles of
Incorporation, or by these By-Laws. If a quorum shall not be present at any
meeting of the Board of Directors or a committee, the members present thereat
may adjourn the meeting from time to time and to another place without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise provided by the Articles of Incorporation, any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee
4
<PAGE> 5
thereof may be taken without a meeting, if, before or after the action, all
members of the Board or committee consent thereto in writing. The written
consents shall be filed with the minutes of proceedings of the Board or
committee. Such consents shall have the same effect as a vote of the Board or
committee for all purposes.
Section 10. The Board of Directors may, by resolution, designate one (1)
or more committees, each committee to consist of one (1) or more of the
directors of the corporation. The Board may designate one (1) or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of such committee, the members thereof present
at any meeting and not disqualified from voting, whether or not they constitute
a quorum, may unanimously appoint another member of the Board to act at the
meeting in place of such absent or disqualified member. Any such committee, to
the extent provided in the resolution of the Board, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the corporation provided, however, such a committee shall not have
power or authority to:
(a) Amend the Articles of Incorporation.
(b) Adopt an agreement of merger or consolidation.
(c) Recommend to shareholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets.
(d) Recommend to shareholders a dissolution of the corporation or a
revocation of a dissolution.
(e) Amend the By-Laws of the corporation.
(f) Fill vacancies in the Board.
(g) Fix compensation of the directors for serving on the Board or on a
committee.
(h) Declare a dividend.
(i) Authorize the issuance of stock.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. A
committee, and each member thereof, shall serve at the pleasure of the Board.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
5
<PAGE> 6
Section 12. The Board by affirmative vote of a majority of directors in
office and irrespective of any personal interest of any of them, may establish
reasonable compensation of directors for services to the corporation as
directors, officers or members of a committee. No such payment shall preclude
any director from serving the corporation in any other capacity and receiving
compensation therefor.
Section 13. A director may resign by written notice to the corporation.
The resignation is effective upon its receipt by the corporation or a
subsequent time as set forth in the notice of resignation.
Section 14. Attendance of a director at a meeting constitutes a waiver of
notice of the meeting except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these By-Laws, written notice is required to be
given to any director, committee member or shareholder, such notice may be
given in writing by mail (registered, certified or other first class mail)
addressed to such director, shareholder or committee member at his address as
it appears on the records of the corporation, with postage thereon prepaid.
Such notice shall be deemed to be given at the time when the same shall be
deposited in a post office or official depository under the exclusive care and
custody of the United States postal service.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the shareholders, directors or a
committee, need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
Directors at its first meeting after each annual meeting of shareholders and
shall be a president, a secretary and a treasurer. The Board of Directors may
also create and fill the office of chairman of the board and vice chairman of
the board, and may choose one or more vice presidents, and one or more
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person.
6
<PAGE> 7
Section 2. The Board of Directors may from time to time appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Section 3. The salaries of all officers of the corporation shall be fixed
by the Board of Directors.
Section 4. The officers of the corporation shall hold office at the
pleasure of the Board of Directors. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors with or
without cause. Any vacancy occurring in any office of the corporation by
death, resignation, removal or otherwise shall be filled by the Board of
Directors. An officer may resign by written notice to the corporation. The
resignation is effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation.
Section 5. Unless otherwise provided by resolution of the Board of
Directors, the president shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the Board of
Directors (if he shall be a member of the Board), shall have general and active
management of the business and affairs of the corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect.
He shall execute on behalf of the corporation, and may affix or cause the seal
to be affixed to, all instruments requiring such execution except to the extent
the signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
Section 6. The vice presidents shall act under the direction of the
president and in the absence or disability of the president shall perform the
duties and exercise the powers of the president. They shall perform such other
duties and have such other powers as the president or the Board of Directors
may from time to time prescribe. The Board of Directors may designate one or
more executive vice presidents. The duties and powers of the president shall
descend to the vice presidents in such specified order of seniority.
Section 7. The secretary shall act under the direction of the president.
Subject to the direction of the president he shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
shareholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the president or the Board of
Directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the president or the Board of Directors, cause it to be affixed
to any instrument requiring it.
Section 8. The assistant secretaries shall act under the direction of the
president. In the order of their seniority, unless otherwise determined by the
president or the Board of Directors, they shall, in the absence or disability
of the secretary, perform the duties and exercise the powers of the
7
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secretary. They shall perform such other duties and have such other powers as
the president or the Board of Directors may from time to time prescribe.
Section 9. The treasurer shall act under the direction of the president.
Subject to the direction of the president he shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the president or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. He may affix or cause to be affixed the seal of the corporation
to documents so requiring the seal.
Section 10. The assistant treasurers in the order of their seniority,
unless otherwise determined by the president or the Board of Directors shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer. They shall perform such other duties and have
such other powers as the president or the Board of Directors may from time to
time prescribe.
Section 11. To the extent the powers and duties of the several officers
are not provided from time to time by resolution or other directive of the
Board of Directors or by the president (with respect to other officers), the
officers shall have all powers and shall discharge the duties customarily and
usually held and performed by like officers of corporations similar in
organization and business purposes to this corporation.
ARTICLE VI
CERTIFICATES OF STOCK AND SHAREHOLDERS OF RECORD
Section 1. The shares of stock of the corporation shall be represented by
certificates signed by, or in the name of the corporation by, the chairman of
the board, vice chairman of the board, president, or a vice president, and by
the treasurer, assistant treasurer, secretary or assistant secretary of the
corporation. Each holder of stock in the corporation shall be entitled to have
such a certificate certifying the number of shares owned by him in the
corporation.
Section 2. Any of or all the signatures on the certificate may be a
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar other than the corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of issue. The seal of the corporation or a facsimile
thereof may, but need not, be affixed to the certificates of stock.
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Section 3. The Board of Directors may direct a new certificate for shares
to be issued in place of any certificate theretofore issued by the corporation
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost or destroyed.
When authorizing such issue of a new certificate, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost or destroyed certificate, or his legal representative,
to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 5. In order that the corporation may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to or to dissent from a proposal
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or for the purpose of any other
action, the Board of Directors may fix, in advance, a date as a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
If no record date is fixed:
(a) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
day on which notice is given, or, if no notice is given, at the close of
business on the day next preceding the day on which the meeting is held; and
(b) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares for all
purposes, including voting and dividends, and shall not be bound to recognize
any equitable or other claim to interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Michigan.
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ARTICLE VII
INDEMNIFICATION
The Corporation shall, to the fullest extent authorized or permitted by
the Michigan Business Corporation Act, (a) indemnify any person, and his or her
heirs, executors, administrators and legal representatives, who was, is, or is
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative or investigative)
by reason of the fact that such person is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (collectively, "Covered Matters"); and (b)
pay or reimburse the reasonable expenses incurred by such person and his or her
heirs, executors, administrators and legal representatives in connection with
any Covered Matter in advance of final disposition of such Covered Matter. The
Corporation may provide such other indemnification to directors, officers,
employees and agents by insurance, contract or otherwise as is permitted by law
and authorized by the Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. All checks, drafts or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate. All funds
of the corporation not otherwise employed shall be deposited from time to time
to the credit of the corporation in such banks, trust companies or other
depositories as the Board of Directors may from time to time designate.
Section 2. The fiscal year of the corporation shall end on the last day of
July of each year or such other date as shall be fixed from time to time by
resolution of the Board of Directors.
Section 3. The Board of Directors may adopt a corporate seal for the
corporation. The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Michigan." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 4. The corporation shall keep within or without the State of
Michigan books and records of account and minutes of the proceedings of its
shareholders, Board and executive committee, if any. The corporation shall
keep at its registered office or at the office of its transfer agent within or
without the State of Michigan records containing the names and addresses of all
shareholders, the number, class and series of shares held by each and the dates
when they respectively became holders of record thereof. Any of such books,
records or minutes may be in written form or in any other form capable of being
converted into written form within a reasonable time.
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Section 5. These By-Laws shall govern the internal affairs of the
corporation to the extent they are consistent with law and the Articles of
Incorporation. Nothing contained in the By-Laws shall, however, prevent the
imposition by contract of greater voting, notice or other requirements than
those set forth in these By-Laws.
ARTICLE IX
AMENDMENTS
Section 1. The By-Laws may be amended or repealed, or new by-laws may he
adopted, by action of either the shareholders or the Board of Directors. The
shareholders may from time to time specify particular provisions of the By-Laws
which shall not be altered or repealed by the Board of Directors.
ARTICLE X
CONTROL SHARE ACT
Chapter 7B of the Michigan Business Corporation Act does not
apply to control share acquisitions of shares of the Corporation.
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EXHIBIT 4.2
Execution Copy
OXFORD AUTOMOTIVE, INC.
------------------------------------------
CREDIT AGREEMENT
dated as of June 24, 1997
------------------------------------------
THE BORROWING SUBSIDIARIES PARTY HERETO,
THE LENDERS PARTY HERETO
and
NBD BANK, as Agent
ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC.
<PAGE> 2
<TABLE>
<CAPTION>
Article Page
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<S> <C> <C>
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitions; Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . 18
II. THE COMMITMENTS, THE SWINGLINE FACILITY
AND THE ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Commitment of the Lenders and Canadian and
Swingline Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Termination and Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4 Disbursement of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.5 Conditions for First Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Further Conditions for Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.7 Subsequent Elections as to Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.8 Limitation of Requests and Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.9 Minimum Amounts; Limitation on Number of Borrowings; Etc. . . . . . . . . . . . . . . . . 28
2.10 Borrowing Base Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.11 Security and Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
III. PAYMENTS AND PREPAYMENTS OF ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 Principal Payments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.2 Interest Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 Letters of Credit and Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Additional Terms of Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Payment Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.6 No Setoff or Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.7 Payment on Non-Business Day; Payment Computations . . . . . . . . . . . . . . . . . . . . 35
3.8 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.9 Illegality and Impossibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.12 Substitution of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.3 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7 Use of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.8 Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.10 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.11 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.16 No Defaults under Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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4.17 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.18 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.19 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . 42
4.20 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.21 Unrestricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
V. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a) Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . 43
(b) Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(c) Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . 43
(d) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(e) Accounting; Access to Records, Books, Etc. . . . . . . . . . . . . . . . . . . . 45
(f) Maintenance of Business Lines . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(g) Additional Security and Collateral . . . . . . . . . . . . . . . . . . . . . . . 46
(h) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(a) Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(b) Total Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(c) Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(d) Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(e) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(f) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(g) Merger; Acquisitions; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(h) Disposition of Assets; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(i) Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(j) Dividends and Other Restricted Payments . . . . . . . . . . . . . . . . . . . . . 50
(k) Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(l) Loans, Advances and Investments . . . . . . . . . . . . . . . . . . . . . . . . . 50
(m) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(n) Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 51
(o) Negative Pledge Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(p) FSC Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(q) Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(r) Subsidiary Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(s) Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(t) Other Indebtedness and Agreements . . . . . . . . . . . . . . . . . . . . . . . . 52
(u) Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(v) Restricted Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.3 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
VI. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(a) Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(b) Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(c) Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(e) Cross Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(f) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(g) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(h) Insolvency, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(i) Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(j) Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
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6.3 Distribution of Proceeds of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 55
VII. THE AGENT AND THE LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.2 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.3 Scope of Agent's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.5 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.6 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.7 Nonreliance on Agent and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.10 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.3 No Waiver By Conduct; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 61
8.4 Reliance on and Survival of Various Provisions . . . . . . . . . . . . . . . . . . . . . . 61
8.5 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.9 Table of Contents and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.10 Construction of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.11 Integration and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.12 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.13 Interest Rate Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.14 Judgment and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
iii
<PAGE> 5
EXHIBITS
Exhibit A - Borrowing Base Certificate
Exhibit B - Company Security Agreement
Exhibit C - Environmental Certificate
Exhibit D - Guaranty
Exhibit E - Guarantor Security Agreement
Exhibit F - Revolving Credit Note
Exhibit G - Swingline Note
Exhibit H - Disbursement of Advances
Exhibit I - Disbursement of Swingline Loans
Exhibit J - Subsequent Elections as to Borrowings
Exhibit K - Assignment and Acceptance
SCHEDULES
Schedule 1.1(A) - Existing Letters of Credit
Schedule 1.1(B) - GM Agreement
Schedule 1.1(C) - Senior Subordinated Debt Documents
Schedule 4.4 - Subsidiaries
Schedule 4.5 - Litigation
Schedule 4.17 - Intellectual Property
Schedule 4.18 - Lobdell Preferred Stock
Schedule 4.20 - Other Subordinated Debt
Schedule 5.2(e) - Indebtedness
Schedule 5.2(f) - Liens
Schedule 5.2(o) - Negative Pledges
Schedule 5.2(u) - Management Fees
iv
<PAGE> 6
THIS CREDIT AGREEMENT, dated as of June 24,1997 (this "Agreement"), is
by and among OXFORD AUTOMOTIVE, INC., a Michigan corporation (the "Company"),
each of the Subsidiaries of the Company designated in Section 1.1 as a
Borrowing Subsidiary (a "Borrowing Subsidiary" and collectively with the
Company the "Borrowers"), the lenders set forth on the signature pages hereof,
their successors and assigns, and each other Person becoming a lender hereunder
from time to time (collectively, together with any Affiliates of such Lenders
designated by such Lenders to make Canadian Advances hereunder, the "Lenders"
and individually a "Lender"), and NBD BANK, a Michigan banking corporation, as
agent (in such capacity, and collectively with any of its Affiliates designated
by it to administer any of its functions hereunder at any time, the "Agent")
for the Lenders.
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms shall
have the following respective meanings:
"Acceptance" shall mean Bankers' Acceptances and BA Equivalent Loans.
"Acceptance Fee" shall mean the fee payable at the time of the
acceptance of Bankers' Acceptances established by multiplying the face amount
of such Bankers' Acceptances by the Applicable Margin and by multiplying the
product so obtained by a fraction having a numerator equal to the number of
days in the term of such Bankers' Acceptances and a denominator of 365.
"Acquisition" is defined in Section 5.2(g).
"Advance" shall mean any Loan, any acceptance of any Bankers'
Acceptance, any BA Equivalent Loan, and any Letter of Credit Advance.
"Affiliate", when used with respect to any Person, shall mean any other
Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise, and a Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any class of
voting securities (or other ownership interest) of the controlled Person.
"Applicable Lending Office" shall mean, with respect to any Loan made
by any Lender or with respect to such Lender's Commitments, the office of such
Lender or of any Affiliate of such Lender located at the address specified as
the applicable lending office for such Lender set forth next to the name of
such Lender in the signature pages hereof or any other office or Affiliate of
such Lender or of any Affiliate of such Lender hereafter selected and notified
in writing to the Company and the Agent by such Lender. Any Affiliate of any
such Lender so selected and notified shall have all rights of a Lender
hereunder.
<PAGE> 7
"Applicable Margin" shall mean, with respect to any Floating Rate Loan,
Bankers' Acceptance, LIBOR Loan, commitment fee payable under Section 2.3(a)
and Letter of Credit fee payable pursuant to Section 2.3(b), as the case may
be, the per annum rate (expressed as a percentage) in accordance with the
following:
<TABLE>
<CAPTION>
Total Debt to Floating Rate Bankers' Letter of Credit Commitment Fees
EBITDA Ratio Loans Acceptances and Fees
LIBOR Loans
<S> <C> <C> <C> <C>
>5.00
0.75% 2.25% 2.25% 0.50%
>4.51 but <5.00 0.50% 2.00% 2.00% 0.45%
>3.75 but <4.50 0.25% 1.75% 1.75% 0.375%
>3.00 but <3.75 0.0% 1.50% 1.50% 0.30%
<3.00 0.0% 1.25% 1.25% 0.25%
</TABLE>
The Applicable Margin shall be based upon the Total Debt to EBITDA
Ratio as calculated as of the last day of each fiscal quarter of the Company
and the Applicable Margin shall be adjusted on (a) the last day of the second
month following the close of the fiscal quarter for the first three fiscal
quarters, and (b) the last day of the fourth month following the close of the
last fiscal quarter, based on the financial statements of the Company and
related compliance certificate pursuant to Section 5.1(d) to the Lenders, and
shall remain in effect until the next change to be effected pursuant to this
definition and shall be adjusted for the first time on the earlier of (i) if
requested by the Agent, the date of any Acquisition (other than the Acquisition
of Howell) by the Company or any of its Subsidiaries in which any Borrower or
Guarantor incurs any Indebtedness or makes any loan, advance or investment in
any Unrestricted Subsidiary, based on the pro forma Total Debt to EBITDA Ratio
after giving effect to such acquisition, on a pro forma basis acceptable to the
Agent, or (ii) based on the financial statements delivered to the Agent for the
fiscal quarter ending September 30, 1997; provided that the Applicable Margin
shall be based on a Total Debt to EBITDA Ratio of greater than 3.00 to 1.00 but
less than or equal to 3.75 to 1.00 until it is adjusted for the first time
hereunder.
"Assignment and Acceptance" is defined in Section 8.6(d).
"Available Commitment" shall mean, as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Commitment at such time over (b) the aggregate Canadian Advances made by such
Lender outstanding at such time.
"BA Equivalent Loan" shall mean a Loan contemplated as such in Section
3.4.
"BA Rate" shall mean the rate per annum determined as being the
arithmetic average (rounded upwards, if necessary, to the nearest .01%) of the
rates quoted for NBD Canada for one month bankers' acceptances as appears on
the Reuters Screen CDOR (Certificate of Deposit Offered Rate) page, as
determined as at 10:00 a.m. (Toronto time) on the relevant Business Day (for
non-Business Days, and if no CDOR rate is available for a given Business Day,
the CDOR rate for the immediately previous Business Day for which a CDOR rate
is available shall be used)
2
<PAGE> 8
"BA Interest Period" shall mean, relative to any Bankers Acceptance or
BA Equivalent Loan, the period beginning on (and including) the date on which
such Bankers Acceptance is accepted or continued or such BA Equivalent Loan is
made or continued to (but excluding) the date which is 30, 60 or 90 days
thereafter, as selected by the Company.
"Bankers' Acceptance" shall mean a non-interest bearing bill of
exchange in a form satisfactory to the Agent, denominated in CAD, drawn and
endorsed by a Borrowing Subsidiary and presented to each Canadian Lender for
acceptance pursuant to this Agreement.
"BMG" shall mean BMG North America Limited, a corporation incorporated
under the laws of the Province of Ontario, Canada.
"Borrowing" shall mean the aggregation of Advances, including each
Letter of Credit and Bankers' Acceptance issuance, of the Lenders to be made to
any Borrower, or continuations and conversions of any Advances, made pursuant
to Article II on a single date and, in the case of any LIBOR Loans or Bankers'
Acceptances, for a single Interest Period, which Borrowings may be classified
for purposes of this Agreement by reference to the type of Loans or the type of
Advance comprising the related Borrowing, e.g., a "LIBOR Borrowing" is a
Borrowing comprised of LIBOR Loans and a "Letter of Credit Borrowing" is an
Advance comprised of a single Letter of Credit.
"Borrowing Base" shall mean, as of any date, the sum of:
(a) an amount equal to 85% of the value of Eligible Accounts
Receivable, plus
(b) an amount equal to 50% of the value of Eligible Tooling
Reimbursement Payments, plus
(c) an amount equal to 50% of the value of Eligible Inventory, plus
(d) an amount equal to 50% of the value of Eligible Tooling, plus
(e) an amount equal to
(i) 65% of the net book value of Eligible Fixed
Assets, other than Eligible Fixed Assets acquired pursuant to an
Acquisition (exclusive of the Eligible Fixed Assets of Howell to be
acquired in connection with the Acquisition of Howell, which Eligible
Fixed Assets of Howell will be included in this clause (i) when Howell
becomes a Guarantor hereunder) after the Effective Date, and
(ii) the following amount with respect to Eligible
Fixed Assets acquired pursuant to an Acquisition (exclusive of the
Eligible Fixed Assets of Howell to be acquired in connection with the
Acquisition of Howell) after the Effective Date: (A) if appraisals of
such Eligible Fixed Assets are not performed, 50% of the net book value
of such Eligible Fixed Assets or (B) if appraisals of such Eligible
Fixed Assets are performed, then an amount equal to the lesser of (x)
65% of the net book value of such Eligible Fixed Assets or (y) such
percentage
3
<PAGE> 9
of the net book value of such Eligible Fixed Assets which would
equate to 80% of the orderly liquidation value shown in such appraisals
for equipment and 80% of the fair market value shown in such appraisals
for real estate with respect to such Eligible Fixed Assets, provided
that (1) with respect to such Eligible Fixed Assets acquired in
connection with an Acquisition after the Effective Date, the net
book value of such assets will be the higher of the net book value
immediately prior to such Acquisition or immediately after such
Acquisition, provided further that if the value is determined by
reference to the net book value of such assets immediately prior to
such Acquisition the Company shall apply its normal depreciation
policies to such assets and (2) such appraisals shall be done by an
independent third party appraiser acceptable to the Agent.
"Borrowing Base Certificate" for any date shall mean an appropriately
completed report as of such date in substantially the form of Exhibit A hereto,
certified as true and correct as of such date by the Chief Financial Officer or
Treasurer of the Company.
"Borrowing Subsidiary" shall mean any Canadian Subsidiary designated by
the Company to the Agent as a "Borrowing Subsidiary" hereunder so long as (a)
each of the Company and each Guarantor guarantees the obligation of such
Borrowing Subsidiary pursuant to a Guaranty, and grants a first priority lien
and security interest on its assets to the extent required under Section 2.11
to secure such Guaranty and all obligations of such Borrowing Subsidiary, (b)
such Borrowing Subsidiary delivers all corporate or organizational documents
and authorizing resolutions and legal opinions requested by the Agent and (c)
such Borrowing Subsidiary executes all agreements, instruments and documents
and takes such other action requested by the Agent, including without
limitation becoming bound by the terms hereof as a Borrowing Subsidiary and
granting a first priority lien and security interest on its assets to the
extent required under Section 2.11 to secure all Canadian Advances and other
obligations of such Borrowing Subsidiary to the Lenders and the Agent. As of
the Effective Date, the only Borrowing Subsidiary is BMG.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which the Agent is not open to the public for carrying on substantially
all of its banking functions in Detroit, Michigan or, with respect to any
Canadian Advance, NBD Canada is not open to the public for carrying on
substantially all of its banking functions in Toronto, Ontario.
"CAD" or "C$" shall mean the lawful money of Canada.
"Canadian Advances" shall mean all Loans, including Acceptances,
denominated in CAD.
"Canadian Lender" shall mean any Lender which, whether directly or
through an Affiliate of such Lender, can make Canadian Advances hereunder free
of withholding taxes of Canada and that is designated to the Agent and the
Company as a Canadian Lender.
"Canadian Percentage" of any Canadian Lender as of any date, shall mean
a fraction (expressed as a percentage), the numerator of which is the
Commitment of such Canadian Lender and the denominator which is the aggregate
Commitments of all Canadian Lenders.
4
<PAGE> 10
"Canadian Subsidiary" shall mean any Subsidiary of the Company
organized under the laws of Canada or any Province thereof.
"Capital Lease" of any Person shall mean any lease which, in accordance
with Generally Accepted Accounting Principles, is or should be capitalized on
the books of such Person.
"Capital Stock" shall mean (i) in the case of any corporation, all
capital stock and any securities exchangeable for or convertible into capital
stock and any warrants, rights or other options to purchase or otherwise
acquire capital stock or such securities or any other form of equity
securities, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person.
"Change in Control" shall mean:
(a) prior to a primary sale or sales of shares of Capital Stock of
the Company resulting in the sale of more than 50% of each class of outstanding
Capital Stock of the Company pursuant to any one or more public offerings
thereof (a "Majority IPO"), Permitted Holders shall cease to control, directly
or indirectly, in each case free and clear of all Liens, a majority (on a fully
diluted basis) of the issued and outstanding shares of Voting Stock of the
Company and have the right and authority to appoint, designate or otherwise
elect a majority of the members of the board of directors of the Company;
(b) after a Majority IPO, (i) Permitted Holders shall cease to
control, directly, or indirectly, in each case free and clear of all Liens, at
least 20% (on a fully diluted basis) of the issued and outstanding shares of
Voting Stock of the Company and have the right and authority to appoint,
designate or otherwise elect at least 20% of the members of the board of
directors of the Company or (ii) any person, or two or more persons acting in
concert, acquire or own beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Exchange Act of
1934) an amount of the outstanding shares of Voting Stock of the Company or the
Company on a fully diluted basis which is equal to or greater than the amount
owned by the Permitted Holders free and clear of any Lien; or
(c) any "Change of Control" as defined in the Senior Subordinated
Note Indenture.
"Commitment" shall mean, with respect to each Lender, the commitment of
each such Lender to make or accept, as the case may be, Loans and to
participate in Letter of Credit Advances made through the Agent pursuant to
Section 2.1, in amounts not exceeding in aggregate principal amount outstanding
at any time the respective Commitment amounts for each such Lender set forth
next to the name of each such Lender in the signature pages hereof, or, as the
Lender becoming a party hereto after the Effective Date, as set forth in the
applicable Assignment and Acceptance, in each case as reduced or modified
pursuant to this Agreement.
"Company Security Agreement" shall mean the security agreement entered
into by the Company for the benefit of the Agent and the Lenders pursuant to
this Agreement in substantially the form of Exhibit B hereto, as amended or
modified from time to time.
5
<PAGE> 11
"Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for two or more persons
of the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
"Contingent Liabilities" of any Person shall mean, as of any date, all
obligations of others for which such Person is contingently liable, as
guarantor, surety, accommodation party, partner or in any other capacity, or in
respect of which obligations such Person assures a creditor against loss or
agrees to take any action to prevent any such loss (other than endorsements of
negotiable instruments for collection in the ordinary course of business),
including without limitation all reimbursement obligations of such Person in
respect of any letters of credit, surety bonds or similar obligations and all
obligations of such Person to advance funds to, or to purchase assets, property
or services from, any other Person in order to maintain the financial condition
of such other Person.
"Creative" shall mean Creative Fabrication Corporation, a Tennessee
corporation.
"Creative Letter of Credit" shall mean the irrevocable letter of credit
number 442 issued by NBD Bank on September 27, 1995 for the account of
Creative, as renewed or extended or otherwise modified from time to time.
"Creative Revenue Bond" shall mean the $8,500,000 Industrial
Development Revenue Bond (Creative Fabrication Corporation Project), Series
1995 issued by the Industrial Development Board of the County of McMinn, a
public non-profit corporation and public instrumentality of the County of
McMinn, Tennessee.
"Creative Revenue Bond Documents" shall mean the indenture of trust,
loan agreement, reimbursement agreement, irrevocable letter of credit, pledge
and security agreement, deed of trust, security agreement, fixture filing and
assignment of rents, security agreement, guarantor security agreement,
irrevocable guaranty agreement and all other agreements and documents executed
or issued in connection with the Creative Revenue Bond, all as amended or
modified from time to time.
"Default" shall mean any event or condition which might become an Event
of Default with notice or lapse of time or both.
"Defaulting Lender" shall mean any Lender that fails to make available
to the Agent such Lender's Loans required to be made hereunder or shall have
not made a payment required to be made to the Agent hereunder. Once a Lender
becomes a Defaulting Lender, such Lender shall continue as a Defaulting Lender
until such time as such Defaulting Lender makes available to the Agent the
amount of such Defaulting Lender's Loans and all other amounts required to be
paid to the Agent pursuant to this Agreement.
"Discount Rate" shall mean with respect to Bankers' Acceptances issued
pursuant to this Agreement with the same maturity date, the rate determined by
the Agent as being the discount rate, calculated on the basis of a year of 365
days, of the Agent established in accordance with its normal practices at or
about 10:00 a.m. on the date of issue of such Bankers' Acceptances, for
bankers' acceptances having a comparable face value and an identical maturity
date to the face value and maturity date of the Agent's portion of such issue
of Bankers' Acceptances.
6
<PAGE> 12
"Discounted Proceeds" shall mean in respect of any Bankers' Acceptance
to be accepted and purchased by a Lender hereunder on any day, an amount
(rounded to the nearest whole cent, and with one-half of one cent being rounded
up) calculated on such day by multiplying (i) the face amount of such Bankers'
Acceptance by (ii) the price, where the price is determined by dividing one by
the sum of one plus the product of (A) the Discount Rate (expressed as a
decimal) and (B) a fraction, the numerator of which is the number of days in
the term of such Bankers' Acceptance and the denominator of which is 365.
"Disqualified Stock" shall mean any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, or which otherwise
has any mandatory payments with respect thereto.
"Dollar Equivalent" shall mean as of any date, with respect to any
amount in a currency other than Dollars, the sum in Dollars resulting from the
conversion of such amount from such currency into Dollars at the spot exchange
rate determined by the Agent to be available to it for the purchase of such
currency with Dollars at approximately 11:00 a.m. local time of the Applicable
Lending Office on such date as a determination of the Dollar Equivalent is
made.
"Documents" shall have the meaning ascribed thereto in Section 3.3(b).
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"Domestic Subsidiary" shall mean each present and future Subsidiary of
the Company which is not a Foreign Subsidiary.
"EBITDA" for any period shall mean the sum of Net Income plus, without
duplication, the following to the extent deducted in calculating such
Net Income: (i) Interest Expense, (ii) income tax expense (including Michigan
Single Business Taxes expense), (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash items reducing Net Income (other than items
that will require cash payments and for which an accrual or reserve is, or is
required by Generally Accepted Accounting Principles to be, made, except as
otherwise consented to by the Agent), less all non-cash items increasing Net
Income, in each case for such period. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of the Company shall be added to Net Income to
compute EBITDA only to the extent (and in the same proportion) that the net
income of such Subsidiary was included in calculating Net Income.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Eligible Accounts Receivable" shall mean, as of any date and without
duplication, those trade accounts receivable owned by a Borrower or a Guarantor
that are payable in Dollars, CAD or any other readily available and freely
tradable currency acceptable to the Agent and in which such Borrower or
Guarantor has granted to the Agent for the benefit of the Lenders and the Agent
a first-priority perfected security interest pursuant to the Security
Agreements, subject to only such Liens as are permitted Section 5.2(f)(i),
valued at the face amount thereof less sales, excise or similar taxes and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed, but shall not
include any such account receivable (a) that is not a bona fide existing
obligation created by the sale and actual delivery of inventory, goods or other
property, or
7
<PAGE> 13
the furnishing of services or other good and sufficient consideration to
customers of a Borrower or a Guarantor in the ordinary course of business, (b)
that is more than 90 days past due or that remains outstanding more than 90
days after the earlier of the date of the invoice or the shipment of the
related inventory, goods or other property or the furnishing of the related
services or other consideration, (c) that is subject to any dispute,
contra-account, defense, offset or counterclaim or any Lien (except those in
favor of the Agent for the benefit of the Lenders and the Agent under the
Security Documents), or the inventory, goods, property, services or other
consideration of which such account receivable constitutes proceeds is subject
to any such Lien, (d) in respect of which the inventory, goods, property,
services or other consideration have been rejected, (e) that is due from any
Affiliate or Subsidiary of any Borrower or Guarantor, (f) that has been
classified by any Borrower or Guarantor as doubtful or has otherwise failed to
meet established or customary credit standards of any Borrower or Guarantor,
(g) that is payable by any Person located outside the United States or Canada
(which shall not be deemed to include any territories of the United States or
Canada), other than a Subsidiary of General Motors Corporation, Ford Motor
Company or Chrysler Corporation, or any other substantial auto manufacturer or
supplier approved by the Agent, (h) with respect to which any representation or
warranty contained in Section 4.11 is incorrect at any time, (i) that is
payable by the United States or any of its departments, agencies or
instrumentalities or by any state or other governmental entity unless such
Borrower or Guarantor shall have notified the Agent thereof and shall have
executed and delivered any and all instruments and documents and taken such
other action required by the Agent to duly effect the assignment thereof to the
Agent under the Federal Assignment of Claims Act, as amended, or other
applicable law now or hereafter in effect, (j) that is payable by any Person as
to which 30% or more of the accounts receivable payable by such Person to any
Borrower or Guarantor do not otherwise constitute Eligible Accounts Receivable,
(k) that is payable by any Person that is the subject of any proceeding seeking
to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief or protection of debtors or seeking the appointment of
a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property, or that is not generally paying its debts as
they become due or has admitted in writing its inability to pay its debts
generally or has made a general assignment for the benefit of creditors, (l)
that is evidenced by a promissory note or other instrument, (m) that is
subordinate or junior in right or priority of payment to any other obligation
or claim, (n) arising as a result of or relating to Tooling if such account
receivable is not currently due or arising as a result of or relating to
Tooling if it arises under any Tooling Contract financed by any lender other
than by Advances by the Lenders under this Agreement, or (o) that for any other
reason is at any time reasonably deemed by the Agent to be ineligible.
"Eligible Fixed Assets" shall mean, as of any date, those tangible
fixed assets owned by a Borrower or a Guarantor in which such Borrower or
Guarantor has granted to the Agent and Lenders a first-priority perfected
security interest pursuant to the Security Agreements, subject to only such
Liens as are permitted Section 5.2(f)(i),but not including any such fixed asset
(a) that is not usable in the business of a Borrower or Guarantor, (b) that is
located outside the United States or Canada or such other jurisdiction approved
by the Agent, (c) that is subject to, or any accounts or other proceeds
resulting from the sale or other disposition thereof could be subject to, any
Lien (except those in favor of the Agent and the Lenders under the Security
Agreements, (d) that is not in the possession of the Company, (e) that is held
for sale or lease or is the subject of any lease, (f) that is subject to any
trademark, trade name or licensing arrangement, or any law, rule or regulation,
that could limit or impair the ability of the Agent and the Lenders to promptly
exercise all rights of the Agent and the Lenders under the Security Agreements,
(g) if such fixed asset is located on premises not owned by the Company and the
landlord or other owner of such premises shall not have waived its distraint,
lien and similar rights with respect to such fixed asset, and shall not have
agreed to permit the Agent to enter such premises after the
8
<PAGE> 14
occurrence of an Event of Default pursuant to a waiver and agreement of such
person in favor of and in form and substance acceptable to the Agent, (h) with
respect to which any insurance proceeds are not payable to the Agent as a
lender loss payee or are payable to any loss payee other than the Agent or a
Borrower or Guarantor, and (i) that for any other reason is at any time
reasonably deemed by the Agent to be ineligible.
"Eligible Inventory" shall mean, as of any date, that inventory owned
by a Borrower or a Guarantor that constitutes raw materials, work-in-process or
finished goods in which such Borrower or Guarantor has granted to the Agent for
the benefit of the Lenders and the Agent a first-priority perfected security
interest pursuant to the Security Agreements, subject to only such Liens as are
permitted Section by 5.2(f)(i), valued at the lower of cost or market on a FIFO
basis, but shall not include any such inventory (a) that does not constitute
raw materials, work-in-process or finished goods readily salable or usable in
the business of a Borrower or a Guarantor, (b) that is located outside the
United States or Canada (which shall not be deemed to include any territories
of the United States or Canada) or such other jurisdiction approved by the
Agent, (c) that is subject to, or any accounts or other proceeds resulting from
the sale or other disposition thereof could be subject to, any Lien (except
those in favor of the Agent for the benefit of the Lenders and the Agent under
the Security Documents), including any sale on approval or sale or return
transaction or any consignment, (d) that is not in the possession of such
Borrower or Guarantor, (e) that is held for lease or is the subject of any
lease, (f) that is subject to any trademark, trade name or licensing
arrangement, or any law, rule or regulation, that could limit or impair the
ability of the Agent to promptly exercise all rights of the Agent under the
Security Documents, (g) if such inventory is located on premises not owned by
such Borrower or Guarantor and the landlord or other owner of such premises
shall not have waived its distraint, lien and similar rights with respect to
such inventory and shall not have agreed to permit the Lenders and the Agent to
enter such premises pursuant to a waiver and agreement of such Person in favor
of and in form and substance acceptable to the Lenders and the Agent or any
other substantial auto manufacturer or supplier approved by the Agent, (h) with
respect to which any insurance proceeds are not payable to the Agent for the
benefit of the Lenders as a lender loss payee or are payable to any loss payee
other than the Agent or such Borrower or Guarantor, (i) that is classified as
Eligible Tooling or Eligible Tooling Reimbursement Payments, or (j) that for
any other reason is at any time reasonably deemed by the Agent to be
ineligible.
"Eligible Tooling" shall mean such portion of assets, net of any
payments received thereon, of a Borrower or Guarantor which consists of
Tooling, provided that each of the following conditions is satisfied: (a) the
sale of such Tooling is covered under specific written purchase orders or
agreements between a Borrower or Guarantor and the purchaser of such Tooling,
and the terms and provisions of all such purchase orders and agreements and the
purchaser thereof must be satisfactory to the Agent, (b) the Agent has a first
priority, perfected and enforceable security interest in such Tooling and any
account receivable or other proceeds of a Borrower or Guarantor relating to
such Tooling , subject to only such Liens as are permitted by Section
5.2(f)(i), and (c) the unpaid balance of such Tooling as represented by a
Borrower or Guarantor is not subject to any defense, counterclaim, setoff,
contra-account, credit, allowance or adjustment. For purposes of this
definition, all Tooling of a Borrower or Guarantor which is the subject of any
Tooling Contract financed by any lender other than by Advances by the Lenders
under this Agreement shall be excluded from this definition, and no (i)
accounts receivable included within Eligible Accounts Receivable, (ii) Eligible
Tooling Reimbursement Payments or (iii) Eligible Inventory shall be included as
part of Eligible Tooling.
"Eligible Tooling Reimbursement Payments" shall mean such portion of
long term assets, net of any payments received thereon, of a Borrower or
Guarantor which consists of Tooling reimbursement payments provided that each
of the following conditions are satisfied: (a) the sale of the
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<PAGE> 15
related Tooling is covered under specific written purchase orders or agreements
between a Borrower or Guarantor and the purchaser of such Tooling, and the
terms and provisions of all such purchase orders and agreements and the
purchaser thereof must be satisfactory to the Agent, (b) the Agent has a first
priority, perfected and enforceable security interest in such long term assets
and any account receivable or other proceeds of a Borrower or Guarantor
relating to such long term assets, subject to only such Liens as are permitted
by Section 5.2(f)(i), (c) the unpaid balance of such Tooling as represented by
a Borrower or Guarantor is not subject to any defense, counterclaim, setoff,
contra-account, credit, allowance or adjustment and (d) such Tooling is
completed and has been approved by the purchaser thereof. For purposes of this
definition, all Tooling reimbursement payments of a Borrower or Guarantor which
are the subject of any Tooling Contract financed by any lender other than by
Advances by the Lenders under this Agreement shall be excluded from this
definition and no (i) Eligible Inventory, (ii), Eligible Tooling or (iii)
accounts receivable included within Eligible Accounts Receivable shall be
included as part of Eligible Tooling Reimbursement Payments.
"Environmental Certificate" shall mean the environmental certificate
given by the Borrowers and the Guarantors to the Agent for the benefit of the
Lenders pursuant to this Agreement in substantially the form of Exhibit C
hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, any trade or
business (whether or not incorporated) which, together with such Person or any
Subsidiary of such Person, would be treated as a single employer under Section
414 of the Code and the regulations promulgated thereunder.
"Event of Default" shall mean any of the events or conditions described
in Section 6.1.
"Existing Letters of Credit" shall mean the letters of credit set forth
on Schedule 1.1(A).
"Federal Funds Rate" shall mean the per annum rate established and
announced by the Agent from time to time as the opening federal funds rate paid
by the Agent in its regional federal funds market for overnight borrowings from
other banks, which Federal Funds Rate shall change simultaneously with any
change in such announced rates.
"Fixed Charges" shall mean, for any period, the sum, without
duplication, of (a) Interest Expense for such period, plus (b) all payments of
principal or other sums paid or payable during such period by the Company or
its Restricted Subsidiaries with respect to Indebtedness of the Company or its
Restricted Subsidiaries, other than (i) payments on the Advances and (ii)
payments on Tooling Indebtedness, plus (c) all debt discount and expense
amortized or required to be amortized during such period by the Company or its
Restricted Subsidiaries, plus (d) Rental Charges paid or payable during such
period by the Company and its Restricted Subsidiaries, plus (e) all dividends,
distributions and other obligations paid with respect to any class of the
Company's Capital Stock or any dividend, payment or distribution paid in
connection with the redemption, purchase, retirement or other acquisition,
directly or indirectly, of any shares of the Company's Capital Stock, (f) all
net income taxes accrued in such period by the Company or its Restricted
Subsidiaries, plus (g) all payments of principal or other sums paid or payable,
whether directly or indirectly, during such period by the Company or any of its
Restricted Subsidiaries with respect to Indebtedness of any Unrestricted
Subsidiary.
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"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(a) the sum of (i) the EBITDA for such period (provided that EBITDA as
calculated in determining the Fixed Charge Coverage Ratio for (i) the fiscal
quarter ending June 30, 1997 shall be equal to the sum of the EBITDA for the
fiscal quarter ending June 30, 1997 plus $21,144,000, (ii) the fiscal quarter
ending September 30, 1997 shall be equal to the sum of EBITDA for the two
quarters ending September 30, 1997 plus $14,096,000 and (iii) the fiscal
quarter ending December 31, 1997 shall be equal to the sum of EBITDA for the
three fiscal quarters ending December 31, 1997 plus $7,048,000), plus (ii) the
Rental Charges for such period (provided that the Rental Charges for (i) the
fiscal quarter ending September 30, 1997 shall be equal to the product of the
Rental Charges for the two quarters ending September 30, 1997 times two and
(iii) the fiscal quarter ending December 31, 1997 shall be equal to the product
of the Rental Charges for the three fiscal quarters ending December 31, 1997
times four thirds) to (b) the Fixed Charges for such period (provided that the
Fixed Charges for (i) the fiscal quarter ending September 30, 1997 shall be
equal to the product of the Fixed Charges for the two quarters ending September
30, 1997 times two and (iii) the fiscal quarter ending December 31, 1997 shall
be equal to the product of the Fixed Charges for the three fiscal quarters
ending December 31, 1997 times four thirds)
"Floating Rate" shall mean the per annum rate equal to the sum of (a)
the Applicable Margin, plus (b) (i) with respect to U.S. Advances and other
obligations denominated in Dollars, the greater of (x) the Prime Rate in effect
from time to time, and (y) the sum of one half of one percent (1/2%) per annum
plus the Federal Funds Rate in effect from time to time; and (ii) with respect
to Canadian Advances and other obligations denominated in CAD, the greater of
(x) the per annum rate of interest quoted, published and commonly known as the
"prime rate" of NBD Canada which NBD Canada establishes as the reference rate
of interest in order to determine interest rates for loans to its Canadian
commercial borrowers, which rate is not necessarily the lowest rate of interest
offered by NBD Canada in connection with extensions of credit; and (y) the BA
Rate plus 1/2 of 1% per annum; in each case adjusted automatically with each
quoted or published change in such rate, all without the necessity of any
notice to any Borrower, which Floating Rate shall change simultaneously with
any change in any such rates.
"Floating Rate Loan" shall mean any Loan which bears interest at the
Floating Rate.
"Foreign Subsidiary" shall mean any Subsidiary incorporated or formed
in any jurisdiction other than any State of the United States of America.
"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.
"GM Agreement" shall mean the non-offset agreement of General Motors in
the form of Schedule 1.1(B) hereto.
"Guaranties" shall mean each guaranty entered into by the Guarantors
for the benefit of the Agent and the Lenders pursuant to this Agreement in
substantially the form of Exhibit D hereto, as amended or modified from time to
time.
"Guarantor Security Agreement" shall mean each security agreement
entered into by the Guarantors for the benefit of the Agent and the Lenders
pursuant to this Agreement in substantially the form of Exhibit E hereto, as
amended or modified from time to time.
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"Guarantors" shall mean each Domestic Subsidiary of the Company
existing as of the Effective Date, each Canadian Subsidiary, the Company (in
its capacity as guarantor of the Borrowing Subsidiaries), and each Person
becoming a Restricted Subsidiary of the Company after the Effective Date or
otherwise entering into a Guaranty from time to time.
"Howell" shall mean Howell Industries, Inc., a Michigan corporation.
"Indebtedness" of any Person shall mean, as of any date, (a) all
obligations of such Person for borrowed money, and similar monetary obligations
evidenced by bonds, notes, debentures, Capital Lease obligations, bankers
acceptances or otherwise, (b) all obligations of such Person as lessee under
any Capital Lease, (c) all obligations which are secured by any Lien existing
on any asset or property of such Person whether or not the obligation secured
thereby shall have been assumed by such Person, (d) all obligations of such
Person for the unpaid purchase price for goods, property or services acquired
by such Person, except for trade accounts payable and taxes arising in the
ordinary course of business that are not past due, (e) all obligations of such
Person to purchase goods, property or services where payment therefor is
required regardless of whether delivery of such goods or property or the
performance of such services is ever made or tendered (generally referred to as
"take or pay contracts"), (f) all Rate Hedging Obligations, and (g) all
Contingent Liabilities.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
on or about the Effective Date in form and substance satisfactory to the Agent
among the Agent, BMG and all other material lenders to BMG or any of its
Subsidiaries, as amended or modified from time to time.
"Interest Coverage Ratio" shall mean, for any period, the ratio of (a)
EBITDA for such period to (b) Interest Expense for such period.
"Interest Expense" shall mean, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Restricted Subsidiaries, (i) interest expense
attributable to Capital Lease obligations, (ii) amortization of debt discount,
(iii) capitalized interest, (iv) non-cash interest expense, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs associated with Rate Hedging
Agreements (including amortization of fees), (vii) Preferred Stock dividends in
respect of all Preferred Stock held by Persons other than the Company or a
Restricted Subsidiary, and (viii) interest actually paid by the Company or any
Restricted Subsidiary on any Indebtedness of any other Person. Notwithstanding
the foregoing, net interest expense attributable to Tooling Indebtedness shall
not be included in Interest Expense.
"Interest Payment Date" shall mean (a) with respect to any LIBOR Loan
or Acceptance, the last day of each Interest Period with respect thereto and,
in the case of any Interest Period exceeding three months, those days that
occur during such Interest Period at intervals of three months after the first
day of such Interest Period, and (b) in all other cases, the last Business Day
of each March, June, September and December occurring after the date hereof,
commencing with the first such Business Day occurring after the date of this
Agreement.
"Interest Period" shall mean any BA Interest Period or LIBOR Interest
Period.
"Letter of Credit" shall mean a standby or commercial letter of credit
issued by the Agent on behalf of the Lenders for the account of the Company
under an application and/or other
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<PAGE> 18
documentation acceptable to the Agent requiring, among other things, immediate
reimbursement by the Company to the Agent in respect of all drafts or other
demand for payment honored thereunder and all expenses paid or incurred by the
Agent relative thereto, and shall include the Creative Letter of Credit and all
other Existing Letters of Credit.
"Letter of Credit Advance" shall mean each issuance of a Letter of
Credit.
"LIBOR" shall mean, with respect to any LIBOR Loan and the related
LIBOR Interest Period, the per annum rate that is equal to the sum of:
(a) the Applicable Margin, plus
(b) the rate per annum obtained by dividing (i) the per annum rate
of interest at which deposits in Dollars for such LIBOR Interest Period and in
an aggregate amount comparable to the amount of such LIBOR Loan to be made by
the Agent in its capacity as a Lender hereunder are offered to the Agent by
other prime banks in the London interbank market, at approximately 11:00 a.m.
London time, on the second LIBOR Business Day prior to the first day of such
LIBOR Interest Period by (ii) an amount equal to one minus the stated maximum
rate (expressed as a decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
that are specified on the first day of such LIBOR Interest Period by the Board
of Governors of the Federal Reserve System (or any successor agency thereto)
for determining the maximum reserve requirement with respect to eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation D of
such Board) maintained by a member bank of such System; all as conclusively
determined by the Agent, such sum to be rounded up, if necessary, to the
nearest whole multiple of one one-hundredth of one percent (1/100 of 1%).
"LIBOR Business Day" shall mean, with respect to any LIBOR Loan, a day
which is both a Business Day and a day on which dealings in Dollar deposits are
carried out in the London interbank market.
"LIBOR Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the day such LIBOR Loan is made or converted to a LIBOR
Loan and ending on the day which is one, two or three months thereafter (or
such longer period requested by the Company and acceptable to the Lenders), as
the Company may elect under this Agreement, and each subsequent period
commencing on the last day of the immediately preceding LIBOR Interest Period
and ending on the day which is one, two or three months thereafter (or such
longer period requested by the Company and acceptable to the Lenders), as the
Company may elect under this Agreement, provided, however, that (a) any LIBOR
Interest Period which commences on the last LIBOR Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last LIBOR Business Day
of the appropriate subsequent calendar month, (b) each LIBOR Interest Period
which would otherwise end on a day which is not a LIBOR Business Day shall end
on the next succeeding LIBOR Business Day or, if such next succeeding LIBOR
Business Day falls in the next succeeding calendar month, on the next preceding
LIBOR Business Day, and (c) no LIBOR Interest Period which would end after the
Termination Date shall be permitted.
"LIBOR Loan" shall mean any Loan which bears interest at LIBOR.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction,
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<PAGE> 19
financing statement filing, lessor's or lessee's interest under any lease,
subordination of any claim or right, or any other type of lien, charge,
encumbrance, preferential arrangement or other claim or right.
"Loan" shall mean any Revolving Credit Loan and any Swingline Loan.
Any Loan or any portion thereof may also be denominated as a Floating Rate
Loan, a Bankers' Acceptance or BA Equivalent Loan or a LIBOR Loan and such
Loans are referred to herein as "types" of Loans.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Security Documents and any other agreement, instrument or document executed
in connection with any of the foregoing at any time.
"Lobdell" shall mean Lobdell Emery Corporation, a Michigan corporation.
"Lobdell Preferred Stock" shall mean all existing preferred stock
issued by Lobdell, including the Series B Preferred Stock and Series A
Preferred Stock, in the aggregate amount of $50,700,000.
"Lobdell Preferred Stock Documents" shall mean all stock certificates,
agreements and other documents relating to the terms of the Preferred Stock or
otherwise relating to the Preferred Stock.
"Material Adverse Effect" shall mean (i) a material adverse effect on
the property, business, operations, financial condition, liabilities or
capitalization of the Company and its Restricted Subsidiaries, taken as a
whole, (ii) a material adverse effect on the ability of the Company or any
Guarantor to perform its obligations under the Loan Documents or (iii) a
material adverse effect on the rights and remedies of the Agent or the Lenders
under the Loan Documents.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NBD Canada" shall mean First Chicago NBD Bank, Canada, a Canadian
chartered bank.
"Net Cash Proceeds" means, without duplication (a) in connection with
any sale or other disposition of any asset or any settlement by, or receipt of
payment in respect of, any property insurance claim or condemnation award, the
cash proceeds (including any cash payments received by way of deferred payment
of principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such
sale, settlement or payment, net of reasonable and documented attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder
on any asset which is the subject of such sale, insurance claim or condemnation
award (other than any Lien in favor of the Agent for the benefit of the Agent
and the Lenders) and other customary fees actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof and (b) in connection with any issuance or sale of any equity
securities or debt securities or instruments or the incurrence of loans, the
cash proceeds received from such issuance or incurrence, net of investment
banking fees, reasonable and documented attorneys' fees, accountants' fees,
underwriting discounts and commissions and other reasonable and customary fees
and expenses actually incurred in connection therewith.
"Net Income" shall mean, for any period, the net income of the
Company and its consolidated Restricted Subsidiaries; provided, however, that
there shall not be included in such Net
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<PAGE> 20
Income: (i) any net income (or loss) of any Person if such Person is not a
Restricted Subsidiary, except that subject to the exclusion contained in clause
(iv) below, the Company's equity in the net income of any such Person for such
period shall be included in such Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (iii) below); (ii) any net income (or loss) of
any Person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any net
income of any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Net Income up to the aggregate amount
of cash that could have been distributed by such Restricted Subsidiary
consistent with such restriction during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause) and (B) the Company's equity in a net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Net Income; (iv) any gain (or loss) realized upon the sale or
other disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain (or loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) extraordinary or nonrecurring gains or non-cash losses; and (vi) the
cumulative effect of a change in accounting principles.
"Net Worth" of any Person shall mean, as of any date, the amount of any
capital stock, paid in capital and similar equity accounts plus (or minus in
the case of a deficit) the capital surplus and retained earnings of such Person
and the amount of any foreign currency translation adjustment account shown as
a capital account of such Person, less treasury stock, all as determined under
Generally Accepted Accounting Principles.
"Non Canadian Lender" is defined is Section 2.1(c)(iii).
"Note" shall mean any Revolving Credit Note or any Swingline Note.
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per
annum plus the Floating Rate, (b) in respect of principal of LIBOR Loans, a
rate per annum that is equal to the sum of three percent (3%) per annum plus
the per annum rate in effect thereon until the end of the then current Interest
Period for such Loan and, thereafter, a rate per annum that is equal to the sum
of three percent (3%) per annum plus the Floating Rate, and (c) in respect of
other amounts payable by the Company hereunder (other than interest), a per
annum rate that is equal to the sum of three percent (3%) per annum plus the
Floating Rate.
"Oxford" shall mean The Oxford Investment Group, Inc., a Michigan
corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Disqualified Stock" is defined is Section 5.2(j).
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<PAGE> 21
"Permitted Holders" shall mean (i) any of Selwyn Isakow, his spouse and
any of his lineal descendants and their respective spouses (collectively, the
"Isakow Family") whether acting in their own name or as one or as a majority of
persons having the power to exercise the voting rights attached to, or having
investment power over, shares held by others, (ii) any Person wholly owned and
controlled by any member of the Isakow Family, and (iii) any trust solely for
the benefit of one or more members of the Isakow Family (whether or not any
member of the Isakow Family is a trustee of such trust).
"Permitted Liens" shall mean Liens permitted by Section 5.2(f) hereof.
"Person" shall include an individual, a corporation, an association, a
partnership, a limited liability company, a trust or estate, a joint stock
company, an unincorporated organization, a joint venture, a trade or business
(whether or not incorporated), a government (foreign or domestic) and any
agency or political subdivision thereof, or any other entity.
"Plan" shall mean, with respect to any Person, any pension plan
(including a Multiemployer Plan) subject to Title IV of ERISA or to the minimum
funding standards of Section 412 of the Code which has been established or
maintained by such Person, any Subsidiary of such Person or any ERISA
Affiliate, or by any other Person if such Person, any Subsidiary of such Person
or any ERISA Affiliate could have liability with respect to such pension plan.
"Pledge Agreements" shall mean each pledge agreement entered into by
the Company or any Guarantor for the benefit of the Agent and the Lenders
pursuant to this Agreement in form and substance satisfactory to the Agent, as
amended or modified from time to time.
"Preferred Stock" shall mean all Lobdell Preferred Stock and all other
preferred stock or similar Capital Stock issued by the Company or any of its
Restricted Subsidiaries at any time.
"Prime Rate" shall mean the per annum rate announced by the
Agent from time to time as its "prime rate" (it being acknowledged that such
announced rate may not necessarily be the lowest rate charged by the Agent to
any of its customers); which Prime Rate shall change simultaneously with any
change in such announced rate.
"Prohibited Transaction" shall mean any transaction involving any Plan
which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
"Rate Hedging Agreement" shall mean an agreement, device or arrangement
entered into by the Company or any of its Restricted Subsidiaries providing for
payments which are related to fluctuations of interest rates, exchange rates or
forward rates, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person shall mean any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (i) any
and all Rate Hedging Agreements, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Hedging Agreement.
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"Rental Charges" shall mean the maximum amount of all rents and other
payments (exclusive of property taxes, property and liability insurance
premiums and maintenance costs) paid or required to be paid by the Company or
its Restricted Subsidiaries during such period under any lease of real or
personal property in respect of which the Company or its Restricted
Subsidiaries is obligated as a lessee or user, other than any Capital Lease.
"Reportable Event" shall mean a reportable event as described in
Section 4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the regulations promulgated by the
PBGC under ERISA.
"Required Lenders" shall mean Lenders holding not less than (i) 51% (or
100% where required pursuant to Section 8.1) of the Commitments, or (ii) 51%
(or 100% where required pursuant to Section 8.1) of the Advances if the
Commitments have expired or been terminated.
"Restricted Subsidiary" shall mean each Subsidiary of the Company
existing as of the Effective Date (including the Guarantors and the Borrowing
Subsidiaries) and each other Subsidiary of the Company that is designated by
the Company as a Restricted Subsidiary.
"Revolving Credit Advance" shall mean any Revolving Credit Loan and any
Letter of Credit Advance.
"Revolving Credit Loan" shall mean any borrowing, including any
Bankers' Acceptance, under Section 2.4 evidenced by Revolving Credit Notes and
made pursuant to Section 2.1(a) or (b).
"Revolving Credit Note" shall mean any promissory note of a Borrower
evidencing the Revolving Credit Loans made to it in substantially the form
annexed hereto as Exhibit F, as amended or modified from time to time and
together with any promissory note or notes issued in exchange or replacement
therefor.
"Security Agreements" shall mean the Company Security Agreement and the
Guarantor Security Agreements.
"Security Documents" shall mean, collectively, the Security Agreements,
the Documents, the Environmental Certificate, the Creative Bond Documents, the
Guaranties, the Pledge Agreements, the subrogation and contribution agreement
and all other related agreements and documents, including financing statements
and similar documents, delivered pursuant to this Agreement or otherwise
entered into by any Person to secure or guarantee the Advances or otherwise
relating hereto.
"Senior Subordinated Debt Documents" shall mean the Senior Subordinated
Note Indenture, the Senior Subordinated Notes and all agreements and documents
executed in connection therewith at any time, including without limitation
those agreements and documents listed on Schedule 1.1-C hereto.
"Senior Subordinated Notes" shall mean the Senior Subordinated Notes
issued by the Company in the aggregate principal amount of $125,000,000 due
2007 issued pursuant to the Senior Subordinated Note Indenture.
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"Senior Subordinated Note Indenture" shall mean the Senior Subordinated
Indenture between the Company and First Trust National Association, as trustee,
dated as of June 24, 1997, as amended or modified from time to time.
"Solvent" when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present
fair saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its
debts as they mature. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.
"Subordinated Debt" of any Person shall mean, as of any date, that
Indebtedness of such Person for borrowed money which is expressly subordinate
and junior in right and priority of payment to the Advances and other
Indebtedness of such Person to the Lenders in manner and by agreement
satisfactory in form and substance to the Agent and subject to such other terms
and provisions, including without limitation maturities, covenants, defaults,
rates and fees, acceptable to the Agent, and shall include, without limitation,
all indebtedness owing pursuant to the Senior Subordinated Debt Documents and
any Permitted Disqualified Stock.
"Subordinated Debt Documents" shall mean the Senior Subordinated Debt
Documents and any other agreement or document evidencing or relating to any
Subordinated Debt, whether under the Senior Subordinated Notes or any other
Subordinated Debt.
"Subsidiary" of any Person shall mean any other Person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and
of record, by such Person or by one or more of the other Subsidiaries of such
Person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" shall mean a Subsidiary of the Company.
"Swingline Facility" shall have the meaning specified in Section
2.1(c).
"Swingline Loan" shall mean any loan under Section 2.4 evidenced by a
Swingline Note and made by the Agent (including NBD Canada) to a Borrower
pursuant to Section 2.1(c).
"Swingline Note" shall mean any promissory note of a Borrower
evidencing the Swingline Loans in substantially the form of Exhibit G hereto,
as amended or modified from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
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"Tax Sharing Agreement" shall mean any tax sharing or similar
agreement, if any, entered into between the Company and its Subsidiaries at any
time, as amended or modified from time to time.
"Termination Date" shall mean the earlier to occur of (a) June 24, 2003
and (b) the date on which the Commitments shall be terminated pursuant to
Section 2.2 or Section 6.2.
"Tooling" shall mean dies, molds, tooling and similar items.
"Tooling Contract" shall mean any contract for the fabrication or
purchase of Tooling.
"Tooling Indebtedness" shall mean all Indebtedness of the Company and
its Restricted Subsidiaries incurred for the purpose of financing Tooling,
which Indebtedness can be and is being fully serviced by payments for such
Tooling so financed and which payments are not in dispute, all as reasonably
determined by the Agent.
"Total Debt" shall mean, as of any date, each of the following, on a
consolidated basis for the Company and its Restricted Subsidiaries without
duplication: (a) all Indebtedness for borrowed money and similar monetary
obligations evidenced by bonds, notes, debentures, Capital Lease obligations,
bankers acceptances or otherwise, including without limitation obligations in
respect of the deferred purchase price of properties or assets, in each case
whether direct or indirect; plus (b) all liabilities secured by any Lien
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; plus (c) all reimbursements
obligations under outstanding letters of credit in respect of drafts which may
be presented or have been presented and have not yet been paid and are not
included in clause (a) above; plus (d) Permitted Disqualified Stock; plus (e)
all guarantees and all other Contingent Liabilities with respect to any of the
indebtedness, obligations or liabilities described in the foregoing clauses
(a), (b), (c)or (d), including without limitation all guarantees and other
Contingent Liabilities of the Company or any Restricted Subsidiary with respect
to any such indebtedness, obligations or liabilities of any Unrestricted
Subsidiaries; less (f) unexpended proceeds of the Creative Revenue Bond; less
(g) Tooling Indebtedness; less (h) cash equivalents acceptable to the Agent and
cash of the Company and its Restricted Subsidiaries, less any book overdrafts,
bank overdrafts or similar items.
"Total Debt to EBITDA Ratio" shall mean, at any time, the ratio of (a)
Total Debt at such time to (b) EBITDA, calculated as of the four most recently
completed fiscal quarters of the Company (provided that EBITDA as calculated in
determining the Total Debt to EBITDA Ratio for (i) the fiscal quarter ending
June 30, 1997 shall be equal to the sum of the EBITDA for the fiscal quarter
ending June 30, 1997 plus $21,144,000, (ii) the fiscal quarter ending September
30, 1997 shall be equal to the sum of EBITDA for the two quarters ending
September 30, 1997 plus $14,096,000 and (iii) the fiscal quarter ending
December 31, 1997 shall be equal to the sum of EBITDA for the three fiscal
quarters ending December 31, 1997 plus $7,048,000), all as determined in
accordance with Generally Accepted Accounting Principles.
"U.S. Advances" shall mean all Loans denominated in Dollars and all
Letters of Credit.
"U.S. Percentage" of any Lender as of any date, shall mean a fraction
(expressed as a percentage), the numerator of which is the difference of (a)
the Commitment of such Lender on such date minus (b) the Canadian Advances made
by such Lender (including any Affiliate of such Lender) which
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are outstanding as of such date, after giving effect to any Canadian Advances
to be made as of such date, and the denominator of which is the aggregate
Commitments of all Lenders.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as
of any date, the net pension liability as determined under FAS 87.
"Unrestricted Guaranties" shall mean all Contingent Liabilities of the
Company or of any Guarantor with respect to any Indebtedness of any
Unrestricted Subsidiaries, which Contingent Liabilities shall be deemed
outstanding in an amount equal to the maximum amount that could be payable
thereunder.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary) which is not a
Restricted Subsidiary.
"Voting Stock" of a Person shall mean all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Wholly Owned Subsidiary" shall mean a Subsidiary all the Capital Stock
of which (other than directors' qualifying shares) is owned by the Company
and/or one or more other Wholly Owned Subsidiaries.
1.2 Other Definitions; Rules of Construction. As used herein, the
terms "Agent", "Lender", "Lenders", "Company", "Borrowing Subsidiary",
"Borrowers" and "this Agreement" shall have the respective meanings ascribed
thereto in the introductory paragraph of this Agreement. Such terms, together
with the other terms defined in Section 1.1, shall include both the singular
and the plural forms thereof and shall be construed accordingly. All
computations required hereunder and all financial terms used herein shall be
made or construed in accordance with Generally Accepted Accounting Principles
unless such principles are inconsistent with the express requirements of this
Agreement; provided that, if the Company notifies the Agent that the Company
wishes to amend any covenant in Article V to eliminate the effect of any change
in Generally Accepted Accounting Principles in the operation of such covenant
(or if the Agent notifies the Company that the Required Lenders wish to amend
Article V for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of Generally Accepted Accounting Principles in
effect immediately before the relevant change in Generally Accepted Accounting
Principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Lenders. Use of the terms "herein", "hereof", and "hereunder" shall be deemed
references to this Agreement in its entirety and not to the Section or clause
in which such term appears. References to "Sections" and "subsections" shall
be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided. Notwithstanding anything herein, in any
financial statements of the Company or in Generally Accepted Accounting
Principles to the contrary, for purposes of calculating the Applicable Margin
and of calculating and determining compliance with the financial covenants in
Sections 5.2(a), (b), (c) and (d), including defined terms used therein, (i) no
Unrestricted Subsidiary shall be consolidated with the Company and its other
Subsidiaries and each Unrestricted Subsidiary shall be treated as if it were an
equity interest and all income, liabilities and assets of each Unrestricted
Subsidiary shall be excluded from all such calculations and determinations
thereunder except to the extent expressly provided herein, and (ii) any
acquisitions made by the Company or any of its Subsidiaries, including through
mergers or consolidations and including any related financial transactions,
during the period for which such financial covenants were calculated shall be
deemed to
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have occurred on the first day of the relevant period for which such financial
covenants were calculated on a pro forma basis acceptable to the Agent.
ARTICLE II.
THE COMMITMENTS, THE SWINGLINE FACILITY
AND THE ADVANCES
2.1 Commitment of the Lenders and Canadian and Swingline Facility.
(a) U.S. Advances. Each Lender agrees, for itself only,
subject to the terms and conditions of this Agreement, to make Loans to the
Company pursuant to Section 2.4 and to participate in Letter of Credit Advances
to the Company pursuant to Section 2.4 and Section 3.3, from time to time from
and including the Effective Date to but excluding the Termination Date,
denominated in Dollars and not to exceed in aggregate principal amount at any
time outstanding to the Company the respective amounts determined pursuant to
Section 2.1(d).
(b) Canadian Advances. (i) Each Canadian Lender agrees,
for itself only, subject to the terms and conditions of this Agreement, to make
Canadian Advances to the Borrowing Subsidiaries pursuant to Section 2.4, from
time to time from and including the Effective Date to be excluding the
Termination Date, not to exceed an aggregate principal amount at any time
outstanding to the Borrowing Subsidiaries the respective amounts determined
pursuant to Section 2.1(d).
(ii) If on any date a Canadian Advance is to be made to a
Borrowing Subsidiary (A) such Canadian Advance may not be made because the
aggregate Commitments of the Canadian Lenders would be exceeded and (B) the
amount by which such Commitments of the Canadian Lenders would be exceeded is
less than or equal to the aggregate unused Commitments of Lenders that are not
Canadian Lenders, each Lender that is not a Canadian Lender shall make a U.S.
Advance to the Company on such date, if the conditions for such an Advance are
satisfied, and the proceeds of such U.S. Advance shall be simultaneously
applied to repay the outstanding U.S. Advances of the Canadian Lenders, in each
case in amounts such that, after giving effect to such Borrowing and repayments
and the Borrowing from the Canadian Lenders of the requested Canadian Advance,
the provisions of Section 2.1(d) will not be violated. If any Borrowing of
U.S. Advances is required pursuant to this Section 2.1(b)(ii), the Company
shall notify the Agent in the manner provided for U.S. Advances in Section 2.4
and the Agent will notify each Lender of the amount to be advanced by such
Lender.
(c) Swingline Loans. (i) Any Borrower may request the
Agent to make, and the Agent may, in its sole discretion, make Swingline Loans
to the Borrowers from time to time on any Business Day during the period from
the Effective Date until the Termination Date in an aggregate principal amount
for all Borrowers not to exceed at any time the lesser of (A) the Dollar
Equivalent of $10,000,000 (the "Swingline Facility") and (B) the aggregate
amount of Revolving Credit Advances that could be but is not borrowed as of
such date. Each Lender's Commitment shall be deemed utilized by an amount
equal to such Lender's pro rata share (based on such Lender's Commitment) of
each Swingline Loan for purposes of determining the amount of Revolving Credit
Advances required to be made by such Lender, but no Lender's (including NBD
Bank's) Commitment, shall be deemed utilized for purposes of determining
commitment fees under Section 2.3(a). Swingline Loans shall bear interest at
the Floating Rate. Within the limits of the Swingline Facility, so long as the
Agent, in its sole discretion, elects to make Swingline Loans, the Borrowers
may borrow and reborrow under this Section 2.1(c)(i). Swingline Loans to the
Borrowing Subsidiaries will be made by the Agent through its Affiliate NBD
Canada.
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(ii) The Agent may at any time in its sole and
absolute discretion require that any Swingline Loan be refunded by a Floating
Rate Borrowing from the Lenders (or the Canadian Lenders in the case of a
Swingline Loan to a Borrowing Subsidiary), and upon written notice thereof by
the Agent to such Lenders and the relevant Borrower, such Borrower shall be
deemed to have requested a Floating Rate Borrowing in an amount equal to the
amount of such Swingline Loan, and such Floating Rate Borrowing shall be made
to refund such Swing Line Loan. Each such Lender shall be absolutely and
unconditionally obligated to fund its pro rata share (based on such Lender's
Commitment) of such Floating Rate Borrowing or, if applicable, purchase a
participating interest in the Swingline Loans pursuant to Section 2.1(c)(iii)
and such obligation shall not be affected by any circumstance, including,
without limitation, (A) any set-off, counterclaim, recoupment, defense or other
right which such Lender has or may have against the Agent, NBD Canada or the
Company or any if its Subsidiaries or anyone else for any reason whatsoever;
(B) the occurrence or continuance of a Default or an Event of Default, subject
to Section 2.1(c)(iii); (C) any adverse change in the condition (financial or
otherwise) of the Company or any of its Subsidiaries; (D) any breach of this
Agreement or any other agreement by any other Lender, the Company or any
Guarantor; or (E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing (including without limitation
the Company's failure to satisfy any conditions contained in Article II or any
other provision of this Agreement).
(iii) If Floating Rate Loans may not be made by the
Lenders as described in Section 2.1(c)(ii) due to any Event of Default pursuant
to Section 6.1(h) or if the Lenders are otherwise legally prohibited from
making Floating Rate Loans, then effective on the date each such Floating Rate
Loan would otherwise have been made, each Lender (or the Canadian Lenders in
the case of a Swingline Loan to a Borrowing Subsidiary) severally agrees that
it shall unconditionally and irrevocably, without regard to the occurrence of
any Default or Event of Default or any other circumstances, in lieu of deemed
disbursement of Loans, to the extent of such Lender's Commitment, purchase a
participating interest in the Swingline Loans by paying its participation
percentage thereof. Each such Lender will immediately transfer to the Agent,
in same day funds, the amount of its participation. After such payment to the
Agent, each Lender shall share on a pro rata basis (calculated by reference to
its Commitment) in any interest which accrues thereon and in all repayments
thereof. If and to the extent that any such Lender shall not have so made the
amount of such participating interest available to the Agent, such Lender and
the Borrowers severally agree to pay to the Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Agent until the date such amount is paid to the Agent, at (A) in the case
of the Borrowers, the interest rate specified above and (B) in the case of such
Lender, the Federal Funds Rate for the first five days after the date of demand
by the Agent and thereafter at the interest rate specified above.
(d) Limitation on Amount of Advances. Notwithstanding
anything in this Agreement to the contrary, (i) the Dollar Equivalent to the
aggregate principal amount of the Revolving Credit Advances made or
participated in by any Lender (which for any Lender includes all U.S. Advances
and all Canadian Advances by such Lender, which directly by such Lender or
through an Affiliate of such Lender in the case of Canadian Advances) at any
time outstanding shall not exceed the amount of its respective Commitment as of
the date any such Advance is made, (ii) the aggregate principal amount of
Letter of Credit Advances outstanding at any time shall not exceed $15,000,000,
(iii) the aggregate Dollar Equivalent of all Canadian Advances shall not exceed
$25,000,000 at any time, (iv) the sum of the Dollar Equivalent of the aggregate
Advances plus the Dollar Equivalent of the aggregate amount of Unrestricted
Guaranties shall not exceed the aggregate Commitments and (v) the sum of the
Dollar Equivalent to the aggregate Advances plus the aggregate Dollar
Equivalent of the Unrestricted Guaranties shall not exceed the amount of the
Borrowing Base.
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2.2 Termination and Reduction of Commitments. (a) The Company
shall have the right to 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 Agent
specifying the amount and effective date thereof, (ii) each partial reduction
of the Commitments shall be in a minimum amount of $1,000,000 and in an
integral multiple of $1,000,000 and shall reduce the Commitments of all of the
Lenders proportionately in accordance with the respective Commitment amounts
for each such Lender set forth in the signature pages hereof next to name of
each such Lender, (iii) no such termination or reduction shall be permitted
with respect to any portion of the Commitments as to which a request for an
Advance pursuant to Section 2.4 is then pending and (iv) the Commitments may
not be terminated if any Advance is then outstanding with respect to such
Commitments and may not be reduced below the principal amount of Advances with
respect to such Commitments then outstanding. The Commitments or any portion
thereof terminated or reduced pursuant to this Section 2.2 may not be
reinstated.
(b) For purposes of this Agreement, a Letter of Credit
Advance (i) shall be deemed outstanding in an amount equal to the sum of the
maximum amount available to be drawn under the related Letter of Credit on or
after the date of determination and on or before the stated expiry date thereof
plus the amount of any draws under such Letter of Credit that have not been
reimbursed as provided in Section 3.3 and (ii) shall be deemed outstanding at
all times on and before such stated expiry date or such earlier date on which
all amounts available to be drawn under such Letter of Credit have been fully
drawn, and thereafter until all related reimbursement obligations have been
paid pursuant to Section 3.3. As provided in Section 3.3, upon each payment
made by the Agent in respect of any draft or other demand for payment under any
Letter of Credit, the amount of any Letter of Credit Advance outstanding
immediately prior to such payment shall be automatically reduced by the amount
of each Loan deemed advanced, if any, in respect of the related reimbursement
obligation of the Company.
2.3 Fees. (a) The Company agrees to pay to the Agent, for the
benefit of each Lender, a commitment fee on the daily average unused amount
(with Letter of Credit Advances constituting usage under the Commitment and
with Unrestricted Guaranties and Swingline Loans not constituting usage under
the Commitment for purposes of this Section 2.3(a)) of its respective
Commitment during each calendar quarter or portion thereof, for the period from
the Effective Date to but excluding the Termination Date, at a rate equal to
the Applicable Margin in effect. Accrued commitment fees shall be payable
quarterly in arrears on the last Business Day of each March, June, September
and December, commencing on the first such Business Day occurring after the
Effective Date, and on the Termination Date.
(b) The Company agrees to pay to the Agent, for the
benefit of the Lenders, a fee computed at the rate equal to the then Applicable
Margin in effect of the maximum amount available to be drawn from time to time
under each Letter of Credit for the period from and including the date of
issuance, extension or renewal, as the case may be, of such Letter of Credit to
and including the expiry date of such Letter of Credit, provided that the Agent
shall retain, for its own account from each such fee, a fee computed at the
rate of 0.25% per annum of such maximum amount for such period. Such fees are
payable quarterly in arrears on the last Business Day of each March, June,
September and December. The Company further agrees to pay to the Agent, on
demand, such other customary administrative fees, charges and expenses of the
Agent in respect of the issuance, negotiation, acceptance, amendment, transfer
and payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued. Notwithstanding
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anything in the Creative Revenue Bond Documents to the contrary, the fees
payable for the Creative Letter of Credit shall be governed by this Section
2.3(b) as of and after the Effective Date.
(c) The Company further agrees to pay to the Agent and/or
its Affiliates such fees in such amounts as may from time to time be agreed
upon in writing by the Company and the Agent.
2.4 Disbursement of Advances. (a) The applicable Borrower shall
give the Agent notice of its request for an Advance in substantially the form
of Exhibit H hereto not later than 1:00 p.m. Detroit time (i) three LIBOR
Business Days prior to the date such Borrowing is requested to be made if such
Borrowing is to be made as a LIBOR Borrowing, (ii) five Business Days prior to
the date any Letter of Credit Borrowing is requested to be made, (iii) three
Business Days prior to the date such Borrowing is requested to be made if such
Borrowing is to be made as an Acceptance Borrowing and (iv) one Business Day
prior to the date such Borrowing is requested to be made in all other cases,
which notice shall specify whether a LIBOR Borrowing, Floating Rate Borrowing,
Acceptance or Letter of Credit Borrowing is requested and, in the case of each
requested LIBOR Borrowing or Acceptance Borrowing, the Interest Period to be
initially applicable to such Borrowing and, in the case of each Letter of
Credit Borrowing, such information as may be necessary for the issuance thereof
by the Agent. The Applicable Borrower shall give the Agent notice of its
request for each Swingline Loan in substantially the form of Exhibit I hereto
not later than 1:00 p.m. Detroit time on the same Business Day such Swingline
Loan is requested to be made. The Agent, not later than the Business Day next
succeeding the day such notice is given, shall provide notice of such requested
Borrowing (not including Swingline Loans) to each Lender. Subject to the terms
and conditions of this Agreement, the proceeds of each such requested Borrowing
or Swingline Loan shall be made available to such Borrower by depositing the
proceeds thereof in immediately available funds, in an account maintained and
designated by such Borrower at the principal office of the Agent in the case of
U.S. Advances and at the principal office of NBD Canada in the case of Canadian
Advances. Subject to the terms and conditions of this Agreement, the Agent
shall, on the date any Letter of Credit Borrowing is requested to be made,
issue the related Letter of Credit on behalf of the Lenders for the account of
the Company. Notwithstanding anything herein to the contrary, the Agent may
decline to issue any requested Letter of Credit on the basis that the
beneficiary, the purpose of issuance or the terms or the conditions of drawing
are unacceptable to it in its reasonable discretion.
(b) Each Lender, on the date any Borrowing is requested to
be made, shall make its pro rata share of such Borrowing available in
immediately available funds for disbursement to the applicable Borrower
pursuant to the terms and conditions of this Agreement. Unless the Agent shall
have received notice from any Lender prior to the date such Borrowing is
requested to be made under this Section 2.4 that such Lender will not make
available to the Agent such Lender's pro rata portion of such Borrowing, the
Agent may assume that such Lender has made such portion available to the Agent
on the date such Borrowing is requested to be made in accordance with this
Section 2.4. Each Lender's pro rata share of any U.S. Advance shall be based
on its U.S. Percentage, and each Canadian Advance shall be made by the Canadian
Lenders (either directly or through an Affiliate) based on its Canadian
Percentage. If and to the extent such Lender shall not have so made such pro
rata portion available to the Agent, the Agent may (but shall not be obligated
to) make such amount available to such Borrower , and such Lender and such
Borrower severally agree to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date such amount is made
available to such Borrower by the Agent until the date such amount is repaid to
the Agent, at a rate per annum equal to the interest rate applicable to such
Borrowing during such period. If such Lender shall pay such amount to the
Agent together with interest, such amount so paid shall constitute a Loan by
such Lender as a part of such Borrowing for purposes of this Agreement. The
failure of any Lender to make its pro rata portion
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of any such Borrowing available to the Agent shall not relieve any other Lender
of its obligations to make available its pro rata portion of such Borrowing on
the date such Borrowing is requested to be made, but no Lender shall be
responsible for failure of any other Lender to make such pro rata portion
available to the Agent on the date of any such Borrowing.
(c) All Revolving Credit Loans made under this Section 2.4
to the Borrowers shall be evidenced by the Revolving Credit Notes issued by the
Borrowers and all Swingline Loans under this Section 2.4 shall be evidenced by
the Swingline Notes issued by the Borrowers, and all such Loans shall be due
and payable and bear interest as provided in Article III. Each Lender is
hereby authorized by the Borrowers to record on the schedules attached to the
Notes or in its books and records, the date, amount and type of each Loan and
the duration of the related Interest Period (if applicable), the amount of each
payment or prepayment of principal thereon, and the other information provided
for on such schedule, which schedule or books and records, as the case may be,
shall constitute prima facie evidence of the information so recorded, provided,
however, that failure of any Lender to record, or any error in recording, any
such information shall not relieve the Borrowers of their obligations to repay
the outstanding principal amount of the Loans, all accrued interest thereon and
other amounts payable with respect thereto in accordance with the terms of the
Notes and this Agreement. Subject to the terms and conditions of this
Agreement, the Borrowers may borrow Loans under this Section 2.4 and under
Section 3.3, prepay Loans pursuant to Section 3.1 and reborrow Loans, under
this Section 2.4 and under Section 3.3.
(d) Nothing in this Agreement shall be construed to
require or authorize any Lender to issue any Letter of Credit, it being
recognized that the Agent has the sole obligation under this Agreement to issue
Letters of Credit on behalf of the Lenders. Upon each issuance, extension and
renewal by the Agent, each Lender shall automatically and unconditionally
acquire a pro rata risk participation interest in such Letter of Credit Advance
based on the amount of its respective Commitment, and each Existing Letter of
Credit shall be deemed issued hereunder and each Lender shall automatically and
unconditionally acquire a pro rata risk participation interest therein based on
the amount of its respective Commitment, upon becoming a Lender hereunder. If
the Agent shall honor a draft or other demand for payment presented or made
under any Letter of Credit, the Agent shall provide notice thereof to each
Lender promptly after such draft or demand is honored unless the Company shall
have satisfied its reimbursement obligation under Section 3.3 by payment to the
Agent on such date. Each Lender, on the date of such notice, shall absolutely
and unconditionally make its pro rata share, (based on its Commitment) of the
amount paid by the Agent available in immediately available funds at the
principal office of the Agent for the account of the Agent. If and to the
extent such Lender shall not have made such pro rata portion available to the
Agent, such Lender and the Company severally agree to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date such amount was paid by the Agent until such amount is so made
available to the Agent at a per annum rate equal to the interest rate
applicable during such period to the Floating Rate Loans. If a Loan has been
disbursed in respect to the reimbursement obligation of the Company under
Section 3.3 in the case of Letter of Credit, then if such Lender shall pay such
amount to the Agent together with such interest, such amount so paid shall
constitute a Loan by such Lender as part of such Borrowing disbursed in respect
of the reimbursement obligation of the Company under Section 3.3 for purposes
of this Agreement. The failure of any Lender to make its pro rata portion of
any such amount paid by the Agent available to the Agent shall not relieve any
other Lender of its obligation to make available its pro rata portion of such
amount, but no Lender shall be responsible for failure of any other Lender to
make such pro rata portion available to the Agent.
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2.5 Conditions for First Disbursement. The obligation of the
Lenders to make the first Borrowing hereunder is subject to receipt by each
Lender and the Agent of the following documents and completion of the following
matters, in form and substance satisfactory to each Lender and the Agent:
(a) Charter Documents. Certificates of recent date of the
appropriate authority or official of each Borrower and each Guarantor's
respective state or province of organization (listing all charter documents of
each Borrower and each Guarantor, respectively, on file in that office if such
listing is available) and certifying as to the good standing and existence of
each Borrower and each Guarantor, respectively, together with copies of such
charter documents of each Borrower and each Guarantor, certified as of a recent
date by such authority or official and certified as true and correct as of the
Effective Date by a duly authorized officer of each Borrower and each
Guarantor, respectively;
(b) Operating Agreements, By-Laws and Corporate
Authorizations. Copies of the operating agreements or article of
incorporation, as the case may be, and by-laws of each Borrower and each
Guarantor together with all authorizing resolutions and evidence of other
corporate action taken by each Borrower and each Guarantor to authorize the
execution, delivery and performance by each Borrower and each Guarantor of the
Loan Documents to which each Borrower and such Guarantor, respectively, is a
party and the consummation by each Borrower and such Guarantor, respectively,
of the transactions contemplated hereby, certified as true and correct as of
the Effective Date by a duly authorized officer of each Borrower and each
Guarantor, respectively;
(c) Incumbency Certificate. Certificates of incumbency of
each Borrower and each Guarantor containing, and attesting to the genuineness
of, the signatures of those officers authorized to act on behalf of each
Borrower and such Guarantor in connection with the Loan Documents to which each
Borrower or such Guarantor is a party and the consummation by each Borrower and
such Guarantor of the transactions contemplated hereby, certified as true and
correct as of the Effective Date by a duly authorized officer of each Borrower
and each Guarantor, respectively;
(d) Notes. The Revolving Credit Notes duly executed on
behalf of the Borrowers for each Lender and the Swingline Notes duly executed
on behalf of the Borrowers for the Agent and NBD Canada;
(e) Security Documents. The Security Agreements duly
executed on behalf of the Company and the Guarantors, the Pledge Agreements
duly executed by the Company and, to the extent applicable, each Guarantor and
the Guaranties duly executed on behalf of each Guarantor, granting to the
Lenders and the Agent the collateral and security intended to be provided
pursuant to Section 2.11, together with:
(i) Recording, Filing, Etc. Evidence of the
recordation, filing and other action (including payment of any applicable taxes
or fees) in such jurisdictions as the Lenders or the Agent may deem necessary
or appropriate with respect to the Security Documents, including the filing of
financing statements, financing statement assignments, financing statement
amendments and similar documents which the Lenders and the Agent may deem
necessary or appropriate to create, preserve or perfect the liens, security
interests and other rights intended to be granted to the Lenders or the Agent
thereunder, together with Uniform Commercial Code record and other searches in
such offices as the Lenders or the Agent may request;
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(ii) Leased Property; Landlord Waivers. A
schedule setting forth all real property leased by the Company and each
Guarantor, together with copies of the related leases, certified as true and
correct as of the Effective Date by a duly authorized officer of the Company,
and an agreement of each landlord under such leases, in form and substance
acceptable to the Lenders and the Agent, waiving its distraint, lien and
similar rights with respect to any property subject to the Security Documents
and agreeing to permit the Lenders and the Agent to enter such premises in
connection therewith;
(iii) Casualty and Other Insurance. Evidence that
the casualty and other insurance required pursuant to Section 5.1(c) and the
Security Agreements is in full force and effect;
(iv) Stock. The original stock certificates of
the Capital Stock of each Restricted Subsidiary and appropriate stock powers,
together with any recording and any consents and waivers requested by the Agent
with respect to the exercise of any rights under the Pledge Agreements,
including without limitation any shareholders' and board of directors' consents
so requested; and
(v) Environmental Matters. The Environmental
Certificate duly executed on behalf of the Borrowers and each of the
Guarantors;
(f) Legal Opinion. The favorable written opinion of
Dykema Gossett PLLC and Fasken Campell Godfrey, counsels for the Borrowers and
Guarantors, with respect to such matters as the Agent may reasonably request;
(g) Consents, Approvals, Etc. Copies of all governmental
and nongovernmental consents, approvals, authorizations, declarations,
registrations or filings, if any, required on the part of the Company or any
Guarantor in connection with the execution, delivery and performance of the
Loan Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of the Loan Documents, certified as true
and correct and in full force and effect as of the Effective Date by a duly
authorized officer of the Company, or, if none is required, a certificate of
such officer to that effect;
(h) Fees. Payment of the fees described in Section
2.3(c);
(i) Termination of Existing Credit Agreements. Evidence
in form and substance satisfactory to the Agent regarding the termination of
all commitments and other credit facilities under the Credit Agreement dated as
of January 10, 1997 among Lobdell, the lenders party thereto, and NBD Bank, as
Agent, and the Credit Agreement dated as of February 11, 1997 among BMG, the
lenders party thereto, and NBD Canada, as Agent, together with the payment of
all indebtedness and liabilities owing pursuant thereto, and it is acknowledged
and agreed that this Agreement is in substitution and replacement for such
credit agreements and all liens and security interests granted pursuant thereto
shall continue hereunder and all financing statements filed in connection
therewith shall remain in effect with respect to the Loan Documents executed in
connection herewith;
(j) Solvency Certificate. A solvency certificate duly
executed by the Company and its Subsidiaries in form and substance satisfactory
to the Agent;
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(k) Subordinated Debt. Evidence satisfactory to the Agent
that the Company has incurred Subordinated Debt in an amount equal to or
greater than $125,000,000 in accordance with the Senior Subordinated Debt
Documents, all Senior Subordinated Debt Documents shall have been delivered to
the Agent and shall be satisfactory to the Agent and all transactions
contemplated pursuant to the Senior Subordinated Debt Documents shall have been
completed;
(l) Intercreditor Agreement. The Intercreditor Agreement
duly executed by all parties thereto, together with any documents required in
connection therewith by the Agent; and
(m) Miscellaneous. Such other documents, and completion
of such other matters, as the Agent may reasonably request.
2.6 Further Conditions for Disbursement. The obligation of the
Lenders to make any Advance (including the first Advance), or any continuation
or conversion under Section 2.7, is further subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties contained in
Article IV hereof, and in the other Loan Documents, shall be true and correct
on and as of the date such Advance is made (both before and after such Advance
is made) as if such representations and warranties were made on and as of such
date;
(b) No Default or Event of Default shall exist or shall
have occurred and be continuing on the date such Advance is made (whether
before or after such Advance is made);
(c) The Agent shall have received the Borrowing Base
Certificate if required pursuant to Section 5.1(d)(v) as of the close of
business on the last day of the month next preceding the date such Advance is
made; and
(d) In the case of any Letter of Credit Advance, the
Company shall have delivered to the Agent an application for the related Letter
of Credit and other related documentation requested by and acceptable to the
Agent appropriately completed and duly executed on behalf of the Company; and
(e) In the case of any Acceptance, the Borrowing
Subsidiary shall have delivered all documents and agreements required pursuant
to Section 3.4.
The Borrowers shall be deemed to have made a representation and warranty to the
Lenders at the time of the making of, and the continuation or conversion of,
each Advance to the effects set forth in clauses (a) and (b). For purposes of
this Section 2.6 the representations and warranties contained in Section 4.6
hereof shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Borrowings. The applicable
Borrower may elect (a) to continue a LIBOR Borrowing, or a portion thereof, as
a LIBOR Borrowing or (b) to convert a LIBOR Borrowing or a portion thereof to a
Floating Rate Borrowing, (c) to convert a Floating Rate Borrowing to a LIBOR
Borrowing, (d) to continue an Acceptance or a portion thereof, as an Acceptance
or (e) to convert an Acceptance or a portion thereof to a Floating Rate
Borrowing, in each case by giving notice thereof to the Agent (with sufficient
executed copies for each Lender) in substantially the form of Exhibit J hereto
not later than 1:00 p.m. Detroit time three LIBOR Business Days prior to the
date any such
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continuation of or conversion to a LIBOR Borrowing is to be effective, not
later than 1:00 p.m. Toronto time three Business Days prior to the date any
such continuation of or conversion to an Acceptance is to be effective and not
later than 1:00 p.m. Detroit time on one Business Day prior to the date of any
such continuation or conversion is to be effective in all other cases, provided
that an outstanding LIBOR Borrowing or Acceptance Borrowing may only be
converted on the last day of the then current Interest Period with respect
to such Borrowing, and provided, further, if a continuation of a Borrowing as,
or a conversion of a Borrowing to, a LIBOR Borrowing or Acceptance Borrowing is
requested, such notice shall also specify the Interest Period to be applicable
thereto upon such continuation or conversion. The Agent, not later than the
Business Day next succeeding the day such notice is given, shall provide notice
of such election to the Lenders. If the applicable Borrower shall not timely
deliver such a notice with respect to any outstanding LIBOR Borrowing or
Acceptance Borrowing, such Borrower shall be deemed to have elected to convert
such LIBOR Borrowing or Acceptance Borrowing to a Floating Rate Borrowing on
the last day of the then current Interest Period with respect to such
Borrowing.
2.8 Limitation of Requests and Elections. Notwithstanding any
other provision of this Agreement to the contrary, (a) if, upon receiving a
request for a LIBOR Borrowing pursuant to Section 2.4, or a request for a
continuation of a LIBOR Borrowing or a request for a conversion of a Floating
Rate Borrowing to a LIBOR Borrowing pursuant to Section 2.7, (i) deposits in
Dollars for periods comparable to the LIBOR Interest Period elected by the
Company are not available to any Lender in the relevant interbank market, or
(ii) LIBOR will not adequately and fairly reflect the cost to any Lender of
making, funding or maintaining the related LIBOR Loan or (iii) by reason of
national or international financial, political or economic conditions or by
reason of any applicable law, treaty or other international agreement, rule or
regulation (whether domestic or foreign) now or hereafter in effect, or the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for, or shall limit or impair the ability
of, any Lender to make or fund the relevant Loan or to so continue or convert
such Loan then the Company shall not be entitled, so long as such circumstances
continue, to request such a Borrowing pursuant to Section 2.4 or a continuation
of or conversion to such a Borrowing pursuant to Section 2.7 and (b) if the
Agent shall have determined that by reason of circumstances affecting the money
market, there is no market for Acceptances, then the right of the Borrowing
Subsidiary to request Acceptances and the acceptance thereof shall be suspended
until the Agent determines that the circumstances causing such suspension no
longer exists and the Agent so notifies the Borrowing Subsidiary. In the event
that such circumstances no longer exist, the Lenders shall again consider
requests for such Borrowings pursuant to Section 2.4, and requests for
continuations of and conversions to such Borrowings pursuant to Section 2.7.
2.9 Minimum Amounts; Limitation on Number of Borrowings; Etc.
Except for (a) Borrowings which exhaust the entire remaining amount of the
Commitments, and (b) payments required pursuant to Section 3.1(c), each
Floating Rate Borrowing in denominated Dollars and each prepayment thereof
shall be in a minimum amount of $500,000 and in an integral multiple of
$100,000, each LIBOR Borrowing and each continuation or conversion thereof
pursuant to Section 2.7 shall be in a minimum amount of $2,000,000 and in an
integral multiple of $500,000, each Letter of Credit Advance shall be in a
minimum amount of $100,000, each Floating Rate denominated in CAD and each
prepayment thereof shall be in a minimum amount of CAD $500,000 and in integral
multiple of CAD $100,000, and each Acceptance and each continuation or
conversion thereof pursuant to Section 2.7 shall be in a minimum amount of CAD
$2,000,000 and in an integral multiple of CAD $500,000. The aggregate number
of LIBOR Borrowings and Acceptance Borrowing outstanding at any one time under
this Agreement may
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not exceed eight (8). The aggregate number of Letter of Credit Advances
outstanding at any time under this Agreement may not exceed five (5). No
Letter of Credit shall have a stated expiry date earlier than 30 days after the
date of issuance or later than the earlier to occur of (i) the first
anniversary of its date of issuance or (ii) the fifth Business Day before the
Termination Date.
2.10 Borrowing Base Adjustments. The Borrowers agree that if at
any time any trade account receivable, fixed asset, tooling reimbursement
obligation or any inventory of the Borrowers or any Guarantor fails to
constitute Eligible Accounts Receivable, Eligible Fixed Assets, Eligible
Inventory, Eligible Tooling or Eligible Tooling Reimbursement Payments, as the
case may be, for any reason, the Agent may, at any time upon written notice to
the Company and notwithstanding any prior classification of eligibility,
classify such asset or property as ineligible and exclude the same from the
computation of the Borrowing Base without in any way impairing the rights of
the Lenders and the Agent, in and to the same under the Security Agreements.
The Borrowers agree that real estate shall only be included in the Borrowing
Base if the Borrowers shall have delivered an appraisal acceptable to the Agent
performed by an independent third party appraiser acceptable to the Agent.
2.11 Security and Collateral. To secure the payment when due of
the Notes and all other obligations of the Company under this Agreement or any
Rate Hedging Agreement to the Lenders and the Agent, the Company shall execute
and deliver, or cause to be executed and delivered, to the Lenders and the
Agent Security Documents granting the following:
(a) Security interests in all present and future accounts,
inventory, equipment, general intangibles, instruments, chattel paper,
documents, fixtures and all other personal property of each Borrower and each
Guarantor, which security interests shall secure all present and future
indebtedness, obligations and liabilities of the Borrowers to the Lenders and
the Agent.
(b) Guarantees of all Guarantors, which Guarantees shall
guarantee all present and future indebtedness, obligations and liabilities of
the Borrowers to the Lenders and the Agent.
(c) Pledges of 100% of the Capital Stock of all Restricted
Subsidiaries owned directly or indirectly by the Company.
(d) All real property owned at any time by Howell
Industries if the Company acquires, directly or indirectly, Howell Industries
at any time.
(e) All other security and collateral described in the
Security Documents.
ARTICLE III.
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments and Prepayments.
(a) Unless earlier payment is required under this
Agreement, the Borrowers shall pay to the Lenders on the Termination Date the
entire outstanding principal amount of the Advances.
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(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 Borrowing as to which an
election for a continuation of or a conversion to a LIBOR Borrowing or
Acceptance Borrowing is pending pursuant to Section 2.7, and (ii) unless
earlier payment is required under this Agreement, any LIBOR Borrowing or
Acceptance Borrowing may only be prepaid on the last day of the then current
Interest Period with respect to such Borrowing,
(c) If at any time the aggregate outstanding principal
amount of the Advances shall exceed any of the limits provided under Section
2.1(d), the Borrowers shall forthwith pay to the Lenders an amount for
application to the outstanding principal amount of the Loans, or provide to the
Lenders cash collateral in respect of outstanding Letters of Credit in an
amount, such that the aggregate amount of such payments with respect to the
Loans and such cash collateral is not less than the amount of such excess.
(d) In addition to all other payments of the Advances
required hereunder, the Borrowers shall prepay the Advances by an amount equal
to 100% of all of the Net Cash Proceeds from any sale or other disposition of
any assets, other than the sale of inventory in the ordinary course of business
upon customary credit terms, sales of scrap or obsolete material or equipment
which are not material in the aggregate, in excess of $2,000,000 in aggregate
amount in any fiscal year (other than such Net Cash Proceeds which are used
within 180 days of the date received to purchase an asset of comparable value)
if after giving effect to such sale the Company is not able to borrow at least
$10,000,000 of additional Advances hereunder, which payments shall be due 20
days after the end of each month for all such sales and other dispositions
during such month. The Company shall provide a certificate to the Agent within
20 days after each sale of assets, excluding any sale of assets which is not in
excess of $2,000,000 in aggregate amount in any fiscal year, which, but for the
above parenthetical, would cause a prepayment under this Section 3.1(d), which
certificate shall describe such sale of assets and estimate when such Net Cash
Proceeds will be used to purchase assets of a comparable value; and if such Net
Cash Proceeds are not used within 180 days after such sale or such earlier date
when the Company has determined not to purchase assets of comparable value with
such Net Cash Proceeds the Company will then prepay the Loans with such Net
Cash Proceeds. Notwithstanding the foregoing, upon and during the continuance
of any Event of Default, 100% of all the Net Cash Proceeds from any sale or
other disposition of any assets shall be used to prepay the Advances.
3.2 Interest Payments. The Borrowers shall pay interest to the
Lenders on the unpaid principal amount of each Loan made to them, for the
period commencing on the date such Loan is made until such Loan is paid in
full, on each Interest Payment Date and at maturity (whether at stated
maturity, by acceleration or otherwise), and thereafter on demand, at, in the
case of Swingline Loans, the Floating Rate and, in all other cases, the
following rates per annum:
(a) During such periods that such Loan is a Floating Rate
Loan, the Floating Rate.
(b) During such periods that such Loan is a LIBOR Loan,
the LIBOR applicable to such Loan for each related LIBOR Interest Period.
(c) During such periods such Loan is a BA Equivalent Loan,
the applicable rate specified in Section 3.4.
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Notwithstanding the foregoing, the Borrowers shall pay interest on demand by
the Agent at the Overdue Rate on the outstanding principal amount of any Loan
and any other amount payable by the Borrowers hereunder (other than interest)
which is not paid in full when due (whether at stated maturity, by acceleration
or otherwise) for the period commencing on the due date thereof until the same
is paid in full.
For the purposes of the Interest Act (Canada) and Canadian Advances hereunder:
(i) whenever any interest or fee under this Agreement is
calculated using a rate based on a year of 360 days or 365 days, such
rate determined pursuant to such calculation, when expressed as an
annual rate, is equivalent to (X) the applicable rate based on a year
of 360 days or 365 days, as the case may be, (Y) multiplied by the
actual number of days in the relevant calendar year, and (Z) divided by
360 or 365 as the case may be;
(ii) the principal of deemed reinvestment of interest does not
apply to any interest calculation under this Agreement; and
(iii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.
3.3 Letters of Credit and Acceptances. (a) (i) The Borrowers
agree to pay to the Lenders, on the day on which the Agent shall honor a draft
or other demand for payment presented or made under any Letter of Credit and on
the maturity date of each Bankers' Acceptance, an amount equal to the amount
paid by the Agent in respect of such draft or other demand under such Letter of
Credit, an amount equal to the face value of each Bankers' Acceptance accepted
by such Lender maturing on that day (notwithstanding that a Lender may be the
holder thereof at maturity) and all reasonable expenses paid or incurred by the
Agent relative thereto. Unless the Borrowers shall have made such payment to
the Lenders on such day, upon each such payment by the Agent with respect to a
Letter of Credit and each such maturity date of each Banker's Acceptance, the
Agent shall be deemed to have disbursed to the relevant Borrowers, and such
Borrowers shall be deemed to have elected to satisfy its reimbursement and
payment obligation by, a Revolving Credit Borrowing bearing interest at the
Floating Rate for the account of the Lenders in an amount equal to the amount
so paid by the Agent in respect of such draft or other demand under such Letter
of Credit or in the face value of such Banker's Acceptance then maturing. Such
Revolving Credit Borrowing shall be disbursed notwithstanding any failure to
satisfy any conditions for disbursement of any Loan set forth in Article II
hereof and, to the extent of the Revolving Credit Borrowing so disbursed, the
reimbursement and payment obligation of the Company under this Section
3.3(a)(i) shall be deemed satisfied; provided, however, that nothing in this
Section 3.3 shall be deemed to constitute a waiver of any Default or Event of
Default caused by the failure to the conditions for disbursement or otherwise.
(ii) If, for any reason (including without
limitation as a result of the occurrence of an Event of Default with respect to
the Company pursuant to Section 6.1(g)), Floating Rate Loans may not be made by
the Lenders as described in Section 3.3(a)(i), then (A) the Borrowers agree
that each amount not paid pursuant to the first sentence of Section 3.3(a)(i)
shall bear interest, payable on demand by the Agent, at the interest rate then
applicable to Floating Rate Borrowings, and (B) effective on the date each such
Floating Rate Borrowing would otherwise have been made, each Lender severally
agrees that it shall unconditionally and irrevocably, without regard to the
occurrence of any Default or Event of Default, in lieu of deemed disbursement
of Floating Rate Loans, to the extent of such Lender's Commitment in the case
of Letters of Credit, purchase a participating interest in each reimbursement
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amount paid by the Agent with respect to Letters of Credit. Each Lender will
immediately transfer to the Agent, in same day funds, the amount of its
participation. Each Lender shall share on a pro rata basis (calculated by
reference to its Commitment) in any interest which accrues thereon and in all
repayments thereof. If and to the extent that any Lender shall not have so
made the amount of such participating interest available to the Agent, such
Lender and the Borrowers severally agree to pay to the Agent forthwith on
demand such amount together with interest thereon, for each day from the date
of demand by the Agent until the date such amount is paid to the Agent, at (x)
in the case of the Borrowers, the interest rate then applicable to Floating
Rate Borrowings and (y) in the case of such Lender, the Federal Funds Rate for
the first five days after the date of demand by the Agent and thereafter at the
interest rate then applicable to Floating Rate Borrowings.
(b) The reimbursement and other payment obligations of the
Borrowers under this Section 3.3 shall be absolute, unconditional and
irrevocable and shall remain in full force and effect until all obligations of
the Borrowers to the Lenders hereunder shall have been satisfied, and such
obligations of the Borrowers shall not be affected, modified or impaired upon
the happening of any event, including without limitation, any of the following,
whether or not with notice to, or the consent of, the Borrowers:
(i) Any lack of validity or enforceability of any
Letter of Credit, Acceptance or any documentation relating to any Letter of
Credit, any Acceptance or to any transaction related in any way thereto (the
"Documents");
(ii) Any amendment, modification, waiver, consent,
or any substitution, exchange or release of or failure to perfect any interest
in collateral or security, with respect to any of the Documents;
(iii) The existence of any claim, setoff, defense
or other right which the Company or any of its Subsidiaries may have at any
time against any beneficiary or any transferee of any Letter of Credit or
Acceptance (or any persons or entities for whom any such beneficiary,
transferee or holder may be acting), the Agent or any Lender or any other
Person or entity, whether in connection with any of the Documents, the
transactions contemplated herein or therein or any unrelated transactions;
(iv) Any draft or other statement or document
presented under any Letter of Credit or Acceptance proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(v) Payment by the Agent to the beneficiary under
any Letter of Credit against presentation of documents which do not comply with
the terms of the Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on the
part of the Agent or any Lender or any party to any of the Documents to
enforce, assert or exercise any right, power or remedy conferred upon the
Agent, any Lender or any such party under this Agreement or any of the
Documents, or any other acts or omissions on the part of the Agent, any Lender
or any such party;
(vii) Any defense based on the lack of presentment
for payment and any other defense to payment of any amounts due to a Lender in
respect of any Acceptance accepted by it pursuant to this Agreement which might
exist solely by reason of such Acceptance being held, at the maturity thereof,
by such Lender in its own right;
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(viii) Any other event or circumstance that would,
in the absence of this clause, result in the release or discharge by operation
of law or otherwise of the Company from the performance or observance of any
obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or
any defense of any kind or nature which any Borrower has or may have against
the beneficiary or holder of any Letter of Credit or Acceptance shall be
available hereunder to any Borrower against the Agent or any Lender. Nothing
in this Section 3.3 shall limit the liability, if any, of the Agent and the
Lenders to the Company pursuant to Section 8.5(b).
3.4 Additional Terms for Acceptances. Subject to the terms and
conditions hereof, upon giving to the Agent prior written notice in accordance
with Section 2.4 hereof, on any Business Day a Borrowing Subsidiary may borrow
from the Lenders by way of Acceptances, provided that:
(a) (i) each Lender shall have received a Bankers' Acceptance
or Bankers' Acceptances in the aggregate principal amount of such Borrowing
from such Lender in due and proper form duly completed and executed by the
Borrowing Subsidiary and presented for acceptance to such Lender prior to 10:00
a.m. (Toronto time) on the date for such Borrowing, together with such other
document or documents as such Lender may reasonably require (including the
execution by the Borrowing Subsidiary of such Lender's usual form of bankers'
acceptances) and the Acceptance Fee shall have been paid to such Lender at or
prior to such time;
(ii) each Bankers' Acceptance shall be stated to
mature on a Business Day, no later than the Termination Date, which is 30, 60
or 90 days from the date of its acceptance;
(iii) each Bankers' Acceptance shall be stated to
mature on a Business Day in such a way that no Lender will be required to incur
any costs for the redeployment of funds as a consequence of any repayment
required during any period for which such Bankers' Acceptance is outstanding;
(iv) no days of grace shall be permitted on any
Bankers' Acceptance; and
(v) the aggregate face amount of the Bankers'
Acceptances to be accepted by a Lender shall be determined by the Agent by
reference to the respective relevant Commitments of the Lenders, except that,
if the face amount of a Bankers' Acceptance which would otherwise be accepted
by a Lender would not be $100,000 or a whole multiple thereof, such face amount
shall be increased or reduced by the Agent in its sole discretion to $100,000
or the nearest whole multiple of that amount, as appropriate.
(b) The Borrowing Subsidiary acknowledges, agrees and
confirms that each Lender may at any time and from time to time hold, sell,
rediscount or otherwise dispose of any Acceptance accepted and purchased by it
hereunder. The Borrowing Subsidiary acknowledges, agrees and confirms with the
Lenders that the records of each Lender in respect of payment of any Banker's
Acceptance by such Lender shall be binding on the Borrowing Subsidiary and
shall be conclusive evidence (in the absence of manifest error) of a Floating
Rate Loan to the Borrowing Subsidiary and of an amount owing by the Borrowing
Subsidiary to such lender.
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(c) In the event a Lender is unable to accept Bankers'
Acceptances, such Lender shall have the right at the time of accepting drafts
to require the Borrowing Subsidiary to accept a Loan from such Lender in lieu
of the issue and acceptance of a Bankers' Acceptance requested by the Borrowing
Subsidiary to be accepted so that there shall be outstanding while the Bankers'
Acceptances are outstanding BA Equivalent Loans from such Lender as
contemplated herein. The principal amount of each BA Equivalent Loan shall be
that amount which, when added to the amount of interest (calculated at the
applicable Discount Rate) which will accrue during the BA Equivalent Interest
Period shall be equal, at maturity, to the face amount of the drafts which
would have been accepted by such Lender had it accepted Bankers' Acceptances.
The "BA EQUIVALENT INTEREST PERIOD" for each BA Equivalent Loan shall be equal
to the Interest Period of the drafts presented for acceptance as Bankers'
Acceptances on the relevant date of Borrowing. On the relevant date of the
Borrowing the Borrowing Subsidiary shall pay to the Administrative Agent a fee
equal to the Acceptance Fee which would have been payable to such Lender if it
were a Lender accepting drafts having a term to maturity equal to the
applicable BA Equivalent Interest Period and an aggregate face amount equal to
the sum of the principal amount of the BA Equivalent Loan and the interest
payable thereon by the Borrowing Subsidiary for the Applicable BA Equivalent
Interest Period. The provisions of this Agreement dealing with Bankers'
Acceptances shall apply, mutatis mutandis, to BA Equivalent Loans.
(d) Each Bankers' Acceptance issued pursuant to this
Agreement shall be purchased by the Lender accepting such Bankers' Acceptance
for the Discounted Proceeds thereof. Concurrent with the acceptance of each
Bankers' Acceptance, each Lender shall make available to the Agent the
Discounted Proceeds thereof for disbursement to the Borrowing Subsidiary in
accordance with the terms hereof. In each case, upon receipt of such
Discounted Proceeds from the Lenders and upon fulfilment of the applicable
conditions set forth herein, the Agent shall make such funds available to the
Borrowing Subsidiary in accordance with this Agreement. Upon each issue of
Bankers' Acceptances as a result of the conversion of outstanding Borrowings
into Bankers' Acceptances, the Borrowing Subsidiary shall, concurrently with
the conversion, pay in advance to the Agent on behalf of the Lenders, the
amount by which the face value of such Bankers' Acceptances exceeds the
Discounted Proceeds of such Bankers' Acceptances, to be applied against the
principal amount of the Borrowing being so converted. The Borrowing Subsidiary
shall at the same time pay to the Agent the applicable Acceptance Fee.
(e) To enable the Lenders to make Advances in the manner
specified in this Section 3.4, the Borrowing Subsidiary shall, in accordance
with the request of each Lender either (i) provide a power of attorney to
complete, sign, endorse and issue Bankers' Acceptances, in such form as such
Lender may require; or (ii) supply each Lender with such number of drafts as
such Lender may reasonably request, duly endorsed and executed on behalf of the
Borrowing Subsidiary. Each Lender shall exercise such care in the custody and
safekeeping of drafts as it would exercise in the custody and safekeeping of
similar property owned by it. Each Lender will, upon request by the Borrowing
Subsidiary, promptly advise the Borrowing Subsidiary of the number and
designations, if any, of the uncompleted drafts then held by it.
3.5 Payment Method. (a) All payments with respect to U.S.
Advances to be made by the Borrowers hereunder will be made in Dollars and all
payments with respect to Canadian Advances to made by the Borrowers hereunder
shall be made in CAD, and in each case in immediately available funds to the
Agent for the account of the relevant Lenders at its address referred to in
Section 8.2 not later than 1:00 p.m. Detroit time on the date on which such
payment shall become due and, with respect to Canadian Advances, to NBD Canada
for the account of the relevant Lenders at its address referred to in Section
8.2 not later than 1:00 p.m. Toronto time on the date on which such payment
shall become due. Payments received after 1:00 p.m. shall be deemed to be
payments made prior to 1:00 p.m. on the next succeeding Business Day. The
Borrowers hereby authorize the Agent (including NBD Canada) to
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charge their accounts with the Agent (including NBD Canada) in order to cause
timely payment of amounts due hereunder to be made (subject to sufficient funds
being available in such accounts for that purpose).
(b) At the time of making each such payment, the Company
shall, subject to the other terms and conditions of this Agreement, specify to
the Agent that Borrowing 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, the Agent may apply such payments as it may determine in its
sole discretion.
(c) On the day such payments are deemed received, the
Agent shall remit to the Lenders their pro rata shares of such payments in
immediately available funds. In the case of payments of principal and interest
on any Borrowing, such pro rata shares shall be determined with respect to each
such Lender by the ratio which the outstanding principal balance of its Loan
included in such Borrowing bears to the outstanding principal balance of the
Loans of all of the Lenders included in such Borrowing, in the case of fees
paid pursuant to Section 2.3 and other amounts payable hereunder (other than
the Agent's fees and amounts payable to any Lender under Section 3.8), such pro
rata shares shall be determined with respect to each such Lender by the ratio
which the Commitments of such Lender bears to the Commitments of all the
Lenders or such other pro rata shares as specified in this Agreement.
3.6 No Setoff or Deduction. Subject to Section 3.11, all payments
of principal of and interest on the Advances and other amounts payable by the
Borrowers hereunder shall be made by the Borrowers without setoff or
counterclaim and, subject to the next succeeding sentence, free and clear of,
and without deduction or withholding for, or on account of, any present or
future taxes, levies, imposts, duties, fees, assessments, or other charges of
whatever nature, imposed by any governmental authority, or by any department,
agency or other political subdivision or taxing authority. Subject to Section
3.11, any such taxes, levies, imposts, duties, fees, assessments or other
charges are imposed, the Borrowers will pay such additional amounts as may be
necessary so that payment of principal and of interest on the Loans and other
amounts payable hereunder, after withholding or deduction for or on account
thereof, will not be less than any amount provided to be paid hereunder and, in
any such case, the Borrowers will furnish to the Banks certified copies of all
tax receipts evidencing the payment of such amounts within 45 days after the
date any such payment is due pursuant to applicable law.
3.7 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days (or 365 or 366 days, as the case may
be, when determining the Floating Rate or rates or fees with respect to
Acceptances) for the actual number of days elapsed, including the first day but
excluding the last day of the relevant period.
3.8 Additional Costs. (a) In the event that any applicable law,
treaty or other international agreement, rule or regulation (whether domestic
or foreign) now or hereafter in effect and whether or not presently applicable
to any Lender or the Agent, or any interpretation or administration thereof by
any governmental authority charged with the interpretation or administration
thereof, or compliance by any Lender or the Agent with any guideline, request
or directive of any such authority
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(whether or not having the force of law), shall (i) affect the basis of
taxation of payments to any Lender or the Agent of any amounts payable by the
Borrowers under this Agreement (other than taxes imposed on the overall net
income of any Lender or the Agent, by the jurisdiction, or by any political
subdivision or taxing authority of any such jurisdiction, in which any Lender
or the Agent, as the case may be, has its principal office), (ii) shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any Lender or the Agent, or (iii) shall impose any other condition with respect
to this Agreement, or any of the Commitments, the Notes or the Loans or any
Letter of Credit, and the result of any of the foregoing is to increase the
cost to any Lender or the Agent, as the case may be, of making, funding or
maintaining any LIBOR Loan or any Letter of Credit or to reduce the amount of
any sum receivable by any Lender or the Agent, as the case may be, thereon,
then the Borrowers shall pay to such Lender or the Agent, as the case may be,
from time to time, upon request by such Lender (with a copy of such request to
be provided to the Agent) or the Agent, additional amounts sufficient to
compensate such Lender or the Agent, as the case may be, for such increased
cost or reduced sum receivable to the extent, in the case of any LIBOR Loan,
such Lender or the Agent is not compensated therefor in the computation of the
interest rate applicable to such LIBOR Loan. A statement as to the amount of
such increased cost or reduced sum receivable, prepared in good faith and in
reasonable detail by such Lender or the Agent, as the case may be, and
submitted by such Lender or the Agent, as the case may be, to the relevant
Borrower, shall be prima facie evidence thereof.
(b) In the event that any applicable law, treaty or other
international agreement, rule or regulation (whether domestic or foreign) now
or hereafter in effect and whether or not presently applicable to any Lender or
the Agent, or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by any Lender or the Agent with any guideline, request or directive
of any such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by such Lender or the Agent (or any
corporation controlling such Lender or the Agent) and such Lender or the Agent,
as the case may be, determines that the amount of such capital is increased by
or based upon the existence of such Lender's or the Agent's obligations
hereunder and such increase has the effect of reducing the rate of return on
such Lender's or the Agent's (or such controlling corporation's) capital as a
consequence of such obligations hereunder to a level below that which such
Lender or the Agent (or such controlling corporation) could have achieved but
for such circumstances (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Lender or the Agent to be
material, then the Borrowers shall pay to such Lender or the Agent, as the case
may be, from time to time, upon request by such Lender (with a copy of such
request to be provided to the Agent) or the Agent, additional amounts
sufficient to compensate such Lender or the Agent (or such controlling
corporation) for any increase in the amount of capital and reduced rate of
return which such Lender or the Agent reasonably determines to be allocable to
the existence of such Lender's or the Agent's obligations hereunder. A
statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by such Lender or the Agent, as the case may be, and
submitted by such Lender or the Agent to the relevant Borrower, shall be prima
facie evidence thereof.
3.9 Illegality and Impossibility. In the event that any
applicable law, treaty or other international agreement, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Lender, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Lender with any guideline, request
or directive of such authority (whether or not having the force of law),
including without limitation exchange controls, shall make it unlawful or
impossible for any
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Lender to maintain any Loan under this Agreement, the relevant Borrower shall
upon receipt of notice thereof from such Lender repay in full the then
outstanding principal amount of each Loan so affected, together with all
accrued interest thereon to the date of payment and all amounts owing to such
Lender under Section 3.10, (a) on the last day of the then current Interest
Period applicable to such Loan if such Lender may lawfully continue to maintain
such Loan to such day, or (b) immediately if such Lender may not continue to
maintain such Loan to such day.
3.10 Indemnification. If any Borrower makes any payment of
principal with respect to any LIBOR Loan on any other date than the last day of
a LIBOR Interest Period applicable thereto (whether pursuant to Section 3.1(c),
Section 3.9, Section 6.2 or otherwise), or if any Borrower fails to borrow any
LIBOR Loan after notice has been given to the Lenders in accordance with
Section 2.4, or if any Borrower fails to make any payment of principal or
interest in respect of a LIBOR Loan when due, such Borrower shall reimburse
each Lender on demand for any resulting loss or expense incurred by each such
Lender, including without limitation any loss incurred in obtaining,
liquidating or employing deposits from third parties, whether or not such
Lender shall have funded or committed to fund such Loan. A statement as to the
amount of such loss or expense, prepared in good faith and in reasonable detail
by such Lender and submitted by such Lender to the relevant Borrower, shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to such Lender under this Section 3.10 shall
be made as though such Lender shall have actually funded or committed to fund
the relevant LIBOR Loan through the purchase of an underlying deposit in an
amount equal to the amount of such Loan in the relevant market and having a
maturity comparable to the related Interest Period and through the transfer of
such deposit to a domestic office of such Lender in the United States;
provided, however, that such Lender may fund any LIBOR Loan in any manner it
sees fit and the foregoing assumption shall be utilized only for the purpose of
calculation of amounts payable under this Section 3.10.
3.11 Taxes. (a) Each Lender (which, for purposes of this Section
3.11, shall not include any Affiliate of such Lender used to make Canadian
Advances hereunder) that is not organized and incorporated under the laws of
the United States or any State thereof making U.S. Advances agrees to file with
the Agent and the Company, in duplicate, (a) on or before the later of (i) the
Effective Date and (ii) the date such Lender becomes a Lender under this
Agreement and (b) thereafter, for each taxable year of such Lender (in the case
of a Form 4224) or for each third taxable year of such Lender (in the case of
any other form) during which interest or fees arising under this Agreement and
the Notes are received, unless not legally able to do so as a result of a
change in the United States income tax enacted, or treaty promulgated, after
the date specified in the preceding clause (a), on or prior to the immediately
following due date of any payment by the Company hereunder, a properly
completed and executed copy of either Internal Revenue Service Form 4224 or
Internal Revenue Service Form 1001 and Internal Revenue Service Form W-8 or
Internal Revenue Service Form W-9 and any additional form necessary for
claiming complete exemption from United States withholding taxes (or such other
form as is required to claim complete exemption from United States withholding
taxes), if and as provided by the Code or other pronouncements of the United
States Internal Revenue Service, and such Lender warrants to the Company that
the form so filed will be true and complete; provided that such Lender's
failure to complete and execute such Form 4224 or Form 1001, or Form W-8 or
Form W-9, as the case may be, and any such additional form (or any successor
form or forms) shall not relieve the Company of any of its obligations under
this Agreement, except as otherwise provided in this Section 3.11.
(b) Notwithstanding anything herein to the contrary, for
any period with respect to which a Lender has failed to provide the Company
with the appropriate form pursuant to Section 3.11(a) (unless such failure is
due to a change in treaty, law or regulation occurring subsequent to the date
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on which a form originally was required to be provided), such Lender shall not
be entitled to indemnification under Section 3.6 with respect to withholding
taxes imposed by the United States; provided, however, that should a Lender,
which is otherwise exempt from or subject to a reduced rate of withholding tax,
become subject to withholding because of its failure to deliver a form required
hereunder, the Borrowers shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such taxes.
(c) Each Canadian Lender that is created or organized
under the laws of a jurisdiction other than Canada or a Province thereof making
Canadian Advances shall deliver, or have its designated Affiliate to be used to
make Canadian Advances deliver, to the Company and the Agent on the Effective
Date (or on the date on which such Canadian Lender becomes a Lender hereunder),
evidence that the Minister of National Revenue is satisfied that payments made
to such Lender hereunder are not subject to Taxes pursuant to Regulation 805(2)
of the Income Tax Act ("Evidence of Canadian Tax Exemption"). In addition,
from time to time after the Effective Date (or the date on which such Canadian
Lender becomes a Lender hereunder) upon the reasonable request of the Company,
each such Canadian Lender further agrees to deliver to the Company and the
Agent further Evidence of Canadian Tax Exemption, unless any change in treaty,
law, regulation or official interpretation thereof prevents such Lender from
duly providing same. Notwithstanding anything in this Section 3.11 to the
contrary, the Company shall not have any obligation to pay any withholding
taxes or to indemnify any Canadian Lender for any withholding taxes to the
extent that such taxes result from the failure of such Lender to comply with
its obligations under this paragraph.
(d) Notwithstanding anything herein to the contrary, for
any period with respect to which a Canadian Lender has failed to provide the
Company with the appropriate form pursuant to Section 3.11(c) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Canadian
Lender shall not be entitled to indemnification under Section 3.6 with respect
to withholding taxes imposed by Canada; provided however, that should a
Canadian Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to withholding taxes because of its failure to
deliver a form required hereunder, the Company shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(e) If any Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to Section 3.6, and each Lender
which is not a Canadian Lender shall be entitled to such amounts if it is ever
required to make or participate in Canadian Advances under this Agreement, then
such Lender will change the jurisdiction of its Applicable Lending Office so as
to eliminate or reduce any such additional payment which may thereafter accrue
if such change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender. For the purposes of making any Canadian
Advances, any Lender may designate any Affiliate of such Lender in Canada to
make such Canadian Advances on its behalf, provided that such designation is
made in writing to the Agent and the Borrowers. Upon such designation, such
Affiliate shall have all rights as a Lender with respect to such Canadian
Advances.
3.12 Substitution of Lender. If (i) the obligation of any Lender
to make or maintain LIBOR Loans has been suspended pursuant to Section 3.9 when
not all Lenders' obligations have been suspended, (ii) any Lender has demanded
compensation under Section 3.8 when all Lendershave not done so or (iii) any
Lender is a Defaulting Lender, the Company shall have the right, if no Default
or Event of Default then exists, to replace such Lender (a "Replaced Lender")
with one or more other lenders (collectively, the "Replacement Lender")
acceptable to the Agent, provided that (x) at the time of any replacement
pursuant to this Section 3.12, the Replacement Lender shall enter into one or
more Assignment
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and Acceptances, pursuant to which the Replacement Lender shall acquire the
Commitments and outstanding Advances and other obligations of the Replaced
Lender and, in connection therewith, shall pay to the Replaced Lender in
respect thereof an amount equal to the sum of (A) the amount of principal of,
and all accrued interest on, all outstanding Loans of the Replaced Lender, (B)
the amount of all accrued, but theretofore unpaid, fees owing to the Replaced
Lender under Section 2.3 and (C) the amount which would be payable by the
Company to the Replaced Lender pursuant to Section 3.10 if the Company prepaid
at the time of such replacement all of the Loans of such Replaced Lender
outstanding at such time and (y) all obligations of the Company then owing to
the Replaced Lender (other than those specifically described in clause (x)
above in respect of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
Assignment and Acceptances, the payment of amounts referred to in clauses (x)
and (y) above and, if so requested by the Replacement Lender, delivery to the
Replacement Lender of the appropriate Note or Notes executed by the Company,
the Replacement Lender shall become a Lender hereunder and the Replaced Lender
shall cease to constitute a Lender hereunder. The provisions of this Agreement
(including without limitation Sections 3.10 and 8.5) shall continue to govern
the rights and obligations of a Replaced Lender with respect to any Loans made
or any other actions taken by such lender while it was a Lender. Nothing
herein shall release any Defaulting Lender from any obligation it may have to
any Borrower, the Agent or any other Lender.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lenders and the Agent that:
4.1 Corporate Existence and Power. Each of the Borrowers and the
Guarantors is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation or
formation, and is duly qualified to do business, and is in good standing, in
all additional jurisdictions where such qualification is necessary under
applicable law, except for jurisdictions where their failure to be so qualified
would not result in any Material Adverse Effect. Each of the Company and the
Guarantors has all requisite corporate or other organizational power to own or
lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be conducted, and to execute and deliver the
Loan Documents to which it is a party and to engage in the transactions
contemplated by this Agreement.
4.2 Corporate Authority. The execution, delivery and performance
by each of the Borrowers and the Guarantors of the Loan Documents to which each
of them is a party have been duly authorized by all necessary corporate or
other organizational action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of such Borrower's
or such Guarantor's charter, operating agreement or by-laws, or of any contract
or undertaking to which such Borrower or such Guarantor is a party or by which
such Borrower or such Guarantor or any of their property may be bound or
affected and will not result in the imposition of any Lien on any of such
Borrower's or such Guarantor's property or of any of such Borrower's or such
Guarantor's property, except for Permitted Liens.
4.3 Binding Effect. These Loan Documents to which each of the
Borrowers and the Guarantors is a party when delivered hereunder will be,
legal, valid and binding obligations of such Borrower and such Guarantor,
respectively, enforceable against each of them in accordance with their
respective terms.
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4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation or formation and ownership of
each Subsidiary of the Company. Each such Subsidiary and each corporation or
other organization becoming a Subsidiary of the Company after the date hereof
is and will be a corporation or other organization duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is and will be duly qualified to do business in each
additional jurisdiction where such qualification is or may be necessary under
applicable law, except for such failure which could not have a Material Adverse
Effect. Each Subsidiary of the Company has and will have all requisite
corporate or other organizational power to own or lease the properties used in
its business and to carry on its business as now being conducted and as
proposed to be conducted. All outstanding shares of Capital Stock of each
Subsidiary of the Company have been and will be validly issued and are and will
be fully paid and nonassessable and, except with respect to the Lobdell
Preferred Stock or as disclosed in writing to and approved by the Agent from
time to time, are and will be owned, beneficially and of record, by the Company
or another Subsidiary of the Company free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there
is no action, suit or proceeding pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any of its
Subsidiaries before or by any court, governmental authority or arbitrator,
which if adversely decided might result, either individually or collectively,
in any Material Adverse Effect and, to the best of the Company's knowledge,
there is no basis for any such action, suit or proceeding.
4.6 Financial Condition. The consolidated and consolidating
balance sheet of the Company and its Subsidiaries and the consolidated and
consolidating statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year ended March 31, 1997 and
reported on by Price Waterhouse LLP, independent certified public accountants,
copies of which have been furnished to the Lenders, fairly present, and the
financial statements of the Company and its Subsidiaries delivered pursuant to
Section 5.1(d) will fairly present, the consolidated financial position of the
Company and its Subsidiaries as at the respective dates thereof, and the
consolidated results of operations of the Company and its Subsidiaries for the
respective periods indicated, all in accordance with Generally Accepted
Accounting Principles consistently applied (subject, in the case of said
interim statements, to year-end audit adjustments). There has been no Material
Adverse Effect since March 31, 1997. There is no Contingent Liability of the
Company or any of its Subsidiaries that is not reflected in such financial
statements or in the notes thereto which could have a Material Adverse Effect.
Neither the Company nor any Restricted Subsidiary is liable directly or
indirectly, for any of the Indebtedness or other liabilities of any
Unrestricted Subsidiary or for any Contingent Liabilities with respect to any
Unrestricted Subsidiary except as permitted by Section 5.2(e).
4.7 Use of Advances. The Company will use the proceeds of the
Advances to refinance existing indebtedness of the Guarantors, to acquire
machinery and equipment for the Guarantors and for its and the Guarantors'
general corporate purposes. Neither the Company nor any of its Subsidiaries
extends or maintains, in the ordinary course of business, credit for the
purpose, whether immediate, incidental, or ultimate, of buying or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Advance will be
used for the purpose, whether immediate, incidental, or ultimate, of buying or
carrying any such margin stock or maintaining or extending credit to others for
such purpose. After applying the proceeds of each Advance, such margin stock
will not constitute more than 25% of the value of the assets (either of the
Company alone or of the Company and its Subsidiaries on a consolidated basis)
that are subject to
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any provisions of any Loan Document that may cause the Advances to be deemed
secured, directly or indirectly, by margin stock.
4.8 Consents, Etc. Except for such consents, approvals,
authorizations, declarations, registrations or filings delivered by the Company
pursuant to Section 2.5(g), if any, each of which is in full force and effect,
no consent, approval or authorization of or declaration, registration or filing
with any governmental authority or any nongovernmental Person or entity,
including without limitation any creditor, lessor or stockholder of the Company
or any of its Subsidiaries, is required on the part of any Borrower or any
Guarantor in connection with the execution, delivery and performance of the
Loan Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of any of the Loan Documents.
4.9 Taxes. The Company and its Subsidiaries have filed all tax
returns (federal, state and local) required to be filed and have paid all taxes
shown thereon to be due, including interest and penalties, or have established
adequate financial reserves on their respective books and records for payment
thereof. Neither the Company nor any of its Subsidiaries knows of any actual
or proposed tax assessment or any basis therefor, and no extension of time for
the assessment of deficiencies in any federal or state tax has been granted by
the Company or any such Subsidiary. The Company will not amend any Tax Sharing
Agreement without the prior approval of the Agent.
4.10 Title to Properties. Except as otherwise disclosed in the
latest balance sheet referred to in Section 4.6 or delivered pursuant to
Section 5.1(d), the Company or one or more of its Subsidiaries have good and
marketable fee simple title to all of the real property, and a valid and
indefeasible ownership or leasehold interest in all of the other properties and
assets (including, without limitation, the collateral subject to the Security
Documents to which any of them is a party) reflected in said balance sheet or
subsequently acquired by the Company or any such Subsidiary. All of such
properties and assets are free and clear of any Lien, except for Permitted
Liens.
4.11 Borrowing Base. All trade accounts receivable, fixed assets
and inventory of the Borrowers and the Guarantors represented or reported by
the Company to be, or otherwise included in, Eligible Accounts Receivable,
Eligible Fixed Assets and Eligible Inventory, comply in all respects with the
requirements therefor set forth in the respective definitions thereof, and the
computation of the Borrowing Base set forth in each Borrowing Base Certificate
is true and correct. The aggregate amount of all Advances plus all
Unrestricted Guarantees is equal to or less than the Borrowing Base.
4.12 ERISA. The Company and its ERISA Affiliates and their
respective Plans are in compliance in all material respects with those
provisions of ERISA and of the Code which are applicable with respect to any
Plan. No Prohibited Transaction and no Reportable Event has occurred with
respect to any such Plan which could, in the aggregate, result in any liability
to the Company or any of its ERISA Affiliates in excess of $2,000,000. None of
the Company or any of its ERISA Affiliates is an employer with respect to any
Multiemployer Plan. The Company and its ERISA Affiliates have met or are
meeting in compliance with all laws and regulations the minimum funding
requirements under ERISA and the Code with respect to each of their respective
Plans, if any, and have not incurred any liability to the PBGC or any Plan.
The execution, delivery and performance of the Loan Documents does not
constitute a Prohibited Transaction. There is no Unfunded Benefit Liability,
with respect to any Plan of the Company or its ERISA Affiliates which could
have a Material Adverse Effect.
4.13 Disclosure. No report or other information furnished in
writing by or on behalf of the Company or any of its Subsidiaries to any Lender
or the Agent in connection with the negotiation
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or administration of this Agreement contains any material misstatement of fact
or omits to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made. No Loan Document nor any other document, certificate, or
report or statement or other information furnished to any Lender or the Agent
by or on behalf of the Company or any of its Subsidiaries in connection with
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact in order to make the statements
contained herein and therein not misleading in light of the circumstances in
which they were made. There is no fact known to the Company which materially
and adversely affects, or which in the future may (so far as the Company can
now reasonably foresee) materially and adversely affect, the business,
properties, operations or condition, financial or otherwise, of the Company or
any of its Subsidiaries, which has not been set forth in this Agreement
(including without limitation the schedules hereto) or in the other documents,
certificates, statements, reports and other information furnished in writing to
the Lenders by or on behalf of the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby.
4.14 Environmental Matters. The representations and warranties set
forth in the Environmental Certificate are true and complete.
4.15 Solvency. The Company and its Subsidiaries are and, after
giving effect to the transactions described herein and the Subordinated Debt
Documents and to the incurrence or assumption of all obligations being incurred
or assumed in connection herewith, will be Solvent.
4.16 No Defaults under Certain Agreements. Neither the Company nor
any of its Subsidiaries is in default or has received any written notice of
default under or with respect to any contract or agreement to which it is a
party or by which it is bound, including without limitation any agreements for
the incurrence of any indebtedness or any tooling or purchase contracts, which
could have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.17 Intellectual Property. Set forth on Schedule 4.17 is a
complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof, of
the Company and each of its Subsidiaries showing as of the Effective Date the
jurisdiction in which registered, the registration number and the date of
registration. The Company and each of its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, service marks, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted (the "Intellectual Property") except for those the failure to own or
license which could not reasonably be expected to have a Material Adverse
Effect. No claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Company or any of
its Subsidiaries know of any valid basis for any such claim, the use of such
Intellectual Property by the Company and each of its Subsidiaries does not
infringe on the rights of any Person, and, to the knowledge of the Company, no
Intellectual Property has been infringed, misappropriated or diluted by any
other Person except for such claims, infringements, misappropriation and
dilutions that, in the aggregate, could not have a Material Adverse Effect.
4.18 Preferred Stock. All Lobdell Preferred Stock Documents are
listed on Schedule 4.18 hereto, and true, correct and complete copies of all
Lobdell Preferred Stock Documents have been delivered to the Agent. All
dividends, distributions, redemptions and other payments required on the
Lobdell Preferred Stock are described on Schedule 4.18. Other than the Lobdell
Preferred Stock, there is no other Preferred Stock as of the Effective Date.
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4.19 Investment Company Act; Other Regulations. Neither the
Company nor any of its Subsidiaries is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. Neither the Company nor any of its
Subsidiaries is subject to regulation under any federal or state statute or
regulation which limits its ability to incur Indebtedness.
4.20 Senior Subordinated Debt Documents. All representations and
warranties of the Company contained in any Senior Subordinated Debt Document
are true and correct in all material respects. The Company will be receiving
net proceeds in the approximate amount of $120,800,000 on the Effective Date
from its issuance of the Senior Subordinated Notes, and all agreements,
instruments and documents executed or delivered pursuant to the issuance of the
Senior Subordinated Notes are described on Schedule 1.1 hereto. All Advances
and all other present and future indebtedness, obligations and liabilities
pursuant to the Loan Documents and all Rate Hedging Obligations of each
Borrower and each Guarantor owed to any Lender is "Senior Debt " and
"Designated Senior Debt" as defined in the Senior Subordinated Debt Documents
and, other than the Advances and all other present and future indebtedness,
obligations and liabilities pursuant to the Loan Documents, there is no other
"Designated Senior Debt" thereunder. There is no Event of Default or event or
condition which could become an Event of Default with notice or lapse of time
or both, under the Senior Subordinated Debt Documents and each of the Senior
Subordinated Debt Documents is in full force and effect. Other than pursuant
to the Senior Subordinated Notes and as described on Schedule 4.20, there is no
obligation pursuant to any Senior Subordinated Debt Document or other document
or agreement evidencing or relating to any Subordinated Debt outstanding or to
be outstanding on the Effective Date which obligates the Company to pay any
principal or interest or redeem any of its Capital Stock or incur any other
monetary obligation.
4.21 Unrestricted Subsidiaries. Other than the guaranties
permitted by Section 5.2(e)(viii), neither the Company nor any Restricted
Subsidiary of the Company is liable, directly or indirectly, for any of the
Indebtedness or other liabilities of any Unrestricted Subsidiary or has any
Contingent Liabilities with respect to any Unrestricted Subsidiary, other than
trade payables for the sale of goods in the ordinary course of business and in
compliance with Section 5.2(m).
ARTICLE V.
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees that,
until the termination of all Commitments and Letters of Credit and thereafter
until payment in full of the principal of and accrued interest on the Notes and
the payment and performance of all other obligations of the Company under this
Agreement, any agreement executed in connection herewith and any Rate Hedging
Agreement with any Lender, unless the Required Lenders shall otherwise consent
in writing, it shall, and shall cause each of its Restricted Subsidiaries to:
(a) Preservation of Corporate Existence, Etc. Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and its qualification as a foreign corporation or
other organization in good standing in each jurisdiction in which such
qualification is necessary under applicable law, and the rights, licenses,
permits (including those required under Environmental Laws), franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
businesses, except to the extent any of the foregoing would not have a Material
Adverse Effect; and defend all of the foregoing against all claims, actions,
demands, suits or
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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 respects
with all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and Environmental Laws), in effect from time to
time, except to the extent any of the foregoing would not have a Material
Adverse Effect; and pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon it or upon its income, revenues
or property, before the same shall become delinquent or in default, as well as
all lawful claims for labor, materials and supplies or otherwise, which, if
unpaid, might give rise to Liens upon such properties or any portion thereof,
except to the extent that payment of any of the foregoing is then being
contested in good faith by appropriate legal proceedings and with respect to
which adequate financial reserves have been established on the books and
records of the Company or any of its Restricted Subsidiaries.
(c) Maintenance of Properties; Insurance. Maintain,
preserve and protect all property that is material to the conduct of the
business of the Company or any of its Restricted Subsidiaries and keep such
property in good repair, working order and condition and from time to time
make, or cause to be made all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times in
accordance with customary and prudent business practices for similar
businesses, except to the extent any of the foregoing would not have a Material
Adverse Effect; and maintain in full force and effect insurance with
responsible and reputable insurance companies or associations in such amounts,
on such terms and covering such risks, including fire and other risks insured
against by extended coverage, as is usually carried by companies engaged in
similar businesses and owning similar properties similarly situated and
maintain in full force and effect public liability insurance, insurance against
claims for personal injury or death or property damage occurring in connection
with any of its activities or any properties owned, occupied or controlled by
it, in such amount as it shall reasonably deem necessary, and maintain such
other insurance as may be required by law or as may be reasonably requested by
the Required Lenders for purposes of assuring compliance with this Section
5.1(c).
(d) Reporting Requirements. Furnish to the Lenders and
the Agent the following:
(i) Promptly and in any event within three
calendar days after becoming aware of the occurrence of (A) any Default or
Event of Default, (B) the commencement of any material litigation against, by
or affecting the Company or any of its Restricted Subsidiaries, and any
material developments therein, or (C) entering into any material contract or
undertaking that is not entered into in the ordinary course of business or (D)
any development in the business or affairs of the Company or any of its
Restricted Subsidiaries which has resulted in or which is likely in the
reasonable judgment of the Company, to result in a Material Adverse Effect, a
statement of the Chief Financial Officer or Treasurer of the Company setting
forth details of each such Default or Event of Default or such litigation,
material contract or undertaking or development and the action which the
Company or such Subsidiary, as the case may be, has taken and proposes to take
with respect thereto;
(ii) As soon as available and in any event within
45 days after the end of each of the first three fiscal quarters of the
Company, the consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as of the end of such quarter, and the related
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consolidated and consolidating statements of income, retained earnings and
changes in cash flows for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the corresponding date or
period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the Chief Financial
Officer or Treasurer of the Company as having been prepared in accordance with
Generally Accepted Accounting Principles, together with a certificate of the
Chief Financial Officer or Treasurer of the Company stating (A) that no Default
or Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement setting forth the details
thereof and the action which the Company has taken and proposes to take with
respect thereto, and (B) that a computation (which computation shall accompany
such certificate and shall be in reasonable detail) showing compliance with
Section 5.2(a), (b), (c) and (d) hereof is in conformity with the terms of this
Agreement;
(iii) As soon as available and in any event within
100 days after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income, retained
earnings and changes in cash flows of the Company and its Subsidiaries for such
fiscal year, with a customary audit report of Price Waterhouse LLP, or other
independent certified public accountants selected by the Company and acceptable
to the Agent, without qualifications unacceptable to the Agent, together with a
certificate of the Chief Financial Officer or the Treasurer of the Company
stating (A) that no Default or Event of Default has occurred and is continuing
and, if such a Default or Event of Default exists and is continuing, a
statement setting forth the nature and status thereof, and (B) that a
computation (which computation shall accompany such certificate and shall be in
reasonable detail) showing compliance with Sections 5.2(a), (b), (c) and (d)
hereof is in conformity with the terms of this Agreement;
(iv) Promptly after the sending or filing thereof,
copies of all reports, proxy statements and financial statements which the
Company or any of its Subsidiaries sends to or files with any of their
respective security holders or any securities exchange or the Securities and
Exchange Commission or any successor agency thereof;
(v) On or before the 15th day after the end of
each month during which the Advances exceeded $35,000,000 on any date during
such month and at least two Business Days prior to any request for an Advance
which would cause the Aggregate Advances to exceed $35,000,000, a Borrowing
Base Certificate prepared as of the close of business on the last day of such
month or the most recently ended month, as the case may be, together with
supporting schedules, in form and detail satisfactory to the Agent, setting
forth such information as the Agent may request with respect to the aging,
value, location and other information relating to the computation of the
Borrowing Base and the eligibility of any property or assets included in such
computation, certified as true and correct by the Chief Financial Officer or
Treasurer of the Company;
(vi) As soon as available and in any event at
least 30 days prior to the end of each fiscal year of the Company, copies of
preliminary capital and operating budgets and financial forecasts for the
Company and its Subsidiaries for the following fiscal year, and as soon as
available in any event within 30 days after the end of each fiscal year of the
Company, copies of the final capital and operating budgets and financial
forecasts for the Company and its Subsidiaries for such fiscal year, in each
case prepared on both a consolidated and consolidating basis and for a
twelve-month period (or more frequent period if so prepared by the Company in
the ordinary course) by or under the direction of the Chief Financial Officer
or Treasurer of the Company in form and detail satisfactory to the Agent,
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and, promptly and in any event within 10 days after preparation thereof, copies
of any revisions to such budgets and forecasts;
(vii) Promptly and in any event within 10 calendar
days after receiving or becoming aware thereof (A) a copy of any notice of
intent to terminate any Plan of the Company its Subsidiaries or any ERISA
Affiliate filed with the PBGC, (B) a statement of the Chief Financial Officer
or Treasurer of the Company setting forth the details of the occurrence of any
Reportable Event with respect to any such Plan, (C) a copy of any notice that
the Company, any of its Subsidiaries or any ERISA Affiliate may receive from
the PBGC relating to the intention of the PBGC to terminate any such Plan or to
appoint a trustee to administer any such Plan, or (D) a copy of any notice of
failure to make a required installment or other payment within the meaning of
Section 412(n) of the Code or Section 302(f) of ERISA with respect to any such
Plan;
(viii) As soon as available and in any event within
30 days after the end of each month, a report with respect to the Company
setting forth a summary and aging of accounts payable of the Company, a
listing of any checks held after the due date of the related vendor invoice and
setting forth the corresponding due dates of such invoices, in form and detail
satisfactory to the Agent, certified as true and correct by the Chief Financial
Officer or Treasurer of the Company;
(ix) Promptly and in any event within 10 days
after receipt, a copy of any management letter or comparable analysis prepared
by the auditors for the Company or any of its Subsidiaries; and
(x) Promptly, such other information respecting
the business, properties, operations or condition, financial or otherwise, of
the Company or any of its Restricted Subsidiaries or any of its Unrestricted
Subsidiaries with respect to which the Company or any of its Restricted
Subsidiaries has any Contingent Liabilities as any Lender or the Agent may from
time to time reasonably request.
(e) Accounting; Access to Records, Books, Etc. Maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in accordance
with Generally Accepted Accounting Principles and to comply with the
requirements of this Agreement and, at any reasonable time and from time to
time, (i) during regular business hours, permit any Lender or the Agent or any
agents or representatives thereof to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, the
Company and its Subsidiaries, and to discuss the affairs, finances and accounts
of the Company and its Subsidiaries with their respective directors, officers,
employees and independent auditors, and by this provision the Company hereby
authorizes such persons to discuss such affairs, finances and accounts with any
Lender or the Agent and (ii) during regular business hours, permit the Agent or
any of its agents or representatives to conduct a comprehensive field audit of
its books, records, properties and assets, including without limitation all
collateral subject to the Security Documents; and
(f) Maintenance of Business Lines. Maintain all principal
lines of business in which the Company or any of its Restricted Subsidiaries is
presently engaged.
(g) Additional Security and Collateral. Promptly (i)
execute and deliver, and cause each Restricted Subsidiary of the Company to
execute and deliver, additional Security Documents, within 30 days after
request therefor by the Lenders and the Agent, sufficient to grant to the Agent
for the benefit of the Lenders and the Agent liens and security interests in
any after acquired
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property of the type described in Section 2.11 and (ii) cause each Person
becoming a Restricted Subsidiary of the Company from time to time to execute
and deliver to the Agent, within 30 days after such Person becomes a Restricted
Subsidiary, a Guaranty and Security Documents, together with other related
documents described in Section 2.5 sufficient to grant to the Agent for the
benefit of the Lenders and the Agent liens and security interests in all
collateral of the type described in Section 2.11. The Company shall notify the
Agent, within 10 days after the occurrence thereof, of the acquisition of any
property by the Company or any Restricted Subsidiary that is not subject to the
existing Security Documents, any Person's becoming a Restricted Subsidiary and
any other event or condition that may require additional action of any nature
in order to preserve the effectiveness and perfected status of the liens and
security interests of the Lenders and the Agent with respect to such property
pursuant to the Security Documents.
(h) Further Assurances. Execute and deliver, and cause
each Restricted Subsidiary of the Company to execute and deliver, within 30
days after request therefor by the Lenders and the Agent, all further
instruments and documents and take all further action that may be necessary or
desirable, or that the Agent may request, in order to give effect to, and to
aid in the exercise and enforcement of the rights and remedies of the Lenders
under, the Loan Documents, including without limitation causing each lessor of
real property to the Company or any of its Restricted Subsidiaries to execute
and deliver to the Agent, prior to or upon the commencement of any tenancy, an
agreement in form and substance acceptable to the Lenders and the Agent duly
executed on behalf of such lessor waiving any distraint, lien and similar
rights with respect to any property subject to the Security Documents and
agreeing to permit the Lenders and the Agent to enter such premises in
connection therewith.
5.2 Negative Covenants. Until the termination of all Commitments
and Letters of Credit and thereafter until payment in full of the principal of
and accrued interest on the Notes and the payment and performance of all other
obligations of the Company under this Agreement, any agreement executed in
connection herewith and any Rate Hedging Agreement with any Lender, the Company
agrees that, unless the Required Lenders shall otherwise consent in writing, it
shall not, and shall not permit any of its Restricted Subsidiaries to:
(a) Net Worth. Permit or suffer the Consolidated Net
Worth of the Company and its Restricted Subsidiaries to be less than (i)
$35,400,000, plus (ii) an amount equal to 50% of Consolidated net income of the
Company and its Subsidiaries (without reduction for a net loss) for each fiscal
year of the Company subsequent to its fiscal year ended March 31, 1997, plus
(iii) an amount equal to 100% of the Net Cash Proceeds in connection with the
issuance or other sale by the Company of any of its Capital Stock.
(b) Total Debt to EBITDA Ratio. Permit or suffer the
Total Debt to EBITDA Ratio to be greater than (i) 5.50 to 1.00 at any time
prior to June 30, 1998, or (ii) 5.00 to 1.00 at any time from and including
June 30, 1998 to but excluding June 30, 1999 or (iii) 4.50 to 1.00 at any time
thereafter.
(c) Fixed Charge Coverage Ratio. Permit or suffer the
Fixed Charge Coverage Ratio determined as of the end of each fiscal quarter of
the Company, commencing with the fiscal quarter ending September 30, 1997, for
the period of four fiscal quarters then ended, to be less than (i) 1.45 to 1.0
as of the end of any fiscal quarter of the Company ending on or before March
31, 1998 or (ii) 1.60 to 1.0 as of the end of any fiscal quarter thereafter.
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(d) Interest Coverage Ratio. Permit or suffer the
Interest Coverage Ratio, determined as of the end of each fiscal quarter of the
Company for the period of the four fiscal quarters then ended, to be less (i)
2.0 to 1.0 as of the end of any fiscal quarter ending on or before March 31,
1999 or (ii) than 2.25 to 1.0 as of the end of any fiscal quarter therafter.
(e) Indebtedness. Create, incur, assume or in any manner
become liable in respect of, or suffer to exist, any Indebtedness other than:
(i) The Advances and the other obligations and
liabilities pursuant to any of the Loan Documents;
(ii) The Indebtedness described in Schedule
5.2(e), including Contingent Liabilities, provided that no increase in the
principal amount thereof shall be permitted;
(iii) Indebtedness of the Company or any Restricted
Subsidiary owing to the Company or any Guarantor, provided that any such
Indebtedness owing by the Company shall be fully subordinate to all Advances
and all other obligations of the Company to the Agent and the Lenders, by
written agreement pursuant to terms and conditions satisfactory to the Agent
and the Required Lenders;
(iv) Indebtedness constituting purchase money debt
or Capital Leases in aggregate outstanding principal amount not exceeding
$10,000,000 at any time;
(v) Subordinated Debt under the Senior
Subordinated Notes in aggregate principal amount not to exceed $125,000,000;
(vi) Other Subordinated Debt of the Company or any
Guarantor, provided that (A) after giving effect to such Subordinated Debt, the
Company is able to borrow at least $10,000,000 of additional Loans, (B) both
before and after giving effect to such Subordinated Debt, no Event of Default
or Default exists or would be caused thereby, (C) after giving effect to such
Subordinated Debt, the pro forma Total Debt to EBITDA Ratio is at least 0.25
below the level required under Section 5.2(b), on a pro forma basis acceptable
to the Agent;
(vii) Tooling Indebtedness on terms and in amounts
acceptable to the Agent, which consent will not be unreasonably withheld;
(viii) Rate Hedging Agreements with any Lender or
other person acceptable to the Agent, provided that no Rate Hedging Agreement
shall be entered into for purposes of financial speculation;
(ix) Guaranties by the Company of Unrestricted
Subsidiaries in an aggregate amount (valued at the maximum amount that could be
payable thereunder) not to exceed $30,000,000, provided that any such
guaranties may not be incurred unless: (A) both before and after giving effect
to such guaranty the Company is able to borrow at least $10,000,000 of
additional Loans, (B) all such guaranties shall be collection guaranties on
terms and conditions satisfactory to the Agent, (C) both before and after
giving effect to such guaranty, no Event of Default or Default exists or would
be caused thereby, (D) both before and after giving effect to such guaranty,
the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the level
required under Section 5.2(b), on a pro forma basis
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acceptable to the Agent, and (E) the Company provides such certificates and
legal opinions prior to the incurrence of such guaranty as requested by the
Agent; and
(x) Indebtedness of the Restricted Subsidiaries
of BMG in aggregate principal amount not to exceed $2,500,000 and secured by
the real property owned by such Subsidiaries as of the Effective Date, provided
that the terms of such Indebtedness are no more onerous on such Subsidiaries as
the terms of the Indebtedness of such Subsidiaries secured by such real
property that existed immediately prior to the Effective Date.
(f) Liens. Create, incur or suffer to exist any Lien on
any of the assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether now owned or hereafter acquired, of the Company
or any of its Restricted Subsidiaries, other than:
(i) Liens for taxes not delinquent or for taxes
being contestedb in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA
or any Environmental Law) created and maintained in the ordinary course of
business which do not secure obligations material in the aggregate and which
would not have a Material Adverse Effect and which constitute (A) pledges or
deposits under worker's compensation laws, unemployment insurance laws or
similar legislation, (B) good faith deposits in connection with bids, tenders,
contracts or leases to which the Company or any of its Subsidiaries is a party
for a purpose other than borrowing money or obtaining credit, including rent
security deposits, (C) liens imposed by law, such as those of carriers,
warehousemen and mechanics, if payment of the obligation secured thereby is not
yet due, (D) Liens securing taxes, assessments or other governmental charges or
levies not yet subject to penalties for nonpayment, and (E) pledges or
deposits to secure public or statutory obligations of the Company or any of its
Subsidiaries, or surety, customs or appeal bonds to which the Company or any of
its Subsidiaries is a party;
(iii) Liens affecting real property which
constitute minor survey exceptions or defects or irregularities in title, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of such real property,
provided that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or materially impair
their use in the operation of the businesses of the Company or any of its
Subsidiaries;
(iv) Liens created pursuant to the Security
Documents and Liens expressly permitted by the Security Documents;
(v) Each Lien described in Schedule 5.2(f) hereto
may be suffered to exist upon the same terms as those existing on the date
hereof, but no increase in the principal amount thereof shall be permitted;
(vi) Any Lien created to secure payment of a
portion of the purchase price of, or existing at the time of acquisition of,
any tangible fixed asset acquired by the Company or any of its Restricted
Subsidiaries may be created or suffered to exist upon such fixed asset if the
outstanding principal amount of the Indebtedness secured by such Lien does not
at any time exceed 100% of the purchase price paid by the Company or such
Restricted Subsidiary for such fixed asset and
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the aggregate principal amount of all Indebtedness secured by such Liens does
not exceed the amount permitted under Section 5.2(e)(iv), provided that such
Lien does not encumber any other asset at any time owned by the Company or such
Restricted Subsidiary, and provided, further, that not more than one such Lien
shall encumber such fixed asset at any one time;
(vii) Liens in favor of the Company or any of its
Restricted Subsidiaries as security for Indebtedness of any Subsidiary to the
Company or another Restricted Subsidiary;
(viii) The interest or title of a lessor under any
lease otherwise permitted under this Agreement with respect to the property
subject to such lease to the extent performance of the obligations of the
Company or its Restricted Subsidiary thereunder are not delinquent; and
(ix) Liens on the real property owned by such
Subsidiaries as of the Effective Date securing the Indebtedness permitted by
Section 5.2(b)(x).
(g) Merger; Acquisitions; Etc. Purchase or otherwise
acquire, whether in one or a series of transactions, directly or indirectly,
all or a substantial portion of the business assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, of any Person, or
all or a substantial portion of the capital stock of or other ownership
interest in any other Person (an "Acquisition"); nor merge or consolidate or
amalgamate with any other Person or take any other action having a similar
effect; provided, however, that this Section 5.2(g) shall not prohibit any
merger or acquisition if (i) such merger involves the Company, the Company
shall be the surviving or continuing corporation thereof, (ii) immediately
before and after giving effect such merger or acquisition, no Default or Event
of Default shall exist or shall have occurred and be continuing and the
representations and warranties contained in Article IV and in the other Loan
Documents shall be true and correct on and as of the date thereof (both before
and after such merger or acquisition is consummated) as if made on the date
such merger or acquisition is consummated, (iii) at least 10 Business Days'
prior to the consummation of such merger or acquisition, the Company shall have
provided to the Lenders an opinion of counsel and a certificate of the Chief
Financial Officer or Treasurer of the Company (attaching pro forma computations
acceptable to the Agent to demonstrate compliance with all financial covenants
hereunder), each stating that such merger or acquisition complies with this
Section 5.2(g), all laws and regulations and that any other conditions under
this Agreement relating to such transaction have been satisfied, and such
certificate shall contain such other information and certifications as
requested by the Agent and be in form and substance satisfactory to the Agent,
(iv) at least 10 Business Days' prior to the consummation of such merger or
acquisition, the Company shall have delivered all acquisition documents and
other agreements and documents relating to such merger or acquisition, and the
Agent shall have completed a satisfactory review thereof and completed such
other due diligence satisfactory to the Agent, provided that if such
acquisition is being done by an Unrestricted Subsidiary or such merger involves
Unrestricted Subsidiaries only then the requirements of this clause (iv) will
be satisfied if the Company provides the Lenders with a certificate
representing that neither the Company nor any Restricted Subsidiary shall be
liable, directly or indirectly, for any of the Indebtedness or other
liabilities of such Unrestricted Subsidiary or for any Contingent Liabilities
with respect to any such Unrestricted Subsidiary except as permitted by Section
5.2(e), (v) immediately before and after giving effect to such merger or
acquisition, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below
the level required under Section 5.2(b), on a pro forma basis acceptable to the
Agent, (vi) both before and after giving effect to such merger and acquisition,
the Company is able to borrow at least $10,000,000 of additional Loans, (vii)
the Company shall, at least 10 Business Days prior to the consummation of
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merger or acquisition, provide such other certificates and documents as
requested by the Agent, in form and substance satisfactory to the Agent, and
(viii) the target of such merger or acquisition is in the same line of business
as the Company. Notwithstanding the foregoing, the requirements listed in
clauses (ii), (iii), (iv), (v), (vi) and (vii) of this Section 5.2(g) shall not
be required to be satisfied in connection with any acquisition done solely by
an Unrestricted Subsidiary, provided that the terms of Section 5.2(e)(ix),
Section 5.2(l) and all other terms and provisions hereof shall be applicable.
(h) Disposition of Assets; Etc. Sell, lease, license,
transfer, assign or otherwise dispose of all or any portion of its business,
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether in one or a series of transactions, other than inventory
sold in the ordinary course of business upon customary credit terms and sales
of scrap or obsolete material or equipment which are not material in the
aggregate, and shall not permit or suffer any Subsidiary to do any of the
foregoing; provided, however, that this Section 5.2(h) shall not prohibit any
such sale, lease, license, transfer, assignment or other disposition if (i) the
consolidated book value (disregarding any write-downs of such book value other
than ordinary depreciation and amortization) of all of the business, assets,
rights, revenues and property of the Company and its Restricted Subsidiaries
disposed of in any consecutive twelve-month period shall be less than 10% of
the consolidated book value of the assets of the Company and its Restricted
Subsidiaries as of the beginning of such twelve month period and the aggregate
book value of all assets disposed of after the Effective Date shall be less
than 25% of the consolidated book value of assets of the Company and its
Restricted Subsidiaries at the time of any such disposition and if, immediately
after such transaction, no Default or Event of Default shall exist or shall
have occurred and be continuing, (ii) sales as to which proceeds are used
within 180 days to purchase or construct assets of at least equivalent value to
those sold, (iii) transfers of assets from any Subsidiary to the Company or a
Guarantor which is a wholly Owned Subsidiary; provided, however, in the case of
any of the foregoing permitted sales, leases, licenses, transfers, assignments
or other dispositions (an "Asset Sale") the Company shall not, and shall not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(A) the Company (or the Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value
(evidenced by a resolution of the Board of Directors set forth in an officer's
certificate delivered to the Agent) of the assets and (B) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash, provided that cash equivalents and the assumption of
Indebtedness of the Company or any Guarantor and the unconditional release of
the Company or such Guarantor from such Indebtedness in connection with such
Asset Sale, in each case acceptable to the Agent, shall be considered cash for
purposes of this Section 5.2(h); provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's' most
recent balance sheet), of the Company or any Restricted Subsidiary that are
assumed by the transferee of any such assets such that the Company or such
Restricted Subsidiary have no further liability and (y) any securities, notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to
be cash for purposes of this provision and the definition of Net Cash Proceeds,
and the Agent promptly shall obtain a first priority security interest in any
non cash consideration for any Asset Sale.
(i) Nature of Business. Make any material change in the
nature of its business from that engaged in on the date of this Agreement or
engage in any other businesses other than those in which it is engaged on the
date of this Agreement.
(j) Dividends and Other Restricted Payments. Make, pay,
declare or authorize any dividend, payment or other distribution in respect of
any class of its Capital Stock or any dividend, payment or distribution in
connection with the redemption, purchase, retirement or other
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acquisition, directly or indirectly, of any Capital Stock other than such
dividends, payments or other distributions (i) to the extent payable solely in
shares of common stock of the Company, (ii) to the extent payable to the
Company by a Restricted Subsidiary of the Company, (iii) dividends and
distributions on Preferred Stock to the extent permitted under Section 5.2(s),
(iv) if no Event of Default or Default exists or would be caused thereby, an
aggregate amount not to exceed $1,000,000 made after the Effective Date, (v)
which in aggregate amount do not exceed 25% of the Net Income accrued during
fiscal quarters ending after the Effective Date for which the Total Debt to
EBITDA Ratio was not greater than 3.0 to 1.0, provided that both before and
after the making or declaration of such dividend, payment or other distribution
(A) the pro forma Total Debt to EBITDA Ratio is not greater than 3.0 to 1.0, on
a pro forma basis acceptable to the Agent, (B) the Company is able to borrow at
least $10,000,000 of additional Loans and (C) no Default or Event of Default
shall have occurred or be caused thereby, and (vi) if no Event of Default or
Default exists or would be caused thereby, an aggregate amount not to exceed
$2,000,000 made after the Effective Date for the purpose of redeeming the
Capital Stock of the Company owned by any employee of the Company, other than a
Permitted Holder, upon the termination of the employment by the Company or any
of its Restricted Subsidiaries of such employee, provided that (A) any amounts
used to redeem such Capital Stock under this clause (vi) shall first reduce the
amount allowed or accumulated under Section 5.2(j)(iv) until the amount allowed
thereunder is exhausted and then shall reduce the amount allowed under Section
5.2(j)(v) and (B) the amounts payable for the redemption of such Capital Stock
will not be paid any sooner than contractually required. The Company will not,
and will not permit any of its Restricted Subsidiaries, to issue any Preferred
Stock or any Disqualified Stock, other than (1) any Preferred Stock which does
not require any dividends, payments, redemptions or other distributions of any
kind until at least one year after the Termination Date, (2) the existing
Lobdell Preferred Stock and (3) any other Preferred Stock or Disqualified Stock
which meets all of the requirements for the issuance by the Company of
Subordinated Debt (i.e. all payments and other obligations thereunder are
expressly subordinate and junior in right and priority of payment to the
Advances and other Indebtedness of such Person to the Lenders in manner and by
agreement satisfactory in form and substance to the Agent and such Preferred
Stock or Disqualified Stock is subject to such other terms and provisions,
including without limitation maturities, covenants, defaults, rates and fees,
acceptable to the Agent), and such Preferred Stock and Disqualified Stock
allowed under this clause (3) shall be treated as if it were Subordinated Debt
for all purposes of this Agreement and is defined herein as "Permitted
Disqualified Stock".
(k) Capital Expenditures. Acquire or contract to acquire
any fixed asset or make any other capital expenditure if the aggregate purchase
price and other acquisition costs of all such fixed assets acquired and other
capital expenditures made by the Company or any of its Restricted Subsidiaries
during any fiscal year of the Company would exceed, on a consolidated basis, an
amount equal to (i) $30,000,000 for the fiscal year of the Company ending March
31, 1998, or (ii) for any fiscal year thereafter, the sum of (A) $30,000,000,
plus (B) the amount by which the allowed capital expenditures for the most
recently ended fiscal year exceeded the actual capital expenditures for such
fiscal year, provided that the amount added pursuant to this clause (B) shall
not exceed one third of the allowed capital expenditures for the most recently
ended fiscal year, plus (C) 25% of the amount by which EBITDA was in excess of
$45,000,000 for the most recently ended fiscal year, plus (D) the depreciation
expense for the most recently ended fiscal year relating solely to fixed assets
(other than fixed assets of Howell) acquired pursuant to an Acquisition after
the Effective Date.
(l) Loans, Advances and Investments. Make any loan or
advance of any of its funds or property or make any other extension of credit
to, or increase its investment or acquire any additional interest whatsoever
in, any Person, or enter into any joint venture or similar arrangement with any
other person, other than (i) loans and advances to Guarantors which are
evidenced by promissory
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notes payable on demand in form and substance satisfactory to the Agent and
which are pledged to the Agent for the benefit of the Lenders and investments
in Guarantors, and (ii) loans and advances to, and investments in, Unrestricted
Subsidiaries, Restricted Subsidiaries which are not Wholly Owned Subsidiaries
or joint ventures which do not exceed $40,000,000 for all of foregoing in
aggregate outstanding amount (with the outstanding amount thereof being deemed
decreased by any cash repayments of such loans or advances or cash dividends
paid to the Company or any Restricted Subsidiary with respect to any such
investments), provided that (A) if such transaction involves a loan or advance,
such loans and advances are evidenced by promissory notes in form and substance
satisfactory to the Agent and which are pledged to the Agent for the benefit of
the Lenders, (B) both before and after giving effect to such loan, advance or
investment, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below the
level required under Section 5.2(b), on a pro forma basis acceptable to the
Agent, (C) both before and after giving effect to such loan or advance the
Company is able to borrow at least $10,000,000 of additional Loans, and (D) no
Event of Default or Default exists or would be caused thereby and the Company
provides such certificates and legal opinions as requested by the Agent in
connection therewith.
(m) Transactions with Affiliates. Enter into or
permit to exist any transaction or series of related transactions (including
without limitation the purchase, sale, lease or exchange of any property,
employee compensation arrangements or rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless the terms of such
transaction (i) are no less favorable to the Company or such Restricted
Subsidiary than those that could be obtained at the time of such transaction in
a comparable transaction in arm's-length dealings with a person who is not such
an Affiliate, (ii) if such Affiliate Transaction (or series of related
Affiliated Transactions) involves aggregate payments in an amount in excess of
$1,000,000 in any one year, (A) are set forth in writing, (B) comply with
clause (i) of this Section 5.2(m) and (C) have been approved by a majority of
disinterested members of the Board of Directors of the Company, and (iii) if
such Affiliate Transaction (or series of related Affiliate Transactions)
involves aggregate payments in an amount in excess of $5,000,000 in any one
year, (A) comply with clause (ii) and (B) have been determined by a nationally
recognized investment banking firm to be fair, from a financial standpoint, to
the Company and its Restricted Subsidiaries.
(n) Sale and Leaseback Transactions. Become or remain
liable in any way, whether directly or by assignment or as a guarantor or other
contingent obligor, for the obligations of the lessee or user under any lease
or contract for the use of any real or personal property if such property is
owned on the date of this Agreement or thereafter acquired by the Company or
any of its Subsidiaries and has been or is to be sold or transferred to any
other Person and was, is or will be used by the Company or any such Subsidiary
for substantially the same purpose as such property was used by the Company or
such Subsidiary prior to such sale or transfer.
(o) Negative Pledge Limitation. Enter into any agreement
with any Person, other than the Lenders or the Agent pursuant hereto and other
than the existing provisions without amendment contained in the Lobdell
Preferred Stock Documents and in the agreements listed on Schedule 5.2(o),
which prohibits or limits the ability of the Company or any Restricted
Subsidiary to create, incur, assume or suffer to exist any Lien upon any of its
assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired.
(p) FSC Commissions. Pay or become obligated for the
payment during any fiscal year of the Company, commissions to all related
wholly owned foreign sales corporations in excess of $550,000 in aggregate
amount plus reimbursement of the reasonable administrative expenses of such
wholly owned foreign sales corporations.
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(q) Inconsistent Agreements. Enter into any agreement
containing any provision which would be violated or breached by this Agreement
or any of the transactions contemplated hereby or by performance by the Company
or any of its Subsidiaries of its obligations in connection therewith.
(r) Subsidiary Dividends. Other than those restrictions
existing as of the Effective Date without giving effect to any amendment
thereof on or after the Effective Date, permit any of its Restricted
Subsidiaries, directly or indirectly, to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction which by
its terms materially restricts the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on such Restricted Subsidiary's
Capital Stock, (ii) pay any Indebtedness owed to the Company or any of its
other Restricted Subsidiaries, (iii) make any loans or advances to the Company
or any of such other Restricted Subsidiaries or (iv) transfer any material
portion of its assets to the Company or any of such other Restricted
Subsidiaries.
(s) Preferred Stock. Make any amendment or modification
to any Lobdell Preferred Stock Document, other than any adjustment in the price
of the Lobdell Preferred Stock based on post closing adjustments and which do
not result in any additional obligations of Lobdell or of the Company or any of
its Restricted Subsidiaries, or enter into any other agreement or document
relating thereto other than the documents listed on Schedule 4.18 hereto or
make, pay, declare or authorize any dividend, payment or other distribution
with respect to any Preferred Stock or any dividend, payment or distribution in
connection with the redemption, purchase, retirement or other acquisition,
directly or indirectly, of any Preferred Stock other than as required under the
Lobdell Preferred Stock Documents listed on Schedule 4.18 hereto, provided that
no dividend, payment or other distribution in respect to the Preferred Stock or
dividend, payment or distribution in connection with the redemption, purchase,
retirement or other acquisition, directly or indirectly, of any Preferred
Stock, including those required under the Lobdell Preferred Stock Documents,
will be made if any Event of Default exists under Section 6.1(a) or would be
caused thereby.
(t) Other Indebtedness and Agreements. Make any amendment
or modification to any indenture, note or other agreement evidencing or
governing any Indebtedness (other than Indebtedness hereunder of the Company or
any of its Subsidiaries) or to the Tax Sharing Agreement, or directly or
indirectly voluntarily prepay, defease or in substance defease, purchase,
redeem, retire or otherwise acquire any such Indebtedness, (except, when no
Default or Event of Default exists, (i) to the extent described on Schedule
4.20 and (ii) for the prepayment of Subordinated Debt solely from the Net Cash
Proceeds received by the Company from the primary sale or sales of shares of
common stock (which may not be Disqualified Stock)of the Company pursuant to
any one or more public offerings thereof), or designate any Indebtedness (other
than the Indebtedness under the Loan Documents and under Rate Hedging
Agreements with Lenders) as "Designated Senior Debt" under the Senior
Subordinated Debt Documents.
(u) Management Fees. Pay any management, consulting or
similar fees or amounts to any of its Affiliates other than (i) to the Company
or a Guarantor and (ii) as described on Schedule 5.2(u), without giving effect
to any amendment or modification of the agreement described on Schedule 5.2(u),
provided that no such management, consulting or similar fees or amounts (other
than out of pocket expenses) shall be paid pursuant to this clause (ii) if any
Event of Default or Default exists or would be caused thereby, and Oxford
Investment has acknowledged and agreed that no such management, consulting or
similar fees or amounts (other than out of pocket expenses) will be so paid.
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(v) Restricted Subsidiaries. Except with the consent of
the Agent, which consent will not be unreasonably withheld, permit or suffer
any Restricted Subsidiary to not be a Wholly Owned Subsidiary, other than
Laserweld International, L.L.C. ("Laserweld") or Creative, provided that no
loans or advances to, investments in or sales or other transfers of assets to
Laser or Creative have been made by the Company or any Restricted Subsidiary at
any time on or after the Effective Date.
5.3 Additional Covenants.
(a) Other Terms. If at any time any Borrower or Guarantor
shall enter into or be a party to any instrument or agreement with respect to
any Indebtedness which in the aggregate, together with any related
Indebtedness, exceeds $500,000, including all such instruments or agreements in
existence as of the date hereof and all such instruments or agreements entered
into after the date hereof, relating to or amending any terms or conditions
applicable to any of such Indebtedness which includes covenants, terms,
conditions or defaults not substantially provided for in this Agreement or more
favorable to the lender or lenders thereunder than those provided for in this
Agreement, then the Company shall promptly so advise the Agent and the Lenders.
Thereupon, if the Agent shall request, upon notice to the Company, the Agent
and the Lenders shall enter into an amendment to this Agreement or an
additional agreement (as the Agent may request), providing for substantially
the same covenants, terms, conditions and defaults as those provided for in
such instrument or agreement to the extent required and as may be selected by
the Agent. In addition to the foregoing, any covenants or defaults or similar
provisions (which include without limitation any provisions requiring any
mandatory prepayments or defeasance under the Senior Subordinated Debt
Documents) not substantially provided for in this Agreement or more favorable
to the holders of Subordinated Debt issued in connection therewith are hereby
incorporated by reference into this Agreement to the same extent as if set
forth fully herein, and no subsequent amendment, waiver, termination or
modification thereof shall affect any such covenants, terms, conditions or
defaults as incorporated herein.
(b) Restricted and Unrestricted Subsidiaries. Neither the
Company nor any Restricted Subsidiary of the Company shall be liable at any
time, directly or indirectly, for any of the Indebtedness or other liabilities
of any such Unrestricted Subsidiary or for any Contingent Liabilities with
respect to any Unrestricted Subsidiary except as permitted by Section 5.2(e).
No Restricted Subsidiary may be designated as an Unrestricted Subsidiary at any
time without the prior written approval of the Agent and the Required Lenders.
Any Unrestricted Subsidiary may be designated as a Restricted Subsidiary by the
Company at any time provided that (i) such designation is approved by the
Agent, (ii) no Event of Default or Default exists or would be caused thereby,
(iii) immediately before and after giving effect to such designation, the
Company is able to borrow on a pro forma basis at least $10,000,000 of
additional Loans, and (iv) immediately before and after giving effect to such
designation, the pro forma Total Debt to EBITDA Ratio is at least 0.25 below
the level required under Section 5.2(b), all on a pro forma basis acceptable to
the Agent.
ARTICLE VI.
DEFAULT
6.1 Events of Default. The occurrence of any one of the following
events or conditions shall be deemed an "Event of Default" hereunder unless
waived pursuant to Section 8.1:
(a) Nonpayment. The Company shall fail to pay when due,
whether at stated maturity, by acceleration or otherwise, any principal on the
Loans or any reimbursement
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obligation under Section 3.3 (whether by deemed disbursement of a Revolving
Credit Borrowing or otherwise), or, within five days after becoming due, any
interest on the Loans or any fees or any other amount payable hereunder; or
(b) Misrepresentation. Any representation or warranty
made by the Company or any of the Guarantors in Article IV hereof, or in any
Security Document, or any other certificate, report, financial statement or
other document furnished by or on behalf of the Company or any of the
Guarantors in connection with this Agreement, shall prove to have been
incorrect in any material respect when made or deemed made; or
(c) Certain Covenants. The Company shall fail to perform
or observe any term, covenant or agreement contained in Article V hereof; or
(d) Other Defaults. Any default which remains uncured
beyond any applicable cure period shall exist under any material purchase or
tooling contract that could have a Material Adverse Effect, or the Company or
any Guarantor shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement or in any other Loan Document, and any
such failure shall remain unremedied for 15 calendar days after written notice
thereof shall have been given to the Company by the Agent; or
(e) Cross Default. The Company or any of its Restricted
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 $2,000,000; or if the Company or any of its
Restricted Subsidiaries fails to perform or observe any other term, covenant or
agreement contained in, or if any other event or condition occurs or exists
under, any agreement, document or instrument evidencing or securing any such
Indebtedness having such aggregate outstanding principal amount, or under which
any such Indebtedness was incurred, issued or created, beyond any period of
grace, if any, provided with respect thereto; or
(f) Judgments. One or more judgments or orders for the
payment of money in an aggregate amount of $2,000,000 shall be rendered against
the Company or any of its Restricted Subsidiaries, or any other judgment or
order (whether or not for the payment of money) shall be rendered against or
shall affect the Company or any of its Restricted Subsidiaries which causes or
could cause a Material Adverse Effect, and either (i) such judgment or order
shall have remained unsatisfied and the Company or such Restricted Subsidiary
shall not have taken action necessary to stay enforcement thereof by reason of
pending appeal or otherwise, prior to the expiration of the applicable period
of limitations for taking such action or, if such action shall have been taken,
a final order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such judgment or
order; or
(g) ERISA. The occurrence of a Reportable Event that
results in or could result in liability of the Company or any of its ERISA
Affiliates to the PBGC or to any Plan and such Reportable Event is not
corrected within 30 days after the occurrence thereof; or the occurrence of any
Reportable Event which could constitute grounds for termination of any Plan of
the Company or any of its ERISA Affiliates by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer any
such Plan and such Reportable Event is not corrected within 30 days after the
occurrence thereof; or the Company or any of its ERISA Affiliates shall fail to
pay when due any
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liability to the PBGC or to a Plan; or any Person engages in a Prohibited
Transaction with respect to any Plan which results in or could result in
liability of the Company, any of its ERISA Affiliates, any Plan of the Company
or any of its ERISA Affiliates or any fiduciary of any such Plan; or the PBGC
shall have instituted proceedings to terminate, or to cause a trustee to be
appointed to administer, any Plan of the Company or any of its ERISA
Affiliates; or failure by the Company or any of their ERISA Affiliates to make
a required installment or other payment to any Plan within the meaning of
Section 302(f) of ERISA or Section 412(n) of the Code that results in or could
result in liability of the Company or any of their ERISA Affiliates to the PBGC
or any Plan; or the withdrawal of the Company or any of its ERISA Affiliates
from a Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(9a)(2) of ERISA; or the Company or any of its ERISA
Affiliates becomes an employer with respect to any Multiemployer Plan without
the prior written consent of the Agent, and in each case above, such event or
condition, together with all other events or conditions, if any, could subject
the Company and its Restricted Subsidiaries to any tax, penalties or other
liability which in the aggregate may exceed $2,000,000; or
(h) Insolvency, Etc. the Company or any of its Restricted
Subsidiaries shall be dissolved or liquidated (or any judgment, order or decree
therefor shall be entered), or shall generally not pay its debts as they become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors, or shall
institute, or there shall be instituted against the Company or any of its
Restricted Subsidiaries any proceeding or case seeking to adjudicate it a
bankrupt or insolvent or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors or seeking the entry of an order for relief, or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its assets, rights, revenues or property, and,
if such proceeding is instituted against the Company or such Restricted
Subsidiary and is being contested by the Company or such Restricted 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 Restricted Subsidiary shall take any action (corporate or other) to
authorize or further any of the actions described above in this subsection; or
(i) Security Documents. Any event of default described in
any Loan Document shall have occurred and be continuing, or any material
provision of any Loan Document shall at any time for any reason cease to be
valid and binding and enforceable against any obligor thereunder, or the
validity, binding effect or enforceability thereof shall be contested by any
Person, or any obligor, shall deny that it has any or further liability or
obligation thereunder, or any material provision thereof shall be terminated,
invalidated or set aside, or be declared ineffective or inoperative or in any
way cease to give or provide to the Lenders and the Agent the benefits
purported to be created thereby; or
(j) Control. Any Change of Control shall occur.
6.2 Remedies. (a) Upon the occurrence and during the continuance
of any Event of Default, the Agent may and, upon being directed to do so by the
Required Lenders, shall by written notice to the Company (i) terminate the
Commitments or (ii) declare the outstanding principal of, and accrued interest
on, the Notes, all unpaid reimbursement obligations in respect of drawings
under Letters of Credit and all other amounts owing under this Agreement to be
immediately due and payable, or (iii) demand immediate delivery of cash
collateral, and the Company agrees to deliver such cash collateral upon demand,
in an amount equal to the maximum amount that may be available to be drawn at
any time prior to the stated expiry of all outstanding Letters of Credit, or
any one or more of the foregoing, whereupon the Commitments shall terminate
forthwith and all such amounts, including such cash
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collateral, shall become immediately due and payable, provided that in the case
of any event or condition described in Section 6.1(h) with respect to the
Company or any Guarantor, the Commitments shall automatically terminate
forthwith and all such amounts, including such cash collateral, shall
automatically become immediately due and payable without notice; in all cases
without demand, presentment, protest, diligence, notice of dishonor or other
formality, all of which are hereby expressly waived. Such cash collateral
delivered in respect of outstanding Letters of Credit shall be deposited in a
special cash collateral account to be held by the Agent as collateral security
for the payment and performance of the Company's obligations under this
Agreement to the Lenders and the Agent.
(b) The Agent may and, upon being directed to do so by the
Required Lenders, shall, in addition to the remedies provided in Section
6.2(a), exercise and enforce any and all other rights and remedies available to
it or the Lenders, whether arising under any Loan Document or under applicable
law, in any manner deemed appropriate by the Agent, including suit in equity,
action at law, or other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or agreement
contained in any Loan Document or in aid of the exercise of any power granted
in any Loan Document.
(c) Upon the occurrence and during the continuance of any
Event of Default, each Lender may at any time and from time to time, without
notice to the Company (any requirement for such notice being expressly waived
by the Company) set off and apply against any and all of the obligations of the
Company now or hereafter existing under this Agreement, whether owing to such
Lender or any other Lender or the Agent, any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Company and any property of the Company from time to time in
possession of such Lender, irrespective of whether or not such Lender shall
have made any demand hereunder and although such obligations may be contingent
and unmatured. The Company hereby grants to the Lenders and the Agent a lien
on and security interest in all such deposits, indebtedness and property as
collateral security for the payment and performance of the obligations of the
Company under this Agreement. The rights of such Lender under this Section
6.2(c) are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Lender may have.
(d) Notwithstanding anything in this Agreement or any Loan
Document to the contrary, on the Termination Date each Lender agrees,
unconditionally and irrevocably, that it will purchase, either through an
assignment or a participation or such other manner required by the Agent, an
interest in all of the Advances then outstanding, including all U.S. Advances
and all Canadian Advances (whether or not such Lender is a Canadian Lender),
such that each Lender's share of each Advance is equal to its pro rata share
thereof based on the amount its Commitment bears to the aggregate Commitment of
all Lenders. Such assignments and participations will be made pursuant to such
procedures and documents required by the Agent, and all appropriate adjustments
among the Lenders will be made. Each Lender shall be absolutely and
unconditionally obligated under this Section 6.2(d) and such obligation shall
not be affected by any circumstance, including, without limitation, (A) any
set-off, counterclaim, recoupment, defense or other right which such Lender has
or may have against the Agent, NBD Canada or the Company or any if its
Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or
continuance of a Default or an Event of Default; (C) any adverse change in the
condition (financial or otherwise) of the Company or any of its Subsidiaries;
(D) any breach of this Agreement or any other agreement by any other Lender
(provided that any Defaulting Lender shall not be entitled to receive any
payments or other transfers under this Section 6.2(d) and the Agent will make
all appropriate adjustments hereunder), the Company or any Guarantor; or (E)
any other circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing. The Borrowers shall be
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liable, jointly and severally, for any withholding taxes, if any which may
payable under Section 3.6 as a result of such participations or assignments.
6.3 Distribution of Proceeds of Collateral. All proceeds of any
realization on the collateral pursuant to the Security Documents and any
payments received by the Agent or any Lender subsequent to and during the
continuance of any Event of Default, shall be allocated and distributed by the
Agent as follows:
(a) First, to the payment of all costs and expenses and
other amounts owing to the Agent, including without limitation all attorneys'
fees, in connection with the enforcement of the Security Documents and
otherwise administering this Agreement;
(b) Second, to the payment of all fees, including
commitment fees, owing to the Lenders pursuant to this Agreement and the Notes
on a pro rata basis (other than fees which are payable solely to the Agent or
any Lender directly) in accordance with the respective Advances of the Lenders
or any other amounts owing to the Agent, for application to payment of such
liabilities;
(c) Third, to the Lenders on a pro rata basis in
accordance with the respective Advances of the Lenders consisting of interest
owing to the Lenders under this Agreement and theNotes and net obligations and
liabilities relating to Rate Hedging Agreements, for application to payment of
such liabilities;
(d) Fourth, to the Lenders on a pro rata basis in
accordance with the respective Advances of the Lenders consisting of principal
(including without limitation any cash collateral for any outstanding Letters
of Credit), for application to payment of such liabilities;
(e) Fifth, to the payment of any and all other amounts
owing to the Lenders under this Agreement on a pro rata basis in accordance
with the respective Advances of the Lenders for application to payment of such
liabilities; and
(f) Sixth, to the Company, its Restricted Subsidiaries or
such other Person as may be legally entitled thereto.
Notwithstanding the foregoing, no payments of principal, interest or fees
delivered to the Agent for the account of any Defaulting Lender shall be
delivered by the Agent to such Defaulting Lender. Instead, such payments
shall, for so long as such Defaulting Lender shall be a Defaulting Lender, be
held by the Agent, and the Agent is hereby authorized and directed by all
parties hereto to hold such funds in escrow and apply such funds as follows:
(i) First, if applicable to any payments due to
the Agent, and
(ii) Second, to Loans required to be made by such
Defaulting Lender on any borrowing date to the extent such Defaulting Lender
fails to make such Loans.
Notwithstanding the foregoing, upon the termination of all Commitments and the
payment and performance of all of the Advances and other obligations owing
hereunder (other than those owing to a Defaulting Lender), any funds then held
in escrow by the Agent pursuant to the preceding sentence shall be distributed
to each Defaulting Lender, pro rata in proportion to amounts that would be due
to each Defaulting Lender but for the fact that it is a Defaulting Lender.
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ARTICLE VII.
THE AGENT AND THE LENDERS
7.1 Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. The provisions of this Article VII are solely
for the benefit of the Agent and the Lenders, and the Borrowers shall not have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for any Borrower.
7.2 Agent and Affiliates. NBD Bank in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Agent. NBD Bank and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, and generally engage in any
kind of banking, trust, financial advisory or other business with the Company
or any of its Subsidiaries as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Lenders.
7.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Lender, and no
implied covenants, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or shall otherwise exist against the Agent. As to
any matters not expressly provided for by this Agreement (including, without
limitation, collection and enforcement actions under the Notes and the Security
Documents), the Agent shall not be required to exercise any discretion or take
any action, but the Agent shall take such action or omit to take any action
pursuant to the reasonable written instructions of the Required Lenders and may
request instructions from the Required Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, pursuant to the
written instructions of the Required Lenders (or all of the Lenders, as the
case may be, in accordance with the requirements of this Agreement), which
instructions and any action or omission pursuant thereto shall be binding upon
all of the Lenders; provided, however, that the Agent shall not be required to
act or omit to act if, in the judgment of the Agent, such action or omission
may expose the Agent to personal liability or is contrary to the Loan Documents
or applicable law.
7.4 Reliance by Agent. The Agent shall be entitled to rely upon
any certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it
to be genuine and correct and to have been sent or given by or on behalf of a
proper Person. The Agent may treat the payee of any Note as the holder thereof
unless and until the Agent receives written notice of the assignment thereof
pursuant to the terms of this Agreement signed by such payee and the Agent
receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The
Agent may employ agents (including without limitation collateral agents and
including without limitation NBD Canada with respect to administering the
Canadian Advances, acting as collateral agent in Canada and enforcing any of
the Agent's rights and remedies under the Loan Documents in Canada) and may
consult with legal counsel (who may be counsel for the Borrowers), independent
public accountants and other experts selected by it and shall not be liable to
the Lenders, except as to money or property received by it or its authorized
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agents, for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
In performing any of the functions of the Agent, NBD Canada or any other
Affiliate of the Agent shall be entitled to all of the same powers, immunities,
exculpations, indemnifications and other rights of the Agent described in this
Article VII and otherwise in the Loan Documents. It is acknowledged and agreed
that NBD Canada will be acting as collateral agent for the Lenders with respect
to all collateral in Canada, and all liens and security interests in Canada
will be in favor of NBD Canada for the benefit of itself and each of the
Lenders, and as administrative agent for payments and fundings of Canadian
Advances.
7.5 Default. The Agent shall not be deemed to have knowledge of
the occurrence of any Default or Event of Default, unless the Agent has
received written notice from a Lender or the Borrowers specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice, the Agent shall give written
notice thereto to the Lenders.
7.6 Liability of Agent. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable to the Lenders for
any action taken or not taken by it or them in connection herewith with the
consent or at the request of the Required Lenders or in the absence of its or
their own gross negligence or willful misconduct. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any recital, statement,
warranty or representation contained in any Loan Document, or in any
certificate, report, financial statement or other document furnished in
connection with this Agreement, (ii) the performance or observance of any of
the covenants or agreements of the Borrowers or any Guarantor, (iii) the
satisfaction of any condition specified in Article II hereof, or (iv) the
validity, effectiveness, legal enforceability, value or genuineness of any Loan
Document or any collateral subject thereto or any other instrument or document
furnished in connection herewith.
7.7 Nonreliance on Agent and Other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Company and its
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decision in taking or not taking
action under this Agreement. The Agent shall not be required to keep itself
informed as to the performance or observance by the Company or any of its
Subsidiaries of the Loan Documents or any other documents referred to or
provided for herein or to inspect the properties or books of the Company or any
of its Subsidiaries and, except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any information concerning the affairs, financial condition or
business of the Company or any of its Subsidiaries which may come into the
possession of the Agent or any of its affiliates.
7.8 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrowers, but without limiting any obligation
of the Borrowers to make such reimbursement), ratably according to the
respective principal amounts of the Advances then outstanding made by each of
them (or if no Advances are at the time outstanding, ratably according to the
respective amounts of their Commitments), from and against any and all claims,
damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including, without limitation, fees and disbursements of
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counsel) which may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of this Agreement or the transactions
contemplated hereby or any action taken or omitted by the Agent under this
Agreement, provided, however, that no Lender shall be liable for any portion
of such claims, damages, losses, liabilities, costs or expenses resulting from
the Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including without limitation
fees and expenses of counsel) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Agent is not reimbursed for such expenses by the
Borrowers, but without limiting the obligation of the Borrowers to make such
reimbursement. Each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any amounts owing to the Agent by the Lenders pursuant
to this Section. If the indemnity furnished to the Agent under this Section
shall, in the judgment of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity from the Lenders and cease, or not
commence, to take any action until such additional indemnity is furnished.
7.9 Successor Agent. The Agent may resign as such at any time
upon ten days' prior written notice to the Company and the Lenders. In the
event of any such resignation, the Required Lenders shall, by an instrument in
writing delivered to the Company and the Agent, appoint a successor (which
successor shall be approved by the Company provided no Default or Event of
Default then exists), which shall be a commercial bank organized under the laws
of the United States or any State thereof and having a combined capital and
surplus of at least $500,000,000. If a successor is not so appointed or does
not accept such appointment before the Agent's resignation becomes effective,
the retiring Agent may appoint a temporary successor to act until such
appointment by the Required Lenders is made and accepted or if no such
temporary successor is appointed as provided above by the retiring Agent, the
Required Lenders shall thereafter perform all the duties of the Agent hereunder
until such appointment by the Required Lenders is made and accepted. Any
successor to the Agent shall execute and deliver to the Borrowers and the
Lenders an instrument accepting such appointment and thereupon such successor
Agent, without further act, deed, conveyance or transfer shall become vested
with all of the properties, rights, interests, powers, authorities and
obligations of its predecessor hereunder with like effect as if originally
named as Agent hereunder. Upon request of such successor Agent, the Borrowers
and the retiring Agent shall execute and deliver such instruments of
conveyance, assignment and further assurance and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
such successor Agent all such properties, rights, interests, powers,
authorities and obligations. The provisions of this Article VII shall
thereafter remain effective for such retiring Agent with respect to any actions
taken or omitted to be taken by such Agent while acting as the Agent hereunder.
7.10 Sharing of Payments. The Lenders agree among themselves that,
in the event that any Lender shall obtain payment in respect of any Advance or
any other obligation owing to the Lenders under this Agreement through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share of payments received by all of the Lenders on
account of the Advances and other obligations (or if no Advances are
outstanding, ratably according to the respective amounts of the Commitments),
such Lender shall promptly purchase from the other Lenders participations in
such Advances and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all of the
Lenders share such payment in accordance with such ratable shares. The Lenders
further agree among themselves that if payment to a Lender obtained by such
Lender through the exercise of a right of set-off, banker's lien, counterclaim
or
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otherwise as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have shared the benefit of such payment shall, by repurchase
of participations theretofore sold, return its share of that benefit to each
Lender whose payment shall have been rescinded or otherwise restored. The
Borrowers agree that any Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
set-off, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Advance or other obligation in
the amount of such participation. The Lenders further agree among themselves
that, in the event that amounts received by the Lenders and the Agent hereunder
are insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Agent in such
capacity shall be paid therefrom before payment of obligations owing to the
Lenders under this Agreement. Except as otherwise expressly provided in this
Agreement, if any Lender or the Agent shall fail to remit to the Agent or any
other Lender an amount payable by such Lender or the Agent to the Agent or such
other Lender pursuant to this Agreement on the date when such amount is due,
such payments shall be made together with interest thereon for each date from
the date such amount is due until the date such amount is paid to the Agent or
such other Lender at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Lenders and the Agent that if the Agent shall
engage in any other transactions with the Borrowers and shall have the benefit
of any collateral or security therefor which does not expressly secure the
obligations arising under this Agreement except by virtue of a so-called
dragnet clause or comparable provision, the Agent shall be entitled to apply
any proceeds of such collateral or security first in respect of the obligations
arising in connection with such other transaction before application to the
obligations arising under this Agreement.
ARTICLE VIII.
MISCELLANEOUS
8.1 Amendments, Etc. (a) No amendment, modification, termination
or waiver of any provision of this Agreement nor any consent to any departure
therefrom shall be effective unless the same shall be in writing and signed by
the Required Lenders and, to the extent any rights or duties of the Agent may
be affected thereby, the Agent, provided, however, that no such amendment,
modification, termination, waiver or consent shall, without the consent of the
Agent and all of the Lenders, (i) authorize or permit the extension of time
for, or any reduction of the amount of, any payment of the principal of, or
interest on, the Notes or any Letter of Credit reimbursement obligation, or any
fees or other amount payable hereunder, (ii) amend or extend the respective
Commitments of any Lender set forth on the signature pages hereof or modify the
provisions of this Section regarding the taking of any action under this
Section or the provisions of Section 6.3 or Section 7.10 or the definition of
Required Lenders or any provision of this Agreement requiring the consent of
all of the Lenders, (iii) provide for the discharge of any material Guarantor
under the Guaranties or the release of any substantial amount of the collateral
subject to any Security Document, other than the release of Liens on Collateral
that is permitted to be sold by this Agreement, and the Agent is hereby
authorized to release any such Liens, or (iv) modify any other provision of
this Agreement which by its terms requires the consent of all of the Lenders.
(b) Any such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(c) Notwithstanding anything herein to the contrary, no
Defaulting Lender shall be entitled to vote (whether to consent or to withhold
its consent) with respect to any amendment,
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modification, termination or waiver of any provision of this Agreement or any
departure therefrom or any direction from the Lenders to the Agent, and, for
purposes of determining the Required Lenders at any time, the Commitments and
the Advances of each Defaulting Lenders shall be disregarded.
8.2 Notices. (a) Except as otherwise provided in Section 8.2(c)
hereof, all notices and other communications hereunder shall be in writing and
shall be delivered or sent to the Borrowers at 2000 N. Woodward Avenue,
Bloomfield Hills, Michigan 48304, Attention: President, Facsimile No. (810)
540-7280, Facsimile Confirmation No. (810) 540-0031, and to the Agent and the
Lenders at the respective addresses for notices set forth on the signatures
pages hereof, or to such other address as may be designated by the Borrowers,
the Agent or any Lender by notice to the other parties hereto. All notices and
other communications shall be deemed to have been given at the time of actual
delivery thereof to such address, or, unless sooner delivered, (i) if sent by
certified or registered mail, postage prepaid, to such address, on the third
day after the date of mailing, or (ii) if sent by facsimile transmission, upon
confirmation of receipt by telephone at the number specified for confirmation,
provided, however, that notices to the Agent shall not be effective until
received. Each Borrowing Subsidiary agrees that the Company may give any
notices or other requests on its behalf under this Agreement, including without
limitation requests for Advances, and the Borrowing Subsidiary will be bound
thereby.
(b) Notices by the Borrowers to the Agent with respect to
terminations or reductions of the Commitments pursuant to Section 2.2, requests
for Borrowings pursuant to Section 2.4, requests for continuations or
conversions of Borrowings pursuant to Section 2.7 and notices of prepayment
pursuant to Section 3.1 shall be irrevocable and binding on the Borrowers.
(c) Any notice to be given by the Borrowers to the Agent
pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by the Agent or
any Lender hereunder, may be given by telephone, and all such notices must be
immediately confirmed in writing in the manner provided in Section 8.2(a). Any
such notice given by telephone shall be deemed effective upon receipt thereof
by the party to whom such notice is to be given. The Borrowers shall indemnify
and hold harmless the Lenders and the Agent from any and all losses, damages,
liabilities and claims arising from their good faith reliance on any such
telephone notice.
8.3 No Waiver By Conduct; Remedies Cumulative. No course of
dealing on the part of the Agent or any Lender, nor any delay or failure on the
part of the Agent or any Lender in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice the Agent's or such Lender's rights and remedies hereunder;
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Agent or any Lender under any Loan
Document is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy granted thereunder or now or hereafter existing under any applicable
law. Every right and remedy granted by any Loan Document or by applicable law
to the Agent or any Lender may be exercised from time to time and as often as
may be deemed expedient by the Agent or any Lender and, unless contrary to the
express provisions of any Loan Document, irrespective of the occurrence or
continuance of any Default or Event of Default.
8.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of any Borrower or
Guarantor made herein or in any Security Document or in any certificate,
report, financial statement or other document furnished by or on behalf of any
Borrower or Guarantor in connection with this Agreement shall be deemed to be
material and to
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have been relied upon by the Lenders, notwithstanding any investigation
heretofore or hereafter made by any Lender or on such Lender's behalf, and
those covenants and agreements of the Borrowers set forth in Sections 3.8, 3.10
and 8.5 hereof shall survive the repayment in full of the Advances and the
termination of the Commitments.
8.5 Expenses; Indemnification. (a) The Borrowers jointly and
severally agree to pay, or reimburse the Agent for the payment of, on demand,
(i) the reasonable fees and expenses of counsel to the Agent, including without
limitation the fees and expenses of Dickinson, Wright, Moon, Van Dusen &
Freeman, in connection with the preparation, execution, delivery and
administration of the Loan Documents and in connection with advising the Agent
as to its rights and responsibilities with respect thereto, and in connection
with any amendments, waivers or consents in connection therewith, (ii) all
stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing or recording of the Loan
Documents (or the verification of filing, recording, perfection or priority
thereof) or the consummation of the transactions contemplated hereby, and any
and all liabilities with respect to or resulting from any delay in paying or
omitting to pay such taxes or fees, (iii) all reasonable costs and expenses of
the Agent and the Lenders (including reasonable fees and expenses of counsel
and whether incurred through negotiations, legal proceedings or otherwise)) in
connection with any Default or Event of Default or the enforcement of, or the
exercise or preservation of any rights under, any Loan Document or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in connection with any Event of Default and (iv)
all reasonable costs and expenses of the Agent (including reasonable fees and
expenses of counsel) in connection with any action or proceeding relating to a
court order, injunction or other process or decree restraining or seeking to
restrain the Agent from paying any amount under, or otherwise relating in any
way to, any Letter of Credit and any and all costs and expenses which any of
them may incur relative to any payment under any Letter of Credit.
(b) The Borrowers jointly and severally hereby indemnify
and agree to hold harmless the Lenders and the Agent, and their respective
officers, directors, employees and agents, from and against any and all claims,
damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever which the Lenders or the Agent or any such Person may incur or which
may be claimed against any of them by reason of or in connection with any
Letter of Credit, and neither any Lender nor the Agent or any of their
respective officers, directors, employees or agents shall be liable or
responsible for: (i) the use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary in connection therewith; (ii) the
validity, sufficiency or genuineness of documents or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (iii) payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; (iv) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Company shall not be required to indemnify the
Lenders and the Agent and such other persons, and the Lenders shall be liable
to the Company to the extent, but only to the extent, of any direct, as opposed
to consequential or incidental, damages suffered by the Company which were
caused by (A) the Agent's wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and
conditions of such Letter of Credit, or (B) the payment by the Agent to the
beneficiary under any Letter of Credit against presentation of documents which
do not comply with the terms of the Letter of Credit to the extent, but only to
the extent, that such payment constitutes gross negligence of willful
misconduct of the Agent. It
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is understood that in making any payment under a Letter of Credit the Agent
will rely on documents presented to it under such Letter of Credit as to any
and all matters set forth therein without further investigation and regardless
of any notice or information to the contrary, and such reliance and payment
against documents presented under a Letter of Credit substantially complying
with the terms thereof shall not be deemed gross negligence or willful
misconduct of the Agent in connection with such payment. It is further
acknowledged and agreed that the Company may have rights against the
beneficiary or others in connection with any Letter of Credit with respect to
which the Lenders are alleged to be liable and it shall be a precondition of
the assertion of any liability of the Lenders under this Section that the
Company shall first have exhausted all remedies in respect of the alleged loss
against such beneficiary and any other parties obligated or liable in
connection with such Letter of Credit and any related transactions.
(c) Each Borrower hereby jointly and severally indemnifies
and agrees to hold harmless the Lenders and the Agent, and their respective
officers, directors, employees and agents, from and against any and all claims,
damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including reasonable attorneys fees and disbursements incurred in
connection with any investigative, administrative or judicial proceeding
whether or not such Person shall be designated as a party thereto) which the
Lenders or the Agent or any such Person may incur or which may be claimed
against any of them by reason of or in connection with entering into this
Agreement or the transactions contemplated hereby, including without limitation
those arising in connection with or relating to any acquisition and the
transactions contemplated thereby and under Environmental Laws; provided,
however, that the Borrowers shall not be required to indemnify any such Lender
and the Agent or such other Person, to the extent, but only to the extent, that
such claim, damage, loss, liability, cost or expense is attributable to the
gross negligence or willful misconduct of such Lender or the Agent, as the case
may be.
(d) In consideration of the execution and delivery of this
Agreement by each Lender and the extension of the Commitments, each Borrower
hereby jointly and severally indemnifies, exonerates and holds the Agent, each
Lender and each of their respective affiliates, officers, directors, employees
and agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "Indemnified Liabilities"), incurred
by the Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(i) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of any Advance;
(ii) the entering into and performance of this
Agreement and any other agreement or instrument executed in connection herewith
by any of the Indemnified Parties (including any action brought by or on behalf
of any Borrower as the result of any determination by the Required Lenders not
to fund any Advance unless such determination is determined by a final non
appealable order by of competent jurisdiction to be wrongful);
(iii) any investigation, litigation or proceeding
related to any acquisition or proposed acquisition by the Company or any of its
Subsidiaries of any portion of the stock or assets of any Person or any merger,
investment, issuance of Capital Stock or any transaction related
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thereto by the Company or any of its Subsidiaries, whether or not the Agent or
such Lender is party thereto;
(iv) any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or other matter
relating to the protection of the environment or the release by the Company or
any of its Subsidiaries of any Hazardous Material; or
(v) the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission, discharging or releasing from,
any real property owned or operated by the Company or any of its Subsidiaries
of any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any Environmental
Law), regardless of whether caused by, or within the control of, the Company or
such Subsidiary, except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the activities of the
Indemnified Party on the property of the Company or such Subsidiary conducted
subsequent to a foreclosure on such property by the Lenders or by reason of the
relevant Indemnified Party's gross negligence or willful misconduct or breach
of this Agreement, and if and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Company shall be
obligated to indemnify the Indemnified Parties for all Indemnified Liabilities
subject to and pursuant to the foregoing provisions, regardless of whether the
Company or any of its Subsidiaries had knowledge of the facts and circumstances
giving rise to such Indemnified Liability.
8.6 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that the Borrowers may not, without the prior
consent of the Lenders, assign their rights or obligations hereunder or under
the Notes or any Security Document and the Lenders shall not be obligated to
make any Advance hereunder to any entity other than the Borrowers.
(b) Any Lender may sell to any financial institution or
institutions, and such financial institution or institutions may further sell,
a participation interest (undivided or divided) in, the Advances and such
Lender's rights and benefits under the Loan Documents, and to the extent of
that participation interest such participant or participants shall have the
same rights and benefits against the Borrowers under Section 3.8, 3.10 and
6.2(c) as it or they would have had if such participant or participants were
the Lender making the Advances to the Borrowers hereunder, provided, however,
that (i) such Lender's obligations under this Agreement shall remain unmodified
and fully effective and enforceable against such Lender, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of its Notes for
all purposes of this Agreement, (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
(v) such Lender shall not grant to its participant any rights to consent or
withhold consent to any action taken by such Lender or the Agent under this
Agreement other than action requiring the consent of all of the Lenders
hereunder.
(c) The Agent from time to time in its sole discretion may
appoint agents for the purpose of servicing and administering this Agreement
and the transactions contemplated hereby and enforcing or exercising any
rights or remedies of the Agent provided under any Loan Documents or otherwise.
In furtherance of such agency, the Agent may from time to time direct that the
Borrowers provide notices, reports and other documents contemplated by this
Agreement (or duplicates thereof) to
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such agent. The Borrowers hereby consent to the appointment of such agent and
agrees to provide all such notices, reports and other documents and to
otherwise deal with such agent acting on behalf of the Agent in the same manner
as would be required if dealing with the Agent itself.
(d) Each Lender may, with the prior consent of the Company
(which shall not be unreasonably withheld and may not be withheld if an Event
of Default has occurred and is continuing) and the Agent, assign to one or more
banks or other entities all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Notes held by it); provided,
however, that (i) each such assignment shall be of a uniform, and not a
varying, percentage of all rights and obligations, (ii) except in the case of
an assignment of all of a Lender's rights and obligations under this Agreement,
the amount of the Commitment of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000, and in integral multiples of $1,000,000 thereafter, or such lesser
amount as the Company and the Agent may consent, (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance in the form of Exhibit
K hereto (an "Assignment and Acceptance"), together with any Note or Notes
subject to such assignment and a processing and recordation fee of $4,000, and
(iv) any Lender may without the consent of the Company or the Agent, and
without paying any fee, assign to any Affiliate of such Lender that is a bank
or financial institution all of its rights and obligations under this
Agreement. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(e) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i)
other than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company and its Subsidiaries or the performance or
observance by the Borrowers and the Guarantors of any of their obligations
under this Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof,
together with such powers and discretion as are reasonably incidental thereto;
and (vi) such
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assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.
(f) The Agent shall maintain at its address designated on
the signature pages hereof a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any Note or
Notes subject to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Company. Within five Business Days after its receipt of
such notice, the Borrowers, at its own expense, shall execute and deliver to
the Agent in exchange for the surrendered Note or Notes a new Note or Notes to
the order of such assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder, a new Note to the order of the assigning
Lender in an amount equal to the Commitment retained by it hereunder. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit K hereto.
(h) The Borrowers shall not be liable for any costs or
expenses of any Lender in effectuating any participation or assignment under
this Section 8.6.
(i) The Lenders may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.6, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company and its Subsidiaries.
(j) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in, or assign,
all or any portion of its rights under this Agreement (including, without
limitation, the Advances owing to it and the Note or Notes held by it) in favor
of any Federal Reserve Lender in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; provided that such creation of a
security interest or assignment shall not release such Lender from its
obligations under this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.8 Governing Law. This Agreement is a contract made under, and
shall be governed by and construed in accordance with, the law of the State of
Michigan applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State. The
Borrowers and the Lenders further agrees that any legal or equitable action or
proceeding with respect to any Loan Document or the transactions contemplated
hereby shall be brought in any court of the State of Michigan, or in any court
of the United States of America sitting in Michigan,
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and each of the Borrowers and the Lenders hereby submits to and accepts
generally and unconditionally the jurisdiction of those courts with respect to
its Person and property, and, in the case of each Borrower irrevocably appoints
the Company as its agent for service of process and irrevocably consents to the
service of process in connection with any such action or proceeding by personal
delivery to such agent or to the Company, as the case may be, or by the mailing
thereof by registered or certified mail, postage prepaid to the Company at its
address for notices pursuant to Section 8.2. The Borrowers shall at all times
maintain such an agent in Michigan for such purpose and shall notify the
Lenders and the Agent of such agent's address in Michigan within ten days of
any change of address. Nothing in this paragraph shall affect the right of the
Lenders and the Agent to serve process in any other manner permitted by law or
limit the right of the Lenders or the Agent to bring any such action or
proceeding against the Borrowers or any property in the courts of any other
jurisdiction. The Borrowers and the Lenders hereby irrevocably waives any
objection to the laying of venue of any such action or proceeding in the above
described courts.
8.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.
8.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any Person, or which such Person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.
8.11 Integration and Severability. The Loan Documents embody the
entire agreement and understanding between the Borrowers, the Agent and the
Lenders, and supersede all prior agreements and understandings, relating to the
subject matter hereof. In case any one or more of the obligations of the
Borrowers under the Loan Document shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Borrowers shall not in any way be affected or impaired
thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of the Borrowers under any Loan Document in any other jurisdiction.
8.12 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or such condition exists.
8.13 Interest Rate Limitation. Notwithstanding any provisions of
any Loan Document, in no event shall the amount of interest paid or agreed to
be paid by the Borrowers exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of any Loan Document at the time
performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to
be fulfilled shall be reduced to an amount computed at the highest rate of
interest permissible under applicable law, and if for any reason whatsoever
any Lender shall ever receive as interest an amount which would be deemed
unlawful under such applicable law such interest shall be automatically applied
to the payment of principal of the Advances outstanding hereunder (whether or
not then due and payable)
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and not to the payment of interest, or shall be refunded to the relevant
Borrower if such principal and all other obligations of the Borrowers to the
Lenders have been paid in full.
8.14 Judgment and Payment. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing hereunder by any
Borrower in one currency into another currency, such Borrower agrees, to the
fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the relevant Lender could purchase the first currency
with such other currency for the first currency on the Business Day immediately
preceding the day on which the final judgment is given.
(b) The obligations of any Borrower in respect of any sum
due to any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any payment obligation or
judgment in a currency (the "Payment Currency") other than applicable currency,
be discharged only to the extent that, on the Business Day following receipt by
the Applicable Creditor of any sum adjudged to be so due in the Payment
Currency, the Applicable Creditor may in accordance with normal banking
procedures in the relevant jurisdiction purchase applicable currency with the
Payment Currency; if the amount of applicable currency so purchased is less
than the sum originally due to the Applicable Creditor in applicable currency,
each Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Applicable Creditor against such loss. The
obligations of the Borrowers contained in this Section 8.14 shall survive the
termination of this Agreement and the payment of all other amounts owing
hereunder.
8.15 WAIVER OF JURY TRIAL. THE LENDERS AND THE AGENT AND THE
BORROWERS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER ANY LENDER, THE
AGENT, NOR THE BORROWERS SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE
PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY ANY PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
SUCH PARTY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the 24th day of June 1997, which shall be the
Effective Date of this Agreement.
OXFORD AUTOMOTIVE, INC.
By: [SIG]
----------------------------------------
Its: Vice President Financial Operations
------------------------------------
BMG NORTH AMERICA LIMITED
By: [SIG]
----------------------------------------
Its: Chief Financial Officer
------------------------------------
<PAGE> 79
Address for Notices: NBD BANK, as a Lender and as Agent
NBD Bank
611 Woodward Avenue By: [SIG]
------------------------------------
Detroit, Michigan 48226
Its: Authorized Agent
---------------------------
Attention: Rick Ellis
Facsimile No.: (313) 226-0855
Facsimile
Confirmation No.: (313) 225-3743
Commitment: $110,000,000
Percentage of
Total Commitments: 100%
Applicable Lending Office:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Address for Notices: FIRST CHICAGO NBD BANK, CANADA, as
the Affiliate designated by NBD Bank
to make Canadian Advances on its
behalf and as Agent for the purposes
specified in this Agreement
161 Bay Street, Suite 4240
Toronto, Ontario M5J 2S1 By: [SIG]
------------------------------------
Attention: Michael Bauer
Its: Authorized Agent
---------------------------
Facsimile No.: (416) 363-7574
Facsimile
Confirmation No.: (416) 865-0466
<PAGE> 80
EXHIBITS TO THE CREDIT AGREEMENT
1. Exhibit A: Filed with this Amendment No. 1
2. Exhibit B: Previously filed as Exhibit 4.3 to the Registration
Statement
3. Exhibit C: Filed with this Amendment No. 1
4. Exhibit D: Previously filed as Exhibit 4.11 to the Registration
Statement
5. Exhibit E: Previously filed as Exhibit 4.8 to the Registration
Statement
6. Exhibit F: Filed with this Amendment No. 1
7. Exhibit G: Filed with this Amendment No. 1
8. Exhibit H: Filed with this Amendment No. 1
9. Exhibit I: Filed with this Amendment No. 1
10. Exhibit J: Filed with this Amendment No. 1
11. Exhibit K: Filed with this Amendment No. 1
<PAGE> 81
EXHIBIT A
BORROWING BASE CERTIFICATE
June 24, 1997
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Reference is made to the Credit Agreement dated as of June 24, 1997 (the
"Credit Agreement") among Oxford Automotive, Inc., a corporation incorporated
under the laws of the State of Michigan (the "Company"), the Borrowing
Subsidiaries party thereto, the lenders parties thereto (the "Lenders") and you
as agent for the Lenders (the "Agent"). Capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Credit
Agreement.
The Company hereby represents and warrants to the Agent and
the Lenders that the following computations of the Borrowing Base, and the
related supporting schedules attached hereto, and of the mandatory prepayment
required pursuant to Section 3.1(c) of the Credit Agreement are true and
correct as of the close of business on ___________, ____ and are in conformity
with the terms and conditions of the Credit Agreement:
Borrowing Base
1. Accounts Receivable:
(a) Aggregate Accounts Receivable . . . . . . . $ _______
(b) Less: Ineligible Accounts Receivable . . . $ _______
(c) Eligible Accounts Receivable . . . . . . . $ _______
(d) 85% of Eligible Accounts Receivable . . . . $ _______
<PAGE> 82
2. Inventory:
(a) Aggregate Inventory . . . . . . . . . . . . $ _______
(b) Less: Ineligible Inventory . . . . . . . . $ _______
(c) Eligible Inventory . . . . . . . . . . . . $ _______
(d) 50% of Eligible Inventory . . . . . . . . . $ _______
(e) Lesser of item 3(d) and $5,000,000 . . . . $ _______
3. Eligible Net Tooling in Process:
(a) Aggregate Net Tooling in Process . . . . . $ _______
(b) Less: Ineligible Net Tooling in Process . $ _______
(c) Eligible Net Tooling in Process . . . . . $ _______
(d) 50% of Eligible Net Tooling in Process . . $ _______
(e) Lesser of item 3(d) and $5,000,000 . . . . $ _______
4. Borrowing Base (item 1(d) plus item 2(e)
plus item 3(e) . . . . . . . . . . . . . . . . . . $ =======
Determination of Revolving Credit Loan Prepayment
-------------------------------------------------
1. Aggregate Borrowing Base (item 4 above) . . . . . . $ _______
2. Less: Aggregate principal amount of Revolving
Credit Advances Outstanding as of month
end . . . . . . . . . . . . . . . . . . . . $ _______
3. Excess (or deficiency) in Borrowing Base
(if deficiency, prepayment required in amount
BORROWING BASE CERTIFICATE
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of deficiency) . . . . . . . . . . . . . . . . . . $ =======
The Company hereby further represents and warrants to the
Agent for the benefit of the Lenders that as of _______________, 19___:
A. The representations and warranties contained in Article
IV of the Credit Agreement, and in the Security Documents, are true and correct
on and as of such date, as if such representations and warranties were made on
and as of such date. For purposes of this certificate the representations and
warranties contained in Section 4.6 of the Credit Agreement 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)
of the Credit Agreement.
BORROWING BASE CERTIFICATE
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B. No Event of Default and no Default has occurred and is
continuing.
OXFORD AUTOMOTIVE, INC.
By:____________________________________
Its:__________________________________
BORROWING BASE CERTIFICATE
- 4 -
<PAGE> 85
EXHIBIT C
ENVIRONMENTAL CERTIFICATE
In consideration of and in order to induce NBD BANK, a Michigan banking
corporation, as agent (in such capacity, the "Agent") and the Lenders (the
"Lenders"), to loan money, extend credit, or enter into certain other
transactions pursuant to a Credit Agreement dated as of June __, 1997 (as
amended or modified from time to time, including any agreement entered into in
substitution therefor, the "Credit Agreement") among the Lenders, the Agent and
OXFORD AUTOMOTIVE, INC. (the "Borrower"), Borrower and Guarantor (if signed by
Guarantor below) make the representations, warranties and covenants set forth
in this Environmental Certificate (the "Certificate") to the Agent and the
Lenders with respect to all Property and activities of Borrower and Guarantor.
If there is more than one Borrower or Guarantor, the words "Borrower" and
"Guarantor" shall apply to each such party, individually and collectively.
I. DEFINITIONS.
A. "Environmental Law(s)" means any law, regulation, rule, policy,
ordinance or similar requirement which governs or protects the
environment, enacted from time to time by the United States, any state,
or any county, city or agency or subdivision of the United States or its
political subdivisions.
B. "Hazardous Material" means any material or substance:
(1) which is or becomes defined as a hazardous substance,
pollutant, or contaminant, pursuant to the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") (42 USC Section 9601
et. seq.) as amended and regulations promulgated under it; (2)
containing gasoline, oil, diesel fuel or other petroleum products; (3)
which is or becomes defined as hazardous waste pursuant to the Resource
Conservation and Recovery Act ("RCRA") (42 USC Section 6901 et. seq.)
as amended and regulations promulgated under it; (4) containing
polychlorinated biphenyls (PCBs); (5) containing asbestos; (6) which is
radioactive; (7) the presence of which requires investigation or
remediation under any Environmental Law; or (8) which is or becomes
defined or identified as a hazardous waste, hazardous substance,
hazardous or toxic chemical, pollutant, contaminant, or biologically
hazardous material under any Environmental Law.
C. "Indebtedness" means all loans made or credit extended to
Borrower by any of the Lenders at any time.
D. "Property" means all tangible property now or later owned,
operated, leased or used by Borrower or Guarantor, including but not
limited to, land (including soil, ground water and surface water located
on, in or under the such property), buildings, equipment and inventory.
<PAGE> 86
II. BORROWER'S REPRESENTATIONS AND WARRANTIES.
Except as set forth on the attached SCHEDULE A, to the best of their knowledge
after their thorough review, Borrower and Guarantor represent and warrant to
the Agent and the Lenders as follows:
A. REGULATORY COMPLIANCE; ENFORCEMENT; LITIGATION. (1) They are in
substantial compliance with all Environmental Laws; (2) they have never
received any notice of any violations of any Environmental Law; (3) no
demand, claim, suit, administrative action, or criminal action whether
brought by any government authority or private party, arising under or
relating to any Environmental Law is pending or threatened against
Borrower or Guarantor, or with respect to the Property or any portion
thereof; and (4) they have not used Hazardous Materials on or about the
Property or any portion thereof in any manner in material violation of
any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials and no prior owner of the
Property or any portion thereof, or any existing or prior tenant or
occupant, has used Hazardous Materials on or about the Property or
any portion thereof in any manner which violates any Environmental Law
governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous
Materials.
B. PERMITS AND LICENSES. All federal, state and local permits,
licenses or authorizations required by Environmental Law(s) for
present use of the Property or any portion thereof or activities of
Borrower or Guarantor have been obtained, are presently in effect and
are listed on the attached SCHEDULE A. All federal, state and local
permits, licenses or authorizations required by Environmental Law(s)
for any permitted or licensed activities or uses that are anticipated
at the Property or any portion thereof and for which permits or
licenses have been sought but not yet received are also listed on the
attached SCHEDULE A. There is and has been substantial compliance with
all such permits, licenses or authorizations.
C. CONTAMINATION/RELEASE. There has not been in the past, nor
are there currently, any releases, spills, discharges or other
form of contamination on the Property the aggregate cost of
which to remediate exceeded or will exceed $100,000.00, nor is there
any accumulation, storage or disposal as defined in RCRA (or any other
Environmental Law, of Hazardous Materials on, under or about the
Property which violates any Environmental Law. No portion of the
Property appears either on the National Priorities List (as defined
under CERCLA) or on any state listing which identifies sites for
remedial clean-up or investigatory actions. There are no environmental
liens on the Property or any portion thereof.
D. FACILITIES AND PROGRAMS. The Property has adequate water
supply, sewage and waste disposal facilities or will have such
facilities upon completion of contemplated
ENVIRONMENTAL CERTIFICATE
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<PAGE> 87
improvements. The appropriate operations and maintenance programs,
contingency and emergency plans for environmental hazards are in place.
E. The answers set forth in the CUSTOMER ENVIRONMENTAL
QUESTIONNAIRE as provided to the Agent are incorporated by reference and
such responses are accurate and complete.
III. AFFIRMATIVE COVENANTS. Borrower and Guarantor shall:
A. Do all things necessary to assure that the representations,
warranties and covenants set forth in this Certificate are met and
continue to be accurate and correct.
B. Assure that all individuals or entities acting on their behalf
comply with the obligations under this Certificate.
C. Conduct periodic reviews of the use of the Property and the
activities on it to assure compliance with the obligations under this
Certificate.
D. Promptly (i) notify the Agent in writing of any occurrence,
development, claim, suit, administrative action, permit revocation or
denial filed by or against Borrower or Guarantor that would cause any
representation, warranty or covenant set forth in this Certificate to be
incorrect, and (ii) take steps necessary to mitigate the effect of such
occurrence, development, claim, suit, administrative action or permit
revocations or denials.
E. Promptly provide the Agent with all non-privileged information,
questionnaires,and copies of: environmental compliance reports,
policies, handbooks, litigation audit letters, government inspection
reports and environmental assessment reports, whenever prepared, that
are requested by the Agent in accordance with the Agent's or any
Lender's environmental due diligence procedures.
F. Keep or cause the Property to be kept free of Hazardous
Materials except to the extent that such Hazardous Materials are stored
and/or used in compliance with all applicable Environmental Laws; and,
without limiting the foregoing, not cause or permit the Property or any
portion thereof to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce, or process
Hazardous Materials, except in compliance with all applicable
Environmental Laws; and not cause or permit, as a result of any
intentional or unintentional act or omission on the part of Borrower or
Guarantor or any tenant, subtenant or occupant, a release, spill, leak
or emission of Hazardous Materials on, under or about the Property or
any portion thereof or onto any other contiguous property in
violation of Environmental Laws.
G. Conduct and complete all investigations, environmental site
assessments, sampling, and testing, and all remedial and removal
actions necessary to clean up and remove all
ENVIRONMENTAL CERTIFICATE
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<PAGE> 88
Hazardous Materials on, under, or about the Property or any portion
thereof to the extent required by all applicable Environmental Laws and
in accordance with the final orders and directives of all federal, state
and local governmental authorities, subject to Borrower's and
Guarantor's right to appeal and contest any such order or directive.
Such testing and remedial and removal actions shall include those
required by federal and state regulations governing underground storage
tank systems.
Borrower and Guarantor shall, upon request, demonstrate their compliance
with this Section III.G to the satisfaction of the Agent and the
Required Lenders. To the extent that non-privileged written
documentation such as reports, studies, or sampling results from the
investigation(s) have been or are produced, Borrower and Guarantor shall
provide copies of such documentation to the Agent (with sufficient
copies for each Lender). Borrower or Guarantor shall demonstrate to the
Agent and the Required Lenders to each of their satisfaction that the
value of any Property pledged or mortgaged to the Agent, for the benefit
of the Lenders, is not materially adversely affected by releases, spills
or discharges occurring subsequent to the initial extension of credit
under the Credit Agreement. If Borrower or Guarantor fails to conduct an
environmental assessment to the satisfaction of the Agent and the
Required Lenders as required under this Section III.G., or fails to
provide the Agent (with sufficient copies for each Lender) with copies
of the written documentation referenced above, then the Agent may at its
option and at the expense of Borrower or Guarantor conduct such
assessment, without waiver of its other rights and remedies; provided
that the Agent provides notice to Borrower and Guarantor of its
intent to conduct such assessment.
Any such assessment conducted by the Agent shall be conducted solely for
the benefit of and to protect the interests of the Agent and the Lenders
and shall not be relied upon by Borrower or Guarantor or any third party
for any purpose whatsoever, including but not limited to Borrower's,
Guarantor's or any third party's obligation, if any, to conduct an
independent environmental investigation. By conducting any such
assessment, neither the Agent nor any Lender assumes any control over
the environmental affairs or operations of Borrower or Guarantor or
assumes any obligation or liability to Borrower or Guarantor or any
third party.
IV. NEGATIVE COVENANT. Borrower and Guarantor shall not take any action or
allow the Property or any portion thereof to be used in such a manner that any
representation, warranty or covenant set forth in this Certificate becomes
inaccurate, incorrect or results in non-compliance.
V. DEFAULT AND REMEDIES. If any of the following events occur:
A. Borrower or Guarantor makes any materially incorrect or
misleading representation, warranty or certification to the Agent or any
Lender or provides materially incorrect information to the Agent or
any Lender in connection with this Certificate;
ENVIRONMENTAL CERTIFICATE
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<PAGE> 89
B. Borrower or Guarantor defaults under the terms of this
Certificate;
then, except to the extent this provision is expressly modified by
language in the loan documents referring to this Certificate, whether or
not the Lenders have made demand, the underlying credit facilities shall
terminate and all borrowings under them shall become due immediately at
the Required Lenders' option upon thirty (30) days notice by the Agent
to Borrower.
VI. RIGHT OF ENTRY. Borrower and Guarantor grant the Agent, its employees,
agents and contractors the right to enter the Property for the purpose of
conducting at the expense of Borrower, an environmental site assessment,
sampling, testing, remedial, removal and other actions necessary to investigate
or clean up and remove Hazardous Materials on, under or about the Property in
accordance with Section III.G. above prior to or during any loan workout,
liquidation of collateral, mortgage foreclosure, expiration of a redemption
period, abandonment of the Property or any environmental litigation brought
against the Agent or any Lender regarding the Property or any portion thereof.
The Agent shall notify Borrower or Guarantor prior to its entry and shall use
its best efforts to not disturb any ongoing operations on the Property.
Borrower or Guarantor at the request of the Agent shall execute any consultant
contracts, waste manifests or notices necessary to effectuate the terms of this
section. Any expenditures by Agent for activities performed by the Agent in
accordance with this section shall be considered an additional advance under
the loan or extension of credit.
VII. INDEMNIFICATION. Subject to the limitations set forth below, Borrower
and Guarantor shall defend, indemnify and hold harmless the Agent and the
Lenders, and each of their successors and assigns, employees, agents, officers
and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs or expenses, including, without
limitation, attorneys' and consultants' fees, investigation and laboratory fees,
court costs and litigation expenses, known or unknown, contingent or otherwise
(individually and collectively, the "Losses"), arising out of or in any way
related to (a) the presence, disposal, release or threatened release of any
Hazardous Materials on, over, under, from or affecting the Property or any
portion thereof or the soil, water, vegetation, buildings, personal property,
persons or animals; (b) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Materials on the Property; (c) any claim, demand, notice or lawsuit brought or
threatened, settlement reached or government order relating to such Hazardous
Materials with respect to the Property or any portion thereof regulated
wetlands on the Property or any portion thereof; and/or (d) any violation of
laws, orders, regulations, requirements or demands of government authorities,
which are based upon or in any way related to such Hazardous Materials used on
the Property or regulated wetlands on the Property, unless the Losses arise out
of the gross negligence or willful misconduct of the Agent or Lenders or any of
their successors, assigns, officers, employees and directors. The indemnity
obligations under this paragraph are specifically limited as follows:
ENVIRONMENTAL CERTIFICATE
-5-
<PAGE> 90
(i) Borrower and Guarantor shall have no indemnity obligations with
respect to Hazardous Materials that are first introduced, as evidenced
by reliable documentation, to the Property or any part of the Property
subsequent to the date that Borrower's and Guarantor's interest in and
possession of the Property or such part of the Property shall have ended
or have been fully terminated by foreclosure of any mortgage held by the
Agent or any Lender or acceptance by the Agent or any Lender of a deed
in lieu of foreclosure or other collateral liquidation procedure; and
(ii) Borrower and Guarantor shall have no indemnity obligation with
respect to Hazardous Materials that are first introduced, as evidenced
by reliable documentation, to the Property solely by the Agent or the
Lenders, or their successors or assigns.
Borrower and Guarantor agree that in the event any mortgage held by the Agent
or any Lender is foreclosed or Borrower or Guarantor tender a deed in lieu of
foreclosure, Borrower and Guarantor shall deliver the Property to the Agent or
any such Lender free of any and all Hazardous Materials which are then required
to be removed (whether over time or immediately) pursuant to applicable
Environmental Laws affecting the Property or any portion thereof.
Notwithstanding the provisions of Section VIII. below, the provisions of this
Section VII. shall be in addition to any and all other obligations and
liabilities Borrower and Guarantor may have to the Agent or any Lender under
the Indebtedness, any loan document, and in common law, and shall survive (a)
the loan closing, (b) the repayment of all sums due for the Indebtedness, (c)
the satisfaction of all of the other obligations of Borrower or Guarantor under
any loan document, (d) the discharge of any mortgage held by the Agent or any
Lender and (e) the foreclosure of any mortgage held by the Agent or any Lender
or acceptance of a deed in lieu of foreclosure. The indemnity provisions of
this section shall only apply to a demand or action commenced against (a) any
owner or operator of the Property or any portion thereof or (b) the Agent or
any Lender, in which any interest of the Agent or any Lender is threatened or
any claim, demand, notice or action is made or filed against the Agent or any
Lender.
VIII. MISCELLANEOUS. Except as otherwise specifically provided in this
Certificate, all of the representations, warranties and covenants set forth in
this Certificate shall be continuing and shall survive the execution of this
Certificate until all of the Indebtedness is fully paid to the Agent and the
Lenders and Borrower's and Guarantor's obligations to the Agent and the Lenders
in connection with the Indebtedness are fully performed.
ENVIRONMENTAL CERTIFICATE
-6-
<PAGE> 91
To be signed by Guarantor if the Property or any portion thereof is titled
or held in the name of Guarantor or operated by Guarantor.
This Environmental Certificate is executed on June __, 1997.
BORROWER:
OXFORD AUTOMOTIVE, INC.
By:______________________________________
Its:________________________________
BORROWING SUBSIDIARY:
BMG NORTH AMERICA LIMITED
By:______________________________________
Its:________________________________
GUARANTOR:
LOBDELL EMERY CORPORATION
CORPORATION
By:______________________________________
Its:________________________________
WINCHESTER FABRICATION
CORPORATION
By:______________________________________
Its:________________________________
ENVIRONMENTAL CERTIFICATE
-7-
<PAGE> 92
CREATIVE FABRICATION CORPORATION
By:______________________________________
Its:________________________________
CONCEPT MANAGEMENT CORPORATION
By:______________________________________
Its:________________________________
LASERWELD INTERNATIONAL, L.L.C.
By:______________________________________
Its:________________________________
LEWIS EMERY CAPITAL CORPORATION
By:______________________________________
Its:________________________________
PARALLEL GROUP INTERNATIONAL, INC.
By:______________________________________
Its:________________________________
BMG HOLDINGS, INC.
By:______________________________________
ENVIRONMENTAL CERTIFICATE
-8-
<PAGE> 93
Its:________________________________
976459 ONTARIO LIMITED
By:______________________________________
Its:________________________________
ENVIRONMENTAL CERTIFICATE
-9-
<PAGE> 94
829500 ONTARIO LIMITED
By:______________________________________
Its:________________________________
ENVIRONMENTAL CERTIFICATE
-10-
<PAGE> 95
SCHEDULE A
SCHEDULE OF EXCEPTIONS AND PERMITS
SEE ATTACHED.
Initials: Agent__________ Borrower Oxford Automotive _____
Borrowing
Subsidiary BMG North America _____
Guarantor Lobdell Emery _____
Winchester Fabrication _____
Creative Fabrication _____
Concept Management _____
Laserweld International _____
Lewis Emery Capital _____
Parallel Group _____
BMG Holdings _____
976459 Ontario _____
829500 Ontario _____
ENVIRONMENTAL CERTIFICATE
-11-
<PAGE> 96
EXHIBIT F
REVOLVING CREDIT NOTE
$110,000,000 June __, 1997
Detroit, Michigan
FOR VALUE RECEIVED, OXFORD AUTOMOTIVE, INC., a Michigan corporation (the
"Company"), hereby promises to pay to the order of NBD BANK, a Michigan banking
corporation (the "Lender"), at the principal banking office of the Agent in
lawful money of the United States of America and in immediately available
funds, the principal sum of One Hundred Ten Million Dollars ($110,000,000), or
such lesser amount as is recorded on the schedule attached hereto, or in the
books and records of the Lender, on the Termination Date; and to pay interest
on the unpaid principal balance hereof from time to time outstanding, in like
money and funds, for the period from the date hereof until the Revolving Credit
Loans evidenced hereby shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement referred to below.
The Lender is hereby authorized by the Company to record on the schedule
attached to this Revolving Credit Note, or on its books and records, the date,
amount and type of each Revolving Credit Loan, the duration of the related
Interest Period (if applicable), the amount of each payment or prepayment of
principal thereon and the other information provided for on such schedule,
which schedule or such books and records, as the case may be, shall constitute
prima facie evidence of the information so recorded, provided, however, that
any failure by the Lender to record any such information shall not relieve the
Company of its obligation to repay the outstanding principal amount of such
Revolving Credit Loans, all accrued interest thereon and any amount payable
with respect thereto in accordance with the terms of this Revolving Credit Note
and the 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 and other sums due and
payable hereon, all costs of collecting this Revolving Credit Note, including
attorneys' fees and expenses.
This Revolving Credit Note evidences one or more Revolving Credit Loans
made under a Credit Agreement, dated as of June __, 1997 (as amended or
modified from time to time, the "Credit Agreement"), by and among the Company,
the Borrowing Subsidiary identified from time to time therein, the lenders
(including the Lender) named therein and NBD Bank, as agent for
<PAGE> 97
the Lenders, to which reference is hereby made for a statement of the
circumstances under which this Revolving Credit Note is subject to prepayment
and under which its due date may be accelerated and for a description of the
collateral and security securing this Revolving Credit Note. Capitalized terms
used but not defined in this Revolving Credit Note shall have the respective
meanings assigned to them in the 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 in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
OXFORD AUTOMOTIVE, INC.
By: ______________________________
Its: _________________________
REVOLVING CREDIT NOTE
- 2 -
<PAGE> 98
Schedule to Revolving Credit Note, dated
June __, 1997, made by Oxford Automotive, Inc.
in favor of NBD Bank
<TABLE>
<CAPTION>
Principal
Amount
Trans- Principal Type Interest Paid, Pre- Principal
action Amount of of Interest Period (if paid or Balance Notation
Date Loan Loan* Rate applicable) Converted Outstanding Made by
- ------ --------- ----- -------- ----------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
_________________________
* E - Eurodollar Rate
F - Floating Rate
REVOLVING CREDIT NOTE
- 3 -
<PAGE> 99
EXHIBIT G
SWINGLINE NOTE
June __, 1997
Detroit, Michigan
FOR VALUE RECEIVED, OXFORD AUTOMOTIVE, INC., a Michigan corporation, (the
"Borrower"), hereby unconditionally promises to pay to the order of NBD BANK, a
Michigan banking corporation (the "Lender"), at the principal banking office of
the Lender in lawful money of the United States of America and in immediately
available funds, any and all amounts due and owing to the Lender under the
Credit Agreement referred to below as is evidenced on the books and records of
the Lender, on the Termination Date or such earlier date as the Lender may
require under the Credit Agreement referred to below, when the entire
outstanding principal amount of the Swingline Loans evidenced hereby, and all
accrued interest thereon, shall be due and payable; and to pay interest on the
unpaid principal balance hereof from time to time outstanding, in like money
and funds, for the period from the date hereof until the Swingline Loans
evidenced hereby shall be paid in full, at the rates per annum on and the dates
provided in the Credit Agreement referred to below.
The Lender is hereby authorized by the Borrower to record on its books and
records the date and the amount of each Swingline Loan, the applicable interest
rate, the amount of each payment or prepayment of principal thereon, and the
other information provided for in such books and records, which books and
records shall constitute prime facie evidence of the information so recorded,
provided, however, that any failure by the Lender to record any such notation
shall not relieve the Borrower of its obligation to repay the outstanding
principal amount of this Swingline Note, all accrued interest hereon and any
amount payable with respect hereto in accordance with the terms of this
Swingline Note and the Credit Agreement.
The Borrower and each endorser or guarantor hereof waive presentment,
protest, notice of dishonor and any other formality in connection with this
Swingline Note. Should the indebtedness evidenced by this Swingline Note or
any part thereof be collected in any proceeding or be placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Swingline Note, including attorneys' fees and expenses.
This Swingline Note evidences Swingline Loans made under a Credit
Agreement, dated as of June __, 1997 (as amended or modified from time to time,
the "Credit Agreement"), by and among the Borrower, the Borrowing Subsidiary
identified by the Borrower from time to time, the lenders (including the
Lender) named therein, and NBD Bank, as agent for the Lenders, to which
reference is hereby made for a statement of the circumstances under which this
Swingline Note is subject to prepayment and under which its due date may be
accelerated and a description of the collateral and security securing this
Swingline Note. Capitalized terms used but not defined in
<PAGE> 100
this Swingline Note shall have the respective meanings assigned to them in the
Credit Agreement.
This Swingline Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan in the same manner
applicable to contracts made and to be performed entirely within such State and
without giving effect to choice of law principles of such State.
OXFORD AUTOMOTIVE, INC.
By: ______________________________________
Its: _________________________________
SWINGLINE NOTE
- 2 -
<PAGE> 101
EXHIBIT H
DISBURSEMENT OF ADVANCES
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Oxford Automotive, Inc. (the "Company") hereby requests a [insert
Revolving Credit Loan] [Swingline Loan]or [Letter of Credit Advance] pursuant
to Section 2.4 of the Credit Agreement, dated as of June __, 1997 (as amended
or modified from time to time, the "Credit Agreement"), among the Company, the
Borrowing Subsidiaries party thereto, the Lenders referenced therein and you,
as Agent for the Lenders.
[A Revolving Credit Loan is requested to be made in the amount of
$_________, to be made on ____________, 199__ and evidenced by the Company's
Revolving Credit Note. Such Loan shall be a ______________________________ and
the initial Interest Period, if such requested Loan is an Acceptance, shall be
_______________________________.]
[A Swingline Loan is requested to be made in the amount of $_________, to
be made on ____________, 199__ and evidenced by the Company's Swingline Note.
Such Loan shall be a ______________________________ and the initial Interest
Period, if such requested Loan is an Acceptance, shall be
_______________________________.]
[Such Letter of Credit Advance shall be made by issuance by the Agent of
its Letter of Credit for the account of the Company in the maximum amount of
$____________ to and for the benefit of ____________________ with a stated
expiry date of ______________, ____, and containing the further terms and
conditions set forth in the attached Letter of Credit Application of the
Agent.]
In support of this request, the Company hereby represents and warrants to
the Agent and the Lenders that:
1. The representations and warranties contained in Article IV of the
Credit Agreement, and in the Security Documents, are true and correct in all
material respects on and as of the date hereof, and will be true and correct in
all material respects on the date such Advance is made (both before and after
such Advance is made), as if such representations and warranties were made on
and as of such dates.
2. No Event of Default or Default has occurred and is continuing or will
exist on the date such Advance is made and such Advance shall not cause an
Event of Default or Default.
<PAGE> 102
3. All trade accounts receivable, inventory and net tooling assets of the
Company or any Subsidiary included in Eligible Accounts Receivable, Eligible
Inventory and Eligible Net Tooling in Process comply in all respects with the
requirements therefor set forth in the definitions thereof, and the computation
of the Borrowing Base is true and correct as set forth in the Borrowing Base
Certificate prepared as of _________________ attached hereto.
4. The Credit Agreement, the Notes and the Security Documents remain, and
will be on the date such Advance is made, in full force and effect without any
defense, set-off or counterclaim.
5. The Borrower has delivered to the Agent, prior to the close of business
on the last day of the month next preceding the date such Advance is to be
made, the Borrowing Base Certificate required pursuant to Section 5.1(d)(v).
Acceptance of the proceeds of such Advance by the Company shall be deemed to be
a further representation and warranty that the representations and warranties
made herein are true and correct in all material respects at the time such
proceeds are disbursed.
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement.
OXFORD AUTOMOTIVE, INC.
By: _______________________________
Its: __________________________
Dated: __________________, 19__
DISBURSEMENT OF ADVANCES
- 2 -
<PAGE> 103
EXHIBIT I
DISBURSEMENT OF SWING LINE LOANS
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Oxford Automotive, Inc. (the "Borrower") hereby requests a Swing Line Loan
pursuant to Section 2.4(a) of the Credit Agreement, dated as of June __, 1997
(as amended or modified from time to time, the "Credit Agreement"), among the
Borrower, the Borrowing Subsidiaries party thereto, the lenders party thereto
from time to time (the "Lenders") and you, as Agent for the Lenders.
A Swing Line Loan is requested to be made in the amount of $_________, to
be made on ____________, 19___ and evidenced by the Borrower's Swing Line Note.
In support of this request, the Borrower hereby represents and warrants to
the Agent and the Lenders that:
1. The representations and warranties contained in Article IV of the
Credit Agreement, and in the Security Documents, are true and correct in all
material respects on and as of the date hereof, and will be true and correct in
all material respects on the date such Loan is made (both before and after such
Loan is made), as if such representations and warranties were made on and as of
such dates.
2. No Event of Default or Default has occurred and is continuing or will
exist on the date such Loan is made and such Loan shall not cause an Event of
Default or Default.
3. The Credit Agreement, the Notes and the Security Documents remain, and
will be on the date such Loan is made, in full force and effect without any
defense, set-off or counterclaim.
DISBURSEMENT OF SWING LINE LOANS
-1-
<PAGE> 104
4. The Borrower has delivered to the Agent, prior to the close of business
on the last day of the month next preceding the date such Loan is to be made,
Borrowing Base Certificate required pursuant to Section 5.1(d)(v).
Acceptance of the proceeds of such Loan by the Borrower shall be deemed to
be a further representation and warranty that the representations and
warranties made herein are true and correct in all material respects at the
time such proceeds are disbursed.
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement.
OXFORD AUTOMOTIVE, INC.
By: ______________________________________
Its: ________________________________
Dated: ________________, 19___
DISBURSEMENT OF SWING LINE LOANS
-2-
<PAGE> 105
EXHIBIT J
SUBSEQUENT ELECTIONS AS TO BORROWINGS
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Oxford Automotive, Inc. (the "Borrower"), hereby requests that
$____________ of the principal amount of the [Revolving Credit Loan] [Swingline
Loan] originally made on ____________, 19__, which [Revolving Credit Loan]
[Swingline Loan] is currently a [insert type of Loan], be continued as or
converted to, as the case may be, a [insert type of Loan requested] on
______________, 19__. If such Loan is requested to be continued as or
converted to an Acceptance, the Borrowers hereby elect an Interest Period for
such Loan of [insert permitted Interest Period].
In support of this request, the Borrower hereby represents and warrants to
the Agent and the Lenders that:
1. The representations and warranties contained in Article IV of the
Credit Agreement, and in the Security Documents, are true and correct in all
material respects on and as of the date hereof, and will be true and correct in
all material respects on the date such Loan is [continued][converted] (both
before and after such Loan is [continued][converted]), as if such
representations and warranties were made on and as of such dates.
2. No Event of Default or Default has occurred and is continuing or will
exist on the date such Loan is [continued][converted] (whether before or after
such Loan is [continued][converted]).
3. The Credit Agreement, the Notes and the Security Documents remain, and
will be on the date such Loan is [continued][converted], in full force and
effect without any defense, set-off or counterclaim.
4. The Borrowers have delivered to the Agent, prior to the close of
business on the last day of the month next preceding the date such Loan is to
be [continued][converted], the
<PAGE> 106
Borrowing Base Certificate required pursuant to Section 5.1(d)(v).
The [continuation][conversion] of such Loan by the Borrower shall be
deemed to be a further representation and warranty that the representations and
warranties made herein are true and correct in all material respects at the
time of such [continuation] [conversion].
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement, dated as of June __, 1997,
as amended or modified from time to time, among the Borrower, the Borrowing
Subsidiaries party thereto, the Lenders named therein and you as Agent for such
Lenders.
OXFORD AUTOMOTIVE, INC.
By: __________________________________
Its: _______________________________
SUBSEQUENT ELECTIONS AS TO BORROWINGS
- 2 -
<PAGE> 107
EXHIBIT K
---------
ASSIGNMENT AND ACCEPTANCE
[NBD Bank, as Assignor, and __________________, as Assignee]
Reference is made to the Credit Agreement dated as of June 24, 1997 (the
"Credit Agreement") among OXFORD AUTOMOTIVE, INC., a Michigan corporation, the
Borrowing Subsidiaries named therein, the lenders named therein (the
"Lenders"), and NBD BANK, a Michigan banking corporation, as agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein
with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns (without recourse) to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to the amount specified on Schedule 1 of
all outstanding rights and obligations under the Credit Agreement. After
giving effect to such sale and assignment, the Assignee's Commitment will be as
set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto; (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Company or the performance or observance by the Company of any of its
obligations under the Credit Agreement or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note or Notes held by the
Assignor and requests that the Agent exchange such Note or Notes for a new Note
or Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitments retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers and discretion under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto; (iv) agrees
that it will perform in accordance with their terms of all of the obligations
that by the terms of the Credit Agreement are required to be performed by it as
a Lender; and (v) if the Assignee is organized under the laws of a jurisdiction
outside the United States, attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to the Assignee's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to the Assignee under the Credit Agreement
and the Notes or such other documents as are necessary to indicate that all
such payments are subject to such taxes at a rate reduced by an applicable tax
treaty.
<PAGE> 108
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes
for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance, by telecopier or
otherwise, shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
<PAGE> 109
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
Amount of NBD Bank's Revolving Credit Commitment assigned: $11,500,000.00
Effective date: August 20, 1997
The Assignee is not designated as a Canadian Lender
NBD BANK, as Assignor
By:______________________________
Its: ________________________
____________________, as Assignee
By:______________________________
Its:__________________________
Address for Notices:
Attention:
Facsimile No.:
Telephone No.:
Commitment amount of _______ after
giving effect to this Assignment
and Acceptance:
Revolving Credit Commitment: $
th
Consented to this __ day
of _______, 1997
NBD BANK, as Agent
By:______________________________
Its:__________________________
OXFORD AUTOMOTIVE, INC.
By:______________________________
Its:__________________________
ASSIGNMENT AND ACCEPTANCE
- 3 -
<PAGE> 110
OXFORD AUTOMOTIVE, INC.
__________________________________________
CREDIT AGREEMENT
dated as of June 24, 1997
__________________________________________
THE BORROWING SUBSIDIARIES PARTY THERETO,
THE LENDERS PARTY HERETO
and
NBD BANK, as Agent
ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC.
DISCLOSURE SCHEDULES
<PAGE> 111
Schedule 1.1(A)
Existing Letters of Credit
1. Irrevocable Letter of Credit with FirstBank, dated January 31, 1996, in the
amount of $885,000 regarding workers compensation.
2. Letter of Credit issued by NBD Bank dated September 27, 1995, for the
account of Creative Fabrication Corporation in the amount of $8,669,535.
1
<PAGE> 112
Schedule 1.1(B)
GM Agreement
October 18, 1996
General Motors of Canada Limited,
1908 Colonel Sam Drive,
Oshawa, Ontario,
L1H 8P7
Attention: Mr. Ted Roberts
Dear Mr. Roberts:
Pursuant to our meeting today, this letter documents the terms of our agreement
regarding GM of Canada Limited's ("GMCL") waiver of contra rights as follows:
1. GMCL agrees with BMG North America Limited ("BMG") to waive its right
of off-set or contra for the amount owed to GMCL by BMG under the GM
Steel Resale Programme.
2. The term of this agreement shall be for 12 months, commencing October
26, 1996.
3. This agreement can be terminated prior to expiration by GMCL (Early
Termination) upon 30 days written notice to BMG if BMG fails to
materially perform under any of its awarded purchase orders with GM
and resolution of the performance issue is not resolved to GM's
satisfaction.
4. In the event of early termination of this agreement any amount owed to
GMCL that is subject to the waiver of contra (as set forth above)
shall remain subject to this agreement until fully repaid by BMG.
5. With effect of this agreement, BMG will reduce the payable to GMCL for
the GM Steel Resale Program to sixty (60) days outstanding by December
31, 1996 and to forty-five (45) days outstanding by February 28, 1997.
continued . . .
2
<PAGE> 113
Please indicate your agreement to the terms above by executing below with the
appropriate authorizing signatures.
Sincerely,
BMG NORTH AMERICA LIMITED
/s/ Robert LaCourciere
- -------------------------------------
Robert LaCourciere, President and CEO
GM of Canada Limited hereby agrees to the terms above.
GM of Canada Limited
By: /s/ Edward Roberts
------------------------------------
Its. Purchasing Mgr. 10/21/96
By: /s/ Andrew Williams
------------------------------------
Its: Credit Manager
3
<PAGE> 114
December 19, 1996
General Motors of Canada Limited,
1508 Colonel Sam Drive,
Oshawa, Ontario,
L1H8P7
Attention: Mr. Andrew Williams, Credit Manager
Dear Mr. Williams:
Pursuant to our recent discussion, we have agreed that Paragraph 5 of our
letter agreement dated October 18, 1996, shall be amended to read as follows:
"5. BMG agrees to reduce the payable to GMCL for the GM Steel Resale
Program to sixty (60) days outstanding by January 17, 1997 and to
forty-five (45) days outstanding by February 28, 1997."
All other terms of the letter agreement of October 18, 1996 shall remain in
full force and effect. Please indicate your agreement to the terms above by
executing below with the appropriate authorizing signatures.
Sincerely,
BMG NORTH AMERICA LIMITED
/s/Robert LaCourciere
- -------------------------------
Robert LaCourciere, President
Accepted and Agreed:
GENERAL MOTORS OF CANADA LIMITED.
By: /s/ Andrew Williams
----------------------------
Its: Credit Manager
By: /s/
----------------------------
Corporate Finance
4
<PAGE> 115
Schedule 1.1(D)
Senior Subordinated Debt Documents
1. Purchase Agreement by and among the Company, BMG North America Limited,
Lobdell Emery Corporation, and the Initial Purchasers, dated June 19, 1997.
2. Registration Agreement by and among the Company and the Initial Purchasers,
dated June 24, 1997.
3. Preliminary Offering Memorandum regarding the Senior Subordinated Notes,
dated June 4, 1997.
4. Final Offering Memorandum regarding the Senior Subordinated Notes, dated
June 20, 1997.
5
<PAGE> 116
Schedule 4.4
Subsidiaries
1. Lobdell Emery Corporation
Jurisdiction: Michigan corporation
Ownership: The Company owns 100% of the issued and
outstanding voting securities; various
individuals own shares of the preferred
stock of the Company
(a) Parallel Group International, Inc.
Jurisdiction: Indiana corporation
Ownership: Lobdell Emery Corporation owns 100%
of the issued and outstanding voting
securities
(b) Lewis Emery Capital Corporation
Jurisdiction: Michigan corporation
Ownership: Lobdell Emery Corporation owns 100%
of the issued and outstanding voting
securities
(c) Laserweld International, L.L.C.
Jurisdiction: Indiana limited liability company
Ownership: Lobdell Emery Corporation owns 100%
of the interests
(d) Concept Management Corporation, f/k/a Concept Fabrication
Corporation
Jurisdiction: Michigan corporation
Ownership: Lobdell Emery Corporation owns 100%
of the issued and outstanding voting
securities
6
<PAGE> 117
(e) Winchester Fabrication Corporation
Jurisdiction: Michigan corporation
Ownership: Concept Management Corporation owns
100% of the issued and outstanding
voting securities
(f) Creative Fabrication Corporation
Jurisdiction: Tennessee corporation
Ownership: Concept Management Corporation owns
100% of the issued and outstanding
voting securities
2. BMG Holdings, Inc.
Jurisdiction: Ontario corporation
Ownership: The Company owns 100% of the issued and
outstanding voting securities
(a) BMG North America Limited
Jurisdiction: Ontario corporation
Ownership: BMG Holdings, Inc. owns 100% of the
issued and outstanding voting
securities
(i) 976459 Ontario Limited
Jurisdiction: Ontario corporation
Ownership: BMG North America Limited
owns 100% of the issued and
outstanding voting securities
(ii) 829500 Ontario Limited, an Ontario corporation
Jurisdiction: Ontario corporation
Ownership: BMG North America Limited
owns 100% of the issued and
outstanding voting securities
7
<PAGE> 118
3. HI Acquisition, Inc.
Jurisdiction: Michigan corporation
Ownership: The Company owns 100% of the issued and
outstanding voting securities
8
<PAGE> 119
Schedule 4.5
Litigation
1. Sturgis Iron & Metal Company, Inc. v Lobdell Emery Corporation
2. Dennis Holton v. Lobdell-Emery Manufacturing Company
3. Cindy Zirgibel v. Lobdell Emery Corporation
4. Lobdell Emery Corporation v. Doug Losey
5. Crisher v. Lobdell Emery Corporation (EEOC)
6. Rich v. Lobdell Emery Corporation (EEOC)
7. Nick Nedry v. Lobdell Emery Corporation
8. ADW Industries, Inc. v. Winchester Fabrication Corporation
9. Sheriff Certificate dated June 18, 1997, indicates that a writ of
execution, No. 97-00599, is registered against BMG North America Limited.
The details are as follows.
Creditor: Workers Compensation Board
PO Box 2099, Stn LCD1
Hamilton, Ontario L8N 4C5
Court File: 02838/97A
Amount: Cdn$416,526
Comment: Interest at the rate of 1.5% per month on the
payments in default commencing on March 6, 1997.
Provisions are being made for the immediate payment of the amount owed.
10. Judicial review application brought by the CAW against Butler Metal
Products of an arbitration award dated May 30, 1997. The CAW is attempting
to overturn an arbitrator's award in Butler's favor.
9
<PAGE> 120
Schedule 4.17
Intellectual Property
1. Oxford Automotive (licensed by The Oxford Investment Group, Inc. to the
Company) (registration application pending)
2. Oxford Automotive (logo) (licensed by The Oxford Investment Group, Inc. to
the Company) (registration application pending)
3. Rack Base Construction; US Patent No. 5,533,456; Canadian Patent File No.
2,147,721
10
<PAGE> 121
Schedule 4.18
Preferred Stock
1. Written Consent of the Board of Directors of L-E Acquisition, Inc. In Lieu
of Meeting, dated January 6, 1997, designating the series and prescribing
the relative rights and preferences of the shares of preferred stock of L-E
Acquisition. See Restated Articles of Incorporation of Lobdell Emery
Corporation for a complete description of the dividends, distributions,
redemptions, and other payments required on the Preferred Stock.
2. Lobdell Emery Corporation, Series A $3.00 Cumulative Preferred Stock,
Certificate Nos. 1 through No. 102
3. Lobdell Emery Corporation, Series B Preferred Stock, Certificate Nos. 1
through No. 51
11
<PAGE> 122
Schedule 5.2(e)
Indebtedness
1. $8,500,000 Industrial Development Revenue Bonds (Creative Fabrication
Corporation Project), Series 1995, dated September 27, 1995 of the
Industrial Development Board of the County of McMinn and associated
reimbursement obligation to NBD Bank, guaranteed by Lobdell Emery
Corporation.
2. Credit Agreement between Lewis Emery Capital Corporation and NBD Bank, as
successor, dated as of June 8, 1993, and related documents.
3. Industrial and Regional Development Program dated November 30, 1989, as
amended by Amendments No. 1, 2, 3, 4 and 5.
4. Demand Loan Agreement between BMG North America and Export Development
Corporation dated October 7, 1996.
5. Demand Note payable by BMG North America Limited to Lobdell Emery
Corporation, dated January 17, 1997.
6. Non - Negotiable Demand Note payable by the Company to The Oxford
Investment Group, Inc., dated March 31, 1997.
7. FUL Incorporated Scrubber Lease, dated September 26, 1996.
8. KeyCorp/USL Capital Lease - SMG - Redline Equipment, dated September 19,
1996.
9. Master Lease Republic Financial Corporation, dated May 20, 1993.
10. USL Capital Lease - SMG Presses, dated March 15, 1996.
11. Senior Subordinated Notes.
12
<PAGE> 123
Schedule 5.2(f)
Liens
-----
Oxford Automotive, Inc.
----------------------
<TABLE>
<CAPTION>
File No. Jurisdiction Registration No. Creditor Collateral
- -------- ------------ ---------------- -------- ----------
<S> <C> <C> <C> <C>
811554318 Ontario 950106 1354 Snap on Tools of Equipment,
1629 1101 Canada Ltd. Other
</TABLE>
Lobdell Emery Corporation
-------------------------
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. Clarklift of Michigan Sec'y C601669 05/29/92 Specific Equip.
Flint/Saginaw of State
2. Varilease Corporation Michigan Sec'y C623236 08/03/92 Specific Equip.
of State
C670297 01/04/93 Asgmt of C623236
to NBD Equipmt
Finance, Inc.
3. Varilease Corporation Michigan Sec'y C623237 08/03/92 Specific Equip.
of State
Michigan Sec'y 28192B 02/17/93 Equip. Lease
of State
29254B 03/26/93 Asgmt of 28192B
to U.S. Leasing Int'l
4. U.S. Leasing Corporation Michigan Sec'y 27844B 02/04/93 Equip. Transfer
of State
6. AT&T Commercial Michigan Sec'y 30455B 04/28/93 Equip. Lease
Finance Corporation of State
</TABLE>
13
<PAGE> 124
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
C878910 08/30/94 Partial Release of 30455B
7. Republic Financial Michigan Sec'y 34876B 09/07/93 Equip. Lease
Corporation, asgn'd to of State
Provident Commercial
Group
C785609 12/08/93 Amdmt of C34876B
changing Lobdell's name
C903792 11/08/94 Amdmt of 34876B
changing Lobdell's name
8. Republic Financial Michigan Sec'y C764199 10/04/93 Equip. Lease
Corporation, asgn'd of State
to NBD Leasing, Inc.
C784591 12/03/93 Amdmt of C764199
changing Lobdell's name
9. Republic Financial Michigan Sec'y 36162B 10/19/93 Equip. Lease
Corporation of State
C782548 11/29/93 Amdmt of 36162B
changing Lobdell's name
C782549 11/29/93 Partial Release of C36162B
C782550 11/29/93 Asgmt of 36126B to
Fleet Credit Corporation
</TABLE>
14
<PAGE> 125
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C>
10. Republic Financial Michigan Sec'y 39194B 01/21/94 Equip. Lease
Corporation, asgn'd to of State
Fleet Credit Corporation
41076B 03/23/94 Amdmt of
39l94B to add
serial no's
49169B 11/17/94 Amdmt of 39194B to
amend Lobdell's name
11. Republic Financial Michigan Sec'y C847140 05/27/94 Equip. Lease
Corporation, asgn'd to of State
Colorado Nat'l Leasing
12. Republic Financial Michigan Sec'y C879002 08/30/94 Equip. Lease
Corporation, asgn'd of State
to NBD Leasing, Inc.
13. Republic Financial Michigan Sec'y C903794 11/08/94 Equip. Lease
Corporation, asgn'd to of State
Provident Commercial
Group
14. Republic Financial Michigan Sec'y 55705B 05/11/95 Equip. Lease
Corporation of State
C983782 06/20/95 Amdmt of 55705B to
correct equip.
descriptions
C983783 06/20/95 Asgmt of 55705B
to Colorado Nat'l
Leasing, Inc.
15. NBD Bank Michigan Sec'y 60957B 09/29/95 Blanket
of State
</TABLE>
15
<PAGE> 126
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C>
16. Sanwa Leasing Michigan Sec'y D054394 01/19/96 Equip. Lease
Corporation of State
17. USL Capital Corporation Michigan Sec'y 68702B 03/22/96 Equip. Lease
of State
18. Republic Financial Michigan Sec'y D090694 04/29/96 Equip. Lease
Corporation of State
D105237 06/10/96 Amdmt of D090694
to add serial no's
D115209 07/08/96 Partial Asgmt of D090694
19. FUL, Inc. Michigan Sec'y 0309002 10/23/96 Equip. Lease
of State
20. NBD Bank Michigan Sec'y 77859B 09/20/96 All assets
of State
D183790 01/14/97 Amdmt of
77859B
77861B 09/20/96 All assets
D183792 01/14/97 Amdmt of
77861B
77860B 09/20/96 All assets
D183791 01/14/97 Amdmt of
77860B
D183725 01/14/97 Blanket
22. KeyCorp Leasing Michigan Sec'y D147419 10/08/96 Equip. Lease
of State
23. KeyCorp Leasing Michigan Sec'y D147418 10/08/96 Equip. Lease
of State
</TABLE>
16
<PAGE> 127
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
- ------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C>
24. Sanwa Leasing Michigan Sec'y D144421 10/02/96 Equip. Lease
Corporation of State
25. Sanwa Leasing Michigan Sec'y D117895 07/16/96 Equip. Lease
Corporation of State
26. Manufacturers Rubber Michigan Sec'y D103316 06/04/96 Equip. Lease
Supply of State
27. Fleet Credit Indiana Sec'y of 1950680 11/17/94 Equip. Lease
State amend. 1890658
28. Fleet Credit Indiana Sec'y of 1902655 03/23/94 Equip. Lease
State amend. 1890658
29. Republic Financial Indiana Sec'y of 1934965 08/29/94 Equip. Lease
State
1997398 06/29/95 Equip. Lease
amend. 1986687
30. Colorado Leasing Indiana Sec'y of 1997399 06/29/95 Equip. Lease
State assign. of 1986687
31. NBD Bank Indiana Sec'y of 2011885 10/02/95 Blanket
State
2011885 10/02/95 Blanket
2068907 07/29/96 Blanket
2080004 09/27/96 Blanket
2080005 09/27/96 Blanket
2080006 09/27/96 Blanket
2080007 09/27/96 Blanket
</TABLE>
17
<PAGE> 128
Parallel Group International, Inc.
----------------------------------
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. NBD Bank Indiana Sec'y 2080008 09/27/96 Blanket
of State
2. NBD Bank Michigan Sec'y 77864B 09/20/96 Blanket
of State
</TABLE>
Lewis Emery Capital Corporation
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. NBD Bank Michigan Sec'y 77865B 09/20/96 Blanket
of State
D183786 01/14/97 Amdmt of
77865B
D183720 01/14/97 Blanket
</TABLE>
Laserweld International, L.L.C.
-------------------------------
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. NBD Bank Indiana Sec'y 2080003 09/27/96 Blanket
of State
2. NBD Bank Michigan Sec'y 77862B 09/20/96 Blanket
of State
</TABLE>
Concept Management Corporation, f/k/a Concept Fabrication Corporation
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. NBD Bank Michigan Sec'y 77867B 09/20/96 Blanket
of State
</TABLE>
18
<PAGE> 129
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
- ------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
D183784 01/14/97 Amdmt of
77867B
D183724 01/14/97 Blanket
2. Michigan National Bank Michigan Sec'y 60997B 09/29/95 Blanket
of State
</TABLE>
Winchester Fabrication Corporation
----------------------------------
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No, File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. Concept Fabrication Indiana Sec'y 1969416 02/24/95 Blanket
Corporation of State
Michigan Sec'y C939489 01/14/97 Blanket
of State
2. Michigan National Bank Indiana Sec'y 2011891 10/02/95 Blanket
of State
3. NBD Bank Indiana Sec'y 208009 09/27/96 Blanket
of State
Michigan Sec'y 77866B 09/20/96 Blanket
of State
D183785 01/14/97 Amdmt of
77866B
D183722 01/14/97 Blanket
4. Lobdell Emery Michigan Sec'y C939488 02/22/95 Blanket
Corporation of State
D183783 01/14/97 Amdmt of
C939488
Michigan Sec'y 77866B 09/20/96 Blanket
of State
</TABLE>
19
<PAGE> 130
Creative Fabrication Corporation
--------------------------------
<TABLE>
<CAPTION>
Secured Party Jurisdiction File No. File Date Collateral
------------- ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1. Michigan National Bank Michigan Sec'y 60996B 09/29/95 Blanket
of State
2. NBD Bank Michigan Sec'y 77863B 09/20/96 Blanket
of State
</TABLE>
BMG Holdings, Inc.
------------------
<TABLE>
<CAPTION>
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL
<S> <C> <C> <C>
075631482 951026 1143 0043 2568 GE Capital Canada Equipment Accounts, Other
Financing Inc.
075632706 951026 1143 0043 2569 General Electric Capital Accounts, Other
Canada Inc.
075632706 951124 1558 0096 4306
</TABLE>
BMG North America Limited
-------------------------
<TABLE>
<CAPTION>
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL
<S> <C> <C> <C>
079497603 970207 1509 0043 8340 First Chicago NBD Bank, Inventory, Equipment,
Canada Accounts, Other, Motor
Vehicle included
825354621 961002 1710 9065 3272 Dana Commercial Credit, Equipment, Other
Canada Inc.
074846016 960924 1408 0028 0959 Export Development Inventory, Equipment,
Corporation Accounts, Other
824844582 960912 1451 1667 1267 Transportation Lease Systems Equipment, Motor Vehicle
Inc. included
075274452 960711 0843 0043 1861 Highview Pontiac Buick GMC Consumer Goods, Equipment,
Limited Other, Motor Vehicle included
</TABLE>
20
<PAGE> 131
<TABLE>
<S> <C> <C> <C>
822840975 960619 1719 1737 4293 GMAC Leaseco Limited Equipment, Other, Motor
Vehicle included
821240073 960419 1343 1737 9165 GMAC Leaseco Limited Equipment, Other, Motor
Vehicle included
821240073 961003 1637 1737 0879
817634853 951026 0931 1081 1114 Nationsbank of Tennessee, Inventory, Equipment,
N.A. Accounts, Other
072038844 951004 1419 0004 7308 GE Capital Canada Equipment Inventory, Equipment,
Financing Inc. Accounts, Other, Motor
Vehicle included
078050214 951004 1419 0004 7309 General Electric Capital Inventory, Equipment,
Canada Inc. Accounts, Other, Motor
Vehicle included
814613751 950612 1930 1529 3971 NTFC Capital, Division of Equipment, Accounts, Other
General Electric Canada Inc.
055459998 950324 1138 0024 0088 General Electric Capital Equipment, Accounts, Other
Canada Inc.
810972468 941202 2222 1590 5939 Dana Commercial Credit, Equipment, Other
Canada Inc.
810972468 950315 1756 1590 8493
810972468 950315 1756 1590 8494
810972468 951023 1323 0024 2828
810027153 941018 2150 1529 0698 IBM Canada Ltd. Equipment, Accounts, Other
077111739 940722 1237 0043 6756 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
077111739 951103 1743 1590 3322
803537316 930622 2053 1531 4208 Hewlett-Packard (Canada) Ltd. Equipment, Other
059461524 930218 1107 0043 7709 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
059461524 951103 1743 1590 3323
027527715 910516 1405 0043 1372 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
027527715 920525 0843 0043 0221
</TABLE>
21
<PAGE> 132
<TABLE>
<S> <C> <C> <C>
027527715 930215 1344 0043 6440
027527715 951103 1743 1590 3324
963236493 890529 1417 43 9388 The Royal Trust Company Inventory, Equipment, Book
Debts, Other, Motor Vehicle
included
963236493 890829 1030 43 8523
963236493 920525 0843 0043 0230
963236493 930215 1343 0043 6434
963236493 951103 1743 1590 3325
963236502 890529 1417 43 9390 The Royal Trust Company Book Debts, Other
963236502 890829 1030 43 8524
963236502 920525 0843 0043 0231
963236502 930215 1344 0043 6436
963236502 951103 1743 1590 3326
963236511 890529 1417 43 9391 The Royal Trust Company Other
963236511 890829 1030 43 8525
963236511 920525 0843 0043 0229
963236511 930215 1344 0043 6437
963236511 951103 1743 1590 3327
900929772 092977 CSRA Registration
920525 0843 0043 0219
930215 1344 0043 6435
951103 1743 1590 3328
</TABLE>
829500 Ontario Limited
<TABLE>
<CAPTION>
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL
<S> <C> <C> <C>
079497612 970207 1509 0043 8341 First Chicago NBD Bank, Inventory, Equipment,
Canada Accounts, Other, Motor
Vehicle included
</TABLE>
22
<PAGE> 133
<TABLE>
<S> <C> <C> <C>
817565868 951023 1853 1529 8435 General Electric Capital Inventory, Equipment,
Canada Inc. Accounts, Other, Motor
Vehicle included
817565877 951023 1853 1529 8436 GE Capital Canada Equipment Inventory, Equipment,
Financing Inc. Accounts, Other, Motor
Vehicle included
077111694 940722 1237 0043 6755 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
059461515 930218 1107 0043 7708 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
035456508 910517 1139 0043 2353 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
035456508 920525 0843 0043 0223
946379556 890529 1417 43 9389 The Royal Trust Company Inventory, Equipment,
Accounts, Other, Motor
Vehicle included
946379556 920525 0844 0043 0235
900929772 092977 CSRA Registration
900929772 920525 0843 0043 0219
900929772 930215 1344 0043 6435
900929772 951103 1743 1590 3328
</TABLE>
23
<PAGE> 134
976459 Ontario Limited
<TABLE>
<CAPTION>
FILE NUMBER REGISTRATION NUMBER CREDITOR COLLATERAL
<S> <C> <C> <C>
079490475 970207 1509 0043 8342 First Chicago NBD Bank, Inventory, Equipment,
Canada Accounts, Other, Motor
Vehicle included
817565886 951023 1853 1529 8437 General Electric Capital Inventory, Equipment,
Canada Inc. Accounts, Other, Motor
Vehicle included
817565895 951023 1853 1529 8438 GE Capital Canada Equipment Inventory, Equipment,
Financing Inc. Accounts, Other, Motor
Vehicle included
</TABLE>
24
<PAGE> 135
Additional Liens
1. Security Agreement between Creative Fabrication Corporation and NBD Bank
dated September 1, 1995.
2. Pledge and Security Agreement between Creative Fabrication Corporation and
NBD Bank dated September 1, 1995.
3. Deed of Trust, Security Agreement, Fixture Filing and Assignment of Rents
dated as of September 1, 1995, from Creative Fabrication Corporation in
favor of David Siklosi, Trustee for the benefit of NBD Bank.
25
<PAGE> 136
Schedule 5.2(o)
Negative Pledges
1. Senior Subordinated Debt Documents
2. Demand Loan Agreement between BMG North America and Export Development
Corporation dated October 7, 1996
3. Industrial and Regional Development Program dated November 30, 1989, as
amended by Amendments No. 1, 2, 3, 4 and 5
4. Series A Notes payable by BMG Holdings, Inc. to Canadian Pension Capital
Corporation ($150,000), Canadian Pension Capital Limited ($150,000), and
Canadian Insurers' Capital Corporation ($300,000), each dated October 26,
1995
5. Loan and Security Agreement between Lewis Emery Capital Corporation and NBD
Bank, dated as of June 8, 1993
6. 8,500,000 Industrial Development Revenue Bonds (Creative Fabrication
Corporation Project), Series 1995, dated September 27, 1995 of the
Industrial Development Board of the County of McMinn and associated
reimbursement obligation to NBD Bank, guaranteed by Lobdell Emery
Corporation
26
<PAGE> 137
Schedule 5.2(u)
Management Fees
1. Management Agreement between the Company and The Oxford Investment Group,
Inc., dated June 24, 1997.
27
<PAGE> 1
EXHIBIT 4.3
COMPANY SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security
Agreement"), is made by OXFORD AUTOMOTIVE, INC., a Michigan corporation, (the
"Debtor"), in favor of NBD BANK, a Michigan banking corporation, as agent (in
such capacity, the "Agent") for the benefit of itself and the lenders (the
"Lenders") now or hereafter parties to the Credit Agreement described below.
RECITALS
A. The Debtor and the Borrowing Subsidiary identified from time to time
therein have entered into a Credit Agreement of even date herewith (as amended
or modified from time to time, including any agreement entered into in
substitution therefor, the "Credit Agreement"), with the Lenders and the Agent
pursuant to which the Lenders may make Advances (as therein defined) to the
Debtor and the Borrowing Subsidiary.
B. Under the terms of the Credit Agreement, the Debtor has agreed to grant
to the Agent, for the benefit of itself and the Lenders, a first-priority
security interest, subject only to security interests expressly permitted by
the Credit Agreement, in and to the Collateral hereinafter described.
AGREEMENTS
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Debtor or any Subsidiary now or hereafter owing to the
Lenders or the Agent under or on account of the Credit Agreement, any Security
Document or any Letters of Credit, notes or other instruments issued to the
Agent or any Lender pursuant thereto, (b) the performance of the covenants
under the Credit Agreement and the Security Documents and any monies expended
by the Lender in connection therewith, (c) the prompt and complete payment of
all obligations and performance of all covenants of the Debtor under any
interest rate or currency swap agreements or similar transactions with any
Lender and (d) the prompt and complete payment of any and all other
indebtedness, obligations and liabilities of any kind of the Debtor or any
Subsidiary to the Agent and the Lenders, or any of them, in all cases, of any
kind or nature, howsoever created or evidenced and whether now or hereafter
existing, direct or indirect (including without limitation any participation
interest acquired by any Lender in any such indebtedness, obligations or
liabilities of the Debtor or any Subsidiary to any other person and any
interest rate swap, cap or similar
<PAGE> 2
agreement), absolute or contingent, joint and/or several, secured or unsecured,
arising by operation of law or otherwise, and whether incurred by the Debtor or
any Subsidiary as principal, surety, endorser, guarantor, accommodation party
or otherwise, including without limitation all principal and all interest
(including any interest accruing subsequent to any petition filed by or against
the Debtor or any Subsidiary under the U.S. Bankruptcy Code), indemnity and
reimbursement obligations, charges, expenses, fees, attorneys' fees and
disbursements and any other amounts owing thereunder (all of the aforesaid
indebtedness, obligations and liabilities of the Debtor and its Subsidiaries
being herein called the "Secured Obligations", and all of the documents,
agreements and instruments among the Debtor, the Subsidiaries, the Agent, the
Lenders, or any of them, evidencing or securing the repayment of, or otherwise
pertaining to, the Secured Obligations including without limitation the Credit
Agreement, the Notes, the Letters of Credit and the Security Documents, being
herein collectively called the "Operative Documents"), for value received and
pursuant to the Credit Agreement, the Debtor hereby grants, assigns and
transfers to the Agent for the benefit of the Lenders a first-priority security
interest, subject only to Permitted Liens, in and to the following described
property whether now owned or existing or hereafter acquired or arising and
wherever located (all of which is herein collectively called the "Collateral"):
(a) All of the Debtor's present and future accounts, documents,
instruments, general intangibles and chattel paper, including, but without
limitation, all accounts receivable, all contract rights, all deposit accounts
and all monies and claims for money due or to become due to the Debtor, all
security held or granted to the Debtor, and all assets described in clause (d)
below;
(b) All of the Debtor's furniture, fixtures, machinery and equipment,
whether now owned or hereafter acquired, and wherever located, and whether used
by the Debtor or any other person, or leased by the Debtor to any person and
whether the interest of the Debtor is as owner, lessee or otherwise;
(c) All of the Debtor's present and future inventory of every type,
wherever located, including but not limited to raw materials, work in process,
finished goods and all inventory that is available for leasing or leased to
others by the Debtor;
(d) All other present and future assets of the Debtor (whether tangible or
intangible), including but not limited to all trademarks, trade names, patents,
industrial designs, masks, trade secrets, copyrights, franchises, customer
lists, computer programs, software, tax refund claims, licenses and permits,
and the good will associated therewith and all federal, state, foreign and
other applications and registrations therefor, all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof now or
hereafter in effect, all income, license royalties, damages and payments now
and hereafter due or payable under and with respect thereto, including, without
limitation, any damages, proceeds or payments for past or future infringements
thereof and all income, royalties, damages and payments under all licenses
thereof, the right to sue for past, present and future infringements thereof,
all right, title and interest of the Debtor as licensor under any of
SECURITY AGREEMENT
- 2 -
<PAGE> 3
the foregoing whether now owned and existing or hereafter arising, and all
other rights and other interests corresponding thereto throughout the world
(all of the assets described in this clause (d) collectively referred to as the
"Intellectual Property");
(e) All books, records, files, correspondence, computer programs, tapes,
disks, cards, accounting information and other data of the Debtor related in
any way to the Collateral described in clauses (a), (b), (c) and (d) above,
including but not limited to any of the foregoing necessary to administer, sell
or dispose of any of the Collateral;
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing, and, to
the extent not otherwise included, all payments under insurance (whether or not
the Agent is the loss payee thereof), and any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing.
1. Representations, Warranties, Covenants and Agreements. The Debtor
further represents and warrants to and covenants and agrees with the Agent for
the benefit of the Lenders as follows:
(a) Ownership of Collateral; Security Interest Priority. At the time
any Collateral becomes subject to a security interest of the Agent hereunder,
unless the Agent shall otherwise consent, the Debtor shall be deemed to have
represented and warranted that (i) the Debtor is the lawful owner of such
Collateral and has the right and authority to subject the same to the security
interest of the Agent hereunder; (ii) other than Permitted Liens (as defined in
the Credit Agreement) and lessors' interest with respect to any security
interest in any property leased by the Debtor as lessee, none of the Collateral
is subject to any Lien other than that in favor of the Agent for the benefit of
the Lenders and there is no effective financing statement or other filing
covering any of the Collateral on file in any public office, other than in
favor of the Agent for the benefit of the Lenders. This Security Agreement
creates in favor of the Agent for the benefit of the Lenders a valid
first-priority security interest, subject only to Permitted Liens, in the
Collateral enforceable against the Debtor and all third parties and securing
the payment of the Secured Obligations. All financing statements necessary to
perfect such security interest in the Collateral have been delivered by the
Debtor to the Agent for filing.
(b) Location of Offices, Records and Facilities. The Debtor's chief
executive office and chief place of business and the office where the Debtor
keeps its records concerning its accounts, contract rights, chattel paper,
instruments, general intangibles and other obligations arising out of or in
connection with the sale or lease of goods or the rendering of services or
otherwise ("Receivables"), and all originals of all leases and other chattel
paper which evidence
SECURITY AGREEMENT
- 3 -
<PAGE> 4
Receivables, is at the location listed on Schedule 1(b)(i) hereto. The Debtor
will provide the Agent with prior written notice of any proposed change in the
location of its chief executive office. The Debtor's only other offices and
facilities are at the locations set forth in Schedule 1(b)(ii) hereto. The
Debtor will provide the Agent with prior written notice of any change in the
locations of its other offices and the facilities at which any assets of the
Debtor are located. The tax identification number of the Debtor is set
forth on Schedule 1(b)(i). The name of the Debtor is correctly set forth on the
signature pages hereof, and the Debtor operates under no other names. The
Debtor shall not change its name without the prior written consent of the
Agent.
(c) Location of Inventory, Fixtures, Machinery and Equipment. (i) All
Collateral consisting of inventory is, and will be, located at the locations
listed on Schedule 1(c)(i) hereto, and at no other locations without the prior
written consent of the Agent. (ii) All Collateral consisting of fixtures,
machinery or equipment, is, and will be, located at the locations listed on
Schedule 1(c)(ii) hereto, and at no other locations without the prior written
consent of the Agent. If the Collateral described in clauses (i) or (ii) is
kept at leased locations or warehoused, the Debtor has obtained appropriate
landlord's lien waivers or appropriate warehousemen's notices have been sent,
each satisfactory to the Agent, unless waived by the Agent.
(d) Liens, Etc. The Debtor will keep the Collateral free at all times
from any and all liens, security interests or encumbrances other than those
described in paragraph 1(a)(ii) and those consented to in writing by the
Required Lenders. The Debtor will not, without the prior written consent of the
Agent, sell, lease, license, transfer, assign or otherwise dispose of, or
permit or suffer to be sold, leased, licensed, transferred, assigned or
otherwise disposed of, any of the Collateral, except for, prior to an Event of
Default only (notwithstanding any other agreement), the following: inventory
sold in the ordinary course of business and other assets permitted to be sold,
leased, licensed, transferred, assigned or otherwise disposed under Section
5.2(f) of the Credit Agreement. The Agent or its attorneys may at any and all
reasonable times inspect the Collateral and for such purpose may enter upon any
and all premises where the Collateral is or might be kept or located.
(e) Insurance. The Debtor shall keep the tangible Collateral insured at
all times against loss by theft, fire and other casualties. Said insurance
shall be issued by a company rated A or better by A.M. Best and shall be in
amounts sufficient to protect the Agent and the Lenders against any and all
loss or damage to the Collateral. The policy or policies which evidence said
insurance shall be delivered to the Agent upon request, shall contain a lender
loss payable clause in favor of the Agent for the benefit of the Lenders, shall
name the Agent for the benefit of the Lenders as an additional insured, as its
interest may appear, shall not permit amendment, cancellation or termination
without giving the Agent at least 30 days' prior written notice thereof, and
shall otherwise be in form and substance satisfactory to the Agent.
Reimbursement under any liability insurance maintained by the Debtor pursuant
to this paragraph 1(e) may be paid directly to the person who shall have
incurred liability covered by such insurance, provided that if there is no
SECURITY AGREEMENT
- 4 -
<PAGE> 5
Default or Event of Default (whether before or after any event which caused any
reimbursement under any liability insurance) the Debtor may use the proceeds of
such insurance solely to repair or replace the property damaged if the
insurance proceeds are less than $500,000 and if there is any Event of Default
or Default, and if such reimbursement is greater than $500,000 or there is any
Default or Event of Default such amounts shall be paid to the Agent for
application to the Secured Obligations.
(f) Taxes, Etc. The Debtor will pay promptly, and within the time that
they can be paid without interest or penalty, any taxes, assessments and
similar imposts and charges, not being contested in good faith, which are now
or hereafter may become a Lien upon any of the Collateral. If the Debtor fails
to pay any such taxes, assessments or other imposts or charges in accordance
with this paragraph, the Agent shall have the option to do so and the Debtor
agrees to repay forthwith all amounts so expended by the Agent with interest at
the Overdue Rate.
(g) Further Assurances. The Debtor will do all acts and things and will
execute all financing statements and writings reasonably requested by the Agent
to establish, maintain and continue a perfected and valid security interest of
the Agent for the benefit of the Lenders in the Collateral, and will promptly
on demand pay all reasonable costs and expenses of filing and recording all
instruments, including the costs of any searches deemed necessary by the Agent,
to establish and determine the validity and the priority of the Agent's
security interests for the benefit of the Lenders. A carbon, photographic or
other reproduction of this Security Agreement or any financing statement
covering the Collateral shall be sufficient as a financing statement.
(h) List of Patents, Copyrights, Mask Works and Trademarks. Attached
hereto as Schedule 1(h)(i) is a list of all patents and patent applications
owned by the Debtor. Attached hereto as Schedule 1(h)(ii) is a list of all
registered copyrights and all mask works and applications therefor owned by the
Debtor. Attached hereto as Schedule 1(h)(iii) is a list of all trademarks and
service marks owned by the Debtor. If the Debtor at any time owns any
additional patents, copyrights, mask works, trademarks, service marks or any
applications therefor not listed on such schedules, the Debtor shall give the
Agent prompt written notice thereof and hereby authorizes the Agent to modify
this Agreement by amending Schedules 1(h)(i), 1(h)(ii) and 1(h)(iii) hereto to
include all future patents, copyrights, mask works, trademarks, service marks
and applications therefor and agrees to execute all further instruments and
agreements, if any, if requested by the Agent to evidence the Agent's interest
for the benefit of the Lenders therein.
(i) Maintenance of Tangible Collateral. The Debtor will cause the
tangible Collateral material to the conduct of its business to be maintained
and preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or, in the case of any loss or damage to any of
the tangible Collateral as quickly as practicable after the occurrence thereof,
make or cause to be made all repairs, replacements, and other improvements
which are necessary or
SECURITY AGREEMENT
- 5 -
<PAGE> 6
desirable to such end. The Debtor shall promptly furnish to the Agent a
statement respecting any loss or damage to any of the tangible Collateral.
(j) Special Rights Regarding Receivables. The Agent or any of its
agents may, at any time and from time to time in its sole discretion and
irrespective of the existence of any Event of Default under this Security
Agreement, verify, directly with each person (collectively, the "Obligors")
which owes any Receivables to the Debtor, the Receivables in any manner. The
Agent or any of its agents may, at any time from time to time after and during
the continuance of an Event of Default under this Security Agreement, notify
the Obligors of the security interest of the Agent for the benefit of the
Lenders in the Collateral and/or direct such Obligors that all payments in
connection with such obligations and the Collateral be made directly to the
Agent in the Agent's name. If the Agent or any of its agents shall collect
such obligations directly from the Obligors, the Agent or any of its agents
shall have the right to resolve any disputes relating to returned goods
directly with the Obligors in such manner and on such terms as the Agent or any
of its agents shall deem appropriate. The Debtor directs and authorizes any
and all of its present and future account debtors to comply with requests for
information from the Agent, the Agent's designees and agents and/or auditors,
relating to any and all business transactions between the Debtor and the
Obligors. The Debtor further directs and authorizes all of its Obligors upon
receiving a notice or request sent by the Agent or the Agent's agents or
designees to pay directly to the Agent any and all sums of money or proceeds
now or hereafter owing by the Obligors to the Debtor, as provided in this
paragraph 1(j) and any such payment shall act as a discharge of any debt of
such Obligor to the Debtor in the same manner as if such payment had been made
directly to the Debtor. The Debtor agrees to take any and all action as the
Agent may reasonably request to assist the Agent in exercising the rights
described in this paragraph 1(j).
(k) Maintenance of Intellectual Property and Other Intangible
Collateral. The Debtor shall preserve and maintain all rights of the Debtor and
the Agent for the benefit of the Lenders in all material Intellectual Property
and all other material intangible Collateral, including without limitation the
payment of all maintenance fees and filing fees and the taking of all
appropriate action at the Debtor's expense to halt the infringement of any of
the Intellectual Property or other Collateral, provided that, with respect to
halting the infringement of any Intellectual Property or other Collateral, the
Debtor does not need to take all such appropriate action if the Debtor has, or
after Event of Default the Agent has, reasonably determined that it is not in
its best interest to demand or enforce cessation of such infringement or other
conduct because it is either not material or because the adverse consequences
to the Debtor would outweigh the benefits gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default shall be
deemed an Event of Default under this Security Agreement.
SECURITY AGREEMENT
- 6 -
<PAGE> 7
3. Remedies. Upon the occurrence of any Event of Default, the Agent shall
have and may exercise any one or more of the rights and remedies provided to it
under this Security Agreement or any of the other Operative Documents or
provided by law, including but not limited to all of the rights and remedies of
a secured party under the Uniform Commercial Code, and the Debtor hereby agrees
to assemble the Collateral and make it available to the Agent at a place to be
designated by the Agent which is reasonably convenient to both parties,
authorizes the Agent to take possession of the Collateral with or without
demand and with or without process of law and to sell and dispose of the same
at public or private sale and to apply the proceeds of such sale to the costs
and expenses thereof (including reasonable attorneys' fees and disbursements,
incurred by the Agent) and then to the payment and satisfaction of the Secured
Obligations. Any requirement of reasonable notice shall be met if the Agent
sends such notice to the Debtor, by registered or certified mail, at least 10
days prior to the date of sale, disposition or other event giving rise to a
required notice. The Agent may be the purchaser at any such sale. The Debtor
expressly authorizes such sale or sales of the Collateral in advance of and to
the exclusion of any sale or sales of or other realization upon any other
collateral securing the Secured Obligations. The Agent shall have no
obligation to preserve rights against prior parties. The Debtor hereby waives
as to the Agent and each Lender any right of subrogation or marshalling of such
Collateral and any other collateral for the Secured Obligations. To this end,
the Debtor hereby expressly agrees that any such collateral or other security
of the Debtor or any other party which the Agent or any Lender may hold, or
which may come to the Agent or any Lender's possession, may be dealt with in
all respects and particulars as though this Security Agreement were not in
existence. The parties hereto further agree that public sale of the Collateral
by auction conducted in any county in which any Collateral is located or in
which the Agent or the Debtor does business after advertisement of the time and
place thereof shall, among other manners of public and private sale, be deemed
to be a commercially reasonable disposition of the Collateral. The Debtor
shall be liable for any deficiency remaining after disposition of the
Collateral. Such sale shall be on such terms as the Agent may determine, for
cash or credit or against future delivery in the discretion of the Agent.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any Event of Default, the Debtor shall, if
requested to do so in writing, and to the extent so requested (i) promptly
collect and enforce payment of all amounts due the Debtor on account of, in
payment of, or in connection with, any of the Collateral, (ii) hold all
payments in the form received by the Debtor as trustee for the Agent and the
Lenders, without commingling with any funds belonging to the Debtor, and (iii)
forthwith deliver all such payments to the Agent with endorsement to the
Agent's order of any checks or similar instruments.
(b) Upon the occurrence of any Event of Default, the Debtor shall, if
requested to do so, and to the extent so requested, notify all Obligors and
other persons with obligations to the Debtor on account of or in connection
with any of the Collateral of the security interest of the
SECURITY AGREEMENT
- 7 -
<PAGE> 8
Agent for the benefit of the Lenders in the Collateral and direct such account
debtors and other persons that all payments in connection with such obligations
and the Collateral be made directly to the Agent. The Agent itself may, upon
the occurrence of an Event of Default, so notify and direct any such account
debtor or other person that such payments are to be made directly to the Agent.
(c) Upon the occurrence of any Event of Default, for purposes of
assisting the Agent in exercising its rights and remedies provided to it under
this Security Agreement, the Debtor (i) hereby irrevocably constitutes and
appoints the Agent its true and lawful attorney, for and in the Debtor's name,
place and stead, to collect, demand, receive, sue for, compromise, and give
good and sufficient releases for, any monies due or to become due on account
of, in payment of, or in connection with the Collateral, (ii) hereby
irrevocably authorizes the Agent to endorse the name of the Debtor, upon any
checks, drafts, or similar items which are received in payment of, or in
connection with, any of the Collateral, and to do all things necessary in order
to reduce the same to money, (iii) with respect to any Collateral, hereby
irrevocably assents to all extensions or postponements of the time of payment
thereof or any other indulgence in connection therewith, to each substitution,
exchange or release of Collateral, to the addition or release of any party
primarily or secondarily liable, to the acceptance of partial payments thereon
and the settlement, compromise or adjustment (including adjustment of insurance
payments) thereof, all in such manner and at such time or times as the Agent
shall deem advisable and (iv) hereby irrevocably authorizes the Agent to notify
the post office authorities to change the address for delivery of the Debtor's
mail to an address designated by the Agent, and the Agent may receive, open and
dispose of all mail addressed to the Debtor. Notwithstanding any other
provisions of this Security Agreement, it is expressly understood and agreed
that the Agent shall have no duty, and shall not be obligated in any manner, to
make any demand or to make any inquiry as to the nature or sufficiency of any
payments received by it or to present or file any claim or take any other
action to collect or enforce the payment of any amounts due or to become due on
account of or in connection with any of the Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or reserved to
the Agent under any Operative Document is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative and in addition
to every other right or remedy given hereunder or now or hereafter existing
under any applicable law. Every right and remedy of the Agent under any
Operative Document or under applicable law may be exercised from time to time
and as often as may be deemed expedient by the Agent. To the extent that it
lawfully may, the Debtor agrees that it will not at any time insist upon,
plead, or in any manner whatever claim or take any benefit or advantage of any
applicable present or future stay, extension or moratorium law, which may
affect observance or performance of any provisions of any Operative Document;
nor will it claim, take or insist upon any benefit or advantage of any present
or future law providing for the valuation or appraisal of any security for its
obligations under any Operative Document prior to any sale or sales thereof
which may be made under or by virtue of any instrument governing the
SECURITY AGREEMENT
- 8 -
<PAGE> 9
same; nor will the Debtor, after any such sale or sales, claim or exercise any
right, under any applicable law to redeem any portion of such security so sold.
6. Conduct No Waiver. No waiver shall be effective unless in writing
executed by the Agent and any waiver or forbearance on the part of the Agent in
enforcing any of its rights under this Security Agreement shall not operate as
a waiver of any other default or of the same default on a future occasion or of
such right.
7. Governing Law; Consent to Jurisdiction; Definitions. This Security
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 Debtor agrees that any legal action
or proceeding with respect to this Security Agreement or the transactions
contemplated hereby may be brought in any court of the State of Michigan, or in
any court of the United States of America sitting in Michigan, and the Debtor
hereby submits to and accepts generally and unconditionally the jurisdiction of
those courts with respect to its person and property, and irrevocably appoints
the President of the Debtor, at the Debtor's address set forth in the Credit
Agreement, as its agent for service of process and irrevocably consents to the
service of process in connection with any such action or proceeding by personal
delivery to such agent or to the Debtor or by the mailing thereof by registered
or certified mail, postage prepaid to the Debtor at its address set forth in
the Credit Agreement. Nothing in this paragraph shall affect the right of the
Agent to serve process in any other manner permitted by law or limit the right
of the Agent to bring any such action or proceeding against the Debtor or its
property in the courts of any other jurisdiction. The Debtor hereby
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above described courts. Terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Article 9 of the Uniform Commercial Code in the State of Michigan are used
herein as therein defined on the date hereof. The headings of the various
subdivisions hereof are for convenience of reference only and shall in no way
modify any of the terms or provisions hereof.
8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
9. Rights Not Construed as Duties. The Agent and the Lenders neither
assume nor shall any of them have any duty of performance or other
responsibility under any contracts in which the Agent has or obtains, for the
benefit of the Lenders, a security interest hereunder. If the Debtor fails to
perform any agreement contained herein, the Agent may but is in no way
obligated to itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Agent incurred in connection therewith shall be
payable by the Debtor under paragraph 12 hereof. The powers conferred on the
Agent hereunder are solely to protect its interests for the benefit of the
SECURITY AGREEMENT
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<PAGE> 10
Lenders in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and accounting for monies actually received by it hereunder, the Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.
10. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
11. Severability. If any one or more provisions of this Security
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
12. Expenses. (a) The Debtor agrees to indemnify the Agent and the
Lenders from and against any and all claims, losses and liabilities growing out
of or resulting from this Security Agreement (including, without limitation,
enforcement of this Security Agreement), except claims, losses or liabilities
resulting from the Agent's or any Lender's gross negligence or willful
misconduct.
(b) The Debtor will, upon demand, pay to the Agent an amount of any and
all reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Agent may incur in connection
with (i) the administration of this Security Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent hereunder or under the Operative Documents, or
(iv) the failure of the Debtor to perform or observe any of the provisions
hereof.
13. Successors and Assigns; Termination. This Security Agreement shall
create a continuing security interest in the Collateral and shall be binding
upon the Debtor, its successors and assigns, and inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Agent, the
Lenders and their respective successors, transferees and assigns. Upon the
payment in full in immediately available funds of all of the Secured
Obligations and the termination of all commitments to lend under the Operative
Documents, the security interest granted hereunder shall terminate and all
rights to the Collateral shall revert to the Debtor.
14. Waiver of Jury Trial. The Agent and the Lenders, in accepting this
Security Agreement, and the Debtor, 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 Security Agreement or any related instrument or
SECURITY AGREEMENT
- 10 -
<PAGE> 11
agreement or any of the transactions contemplated by this Security Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders nor the Debtor 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 Agent, any Lender or the Debtor
except by a written instrument executed by each of them.
(space intentionally left blank)
SECURITY AGREEMENT
- 11 -
<PAGE> 12
IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be
duly executed as of the day and year first set forth above.
OXFORD AUTOMOTIVE, INC.
By: [sig]
-------------------------
Its: Vice President - Financial Operations
-------------------------------------
Accepted and Agreed:
NBD BANK, as Agent on behalf
of the Lenders
By: Richard C. Ellis
------------------------
Its: Authorized Agent
------------------
SECURITY AGREEMENT
- 12 -
<PAGE> 13
CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF _________ )
The foregoing Security Agreement was acknowledged before me on this 24th
day of June, 1997 by John H. Ferguson, the Vice-President -- Financial
Operations of Oxford Automotive, Inc., a Michigan corporation, on behalf of
said corporation.
(Seal) Notary Public
Linda M. Anolick
--------------------------
LINDA M. ANOLICK
NOTARY PUBLIC-WAYNE COUNTY, MICH.
MY COMMISSION EXPIRES 08-30-98
STATE OF MICHIGAN )
) ss.
COUNTY OF OAKLAND )
The foregoing Security Agreement was acknowledged before me on this 24th
day of June, 1997, by Richard Ellis the Authorized Agent of NBD
Bank, a Michigan banking corporation, as Agent, on behalf of said corporation.
(Seal) Notary Public
Linda M. Anolic
--------------------------
LINDA M. ANOLICK
NOTARY PUBLIC-WAYNE COUNTY, MICH.
MY COMMISSION EXPIRES 08-30-98
SECURITY AGREEMENT
- 13 -
<PAGE> 14
Company Security Agreement
dated as of June 24, 1997
DISCLOSURE SCHEDULES
<PAGE> 15
Schedule 1(b)
(i) Location of Debtor's Chief Executive Offices
Oxford Automotive, Inc.
2365 Franklin Road
Bloomfield Hills, MI 48302
Tax Identification No. 38-3262809
Michigan corporation
(ii) Other Offices and Facilities
(a) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(c) Lobdell Emery Corporation
1325 East Superior
Alma, Michigan 48801
(d) Laserweld International, L.L.C.
950 JFK Drive
North Vernon, Indiana 47265
(e) Winchester Fabrication Corporation
200 Inks Drive
P.O. Box 270
Winchester, Indiana 47394
(f) Creative Fabrication Corporation
3000 George Price Blvd.
Athens, Tennessee 37371
1
<PAGE> 16
(g) 10850 West 17th Street
Argos, IN 46501
(h) 2190 Landmark Avenue
Corydon, IN 47112
(i) 2365 Franklin Road
Bloomfield Hills, MI 48302
(j) 135 North Fearing Road
PO Box 3416
Toledo, OH 43607
(k) 401 Republic Street
Alma, MI 48801
(l) 370 Manhattan Road
Greencastle, IN 46135
2
<PAGE> 17
Schedule 1(c)
(i) Location of Inventory
(a) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(c) Laserweld International, L.L.C.
950 JFK Drive
North Vernon, Indiana 47265
(d) Winchester Fabrication Corporation
200 Inks Drive
P.O. Box 270
Winchester, Indiana 47394
(e) Creative Fabrication Corporation
3000 George Price Blvd.
Athens, Tennessee 37371
(f) 10850 West 17th Street
Argos, IN 46501
(g) 2190 Landmark Avenue
Corydon, IN 47112
(h) 2365 Franklin Road
Bloomfield Hills, MI 48302
(i) 135 North Fearing Road
PO Box 3416
Toledo, OH 43607
(j) 401 Republic Street
Alma, MI 48801
3
<PAGE> 18
(k) 370 Manhattan Road
Greencastle, IN 46135
(ii) Locations of Fixtures, Machinery and Equipment
(a) See (i) above.
(b) Lindert Tool & Die
23 Raglan Place
Cambridge, Ontario
Canada
(c) Fincore
10 Melford Drive
Units 1-8
Scarborough, Ontario M1B 2G1
Canada
(d) Hinderliter Heat Treating Ltd.
9 Shirley Avenue
Kitchener, Ontario
Canada
(e) Easton Coatings Corporation
97 Easton Road
Brantford, Ontario N3P 1J4
Canada
(f) Camtron Coatings
___________________
___________________
(g) Tube Mill
Heidtman Steel Processing
Butler, Indiana
(h) Danly Presses
Days Corporation
Elkhart, Indiana
(i) Laserwelding Plus System
VIL/Littel International
Addison, Illinois
4
<PAGE> 19
(j) Mid States Steel
________ Inks Drive
Winchester, Indiana 47394
5
<PAGE> 20
Schedule 1(h)
(i) Rack Base Construction; US Patent No. 5,533,456; Canadian Patent File No.
2,147,721 (held by Lobdell Emery Corporation)
(ii) None
(iii)
1. Oxford Automotive (licensed by The Oxford Investment Group, Inc.
to the Company) (registration application pending)
2. Oxford Automotive (logo) (licensed by The Oxford Investment
Group, Inc. to the Company) (registration application pending)
6
<PAGE> 1
EXHIBIT 4.4
GUARANTOR SECURITY AGREEMENT
This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this
"Security Agreement"), is by 829500 ONTARIO LIMITED, a corporation organized
under the laws of the Province of Ontario (the "Debtor") in favor of FIRST
CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD
Bank, a Michigan banking corporation, to make Canadian Advances and as
collateral agent for the Lenders for the purpose of holding this security as
specified in the Credit Agreement referred to below (the "Secured Party").
1. CREATION OF SECURITY INTEREST
(1) For value received, Debtor hereby grants to Secured Party a
security interest (the "Security Interest") in the undertaking of Debtor and in
all Goods (including all parts, accessories, attachments, special tools,
additions and accessions thereto), Chattel Paper, Documents of Title (whether
negotiable or not), Instruments, Intangibles and Securities now owned or
hereafter owned or acquired by or on behalf of Debtor (including such as may be
returned to or repossessed by Debtor) and in all proceeds and renewals thereof,
accretions thereto and substitutions therefor (hereinafter collectively called
"Collateral"), including, without limitation, all of the following now owned or
hereafter owned or acquired by or on behalf of Debtor:
(i) all inventory of whatever kind and wherever situate
("Inventory");
(ii) all equipment (other than Inventory) of whatever kind
and wherever situate, including, without limitation,
all machinery, tools, apparatus, plant, furniture,
fixtures and vehicles of whatsoever nature or kind;
(iii) all book accounts and book debts and generally all
accounts, debts, dues, claims, choses in action and
demands of every nature and kind howsoever arising or
secured including letters of credit and advices of
credit, which are now due, owing or accruing or
growing due to or owned by or which may hereafter
become due, owing or accruing or growing due to or
owned by Debtor ("Debts");
(iv) all deeds, documents, writings, papers, books of
account and other books relating to or being records
of Debts, Chattel Paper or Documents of Title or by
which such are or may hereafter be secured,
evidenced, acknowledged or made payable;
(v) all contractual rights and insurance claims and all
goodwill, patents, trademarks, copyrights, and other
industrial property;
(vi) all monies other than trust monies lawfully belonging
to others; and
<PAGE> 2
(vii) all property described in any schedule now or
hereafter annexed hereto.
(2) The Security Interest granted hereby shall not extend or apply
to and Collateral shall not include the last day of the term of any lease or
agreement therefor but upon the enforcement of the Security Interest Debtor
shall stand possessed of such last day in trust to assign the same to any
person acquiring such term.
(3) The terms "Goods", "Chattel Paper", "Documents of Title",
"Instruments", "Intangibles", "Securities", "proceeds", "inventory" and
"accession" whenever used herein shall be interpreted pursuant to their
respective meanings when used in the Personal Property Security Act of Ontario,
as amended from time to time, which Act, including amendments thereto and any
Act substituted therefor and amendments thereto is herein referred to as the
"P.P.S.A." Provided always that the term "Goods" when used herein shall not
include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and
the term "Inventory" when used herein shall include livestock and the young
thereof after conception and crops that become such within the year of
execution of this Security Agreement. Any reference herein to "Collateral"
shall, unless the context otherwise requires, be deemed a reference to
"Collateral or any part thereof".
(4) As used herein, the term "Credit Agreement" means the Credit
Agreement dated as of the date hereof among Oxford Automotive, Inc., a
corporation incorporated under the laws of the State of Michigan (the
"Company"), each of the Subsidiaries designated under Section 1.1 of the Credit
Agreement as a "Borrowing Subsidiary", the lenders party thereto from time to
time ( the "Lenders") and the Agent, as amended or modified from time to time.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
2. OBLIGATIONS SECURED
The Security Interest granted hereby secures payment and satisfaction
of any and all of the following (the "Obligations"): any and all existing and
future indebtedness, obligation and liability of every kind, nature and
character, direct or indirect, absolute or contingent (including without
limitation all indebtedness, obligations and liabilities pursuant to any Loans,
Letters of Credit, Bankers' Acceptances and other Advances and all interest,
fees, and other charges thereon and all renewals, extensions and modifications
thereof and all fees, costs and expenses incurred by the Agent or any of the
Lenders in connection with the documentation, administration, collection or
enforcement thereof), of the Debtor or of the Company to the Agent or any of
the Lenders or any branch, subsidiary or affiliate thereof, howsoever and
whensoever created, arising, evidenced or acquired pursuant to the Credit
Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or
any other agreement, instrument or documents executed in connection therewith
at any time (all of the foregoing, as amended or modified from time to time,
collectively referred to as the "Loan Documents"). The Obligations secured by
this Agreement are continuing in nature and include those Obligations secured
by the Guarantor Security Agreement dated February 11, 1997 by the Debtor in
favor of the Secured Party.
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR
Debtor represents and warrants and so long as this Security Agreement
remains in effect shall be deemed to continuously represent and warrant that:
(1) the Collateral is genuine and owned by Debtor free of all
security interests, mortgages, liens, claims, charges or other encumbrances
(hereinafter collectively called "Liens"), save for the Security Interest and
Permitted Liens;
(2) to the best of the Debtor's knowledge, other than as disclosed
in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and
Instrument constituting Collateral is enforceable in accordance with its terms
against the party obligated to pay the same (the "Account Debtor"), and the
amount represented by Debtor to Secured Party from time to time as owing by
each Account Debtor or by all Account Debtors will be the correct amount
actually and unconditionally owing by such Account Debtor or Account Debtors,
except for normal cash discounts where applicable, and no Account Debtor will
have any defence, set off, claim or counterclaim against Debtor which can be
asserted against Secured Party, whether in any proceeding to enforce Collateral
or otherwise; and
(3) the locations specified n Schedule "A" hereto as to business
operations and records are accurate and complete and, with respect to Goods
(including Inventory) constituting Collateral, the locations specified in
Schedule "A" hereto are accurate and complete save for Goods in transit to such
locations and Inventory on lease or consignment; and all fixtures or Goods
about to become fixtures and all crops and all oil, gas or other minerals to be
extracted and all timber to be cut which forms part of the Collateral will be
situate at one of such locations.
4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED
PARTY
Subject to compliance with Debtor's covenants contained herein, Debtor
may, until default, possess, operate, collect, use and enjoy and deal with
Collateral in the ordinary course of Debtor's business in any manner not
inconsistent with the provisions hereof; provided always that Secured Party
shall have the right at any time and from time to time to confirm the existence
and state of the Collateral in any manner Secured Party may consider
appropriate and Debtor agrees to furnish all assistance and information and to
perform all such acts as Secured Party may reasonably request in connection
therewith and to all places where Collateral may be located and to all premises
occupied by Debtor.
5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL
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<PAGE> 4
(1) Until default, Debtor shall have the right to receive any
monies constituting income from or interest on Collateral and if Secured Party
receives any such monies prior to default, Secured Party shall either credit
the same to the account of Debtor or pay the same promptly to Debtor.
(2) After default, Debtor will not request or receive any monies
constituting income from or interest on Collateral and if Debtor receives any
such monies, Debtor will receive the same in trust for and promptly pay the
same to Secured Party.
6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL
(1) Whether or not default has occurred, Debtor authorizes Secured
Party
(i) to receive any increase in or profits on Collateral
(other than money) and to hold the same as part of
Collateral; money so received shall be treated as
income for the purposes of Clause 5 hereof and dealt
with accordingly; and
(ii) to receive any payment or distribution upon
redemption or retirement or upon dissolution and
liquidation of the issuer of Collateral; to surrender
Collateral in exchange therefor; and to hold any such
payment or distribution as part of the Collateral.
(2) If Debtor receives any such increase or profits (other than
money) or payments or distributions, Debtor will receive the same in trust for
and deliver the same promptly to Secured Party to be held by Secured Party as
herein provided.
7. SECURITIES FORMING PART OF COLLATERAL
If Collateral at any time includes Securities, Debtor authorizes
Secured Party to transfer the same or any part thereof into its own name or
that of its nominee(s) so that Secured Party or its nominee(s) may appear of
record as the sole owner thereof; provided that, until default, Secured Party
shall deliver promptly to Debtor all notices or other communications received
by it or its nominee(s) as such registered owner and, upon demand and receipt
of payment of any necessary expenses thereof, shall issue to Debtor or its
order a proxy to vote and take all action with respect to such Securities.
After enforcement of remedies hereunder, Debtor waives all rights to receive
any notices or communications received by Secured Party or its nominee(s) as
such registered owner and agrees that no proxy issued by Secured Party to
Debtor or its order as aforesaid shall thereafter be effective.
-4-
<PAGE> 5
8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL
After default, Secured Party may notify all or any Account Debtors of
the Security Interest and may also direct such Account Debtors to make all
payments on Collateral to Secured Party. Debtor acknowledges that any payments
on or other proceeds of Collateral received by Debtor from Account Debtors,
before or after notification of this Security Interest to Account Debtors, if
received after default, shall be received and held by Debtor in trust for
Secured Party and shall be turned over to Secured Party upon request.
9. COVENANTS OF THE DEBTOR
So long as this Security Agreement remains in effect, Debtor covenants
and agrees:
(1) to defend the Collateral against the claims and demands of all
other parties claiming the same or an interest therein; to keep the Collateral
free from all Liens, except for the Security Interest and Permitted Liens or
hereafter approved in writing, prior to their creation or assumption, by
Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise
dispose of Collateral or any interest therein without the prior written consent
of Secured Party, except to the extent permitted under the Credit Agreement;
provided always that, until default, Debtor may, in the ordinary course of
Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use
monies available to Debtor;
(2) to notify Secured Party promptly of:
(i) any change in the information contained herein or in
the Schedules hereto relating to Debtor, Debtor's
business or Collateral; and
(ii) any material loss of or damage to Collateral;
(3) to keep the Collateral in good order, condition and repair and
not to use Collateral in violation of the provisions of this Security Agreement
or any other agreement relating to Collateral or any policy insuring Collateral
or any applicable statute, law, by-law, rule, regulation or ordinance;
(4) to do, execute, acknowledge and deliver such financing
statements and further assignments, transfers, documents, acts, matters and
things (including further schedules hereto) as may be reasonably requested by
Secured Party of or with respect to Collateral in order to give effect to these
presents and to pay all costs for searches and filings in connection therewith;
-5-
<PAGE> 6
(5) to pay all taxes, rates, levies, assessments and other charges
of every nature which may be lawfully levied, assessed or imposed against or in
respect of Debtor or Collateral as and when the same become due and payable;
(6) to insure the Collateral for such periods, in such amounts, on
such terms and against loss or damage by fire and such other risks as Secured
Party shall reasonably direct with loss payable to Secured Party and Debtor, as
insured, as their respective interests may appear, and to pay all premiums
therefor;
(7) to prevent Collateral, save Inventory sold or leased as
permitted hereby, from being or becoming an accession to other property not
covered by this Security Agreement;
(8) to carry on and conduct the business of Debtor in a proper and
efficient manner and so as to protect and preserve the Collateral and to keep,
in accordance with generally accepted accounting principles, consistently
applied, proper books of account for Debtor's business as well as accurate and
complete records concerning Collateral, and mark any and all such records and
Collateral as Secured Party's request so as to indicate the Security Interest;
and
(9) to deliver to Secured Party from time to time promptly upon
request:
(i) any Documents of Title, Instruments, Securities and
Chattel Paper constituting, representing or relating
to Collateral;
(ii) all books of account and all records, ledgers,
reports, correspondence, schedules, documents,
statements, lists and other writing relating to
Collateral for the purpose of inspecting, auditing or
copying the same;
(iii) all financial statements prepared by or for Debtor
regarding Debtor's business;
(iv) all policies and certificates of insurance relating
to Collateral; and
(v) such information concerning Collateral, Debtor and
Debtor's business and affairs as Secured Party may
reasonably request.
10. EVENTS OF DEFAULT
The happening of any of the following events or conditions shall
constitute default hereunder which is herein referred to as "default":
-6-
<PAGE> 7
(1) the nonpayment when due, whether by acceleration or otherwise,
of any principal or interest forming part of the Obligations or the failure of
Debtor to observe or perform any obligation, covenant, term, provision or
condition contained in this Security Agreement; or
(2) any Event of Default under the Credit Agreement;
11. ACCELERATION
Secured Party, in its sole discretion, may declare all or any part of
the Obligations not payable on demand to be immediately due and payable,
without demand or notice of any kind, in the event of default. The provisions
of this clause are not intended in any way to affect any rights of Secured
Party with respect to Obligations which may now or hereafter be payable on
demand.
12. REMEDIES
(1) Upon default, Secured Party may appoint or reappoint by
instrument in writing, any person or persons, whether an officer or officers or
an employee or employees of Secured Party or not, to be a receiver or receivers
(hereinafter called a "Receiver", which term when used herein shall include a
receiver and manager) of Collateral (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and appoint another in his
stead. Any such Receiver shall, so far as concerns responsibility for his
acts, be deemed the agent of Debtor and not Secured Party, and Secured Party
shall not be in any way responsible for any misconduct, negligence or
nonfeasance on the part of any such Receiver, his servants, agents or
employees. Subject to the provisions of the instrument appointing him, any
such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part
of the business of Debtor and to sell, lease or otherwise dispose of or concur
in selling, leasing or otherwise disposing of Collateral. To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others,
including Debtor, enter upon, use and occupy all premises owned or occupied by
Debtor wherein Collateral may be situate, maintain Collateral upon such
premises, borrow money on a secured or unsecured basis and use Collateral
directly in carrying on Debtor's business or otherwise, as such Receiver shall,
in his discretion, determine. Except as may be otherwise directed by Secured
Party, all monies received from time to time by such Receiver in carrying out
his appointment shall be received in trust for and paid over to Secured Party.
Every such Receiver may, in the discretion of Secured Party, be vested with all
or any of the rights and powers of Secured Party.
(2) Upon default, Secured Party may, either directly or through
its agents or nominees, exercise all the powers and rights given to a Receiver
by virtue of the foregoing subclause (1).
-7-
<PAGE> 8
(3) Secured Party may take possession of, collect, demand, sue on,
enforce, recover and receive Collateral and give valid and binding receipts and
discharges therefor and in respect thereof and, upon default, Secured Party may
sell, lease or otherwise dispose of Collateral in such manner, at such time or
otherwise dispose of Collateral in such manner, at such time or times and place
or places, for such consideration and upon such terms and conditions as to
Secured Party may seem reasonable.
(4) In addition to those rights granted herein and in any other
agreement now or hereafter in effect between Debtor and Secured Party and in
addition to any other rights Secured Party may have at law or in equity,
Secured Party shall have, both before and after default, all rights and
remedies of a secured party under the P.P.S.A. Provided always that Secured
Party shall not be liable or accountable for any failure to exercise its
remedies, take possession of, collect, enforce, realize, sell, lease or
otherwise dispose of Collateral or to institute proceedings for such purposes.
Furthermore, Secured Party shall have no obligation to take any steps to
preserve rights against prior parties to any Instrument or Chattel Paper,
whether Collateral or proceeds and whether or not in Secured Party's possession
and shall not be liable or accountable for failure to do so.
(5) Debtor acknowledges that Secured Party or any Receiver
appointed by it may take possession of Collateral wherever it may be located
and by any method permitted by law and Debtor agrees upon request from Secured
Party or any such Receiver to assemble and deliver possession of Collateral at
such place or places as directed.
(6) Debtor agrees to pay all costs, charges and expenses
reasonably incurred by Secured Party or any Receiver appointed by it, whether
directly or for services rendered (including reasonable solicitors' and
auditors' costs and other legal expenses and Receiver remuneration), in
operating Debtor's accounts, in preparing or enforcing this Security Agreement,
taking custody of, preserving, repairing, processing, preparing for disposition
and disposing of Collateral and in enforcing or collecting Obligations and all
such costs, charges and expenses together with any monies owing as a result of
any borrowing by Secured Party or any Receiver appointed by it, as permitted
hereby, shall be a first charge on the proceeds of realization, collection or
disposition of Collateral and shall be secured hereby.
(7) Unless the Collateral in question is perishable or unless
Secured Party believes on reasonable grounds that the Collateral in question
will decline speedily in value, Secured Party will give Debtor such notice of
the date, time and place of any public sale or of the date after which any
private disposition of Collateral is to be made, as may be required by the
P.P.S.A.
13. DISPOSITION OF MONIES
Subject to any applicable requirements of the P.P.S.A., all monies
collected or received by Secured Party pursuant to or in exercise of any right
it possesses with respect to Collateral shall be
-8-
<PAGE> 9
applied on account of the Obligations in such manner as described in the Credit
Agreement or, at the option of Secured Party, may be held unappropriated in a
collateral account or released to Debtor, all without prejudice to the
liability of Debtor or the rights of Secured Party hereunder. Debtor hereby
acknowledges that if the disposition of all or any Collateral by Secured Party
or a Receiver pursuant hereto does not give rise to sufficient funds to pay all
Obligations secured hereby Debtor shall remain liable for any deficiency until
all Obligations have been paid or satisfied in full. Any surplus shall be
accounted for as required by law.
14. MISCELLANEOUS
(1) Debtor hereby authorizes Secured Party to file such financing
statements and other documents and do such acts, matters and things (including
completing and adding schedules hereto identifying Collateral or any Permitted
Liens affecting Collateral or identifying the locations at which Debtor's
business is carried on and Collateral and records relating thereto are situate)
as Secured Party may deem appropriate to perfect and continue the Security
Interest, to protect and preserve Collateral and its Security Interest in the
Collateral and to realize upon the Security Interest and Debtor hereby
irrevocably constitutes and appoints each Vice-President from time to time of
Secured Party the true and lawful attorney of Debtor, with full power of
substitution, to do any of the foregoing in the name of Debtor whenever and
wherever it may be deemed necessary or expedient.
(2) Without limiting any other right of Secured Party, whenever
the Obligations are immediately due and payable or Secured Party has the right
to declare the Obligations to be immediately due and payable (whether or not it
has so declared), Secured Party may, in its sole discretion, set off against
the Obligations any and all monies then owed to Debtor by Secured Party in any
capacity, whether or not due, and Secured Party shall be deemed to have
exercised such right of set off immediately at the time of making its decision
to do so even though any charge therefor is made or entered on Secured Party's
records subsequent thereto.
(3) Upon Debtor's failure to perform any of its duties hereunder,
Secured Party may, but shall not be obligated to, perform any or all of such
duties, and Debtor shall pay to Secured Party, forthwith upon written demand
therefor, an amount equal to the expense incurred by Secured Party in so doing
plus interest thereon from the date such expense is incurred until it is paid
at the Overdue Rate.
(4) After default, Secured Party may grant extensions of time and
other indulgences, take and give up security, accept compositions, compound,
comprise, settle, grant releases and discharges and otherwise deal with Debtor,
debtors of Debtor, sureties and others and with Collateral and other security
as Secured Party may see fit without prejudice to the liability of Debtor or
Secured Party's right to hold and realize the Security Interest. Furthermore,
Secured Party may, after default, demand, collect and sue on Collateral in
either Debtor's or Secured Party's name, at Secured Party's
-9-
<PAGE> 10
option, and may endorse Debtor's name on any and all cheques, commercial paper
and any other Instruments pertaining to or constituting Collateral.
(5) No delay or omission by Secured Party in exercising any right
or remedy hereunder or with respect to any Obligations shall operate as a
waiver thereof or of any other right or remedy, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. Furthermore, Secured Party may remedy
any default by Debtor hereunder or with respect to any Obligations in any
reasonable manner without waiving the default remedied and without waiving any
other prior or subsequent default by Debtor. All rights and remedies of
Secured Party granted or recognized herein are cumulative and may be exercised
at any time and from time to time independently or in combination.
(6) Debtor waives protest of any Instrument constituting
Collateral at any time held by Secured Party on which Debtor is in any way
liable and, subject to Clause 12(7), notice of any other action taken by
Secured Party.
(7) This Security Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. In any action brought by an assignee
of this Security Agreement and the Security Interest or any part thereof to
enforce any rights hereunder, Debtor shall not assert against the assignee any
claim or defence which Debtor now has or hereafter may have against Secured
Party.
(8) Save for any schedules which may be added hereto pursuant to
the provisions hereof, no modification, variation or amendment of any provision
of this Security Agreement shall be made except by a written agreement executed
by the parties hereto and no waiver of any provision hereof shall be effective
unless in writing.
(9) This Security Agreement and the transactions evidenced hereby
shall be governed by and construed in accordance with the laws of the Province
of Ontario as the same may from time to time be in effect, including, where
applicable, the P.P.S.A.
(10) Subject to the requirements of Clauses 12(7) and 14(11)
hereof, whenever either party hereto is required or entitled to notify or
direct the other or to make a demand or request upon the other, such notice,
direction, demand or request shall be in writing shall be sufficiently given
only if delivered to the party for whom it is intended at the principal address
of such party herein set forth or as changed pursuant hereto or if sent by
prepaid registered mail addressed to the party for whom it is intended at the
principal address of such party herein set forth or as changed pursuant hereto.
Either party may notify the other pursuant hereto of any change in such party's
principal address to be used for the purposes hereof.
(11) This Security Agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter
held by Secured Party and is, and is intended
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<PAGE> 11
to be, a continuing Security Agreement and shall remain in full force and
effect until the Obligations have been paid and satisfied in full.
(12) The headings used in this Security Agreement are for
convenience only and are not to be considered a part of this Security Agreement
and do not in any way limit or amplify the terms and provisions of this
Security Agreement.
(13) When the context so requires, the singular number shall be
read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.
(14) If any provisions of this Security Agreement, as amended from
time to time, shall be deemed invalid or void, in whole or in part, by any
court of competent jurisdiction, the remaining terms and provisions of this
Security Agreement shall remain in full force and effect.
(15) Nothing herein contained shall in any way obligate Secured
Party to grant, continue, renew, extend time for payment of or accept anything
which constitutes or would constitute Obligations.
(16) The Security Interest created hereby is intended to attach
when this Security Agreement is signed by Debtor and delivered to Secured
Party.
15. COPY OF AGREEMENT
Debtor hereby acknowledges receipt of a copy of this Security
Agreement.
IN WITNESS WHEREOF Debtor has executed this Security Agreement this
24th day of June, 1997.
829500 ONTARIO LIMITED
By:___________________________________
Name:
Title:
Agreed to and Accepted by:
FIRST CHICAGO NBD BANK, CANADA,
as the Affiliate designated by NBD Bank to make
Canadian Advances and as collateral agent for the
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<PAGE> 12
Lenders for the purpose of holding this security
as specified in the Credit Agreement
By:___________________________________
Its:_________________________
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<PAGE> 13
829500 ONTARIO LIMITED
Guarantor Security Agreement
Schedule A
----------
1. Location of Debtor's Business Operations
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
2. Location of Records Relating to Collateral
(a) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(c) 2365 Franklin Road
Bloomfield Hills, MI 48302
(d) 2000 North Woodward Avenue, Suite 130
Bloomfield Hills, MI 48304
1
<PAGE> 14
3. Locations of Collateral
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(d) Lindert Tool & Die
23 Raglan Place
Cambridge, Ontario
Canada
(e) Fincore
10 Melford Drive
Units 1-8
Scarborough, Ontario M1B 2G1
Canada
(f) Hinderliter Heat Treating Ltd.
9 Shirley Avenue
Kitchener, Ontario
Canada
(g) Easton Coatings Corporation
97 Easton Road
Brantford, Ontario N3P 1J4
Canada
2
<PAGE> 1
EXHIBIT 4.5
GUARANTOR SECURITY AGREEMENT
This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this
"Security Agreement"), is by 976459 ONTARIO LIMITED, a corporation organized
under the laws of the Province of Ontario (the "Debtor") in favor of FIRST
CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD
Bank, a Michigan banking corporation, to make Canadian Advances and as
collateral agent for the Lenders for the purpose of holding this security as
specified in the Credit Agreement referred to below (the "Secured Party").
1. CREATION OF SECURITY INTEREST
(1) For value received, Debtor hereby grants to Secured Party a security
interest (the "Security Interest") in the undertaking of Debtor and in all
Goods (including all parts, accessories, attachments, special tools, additions
and accessions thereto), Chattel Paper, Documents of Title (whether negotiable
or not), Instruments, Intangibles and Securities now owned or hereafter owned
or acquired by or on behalf of Debtor (including such as may be returned to or
repossessed by Debtor) and in all proceeds and renewals thereof, accretions
thereto and substitutions therefor (hereinafter collectively called
"Collateral"), including, without limitation, all of the following now owned or
hereafter owned or acquired by or on behalf of Debtor:
(i) all inventory of whatever kind and wherever
situate ("Inventory");
(ii) all equipment (other than Inventory) of whatever
kind and wherever situate, including, without limitation, all
machinery, tools, apparatus, plant, furniture, fixtures and
vehicles of whatsoever nature or kind;
(iii) all book accounts and book debts and generally
all accounts, debts, dues, claims, choses in action and
demands of every nature and kind howsoever arising or secured
including letters of credit and advices of credit, which are
now due, owing or accruing or growing due to or owned by or
which may hereafter become due, owing or accruing or growing
due to or owned by Debtor ("Debts");
(iv) all deeds, documents, writings, papers, books of
account and other books relating to or being records of Debts,
Chattel Paper or Documents of Title or by which such are or
may hereafter be secured, evidenced, acknowledged or made
payable;
(v) all contractual rights and insurance claims and
all goodwill, patents, trademarks, copyrights, and other
industrial property;
(vi) all monies other than trust monies lawfully
belonging to others; and
(vii) all property described in any schedule now or
hereafter annexed hereto.
<PAGE> 2
(2) The Security Interest granted hereby shall not extend or
apply to and Collateral shall not include the last day of the term of any lease
or agreement therefor but upon the enforcement of the Security Interest Debtor
shall stand possessed of such last day in trust to assign the same to any
person acquiring such term.
(3) The terms "Goods", "Chattel Paper", "Documents of Title",
"Instruments", "Intangibles", "Securities", "proceeds", "inventory" and
"accession" whenever used herein shall be interpreted pursuant to their
respective meanings when used in the Personal Property Security Act of Ontario,
as amended from time to time, which Act, including amendments thereto and any
Act substituted therefor and amendments thereto is herein referred to as the
"P.P.S.A." Provided always that the term "Goods" when used herein shall not
include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and
the term "Inventory" when used herein shall include livestock and the young
thereof after conception and crops that become such within the year of
execution of this Security Agreement. Any reference herein to "Collateral"
shall, unless the context otherwise requires, be deemed a reference to
"Collateral or any part thereof".
(4) As used herein, the term "Credit Agreement" means the Credit
Agreement dated as of the date hereof among Oxford Automotive, Inc., a
corporation incorporated under the laws of the State of Michigan (the
"Company"), each of the Subsidiaries of the Company designated under Section
1.1 of the Credit Agreement as a "Borrowing Subsidiary", the lenders party
thereto from time to time (the "Lenders") and the Agent, as amended or
modified from time to time. Capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Credit Agreement.
2. OBLIGATIONS SECURED
The Security Interest granted hereby secures payment and
satisfaction of any and all of the following (the "Obligations"): any and all
existing and future indebtedness, obligation and liability of every kind,
nature and character, direct or indirect, absolute or contingent (including
without limitation all indebtedness, obligations and liabilities pursuant to
any Loans, Letters of Credit, Bankers' Acceptances and other Advances and all
interest, fees, and other charges thereon and all renewals, extensions and
modifications thereof and all fees, costs and expenses incurred by the Agent or
any of the Lenders in connection with the documentation, administration,
collection or enforcement thereof), of the Debtor or of the Company to the
Agent or any of the Lenders or any branch, subsidiary or affiliate thereof,
howsoever and whensoever created, arising, evidenced or acquired pursuant to
the Credit Agreement, the Notes, the Security Documents, any Rate Hedging
Agreements or any other agreement, instrument or documents executed in
connection therewith at any time (all of the foregoing, as amended or modified
from time to time, collectively referred to as the "Loan Documents"). The
Obligations secured by this Agreement are continuing in nature and include
those Obligations secured by the Guarantor Security Agreement dated February
11, 1997 by the Debtor in favor of the Secured Party.
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR
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<PAGE> 3
Debtor represents and warrants and so long as this Security Agreement
remains in effect shall be deemed to continuously represent and warrant that:
(1) the Collateral is genuine and owned by Debtor free of all
security interests, mortgages, liens, claims, charges or other encumbrances
(hereinafter collectively called "Liens"), save for the Security Interest and
Permitted Liens;
(2) to the best of the Debtor's knowledge, other than as
disclosed in writing by the Debtor to the Secured Party, each Debt, Chattel
Paper and Instrument constituting Collateral is enforceable in accordance with
its terms against the party obligated to pay the same (the "Account Debtor"),
and the amount represented by Debtor to Secured Party from time to time as
owing by each Account Debtor or by all Account Debtors will be the correct
amount actually and unconditionally owing by such Account Debtor or Account
Debtors, except for normal cash discounts where applicable, and no Account
Debtor will have any defence, set off, claim or counterclaim against Debtor
which can be asserted against Secured Party, whether in any proceeding to
enforce Collateral or otherwise; and
(3) the locations specified n Schedule "A" hereto as to business
operations and records are accurate and complete and, with respect to Goods
(including Inventory) constituting Collateral, the locations specified in
Schedule "A" hereto are accurate and complete save for Goods in transit to such
locations and Inventory on lease or consignment; and all fixtures or Goods
about to become fixtures and all crops and all oil, gas or other minerals to be
extracted and all timber to be cut which forms part of the Collateral will be
situate at one of such locations.
4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED
PARTY
Subject to compliance with Debtor's covenants contained herein, Debtor
may, until default, possess, operate, collect, use and enjoy and deal with
Collateral in the ordinary course of Debtor's business in any manner not
inconsistent with the provisions hereof; provided always that Secured Party
shall have the right at any time and from time to time to confirm the existence
and state of the Collateral in any manner Secured Party may consider
appropriate and Debtor agrees to furnish all assistance and information and to
perform all such acts as Secured Party may reasonably request in connection
therewith and to all places where Collateral may be located and to all premises
occupied by Debtor.
5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL
(1) Until default, Debtor shall have the right to receive any monies
constituting income from or interest on Collateral and if Secured Party
receives any such monies prior to default, Secured Party shall either credit
the same to the account of Debtor or pay the same promptly to Debtor.
(2) After default, Debtor will not request or receive any monies
constituting income from
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<PAGE> 4
or interest on Collateral and if Debtor receives any such monies, Debtor will
receive the same in trust for and promptly pay the same to Secured Party.
6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL
(1) Whether or not default has occurred, Debtor authorizes Secured Party
(i) to receive any increase in or profits on
Collateral (other than money) and to hold the same as part of
Collateral; money so received shall be treated as income for
the purposes of Clause 5 hereof and dealt with accordingly;
and
(ii) to receive any payment or distribution upon
redemption or retirement or upon dissolution and liquidation
of the issuer of Collateral; to surrender Collateral in
exchange therefor; and to hold any such payment or
distribution as part of the Collateral.
(2) If Debtor receives any such increase or profits (other than money)
or payments or distributions, Debtor will receive the same in trust for and
deliver the same promptly to Secured Party to be held by Secured Party as
herein provided.
7. SECURITIES FORMING PART OF COLLATERAL
If Collateral at any time includes Securities, Debtor authorizes Secured
Party to transfer the same or any part thereof into its own name or that of its
nominee(s) so that Secured Party or its nominee(s) may appear of record as the
sole owner thereof; provided that, until default, Secured Party shall deliver
promptly to Debtor all notices or other communications received by it or its
nominee(s) as such registered owner and, upon demand and receipt of payment of
any necessary expenses thereof, shall issue to Debtor or its order a proxy to
vote and take all action with respect to such Securities. After enforcement of
remedies hereunder, Debtor waives all rights to receive any notices or
communications received by Secured Party or its nominee(s) as such registered
owner and agrees that no proxy issued by Secured Party to Debtor or its order
as aforesaid shall thereafter be effective.
8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL
After default, Secured Party may notify all or any Account Debtors of the
Security Interest and may also direct such Account Debtors to make all payments
on Collateral to Secured Party. Debtor acknowledges that any payments on or
other proceeds of Collateral received by Debtor from Account Debtors, before or
after notification of this Security Interest to Account Debtors, if received
after default, shall be received and held by Debtor in trust for Secured Party
and shall be turned over
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<PAGE> 5
to Secured Party upon request.
9. COVENANTS OF THE DEBTOR
So long as this Security Agreement remains in effect, Debtor covenants and
agrees:
(1) to defend the Collateral against the claims and demands of all other
parties claiming the same or an interest therein; to keep the Collateral free
from all Liens, except for the Security Interest and Permitted Liens or
hereafter approved in writing, prior to their creation or assumption, by
Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise
dispose of Collateral or any interest therein without the prior written consent
of Secured Party, except to the extent permitted under the Credit Agreement;
provided always that, until default, Debtor may, in the ordinary course of
Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use
monies available to Debtor;
(2) to notify Secured Party promptly of:
(i) any change in the information contained herein or
in the Schedules hereto relating to Debtor, Debtor's business
or Collateral; and
(ii) any material loss of or damage to Collateral;
(3) to keep the Collateral in good order, condition and repair and not
to use Collateral in violation of the provisions of this Security Agreement or
any other agreement relating to Collateral or any policy insuring Collateral or
any applicable statute, law, by-law, rule, regulation or ordinance;
(4) to do, execute, acknowledge and deliver such financing statements
and further assignments, transfers, documents, acts, matters and things
(including further schedules hereto) as may be reasonably requested by Secured
Party of or with respect to Collateral in order to give effect to these
presents and to pay all costs for searches and filings in connection therewith;
(5) to pay all taxes, rates, levies, assessments and other charges of
every nature which may be lawfully levied, assessed or imposed against or in
respect of Debtor or Collateral as and when the same become due and payable;
(6) to insure the Collateral for such periods, in such amounts, on such
terms and against loss or damage by fire and such other risks as Secured Party
shall reasonably direct with loss payable to Secured Party and Debtor, as
insured, as their respective interests may appear, and to pay all premiums
therefor;
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<PAGE> 6
(7) to prevent Collateral, save Inventory sold or leased as permitted
hereby, from being or becoming an accession to other property not covered by
this Security Agreement;
(8) to carry on and conduct the business of Debtor in a proper and
efficient manner and so as to protect and preserve the Collateral and to keep,
in accordance with generally accepted accounting principles, consistently
applied, proper books of account for Debtor's business as well as accurate and
complete records concerning Collateral, and mark any and all such records and
Collateral as Secured Party's request so as to indicate the Security Interest;
and
(9) to deliver to Secured Party from time to time promptly upon request:
(i) any Documents of Title, Instruments, Securities
and Chattel Paper constituting, representing or relating to
Collateral;
(ii) all books of account and all records, ledgers,
reports, correspondence, schedules, documents, statements,
lists and other writing relating to Collateral for the
purpose of inspecting, auditing or copying the same;
(iii) all financial statements prepared by or for
Debtor regarding Debtor's business;
(iv) all policies and certificates of insurance
relating to Collateral; and
(v) such information concerning Collateral, Debtor
and Debtor's business and affairs as Secured Party may
reasonably request.
10. EVENTS OF DEFAULT
The happening of any of the following events or conditions shall
constitute default hereunder which is herein referred to as "default":
(1) the nonpayment when due, whether by acceleration or otherwise, of
any principal or interest forming part of the Obligations or the failure of
Debtor to observe or perform any obligation, covenant, term, provision or
condition contained in this Security Agreement; or
(2) any Event of Default under the Credit Agreement.
11. ACCELERATION
Secured Party, in its sole discretion, may declare all or any part of the
Obligations not
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<PAGE> 7
payable on demand to be immediately due and payable, without demand or notice
of any kind, in the event of default. The provisions of this clause are not
intended in any way to affect any rights of Secured Party with respect to
Obligations which may now or hereafter be payable on demand.
12. REMEDIES
(1) Upon default, Secured Party may appoint or reappoint by instrument
in writing, any person or persons, whether an officer or officers or an
employee or employees of Secured Party or not, to be a receiver or receivers
(hereinafter called a "Receiver", which term when used herein shall include a
receiver and manager) of Collateral (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and appoint another in his
stead. Any such Receiver shall, so far as concerns responsibility for his
acts, be deemed the agent of Debtor and not Secured Party, and Secured Party
shall not be in any way responsible for any misconduct, negligence or
nonfeasance on the part of any such Receiver, his servants, agents or
employees. Subject to the provisions of the instrument appointing him, any
such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part
of the business of Debtor and to sell, lease or otherwise dispose of or concur
in selling, leasing or otherwise disposing of Collateral. To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others,
including Debtor, enter upon, use and occupy all premises owned or occupied by
Debtor wherein Collateral may be situate, maintain Collateral upon such
premises, borrow money on a secured or unsecured basis and use Collateral
directly in carrying on Debtor's business or otherwise, as such Receiver shall,
in his discretion, determine. Except as may be otherwise directed by Secured
Party, all monies received from time to time by such Receiver in carrying out
his appointment shall be received in trust for and paid over to Secured Party.
Every such Receiver may, in the discretion of Secured Party, be vested with all
or any of the rights and powers of Secured Party.
(2) Upon default, Secured Party may, either directly or through its
agents or nominees, exercise all the powers and rights given to a Receiver by
virtue of the foregoing subclause (1).
(3) Secured Party may take possession of, collect, demand, sue on,
enforce, recover and receive Collateral and give valid and binding receipts and
discharges therefor and in respect thereof and, upon default, Secured Party may
sell, lease or otherwise dispose of Collateral in such manner, at such time or
otherwise dispose of Collateral in such manner, at such time or times and place
or places, for such consideration and upon such terms and conditions as to
Secured Party may seem reasonable.
(4) In addition to those rights granted herein and in any other
agreement now or hereafter in effect between Debtor and Secured Party and in
addition to any other rights Secured Party may have at law or in equity,
Secured Party shall have, both before and after default, all rights and
remedies of a secured party under the P.P.S.A. Provided always that Secured
Party shall not be
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<PAGE> 8
liable or accountable for any failure to exercise its remedies, take possession
of, collect, enforce, realize, sell, lease or otherwise dispose of Collateral
or to institute proceedings for such purposes. Furthermore, Secured Party
shall have no obligation to take any steps to preserve rights against prior
parties to any Instrument or Chattel Paper, whether Collateral or proceeds and
whether or not in Secured Party's possession and shall not be liable or
accountable for failure to do so.
(5) Debtor acknowledges that Secured Party or any Receiver appointed by
it may take possession of Collateral wherever it may be located and by any
method permitted by law and Debtor agrees upon request from Secured Party or
any such Receiver to assemble and deliver possession of Collateral at such
place or places as directed.
(6) Debtor agrees to pay all costs, charges and expenses reasonably
incurred by Secured Party or any Receiver appointed by it, whether directly or
for services rendered (including reasonable solicitors' and auditors' costs and
other legal expenses and Receiver remuneration), in operating Debtor's
accounts, in preparing or enforcing this Security Agreement, taking custody of,
preserving, repairing, processing, preparing for disposition and disposing of
Collateral and in enforcing or collecting Obligations and all such costs,
charges and expenses together with any monies owing as a result of any
borrowing by Secured Party or any Receiver appointed by it, as permitted
hereby, shall be a first charge on the proceeds of realization, collection or
disposition of Collateral and shall be secured hereby.
(7) Unless the Collateral in question is perishable or unless Secured
Party believes on reasonable grounds that the Collateral in question will
decline speedily in value, Secured Party will give Debtor such notice of the
date, time and place of any public sale or of the date after which any private
disposition of Collateral is to be made, as may be required by the P.P.S.A.
13. DISPOSITION OF MONIES
Subject to any applicable requirements of the P.P.S.A., all monies
collected or received by Secured Party pursuant to or in exercise of any right
it possesses with respect to Collateral shall be applied on account of the
Obligations in such manner as described in the Credit Agreement or, at the
option of Secured Party, may be held unappropriated in a collateral account or
released to Debtor, all without prejudice to the liability of Debtor or the
rights of Secured Party hereunder. Debtor hereby acknowledges that if the
disposition of all or any Collateral by Secured Party or a Receiver pursuant
hereto does not give rise to sufficient funds to pay all Obligations secured
hereby Debtor shall remain liable for any deficiency until all Obligations have
been paid or satisfied in full. Any surplus shall be accounted for as required
by law.
14. MISCELLANEOUS
-8-
<PAGE> 9
(1) Debtor hereby authorizes Secured Party to file such financing
statements and other documents and do such acts, matters and things (including
completing and adding schedules hereto identifying Collateral or any Permitted
Liens affecting Collateral or identifying the locations at which Debtor's
business is carried on and Collateral and records relating thereto are situate)
as Secured Party may deem appropriate to perfect and continue the Security
Interest, to protect and preserve Collateral and its Security Interest in the
Collateral and to realize upon the Security Interest and Debtor hereby
irrevocably constitutes and appoints each Vice-President from time to time of
Secured Party the true and lawful attorney of Debtor, with full power of
substitution, to do any of the foregoing in the name of Debtor whenever and
wherever it may be deemed necessary or expedient.
(2) Without limiting any other right of Secured Party, whenever the
Obligations are immediately due and payable or Secured Party has the right to
declare the Obligations to be immediately due and payable (whether or not it
has so declared), Secured Party may, in its sole discretion, set off against
the Obligations any and all monies then owed to Debtor by Secured Party in any
capacity, whether or not due, and Secured Party shall be deemed to have
exercised such right of set off immediately at the time of making its decision
to do so even though any charge therefor is made or entered on Secured Party's
records subsequent thereto.
(3) Upon Debtor's failure to perform any of its duties hereunder,
Secured Party may, but shall not be obligated to, perform any or all of such
duties, and Debtor shall pay to Secured Party, forthwith upon written demand
therefor, an amount equal to the expense incurred by Secured Party in so doing
plus interest thereon from the date such expense is incurred until it is paid
at the Overdue Rate.
(4) After default, Secured Party may grant extensions of time and other
indulgences, take and give up security, accept compositions, compound,
comprise, settle, grant releases and discharges and otherwise deal with Debtor,
debtors of Debtor, sureties and others and with Collateral and other security
as Secured Party may see fit without prejudice to the liability of Debtor or
Secured Party's right to hold and realize the Security Interest. Furthermore,
Secured Party may, after default, demand, collect and sue on Collateral in
either Debtor's or Secured Party's name, at Secured Party's option, and may
endorse Debtor's name on any and all cheques, commercial paper and any other
Instruments pertaining to or constituting Collateral.
(5) No delay or omission by Secured Party in exercising any right or
remedy hereunder or with respect to any Obligations shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. Furthermore, Secured Party may remedy any default
by Debtor hereunder or with respect to any Obligations in any reasonable manner
without waiving the default remedied and without waiving any other prior or
subsequent default by Debtor. All rights and remedies of Secured Party granted
or recognized herein are cumulative and may be exercised at any time and from
time to time independently or in combination.
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<PAGE> 10
(6) Debtor waives protest of any Instrument constituting Collateral at
any time held by Secured Party on which Debtor is in any way liable and,
subject to Clause 12(7), notice of any other action taken by Secured Party.
(7) This Security Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns. In any action brought by an assignee of this Security
Agreement and the Security Interest or any part thereof to enforce any rights
hereunder, Debtor shall not assert against the assignee any claim or defence
which Debtor now has or hereafter may have against Secured Party.
(8) Save for any schedules which may be added hereto pursuant to the
provisions hereof, no modification, variation or amendment of any provision of
this Security Agreement shall be made except by a written agreement executed by
the parties hereto and no waiver of any provision hereof shall be effective
unless in writing.
(9) This Security Agreement and the transactions evidenced hereby shall
be governed by and construed in accordance with the laws of the Province of
Ontario as the same may from time to time be in effect, including, where
applicable, the P.P.S.A.
(10) Subject to the requirements of Clauses 12(7) and 14(11) hereof,
whenever either party hereto is required or entitled to notify or direct the
other or to make a demand or request upon the other, such notice, direction,
demand or request shall be in writing shall be sufficiently given only if
delivered to the party for whom it is intended at the principal address of such
party herein set forth or as changed pursuant hereto or if sent by prepaid
registered mail addressed to the party for whom it is intended at the principal
address of such party herein set forth or as changed pursuant hereto. Either
party may notify the other pursuant hereto of any change in such party's
principal address to be used for the purposes hereof.
(11) This Security Agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter
held by Secured Party and is, and is intended to be, a continuing Security
Agreement and shall remain in full force and effect until the Obligations have
been paid and satisfied in full.
(12) The headings used in this Security Agreement are for convenience
only and are not to be considered a part of this Security Agreement and do not
in any way limit or amplify the terms and provisions of this Security
Agreement.
(13) When the context so requires, the singular number shall be read as
if the plural were expressed and the provisions hereof shall be read with all
grammatical changes necessary dependent upon the person referred to being a
male, female, firm or corporation.
(14) If any provisions of this Security Agreement, as amended from time
to time, shall be
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<PAGE> 11
deemed invalid or void, in whole or in part, by any court of competent
jurisdiction, the remaining terms and provisions of this Security Agreement
shall remain in full force and effect.
(15) Nothing herein contained shall in any way obligate Secured Party to
grant, continue, renew, extend time for payment of or accept anything which
constitutes or would constitute Obligations.
(16) The Security Interest created hereby is intended to attach when this
Security Agreement is signed by Debtor and delivered to Secured Party.
15. COPY OF AGREEMENT
Debtor hereby acknowledges receipt of a copy of this Security Agreement.
IN WITNESS WHEREOF Debtor has executed this Security Agreement this 24th
day of June, 1997.
976459 ONTARIO LIMITED
By:______________________
Name:
Title:
Agreed to and Accepted by:
FIRST CHICAGO NBD BANK, CANADA,
as the Affiliate designated by NBD Bank to make
Canadian Advances and as collateral agent for the
Lenders for the purpose of holding this security
as specified in the Credit Agreement
By:__________________________________
Its:____________________________
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<PAGE> 12
976459 ONTARIO LIMITED
Guarantor Security Agreement
Schedule A
1. Location of Debtor's Business Operations
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
2. Location of Records Relating to Collateral
(a) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(c) 2365 Franklin Road
Bloomfield Hills, MI 48302
(d) 2000 North Woodward Avenue, Suite 130
Bloomfield Hills, MI 48304
1
<PAGE> 13
3. Locations of Collateral
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(d) Lindert Tool & Die
23 Raglan Place
Cambridge, Ontario
Canada
(e) Fincore
10 Melford Drive
Units 1-8
Scarborough, Ontario M1B 2G1
Canada
(f) Hinderliter Heat Treating Ltd.
9 Shirley Avenue
Kitchener, Ontario
Canada
(g) Easton Coatings Corporation
97 Easton Road
Brantford, Ontario N3P 1J4
Canada
2
<PAGE> 1
EXHIBIT 4.6
GUARANTOR SECURITY AGREEMENT
This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this
"Security Agreement"), is by BMG HOLDINGS INC., a corporation organized under
the laws of the Province of Ontario (the "Debtor") in favor of FIRST CHICAGO
NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD Bank, a
Michigan banking corporation, to make Canadian Advances and as collateral agent
for the Lenders for the purpose of holding this security as specified in the
Credit Agreement referred to below (the "Secured Party").
1. CREATION OF SECURITY INTEREST
(1) For value received, Debtor hereby grants to Secured Party a
security interest (the "Security Interest") in the undertaking of Debtor and in
all Goods (including all parts, accessories, attachments, special tools,
additions and accessions thereto), Chattel Paper, Documents of Title (whether
negotiable or not), Instruments, Intangibles and Securities now owned or
hereafter owned or acquired by or on behalf of Debtor (including such as may be
returned to or repossessed by Debtor) and in all proceeds and renewals thereof,
accretions thereto and substitutions therefor (hereinafter collectively called
"Collateral"), including, without limitation, all of the following now owned or
hereafter owned or acquired by or on behalf of Debtor:
(i) all inventory of whatever kind and wherever situate
("Inventory");
(ii) all equipment (other than Inventory) of whatever kind
and wherever situate, including, without limitation,
all machinery, tools, apparatus, plant, furniture,
fixtures and vehicles of whatsoever nature or kind;
(iii) all book accounts and book debts and generally all
accounts, debts, dues, claims, choses in action and
demands of every nature and kind howsoever arising or
secured including letters of credit and advices of
credit, which are now due, owing or accruing or
growing due to or owned by or which may hereafter
become due, owing or accruing or growing due to or
owned by Debtor ("Debts");
(iv) all deeds, documents, writings, papers, books of
account and other books relating to or being records
of Debts, Chattel Paper or Documents of Title or by
which such are or may hereafter be secured,
evidenced, acknowledged or made payable;
(v) all contractual rights and insurance claims and all
goodwill, patents, trademarks, copyrights, and other
industrial property;
(vi) all monies other than trust monies lawfully belonging
to others; and
(vii) all property described in any schedule now or
hereafter annexed hereto.
<PAGE> 2
(2) The Security Interest granted hereby shall not extend or apply
to and Collateral shall not include the last day of the term of any lease or
agreement therefor but upon the enforcement of the Security Interest Debtor
shall stand possessed of such last day in trust to assign the same to any
person acquiring such term.
(3) The terms "Goods", "Chattel Paper", "Documents of Title",
"Instruments", "Intangibles", "Securities", "proceeds", "inventory" and
"accession" whenever used herein shall be interpreted pursuant to their
respective meanings when used in the Personal Property Security Act of Ontario,
as amended from time to time, which Act, including amendments thereto and any
Act substituted therefor and amendments thereto is herein referred to as the
"P.P.S.A." Provided always that the term "Goods" when used herein shall not
include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and
the term "Inventory" when used herein shall include livestock and the young
thereof after conception and crops that become such within the year of
execution of this Security Agreement. Any reference herein to "Collateral"
shall, unless the context otherwise requires, be deemed a reference to
"Collateral or any part thereof".
(4) As used herein, the term "Credit Agreement" means the Credit
Agreement dated as of the date hereof among Oxford Automotive, Inc., a
corporation incorporated under the laws of the State of Michigan (the
"Company"), each of the Subsidiaries of the Company designated under Section
1.1 of the Credit Agreement as a "Borrowing Subsidiary", the lenders party
thereto from time to time (the "Lenders") and the Agent, as amended or
modified from time to time. Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Credit Agreement.
2. OBLIGATIONS SECURED
The Security Interest granted hereby secures payment and satisfaction
of any and all of the following (the "Obligations"): any and all existing and
future indebtedness, obligation and liability of every kind, nature and
character, direct or indirect, absolute or contingent (including without
limitation all indebtedness, obligations and liabilities pursuant to any Loans,
Letters of Credit, Bankers' Acceptances and other Advances and all interest,
fees, and other charges thereon and all renewals, extensions and modifications
thereof and all fees, costs and expenses incurred by the Agent or any of the
Lenders in connection with the documentation, administration, collection or
enforcement thereof), of the Debtor or of the Company to the Agent or any of
the Lenders or any branch, subsidiary or affiliate thereof, howsoever and
whensoever created, arising, evidenced or acquired pursuant to the Credit
Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or
any other agreement, instrument or documents executed in connection therewith
at any time (all of the foregoing, as amended or modified from time to time,
collectively referred to as the "Loan Documents").
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<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR
Debtor represents and warrants and so long as this Security Agreement
remains in effect shall be deemed to continuously represent and warrant that:
(1) the Collateral is genuine and owned by Debtor free of all
security interests, mortgages, liens, claims, charges or other encumbrances
(hereinafter collectively called "Liens"), save for the Security Interest and
Permitted Liens;
(2) to the best of the Debtor's knowledge, other than as disclosed
in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and
Instrument constituting Collateral is enforceable in accordance with its terms
against the party obligated to pay the same (the "Account Debtor"), and the
amount represented by Debtor to Secured Party from time to time as owing by
each Account Debtor or by all Account Debtors will be the correct amount
actually and unconditionally owing by such Account Debtor or Account Debtors,
except for normal cash discounts where applicable, and no Account Debtor will
have any defence, set off, claim or counterclaim against Debtor which can be
asserted against Secured Party, whether in any proceeding to enforce Collateral
or otherwise; and
(3) the locations specified n Schedule "A" hereto as to business
operations and records are accurate and complete and, with respect to Goods
(including Inventory) constituting Collateral, the locations specified in
Schedule "A" hereto are accurate and complete save for Goods in transit to such
locations and Inventory on lease or consignment; and all fixtures or Goods
about to become fixtures and all crops and all oil, gas or other minerals to be
extracted and all timber to be cut which forms part of the Collateral will be
situate at one of such locations.
4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED
PARTY
Subject to compliance with Debtor's covenants contained herein, Debtor
may, until default, possess, operate, collect, use and enjoy and deal with
Collateral in the ordinary course of Debtor's business in any manner not
inconsistent with the provisions hereof; provided always that Secured Party
shall have the right at any time and from time to time to confirm the existence
and state of the Collateral in any manner Secured Party may consider
appropriate and Debtor agrees to furnish all assistance and information and to
perform all such acts as Secured Party may reasonably request in connection
therewith and to all places where Collateral may be located and to all premises
occupied by Debtor.
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<PAGE> 4
5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL
(1) Until default, Debtor shall have the right to receive any
monies constituting income from or interest on Collateral and if Secured Party
receives any such monies prior to default, Secured Party shall either credit
the same to the account of Debtor or pay the same promptly to Debtor.
(2) After default, Debtor will not request or receive any monies
constituting income from or interest on Collateral and if Debtor receives any
such monies, Debtor will receive the same in trust for and promptly pay the
same to Secured Party.
6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL
(1) Whether or not default has occurred, Debtor authorizes Secured
Party
(i) to receive any increase in or profits on Collateral
(other than money) and to hold the same as part of
Collateral; money so received shall be treated as
income for the purposes of Clause 5 hereof and dealt
with accordingly; and
(ii) to receive any payment or distribution upon
redemption or retirement or upon dissolution and
liquidation of the issuer of Collateral; to surrender
Collateral in exchange therefor; and to hold any such
payment or distribution as part of the Collateral.
(2) If Debtor receives any such increase or profits (other than
money) or payments or distributions, Debtor will receive the same in trust for
and deliver the same promptly to Secured Party to be held by Secured Party as
herein provided.
7. SECURITIES FORMING PART OF COLLATERAL
If Collateral at any time includes Securities, Debtor authorizes
Secured Party to transfer the same or any part thereof into its own name or
that of its nominee(s) so that Secured Party or its nominee(s) may appear of
record as the sole owner thereof; provided that, until default, Secured Party
shall deliver promptly to Debtor all notices or other communications received
by it or its nominee(s) as such registered owner and, upon demand and receipt
of payment of any necessary expenses thereof, shall issue to Debtor or its
order a proxy to vote and take all action with respect to such Securities.
After enforcement of remedies hereunder, Debtor waives all rights to receive
any notices or communications received by Secured Party or its nominee(s) as
such registered owner and agrees that no proxy issued by Secured Party to
Debtor or its order as aforesaid shall thereafter be effective.
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<PAGE> 5
8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL
After default, Secured Party may notify all or any Account Debtors of
the Security Interest and may also direct such Account Debtors to make all
payments on Collateral to Secured Party. Debtor acknowledges that any payments
on or other proceeds of Collateral received by Debtor from Account Debtors,
before or after notification of this Security Interest to Account Debtors, if
received after default, shall be received and held by Debtor in trust for
Secured Party and shall be turned over to Secured Party upon request.
9. COVENANTS OF THE DEBTOR
So long as this Security Agreement remains in effect, Debtor covenants
and agrees:
(1) to defend the Collateral against the claims and demands of all
other parties claiming the same or an interest therein; to keep the Collateral
free from all Liens, except for the Security Interest and Permitted Liens or
hereafter approved in writing, prior to their creation or assumption, by
Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise
dispose of Collateral or any interest therein without the prior written consent
of Secured Party, except to the extent permitted under the Credit Agreement;
provided always that, until default, Debtor may, in the ordinary course of
Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use
monies available to Debtor;
(2) to notify Secured Party promptly of:
(i) any change in the information contained herein or in
the Schedules hereto relating to Debtor, Debtor's
business or Collateral; and
(ii) any material loss of or damage to Collateral;
(3) to keep the Collateral in good order, condition and repair and
not to use Collateral in violation of the provisions of this Security Agreement
or any other agreement relating to Collateral or any policy insuring Collateral
or any applicable statute, law, by-law, rule, regulation or ordinance;
(4) to do, execute, acknowledge and deliver such financing
statements and further assignments, transfers, documents, acts, matters and
things (including further schedules hereto) as may be reasonably requested by
Secured Party of or with respect to Collateral in order to give effect to these
presents and to pay all costs for searches and filings in connection therewith;
(5) to pay all taxes, rates, levies, assessments and other charges
of every nature which may be lawfully levied, assessed or imposed against or in
respect of Debtor or Collateral as and
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<PAGE> 6
when the same become due and payable;
(6) to insure the Collateral for such periods, in such amounts, on
such terms and against loss or damage by fire and such other risks as Secured
Party shall reasonably direct with loss payable to Secured Party and Debtor, as
insured, as their respective interests may appear, and to pay all premiums
therefor;
(7) to prevent Collateral, save Inventory sold or leased as
permitted hereby, from being or becoming an accession to other property not
covered by this Security Agreement;
(8) to carry on and conduct the business of Debtor in a proper and
efficient manner and so as to protect and preserve the Collateral and to keep,
in accordance with generally accepted accounting principles, consistently
applied, proper books of account for Debtor's business as well as accurate and
complete records concerning Collateral, and mark any and all such records and
Collateral as Secured Party's request so as to indicate the Security Interest;
and
(9) to deliver to Secured Party from time to time promptly upon
request:
(i) any Documents of Title, Instruments, Securities and
Chattel Paper constituting, representing or relating
to Collateral;
(ii) all books of account and all records, ledgers,
reports, correspondence, schedules, documents,
statements, lists and other writing relating to
Collateral for the purpose of inspecting, auditing or
copying the same;
(iii) all financial statements prepared by or for Debtor
regarding Debtor's business;
(iv) all policies and certificates of insurance relating
to Collateral; and
(v) such information concerning Collateral, Debtor and
Debtor's business and affairs as Secured Party may
reasonably request.
10. EVENTS OF DEFAULT
The happening of any of the following events or conditions shall
constitute default hereunder which is herein referred to as "default":
(1) the nonpayment when due, whether by acceleration or otherwise,
of any principal or interest forming part of the Obligations or the failure of
Debtor to observe or perform any obligation, covenant, term, provision or
condition contained in this Security Agreement; or
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<PAGE> 7
(2) any Event of Default under the Credit Agreement.
11. ACCELERATION
Secured Party, in its sole discretion, may declare all or any part of
the Obligations not payable on demand to be immediately due and payable,
without demand or notice of any kind, in the event of default. The provisions
of this clause are not intended in any way to affect any rights of Secured
Party with respect to Obligations which may now or hereafter be payable on
demand.
12. REMEDIES
(1) Upon default, Secured Party may appoint or reappoint by
instrument in writing, any person or persons, whether an officer or officers or
an employee or employees of Secured Party or not, to be a receiver or receivers
(hereinafter called a "Receiver", which term when used herein shall include a
receiver and manager) of Collateral (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and appoint another in his
stead. Any such Receiver shall, so far as concerns responsibility for his
acts, be deemed the agent of Debtor and not Secured Party, and Secured Party
shall not be in any way responsible for any misconduct, negligence or
nonfeasance on the part of any such Receiver, his servants, agents or
employees. Subject to the provisions of the instrument appointing him, any
such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part
of the business of Debtor and to sell, lease or otherwise dispose of or concur
in selling, leasing or otherwise disposing of Collateral. To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others,
including Debtor, enter upon, use and occupy all premises owned or occupied by
Debtor wherein Collateral may be situate, maintain Collateral upon such
premises, borrow money on a secured or unsecured basis and use Collateral
directly in carrying on Debtor's business or otherwise, as such Receiver shall,
in his discretion, determine. Except as may be otherwise directed by Secured
Party, all monies received from time to time by such Receiver in carrying out
his appointment shall be received in trust for and paid over to Secured Party.
Every such Receiver may, in the discretion of Secured Party, be vested with all
or any of the rights and powers of Secured Party.
(2) Upon default, Secured Party may, either directly or through
its agents or nominees, exercise all the powers and rights given to a Receiver
by virtue of the foregoing subclause (1).
(3) Secured Party may take possession of, collect, demand, sue on,
enforce, recover and receive Collateral and give valid and binding receipts and
discharges therefor and in respect thereof and, upon default, Secured Party may
sell, lease or otherwise dispose of Collateral in such manner, at such time or
otherwise dispose of Collateral in such manner, at such time or times and place
or places, for such consideration and upon such terms and conditions as to
Secured Party may seem
-7-
<PAGE> 8
reasonable.
(4) In addition to those rights granted herein and in any other
agreement now or hereafter in effect between Debtor and Secured Party and in
addition to any other rights Secured Party may have at law or in equity,
Secured Party shall have, both before and after default, all rights and
remedies of a secured party under the P.P.S.A. Provided always that Secured
Party shall not be liable or accountable for any failure to exercise its
remedies, take possession of, collect, enforce, realize, sell, lease or
otherwise dispose of Collateral or to institute proceedings for such purposes.
Furthermore, Secured Party shall have no obligation to take any steps to
preserve rights against prior parties to any Instrument or Chattel Paper,
whether Collateral or proceeds and whether or not in Secured Party's possession
and shall not be liable or accountable for failure to do so.
(5) Debtor acknowledges that Secured Party or any Receiver
appointed by it may take possession of Collateral wherever it may be located
and by any method permitted by law and Debtor agrees upon request from Secured
Party or any such Receiver to assemble and deliver possession of Collateral at
such place or places as directed.
(6) Debtor agrees to pay all costs, charges and expenses
reasonably incurred by Secured Party or any Receiver appointed by it, whether
directly or for services rendered (including reasonable solicitors' and
auditors' costs and other legal expenses and Receiver remuneration), in
operating Debtor's accounts, in preparing or enforcing this Security Agreement,
taking custody of, preserving, repairing, processing, preparing for disposition
and disposing of Collateral and in enforcing or collecting Obligations and all
such costs, charges and expenses together with any monies owing as a result of
any borrowing by Secured Party or any Receiver appointed by it, as permitted
hereby, shall be a first charge on the proceeds of realization, collection or
disposition of Collateral and shall be secured hereby.
(7) Unless the Collateral in question is perishable or unless
Secured Party believes on reasonable grounds that the Collateral in question
will decline speedily in value, Secured Party will give Debtor such notice of
the date, time and place of any public sale or of the date after which any
private disposition of Collateral is to be made, as may be required by the
P.P.S.A.
13. DISPOSITION OF MONIES
Subject to any applicable requirements of the P.P.S.A., all monies
collected or received by Secured Party pursuant to or in exercise of any right
it possesses with respect to Collateral shall be applied on account of the
Obligations in such manner as described in the Credit Agreement or, at the
option of Secured Party, may be held unappropriated in a collateral account or
released to Debtor, all without prejudice to the liability of Debtor or the
rights of Secured Party hereunder. Debtor hereby acknowledges that if the
disposition of all or any Collateral by Secured Party or a Receiver pursuant
hereto does not give rise to sufficient funds to pay all Obligations secured
hereby Debtor
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<PAGE> 9
shall remain liable for any deficiency until all Obligations have been paid or
satisfied in full. Any surplus shall be accounted for as required by law.
14. MISCELLANEOUS
(1) Debtor hereby authorizes Secured Party to file such financing
statements and other documents and do such acts, matters and things (including
completing and adding schedules hereto identifying Collateral or any Permitted
Liens affecting Collateral or identifying the locations at which Debtor's
business is carried on and Collateral and records relating thereto are situate)
as Secured Party may deem appropriate to perfect and continue the Security
Interest, to protect and preserve Collateral and its Security Interest in the
Collateral and to realize upon the Security Interest and Debtor hereby
irrevocably constitutes and appoints each Vice-President from time to time of
Secured Party the true and lawful attorney of Debtor, with full power of
substitution, to do any of the foregoing in the name of Debtor whenever and
wherever it may be deemed necessary or expedient.
(2) Without limiting any other right of Secured Party, whenever
the Obligations are immediately due and payable or Secured Party has the right
to declare the Obligations to be immediately due and payable (whether or not it
has so declared), Secured Party may, in its sole discretion, set off against
the Obligations any and all monies then owed to Debtor by Secured Party in any
capacity, whether or not due, and Secured Party shall be deemed to have
exercised such right of set off immediately at the time of making its decision
to do so even though any charge therefor is made or entered on Secured Party's
records subsequent thereto.
(3) Upon Debtor's failure to perform any of its duties hereunder,
Secured Party may, but shall not be obligated to, perform any or all of such
duties, and Debtor shall pay to Secured Party, forthwith upon written demand
therefor, an amount equal to the expense incurred by Secured Party in so doing
plus interest thereon from the date such expense is incurred until it is paid
at the Overdue Rate.
(4) After default, Secured Party may grant extensions of time and
other indulgences, take and give up security, accept compositions, compound,
comprise, settle, grant releases and discharges and otherwise deal with Debtor,
debtors of Debtor, sureties and others and with Collateral and other security
as Secured Party may see fit without prejudice to the liability of Debtor or
Secured Party's right to hold and realize the Security Interest. Furthermore,
Secured Party may, after default, demand, collect and sue on Collateral in
either Debtor's or Secured Party's name, at Secured Party's option, and may
endorse Debtor's name on any and all cheques, commercial paper and any other
Instruments pertaining to or constituting Collateral.
(5) No delay or omission by Secured Party in exercising any right
or remedy hereunder or with respect to any Obligations shall operate as a
waiver thereof or of any other right or remedy,
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<PAGE> 10
and no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. Furthermore,
Secured Party may remedy any default by Debtor hereunder or with respect to any
Obligations in any reasonable manner without waiving the default remedied and
without waiving any other prior or subsequent default by Debtor. All rights
and remedies of Secured Party granted or recognized herein are cumulative and
may be exercised at any time and from time to time independently or in
combination.
(6) Debtor waives protest of any Instrument constituting
Collateral at any time held by Secured Party on which Debtor is in any way
liable and, subject to Clause 12(7), notice of any other action taken by
Secured Party.
(7) This Security Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. In any action brought by an assignee
of this Security Agreement and the Security Interest or any part thereof to
enforce any rights hereunder, Debtor shall not assert against the assignee any
claim or defence which Debtor now has or hereafter may have against Secured
Party.
(8) Save for any schedules which may be added hereto pursuant to
the provisions hereof, no modification, variation or amendment of any provision
of this Security Agreement shall be made except by a written agreement executed
by the parties hereto and no waiver of any provision hereof shall be effective
unless in writing.
(9) This Security Agreement and the transactions evidenced hereby
shall be governed by and construed in accordance with the laws of the Province
of Ontario as the same may from time to time be in effect, including, where
applicable, the P.P.S.A.
(10) Subject to the requirements of Clauses 12(7) and 14(11)
hereof, whenever either party hereto is required or entitled to notify or
direct the other or to make a demand or request upon the other, such notice,
direction, demand or request shall be in writing shall be sufficiently given
only if delivered to the party for whom it is intended at the principal address
of such party herein set forth or as changed pursuant hereto or if sent by
prepaid registered mail addressed to the party for whom it is intended at the
principal address of such party herein set forth or as changed pursuant hereto.
Either party may notify the other pursuant hereto of any change in such party's
principal address to be used for the purposes hereof.
(11) This Security Agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter
held by Secured Party and is, and is intended to be, a continuing Security
Agreement and shall remain in full force and effect until the Obligations have
been paid and satisfied in full.
(12) The headings used in this Security Agreement are for
convenience only and are not to be considered a part of this Security Agreement
and do not in any way limit or amplify the terms
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<PAGE> 11
and provisions of this Security Agreement.
(13) When the context so requires, the singular number shall be
read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.
(14) If any provisions of this Security Agreement, as amended from
time to time, shall be deemed invalid or void, in whole or in part, by any
court of competent jurisdiction, the remaining terms and provisions of this
Security Agreement shall remain in full force and effect.
(15) Nothing herein contained shall in any way obligate Secured
Party to grant, continue, renew, extend time for payment of or accept anything
which constitutes or would constitute Obligations.
(16) The Security Interest created hereby is intended to attach
when this Security Agreement is signed by Debtor and delivered to Secured
Party.
15. COPY OF AGREEMENT
Debtor hereby acknowledges receipt of a copy of this Security
Agreement.
IN WITNESS WHEREOF Debtor has executed this Security Agreement this
24th day of June, 1997.
BMG HOLDINGS, INC.
By:___________________________________
Name:
Title:
Agreed to and Accepted by:
FIRST CHICAGO NBD BANK, CANADA,
as the Affiliate designated by NBD Bank to make
Canadian Advances and as collateral agent for
the Lenders for the purpose of holding this security
as specified in the Credit Agreement
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<PAGE> 12
BMG HOLDINGS, INC.
Guarantor Security Agreement
Schedule A
----------
1. Location of Debtor's Business Operations
(a) BMG Holdings, Inc.
2000 North Woodward Avenue, Suite 130
Bloomfield Hills, Michigan 48304
(b) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(d) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
2. Location of Records Relating to Collateral
(a) BMG Holdings, Inc.
2000 North Woodward Avenue, Suite 130
Bloomfield Hills, Michigan 48304
(b) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
1
<PAGE> 13
(d) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(e) 2365 Franklin Road
Bloomfield Hills, MI 48302
3. Locations of Collateral
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(d) Lindert Tool & Die
23 Raglan Place
Cambridge, Ontario, Canada
(e) Fincore
10 Melford Drive
Units 1-8
Scarborough, Ontario M1B 2G1, Canada
(f) Hinderliter Heat Treating Ltd.
9 Shirley Avenue
Kitchener, Ontario, Canada
(g) Easton Coatings Corporation
97 Easton Road
Brantford, Ontario N3P 1J4, Canada
2
<PAGE> 1
EXHIBIT 4.7
GUARANTOR SECURITY AGREEMENT
This GUARANTOR SECURITY AGREEMENT, dated as of June 24, 1997 (this
"Security Agreement"), is by BMG NORTH AMERICA LIMITED, a corporation organized
under the laws of the Province of Ontario (the "Debtor") in favor of FIRST
CHICAGO NBD BANK, CANADA, in its capacity as the Affiliate designated by NBD
Bank, a Michigan banking corporation, to make Canadian Advances and as
collateral agent for the Lenders for the purpose of holding this security as
specified in the Credit Agreement referred to below (the "Secured Party").
1. CREATION OF SECURITY INTEREST
(1) For value received, Debtor hereby grants to Secured Party a
security interest (the "Security Interest") in the undertaking of Debtor and in
all Goods (including all parts, accessories, attachments, special tools,
additions and accessions thereto), Chattel Paper, Documents of Title (whether
negotiable or not), Instruments, Intangibles and Securities now owned or
hereafter owned or acquired by or on behalf of Debtor (including such as may be
returned to or repossessed by Debtor) and in all proceeds and renewals thereof,
accretions thereto and substitutions therefor (hereinafter collectively called
"Collateral"), including, without limitation, all of the following now owned or
hereafter owned or acquired by or on behalf of Debtor:
(i) all inventory of whatever kind and wherever situate
("Inventory");
(ii) all equipment (other than Inventory) of whatever kind
and wherever situate, including, without limitation,
all machinery, tools, apparatus, plant, furniture,
fixtures and vehicles of whatsoever nature or kind;
(iii) all book accounts and book debts and generally all
accounts, debts, dues, claims, choses in action and
demands of every nature and kind howsoever arising or
secured including letters of credit and advices of
credit, which are now due, owing or accruing or
growing due to or owned by or which may hereafter
become due, owing or accruing or growing due to or
owned by Debtor ("Debts");
(iv) all deeds, documents, writings, papers, books of
account and other books relating to or being records
of Debts, Chattel Paper or Documents of Title or by
which such are or may hereafter be secured,
evidenced, acknowledged or made payable;
(v) all contractual rights and insurance claims and all
goodwill, patents, trademarks, copyrights, and other
industrial property;
(vi) all monies other than trust monies lawfully belonging
to others; and
<PAGE> 2
(vii) all property described in any schedule now or
hereafter annexed hereto.
(2) The Security Interest granted hereby shall not extend or apply
to and Collateral shall not include the last day of the term of any lease or
agreement therefor but upon the enforcement of the Security Interest Debtor
shall stand possessed of such last day in trust to assign the same to any
person acquiring such term.
(3) The terms "Goods", "Chattel Paper", "Documents of Title",
"Instruments", "Intangibles", "Securities", "proceeds", "inventory" and
"accession" whenever used herein shall be interpreted pursuant to their
respective meanings when used in the Personal Property Security Act of Ontario,
as amended from time to time, which Act, including amendments thereto and any
Act substituted therefor and amendments thereto is herein referred to as the
"P.P.S.A." Provided always that the term "Goods" when used herein shall not
include "consumer goods" of Debtor as that term is defined in the P.P.S.A., and
the term "Inventory" when used herein shall include livestock and the young
thereof after conception and crops that become such within the year of
execution of this Security Agreement. Any reference herein to "Collateral"
shall, unless the context otherwise requires, be deemed a reference to
"Collateral or any part thereof".
(4) As used herein, the term "Credit Agreement" means the Credit
Agreement dated as of the date hereof among Oxford Automotive, Inc., a
corporation incorporated under the laws of the State of Michigan (the
"Company"), each of the Subsidiaries designated under Section 1.1 of the Credit
Agreement as a "Borrowing Subsidiary", the lenders party thereto from time to
time ( the "Lenders") and the Agent, as amended or modified from time to time.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
2. OBLIGATIONS SECURED
The Security Interest granted hereby secures payment and satisfaction
of any and all of the following (the "Obligations"): any and all existing and
future indebtedness, obligation and liability of every kind, nature and
character, direct or indirect, absolute or contingent (including without
limitation all indebtedness, obligations and liabilities pursuant to any Loans,
Letters of Credit, Bankers' Acceptances and other Advances and all interest,
fees, and other charges thereon and all renewals, extensions and modifications
thereof and all fees, costs and expenses incurred by the Agent or any of the
Lenders in connection with the documentation, administration, collection or
enforcement thereof), of the Debtor or of the Company to the Agent or any of
the Lenders or any branch, subsidiary or affiliate thereof, howsoever and
whensoever created, arising, evidenced or acquired pursuant to the Credit
Agreement, the Notes, the Security Documents, any Rate Hedging Agreements or
any other agreement, instrument or documents executed in connection therewith
at any time (all of the foregoing, as amended or modified from time to time,
collectively referred to as the "Loan Documents"). The Obligations secured by
this Agreement are continuing in nature and include those Obligations secured
by the Company Security Agreement dated as of February 11, 1997 by the Debtor
in favor of the Secured Party.
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<PAGE> 3
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<PAGE> 4
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR
Debtor represents and warrants and so long as this Security Agreement
remains in effect shall be deemed to continuously represent and warrant that:
(1) the Collateral is genuine and owned by Debtor free of all
security interests, mortgages, liens, claims, charges or other encumbrances
(hereinafter collectively called "Liens"), save for the Security Interest and
Permitted Liens;
(2) to the best of the Debtor's knowledge, other than as disclosed
in writing by the Debtor to the Secured Party, each Debt, Chattel Paper and
Instrument constituting Collateral is enforceable in accordance with its terms
against the party obligated to pay the same (the "Account Debtor"), and the
amount represented by Debtor to Secured Party from time to time as owing by
each Account Debtor or by all Account Debtors will be the correct amount
actually and unconditionally owing by such Account Debtor or Account Debtors,
except for normal cash discounts where applicable, and no Account Debtor will
have any defence, set off, claim or counterclaim against Debtor which can be
asserted against Secured Party, whether in any proceeding to enforce Collateral
or otherwise; and
(3) the locations specified n Schedule "A" hereto as to business
operations and records are accurate and complete and, with respect to Goods
(including Inventory) constituting Collateral, the locations specified in
Schedule "A" hereto are accurate and complete save for Goods in transit to such
locations and Inventory on lease or consignment; and all fixtures or Goods
about to become fixtures and all crops and all oil, gas or other minerals to be
extracted and all timber to be cut which forms part of the Collateral will be
situate at one of such locations.
4. USE OF COLLATERAL BY DEBTOR AND CONFIRMATION OF COLLATERAL BY SECURED
PARTY
Subject to compliance with Debtor's covenants contained herein, Debtor
may, until default, possess, operate, collect, use and enjoy and deal with
Collateral in the ordinary course of Debtor's business in any manner not
inconsistent with the provisions hereof; provided always that Secured Party
shall have the right at any time and from time to time to confirm the existence
and state of the Collateral in any manner Secured Party may consider
appropriate and Debtor agrees to furnish all assistance and information and to
perform all such acts as Secured Party may reasonably request in connection
therewith and to all places where Collateral may be located and to all premises
occupied by Debtor.
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<PAGE> 5
5. RECEIPTS OF INCOME FROM AND INTEREST ON COLLATERAL
(1) Until default, Debtor shall have the right to receive any
monies constituting income from or interest on Collateral and if Secured Party
receives any such monies prior to default, Secured Party shall either credit
the same to the account of Debtor or pay the same promptly to Debtor.
(2) After default, Debtor will not request or receive any monies
constituting income from or interest on Collateral and if Debtor receives any
such monies, Debtor will receive the same in trust for and promptly pay the
same to Secured Party.
6. INCREASES, PROFITS, PAYMENTS OR DISTRIBUTIONS REGARDING COLLATERAL
(1) Whether or not default has occurred, Debtor authorizes Secured
Party
(i) to receive any increase in or profits on Collateral
(other than money) and to hold the same as part of
Collateral; money so received shall be treated as
income for the purposes of Clause 5 hereof and dealt
with accordingly; and
(ii) to receive any payment or distribution upon
redemption or retirement or upon dissolution and
liquidation of the issuer of Collateral; to surrender
Collateral in exchange therefor; and to hold any such
payment or distribution as part of the Collateral.
(2) If Debtor receives any such increase or profits (other than
money) or payments or distributions, Debtor will receive the same in trust for
and deliver the same promptly to Secured Party to be held by Secured Party as
herein provided.
7. SECURITIES FORMING PART OF COLLATERAL
If Collateral at any time includes Securities, Debtor authorizes
Secured Party to transfer the same or any part thereof into its own name or
that of its nominee(s) so that Secured Party or its nominee(s) may appear of
record as the sole owner thereof; provided that, until default, Secured Party
shall deliver promptly to Debtor all notices or other communications received
by it or its nominee(s) as such registered owner and, upon demand and receipt
of payment of any necessary expenses thereof, shall issue to Debtor or its
order a proxy to vote and take all action with respect to such Securities.
After enforcement of remedies hereunder, Debtor waives all rights to receive
any notices or communications received by Secured Party or its nominee(s) as
such registered owner and agrees that no proxy issued by Secured Party to
Debtor or its order as aforesaid shall thereafter be effective.
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<PAGE> 6
8. COLLECTION OF DEBTS FORMING PART OF COLLATERAL
After default, Secured Party may notify all or any Account Debtors of
the Security Interest and may also direct such Account Debtors to make all
payments on Collateral to Secured Party. Debtor acknowledges that any payments
on or other proceeds of Collateral received by Debtor from Account Debtors,
before or after notification of this Security Interest to Account Debtors, if
received after default, shall be received and held by Debtor in trust for
Secured Party and shall be turned over to Secured Party upon request.
9. COVENANTS OF THE DEBTOR
So long as this Security Agreement remains in effect, Debtor covenants
and agrees:
(1) to defend the Collateral against the claims and demands of all
other parties claiming the same or an interest therein; to keep the Collateral
free from all Liens, except for the Security Interest and Permitted Liens or
hereafter approved in writing, prior to their creation or assumption, by
Secured Party; and not to sell, exchange, transfer, assign, lease, or otherwise
dispose of Collateral or any interest therein without the prior written consent
of Secured Party, except to the extent permitted under the Credit Agreement;
provided always that, until default, Debtor may, in the ordinary course of
Debtor's business, sell or lease Inventory and, subject to Clause 8 hereof, use
monies available to Debtor;
(2) to notify Secured Party promptly of:
(i) any change in the information contained herein or in
the Schedules hereto relating to Debtor, Debtor's
business or Collateral; and
(ii) any material loss of or damage to Collateral;
(3) to keep the Collateral in good order, condition and repair and
not to use Collateral in violation of the provisions of this Security Agreement
or any other agreement relating to Collateral or any policy insuring Collateral
or any applicable statute, law, by-law, rule, regulation or ordinance;
(4) to do, execute, acknowledge and deliver such financing
statements and further assignments, transfers, documents, acts, matters and
things (including further schedules hereto) as may be reasonably requested by
Secured Party of or with respect to Collateral in order to give effect to these
presents and to pay all costs for searches and filings in connection therewith;
(5) to pay all taxes, rates, levies, assessments and other charges
of every nature which
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<PAGE> 7
may be lawfully levied, assessed or imposed against or in respect of Debtor or
Collateral as and when the same become due and payable;
(6) to insure the Collateral for such periods, in such amounts, on
such terms and against loss or damage by fire and such other risks as Secured
Party shall reasonably direct with loss payable to Secured Party and Debtor, as
insured, as their respective interests may appear, and to pay all premiums
therefor;
(7) to prevent Collateral, save Inventory sold or leased as
permitted hereby, from being or becoming an accession to other property not
covered by this Security Agreement;
(8) to carry on and conduct the business of Debtor in a proper and
efficient manner and so as to protect and preserve the Collateral and to keep,
in accordance with generally accepted accounting principles, consistently
applied, proper books of account for Debtor's business as well as accurate and
complete records concerning Collateral, and mark any and all such records and
Collateral as Secured Party's request so as to indicate the Security Interest;
and
(9) to deliver to Secured Party from time to time promptly upon
request:
(i) any Documents of Title, Instruments, Securities and
Chattel Paper constituting, representing or relating
to Collateral;
(ii) all books of account and all records, ledgers,
reports, correspondence, schedules, documents,
statements, lists and other writing relating to
Collateral for the purpose of inspecting, auditing or
copying the same;
(iii) all financial statements prepared by or for Debtor
regarding Debtor's business;
(iv) all policies and certificates of insurance relating
to Collateral; and
(v) such information concerning Collateral, Debtor and
Debtor's business and affairs as Secured Party may
reasonably request.
10. EVENTS OF DEFAULT
The happening of any of the following events or conditions shall
constitute default hereunder which is herein referred to as "default":
(1) the nonpayment when due, whether by acceleration or otherwise,
of any principal or
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<PAGE> 8
interest forming part of the Obligations or the failure of Debtor to observe or
perform any obligation, covenant, term, provision or condition contained in
this Security Agreement; or
(2) any Event of Default under the Credit Agreement;
11. ACCELERATION
Secured Party, in its sole discretion, may declare all or any part of
the Obligations not payable on demand to be immediately due and payable,
without demand or notice of any kind, in the event of default. The provisions
of this clause are not intended in any way to affect any rights of Secured
Party with respect to Obligations which may now or hereafter be payable on
demand.
12. REMEDIES
(1) Upon default, Secured Party may appoint or reappoint by
instrument in writing, any person or persons, whether an officer or officers or
an employee or employees of Secured Party or not, to be a receiver or receivers
(hereinafter called a "Receiver", which term when used herein shall include a
receiver and manager) of Collateral (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and appoint another in his
stead. Any such Receiver shall, so far as concerns responsibility for his
acts, be deemed the agent of Debtor and not Secured Party, and Secured Party
shall not be in any way responsible for any misconduct, negligence or
nonfeasance on the part of any such Receiver, his servants, agents or
employees. Subject to the provisions of the instrument appointing him, any
such Receiver shall have power to take possession of Collateral, to preserve
Collateral or its value, to carry on or concur in carrying on all or any part
of the business of Debtor and to sell, lease or otherwise dispose of or concur
in selling, leasing or otherwise disposing of Collateral. To facilitate the
foregoing powers, any such Receiver may, to the exclusion of all others,
including Debtor, enter upon, use and occupy all premises owned or occupied by
Debtor wherein Collateral may be situate, maintain Collateral upon such
premises, borrow money on a secured or unsecured basis and use Collateral
directly in carrying on Debtor's business or otherwise, as such Receiver shall,
in his discretion, determine. Except as may be otherwise directed by Secured
Party, all monies received from time to time by such Receiver in carrying out
his appointment shall be received in trust for and paid over to Secured Party.
Every such Receiver may, in the discretion of Secured Party, be vested with all
or any of the rights and powers of Secured Party.
(2) Upon default, Secured Party may, either directly or through
its agents or nominees, exercise all the powers and rights given to a Receiver
by virtue of the foregoing subclause (1).
(3) Secured Party may take possession of, collect, demand, sue on,
enforce, recover and receive Collateral and give valid and binding receipts and
discharges therefor and in respect thereof
-8-
<PAGE> 9
and, upon default, Secured Party may sell, lease or otherwise dispose of
Collateral in such manner, at such time or otherwise dispose of Collateral in
such manner, at such time or times and place or places, for such consideration
and upon such terms and conditions as to Secured Party may seem reasonable.
(4) In addition to those rights granted herein and in any other
agreement now or hereafter in effect between Debtor and Secured Party and in
addition to any other rights Secured Party may have at law or in equity,
Secured Party shall have, both before and after default, all rights and
remedies of a secured party under the P.P.S.A. Provided always that Secured
Party shall not be liable or accountable for any failure to exercise its
remedies, take possession of, collect, enforce, realize, sell, lease or
otherwise dispose of Collateral or to institute proceedings for such purposes.
Furthermore, Secured Party shall have no obligation to take any steps to
preserve rights against prior parties to any Instrument or Chattel Paper,
whether Collateral or proceeds and whether or not in Secured Party's possession
and shall not be liable or accountable for failure to do so.
(5) Debtor acknowledges that Secured Party or any Receiver
appointed by it may take possession of Collateral wherever it may be located
and by any method permitted by law and Debtor agrees upon request from Secured
Party or any such Receiver to assemble and deliver possession of Collateral at
such place or places as directed.
(6) Debtor agrees to pay all costs, charges and expenses
reasonably incurred by Secured Party or any Receiver appointed by it, whether
directly or for services rendered (including reasonable solicitors' and
auditors' costs and other legal expenses and Receiver remuneration), in
operating Debtor's accounts, in preparing or enforcing this Security Agreement,
taking custody of, preserving, repairing, processing, preparing for disposition
and disposing of Collateral and in enforcing or collecting Obligations and all
such costs, charges and expenses together with any monies owing as a result of
any borrowing by Secured Party or any Receiver appointed by it, as permitted
hereby, shall be a first charge on the proceeds of realization, collection or
disposition of Collateral and shall be secured hereby.
(7) Unless the Collateral in question is perishable or unless
Secured Party believes on reasonable grounds that the Collateral in question
will decline speedily in value, Secured Party will give Debtor such notice of
the date, time and place of any public sale or of the date after which any
private disposition of Collateral is to be made, as may be required by the
P.P.S.A.
13. DISPOSITION OF MONIES
Subject to any applicable requirements of the P.P.S.A., all monies
collected or received by Secured Party pursuant to or in exercise of any right
it possesses with respect to Collateral shall be applied on account of the
Obligations in such manner as described in the Credit Agreement or, at the
option of Secured Party, may be held unappropriated in a collateral account or
released to Debtor,
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<PAGE> 10
all without prejudice to the liability of Debtor or the rights of Secured Party
hereunder. Debtor hereby acknowledges that if the disposition of all or any
Collateral by Secured Party or a Receiver pursuant hereto does not give rise to
sufficient funds to pay all Obligations secured hereby Debtor shall remain
liable for any deficiency until all Obligations have been paid or satisfied in
full. Any surplus shall be accounted for as required by law.
14. MISCELLANEOUS
(1) Debtor hereby authorizes Secured Party to file such financing
statements and other documents and do such acts, matters and things (including
completing and adding schedules hereto identifying Collateral or any Permitted
Liens affecting Collateral or identifying the locations at which Debtor's
business is carried on and Collateral and records relating thereto are situate)
as Secured Party may deem appropriate to perfect and continue the Security
Interest, to protect and preserve Collateral and its Security Interest in the
Collateral and to realize upon the Security Interest and Debtor hereby
irrevocably constitutes and appoints each Vice-President from time to time of
Secured Party the true and lawful attorney of Debtor, with full power of
substitution, to do any of the foregoing in the name of Debtor whenever and
wherever it may be deemed necessary or expedient.
(2) Without limiting any other right of Secured Party, whenever
the Obligations are immediately due and payable or Secured Party has the right
to declare the Obligations to be immediately due and payable (whether or not it
has so declared), Secured Party may, in its sole discretion, set off against
the Obligations any and all monies then owed to Debtor by Secured Party in any
capacity, whether or not due, and Secured Party shall be deemed to have
exercised such right of set off immediately at the time of making its decision
to do so even though any charge therefor is made or entered on Secured Party's
records subsequent thereto.
(3) Upon Debtor's failure to perform any of its duties hereunder,
Secured Party may, but shall not be obligated to, perform any or all of such
duties, and Debtor shall pay to Secured Party, forthwith upon written demand
therefor, an amount equal to the expense incurred by Secured Party in so doing
plus interest thereon from the date such expense is incurred until it is paid
at the Overdue Rate.
(4) After default, Secured Party may grant extensions of time and
other indulgences, take and give up security, accept compositions, compound,
comprise, settle, grant releases and discharges and otherwise deal with Debtor,
debtors of Debtor, sureties and others and with Collateral and other security
as Secured Party may see fit without prejudice to the liability of Debtor or
Secured Party's right to hold and realize the Security Interest. Furthermore,
Secured Party may, after default, demand, collect and sue on Collateral in
either Debtor's or Secured Party's name, at Secured Party's option, and may
endorse Debtor's name on any and all cheques, commercial paper and any other
Instruments pertaining to or constituting Collateral.
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<PAGE> 11
(5) No delay or omission by Secured Party in exercising any right
or remedy hereunder or with respect to any Obligations shall operate as a
waiver thereof or of any other right or remedy, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. Furthermore, Secured Party may remedy
any default by Debtor hereunder or with respect to any Obligations in any
reasonable manner without waiving the default remedied and without waiving any
other prior or subsequent default by Debtor. All rights and remedies of
Secured Party granted or recognized herein are cumulative and may be exercised
at any time and from time to time independently or in combination.
(6) Debtor waives protest of any Instrument constituting
Collateral at any time held by Secured Party on which Debtor is in any way
liable and, subject to Clause 12(7), notice of any other action taken by
Secured Party.
(7) This Security Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. In any action brought by an assignee
of this Security Agreement and the Security Interest or any part thereof to
enforce any rights hereunder, Debtor shall not assert against the assignee any
claim or defence which Debtor now has or hereafter may have against Secured
Party.
(8) Save for any schedules which may be added hereto pursuant to
the provisions hereof, no modification, variation or amendment of any provision
of this Security Agreement shall be made except by a written agreement executed
by the parties hereto and no waiver of any provision hereof shall be effective
unless in writing.
(9) This Security Agreement and the transactions evidenced hereby
shall be governed by and construed in accordance with the laws of the Province
of Ontario as the same may from time to time be in effect, including, where
applicable, the P.P.S.A.
(10) Subject to the requirements of Clauses 12(7) and 14(11)
hereof, whenever either party hereto is required or entitled to notify or
direct the other or to make a demand or request upon the other, such notice,
direction, demand or request shall be in writing shall be sufficiently given
only if delivered to the party for whom it is intended at the principal address
of such party herein set forth or as changed pursuant hereto or if sent by
prepaid registered mail addressed to the party for whom it is intended at the
principal address of such party herein set forth or as changed pursuant hereto.
Either party may notify the other pursuant hereto of any change in such party's
principal address to be used for the purposes hereof.
(11) This Security Agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter
held by Secured Party and is, and is intended to be, a continuing Security
Agreement and shall remain in full force and effect until the Obligations have
been paid and satisfied in full.
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<PAGE> 12
(12) The headings used in this Security Agreement are for
convenience only and are not to be considered a part of this Security Agreement
and do not in any way limit or amplify the terms and provisions of this
Security Agreement.
(13) When the context so requires, the singular number shall be
read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.
(14) If any provisions of this Security Agreement, as amended from
time to time, shall be deemed invalid or void, in whole or in part, by any
court of competent jurisdiction, the remaining terms and provisions of this
Security Agreement shall remain in full force and effect.
(15) Nothing herein contained shall in any way obligate Secured
Party to grant, continue, renew, extend time for payment of or accept anything
which constitutes or would constitute Obligations.
(16) The Security Interest created hereby is intended to attach
when this Security Agreement is signed by Debtor and delivered to Secured
Party.
15. COPY OF AGREEMENT
Debtor hereby acknowledges receipt of a copy of this Security
Agreement.
IN WITNESS WHEREOF Debtor has executed this Security Agreement this
24th day of June, 1997.
BMG NORTH AMERICA LIMITED
By:___________________________________
Name:
Title:
Agreed to and Accepted by:
FIRST CHICAGO NBD BANK, CANADA,
as the Affiliate designated by NBD Bank to make
Canadian Advances and as collateral agent for
the Lenders for the purpose of holding this security
as specified in the Credit Agreement
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<PAGE> 13
BMG NORTH AMERICA LIMITED
Guarantor Security Agreement
Schedule A
1. Location of Debtor's Business Operations
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
2. Location of Records Relating to Collateral
(a) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(c) 2365 Franklin Road
Bloomfield Hills, MI 48302
(d) 2000 North Woodward Avenue, Suite 130
Bloomfield Hills, MI 48304
1
<PAGE> 14
3. Locations of Collateral
(a) BMG North America
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(c) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(d) Lindert Tool & Die
23 Raglan Place
Cambridge, Ontario
Canada
(e) Fincore
10 Melford Drive
Units 1-8
Scarborough, Ontario M1B 2G1
Canada
(f) Hinderliter Heat Treating Ltd.
9 Shirley Avenue
Kitchener, Ontario
Canada
(g) Easton Coatings Corporation
97 Easton Road
Brantford, Ontario N3P 1J4
Canada
2
<PAGE> 1
EXHIBIT 4.8
GUARANTOR SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of June 24, 1997 (this "Security
Agreement"), is made by LOBDELL EMERY CORPORATION, a Michigan corporation,
CREATIVE FABRICATION CORPORATION, a Tennessee corporation, WINCHESTER
FABRICATION CORPORATION, a Michigan Corporation, PARALLEL GROUP INTERNATIONAL,
INC., an Indiana corporation, LASERWELD INTERNATIONAL, L.L.C., an Indiana
limited liability company, CONCEPT MANAGEMENT CORPORATION, a Michigan
corporation, and LEWIS EMERY CAPITAL CORPORATION, a Michigan corporation (each
individually, a "Grantor" and, collectively, the "Grantors"), in favor of NBD
BANK, a Michigan banking corporation, as agent (in such capacity, the "Agent")
for the benefit of itself and the lenders (the "Lenders") now or hereafter
parties to the Credit Agreement described below.
RECITALS
A. Oxford Automotive, Inc. (the "Borrower") and the Borrowing Subsidiary
identified from time to time therein have entered into a Credit Agreement of
even date herewith (as amended or modified from time to time, including any
agreement entered into in substitution therefor, the "Credit Agreement"), with
the Lenders and the Agent pursuant to which the Lenders may make Advances (as
therein defined) to the Borrower and the Borrowing Subsidiary.
B. The Grantors are subsidiaries and affiliates of the Borrower, and are
engaged in common enterprises with the Borrower and other Grantors.
C. The Grantors have guaranteed the Borrower's and the Borrowing
Subsidiary's obligations under the Credit Agreement pursuant to a Guaranty
Agreement dated as of June __, 1997 (as hereafter amended, modified or
restated, the "Guaranty").
D. As a condition to the effectiveness of the obligation of the Lenders
under the Credit Agreement, each Grantor has agreed to grant to the Agent, for
the benefit of itself and the Lenders, a first-priority security interest,
subject only to security interests expressly permitted by the Credit Agreement,
in and to the Collateral hereinafter described.
AGREEMENTS
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Borrower, the Borrowing Subsidiary or any Grantor now
or hereafter owing to the Lenders or the Agent under or on account of the
Credit Agreement, any Security Document or any Letter of Credit, notes or other
instruments issued to the Agent or any Lender pursuant thereto, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by the Lender in connection therewith, (c)
the prompt and complete payment of all obligations and performance of all
covenants of the Borrower and the Borrowing Subsidiary
<PAGE> 2
under any interest rate or currency swap agreements or similar transactions
with any Lender, (d) the prompt and complete payment of all indebtedness of any
Grantor under the Guaranty and (e) the prompt and complete payment of any and
all other indebtedness, obligations and liabilities of any kind of the
Borrower, the Borrowing Subsidiary or any Grantor to the Agent and the Lenders,
or any of them, in all cases, of any kind or nature, howsoever created or
evidenced and whether now or hereafter existing, direct or indirect (including
without limitation any participation interest acquired by any Lender in any
such indebtedness, obligations or liabilities of the Borrower, the Borrowing
Subsidiary or any Grantor to any other person and any interest rate swap, cap
or similar agreement), absolute or contingent, joint and/or several, secured or
unsecured, arising by operation of law or otherwise, and whether incurred by
the Borrower, the Borrowing Subsidiary or any Grantor as principal, surety,
endorser, guarantor, accommodation party or otherwise, including without
limitation all principal and all interest (including any interest accruing
subsequent to any petition filed by or against the Borrower, the Borrowing
Subsidiary or any Grantor under the U.S. Bankruptcy Code), indemnity and
reimbursement obligations, charges, expenses, fees, attorneys' fees and
disbursements and any other amounts owing thereunder (all of the aforesaid
indebtedness, obligations and liabilities of the Borrower, the Borrowing
Subsidiary and each Grantor being herein called the "Secured Obligations", and
all of the documents, agreements and instruments among the Debtors, the
Subsidiaries, the Agent, the Lenders, or any of them, evidencing or securing
the repayment of, or otherwise pertaining to, the Secured Obligations including
without limitation the Credit Agreement, the Notes, the Letters of Credit and
the Security Documents, being herein collectively called the "Operative
Documents"), for value received and pursuant to the Credit Agreement, each
Grantor hereby grants, assigns and transfers to the Agent for the benefit of
the Lenders a first-priority security interest, subject only to Permitted
Liens, in and to the following described property whether now owned or existing
or hereafter acquired or arising and wherever located (all of which is herein
collectively called the "Collateral"):
(a) All of such Grantor's present and future accounts, documents,
instruments, general intangibles and chattel paper, including, but without
limitation, all accounts receivable, all contract rights, all deposit accounts
and all monies and claims for money due or to become due to such Grantor, all
security held or granted to such Grantor, and all assets described in clause
(d) below;
(b) All of such Grantor's furniture, fixtures, machinery and equipment,
whether now owned or hereafter acquired, and wherever located, and whether used
by such Grantor or any other person, or leased by such Grantor to any person
and whether the interest of such Grantor is as owner, lessee or otherwise;
(c) All of such Grantor's present and future inventory of every type,
wherever located, including but not limited to raw materials, work in process,
finished goods and all inventory that is available for leasing or leased to
others by such Grantor;
(d) All other present and future assets of such Grantor (whether tangible
or intangible), including but not limited to all trademarks, trade names,
patents, industrial designs, masks, trade names, trade secrets, copyrights,
franchises, customer lists, computer programs, software, tax refund
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<PAGE> 3
claims, licenses and permits, and the good will associated therewith and all
federal, state, foreign and other applications and registrations therefor, all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof now or hereafter in effect, all income, license
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including, without limitation, any damages, proceeds or
payments for past or future infringements thereof and all income, royalties,
damages and payments under all licenses thereof, the right to sue for past,
present and future infringements thereof, all right, title and interest of such
Grantor as licensor under any of the foregoing whether now owned and existing
or hereafter arising, and all other rights and other interests corresponding
thereto throughout the world (all of the assets described in this clause (d)
collectively referred to as the "Intellectual Property");
(e) All books, records, files, correspondence, computer programs, tapes,
disks, cards, accounting information and other data of such Grantor related in
any way to the Collateral described in clauses (a), (b), (c) and (d) above,
including but not limited to any of the foregoing necessary to administer, sell
or dispose of any of the Collateral;
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing, and,
to the extent not otherwise included, all payments under insurance (whether or
not the Agent is the loss payee thereof), and any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
1. Representations, Warranties, Covenants and Agreements. Each Grantor
further represents and warrants to and covenants and agrees with the Agent for
the benefit of the Lenders as follows:
(a) Ownership of Collateral; Security Interest Priority. At the
time any Collateral becomes subject to a security interest of the Agent
hereunder, unless the Agent shall otherwise consent, such Grantor shall be
deemed to have represented and warranted that (i) such Grantor is the lawful
owner of such Collateral and has the right and authority to subject the same to
the security interest of the Agent hereunder; (ii) other than Permitted Liens
(as defined in the Credit Agreement) and lessors' interest with respect to any
security interest in any property leased by such Grantor as lessee, none of the
Collateral is subject to any Lien other than that in favor of the Agent for the
benefit of the Lenders and there is no effective financing statement or other
filing covering any of the Collateral on file in any public office, other than
in favor of the Agent for the benefit of the Lenders. This Security Agreement
creates in favor of the Agent for the benefit of the Lenders a valid
first-priority security interest, subject only to Permitted Liens, in the
Collateral enforceable against such Grantor and all third parties and securing
the payment of the Secured Obligations. All financing statements necessary to
perfect such security interest in the Collateral have been delivered by such
Grantor to the Agent for filing.
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<PAGE> 4
(b) Location of Offices, Records and Facilities. Such Grantor's
chief executive office and chief place of business and the office where such
Grantor keeps its records concerning its accounts, contract rights, chattel
paper, instruments, general intangibles and other obligations arising out of or
in connection with the sale or lease of goods or the rendering of services or
otherwise ("Receivables"), and all originals of all leases and other chattel
paper which evidence Receivables, is at the location listed on Schedule 1(b)(i)
hereto. Such Grantor will provide the Agent with prior written notice of any
proposed change in the location of its chief executive office. Such Grantor's
only other offices and facilities are at the locations set forth in Schedule
1(b)(ii) hereto. Such Grantor will provide the Agent with prior written notice
of any change in the locations of its other offices and the facilities at which
any assets of such Grantor are located. The tax identification number of
such Grantor is set forth on Schedule 1(b)(i). The name of such Grantor is
correctly set forth on the signature pages hereof, and such Grantor operates
under no other names. Such Grantor shall not change its name without the prior
written consent of the Agent.
(c) Location of Inventory, Fixtures, Machinery and Equipment. (i)
All Collateral consisting of inventory is, and will be, located at the
locations listed on Schedule 1(c)(i) hereto, and at no other locations without
the prior written consent of the Agent. (ii) All Collateral consisting of
fixtures, machinery or equipment, is, and will be, located at the locations
listed on Schedule 1(c)(ii) hereto, and at no other locations without the prior
written consent of the Agent. If the Collateral described in clauses (i) or
(ii) is kept at leased locations or warehoused, such Grantor has obtained
appropriate landlord's lien waivers or appropriate warehousemen's notices have
been sent, each satisfactory to the Agent, unless waived by the Agent.
(d) Liens, Etc. Such Grantor will keep the Collateral free at all
times from any and all liens, security interests or encumbrances other than
those described in paragraph 1(a)(ii) and those consented to in writing by the
Required Lenders. Such Grantor will not, without the prior written consent of
the Agent, sell, lease, license, transfer, assign or otherwise dispose of, or
permit or suffer to be sold, leased, licensed, transferred, assigned or
otherwise disposed of, any of the Collateral, except for, prior to an Event of
Default only (notwithstanding any other agreement), the following: inventory
sold in the ordinary course of business and other assets permitted to be sold,
leased, licensed, transferred, assigned or otherwise disposed under Section
5.2(f) of the Credit Agreement. The Agent or its attorneys may at any and all
reasonable times inspect the Collateral and for such purpose may enter upon any
and all premises where the Collateral is or might be kept or located.
(e) Insurance. Such Grantor shall keep the tangible Collateral
insured at all times against loss by theft, fire and other casualties. Said
insurance shall be issued by a company rated A or better by A.M. Best and shall
be in amounts sufficient to protect the Agent and the Lenders against any and
all loss or damage to the Collateral. The policy or policies which evidence
said insurance shall be delivered to the Agent upon request, shall contain a
lender loss payable clause in favor of the Agent for the benefit of the
Lenders, shall name the Agent for the benefit of the Lenders as an additional
insured, as its interest may appear, shall not permit amendment, cancellation
or termination without giving the Agent at least 30 days' prior written notice
thereof, and shall
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<PAGE> 5
otherwise be in form and substance satisfactory to the Agent. Reimbursement
under any liability insurance maintained by such Grantor pursuant to this
paragraph 1(e) may be paid directly to the person who shall have incurred
liability covered by such insurance, provided that if there is no Default or
Event of Default (whether before or after any event which caused any
reimbursement under any liability insurance) such Grantor may use the proceeds
of such insurance solely to repair or replace the property damaged if the
insurance proceeds are less than $500,000 and if there is any Event of Default
or Default, and if such reimbursement is greater than $500,000 or there is any
Default or Event of Default such amounts shall be paid to the Agent for
application to the Secured Obligations.
(f) Taxes, Etc. Such Grantor will pay promptly, and within the
time that they can be paid without interest or penalty, any taxes, assessments
and similar imposts and charges, not being contested in good faith, which are
now or hereafter may become a Lien upon any of the Collateral. If such Grantor
fails to pay any such taxes, assessments or other imposts or charges in
accordance with this paragraph, the Agent shall have the option to do so and
such Grantor agrees to repay forthwith all amounts so expended by the Agent
with interest at the Overdue Rate.
(g) Further Assurances. Such Grantor will do all acts and things
and will execute all financing statements and writings reasonably requested by
the Agent to establish, maintain and continue a perfected and valid security
interest of the Agent for the benefit of the Lenders in the Collateral, and
will promptly on demand pay all reasonable costs and expenses of filing and
recording all instruments, including the costs of any searches deemed necessary
by the Agent, to establish and determine the validity and the priority of the
Agent's security interests for the benefit of the Lenders. A carbon,
photographic or other reproduction of this Security Agreement or any financing
statement covering the Collateral shall be sufficient as a financing statement.
(h) List of Patents, Copyrights, Mask Works and Trademarks.
Attached hereto as Schedule 1(h)(i) is a list of all patents and patent
applications owned by such Grantor. Attached hereto as Schedule 1(h)(ii) is a
list of all registered copyrights and all mask works and applications therefor
owned by such Grantor. Attached hereto as Schedule 1(h)(iii) is a list of all
trademarks and service marks owned by such Grantor. If such Grantor at any
time owns any additional patents, copyrights, mask works, trademarks, service
marks or any applications therefor not listed on such schedules, such Grantor
shall give the Agent prompt written notice thereof and hereby authorizes the
Agent to modify this Agreement by amending Schedules 1(h)(i), 1(h)(ii) and
1(h)(iii) hereto to include all future patents, copyrights, mask works,
trademarks, service marks and applications therefor and agrees to execute all
further instruments and agreements, if any, if requested by the Agent to
evidence the Agent's interest for the benefit of the Lenders therein.
(i) Maintenance of Tangible Collateral. Such Grantor will cause
the tangible Collateral material to the conduct of its business to be
maintained and preserved in the same condition, repair and working order as
when new, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and shall forthwith, or, in the case of any loss or
damage to any of the tangible Collateral as quickly as practicable after the
occurrence thereof, make
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<PAGE> 6
or cause to be made all repairs, replacements, and other improvements which are
necessary or desirable to such end. Such Grantor shall promptly furnish to the
Agent a statement respecting any loss or damage to any of the tangible
Collateral.
(j) Special Rights Regarding Receivables. The Agent or any of its
agents may, at any time and from time to time in its sole discretion and
irrespective of the existence of any event of default under this Security
Agreement, verify, directly with each person (collectively, the "Obligors")
which owes any Receivables to such Grantor, the Receivables in any manner. The
Agent or any of its agents may, at any time from time to time after and during
the continuance of an event of default under this Security Agreement, notify
the Obligors of the security interest of the Agent for the benefit of the
Lenders in the Collateral and/or direct such Obligors that all payments in
connection with such obligations and the Collateral be made directly to the
Agent in the Agent's name. If the Agent or any of its agents shall collect
such obligations directly from the Obligors, the Agent or any of its agents
shall have the right to resolve any disputes relating to returned goods
directly with the Obligors in such manner and on such terms as the Agent or any
of its agents shall deem appropriate. Such Grantor directs and authorizes any
and all of its present and future account debtors to comply with requests for
information from the Agent, the Agent's designees and agents and/or auditors,
relating to any and all business transactions between such Grantor and the
Obligors. Such Grantor further directs and authorizes all of its Obligors upon
receiving a notice or request sent by the Agent or the Agent's agents or
designees to pay directly to the Agent any and all sums of money or proceeds
now or hereafter owing by the Obligors to such Grantor, as provided in this
paragraph 1(j) and any such payment shall act as a discharge of any debt of
such Obligor to such Grantor in the same manner as if such payment had been
made directly to such Grantor. Such Grantor agrees to take any and all action
as the Agent may reasonably request to assist the Agent in exercising the
rights described in this paragraph 1(j).
(k) Maintenance of Intellectual Property and Other Intangible
Collateral. Such Grantor shall preserve and maintain all rights of such
Grantor and the Agent for the benefit of the Lenders in all material
Intellectual Property and all other material intangible Collateral, including
without limitation the payment of all maintenance fees and filing fees and the
taking of all appropriate action at such Grantor's expense to halt the
infringement of any of the Intellectual Property or other Collateral, provided
that, with respect to halting the infringement of any Intellectual Property or
other Collateral, such Grantor does not need to take all such appropriate
action if such Grantor has, or after Event of Default the Agent has, reasonably
determined that it is not in its best interest to demand or enforce cessation
of such infringement or other conduct because it is either not material or
because the adverse consequences to such Grantor would outweigh the benefits
gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default shall be
deemed an Event of Default under this Security Agreement.
3. Remedies. Upon the occurrence of any Event of Default, the Agent
shall have and may exercise any one or more of the rights and remedies provided
to it under this Security
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<PAGE> 7
Agreement or any of the other Operative Documents or provided by law, including
but not limited to all of the rights and remedies of a secured party under the
Uniform Commercial Code, and each Grantor hereby agrees to assemble the
Collateral and make it available to the Agent at a place to be designated by
the Agent which is reasonably convenient to both parties, authorizes the Agent
to take possession of the Collateral with or without demand and with or without
process of law and to sell and dispose of the same at public or private sale
and to apply the proceeds of such sale to the costs and expenses thereof
(including reasonable attorneys' fees and disbursements, incurred by the Agent)
and then to the payment and satisfaction of the Secured Obligations. Any
requirement of reasonable notice shall be met if the Agent sends such notice to
such Grantors, by registered or certified mail, at least 5 days prior to the
date of sale, disposition or other event giving rise to a required notice. The
Agent may be the purchaser at any such sale. Each Grantor expressly authorizes
such sale or sales of the Collateral in advance of and to the exclusion of any
sale or sales of or other realization upon any other collateral securing the
Secured Obligations. The Agent shall have no obligation to preserve rights
against prior parties. Each Grantor hereby waives as to the Agent and each
Lender any right of subrogation or marshalling of such Collateral and any other
collateral for the Secured Obligations. To this end, each Grantor hereby
expressly agrees that any such collateral or other security of such Grantor or
any other party which the Agent or any Lender may hold, or which may come to
the Agent or any Lender's possession, may be dealt with in all respects and
particulars as though this Security Agreement were not in existence. The
parties hereto further agree that public sale of the Collateral by auction
conducted in any county in which any Collateral is located or in which the
Agent or such Grantor does business after advertisement of the time and place
thereof shall, among other manners of public and private sale, be deemed to be
a commercially reasonable disposition of the Collateral. Each Grantor shall be
liable for any deficiency remaining after disposition of the Collateral. Such
sale shall be on such terms as the Agent may determine, for cash or credit or
against future delivery in the discretion of the Agent.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any Event of Default, each Grantor shall,
if requested to do so in writing, and to the extent so requested (i) promptly
collect and enforce payment of all amounts due such Grantor on account of, in
payment of, or in connection with, any of the Collateral, (ii) hold all
payments in the form received by such Grantor as trustee for the Agent and the
Lenders, without commingling with any funds belonging to such Grantor, and
(iii) forthwith deliver all such payments to the Agent with endorsement to the
Agent's order of any checks or similar instruments.
(b) Upon the occurrence of any event of default, each Grantor shall,
if requested to do so, and to the extent so requested, notify all Obligors and
other persons with obligations to such Grantor on account of or in connection
with any of the Collateral of the security interest of the Agent for the
benefit of the Lenders in the Collateral and direct such account debtors and
other persons that all payments in connection with such obligations and the
Collateral be made directly
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<PAGE> 8
to the Agent. The Agent itself may, upon the occurrence of an Event of
Default, so notify and direct any such account debtor or other person that such
payments are to be made directly to the Agent.
(c) Upon the occurrence of any event of default, for purposes of
assisting the Agent in exercising its rights and remedies provided to it under
this Security Agreement, each Grantor (i) hereby irrevocably constitutes and
appoints the Agent its true and lawful attorney, for and in such Grantor's
name, place and stead, to collect, demand, receive, sue for, compromise, and
give good and sufficient releases for, any monies due or to become due on
account of, in payment of, or in connection with the Collateral, (ii) hereby
irrevocably authorizes the Agent to endorse the name of such Grantor, upon any
checks, drafts, or similar items which are received in payment of, or in
connection with, any of the Collateral, and to do all things necessary in order
to reduce the same to money, (iii) with respect to any Collateral, hereby
irrevocably assents to all extensions or postponements of the time of payment
thereof or any other indulgence in connection therewith, to each substitution,
exchange or release of Collateral, to the addition or release of any party
primarily or secondarily liable, to the acceptance of partial payments thereon
and the settlement, compromise or adjustment (including adjustment of insurance
payments) thereof, all in such manner and at such time or times as the Agent
shall deem advisable and (iv) hereby irrevocably authorizes the Agent to notify
the post office authorities to change the address for delivery of such
Grantor's mail to an address designated by the Agent, and the Agent may
receive, open and dispose of all mail addressed to such Grantor.
Notwithstanding any other provisions of this Security Agreement, it is
expressly understood and agreed that the Agent shall have no duty, and shall
not be obligated in any manner, to make any demand or to make any inquiry as to
the nature or sufficiency of any payments received by it or to present or file
any claim or take any other action to collect or enforce the payment of any
amounts due or to become due on account of or in connection with any of the
Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or reserved to
the Agent under any Operative Document is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative and in addition
to every other right or remedy given hereunder or now or hereafter existing
under any applicable law. Every right and remedy of the Agent under any
Operative Document or under applicable law may be exercised from time to time
and as often as may be deemed expedient by the Agent. To the extent that it
lawfully may, each Grantor agrees that it will not at any time insist upon,
plead, or in any manner whatever claim or take any benefit or advantage of any
applicable present or future stay, extension or moratorium law, which may
affect observance or performance of any provisions of any Operative Document;
nor will it claim, take or insist upon any benefit or advantage of any present
or future law providing for the valuation or appraisal of any security for its
obligations under any Operative Document prior to any sale or sales thereof
which may be made under or by virtue of any instrument governing the same; nor
will such Grantor, after any such sale or sales, claim or exercise any right,
under any applicable law to redeem any portion of such security so sold.
6. Conduct No Waiver. No waiver shall be effective unless in writing
executed by the Agent and any waiver or forbearance on the part of the Agent in
enforcing any of its rights under this Security Agreement shall not operate as
a waiver of any other default or of the same default on a
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<PAGE> 9
future occasion or of such right.
7. Governing Law; Consent to Jurisdiction; Definitions. This Security
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. Each Grantor agrees that any legal
action or proceeding with respect to this Security Agreement or the
transactions contemplated hereby may be brought in any court of the State of
Michigan, or in any court of the United States of America sitting in Michigan,
and each Grantor hereby submits to and accepts generally and unconditionally
the jurisdiction of those courts with respect to its person and property, and
irrevocably appoints the President of such Grantor, at such Grantor's address
set forth in the Credit Agreement, as its agent for service of process and
irrevocably consents to the service of process in connection with any such
action or proceeding by personal delivery to such agent or to such Grantor or
by the mailing thereof by registered or certified mail, postage prepaid to such
Grantor at its address set forth in the Credit Agreement. Nothing in this
paragraph shall affect the right of the Agent to serve process in any other
manner permitted by law or limit the right of the Agent to bring any such
action or proceeding against such Grantor or its property in the courts of any
other jurisdiction. Each Grantor hereby irrevocably waives any objection to
the laying of venue of any such suit or proceeding in the above described
courts. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. Unless otherwise defined herein or
in the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code
in the State of Michigan are used herein as therein defined on the date hereof.
The headings of the various subdivisions hereof are for convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.
8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
9. Rights Not Construed as Duties. The Agent and the Lenders neither
assume nor shall any of them have any duty of performance or other
responsibility under any contracts in which the Agent has or obtains, for the
benefit of the Lenders, a security interest hereunder. If any Grantor fails to
perform any agreement contained herein, the Agent may but is in no way
obligated to itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Agent incurred in connection therewith shall be
payable by such Grantors under paragraph 12 hereof. The powers conferred on
the Agent hereunder are solely to protect its interests for the benefit of the
Lenders in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and accounting for monies actually received by it hereunder, the Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.
10. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
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11. Severability. If any one or more provisions of this Security
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
12. Expenses. (a) Each Grantor agrees, jointly and severally, to
indemnify the Agent and the Lenders from and against any and all claims, losses
and liabilities growing out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security Agreement), except
claims, losses or liabilities resulting from the Agent's or any Lender's gross
negligence or willful misconduct.
(b) Each Grantor will, upon demand, pay to the Agent an amount of any
and all reasonable expenses, including the reasonable fees and disbursements of
its counsel and of any experts and agents, which the Agent may incur in
connection with (i) the administration of this Security Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder or under the Operative
Documents, or (iv) the failure of any Grantor to perform or observe any of the
provisions hereof.
13. Successors and Assigns; Termination. This Security Agreement shall
create a continuing security interest in the Collateral and shall be binding
upon each Grantor, its successors and assigns, and inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Agent, the
Lenders and their respective successors, transferees and assigns. Upon the
payment in full in immediately available funds of all of the Secured
Obligations and the termination of all commitments to lend under the Operative
Documents, the security interest granted hereunder shall terminate and all
rights to the Collateral shall revert to such Grantors.
14. Waiver of Jury Trial. The Agent and the Lenders, in accepting this
Security Agreement, and each Grantor, 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 Security Agreement or any related instrument or
agreement or any of the transactions contemplated by this Security Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders nor any Grantor 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 Agent, any Lender or any Grantor
except by a written instrument executed by each of them.
IN WITNESS WHEREOF, the Grantors have caused this Security Agreement to be
duly executed as of the day and year first set forth above.
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LOBDELL EMERY CORPORATION
By: _________________________________
Its: _______________________________
CREATIVE FABRICATION CORPORATION
By: _________________________________
Its: _______________________________
WINCHESTER FABRICATION CORPORATION
By: _________________________________
Its: _______________________________
PARALLEL GROUP INTERNATIONAL, INC.
By: _________________________________
Its: _______________________________
LASERWELD INTERNATIONAL, L.L.C.
By: _________________________________
Its: _______________________________
CONCEPT MANAGEMENT CORPORATION
By: _________________________________
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Its: _______________________________
12
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LEWIS EMERY CAPITAL CORPORATION
By: _________________________________
Its: _______________________________
Accepted and Agreed:
NBD BANK, as Agent on behalf
of the Lenders
By: ___________________________________
Its: _________________________________
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CERTIFICATE OF ACKNOWLEDGMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997, by John H. Ferguson, the Assistant Treasurer of Lobdell
Emery Corporation, a Michigan corporation, on behalf of said corporation.
(Seal) Notary Public
____________________________________
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997, by John H. Ferguson, the Assistant Treasurer of
Creative Fabrication Corporation, a Tennessee corporation, on behalf of said
corporation.
(Seal) Notary Public
____________________________________
14
<PAGE> 15
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997, by ____________________, the ___________________ of
Winchester Fabrication Corporation, a Michigan corporation, on behalf of said
corporation.
(Seal) Notary Public
____________________________________
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997 by ____________________, the ___________________ of
Parallel Group International, Inc., an Indiana corporation, on behalf of said
corporation.
(Seal) Notary Public
____________________________________
15
<PAGE> 16
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997 by John H. Ferguson, the Assistant Treasurer of Lobdell
Emery Corporation, the sole member of Laserweld International, L.L.C., an
Indiana limited liability company, on behalf of said limited liability company.
(Seal) Notary Public
____________________________________
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997 by John H. Ferguson, the Assistant Treasurer of Concept
Management Corporation, a Michigan corporation, on behalf of said corporation.
(Seal) Notary Public
____________________________________
16
<PAGE> 17
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997 by ____________________, the ___________________ of
Lewis Emery Capital Corporation, a Michigan corporation, on behalf of said
corporation.
(Seal) Notary Public
____________________________________
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing Security Agreement was acknowledged before me on this _____
day of June, 1997, by ____________________, the ___________________ of NBD
Bank, a Michigan banking corporation, as Agent, on behalf of said corporation.
(Seal) Notary Public
____________________________________
17
<PAGE> 18
SCHEDULE 1(b)(i) TO SECURITY AGREEMENT
List of Chief Executive Offices and Tax ID Number
Grantor Chief Executive Office Address Tax ID #
------- ------------------------------ --------
Lobdell Emery Corporation 1325 East Superior Street 38-0768460
Alma, Michigan 48801
Creative Fabrication Corporation 1325 East Superior Street 62-1613148
Alma, Michigan 48801
Winchester Fabrication Corporation 1325 East Superior Street 38-3209840
Alma, Michigan 48801
Parallel Group International, Inc. 1325 East Superior Street 35-1971190
Alma, Michigan 48801
Laserweld International, L.L.C. 1325 East Superior Street 35-1969204
Alma, Michigan 48801
Concept Management Corporation 1325 East Superior Street 38-3209841
Alma, Michigan 48801
Lewis Emery Capital Corporation 1325 East Superior Street 38-6602578
Alma, Michigan 48801
BMG Holdings, Inc. 2000 North Woodward Avenue N/A
Suite 130
Bloomfield Hills, MI 48304
<PAGE> 19
SCHEDULE 1(b)(ii) TO SECURITY AGREEMENT
List of Other Office and Facility Locations
Grantor Address
- ------- -------
Lobdell Emery Corporation 1325 East Superior
Alma, Michigan 48801
Laserweld International, L.L.C. 950 JFK Drive
North Vernon, Indiana 47265
Winchester Fabrication Corporation 200 Inks Drive
P.O. Box 270
Winchester, Indiana 47394
Creative Fabrication Corporation 3000 George Price Blvd.
Athens, Tennessee 37371
10850 West 17th Street
Argos, IN 46501
2190 Landmark Avenue
Corydon, IN 47112
2365 Franklin Road
Bloomfield Hills, MI 48302
135 North Fearing Road
PO Box 3416
Toledo, OH 43607
401 Republic Street
Alma, MI 48801
370 Manhattan Road
Greencastle, IN 46135
2000 North Woodward Avenue, Suite 130
Bloomfield Hills, MI 48304
<PAGE> 20
Schedule 1(c)
(i) Location of Inventory
(a) Butler Metal Products
1574 Eagle Street North
Cambridge, Ontario N3H 4S5
Canada
(b) Del-Tech Metal Products
1 Butler Drive
Delhi, Ontario N4B 2W8
Canada
(c) Laserweld International, L.L.C.
950 JFK Drive
North Vernon, Indiana 47265
(d) Winchester Fabrication Corporation
200 Inks Drive
P.O. Box 270
Winchester, Indiana 47394
(e) Creative Fabrication Corporation
3000 George Price Blvd.
Athens, Tennessee 37371
(f) 10850 West 17th Street
Argos, IN 46501
(g) 2190 Landmark Avenue
Corydon, IN 47112
(h) 2365 Franklin Road
Bloomfield Hills, MI 48302
(i) 135 North Fearing Road
PO Box 3416
Toledo, OH 43607
(j) 401 Republic Street
Alma, MI 48801
(k) 370 Manhattan Road
Greencastle, IN 46135
<PAGE> 21
(ii) Locations of Fixtures, Machinery and Equipment
(a) See (i) above.
(b) Lindert Tool & Die
23 Raglan Place
Cambridge, Ontario
Canada
(c) Fincore
10 Melford Drive
Units 1-8
Scarborough, Ontario M1B 2G1
Canada
(d) Hinderliter Heat Treating Ltd.
9 Shirley Avenue
Kitchener, Ontario
Canada
(e) Easton Coatings Corporation
97 Easton Road
Brantford, Ontario N3P 1J4
Canada
(f) Camtron Coatings
___________________
___________________
(g) Mid States Steel
______ Inks Drive
Winchester, IN 47394
<PAGE> 22
Schedule 1(h)
(i) Rack Base Construction; US Patent No. 5,533,456; Canadian Patent File No.
2,147,721 (held by Lobdell Emery Corporation)
(ii) None
(iii) None
<PAGE> 1
EXHIBIT 4.12
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
THIS PLEDGE AGREEMENT dated as of June 24, 1997 (this "Pledge
Agreement"), is given by OXFORD AUTOMOTIVE, INC., a Michigan corporation (the
"Company"), in favor of NBD Bank, a Michigan banking corporation, as agent (in
such capacity, the "Agent") for the benefit of itself and the lenders (the
"Lenders") now or hereafter parties to the Credit Agreement described below.
RECITALS
A. The Company (also occasionally referred to as the "Borrower")
and the Borrowing Subsidiary identified from time to time therein (the
"Borrowing Subsidiary") have entered into a Credit Agreement, dated as of June
24, 1997, (as amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement"), with the
Lenders parties thereto and the Agent pursuant to which the Lenders may make
Advances (as therein defined) to the Borrower and the Borrowing Subsidiary.
B. As a condition precedent to the effectiveness of the Bank's
obligations under the Credit Agreement, the Company has agreed to pledge to the
Agent, for the benefit of the Lenders, and grant a first-priority security
interest to the Agent, for the benefit of the Lenders, in and to the collateral
described herein and to execute this Pledge Agreement.
For value received and pursuant to the Credit Agreement, the Company
hereby grants a first-priority security interest to the Agent, for the benefit
of the Lenders, in and to all of the outstanding capital stock of the companies
listed on the schedule attached hereto as Schedule 1 (the "Pledged
Subsidiaries", and said shares of stock, together with any other shares and
securities from time to time receivable or otherwise distributed in respect of
or in exchange for any or all of such shares, being called the "Pledged
Stock"), to secure, (a) the prompt and complete payment of all indebtedness and
other obligations of the Company or any Subsidiary now or hereafter owing to
the Lenders or the Agent under or on account of the Credit Agreement, any
Security Document or any letters of credit, notes or other instruments issued
to the Agent or Lenders pursuant thereto, (b) the performance of the covenants
under the Credit Agreement and the Security Documents and any monies expended
by the Agent in connection therewith payable under the Credit Agreement and (c)
the prompt and complete payment of all obligations and performance of all
covenants of the Company under any interest rate or currency swap agreements or
similar transactions with any Bank (all of the aforesaid indebtedness,
obligations and liabilities of the Company and its Subsidiaries being herein
called the "Secured Obligations", and all of the documents, agreements and
instruments among the Company, the Subsidiaries, the Agent, the Lenders, or any
of them, evidencing or securing the repayment of, or otherwise pertaining to,
the Secured Obligations being herein collectively called the "Operative
Documents"). The Company is herewith delivering to the Agent for the benefit
of the Lenders originals of all stock certificates of the Pledged Stock or
taking such other action acceptable to the Agent and the Required Lenders to
perfect the security interest in the Pledged Stock granted hereby.
<PAGE> 2
The Company further represents and warrants to, and agrees with, the
Agent for the benefit of the Lenders as follows:
1. Representations and Warranties. The Company represents and
warrants that the Pledged Stock is represented by the stock certificate or
certificates or shares described on Schedule 1 hereto, and that such stock
certificate or certificates, accompanied by an instrument of assignment or
transfer duly executed in blank by the Company as the owner named in such stock
certificate or certificates, have been delivered to the Agent by the Company.
The Company further represents and warrants that (a) the Pledged Stock is duly
authorized and validly issued, fully paid and nonassessable and constitutes
100% of all of the issued and outstanding shares of the capital stock of each
Pledged Subsidiary (except with respect to Lobdell Emery Corporation which has
Preferred Stock outstanding), (b) the Company is the legal and beneficial owner
of the Pledged Stock, free and clear of all Liens other than the Lien of Agent
hereunder, with requisite right and power to deliver, pledge and assign the
Pledged Stock to the Agent hereunder, and (c) the pledge of the Pledged Stock
pursuant to this Pledge Agreement creates in favor of the Agent a valid and
perfected first-priority security interest in the Pledged Stock enforceable
against the Company and all third parties and securing the payment of the
Secured Obligations.
2. Title; Stock Rights, Dividends, Etc. The Company will warrant
and defend the Agent's title to the Pledged Stock, and the security interest
herein created, against all claims of all persons, and will maintain and
preserve such security interest. It is understood and agreed that the
collateral hereunder includes any stock rights, stock dividends, liquidating
dividends, new securities, payments, distributions and proceeds (including cash
dividends and sale proceeds) and other property to which the Company may become
entitled by reason of the ownership of the Pledged Stock during the existence
of this Pledge Agreement, and any such property received by the Company shall
be held in trust and forthwith delivered to the Agent to be held hereunder in
accordance with the terms of this Pledge Agreement.
3. Registration Rights. If any Pledged Subsidiary at any time or
from time to time proposes to register any of its securities under the
Securities Act of 1933, the Company will at each such time give notice to the
Agent of such Pledged Subsidiary's intentions so to do. Upon the request of
the Agent given 30 days after receipt of such notice, the Company will cause
all Pledged Stock of such Pledged Subsidiary to be included in the registration
statement proposed to be filed, all to the extent requisite to permit the
public sale or other public disposition of such Pledged Stock so registered by
the holders thereof. The costs and expenses of all such registrations and
qualifications under said Act shall be paid by the Company or such Pledged
Subsidiary, except that underwriting discounts and commissions in respect of
any Pledged Stock sold pursuant to any such registration statement shall be
borne by the sellers thereof. As expeditiously as possible after the effective
date of any such registration statement, the Company will deliver in exchange
for any certificates representing shares of Pledged Stock so registered
pursuant to such registration, which bear any restrictive legend, new Pledged
Stock certificates not bearing such legend or any similar legend. In the event
of any such registration, the Company hereby agrees to indemnify and hold
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-2-
<PAGE> 3
harmless the Agent and the Lenders as pledgee of the Pledged Stock against any
losses, claims, damages or liabilities to which the Agent and the Lenders may
become subject to the extent that such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, and any
preliminary prospectus or filed prospectus, or in any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Agent and
the Lenders for any legal or other expenses reasonably incurred by the Agent
and the Lenders in connection with investigating or defending any such loss,
claim, damage or liability. The indemnifications contained in this paragraph
shall include each person, if any, who controls the Agent or any Bank.
4. Events of Default; Remedies.
(a) Upon the occurrence of any Event of Default under the Credit
Agreement, which has not been remedied by the Company, the Borrower, or the
Borrowing Subsidiary within fifteen (15) days after the Borrower or the
Borrowing Subsidiary receives written notice of such occurrence from the Agent
(the "Cure Period"), an Event of Default shall be deemed to have occurred
hereunder and the Agent shall have all of the rights, remedies and
responsibilities provided by law and/or by this Pledge Agreement, including but
not limited to all of the rights, remedies and responsibilities of a secured
party under the Michigan Uniform Commercial Code, and the Company hereby
authorizes the Agent, in accordance with the Michigan Uniform Commercial Code,
to sell all or any part of the Pledged Stock at public or private sale and to
apply the proceeds of such sale to the costs and expenses thereof (including
the reasonable attorneys' fees and disbursements incurred by the Agent) and
then to the payment of the other Secured Obligations. Any requirement of
reasonable notice in connection with such sale shall be met if the Agent sends
such notice to the Company, by registered or certified mail, at least 5 days
prior to the date of sale, disposition or other event giving rise to the
required notice. The Agent or any Bank may be the purchaser at any such sale.
The Agent shall be under no obligation to preserve rights against prior
parties.
(b) The Company hereby waives as to the Agent and the Lenders any
right of subrogation or marshaling of such stock and other collateral for
indebtedness or other obligations owed to the Agent and the Lenders. To this
end, the Company hereby expressly agrees that any such collateral or other
security of the Company or any other party which the Agent or any Bank may
hold, or which may come to any of their possession, may be dealt with in all
respects and particulars as though this Pledge Agreement were not in existence.
The Company agrees and acknowledges that because of applicable securities laws,
the Agent may not be able to effect a public sale of the Pledged Stock and
sales at a private sale may be on terms less favorable than if such securities
were sold at a public sale and may be at a price less favorable than a public
sale.
(c) The Company irrevocably designates, makes, constitutes and
appoints the Agent (and all persons designated by the Agent) as its true and
lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may,
upon and after an Event of Default hereunder which has not been waived,
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-3-
<PAGE> 4
with notice to the Company if the Secured Obligations have not been accelerated
and without notice if the Secured Obligations have been accelerated, take any
action as the Agent reasonably deems necessary under the circumstances to
enforce or otherwise take action in respect to the Pledged Stock as required
hereby, or to carry out any other obligation or duty of the Company under this
Agreement.
(d) Notwithstanding the foregoing, the Agent, on behalf of the
Lenders, agrees that it shall not exercise any remedy hereunder, including the
remedies set forth in Section 5, until such time as Agent has exercised its
remedies under the Company Security Agreement and Guarantor Security Agreement
and has realized upon substantially all of the assets subject thereto to the
extent permitted by law; provided that the Agent and the Lenders may exercise
all rights and remedies hereunder immediately upon the occurrence of, and
nothing in this Section 4(d) shall limit or otherwise impair any of the Agent's
and the Lenders' interests, rights and remedies in, any bankruptcy, insolvency
or similar proceeding.
5. Additional Remedies; Irrevocable Proxy.
(a) After satisfaction of the sale provisions of Section 4 but
subject to Section 4(d) herein, the Agent may transfer into its name, or into
the name of its nominee or nominees, any or all of the Pledged Stock and may
vote any or all of the Pledged Stock (whether or not so transferred) and may
otherwise act with respect thereto as though it were the outright owner
thereof, the Company hereby irrevocably constituting and appointing the Agent
as the proxy and attorney-in-fact of the Company, with full power of
substitution, to do so.
(b) Upon the occurrence of the events described in Section 5(a)
above, the Agent may vote the Pledged Stock to remove the directors and
officers of any Pledged Subsidiary, and to elect new directors and officers of
any Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged
Subsidiary, operate its properties and carry on its business and otherwise take
any action with respect to the business, properties and affairs of such Pledged
Subsidiary which such new directors shall deem necessary or appropriate,
including, but not limited to, the maintenance, repair, renewal or alteration
of any or all of the properties of such Pledged Subsidiary, the leasing,
subleasing, sale or other disposition of any or all of such properties, the
borrowing of money on the credit of such Pledged Subsidiary, and the employment
of attorneys, agents or other employees deemed by such new directors to be
necessary for the proper operation, conduct, winding up or liquidation of the
business, properties and affairs of such Pledged Subsidiary, and all revenues
from the operation, conduct, winding up or liquidation of the business,
properties and affairs of such Pledged Subsidiary after the payment of expenses
thereof shall be applied to the payment of the Secured Obligations.
(c) The Company agrees that the proxy granted in this paragraph 5
is coupled with an interest and is and shall be both valid and irrevocable so
long as the Pledged Stock is subject to this Pledge Agreement. The Company
further acknowledges that the term of said proxy may exceed three years from
the date hereof.
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-4-
<PAGE> 5
6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Agent and the Lenders under any Operative Document is intended
to be exclusive of any other right or remedy, and every right and remedy shall
be cumulative in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy of the
Agent and the Lenders under any Operative Document or under applicable law may
be exercised from time to time and as often as may be deemed expedient by the
Agent and the Lenders. To the extent that it lawfully may, the Company agrees
that it will not at any time insist upon, plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of any provisions of any Operative Document; nor will it claim, take or insist
upon any benefit or advantage of any present or future law providing for the
valuation or appraisal of any security for its obligations under any Operative
Document prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same; nor will it, after any such sale
or sales, claim or exercise any right, under any applicable law to redeem any
portion of such security so sold.
7. Conduct No Waiver. No waiver of default shall be effective
unless in writing executed by the Agent and waiver of any default or
forbearance on the part of the Agent in enforcing any of its rights under this
Pledge Agreement shall not operate as a waiver of any other default or of the
same default on a future occasion or of such right.
8. Governing Law; Definitions. This Pledge Agreement is a
contract made under, and shall be governed by and construed in accordance with,
the law of the State of Michigan applicable to contracts made and to be
performed entirely within such State and without giving effect to choice of law
principles of such State. The Company agrees that any legal action or
proceeding with respect to this Pledge Agreement or the transactions
contemplated hereby may be brought in any court of the State of Michigan, or in
any court of the United States of America sitting in Michigan, and the Company
hereby submits to and accepts generally and unconditionally the jurisdiction of
those courts with respect to its person and property, and irrevocably appoints
the Chief Financial Officer of the Company, at the Company's address set forth
in the Credit Agreement, as its agent for service of process and irrevocably
consents to the service of process in connection with any such action or
proceeding by personal delivery to such agent or to the Company or by the
mailing thereof by registered or certified mail, postage prepaid to the Company
at its address set forth in the Credit Agreement. Nothing in this paragraph
shall affect the right of the Agent to serve process in any other manner
permitted by law or limit the right of the Agent to bring any such action or
proceeding against the Company or its property in the courts of any other
jurisdiction. The Company hereby irrevocably waives any objection to the
laying of venue of any such suit or proceeding in the above described courts.
Terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the
State of Michigan are used herein as therein defined on the date hereof. The
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-5-
<PAGE> 6
9. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
10. Rights Not Construed as Duties. The Agent neither assumes nor
shall it have any duty of performance or other responsibility under any
contracts in which the Agent has or obtains a security interest hereunder. If
the Company fails to perform any agreement contained herein, the Agent may but
is in no way obligated to itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Company under paragraph 13. The powers
conferred on the Agent hereunder are solely to protect its interests in the
Pledged Stock and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Pledged Stock in its possession and
accounting for monies actually received by it hereunder, the Agent shall have
no duty as to any Pledged Stock or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Stock.
11. Amendments. None of the terms and provisions of this Pledge
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
12. Severability. If any one or more provisions of this Pledge
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
13. Expenses.
(a) The Company agrees to indemnify the Agent from and against any
and all claims, losses and liabilities growing out of or resulting from this
Pledge Agreement (including, without limitation, enforcement of this Pledge
Agreement), except claims, losses or liabilities resulting from the Agent's
gross negligence or willful misconduct.
(b) The Company will, upon written demand, pay to the Agent an
amount of any and all reasonable and documented expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Agent may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Pledged Stock,
(iii) the exercise or enforcement of any of the rights of the Agent hereunder
or under the Operative Documents, or (iv) the failure of the Company to perform
or observe any of the provisions hereof.
14. Successors and Assigns; Termination. This Pledge Agreement
shall create a continuing security interest in the Pledged Stock and shall be
binding upon the Company, its successors and assigns, and inure, together with
the rights and remedies of the Agent hereunder, to the benefit of the Agent and
its successors, transferees and assigns. Upon the payment in full in
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-6-
<PAGE> 7
immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and upon such termination
the Agent shall assign, transfer and deliver without recourse and without
warranty the Pledged Stock to the Company (and any property received in respect
thereof) as has not theretofore been sold or otherwise applied pursuant to the
provisions of this Pledge Agreement.
15. Waiver of Jury Trial. The Agent and the Lenders, in accepting
this Pledge Agreement, and the Company, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Pledge Agreement or any related instrument or
agreement or any of the transactions contemplated by this Pledge Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders, nor the Company shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Agent and the Lenders or
the Company except by a written instrument executed by all of them.
IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be
duly executed as of the day and year first above written.
OXFORD AUTOMOTIVE, INC.
By:
____________________________________
Its:
________________________________
Accepted and Agreed:
NBD BANK, as Agent
By:
____________________________________
Its:
___________________________________
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-7-
<PAGE> 8
SCHEDULE 1
<TABLE>
<CAPTION>
Percentage
of Total
Common
Number of Number of Shares of
Jurisdiction of Issued Stock Pledged Percentage
Name of Subsidiary Incorporation Shares Certificates Subsidiary Owned
- ------------------ --------------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Lobdell Emery Michigan 100 1 100% 100%
Corporation
BMG Holdings, Ontario 100 1 100% 100%
Inc.
</TABLE>
<PAGE> 1
EXHIBIT 4.13
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
THIS PLEDGE AGREEMENT dated as of June 24, 1997 (this "Pledge
Agreement"), is given by LOBDELL EMERY CORPORATION, a Michigan corporation (the
"Company"), in favor of NBD Bank, a Michigan banking corporation, as agent (in
such capacity, the "Agent") for the benefit of itself and the lenders (the
"Lenders") now or hereafter parties to the Credit Agreement described below.
RECITALS
A. Oxford Automotive, Inc., a Michigan corporation (the
"Borrower") and the Borrowing Subsidiaries identified from time to time therein
(the "Borrowing Subsidiary") have entered into a Credit Agreement, dated as of
June 24, 1997, (as amended or modified from time to time, including any
agreement entered into in substitution therefor, the "Credit Agreement"), with
the Lenders parties thereto and the Agent pursuant to which the Lenders may
make Advances (as therein defined) to the Borrower and the Borrowing
Subsidiary.
B. The Company is a subsidiary of the Borrower, and is engaged in
a common enterprise with the Borrower and other subsidiaries of the Borrower.
C. The Company, together with the other subsidiaries of the
Company, has guaranteed the Borrower's and the Borrowing Subsidiary's
obligations under the Credit Agreement pursuant to a Guaranty Agreement dated
as of June 24, 1997 (as hereinafter amended, modified or restated, the
"Guaranty").
D. As a condition precedent to the effectiveness of the Bank's
obligations under the Credit Agreement, the Company has agreed to pledge to the
Agent, for the benefit of the Lenders, and grant a first-priority security
interest to the Agent, for the benefit of the Lenders, in and to the collateral
described herein and to execute this Pledge Agreement.
For value received and pursuant to the Credit Agreement, the Company
hereby grants a first-priority security interest to the Agent, for the benefit
of the Lenders, in and to all of the outstanding capital stock of the companies
listed on the schedule attached hereto as Schedule 1 (the "Pledged
Subsidiaries", and said shares of stock, together with any other shares and
securities from time to time receivable or otherwise distributed in respect of
or in exchange for any or all of such shares, being called the "Pledged
Stock"), to secure, (a) the prompt and complete payment of all indebtedness and
other obligations of the Company or any Subsidiary now or hereafter owing to
the Lenders or the Agent under or on account of the Credit Agreement, any
Security Document or any letters of credit, notes or other instruments issued
to the Agent or Lenders pursuant thereto, (b) the performance of the covenants
under the Credit Agreement and the Security Documents and any monies expended
by the Agent in connection therewith payable under the Credit Agreement and (c)
the prompt and complete payment of all obligations and performance of all
covenants of the Company under any interest rate or currency swap agreements or
similar transactions with any Bank (all of the aforesaid indebtedness,
obligations and liabilities of the Company and its Subsidiaries
<PAGE> 2
being herein called the "Secured Obligations", and all of the documents,
agreements and instruments among the Company, the Subsidiaries, the Agent, the
Lenders, or any of them, evidencing or securing the repayment of, or otherwise
pertaining to, the Secured Obligations being herein collectively called the
"Operative Documents"). The Company is herewith delivering to the Agent for
the benefit of the Lenders originals of all stock certificates of the Pledged
Stock or taking such other action acceptable to the Agent and the Required
Lenders to perfect the security interest in the Pledged Stock granted hereby.
The Company further represents and warrants to, and agrees with, the
Agent for the benefit of the Lenders as follows:
1. Representations and Warranties. The Company represents and
warrants that the Pledged Stock is represented by the stock certificate or
certificates or shares described on Schedule 1 hereto, and that such stock
certificate or certificates, accompanied by an instrument of assignment or
transfer duly executed in blank by the Company as the owner named in such stock
certificate or certificates, have been delivered to the Agent by the Company.
The Company further represents and warrants that (a) the Pledged Stock is duly
authorized and validly issued, fully paid and nonassessable and constitutes
100% of all of the issued and outstanding shares of the capital stock of each
Pledged Subsidiary, (b) the Company is the legal and beneficial owner of the
Pledged Stock, free and clear of all Liens other than the Lien of Agent
hereunder, with requisite right and power to deliver, pledge and assign the
Pledged Stock to the Agent hereunder, and (c) the pledge of the Pledged Stock
pursuant to this Pledge Agreement creates in favor of the Agent a valid and
perfected first-priority security interest in the Pledged Stock enforceable
against the Company and all third parties and securing the payment of the
Secured Obligations.
2. Title; Stock Rights, Dividends, Etc. The Company will warrant
and defend the Agent's title to the Pledged Stock, and the security interest
herein created, against all claims of all persons, and will maintain and
preserve such security interest. It is understood and agreed that the
collateral hereunder includes any stock rights, stock dividends, liquidating
dividends, new securities, payments, distributions and proceeds (including cash
dividends and sale proceeds) and other property to which the Company may become
entitled by reason of the ownership of the Pledged Stock during the existence
of this Pledge Agreement, and any such property received by the Company shall
be held in trust and forthwith delivered to the Agent to be held hereunder in
accordance with the terms of this Pledge Agreement.
3. Registration Rights. If any Pledged Subsidiary at any time or
from time to time proposes to register any of its securities under the
Securities Act of 1933, the Company will at each such time give notice to the
Agent of such Pledged Subsidiary's intentions so to do. Upon the request of
the Agent given 30 days after receipt of such notice, the Company will cause
all Pledged Stock of such Pledged Subsidiary to be included in the registration
statement proposed to be filed, all to the extent requisite to permit the
public sale or other public disposition of such Pledged Stock so registered by
the holders thereof. The costs and expenses of all such registrations and
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-2-
<PAGE> 3
qualifications under said Act shall be paid by the Company or such Pledged
Subsidiary, except that underwriting discounts and commissions in respect of
any Pledged Stock sold pursuant to any such registration statement shall be
borne by the sellers thereof. As expeditiously as possible after the effective
date of any such registration statement, the Company will deliver in exchange
for any certificates representing shares of Pledged Stock so registered
pursuant to such registration, which bear any restrictive legend, new Pledged
Stock certificates not bearing such legend or any similar legend. In the event
of any such registration, the Company hereby agrees to indemnify and hold
harmless the Agent and the Lenders as pledgee of the Pledged Stock against any
losses, claims, damages or liabilities to which the Agent and the Lenders may
become subject to the extent that such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, and any
preliminary prospectus or filed prospectus, or in any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Agent and
the Lenders for any legal or other expenses reasonably incurred by the Agent
and the Lenders in connection with investigating or defending any such loss,
claim, damage or liability. The indemnifications contained in this paragraph
shall include each person, if any, who controls the Agent or any Bank.
4. Events of Default; Remedies.
(a) Upon the occurrence of any Event of Default under the Credit
Agreement, which has not been remedied by the Company, the Borrower, or the
Borrowing Subsidiary within fifteen (15) days after the Borrower or the
Borrowing Subsidiary receives written notice of such occurrence from the Agent
(the "Cure Period"), an Event of Default shall be deemed to have occurred
hereunder and the Agent shall have all of the rights, remedies and
responsibilities provided by law and/or by this Pledge Agreement, including but
not limited to all of the rights, remedies and responsibilities of a secured
party under the Michigan Uniform Commercial Code, and the Company hereby
authorizes the Agent, in accordance with the Michigan Uniform Commercial Code,
to sell all or any part of the Pledged Stock at public or private sale and to
apply the proceeds of such sale to the costs and expenses thereof (including
the reasonable attorneys' fees and disbursements incurred by the Agent) and
then to the payment of the other Secured Obligations. Any requirement of
reasonable notice in connection with such sale shall be met if the Agent sends
such notice to the Company, by registered or certified mail, at least 5 days
prior to the date of sale, disposition or other event giving rise to the
required notice. The Agent or any Bank may be the purchaser at any such sale.
The Agent shall be under no obligation to preserve rights against prior
parties.
(b) The Company hereby waives as to the Agent and the Lenders any
right of subrogation or marshaling of such stock and other collateral for
indebtedness or other obligations owed to the Agent and the Lenders. To this
end, the Company hereby expressly agrees that any such collateral or other
security of the Company or any other party which the Agent or any Bank may
hold, or which may come to any of their possession, may be dealt with in all
respects and particulars as though this Pledge Agreement were not in existence.
The Company agrees and acknowledges that
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-3-
<PAGE> 4
because of applicable securities laws, the Agent may not be able to effect a
public sale of the Pledged Stock and sales at a private sale may be on terms
less favorable than if such securities were sold at a public sale and may be at
a price less favorable than a public sale.
(c) The Company irrevocably designates, makes, constitutes and
appoints the Agent (and all persons designated by the Agent) as its true and
lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may,
upon and after an Event of Default hereunder which has not been waived, with
notice to the Company if the Secured Obligations have not been accelerated and
without notice if the Secured Obligations have been accelerated, take any
action as the Agent reasonably deems necessary under the circumstances to
enforce or otherwise take action in respect to the Pledged Stock as required
hereby, or to carry out any other obligation or duty of the Company under this
Agreement.
(d) Notwithstanding the foregoing, the Agent, on behalf of the
Lenders, agrees that it shall not exercise any remedy hereunder, including the
remedies set forth in Section 5, until such time as Agent has exercised its
remedies under the Company Security Agreement and Guarantor Security Agreement
and has realized upon substantially all of the assets subject thereto to the
extent permitted by law; provided that the Agent and the Lenders may exercise
all rights and remedies hereunder immediately upon the occurrence of, and
nothing in this Section 4(d) shall limit or otherwise impair any of the Agent's
and the Lenders' interests, rights and remedies in, any bankruptcy, insolvency
or similar proceeding.
5. Additional Remedies; Irrevocable Proxy.
(a) After satisfaction of the sale provisions of Section 4, but
subject to Section 4(d) herein, the Agent may transfer into its name, or into
the name of its nominee or nominees, any or all of the Pledged Stock and may
vote any or all of the Pledged Stock (whether or not so transferred) and may
otherwise act with respect thereto as though it were the outright owner
thereof, the Company hereby irrevocably constituting and appointing the Agent
as the proxy and attorney-in-fact of the Company, with full power of
substitution, to do so.
(b) Upon the occurrence of the events described in Section 5(a)
above, the Agent may vote the Pledged Stock to remove the directors and
officers of any Pledged Subsidiary, and to elect new directors and officers of
any Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged
Subsidiary, operate its properties and carry on its business and otherwise take
any action with respect to the business, properties and affairs of such Pledged
Subsidiary which such new directors shall deem necessary or appropriate,
including, but not limited to, the maintenance, repair, renewal or alteration
of any or all of the properties of such Pledged Subsidiary, the leasing,
subleasing, sale or other disposition of any or all of such properties, the
borrowing of money on the credit of such Pledged Subsidiary, and the employment
of attorneys, agents or other employees deemed by such new directors to be
necessary for the proper operation, conduct, winding up or liquidation of the
business, properties and affairs of such Pledged Subsidiary, and all revenues
from the operation, conduct, winding up or liquidation of the business,
properties and affairs of such
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-4-
<PAGE> 5
Pledged Subsidiary after the payment of expenses thereof shall be applied to
the payment of the Secured Obligations.
(c) The Company agrees that the proxy granted in this paragraph 5
is coupled with an interest and is and shall be both valid and irrevocable so
long as the Pledged Stock is subject to this Pledge Agreement. The Company
further acknowledges that the term of said proxy may exceed three years from
the date hereof.
6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Agent and the Lenders under any Operative Document is intended
to be exclusive of any other right or remedy, and every right and remedy shall
be cumulative in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy of the
Agent and the Lenders under any Operative Document or under applicable law may
be exercised from time to time and as often as may be deemed expedient by the
Agent and the Lenders. To the extent that it lawfully may, the Company agrees
that it will not at any time insist upon, plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of any provisions of any Operative Document; nor will it claim, take or insist
upon any benefit or advantage of any present or future law providing for the
valuation or appraisal of any security for its obligations under any Operative
Document prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same; nor will it, after any such sale
or sales, claim or exercise any right, under any applicable law to redeem any
portion of such security so sold.
7. Conduct No Waiver. No waiver of default shall be effective
unless in writing executed by the Agent and waiver of any default or
forbearance on the part of the Agent in enforcing any of its rights under this
Pledge Agreement shall not operate as a waiver of any other default or of the
same default on a future occasion or of such right.
8. Governing Law; Definitions. This Pledge Agreement is a
contract made under, and shall be governed by and construed in accordance with,
the law of the State of Michigan applicable to contracts made and to be
performed entirely within such State and without giving effect to choice of law
principles of such State. The Company agrees that any legal action or
proceeding with respect to this Pledge Agreement or the transactions
contemplated hereby may be brought in any court of the State of Michigan, or in
any court of the United States of America sitting in Michigan, and the Company
hereby submits to and accepts generally and unconditionally the jurisdiction of
those courts with respect to its person and property, and irrevocably appoints
the Chief Financial Officer of the Company, at the Company's address set forth
in the Credit Agreement, as its agent for service of process and irrevocably
consents to the service of process in connection with any such action or
proceeding by personal delivery to such agent or to the Company or by the
mailing thereof by registered or certified mail, postage prepaid to the Company
at its address set forth in the Credit Agreement. Nothing in this paragraph
shall affect the right of the Agent to serve process in any other manner
permitted by law or limit the right of the Agent to bring any such action or
proceeding against the Company or its property in the courts of any other
jurisdiction. The Company hereby
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-5-
<PAGE> 6
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above described courts. Terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Article 9 of the Uniform Commercial Code in the State of Michigan are used
herein as therein defined on the date hereof. The headings of the various
subdivisions hereof are for convenience of reference only and shall in no way
modify any of the terms or provisions hereof.
9. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
10. Rights Not Construed as Duties. The Agent neither assumes nor
shall it have any duty of performance or other responsibility under any
contracts in which the Agent has or obtains a security interest hereunder. If
the Company fails to perform any agreement contained herein, the Agent may but
is in no way obligated to itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Company under paragraph 13. The powers
conferred on the Agent hereunder are solely to protect its interests in the
Pledged Stock and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Pledged Stock in its possession and
accounting for monies actually received by it hereunder, the Agent shall have
no duty as to any Pledged Stock or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Stock.
11. Amendments. None of the terms and provisions of this Pledge
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
12. Severability. If any one or more provisions of this Pledge
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
13. Expenses.
(a) The Company agrees to indemnify the Agent from and against any
and all claims, losses and liabilities growing out of or resulting from this
Pledge Agreement (including, without limitation, enforcement of this Pledge
Agreement), except claims, losses or liabilities resulting from the Agent's
gross negligence or willful misconduct.
(b) The Company will, upon written demand, pay to the Agent an
amount of any and all reasonable and documented expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Agent may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Pledged Stock,
(iii) the exercise or enforcement of any of
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-6-
<PAGE> 7
the rights of the Agent hereunder or under the Operative Documents, or (iv) the
failure of the Company to perform or observe any of the provisions hereof.
14. Successors and Assigns; Termination. This Pledge Agreement
shall create a continuing security interest in the Pledged Stock and shall be
binding upon the Company, its successors and assigns, and inure, together with
the rights and remedies of the Agent hereunder, to the benefit of the Agent and
its successors, transferees and assigns. Upon the payment in full in
immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and upon such termination
the Agent shall assign, transfer and deliver without recourse and without
warranty the Pledged Stock to the Company (and any property received in respect
thereof) as has not theretofore been sold or otherwise applied pursuant to the
provisions of this Pledge Agreement.
15. Waiver of Jury Trial. The Agent and the Lenders, in accepting
this Pledge Agreement, and the Company, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Pledge Agreement or any related instrument or
agreement or any of the transactions contemplated by this Pledge Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders, nor the Company shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Agent and the Lenders or
the Company except by a written instrument executed by all of them.
IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be
duly executed as of the day and year first above written.
LOBDELL EMERY CORPORATION
By:
____________________________________
Its:
__________________________________
Accepted and Agreed:
NBD BANK, as Agent
By:
___________________________
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-7-
<PAGE> 8
Its:
_____________________________________
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-8-
<PAGE> 9
SCHEDULE 1
<TABLE>
<CAPTION>
Percentage
of Total
Common
Number of Number of Shares of
Jurisdiction of Issued Stock Pledged Percentage
Name of Subsidiary Incorporation Shares Certificates Subsidiary Owned
- ------------------ --------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Lewis Emery Michigan 10,000 1 100% 100%
Capital Corporation
Concept Michigan 400,000 1 100% 100%
Management
Corporation
Parallel Group Indiana 100 1 100% 100%
International, Inc.
Laserweld Indiana N/A N/A 100% 100%
International,
L.L.C.
</TABLE>
<PAGE> 1
EXHIBIT 4.14
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
THIS PLEDGE AGREEMENT dated as of June 24, 1997 (this "Pledge
Agreement"), is given by CONCEPT MANAGEMENT CORPORATION, a Michigan corporation
(the "Company"), in favor of NBD Bank, a Michigan banking corporation, as agent
(in such capacity, the "Agent") for the benefit of itself and the lenders (the
"Lenders") now or hereafter parties to the Credit Agreement described below.
RECITALS
A. Oxford Automotive, Inc., a Michigan corporation (the
"Borrower") and the Borrowing Subsidiaries identified from time to time therein
(the "Borrowing Subsidiary") have entered into a Credit Agreement, dated as of
June 24, 1997 (as amended or modified from time to time, including any
agreement entered into in substitution therefor, the "Credit Agreement"), with
the lenders parties thereto and the Agent pursuant to which the Lenders may
make Advances (as therein defined) to the Borrower and the Borrowing
Subsidiary.
B. The Company is a subsidiary of the Borrower, and is engaged in
a common enterprise with the Borrower and other subsidiaries of the Borrower.
C. The Company, together with the other subsidiaries of the
Company, has guaranteed the Borrower's and the Borrowing Subsidiary's
obligations under the Credit Agreement pursuant to a Guaranty Agreement dated
as of June 24, 1997 (as hereinafter amended, modified or restated, the
"Guaranty").
D. As a condition precedent to the effectiveness of the Bank's
obligations under the Credit Agreement, the Company has agreed to pledge to the
Agent, for the benefit of the Lenders, and grant a first-priority security
interest to the Agent, for the benefit of the Lenders, in and to the collateral
described herein and to execute this Pledge Agreement.
For value received and pursuant to the Credit Agreement, the Company
hereby grants a first-priority security interest to the Agent, for the benefit
of the Lenders, in and to all of the outstanding capital stock of the companies
listed on the schedule attached hereto as Schedule 1 (the "Pledged
Subsidiaries", and said shares of stock and beneficial interests, together with
any other shares and securities from time to time receivable or otherwise
distributed in respect of or in exchange for any or all of such shares, being
called the "Pledged Stock"), to secure, (a) the prompt and complete payment of
all indebtedness and other obligations of the Borrower or any Subsidiary now or
hereafter owing to the Lenders or the Agent under or on account of the Credit
Agreement, any Security Document or any Letter of Credit, notes or other
instruments issued to the Agent or any Lender pursuant thereto, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by the Agent in connection therewith payable
under the Credit Agreement, (c) the prompt and complete payment of all
obligations and performance of all covenants of the Borrower under any interest
rate or currency swap agreements or similar transactions with any Lender, and
(d) the prompt and complete payment of all indebtedness of the
<PAGE> 2
Company and any other guarantor under the Guaranty, (all of the aforesaid
indebtedness, obligations and liabilities of the Company and its Subsidiaries
being herein called the "Secured Obligations", and all of the documents,
agreements and instruments among the Company, the Subsidiaries, the Agent, the
Lenders, or any of them, evidencing or securing the repayment of, or otherwise
pertaining to, the Secured Obligations being herein collectively called the
"Operative Documents"). The Company is herewith delivering to the Agent for
the benefit of the Lenders originals of all stock certificates of the Pledged
Stock or taking such other action acceptable to the Agent and the Required
Lenders to perfect the security interest in the Pledged Stock granted hereby.
The Company further represents and warrants to, and agrees with, the
Agent for the benefit of the Lenders as follows:
1. Representations and Warranties. The Company represents and
warrants that the Pledged Stock is represented by the stock certificate or
certificates or shares described on Schedule 1 hereto, and that such stock
certificate or certificates, accompanied by an instrument of assignment or
transfer duly executed in blank by the Company as the owner named in such stock
certificate or certificates, have been delivered to the Agent by the Company.
The Company further represents and warrants that (a) the Pledged Stock is duly
authorized and validly issued, fully paid and nonassessable and constitutes
100% of all of the issued and outstanding shares of the capital stock of each
Pledged Subsidiary, (b) the Company is the legal and beneficial owner of the
Pledged Stock, free and clear of all Liens other than the Lien of Agent
hereunder, with requisite right and power to deliver, pledge and assign the
Pledged Stock to the Agent hereunder, and (c) the pledge of the Pledged Stock
pursuant to this Pledge Agreement creates in favor of the Agent a valid and
perfected first-priority security interest in the Pledged Stock enforceable
against the Company and all third parties and securing the payment of the
Secured Obligations.
2. Title; Stock Rights, Dividends, Etc. The Company will warrant
and defend the Agent's title to the Pledged Stock, and the security interest
herein created, against all claims of all persons, and will maintain and
preserve such security interest. It is understood and agreed that the
collateral hereunder includes any stock rights, stock dividends, liquidating
dividends, new securities, payments, distributions and proceeds (including cash
dividends and sale proceeds) and other property to which the Company may become
entitled by reason of the ownership of the Pledged Stock during the existence
of this Pledge Agreement, and any such property received by the Company shall
be held in trust and forthwith delivered to the Agent to be held hereunder in
accordance with the terms of this Pledge Agreement.
3. Registration Rights. If any Pledged Subsidiary at any time or
from time to time proposes to register any of its securities under the
Securities Act of 1933, the Company will at each such time give notice to the
Agent of such Pledged Subsidiary's intentions so to do. Upon the request of
the Agent given 30 days after receipt of such notice, the Company will cause
all Pledged Stock of such Pledged Subsidiary to be included in the registration
statement proposed to be filed, all to the extent requisite to permit the
public sale or other public disposition of such Pledged Stock
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-2-
<PAGE> 3
so registered by the holders thereof. The costs and expenses of all such
registrations and qualifications under said Act shall be paid by the Company or
such Pledged Subsidiary, except that underwriting discounts and commissions in
respect of any Pledged Stock sold pursuant to any such registration statement
shall be borne by the sellers thereof. As expeditiously as possible after the
effective date of any such registration statement, the Company will deliver in
exchange for any certificates representing shares of Pledged Stock so
registered pursuant to such registration, which bear any restrictive legend,
new Pledged Stock certificates not bearing such legend or any similar legend.
In the event of any such registration, the Company hereby agrees to indemnify
and hold harmless the Agent and the Lenders as pledgee of the Pledged Stock
against any losses, claims, damages or liabilities to which the Agent and the
Lenders may become subject to the extent that such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such registration
statement, and any preliminary prospectus or filed prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Agent and the Lenders for any legal or other expenses reasonably
incurred by the Agent and the Lenders in connection with investigating or
defending any such loss, claim, damage or liability. The indemnifications
contained in this paragraph shall include each person, if any, who controls the
Agent or any Bank.
4. Events of Default; Remedies.
(a) Upon the occurrence of any Event of Default under the Credit
Agreement, which has not been remedied by the Company, the Borrower, or the
Borrowing Subsidiary within fifteen (15) days after the Borrower or the
Borrowing Subsidiary receives written notice of such occurrence from the Agent
(the "Cure Period"), an Event of Default shall be deemed to have occurred
hereunder and the Agent shall have an Event of Default shall be deemed to have
occurred hereunder and the Agent shall have all of the rights, remedies and
responsibilities provided by law and/or by this Pledge Agreement, including but
not limited to all of the rights, remedies and responsibilities of a secured
party under the Michigan Uniform Commercial Code, and the Company hereby
authorizes the Agent, accordance with the Michigan Uniform Commercial Code, to
sell all or any part of the Pledged Stock at public or private sale and to
apply the proceeds of such sale to the costs and expenses thereof (including
the reasonable attorneys' fees and disbursements incurred by the Agent) and
then to the payment of the other Secured Obligations. Any requirement of
reasonable notice in connection with such sale shall be met if the Agent sends
such notice to the Company, by registered or certified mail, at least 5 days
prior to the date of sale, disposition or other event giving rise to the
required notice. The Agent or any Bank may be the purchaser at any such sale.
The Agent shall be under no obligation to preserve rights against prior
parties.
(b) The Company hereby waives as to the Agent and the Lenders any
right of subrogation or marshaling of such stock and other collateral for
indebtedness or other obligations owed to the Agent and the Lenders. To this
end, the Company hereby expressly agrees that any such collateral or other
security of the Company or any other party which the Agent or any Bank may
hold, or
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-3-
<PAGE> 4
which may come to any of their possession, may be dealt with in all respects
and particulars as though this Pledge Agreement were not in existence. The
Company agrees and acknowledges that because of applicable securities laws, the
Agent may not be able to effect a public sale of the Pledged Stock and sales at
a private sale may be on terms less favorable than if such securities were sold
at a public sale and may be at a price less favorable than a public sale.
(c) The Company irrevocably designates, makes, constitutes and
appoints the Agent (and all persons designated by the Agent) as its true and
lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may,
upon and after an Event of Default hereunder which has not been waived, with
notice to the Company if the Secured Obligations have not been accelerated and
without notice if the Secured Obligations have been accelerated, take any
action as the Agent reasonably deems necessary under the circumstances to
enforce or otherwise take action in respect to the Pledged Stock as required
hereby, or to carry out any other obligation or duty of the Company under this
Agreement.
(d) Notwithstanding the foregoing, the Agent, on behalf of the
Lenders, agrees that it shall not exercise any remedy hereunder, including the
remedies set forth in Section 5, until such time as Agent has exercised its
remedies under the Company Security Agreement and Guarantor Security Agreement
and has realized upon substantially all of the assets subject thereto to the
extent permitted by law; provided that the Agent and the Lenders may exercise
all rights and remedies hereunder immediately upon the occurrence of, and
nothing in this Section 4(d) shall limit or otherwise impair any of the Agent's
and the Lenders' interests, rights and remedies in, any bankruptcy, insolvency
or similar proceeding.
5. Additional Remedies; Irrevocable Proxy.
(a) After satisfaction of the sale provisions of Section 4 but
subject to Section 4(d) herein, the Agent may transfer into its name, or into
the name of its nominee or nominees, any or all of the Pledged Stock and may
vote any or all of the Pledged Stock (whether or not so transferred) and may
otherwise act with respect thereto as though it were the outright owner
thereof, the Company hereby irrevocably constituting and appointing the Agent
as the proxy and attorney-in-fact of the Company, with full power of
substitution, to do so.
(b) Upon the occurrence of the events described in Section 5(a)
above, the Agent may vote the Pledged Stock to remove the directors and
officers of any Pledged Subsidiary, and to elect new directors and officers of
any Pledged Subsidiary, who thereafter shall manage the affairs of such Pledged
Subsidiary, operate its properties and carry on its business and otherwise take
any action with respect to the business, properties and affairs of such Pledged
Subsidiary which such new directors shall deem necessary or appropriate,
including, but not limited to, the maintenance, repair, renewal or alteration
of any or all of the properties of such Pledged Subsidiary, the leasing,
subleasing, sale or other disposition of any or all of such properties, the
borrowing of money on the credit of such Pledged Subsidiary, and the employment
of attorneys, agents or other employees deemed by such new directors to be
necessary for the proper operation, conduct, winding up or
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-4-
<PAGE> 5
liquidation of the business, properties and affairs of such Pledged Subsidiary,
and all revenues from the operation, conduct, winding up or liquidation of the
business, properties and affairs of such Pledged Subsidiary after the payment
of expenses thereof shall be applied to the payment of the Secured Obligations.
(c) The Company agrees that the proxy granted in this paragraph 5
is coupled with an interest and is and shall be both valid and irrevocable so
long as the Pledged Stock is subject to this Pledge Agreement. The Company
further acknowledges that the term of said proxy may exceed three years from
the date hereof.
6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Agent and the Lenders under any Operative Document is intended
to be exclusive of any other right or remedy, and every right and remedy shall
be cumulative in addition to every other right or remedy given hereunder or now
or hereafter existing under any applicable law. Every right and remedy of the
Agent and the Lenders under any Operative Document or under applicable law may
be exercised from time to time and as often as may be deemed expedient by the
Agent and the Lenders. To the extent that it lawfully may, the Company agrees
that it will not at any time insist upon, plead, or in any manner whatever
claim or take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or performance
of any provisions of any Operative Document; nor will it claim, take or insist
upon any benefit or advantage of any present or future law providing for the
valuation or appraisal of any security for its obligations under any Operative
Document prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same; nor will it, after any such sale
or sales, claim or exercise any right, under any applicable law to redeem any
portion of such security so sold.
7. Conduct No Waiver. No waiver of default shall be effective
unless in writing executed by the Agent and waiver of any default or
forbearance on the part of the Agent in enforcing any of its rights under this
Pledge Agreement shall not operate as a waiver of any other default or of the
same default on a future occasion or of such right.
8. Governing Law; Definitions. This Pledge Agreement is a
contract made under, and shall be governed by and construed in accordance with,
the law of the State of Michigan applicable to contracts made and to be
performed entirely within such State and without giving effect to choice of law
principles of such State. The Company agrees that any legal action or
proceeding with respect to this Pledge Agreement or the transactions
contemplated hereby may be brought in any court of the State of Michigan, or in
any court of the United States of America sitting in Michigan, and the Company
hereby submits to and accepts generally and unconditionally the jurisdiction of
those courts with respect to its person and property, and irrevocably appoints
the Chief Financial Officer of the Company, at the Company's address set forth
in the Credit Agreement, as its agent for service of process and irrevocably
consents to the service of process in connection with any such action or
proceeding by personal delivery to such agent or to the Company or by the
mailing thereof by registered or certified mail, postage prepaid to the Company
at its address set forth in the Credit Agreement. Nothing in this paragraph
shall affect the right of the Agent to serve process in any
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-5-
<PAGE> 6
other manner permitted by law or limit the right of the Agent to bring any such
action or proceeding against the Company or its property in the courts of any
other jurisdiction. The Company hereby irrevocably waives any objection to the
laying of venue of any such suit or proceeding in the above described courts.
Terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the
State of Michigan are used herein as therein defined on the date hereof. The
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
9. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
10. Rights Not Construed as Duties. The Agent neither assumes nor
shall it have any duty of performance or other responsibility under any
contracts in which the Agent has or obtains a security interest hereunder. If
the Company fails to perform any agreement contained herein, the Agent may but
is in no way obligated to itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Company under paragraph 13. The powers
conferred on the Agent hereunder are solely to protect its interests in the
Pledged Stock and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Pledged Stock in its possession and
accounting for monies actually received by it hereunder, the Agent shall have
no duty as to any Pledged Stock or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Stock.
11. Amendments. None of the terms and provisions of this Pledge
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
12. Severability. If any one or more provisions of this Pledge
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
13. Expenses.
(a) The Company agrees to indemnify the Agent from and against any
and all claims, losses and liabilities growing out of or resulting from this
Pledge Agreement (including, without limitation, enforcement of this Pledge
Agreement), except claims, losses or liabilities resulting from the Agent's
gross negligence or willful misconduct.
(b) The Company will, upon written demand, pay to the Agent an
amount of any and all reasonable and documented expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Agent may incur in connection with (i) the administration
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-6-
<PAGE> 7
of this Pledge Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from or other realization upon, any of the Pledged
Stock, (iii) the exercise or enforcement of any of the rights of the Agent
hereunder or under the Operative Documents, or (iv) the failure of the Company
to perform or observe any of the provisions hereof.
14. Successors and Assigns; Termination. This Pledge Agreement
shall create a continuing security interest in the Pledged Stock and shall be
binding upon the Company, its successors and assigns, and inure, together with
the rights and remedies of the Agent hereunder, to the benefit of the Agent and
its successors, transferees and assigns. Upon the payment in full in
immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and upon such termination
the Agent shall assign, transfer and deliver without recourse and without
warranty the Pledged Stock to the Company (and any property received in respect
thereof) as has not theretofore been sold or otherwise applied pursuant to the
provisions of this Pledge Agreement.
15. Waiver of Jury Trial. The Agent and the Lenders, in accepting
this Pledge Agreement, and the Company, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Pledge Agreement or any related instrument or
agreement or any of the transactions contemplated by this Pledge Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Lenders, nor the Company shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury
trial has been waived with any other action in which a jury trial cannot be or
has not been waived. These provisions shall not be deemed to have been
modified in any respect or relinquished by either the Agent and the Lenders or
the Company except by a written instrument executed by all of them.
IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be
duly executed as of the day and year first above written.
CONCEPT MANAGEMENT CORPORATION
By:
Its:
Accepted and Agreed:
NBD BANK, as Agent
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-7-
<PAGE> 8
By:
Its:
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
-8-
<PAGE> 9
SCHEDULE 1
<TABLE>
<CAPTION>
Percentage
of Total
Common
Number of Number of Shares of
Jurisdiction of Issued Stock Pledged Percentage
Name of Subsidiary Incorporation Shares Certificates Subsidiary Owned
- ------------------ --------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Winchester Michigan 40,000 1 100% 100%
Fabrication
Corporation
Creative Tennessee 48,000 1 100% 100%
Fabrication
Corporation
</TABLE>
<PAGE> 1
EXHIBIT 4.17
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of August
15, 1997, among Howell Industries, Inc. (the "New Subsidiary Guarantor"), a
subsidiary of Oxford Automotive, Inc., a Michigan corporation (the "Company"),
the Company, the Subsidiary Guarantors (the "Existing Subsidiary Guarantors")
under the Indenture referred to below, and First Trust National Association, a
national banking corporation, as trustee under the Indenture referred to below
(the "Trustee").
WHEREAS the Company has heretofore executed and delivered to the Trustee
an Indenture (as such may be amended from time to time, the "Indenture"), dated
as of June 15, 1997, providing for the issuance of an aggregate principal
amount of $160,000,000 of 10 1/8% Senior Subordinated Notes Due 2007 (the
"Securities");
WHEREAS Section 4.14 of the Indenture provides that under certain
circumstances the Company is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally guarantee all of the
Company's obligations under the Securities pursuant to a Subsidiary Guaranty on
the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.1 of the Indenture, the Trustee, the Company
and Existing Subsidiary Guarantors are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as otherwise
herein expressly provided or unless the context otherwise requires: (i) the
terms and expressions used herein shall have the same meanings as corresponding
terms and expressions used in the Indenture; and (ii) the words "herein,"
"hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.
2. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, to guarantee the
Company's obligations under the Securities on the terms and subject to the
conditions set forth in Article 11 of the Indenture and to be bound by all
other applicable provisions of the Indenture. From and after the date hereof,
the
<PAGE> 2
New Subsidiary Guarantor shall be a Subsidiary Guarantor for all purposes
under the Indenture and the Securities.
3. Ratification of Indenture; Supplemental Indentures Part of Indenture.
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall remain
in full force and effect. This Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. Trustee Makes No Representation. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
6. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
HOWELL INDUSTRIES, INC.
By: /s/ Steven M. Abelman
---------------------------
Name: Steven M. Abelman
Title: President
OXFORD AUTOMOTIVE, INC.
By: /s/ Steven M. Abelman
---------------------------
Name: Steven M. Abelman
Title: President
2
<PAGE> 3
SUBSIDIARY GUARANTORS:
BMG NORTH AMERICA LIMITED
LOBDELL EMERY CORPORATION
WINCHESTER FABRICATION CORPORATION
CREATIVE FABRICATION CORPORATION
PARALLEL GROUP INTERNATIONAL, INC.
CONCEPT MANAGEMENT CORPORATION
LEWIS EMERY CAPITAL CORPORATION
BMG HOLDINGS, INC.
By: /s/ Steven M. Abelman
---------------------------
Name: Steven M. Abelman
Title: President
LASERWELD INTERNATIONAL, L.L.C.
By: Lobdell Emery Corporation, its sole member
By: /s/ Steven M. Abelman
---------------------------
Name: Steven M. Abelman
Title: President
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Nan Packard
---------------------------
Name: Nan Packard
Title: Assistant Vice President
3
<PAGE> 1
EXHIBIT 16
September 17, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Amendment No. 1 to the Oxford Automotive, Inc.
Registration Statement on Form S-4
Commission File No. 333-32975
Dear Sir/Madam:
We have read the statements made by Oxford Automotive, Inc. in the
"Experts" section of Amendment No. 1 to the Oxford Automotive, Inc. Form S-4,
Commission File No. 333-32975 ("Amendment No. 1"), which we understand will be
filed with the Securities and Exchange Commission as an Exhibit to Amendment
No. 1. We agree with the statements concerning our firm in the "Experts"
section of Amendment No. 1.
Very truly yours,
/s/ DELOITTE & TOUCHE
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Oxford Automotive, Inc. of our report
dated May 19, 1997 relating to the financial statements of Lobdell Emery
Corporation as of December 31, 1996 and 1995 and for each year in the
three-year period ended December 31, 1996, which appears in such Prospectus.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
Detroit, Michigan
September 18, 1997
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Oxford Automotive, Inc. of our report
dated May 19, 1997, relating to the financial statements of Oxford Automotive,
Inc. as of and for the year ended March 31, 1997, which appears in such
Prospectus. We also consent to the application of such as of and for the year
ended March 31, 1997 report to the Financial Statement Schedule for the year
ended March 31, 1997 listed under Item 21 of this Registration Statement when
such schedule is read in conjunction with the financial statements referred to
in our report. The audit referred to in such report also included this schedule.
We also consent to the references to us under the headings "Experts" and
"Selected Consolidated Historical Financial Data" in such Prospectus. However,
it should be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Consolidated Historical Financial Data."
/s/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
Detroit, Michigan
September 18, 1997
<PAGE> 1
EXHIBIT 23.3
DELOITTE & TOUCHE
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form S-4 of Oxford
Automotive, Inc. of our report dated May 21, 1996, appearing in the Prospectus,
which is part of this Registration Statement, and to the references to us under
the headings "Experts" and "Selected Consolidated Historical Financial Data" in
such Prospectus.
Our audits of the financial statements referred to in our aforementioned report
also include the financial statement schedule of Oxford Automotive, Inc. and
BMG North America Limited, for the periods October 28, 1995 to March 31, 1996
and April 1, 1995 to October 27, 1995 and for the year ended March 31, 1995
listed in Item 21. This financial statement schedule is the responsibility of
the Corporation's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche
Chartered Accountants
Kitchener, Ontario
September 17, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING JUNE
30, 1997 AND AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING MARCH
31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<CIK> 0001040475
<NAME> OXFORD AUTOMOTIVE INC.
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1998
<PERIOD-START> MAR-31-1996 MAR-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997
<CASH> 9,671 58,883
<SECURITIES> 0 0
<RECEIVABLES> 47,626 41,511
<ALLOWANCES> 1,272 1,272
<INVENTORY> 13,411 14,623
<CURRENT-ASSETS> 83,304 126,932
<PP&E> 146,778 149,058
<DEPRECIATION> 4,920 8,922
<TOTAL-ASSETS> 243,694 289,420
<CURRENT-LIABILITIES> 76,771 52,989
<BONDS> 0 124,814
39,300 39,635
0 0
<COMMON> 1,050 1,050
<OTHER-SE> 1,291 4,409
<TOTAL-LIABILITY-AND-EQUITY> 243,694 289,420
<SALES> 136,861 91,960
<TOTAL-REVENUES> 139,062 91,997
<CGS> 125,375 82,662
<TOTAL-COSTS> 133,060 84,354
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,388 1,798
<INCOME-PRETAX> 2,614 5,845
<INCOME-TAX> 1,065 2,338
<INCOME-CONTINUING> 1,549 3,507
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,549 3,507
<EPS-PRIMARY> 9.37 10.24
<EPS-DILUTED> 9.37 10.24
</TABLE>
