FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended June 30, 1996
---------------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 1-5599
----------------------
GREAT DANE HOLDINGS INC.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 54-0698116
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(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
2016 North Pitcher Street, Kalamazoo, Michigan 49007
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (616) 343-6121
------------------------
- -----------------------------------------------------------------------------
Indicate by check mark whether Registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
----- -----
There were 1,002.083 shares of Registrant's only class of common stock
outstanding as of August 9, 1996.
<PAGE>
<PAGE-1>
INDEX
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
Page Number
-----------
PART I FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets at December 31, 1995
and June 30, 1996. . . . . . . . . . . . . . . . . . . . 2-3
Consolidated Statements of Operations for
the Three Months Ended June 30, 1995 and
June 30, 1996. . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations for
the Six Months Ended June 30, 1995 and
June 30, 1996. . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1995 and
June 30, 1996. . . . . . . . . . . . . . . . . . . . . . 6-7
Notes to Consolidated Financial Statements . . . . . . . 8-9
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . 10-12
PART II OTHER INFORMATION
Item 5 Other Information . . . . . . . . . . . . . . . . . . . .13
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . .13
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
<PAGE>
<PAGE-2>
<TABLE>
Balance-Sheets
<CAPTION>
CONSOLIDATED BALANCE SHEETS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
(unaudited)
December 31, June 30,
1995 1996
------------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 41,086 $ 31,615
Accounts receivable, less allowance for
doubtful accounts of $1,564 (1995)
$1,598 (1996) 101,138 112,987
Inventories 84,686 80,924
Other current assets 26,574 37,102
---------- ----------
Total current assets 253,484 262,628
Property, plant and equipment, net 123,864 133,129
Insurance Subsidiary's investments 110,058 111,233
Cost in excess of net assets acquired,
net of accumulated amortization of $8,752
(1995) and $9,377 (1996) 41,243 40,618
Trademark, net of accumulated amortization
of $2,450 (1995) and $2,625 (1996) 10,996 10,821
Other assets 30,960 35,485
---------- ----------
Total Assets $ 570,605 $ 593,914
========== ==========
</TABLE>
<PAGE>
<PAGE-3>
<TABLE>
Balance-Sheets--Continued
<CAPTION>
CONSOLIDATED BALANCE SHEETS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
(unaudited)
December 31, June 30,
1995 1996
------------ -------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' DEFICIT:
Accounts payable $ 71,989 $ 75,235
Notes payable 3,133 ---
Income taxes payable 9,305 9,126
Accrued compensation 18,490 17,382
Accrued interest 11,049 10,875
Customer deposits 14,315 1,149
Other accrued liabilities 43,390 54,554
Current portion of long-term debt 16,260 19,137
---------- ----------
Total current liabilities 187,931 187,458
Long-term debt, excluding current portion 276,918 273,759
Insurance Subsidiary's unpaid losses and
loss adjustment expenses 78,151 80,261
Unearned insurance premiums 12,545 23,249
Deferred income taxes 1,675 2,393
Postretirement benefits other than pensions 52,766 53,474
Other noncurrent liabilities 46,930 45,546
Minority interest 1,748 2,655
---------- ----------
Total liabilities 658,664 668,795
Shareholders' deficit:
Common stock, par value $1.00:
Authorized 3,000 shares
Outstanding 1,000 (1995) 1,002.083
(1996) shares 1 1
Additional paid-in capital 14,999 15,044
Retained earnings 23,128 38,106
Unrealized appreciation on Insurance
Subsidiary's investments in certain
debt and equity securities 2,186 341
Amount paid in excess of Motors'
net assets (128,373) (128,373)
---------- ----------
Total shareholders' deficit (88,059) (74,881)
---------- ----------
Total Liabilities and
Shareholders' Deficit $ 570,605 $ 593,914
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE-4>
<TABLE>
Statements of Operations--3 Months
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,
1995 1996
---------- ----------
<S> <C> <C>
Revenues $ 329,527 $ 270,016
Cost of revenues (281,379) (231,212)
---------- ----------
Gross profit 48,148 38,804
Selling, general and administrative expense (22,982) (21,650)
---------- ----------
Operating profit 25,166 17,154
Interest expense (10,840) (9,294)
Interest income 2,275 2,223
Other income, net 474 3,128
---------- ----------
Income before minority equity and
income taxes 17,075 13,211
Minority equity (329) (547)
---------- ----------
Income before income taxes 16,746 12,664
Income tax expense (7,171) (4,332)
---------- ----------
Net income $ 9,575 $ 8,332
========== ==========
Weighted average number of shares used in
per share computations 1,000 1,002
========== ==========
Net income per share $ 9,575 $ 8,315
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE-5>
<TABLE>
Statements of Operations--6 Months
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands, except share and per share amounts)
(unaudited)
Six Months Ended June 30,
1995 1996
---------- ----------
<S> <C> <C>
Revenues $ 651,920 $ 535,563
Cost of revenues (557,910) (460,347)
---------- ----------
Gross profit 94,010 75,216
Selling, general and administrative expense (46,358) (44,027)
---------- ----------
Operating profit 47,652 31,189
Interest expense (21,304) (18,718)
Interest income 4,552 4,379
Other income, net 1,186 4,037
Special Credit--Note F --- 4,300
---------- ----------
Income before minority equity and
income taxes 32,086 25,187
Minority equity (742) (907)
---------- ----------
Income before income taxes 31,344 24,280
Income tax expense (13,476) (9,302)
---------- ----------
Net income $ 17,868 $ 14,978
========== ==========
Weighted average number of shares used in
per share computations 1,000 1,002
========== ==========
Net income per share $ 17,868 $ 14,948
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE-6>
<TABLE>
Statements of Cash Flows
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Six Months Ended June 30,
1995 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,868 $ 14,978
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 11,122 9,883
Deferred income tax benefit (1,604) (503)
Amortization of cost in excess of
net assets acquired 625 625
Amortization of debt discount 893 479
Gain on sale of property, plant
and equipment (335) (215)
Investment gains (116) (665)
Increase in minority equity 742 907
Other noncash charges 5,760 4,258
Changes in operating assets and
liabilities:
Accounts receivable (43,540) (11,952)
Inventories (19,069) 3,762
Insurance Subsidiary's reinsurance
receivable (68) 114
Other assets (4,128) (13,335)
Accounts payable 18,683 3,246
Income taxes (2,766) (182)
Unpaid losses and loss adjustment
expenses 3,583 2,110
Unearned insurance premiums 5,187 10,704
Postretirement benefits other
than pensions 724 708
Other liabilities (3,212) (8,253)
---------- ----------
Net cash flow provided by (used in)
operating activities (9,651) 16,669
</TABLE>
<PAGE>
<PAGE-7>
<TABLE>
Statements of Cash Flows--Continued
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(in thousands)
(unaudited)
Six Months Ended June 30,
1995 1996
---------- ----------
<S> <C> <C>
Cash flows from investing activities:
Purchases of property, plant and equipment $ (24,656) $ (19,424)
Proceeds from disposal of property, plant
and equipment and other productive assets 656 491
Purchase of investments available for sale (14,592) (19,249)
Purchases of investments held to maturity (336) --
Proceeds from sale of investments available
for sale 5,474 10,268
Proceeds from maturity and redemption of
investments held to maturity 6,901 5,622
Other 69 11
---------- ----------
Net cash flow used in investing activities (26,484) (22,281)
Cash flows from financing activities:
Proceeds from borrowings 119,694 21,407
Repayments of borrowings (78,543) (25,301)
Proceeds from issuance of common stock --- 35
---------- ----------
Net cash flow provided by (used in)
financing activities 41,151 (3,859)
---------- ----------
Increase (decrease) in cash and cash
equivalents 5,016 (9,471)
Beginning cash and cash equivalents 34,874 41,086
---------- ----------
Ending cash and cash equivalents $ 39,890 $ 31,615
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE-8>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
JUNE 30, 1996
(unaudited)
NOTE A--BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for
interim financial information, the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In Management's opinion, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six months ended
June 30, 1996, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information,
refer to the audited consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1995.
NOTE B--PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Great Dane
Holdings Inc. and its subsidiaries, including Great Dane Trailers, Inc.
(Great Dane) and Checker Motors Corporation ("Motors") and Motors' wholly-
owned subsidiaries, including American Country Insurance Company ("Insurance
Subsidiary").
NOTE C-INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
-------------- --------------
<S> <C> <C>
Raw materials and supplies $ 53,097 $ 51,666
Work-in-process 10,501 8,054
Finished goods 21,088 21,204
---------- ----------
$ 84,686 $ 80,924
========== ==========
</TABLE>
NOTE D--INCOME TAXES
The Company's estimated effective tax rate differs from the statutory rate
because of state income taxes as well as the impact of the reporting of
certain income and expense items in the financial statements which are not
taxable or deductible for income tax purposes.
During the quarter ended June 30, 1996, the income tax rate used to
calculate income taxes was changed. The change was the result of, among
other things, the impact of certain tax strategies on state income taxes.
The change in rate had the effect of increasing net income by $1.1 million
($1,131 per share).
<PAGE>
<PAGE-9>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
(unaudited)
NOTE E--STOCK ISSUANCE
1.042 shares of common stock were issued on each of April 2, 1996, and
January 4, 1996, to an executive officer of the Company in connection with
an agreement between this executive officer and the Company.
NOTE F--SPECIAL CREDIT
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-119MA, United States District Court for the
District of Oregon. On December 22, 1993, the Company entered into a
settlement with Boeing, settling all claims asserted by Boeing in the
lawsuit. Pursuant to the settlement terms, the Company agreed to pay Boeing
$12.5 million over the course of five years, $5 million of which had been
committed by certain insurance companies in the form of cash or an
irrevocable letter of credit as of that date. Accordingly, a $7.5 million
special charge was recorded in 1993 to provide for the cost associated with
this legal proceeding.
Since the date of the settlement with Boeing, and as a result of agreements
negotiated with insurance companies, the total cost to the Company related
to the Boeing lawsuit has decreased to $3.2 million. The lower cost
principally related to an insurance settlement negotiated in the quarter
ended March 31, 1996. Accordingly, a special credit of $4.3 million was
recorded in the quarter ended March 31, 1996, relating to the finalization
of insurance settlements.
NOTE G--SUBSEQUENT EVENT
On July 3, 1996, Motors executed an agreement to purchase the balance of the
common stock of South Charleston Stamping & Manufacturing Company ("SCSM")
from the minority interest holder for $5.5 million, $1 million of which was
paid upon the signing of the agreement. In connection with the purchase,
Motors also executed a $4.5 million promissory note payable in four payments
over the next ten months with interest at 10% per annum.
<PAGE>
<PAGE-10>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Available cash and cash equivalents, cash flow generated from (used in)
operations ($(9.7) million and $16.7 million for the six months ended June 30,
1995 and 1996, respectively) and proceeds from borrowings have provided
sufficient liquidity and capital resources for the Company to conduct its
operations during the first six months of 1995 and 1996.
The Company is a holding company and is, therefore, dependent on cash flow
from its operating subsidiaries in order to meet its obligations. The Company's
operating subsidiaries are required, pursuant to financing agreements with third
parties, to meet certain covenants, which may have the effect of limiting cash
available to the Company. Further, the payment of dividends by the Insurance
Subsidiary is currently subject to the notification, reporting and disapproval
requirements of the Insurance Code of the State of Illinois Department of
Insurance. The operating subsidiaries' plans indicate that sufficient funds are
anticipated to be available to the Company to meet its short-term obligations.
Certain efforts have been made over the past several years to restructure
the Company. As a result of these efforts, subsidiary debt was restructured and
certain of the 12-3/4% Senior Debentures and the 14-1/2% Subordinated Discount
Debentures were repurchased. However, the Company has been unsuccessful in
completing an overall comprehensive restructuring. Management of the Company
continually reassesses the financial condition and prospects of the Company.
As a result of this reassessment, the Company has retained an investment banking
organization to act as its exclusive financial advisor to consider certain
strategic alternatives, including the merger, recapitalization or potential sale
of the entire company or one or more of its subsidiaries.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996
Compared to Three Months Ended June 30, 1995
-------------------------------------------------
Revenues decreased $59.5 million during the three months ended June 30,
1996, as compared to the same period in 1995. The lower revenues are
principally attributed to lower Trailer Manufacturing revenues ($73.4 million)
primarily associated with lower volume in trailer sales. The volume decline
represents the effect of weakened demand for the movement of freight resulting
in decreased sales of truck trailers. Automotive Products revenues increased
$11.9 million during the three months ended June 30, 1996, as compared to the
same period in 1995. Revenues associated with the production of tooling for
certain customers accounted for the increased revenues for the segment.
The Company's operating profit decreased $8.0 million in the 1996 period
compared to the 1995 period. This decrease is attributed to a decrease of
Trailer Manufacturing operating profits ($9.5 million) which is principally due
to lower volume of trailer sales indicated above and slightly lower margins.
The volume decline represents the effect of weakened demand for the movement of
freight resulting in decreased sales of truck trailers. The margins were
impacted by certain raw material price increases. The Automotive Products
<PAGE>
<PAGE-11>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
operating profits increased $0.7 million, primarily due to the mix of sales and
the increase in revenues.
During the quarter ended June 30, 1996, the Company recorded $2.9 million
of other income related to a nonrecurring refund.
During the quarters ended June 30, 1996 and 1995, $0.5 and $0.3 million
charges, respectively, were recorded to reflect minority equity in SCSM, a
subsidiary of Motors. On July 3, 1996, Motors executed an agreement to purchase
the entire minority interest in SCSM for $5.5 million in cash and notes.
Income tax expense is lower for financial statement purposes than would be
computed if the statutory rate were used. During the quarter ended June 30,
1996, the income tax rate used to calculate income taxes was changed. The
change was the result of, among other things, the impact of certain tax
strategies on state income taxes. The change in rate had the effect of
increasing net income by $1.1 million ($1,131 per share).
Net income was $8.3 million for the three months ended June 30, 1996, as
compared to $9.6 million for the comparable period in 1995. The decline in net
income is attributed to the reasons mentioned above.
Six Months Ended June 30, 1996
Compared to Six Months Ended June 30, 1995
-------------------------------------------------
Revenues decreased $116.4 million during the six months ended June 30,
1996, as compared to the same period in 1995. The lower revenues are
principally attributed to lower Trailer Manufacturing revenues ($140.5 million)
primarily associated with lower volume in trailer sales. The volume decline
represents the effect of weakened demand for the movement of freight resulting
in decreased sales of truck trailers. Automotive Products revenues increased
$20.8 million during the six months ended June 30, 1996, as compared to the same
period in 1995. Revenues associated with the production of tooling for certain
customers accounted for the increased revenues for the segment.
The Company's operating profit decreased $16.5 million in the 1996 period
compared to the 1995 period. This decrease is attributed to a decrease of
Trailer Manufacturing operating profits ($16.5 million) which is principally
due to lower volume of trailer sales indicated above and slightly lower mar-
gins. The volume decline represents the effect of weakened demand for the
movement of freight resulting in decreased sales of truck trailers. The
margins were impacted by certain raw material price increases. The Automotive
Products operating profits decreased ($0.1 million) primarily due to the mix of
sales, as well as certain raw material price increases. The profit margins on
tooling programs are lower than margins on contract parts production.
<PAGE>
<PAGE-12>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
the Company, together with three prior subsidiaries of the Company, as
defendants in Case No. CV89-119MA, United States District Court for the District
of Oregon. On December 22, 1993, the Company entered into a settlement with
Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to the
settlement terms, the Company agreed to pay Boeing $12.5 million over the course
of five years, $5 million of which had been committed by certain insurance
companies in the form of cash or irrevocable letter of credit as of that date.
Accordingly, a $7.5 million charge was recorded in 1993 to provide for the cost
associated with this legal proceeding.
Since the date of the settlement with Boeing, and as a result of agreements
negotiated with insurance companies, the total cost to the Company related to
the Boeing lawsuit has decreased to $3.2 million. The lower cost principally
related to an insurance settlement negotiated in the quarter ended March 31,
1996. Accordingly, a special credit of $4.3 million was recorded in the quarter
ended March 31, 1996, relating to the finalization of insurance settlements.
During the six months ended June 30, 1996 and 1995, a $0.9 million and $0.7
million charge, respectively, was recorded to reflect minority equity in South
Charleston Stamping & Manufacturing Company ("SCSM"), a subsidiary of Motors.
Income tax expense is higher for financial statement purposes than would
be computed if the statutory rate were used because of state income taxes and
the impact of the reporting of certain income and expense items in the financial
statements which are not taxable or deductible for income tax purposes. During
the quarter ended June 30, 1996, the income tax rate used to calculate income
taxes was changed. The change was the result of, among other things, the impact
of certain tax strategies on state income taxes. The change in rate had the
effect of increasing net income by $1.1 million ($1,131 per share).
Net income was $15.0 million for the six months ended June 30, 1996, as
compared to $17.9 million for the comparable period in 1995. The decline in net
income is attributed to the reasons mentioned above.
<PAGE>
<PAGE-13>
PART II
OTHER INFORMATION
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
Item 5: Other Information
The Company has retained the firm of Berenson Minella & Company as its
exclusive financial advisor to consider certain strategic alternatives,
including the merger,recapitalization or potential sale of the entire company
or one or more of its subsidiaries.
Item 6: Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
10.1 - Employment Agreement, dated May 25, 1993, between American
Country Insurance Company and Edwin W. Elder III, as amended
by amendments dated June 7, 1995 and April 15, 1996.
10.2 - Employment Agreement, commencing as of August 1, 1996, between
CMC Kalamazoo Inc. and Larry D. Temple.
10.3 - Employment Agreement, dated as of August 1, 1996, between
South Charleston Stamping & Manufacturing Company and John T.
Wise.
10.4 - Stock Purchase Agreement, dated as of June 28, 1996, by and
between Checker Motors Corporation and the Trustees under the
ELIC Trust (the "Trustees").
10.5 - Guaranty, dated as of July 3, 1996 by South Charleston
Stamping & Manufacturing Company in favor of the Trustees.
10.6 - Third Amendment, dated as of June 5, 1996 among Checker Motors
Corporation, Yellow Cab Company, Chicago AutoWerks, Inc., CMC
Kalamazoo Inc., South Charleston Stamping & Manufacturing
Company, the Lenders named therein and NBD Bank, as Agent.
27.1 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
<PAGE>
<PAGE-14>
GREAT DANE HOLDINGS INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT DANE HOLDINGS INC.
------------------------------
(Registrant)
/s/ Marlan R. Smith
----------------------------------------
Marlan R. Smith
Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Date: August 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000051200
<NAME> GREAT DANE HOLDINGS INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 31,615
<SECURITIES> 0
<RECEIVABLES> 114,585
<ALLOWANCES> 1,598
<INVENTORY> 80,924
<CURRENT-ASSETS> 262,628
<PP&E> 253,849
<DEPRECIATION> 120,720
<TOTAL-ASSETS> 593,914
<CURRENT-LIABILITIES> 187,458
<BONDS> 273,759
0
0
<COMMON> 1
<OTHER-SE> (74,882)
<TOTAL-LIABILITY-AND-EQUITY> 593,914
<SALES> 489,073
<TOTAL-REVENUES> 535,563
<CGS> 425,843
<TOTAL-COSTS> 460,347
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,718
<INCOME-PRETAX> 24,280
<INCOME-TAX> 9,302
<INCOME-CONTINUING> 14,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,978
<EPS-PRIMARY> 14,948.000
<EPS-DILUTED> 14,948.000
</TABLE>
<PAGE> 10.1-1
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, dated as of the date of execution hereof, is made by and
between AMERICAN COUNTRY INSURANCE COMPANY, an Illinois stock insurance
company having its principal place of business in Chicago, Illinois (the
"Company"), and Edwin W. Elder III, a resident of the State of Wisconsin (the
"Executive").
The Company desires to obtain the services of the Executive, and the
Executive is willing to render such services, in accordance with the terms
hereinafter set forth; and
The Board of Directors of the Company by appropriate resolutions
authorized the employment of the Executive as provided for in this Agreement.
Accordingly, the Company and the Executive agree as follows:
ARTICLE I
DUTIES
1.01 DUTIES. The Company hereby employs the Executive as president and
chief executive officer of the Company with the duties of chief executive
officer and such additional duties as are appropriate for a senior executive
officer as are assigned from time to time by the Board of Directors of the
Company (the "Board"). During the Executive's employment with the Company,
and excluding any periods of vacation or sick leave to which the Executive is
entitled or periods of the Executive's physical or mental incapacity, the
Executive agrees to devote the Executive's full attention and time to the
business and affairs of the Company and, to the extent necessary to discharge
the duties assigned to the Executive hereunder, to use his best efforts to
perform such duties faithfully and efficiently. In addition, Executive shall
be named as a director of Company.
1.02 OTHER ACTIVITIES. It shall not be a violation of this Agreement
for the Executive to (a) serve on corporate, civic or charitable boards or
committees or (b) manage personal investments, so long as such activities are
consistent with the policies of the Company (as from time to time amended)
and do not significantly interfere with the performance of the Executive's
duties in accordance with this Agreement.
ARTICLE II
TERM OF AGREEMENT
2.01 TERM. Except as provided in Article V, the term ("Contract Term")
of this Agreement shall commence on June 14, 1993 and end on June 30, 1995.
<PAGE>
<PAGE> 10.1-2
ARTICLE III
COMPENSATION
3.01 BASE SALARY. During the Contract Term, the Company shall pay or
cause to be paid to the Executive in cash in accordance with the normal
payroll practices of the Company for senior executives, in installments not
less frequently than bi-monthly, an annual base salary ("Annual Base Salary")
at a rate of $125,000 for each year of the Contract Term. Such Annual Base
Salary shall be reviewed annually and may be increased by the Board from time
to time in accordance with the Company's policies and procedures for senior
executives.
3.02 ANNUAL INCENTIVE BONUS. The Company shall pay or cause to be paid
to the Executive an annual cash bonus ("Incentive Bonus") in accordance with
any annual incentive bonus plan for senior executives which has been approved
by the Board, provided that for each calendar year (or portion of a calendar
year), occurring during the Contract Term, the amount of such Incentive Bonus
shall not be less than:
(a) $15,000 for the calendar year ending December 31, 1993,
provided that the Executive is employed by the Company on such date;
(b) Thereafter, the bonus shall be in an amount determined by the
Board of Directors of Company but in no event less than the one percent
(1%) of the net earnings of Company after allowance for all applicable
corporate income taxes.
3.03 PAYMENTS UPON SIGNING THE AGREEMENT. As soon as possible after
June 1, 1993, but not later than June 30, 1993, the Company shall provide to
the Executive a signing bonus of $5,000.
3.04 PURCHASE OF COMPANY SHARES. The Executive shall on or before June
30, 1993 purchase at least one share of Company's $100 par value shares at a
price equal to the book value thereof on June 1, 1993.
3.05 SUPPLEMENTAL RETIREMENT BENEFIT.
(a) SUPPLEMENTAL RETIREMENT BENEFIT UNDER THE NONQUALIFIED PLAN
MAINTAINED BY THE COMPANY. The Executive shall be entitled to a
supplemental retirement benefit in addition to the benefit provided
under the terms of the Company's Retirement Plan ("Retirement Plan")
equal to the benefit to which he would be entitled under the Retirement
Plan as if he became a participant in such plan (1) as of June 1, 1993,
and was immediately fully vested in the benefit provided thereunder for
service of five (5) years or more.
ARTICLE IV
OTHER BENEFITS
4.01 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Executive's
employment with the Company during the Contract Term, the Executive shall be
<PAGE>
<PAGE> 10.1-3
entitled to participate in all incentive (including long-term incentives),
fringe benefit, vacation and savings and retirement plans, practices,
policies and programs applicable to other senior executives of the Company,
including but not limited to:
(a) WELFARE BENEFITS. The Executive and/or the Executive's
family, as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (including, and without
limitation except as otherwise provided herein, medical, dental,
prescription, disability, group life, and travel accident insurance
plans and programs, any severance or salary continuation plan, practice,
policy or program) and applicable to other senior executives of the
Company. In addition, the Executive shall receive the amount of $150.00
monthly to purchase a $500,000 term life insurance policy on his life.
The Executive shall secure such insurance and name the beneficiary
thereof. All insurance benefits provided by Company shall vest
immediately upon June 14, 1993 without a waiting or qualification
period.
(b) FRINGE BENEFITS. The Executive shall be entitled to fringe
benefits applicable to other senior executives of the Company. In
addition, Executive shall be entitled to reimbursement of all costs of
moving furniture, furnishings, clothing and personal effects from Green
Bay, Wisconsin to Chicago or its environs provided such move is
consummated prior to September 14, 1993. Company shall also reimburse
the Executive for Temporary Living Expenses for a period of not more
than ninety-one (91) days. Temporary Living Expenses shall consist of
the following reasonable expenses actually incurred by the Executive and
his spouse for the period commencing June 14, 1993 and ending September
14, 1993: (1) travel on a weekly basis between Green Bay, Wisconsin and
Chicago, Illinois, and (2) until such time as the Green Bay residence is
sold, the cost of lodging in a hotel or rental unit and other incidental
related expenses.
(c) The Executive shall be entitled to receive prompt
reimbursement for all reasonable employment-related expenses incurred by
the Executive upon the Company's receipt of accounting in accordance
with practices, policies and procedures applicable to senior executives
of the Company.
(d) The Executive shall receive use of a Cadillac or equivalent
automobile equipped with a cellular phone.
(e) The Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to personal
secretarial and other assistance, provided with respect to the chief
executive officer of the Company.
(f) The Executive shall have the use of a city dining club such
as The Metropolitan Club of Chicago.
(g) The Executive shall be entitled to paid vacation time (but
not less than three (3) weeks per year) in accordance with the plans,
<PAGE>
<PAGE> 10.1-4
practices, policies, and programs applicable to other senior executives
of the Company.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.01 TERMINATION OF EMPLOYMENT FOR CAUSE OR VOLUNTARY TERMINATION. If
the Company terminates the Executive's employment for Cause or the Executive
voluntarily terminates employment, the Company's obligations under this
Agreement shall terminate, except as otherwise specifically provided herein
and except that the Company shall pay within 30 days after the Date of
Termination to the Executive that portion of the Executive's Annual Base
Salary which is accrued but unpaid as of such Date of Termination.
5.02 TERMINATION OF EMPLOYMENT UPON DEATH OR BY THE COMPANY BECAUSE OF
DISABILITY.
(a) If the Executive's employment with the Company is terminated on
account of his death or if the Company terminates Executive's employment on
account of disability, the Company's obligations under this Agreement shall
terminate except as otherwise specifically provided herein and except that
the Company shall pay within 30 days after the Date of Termination to the
Executive (1) that portion of the Executive's Annual Base Salary which is
accrued but unpaid as of such Date of Termination and (2) that portion of the
amount of the guaranteed Incentive Bonus (as set forth in Section 3.02(a) and
(9b) to which the Executive would have been entitled if he had been employed
by the Company on December 31 of the calendar year in which his death
occurred or in which the Company terminated his employment on account of
disability, equal to such amount, multiplied by a fraction, the numerator of
which is the number of days which have elapsed in such calendar year through
the Date of Termination, and the denominator of which is 184 in 1993, and 365
in 1994. The decision regarding whether the Executive's employment by the
Company shall be terminated on account of disability is at the sole option of
the Company which may, notwithstanding any physical or mental incapacity,
choose not to terminate the Executive or may delay the date on which it
decides to terminate the Executive.
(b) For purposes of this Agreement, "disability" means the Executive's
failure to render and perform the services required of him under this
Agreement for a continuous period of six months, or for such shorter periods
aggregating six months or more during any period of twelve consecutive
months, because of physical or mental incapacity. If there is any dispute
between the parties as to the Executive's physical or mental incapacity
pursuant to the provisions hereof, such question shall be settled by the
opinion of an impartial, reputable physician agreed upon for this purpose by
the parties or their representatives, or, failing such agreement within ten
days of a written request therefor by either party to the other, then a
physician designated by the then president of Northwestern Memorial Hospital
in Chicago, Illinois. The certificate of such physician as to the matter in
dispute shall be final and binding upon both parties.
<PAGE>
<PAGE> 10.1-5
5.03 TERMINATION OF EXECUTIVE'S EMPLOYMENT BY THE COMPANY OTHER THAN FOR
CAUSE.
(a) If, during the Contract Term, the Company terminates the
Executive's employment other than for Cause, the Company's obligations under
this Agreement shall terminate, except that the Executive shall be entitled
to the following payments under this Agreement (at the times the Executive
would have been entitled to receive such amounts had his employment not been
so terminated), to the extent not already paid, but to no other payments by
the Company except as provided in Section 5.04: (1) the amounts of (A) his
annual base salary as if he had remained employed by the Company until the
end of the Contract Term, (B) the Incentive Bonus guaranteed in Section
3.02(a) and (b) as if he had remained employed up to and including May 31,
1995, (C) any other such benefit which the Agreement specifically provides is
vested or payable upon the termination of the Executive's employment by the
Company other than for Cause, less (2) by way of mitigation, the amount of
any compensation and benefits to which the Executive is entitled because of
any employment subsequent to such termination of employment and prior to
May 31, 1995.
(b) A termination of employment by the Company other than for Cause
shall (1) include a termination of employment by the Executive (A) on account
of the Company's failure to cure a material diminution of the Executive's
responsibilities, duties or authority hereunder (including but not limited to
his removal as chief executive officer of the Company or assignment of duties
materially and adversely inconsistent with the Executive's position as a
senior officer of the Company) within 30 days after receiving written notice
from the Executive of such diminution, or (B) the Company's failure to cure
a material breach of this Agreement by the Company within 30 days after
receiving written notice from the Executive of such breach, and (2) exclude
a suspension of the Executive's employment pursuant to Section 6.01.
5.04 OTHER TERMINATION BENEFITS. In addition to any amounts or benefits
payable upon termination of employment hereunder and except as otherwise
provided herein, the Executive shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law.
ARTICLE VI
CERTAIN DEFINITIONS
6.01 DEFINITION OF CAUSE.
(a) "CAUSE" means a written finding by the Board or, if directed by the
Board to consider whether or not such a finding should be made, the
Compensation Committee of the Board or any other Board committee consisting
of three or more directors who are not employees of the Company
("Committee"), to the effect that:
(1) the Executive committed any felony or other crime involving
dishonesty;
<PAGE>
<PAGE> 10.1-6
(2) the Executive engaged in any serious misconduct (excluding (A)
the failure of the Executive to achieve business goals and objectives, and
(B) other actions by the Executive which are reasonably believed by the
Executive to be in the best interests of the Company) in the course of the
Executive's employment which, in the judgment of the Board (or if applicable,
Committee), materially injures the Company, financially or otherwise;
(3) the Executive habitually neglected (neglect to be determined
based upon the failure of the Executive to meet the standards of performance
which reasonably would be expected of a senior executive officer of a major
company with the Executive's duties) the Executive's duties (other than on
account of physical or mental incapacity), provided that either (A) he
received from the Company notice of habitual neglect of duties ("Notice of
Neglect") where no prior notice of any instance of neglect of duties was
given, and he failed to cure such habitual neglect within 15 days of
receiving such notice, or (B) the Executive received notice of an instance of
neglect of duties and failed to cure before such neglect became habitual, or
(4) the Executive materially breached this Agreement provided
that, if such breach is both inadvertent and nonrecurring, the Executive
received written notice by the Company of such breach ("Notice of Breach")
and failed to fully cure such breach within 15 days after receiving such
notice.
(b) The Company shall give the Executive at least 30 days' written
notice ("Notice of Intent") that the Board will make a determination of the
basis, if any, to terminate the Executive's employment for Cause in
accordance with Section 6.01(a)(1) - (4). The findings of the Board (or, if
applicable, Committee) shall be based upon any information which the Board
(or, if applicable, Committee) may consider relevant, including, but not
limited to, written submissions by the Executive or his representatives and,
at the Executive's request, a personal presentation to the Board (or, if
applicable, Committee) by the Executive. Any finding by the Board (or, if
applicable, Committee) shall be conclusive for all purposes of this
Agreement. Concurrently with or subsequently to such Notice of Intent, the
Board (or, if applicable, Committee) may by written notice to the Executive
suspend him from any or all of his functions contemplated under this
Agreement, provided that the Executive shall receive during any such
suspension the full amount of salary and benefits to which he is entitled
under this Agreement. Any such notice of suspension may be effective for a
period commencing on or after the Executive's receipt thereof and ending on
the date on which a finding is made as to the existence of Cause in
accordance with this Section 6.01, but in no event shall such period exceed
90 days. If the Board (or, if applicable, Committee) determines that the
Executive should be terminated for Cause, such termination of employment
shall be effective for all purposes as of the date the Executive receives a
notice of suspension or if no such notice of suspension is given, a Notice of
Intent.
(c) At the discretion of the Board, the periods relating to the Notice
of Neglect, the Notice of Breach and the Notice of Intent may run
concurrently.
<PAGE>
<PAGE> 10.1-7
6.02 "DATE OF TERMINATION" means the date as of which the Executive's
employment with the Company is terminated by the Company or by the Executive
for any reason including, but not limited to, death or disability.
ARTICLE VII
TRADE SECRETS, CONFIDENTIAL AND PROPRIETARY
BUSINESS INFORMATION
7.01 PROTECTED INFORMATION.
(a) DEFINITION OF PROTECTED INFORMATION. The Company has advised
the Executive and the Executive acknowledges that it is the policy of
the Company to maintain as secret and confidential all Protected
Information (as defined below), and that Protected Information has been
and will be developed at substantial cost and effort to the Company.
"Protected Information" means trade secrets, confidential and
proprietary business information of the Company, any information of the
Company other than information which has entered the public domain
(unless such information entered the public domain through the efforts
of or on account of the Executive), and all valuable and unique
information and techniques acquired, developed or used by the Company
relating to its business, operations, employees and customers, which
give the Company a competitive advantage over those who do not know the
information and techniques and which are protected by the Company from
unauthorized disclosure.
(b) ACKNOWLEDGMENT. The Executive acknowledges that the
Executive will acquire Protected Information with respect to the Company
and its successors in interest, which information is a valuable, special
and unique asset of the Company's business and operations and that
disclosure of such Protected Information would cause irreparable damage
to the Company.
(c) NO DISCLOSURE OR USE. The Executive shall not use in any
manner, either during or after any termination of employment, any
Protected Information other than for the exclusive benefit of the
Company. The Executive shall not, directly or indirectly, divulge,
furnish or make accessible to any person, firm, corporation, association
or other entity any Protected Information, except (i) in furtherance of
the regular course of the Executive's duties under this Agreement or
(ii) as may be required by order or subpoena of any court or
administrative agency of the United States or any state or political
subdivision thereof; provided, however, that the Executive shall use his
best efforts to give the Company notice of any such order or subpoena at
the earliest practical date and shall to the maximum extent permitted by
such order or subpoena, and applicable law, defer compliance with such
order or subpoena until the Company has had every reasonable opportunity
to contest such order or subpoena by appropriate proceedings. The
Executive shall reasonably cooperate with any such contest proceeding
brought by the Company.
<PAGE>
<PAGE> 10.1-8
7.02 SURVIVAL OF UNDERTAKINGS AND INJUNCTIVE RELIEF.
(a) SURVIVAL OF SECTION 7.01. The provisions of Section 7.01
shall survive the termination of the Executive's employment with the
Company irrespective of the reasons therefor.
(b) INJUNCTIVE RELIEF. The Executive consents and agrees that,
if the Executive violates any of the provisions of Section 7.01, the
Company and its successors in interest as the case may be, shall be
entitled, in addition to any other remedies that they may have,
including money damages, to an injunction to be issued by a court of
competent jurisdiction, restraining the Executive from committing or
continuing any violation of Article VII of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.01 ASSIGNMENT, SUCCESSORS. The Company may freely assign its
respective rights and obligations under this Agreement to a successor of the
Company's business, without the prior written consent of the Executive. This
Agreement shall be binding upon and inure to the benefit of the Executive and
the Executive's estate and the Company and any assignee of or successor to
the Company.
8.02 BENEFICIARY. Except as otherwise provided herein, if the Executive
dies prior to receiving all amounts hereunder, such amounts shall be paid in
a lump sum payment to the beneficiary designated in writing by the Executive
("Beneficiary") and if no such Beneficiary is designated, to the Executive's
estate.
8.03 NONALIENATION OF BENEFITS. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, either voluntary or involuntary, prior to actually being
received by the Executive, and any such attempt to dispose of any right to
benefits payable hereunder shall be void.
8.04 SEVERABILITY. If all or any part of this Agreement is declared by
any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of this
Agreement not declared to be unlawful or invalid. Any paragraph or part of
a paragraph so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such paragraph
or part of a paragraph to the fullest extent possible while remaining lawful
and valid.
8.05 AMENDMENT AND WAIVER. This Agreement shall not be altered, amended
or modified except by written instrument executed by the Company and the
Executive. A waiver of any term, covenant, agreement or condition contained
in this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any default in any such term,
<PAGE>
<PAGE> 10.1-9
covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.
8.06 NOTICES. All notices and other communications hereunder shall be
in writing and delivered by hand or by first class registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: American Country Insurance Company
222 N. LaSalle Street
Chicago, Illinois 60601
Attn: General Counsel
If to the Executive: Mr. Edwin W. Elder III
2085 Sandalwood Court
Green Bay, Wisconsin 54304
Either party may from time to time designate a new address by notice given in
accordance with this Section. Notice and communications shall be effective
when actually received by the addressee.
8.07 COUNTERPART ORIGINALS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
8.08 ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement forms the entire agreement between the parties hereto with respect
to any severance payment and with respect to the subject matter contained in
the Agreement. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
8.09 EMPLOYEE BENEFIT PLANS AS AMENDED. Any reference to any plan,
practice, policy or program contained herein shall, except as otherwise
specifically provided herein, mean such plan, practice, policy or program as
amended from time to time.
<PAGE>
<PAGE> 10.1-10
8.10 APPLICABLE LAW. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the state of
Illinois, without regard to its choice of law principles.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
25th day of May, 1993.
AMERICAN COUNTRY INSURANCE COMPANY
By: /s/ David Markin
-----------------------------------
DAVID MARKIN, its Chairman of the Board
of Directors
/s/ Edwin W. Elder III
----------------------------------------
EDWIN W. ELDER III
<PAGE>
<PAGE> 10.1-11
AMENDMENT TO EMPLOYMENT AGREEMENT
American Country Insurance Company (the "Company") and Edwin W. Elder
III (now resident of Illinois) (the "Executive") have entered into an Employ-
ment Agreement dated May 25, 1993, and now desire to extend the term of that
agreement and to modify certain provisions thereof.
Accordingly, the Company and the Executive agree as follows:
The Employment Agreement dated May 25, 1993, between Company and
Executive is hereby amended in the following respects:
ARTICLE I is hereby modified to read:
"2.01 TERM. Except as provided in Article V, the term ("Contract
Term") of this Agreement that commenced on June 14, 1993, will end on
June 30, 1996."
ARTICLE III entitled "Compensation" shall be amended to read as follows:
"3.01 BASE SALARY. During the Contract Term, the Company shall pay or
cause to be paid to Executive in cash, in accordance with the normal payroll
practices of the Company for senior executives, in installments not less
frequently than bi-monthly, an annual base salary ("Annual Base Salary") at
the rate of $165,000 for each year of the Contract Term. Such Annual Base
Salary shall be reviewed annually and may be increased by the Board from time
to time in accordance with the Company's policies and procedures for senior
executives.
3.05 SUPPLEMENTARY RETIREMENT BENEFIT.
(a) SUPPLEMENTARY RETIREMENT BENEFIT UNDER THE NONQUALIFIED PLAN
MAINTAINED BY THE COMPANY. The Executive shall be entitled to a supplemental
retirement benefit in addition to the benefit provided under the terms of the
Company's retirement plan ("Retirement Plan") equal to the benefit to which
he would be entitled under the Retirement Plan as if he became a participant
in such Plan with the benefits of the paarticipant who has a service of seven
(7) years or more as of June 1, 1995. No change is made in the balance of
the provisions of Article III.
Except to the extent of the amendments set forth above, all of the
provisions of the Employment Agreement between Executive and Company dated
May 25, 1993, are hereby reaffirmed and ratified as of this date.
<PAGE>
<PAGE> 10.1-12
IN WITNESS WHEREOF the parties have executed this Agreement this 7th day
of June, 1995.
AMERICAN COUNTRY INSURANCE COMPANY
By: /s/ David Markin
------------------------------------
DAVID MARKIN, its Chairman of the
Board of Directors
/s/ Edwin W. Elder
---------------------------------------
EDWIN W. ELDER III
<PAGE>
<PAGE> 10.1-13
AMENDMENT TO EMPLOYMENT AGREEMENT
American Country Insurance Company (the "Company") and Edwin W. Elder
III (now resident of Illinois) (the "Executive") have entered into an
Employment Agreement dated May 25, 1993 and have amended that agreement by
amendment dated June 7, 1995 and now desire to extend the term of that
agreement and to modify certain provisions thereof.
Accordingly, the Company and the Executive agree as follows:
The Employment Agreement dated May 25, 1993 as amended June 7, 1995
between Company and Executive is hereby amended in the following respects:
ARTICLE I is hereby modified to read:
"2.01 TERM. Except as provided in Article V, the term ("Contract
Term") of this Agreement that commenced on June 14, 1993 will end on June 30,
1999."
ARTICLE III entitled "Compensation" shall be amended to read as follows:
"3.01 BASE SALARY. During the Contract Term, the Company shall pay or
cause to be paid to Executive in cash, in accordance with the normal payroll
practices of the Company for senior executives, in installments not less
frequently than bi-monthly, an annual base salary ("Annual Base Salary") at
the rate of $180,000 for each year of the Contract Term. Such Annual Base
Salary shall be reviewed annually and may be increased by the Board from time
to time in accordance with the Company's policies and procedures for senior
executives.
Except to the extent of the amendment set forth above, all of the
provisions of the Employment Agreement between Executive and Company dated
May 25, 1993 and amended June 7, 1995 are hereby reaffirmed and ratified as
of this date.
IN WITNESS WHEREOF the parties have executed this Agreement this 15th
date of April, 1996.
AMERICAN COUNTRY INSURANCE COMPANY
By: /s/ David Markin
-------------------------------
DAVID MARKIN, its Chairman of
the Board of Directors
/s/ Edwin W. Elder III
----------------------------------
EDWIN W. ELDER III
<PAGE>
<PAGE> 10.2-1
EMPLOYMENT AGREEMENT
This Agreement is made as of this 23rd day of July, 1996 by and
between CMC KALAMAZOO INC., a Delaware corporation with a mailing address at
2016 No. Pitcher St., Kalamazoo, Michigan 49007 (the "Company"), and Larry D.
Temple ("Employee"), residing at 395 Midlakes Boulevard, Plainwell, MI 49080.
In consideration of the mutual covenants contained in this Agreement, the
Company and the Employee hereby agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
1.1. TERM. The Company hereby employs the Employee and the
Employee accepts employment with the Company, on the terms and conditions of
this Agreement, for a period of three years commencing as of August 1, 1996,
and ending on July 31, 1999, unless otherwise terminated as provided herein.
The period during which Employee is employed hereunder is hereinafter
referred to as the "Term."
ARTICLE 2
DUTIES OF EMPLOYEE
2.1. DUTIES. During the Term, the Employee shall serve as Vice
President and Chief Operating Officer of the Company, shall perform such
services in a responsible executive or managerial capacity for such of the
Company's subsidiaries as may be requested by the President of the Company
and will devote his full time to the faithful and diligent performance of the
duties inherent in, and implied by, this executive position, subject to the
direction of the Board of Directors (the "Board"). Employee shall be
available to travel as the needs of the business require.
ARTICLE 3
COMPENSATION OF EMPLOYEE
3.1. BASE SALARY. As compensation for services rendered under
this Agreement, Employee shall be entitled to receive from the Company a
salary of $150,000 per year, as may be increased from time to time at the
sole discretion of the Board (the "Base Salary") payable in equal
installments in accordance with the Company's regular policy.
3.2. ADDITIONAL COMPENSATION. Employee shall be paid annually
such bonus for his services as may be determined, from time to time, in the
sole discretion of the Board.
<PAGE>
<PAGE> 10.2-2
ARTICLE 4
EMPLOYEE BENEFITS
4.1. EMPLOYEE BENEFITS. Employee shall be entitled to benefits
in accordance with the Company's policy for executive officers and other
benefits provided to all salaried employees of the Company, with a vacation
period at the maximum allowable by the Company's policy. Employee
acknowledges that the foregoing does not require the Company to continue any
benefit or policy currently in effect or adopted hereafter.
ARTICLE 5
CONFIDENTIALITY AND NONCOMPETITION
5.1. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
5.1.1. Employee shall not disclose to anyone, or use or
otherwise exploit during the Term and for a period of eighteen months
thereafter (or such longer period, if any, as Employee shall be receiving any
Termination Payment or Change in Control Payment (as each is hereinafter
defined)), for the benefit of anyone other than the Company, any confidential
business information, which shall be defined as data and information relating
to the business of the Company (whether constituting a trade secret or not)
which is or has been disclosed to Employee or of which Employee became aware
as a consequence of or through his relationship to the Company and which has
value to the Company and is not generally known to its competitors (the
"Confidential Information"). The Confidential Information shall include the
following (to the extent not generally known to competitors), (i) any trade
secrets, customer lists, details of client or consultant contracts, marketing
plans, product or service development plans, business acquisition plans of
the Company, or (ii) any portion or phase of any technical information,
ideas, "know-how", discoveries, product designs, computer programs (including
source or object codes), processes, procedures, formulae or improvements of
the Company, and whether or not in written or tangible form, and including
all memoranda, notes, plans, reports, records, documents and other evidence
thereof.
5.1.2. The foregoing notwithstanding, the term
"Confidential Information" does not include, and there shall be no obligation
hereunder with respect to, (i) information that becomes generally available
to the public other than as a result of a disclosure by Employee, and (ii)
business methods applicable to businesses generally. Employee shall not have
any obligation hereunder to keep confidential any Confidential Information if
and to the extent disclosure of any thereof is required by law. Employee
shall provide the Company with prompt notice of such requirement, prior to
making any disclosure, so that the Company may seek an appropriate protective
or restrictive order.
5.1.3. At the request of the Company, Employee agrees to
deliver to the Company, at any time during the Term or upon or after the
termination thereof, all Confidential Information which he may possess or
control. Employee agrees that all Confidential Information of the Company
discovered or made by him during the term of employment hereunder belongs to
the Company, and Employee hereby assigns and transfers to the Company all
such Confidential Information.
<PAGE>
<PAGE> 10.2-3
5.2 NONCOMPETITION. Employee acknowledges that, as a result of
his executive position with the Company and his involvement daily in all of
the financial aspects of its business, it would be impossible for him to work
for a competitor of the Company without making use of Confidential
Information in a manner which would be damaging to the Company. Therefore,
for a period of twelve months after the termination of his employment with
the Company (or such longer period, if any, as Employee shall be receiving
any Termination Payment or Change in Control Payment), and so long as the
Company is not in default of any Termination Payments or Change in Control
Payments during such period, Employee shall not, directly or indirectly, be
employed by, or act as consultant or lender to, or be a director, officer,
employer, owner, or partner of, any business or organization which develops,
designs, engineers or manufactures sheet metal automotive components and
subassemblies, including tailgates, fenders, doors, roofs and hoods
(collectively, the "Products"). Employee shall not be restricted from
serving in any capacity of any company that does not manufacture, distribute
or sell Products. The provisions of this Section 5.2 will not be deemed
breached merely because Employee owns not more than 1% of the outstanding
common stock of a corporation, if, at the time of its acquisition by
Employee, such stock is listed on a national securities exchange, is reported
on NASDAQ, or is regularly traded in the over-the-counter market by a member
of a national securities exchange.
5.3 NONSOLICITATION OF EMPLOYEES. For a period of eighteen
months after the termination of his employment with the Company (or such
longer period, if any, as Employee in receiving any Termination Payment or
Change in Control Payment), Employee shall not, directly or indirectly, on
Employee's own behalf or on behalf of any other person, entity or enterprise,
employ, attempt to employ or assist anyone else in employing in as a manager,
executive, engineer, designer or salesperson in any competing business, any
of the Company's managerial, executive, engineering, design or sales
personnel.
5.4 NONSOLICITATION OF CUSTOMERS. For a period of eighteen
months after the termination of this Agreement (or such longer period, if
any, as Employee in receiving any Termination Payment or Change in Control
Payment), Employee shall not, directly or indirectly, on Employee's own
behalf or on behalf of any other person, entity or enterprise, solicit,
contact, call upon, communicate with or attempt to communicate with any
customer or prospect of Employer with a view to the sale or provision of any
product or service competitive or potentially competitive with the Products
or any other products or services manufactured, sold or provided by the
Company during the period of two years immediately preceding the cessation of
Employee's employment with the Company, provided that the restrictions set
forth in this Section shall apply only to customers or prospects of the
Company, or representatives of customers or prospects of the Company, with
which Employee had any contact during such two-year period prior to the
termination of this Agreement. The actions prohibited by this Section 5.4
shall not be engaged in by Employee directly or indirectly, whether as an
executive, financial officer, manager, salesman, agent, consultant, sales or
service representative, or otherwise. Nothing in this provision shall
prohibit employment of Employee by a customer or supplier of the Company.
5.5 RETURN OF PAYMENTS. In the event that Employee breaches any
provision of this Article 5, Employee agrees to return, within five business
days of the date on which such provision was breached, all Payments made by
the Company and further agrees to forfeit any future Payments he may have
been entitled to receive. The foregoing shall be in addition to, and not in
<PAGE>
<PAGE> 10.2-4
substitution for, any other remedies available to the Company at law or in
equity. The term "Payments" as used herein shall mean any Termination
Payment or any Change in Control Payment.
ARTICLE 6
TERMINATION OF EMPLOYMENT
6.1. WITH OR WITHOUT CAUSE. The Company may, at the Company's
sole option, terminate this Agreement with or without Cause by giving written
notice of the termination to Employee. "Cause" for purposes hereof means (i)
fraud, misappropriation or embezzlement involving property of the Company and
its affiliated companies or other intentional wrongful acts or any
intentional wrongful failures to act that may materially impair the goodwill
or business of the Company and its affiliated companies or that may cause
material damage to their property, goodwill or business, (ii) commission by
Employee of a felony, (iii) gross negligence, or (iv) refusal or inability to
perform or neglect of duty or duties.
6.2. COMPENSATION ON TERMINATION. In the event of the
termination of this Agreement by the Company for Cause, or, in the event of
the death or disability of Employee, Employee or his Estate shall receive
solely his Base Salary and benefits through the date of termination. In the
event of the termination of this Agreement by the Company without Cause prior
to the completion of the Term, or if upon expiration of this Agreement, the
Company does not offer to renew this Agreement on terms that are at least
equal to those then in effect, then Employee shall be entitled to the
compensation (Article 3) and benefits (Article 4) earned by him prior to the
date of termination as provided for in this Agreement, plus the greater of
(a) his Base Salary for the balance of the Term or (b) an amount equal to one
year of Base Salary (the "Termination Payment"). The Termination Payment
shall be made in equal installments in the same amount and at the same
periodic intervals as if Employee had remained employed by the Company. In
addition to the Termination Payment or the Change in Control Payment,
Employee's medical, life and disability insurance payments shall continue to
be made by the Company for a period of twelve months from the date of
termination; PROVIDED, HOWEVER, that if Employee commences employment with
another employer prior to the end of such twelve-month period, then the
Company shall not pay for such benefits from and after the date that such
benefits are paid for by Employee's new employer.
6.3. CHANGE IN CONTROL. In the event of a change in control (as
defined below), Employee shall have the option at any time after the date
that the change in control occurs to terminate his employment. Under such a
change in control termination, the Employee will receive from the Company
compensation in an amount equal to 2.99 times the Base Salary, less any Base
Salary paid to him from the date of the change in control to the date of
termination (the "CHANGE IN CONTROL PAYMENT"). Employee shall have the
option to receive the Change in Control Payment in (i) equal installments in
the same amount and at the same periodic intervals as if Employee had
remained employed by the Company or (ii) in a single lump sum payment. If
Employee elects to receive the Change in Control Payment in installments,
Employee may at any time within one year after termination elect to receive
the balance of the Change in Control Payment in a lump sum. A change in
control shall mean (i) the occurrence of any event resulting in Great Dane
Holdings Inc. ("GDHI") owning less than 51% of the outstanding shares of
common stock of the Company, or (ii) a change in control of GDHI whereby the
<PAGE>
<PAGE> 10.2-5
current five owners of GDHI (or their estates, heirs or family members)
individually or collectively beneficially own less than 50% of the
outstanding shares of GDHI.
ARTICLE 7
GENERAL PROVISIONS
7.1. REMEDIES. Employee acknowledges that the covenants to be
provided under Article 5 are unique and that their loss would cause
irreparable injury to the Company. Employee covenants and agrees with the
Company that money damages for any breach thereof will be an inadequate
remedy and that, therefore, the Company shall be entitled to specific
performance, injunctive and/or any other mode of equitable relief to enforce
its rights thereunder and, in any such case, no bond or other security shall
be required in connection therewith. If any restriction contained in Article
5 shall be deemed invalid, illegal, or unenforceable by reason of extent,
duration, or geographical scope or other provisions thereof, then the court
making such determination shall have the right to reduce such extent,
duration, or geographical scope thereof, or otherwise, and in its reduced
form such restriction shall then be unenforceable in the manner contemplated
hereby.
7.2. NOTICES. Any notices to be given under this Agreement by
either party to the other may be effected in writing either by personal
delivery or by certified mail. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of this
Agreement (in the case of the Company c/o President, with a copy to Great
Dane Holdings Inc., 2016 North Pitcher Street, Kalamazoo, Michigan 49007,
Attn: President), but each party may change the address by written notice in
accordance with this paragraph. Notices delivered personally shall be
communicated as of actual receipt; mailed notices shall be deemed
communicated as of two days after mailing.
7.3. ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements, whether oral or in writing, between the parties with
respect to the employment of Employee by the Company, and this Agreement
contains all of the covenants and agreements between the parties with respect
to the employment in any manner whatsoever. Each party to this Agreement
acknowledges that no representations inducements, promises or agreement,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, that are not embodied in this Agreement, and that no other
agreement, statement, or promise not contained in this Agreement shall be
valid or binding. Any modification of this Agreement will be effective only
if it is in writing signed by the party to be charged.
7.4. SURVIVAL. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment, irrespective of any investigation made
by or on behalf of any party.
7.5. WAIVER. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist
<PAGE>
<PAGE> 10.2-6
upon strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
7.6. BINDING EFFECT. Employee's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, such
rights shall not be subject to commutation, encumbrance, or the claims of
Employee's creditors, and any attempt to do any of the foregoing shall be
void. The provisions of this Agreement shall be binding upon and inure to
the benefit of Employee and his heirs and personal representatives, and shall
be binding upon and inure to the benefit of the Company and its successors
and assigns.
7.7. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement
(except as provided in Section 7.6).
7.8. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It shall
be governed by and construed in accordance with the laws of the State of New
York, without giving effect to conflict of laws.
7.9. SEPARABILITY. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall
remain in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons
and circumstances.
7.10. HEADINGS. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
CMC KALAMAZOO INC.
By: /s/ David R. Markin
------------------------------------------
Name: David R. Markin
Title: President and Chief Executive
Officer
/s/ Larry D. Temple
---------------------------------------------
Larry D. Temple
<PAGE>
<PAGE> 10.3-1
EMPLOYMENT AGREEMENT
This Agreement is made as of this 1st day of August, 1996 by and
between SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY, a West Virginia
corporation with a mailing address at 3100 MacCorkle Avenue S.W., South
Charleston, West Virginia 25303 (the "Company"), and JOHN T. WISE
("Employee"), residing at 44 Spruce Ridge Drive, Hurricane, West Virginia
25526. In consideration of the mutual covenants contained in this Agreement,
the Company and the Employee hereby agree as follows:
ARTICLE 1
TERM OF EMPLOYMENT
1.1. TERM. The Company hereby employs the Employee and the Employee
accepts employment with the Company, on the terms and conditions of this
Agreement, for a period of three years commencing as of August 1, 1996, and
ending on July 31, 1999, unless otherwise terminated as provided herein.
The period during which Employee is employed hereunder is hereinafter
referred to as the "Term."
ARTICLE 2
DUTIES OF EMPLOYEE
2.1. DUTIES. During the Term, the Employee shall serve as President
and Chief Executive Officer of the Company, shall perform such services in
a responsible executive or managerial capacity for the Company as may be
requested by the Board of Directors (the "Board") of the Company and will
devote his full time to the faithful and diligent performance of the
duties inherent in, and implied by, this executive position. Employee shall
be available to travel as the needs of the business require.
ARTICLE 3
COMPENSATION OF EMPLOYEE
3.1. BASE SALARY. As compensation for services rendered under
this Agreement, Employee shall be entitled to receive from the Company a
salary of $140,000 per year, as may be increased from time to time at the
sole discretion of the Board (the "Base Salary") payable in equal
installments in accordance with the Company's regular policy.
3.2. ADDITIONAL COMPENSATION. Employee shall be paid annually
such bonus for his services as may be determined, from time to time, in the
sole discretion of the Board.
<PAGE>
<PAGE> 10.3-2
ARTICLE 4
EMPLOYEE EXPENSES AND BENEFITS
4.1. EXPENSES. Employee shall be entitled to reimbursement
during the term for reasonable travel and other out-of-pocket expenses
necessarily incurred in the performance of his duties hereunder, upon
submission of statements and bills in accordance with the then regular
procedures of the Company.
4.2. BENEFITS. Employee shall be entitled to benefits in
accordance with the Company's policy for executive officers and other
benefits provided to all salaried employees of the Company, with a vacation
period at the maximum allowable by the Company's policy. Employee
acknowledges that the foregoing does not require the Company to continue any
benefit or policy currently in effect or adopted hereafter.
ARTICLE 5
CONFIDENTIALITY AND NONCOMPETITION
5.1. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
5.1.1. Employee shall not disclose to anyone, or use or
otherwise exploit during the Term and for a period of two years thereafter
for the benefit of anyone other than the Company, any confidential business
information, which shall be defined as data and information relating to the
business of the Company (whether constituting a trade secret or not) which is
or has been disclosed to Employee or of which Employee became aware as a
consequence of or through his relationship to the Company and which has value
to the Company and is not generally known to its competitors (the
"Confidential Information"). The Confidential Information shall include the
following (to the extent not generally known to competitors), (i) any trade
secrets, customer lists, details of client or consultant contracts, marketing
plans, product or service development plans, business acquisition plans of
the Company, or (ii) any portion or phase of any technical information,
ideas, "know-how", discoveries, product designs, computer programs (including
source or object codes), processes, procedures, formulae or improvements of
the Company, and whether or not in written or tangible form, and including
all memoranda, notes, plans, reports, records, documents and other evidence
thereof.
5.1.2. The foregoing notwithstanding, the term "Confidential
Information" does not include, and there shall be no obligation hereunder
with respect to, (i) information that becomes generally available to the
public other than as a result of a disclosure by Employee, and (ii)
business methods applicable to businesses generally. Employee shall not have
any obligation hereunder to keep confidential any Confidential Information if
and to the extent disclosure of any thereof is required by law. Employee
shall provide the Company with prompt notice of such requirement, prior to
making any disclosure, so that the Company may seek an appropriate protective
or restrictive order.
5.1.3. At the request of the Company, Employee agrees to
deliver to the Company, at any time during the Term or upon or after the
termination thereof, all Confidential Information which he may possess or
control. Employee agrees that all Confidential Information of the Company
<PAGE>
<PAGE> 10.3-3
discovered or made by him during the term of employment hereunder belongs to
the Company, and Employee hereby assigns and transfers to the Company all
such Confidential Information.
5.2 NONCOMPETITION AND NONSOLICITATION. In view of the unique
and valuable services it is expected Employee will render to the Company,
Employee's knowledge of the customers, trade secrets, and other proprietary
information relating to the business of the Company and its customers and
suppliers it is expected Employee will obtain, and in consideration of the
compensation to be received hereunder, Employee agrees (a) that he will not
during the period he is employed by the Company under this Agreement or
otherwise Participate in (hereinafter defined in this Section 5.2) any other
business or organization, whether or not such business or organization now is
or shall then be competing with or of a nature similar to the business of the
Company, and (b) for a period of one year after he ceases to be employed by
the Company under this Agreement or otherwise, he will not compete with or be
engaged in the same business as, or Participate In any other business or
organization which during such one-year period competes with or is engaged in
the same business as the Company, with respect to any product or service sold
or activity engaged in up to the time of such cessation in any geographical
area in which at the time of such cessation such product or service is sold
or activity engaged in, except that in each case the provisions of this
Section 5.2 will not be deemed breached merely because Employee owns not more
than 1% of the outstanding common stock of a corporation, if, at the time of
its acquisition by Employee, such stock is listed on a national securities
exchange, is reported on NASDAQ, or is regularly traded in the over-the-
counter market by a member of a national securities exchange. The term
"Participate In" shall mean: "directly or indirectly, for his own benefit or
for, with, or through any other person, firm, or corporation, own, manage,
operate, control, loan money to, or participate in the ownership, management,
operation, or control of, or be connected as a director, officer, employee,
partner, consultant, agent, independent contractor, or otherwise with, or
acquiesce in the use of his name in." Employee will not directly or
indirectly reveal the name of, solicit or interfere with, or endeavor to
entice away from the Company any of its suppliers, customers, or employees.
Employee will not directly or indirectly employ any person who, at any time
up to such cessation, was an employee of the Company within a period of two
years after such person leaves the employ of the Company. Since a breach of
the provisions of this Article 5 could not adequately be compensated by money
damages, the Company shall be entitled, in addition to any other right and
remedy available to it, to an injunction restraining such breach or a
threatened breach, and in either case no bond or other security shall be
required in connection therewith. Employee agrees that the provisions of
this Article 5 are necessary and reasonable to protect the Company in the
conduct of its business. If any restriction contained in this Article 5
shall be deemed to be invalid, illegal, or unenforceable by reason of the
extent, duration, or geographical scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent,
duration, geographical scope, or other provisions hereof, and in its reduced
form such restriction shall then be enforceable in the manner contemplated
hereby.
Solely in the event that this Agreement expires without the Company
offering to renew it on terms at least as favorable to Employee as those
then in effect, then the Company agrees to pay Employee, in consideration
for his agreements in this Section 5.2, $200,000, in a single lump sum
payment within thirty days after the date of termination.
<PAGE>
<PAGE> 10.3-4
5.3. RETURN OF PAYMENTS. In the event that Employee breaches any
provision of this Article 5, Employee agrees to return, within five business
days of the date on which such provision was breached, all Payments made by
the Company and further agrees to forfeit any future Payments he may have
been entitled to receive. The foregoing shall be in addition to, and not in
substitution for, any other remedies available to the Company at law or in
equity. The term "Payments" as used herein shall mean any payment made by
the Company on termination of the Employee's employment hereunder, including
any Change in Control Payment.
ARTICLE 6
TERMINATION OF EMPLOYMENT
6.1. Notwithstanding anything herein contained, if on or after the
date hereof and prior to the end of the Employment Period, (a) either (i)
Employee shall be physically or mentally incapacitated or disabled or
otherwise unable fully to discharge his duties hereunder, (ii) Employee shall
be convicted of a felony or of a misdemeanor involving moral turpitude, (iii)
Employee shall commit any act or omit to take any action in bad faith and to
the detriment of the Company, or (iv) Employee shall breach any material term
of this Agreement and fail to correct such breach within ten days after
commission thereof, then, and in each such case, the Company shall have the
right to give notice of termination of Employee's services hereunder as of a
date (not earlier than 10 days from such notice) to be specified in such
notice, and this Agreement shall terminate on the date so specified, or (b)
Employee shall die, then this Agreement shall terminate on the date of
Employee's death, whereupon Employee or his estate, as the case may be, shall
be entitled to receive only his Base Salary at the rate provided in Article
3 and the benefits provided pursuant to Article 4 to the date on which
termination shall take effect. In the event of the termination of this
Agreement by the Company prior to the end of the Term, for any reason other
than as set forth above in this Section 6.1 or in Section 6.3, Employee shall
be entitled, in addition to his Base Salary and benefits to the date of
termination, the greater of (a) his Base Salary (at the then current rate)
for the balance of the Term or (b) an amount equal to one year of Base Salary
(at the then current rate) (the "Termination Payment"). Such payment shall
be made in a lump sum within thirty days after the date of termination. If
Employee is entitled to a Termination Payment or a Change in Control Payment
(as defined below) then Employee's medical, life and disability benefit
payments, if any, shall continue to be paid by the Company for a period of
one year following the date of termination, unless Employee commences
employment with another employer prior to the end of such one-year period, in
which case the Company shall not pay for such benefits from and after the
date Employee is eligible for coverage under such new employee's benefit
plans. Nothing contained in this Article 6 shall be deemed to limit any
right the Company may have to terminate Employee's employment hereunder upon
any ground permitted by law.
6.2. CHANGE IN CONTROL. In the event of a change in control (as
defined below), Employee shall have the option at any time during the six
months following the date that the change in control occurs to terminate his
employment. Under such a change in control termination, the Employee will
receive from the Company compensation in an amount equal to 2.99 times his
then Base Salary less any Base Salary paid to him from the date of the change
in control to the date of termination (the "Change in Control Payment") in a
single lump sum payment within thirty days after the date of termination. A
<PAGE>
<PAGE> 10.3-5
change in control shall mean (i) the occurrence of any event resulting in
Checker Motors Corporation ("Checker") owning less than 51% of the
outstanding shares of common stock of the Company, (ii) the occurrence of any
event resulting in Great Dane Holdings Inc. ("GDHI") owning less than 51% of
the outstanding shares of common stock of Checker, or (iii) a change in
control of GDHI whereby the current owners of GDHI (or their estates, heirs
or family members) individually or collectively beneficially own less than
50% of the outstanding shares of GDHI.
6.3. PRESS RELEASE. In the event of the termination of the Employee for
any reason other than death, the Employee and the Company will agree to a
statement (the "Termination Statement") to be issued in response to any
inquiry concerning the termination and Employee's job performance while in
the employ of the Company. Neither the Company nor the Employee shall make
any statement concerning the termination or the job performance of the
Employee other than the Termination Statement.
ARTICLE 7
GENERAL PROVISIONS
7.1. NOTICES. Any notices to be given under this Agreement by
either party to the other may be effected in writing either by personal
delivery or by certified mail. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph of this
Agreement (in the case of the Company c/o Chief Financial Officer, with a
copy to Checker Motors Corporation, 2016 North Pitcher Street, Kalamazoo,
Michigan 49007, Attn: President), but each party may change the address by
written notice in accordance with this paragraph. Notices delivered
personally shall be communicated as of actual receipt; mailed notices shall
be deemed communicated as of two days after mailing.
7.2. ENTIRE AGREEMENT. This Agreement supersedes any and all
other agreements, whether oral or in writing, between the parties with
respect to the employment of Employee by the Company, and this Agreement
contains all of the covenants and agreements between the parties with respect
to the employment in any manner whatsoever. Each party to this Agreement
acknowledges that no representations inducements, promises or agreement,
orally or otherwise, have been made by any party, or anyone acting on behalf
of any party, that are not embodied in this Agreement, and that no other
agreement, statement, or promise not contained in this Agreement shall be
valid or binding. Any modification of this Agreement will be effective only
if it is in writing signed by the party to be charged.
7.3. SURVIVAL. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive
Employee's termination of employment, irrespective of any investigation made
by or on behalf of any party.
7.4. WAIVER. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
<PAGE>
<PAGE> 10.3-6
7.5. BINDING EFFECT. Employee's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, such
rights shall not be subject to commutation, encumbrance, or the claims of
Employee's creditors, and any attempt to do any of the foregoing shall be
void. The provisions of this Agreement shall be binding upon and inure to
the benefit of Employee and his heirs and personal representatives, and shall
be binding upon and inure to the benefit of the Company and its successors
and assigns.
7.6. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement
(except as provided in Section 7.6).
7.7. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It shall
be governed by and construed in accordance with the laws of the State of West
Virginia, without giving effect to conflict of laws.
7.8. SEPARABILITY. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons
and circumstances.
7.9. HEADINGS. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
SOUTH CHARLESTON STAMPING & MANUFACTURING
COMPANY
By: /s/ Larry D. Temple
------------------------------------------
Name: Larry D. Temple
Title: Vice President
/s/ John T. Wise
------------------------------------------
John T. Wise
<PAGE>
<PAGE> 10.4-1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of the 28th
day of June, 1996, by and between Checker Motors Corporation, a Delaware
corporation ("Buyer"), and Wilbert F. Schwartz, Thomas E. Arnold, Jr., and
Karl W. Dolk, Trustees of the ELIC Trust, under agreement dated February 15,
1994 ("Seller").
W I T N E S S E T H
- - - - - - - - - -
A. Seller owns 100 shares (the "Shares") of common stock, $1.00 par
value, of South Charleston Stamping and Manufacturing Company, a West
Virginia corporation ("Sub"); and
B. Seller desires to sell, and Buyer desires to purchase, the Shares
in exchange for cash and a promissory note (the "Promissory Note") upon the
terms and conditions stated hereafter.
NOW THEREFORE, in consideration of the mutual agreements,
representations and warranties contained herein, Seller and Buyer hereby
agree as follows:
ARTICLE 1.
SALE OF SHARES AND ISSUANCE OF THE PROMISSORY NOTE
--------------------------------------------------
a. Sale of Shares and Issuance of the Promissory Note.
---------------------------------------------------
Subject to the terms and conditions set forth herein, (i) Seller agrees
to sell, transfer, convey, assign and deliver the Shares to Buyer, and Buyer
agrees to purchase, acquire and accept the Shares from Seller and (ii) as
consideration for the Shares, Buyer hereby agrees (A) to issue to Seller the
Promissory Note in the principal amount of $4,500,000 in substantially the
form attached hereto as EXHIBIT A, such Promissory Note to be guaranteed by
Sub pursuant to the Guaranty attached hereto as EXHIBIT B, and (B) to pay
Seller the amount of $1,000,000 in cash.
b. The Closing.
------------
The closing (the "Closing") shall take place simultaneously at the
offices of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
Corporation, Three Embarcadero Center, San Francisco, California counsel to
Seller, and the offices of Hutton Ingram Yuzek Gainen Carroll & Bertolotti,
250 Park Avenue, New York, New York, counsel for Buyer, on such day and at
such time as agreed to by and between the parties, but in no event later than
10:00 a.m. on July 1, 1996 (the "Closing Date"). At the Closing, (i) Buyer
shall (A) wire transfer $1,000,000 in immediately available funds to Seller's
bank account and (B) deliver the duly executed Promissory Note dated as of
the Closing Date; and (ii) Seller shall deliver to Buyer the certificate(s)
representing the Shares, together with appropriate stock powers in form
<PAGE>
<PAGE> 10.4-2
reasonably satisfactory to Buyer and executed by Seller, assigning such
certificates to Buyer. Seller shall provide wire instructions to Buyer prior
to the Closing Date. Buyer and Seller shall place in escrow with each
other's counsel such original documents as are necessary to effect the
Closing.
Wire transfers to ELIC shall be made to:
Bank of New York Western Trust Company
700 South Flower Street, 2nd Floor
Los Angeles, CA 90017-4104
Bank of New York City/CTR/BBK
ABA #021-000-018
IOC 565 - Inst'l Custody
Attn: Gaby Rodriguez
Account Number: 106120
Account Name: ELIC Trust Main Custodial
c. Mutual Condition.
-----------------
Seller's obligation to sell the Shares to Buyer and Buyer's obligation
to purchase the Shares from Seller shall be subject to Seller's receipt of
approval of this Agreement on or before the Closing Date from the Superior
Court for the State of California, County of Los Angeles with jurisdiction
over the rehabilitation of Executive Life Insurance Company, Case No.
BS006912.
d. Terms of the Promissory Note.
-----------------------------
The terms and conditions of the Promissory Note are as set forth in the
form of Promissory Note.
1.5 Possible Sale.
--------------
(a) Great Dane Holdings Inc. ("Holdings"), of which Buyer is a
wholly-owned subsidiary, has engaged Berenson Minella & Company ("Berenson
Minella") until March 29, 1997, to sell all or part of Holdings. If Holdings
cannot be sold in its entirety, Berenson Minella will seek to sell the
various segments of Holdings' business, including an automotive segment (the
"Automotive Segment") consisting of Sub and CMC Kalamazoo Inc. ("CMC
Kalamazoo"). If all or substantially all of Sub's assets or equity are sold,
whether alone or in connection with the sale of other Holdings-related assets
or equity, then (i) Buyer and/or Sub shall notify Seller as soon as
practicable, and, in any event, before the closing, that such sale has
occurred and (ii) the remaining principal amount of the Note and all unpaid
accrued interest thereon shall become due and payable upon the closing of
such sale.
In addition, if all or substantially all of Sub's assets or equity
are sold alone or as part of a sale of all or any part of the assets or
equity of the Automotive Segment either (i) on or before March 29, 1997 or
<PAGE>
<PAGE> 10.4-3
(ii) prior to December 31, 1997 to a buyer identified by Berenson Minella,
then Buyer shall pay Seller (or Seller's successors or assigns) 10% of the
amount by which the purchase price for Sub exceeds $55 million. This
additional payment shall be made in cash, within 15 days after the later of
(a) the date of the closing of such sale and (b) the date the purchase price
allocated to Sub is determined pursuant to the terms of Section 1.5(b) below.
(b) If all or substantially all of Sub's assets or equity are sold
as part of a sale of all or any part of the assets or equity of the
Automotive Segment, then Seller and Buyer shall, as soon as practicable and,
in any event, within 15 days of the closing of the sale of Sub, select a
mutually agreeable investment banker to determine the amount of such
consideration properly allocated to the assets or equity of Sub. If the
parties cannot within such 15 day period agree on an investment banker, each
shall within 20 days after the closing of such sale select an investment
banker and the two investment bankers shall within 15 days thereafter select
a third party who will perform the allocation. Holdings, Buyer, Sub and CMC
Kalamazoo shall make all reasonable efforts to cooperate with the investment
banker or bankers making such allocation.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
a. Power and Authority.
--------------------
Buyer has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement (including issuance of the
Promissory Note) and to consummate the transactions contemplated hereby.
b. Due Organization.
-----------------
Buyer is a corporation duly organized and validly existing under the
laws of the State of Delaware and is duly qualified as a foreign corporation
in all jurisdictions in which the nature of its business or the ownership of
its properties requires such qualification.
c. Authorization of Agreement.
---------------------------
Buyer has taken all requisite corporate action to authorize it to enter
into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Buyer. As of the Closing Date, the Promissory Note
will be duly authorized, executed and delivered. This Agreement constitutes
a valid and binding obligation of Buyer, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy or similar laws now or
hereafter in effect relating to creditors' rights generally.
<PAGE>
<PAGE> 10.4-4
d. No Violation.
-------------
Neither the execution and delivery of this Agreement nor the performance
by Buyer of its obligations hereunder will (a) violate any provision of the
certificate of incorporation or by-laws of Buyer; (b) violate any statute or
law (including federal and state securities laws) or any judgment, decree,
order, regulation or rule of any court or governmental authority to which
Buyer or any of its assets may be bound; (c) cause the acceleration of the
maturity of any material debt or obligation of Buyer; or (d) violate, or be
in conflict with, or constitute a default under, or permit the termination
of, or require the consent of any person under, or result in the creation of
any lien, charge, encumbrance or other similar restriction upon any assets of
Buyer under, any material agreement to which Buyer is a party or by which
Buyer or its assets may be bound.
e. Consents.
---------
Neither the execution and delivery of this Agreement, nor the offer,
issuance, sale and delivery of the Promissory Note as contemplated hereby
will require a consent, waiver, approval or authorization of, or filing,
registration or qualification with, any person or entity, including without
limitation any court or governmental authority.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
a. Power and Authority.
--------------------
Seller has all requisite power and authority to enter into and perform
all of its obligations under this Agreement and to consummate the
transactions contemplated hereby.
b. Ownership of the Shares.
------------------------
Seller is sole owner of the Shares, free and clear of any liens or other
encumbrances, except to the extent that beneficial interest in the proceeds
from the sale of the Shares has by court order been vested in the
beneficiaries of the Seller.
c. Authorization of Agreement.
---------------------------
Seller has taken all requisite action to authorize it to enter into and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by Seller and constitutes a valid and binding
obligation of Seller enforceable in accordance with its terms, except as the
<PAGE>
<PAGE> 10.4-5
same may be limited by bankruptcy or similar laws now or hereafter in effect
relating to creditors' rights generally.
d. No Violation.
-------------
Neither the execution and delivery of this Agreement nor the performance
by Seller of its obligations hereunder will (a) violate any provision of its
trust agreement or (b) violate any statute or law (including federal or state
securities laws) or any judgment, decree, order, regulation or rule of any
court or governmental authority to which Seller or any of its assets may be
bound or (c) violate or constitute a default under, or cause the termination
of, or require the consent of any person under, or result in the creation of
any lien, charge, encumbrance or other similar restriction upon any assets of
Seller under, any material agreement to which Seller is a party or by which
Seller or its assets may be bound.
e. Consents.
---------
Seller has obtained the requisite consent, waiver, approval or
authorization of any person or entity, including, without limitation, any
court or governmental authority, required to permit Seller to execute and
deliver this Agreement and to perform its obligations hereunder.
ARTICLE 4.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
The representations and warranties given by Buyer and Seller herein
shall survive the Closing but expire once the Promissory Note has been paid
in full; except that Seller's representations pursuant to Section 3.2 shall
survive indefinitely.
ARTICLE 5.
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
Seller's obligation to sell the Shares to Buyer shall be subject to the
satisfaction of the following condition on or before the Closing Date:
a. Representations and Warranties True.
------------------------------------
The representations and warranties of Buyer contained in Article II
hereof shall be true and correct in all material respects at and as of the
Closing Date (after giving effect to the transactions contemplated by this
Agreement) with the same force and effect as if made at and as of such date.
<PAGE>
<PAGE> 10.4-6
b. Governmental Consents Still Effective.
--------------------------------------
Any consent, waiver, approval or authorization of any court or
governmental authority obtained by Seller with respect to this Agreement and
its obligations hereunder shall remain in effect and shall not have been
rescinded, cancelled or modified in any way.
ARTICLE 6.
GENERAL PROVISIONS
------------------
a. Notices.
--------
All notices and other communications provided for or permitted hereunder
shall be in writing, and shall be personally delivered or mailed, certified
or registered mail, postage prepaid:
(a) if to Seller, at the following address:
Karl W. Dolk, Trustee
c/o Lauren Roberson
Chief Financial Officer
Executive Life Insurance Company Trust
11400 West Olympic Blvd., 3rd Floor
Los Angeles, CA 90064
with a copy to:
Horace L. Nash, Esquire
Howard, Rice, Nemerovski, Canady, Falk & Rabkin
A Professional Corporation
Three Embarcadero Center
Seventh Floor
San Francisco, CA 94111-4065
(b) if to Buyer, at the following address:
Checkers Motors Corporation
2016 North Pitcher Street
Kalamazoo, MI 49007
Attention: Vice President
with a copy to:
Paulette Kendler, Esquire
Hutton Ingram Yuzek Gainen Carroll and Bertolotti
250 Park Avenue
New York, NY 10177
<PAGE>
<PAGE> 10.4-7
b. Successors and Assigns.
-----------------------
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto.
c. Amendment and Waiver.
---------------------
This Agreement may not be amended, modified or supplemented unless the
same is in writing and signed by the parties hereto.
d. Counterparts.
-------------
This Agreement may be executed in any number of 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.
e. Headings.
---------
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
f. Governing Law; Jurisdiction and Venue.
--------------------------------------
The interpretation and construction of this Stock Purchase Agreement,
and all matters relating hereto, shall be governed by the laws of the State
of California applicable to contracts made and to be performed entirely
within the State of California. Any disputes arising out of or relating to
this Agreement, any document or instrument delivered pursuant to, in
connection with, or simultaneously with this Agreement, or any breach of this
Agreement or any such document or instrument shall be settled by arbitration
to be held in Los Angeles, California, in accordance with the rules then in
effect of the American Arbitration Association or any successor thereto. The
arbitrator ("Arbitrator") shall be a party mutually acceptable to Buyer and
Seller; PROVIDED, HOWEVER, that if they cannot agree on an arbitrator, the
Regional Director of the American Arbitration Association shall choose the
Arbitrator. The Arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the Arbitrator shall be final,
conclusive, and binding on the parties to the arbitration. Judgment may be
entered on the Arbitrator's decision in any court having jurisdiction.
Any party that prevails in an arbitration described in this Section 6.6
shall be entitled to reasonable attorneys' fees and other costs incurred in
such arbitration, or in enforcing a judgment entered with respect to such
arbitration or any appeal therefrom, separately from and in addition to any
other amount included in such judgment. This Section 6.6 shall be severable
from the other provisions of this Stock Purchase Agreement and shall survive
and not be merged into any such judgment.
<PAGE>
<PAGE> 10.4-8
g. Severability.
-------------
In the event that any one or more of the provisions contained herein is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired.
h. Entire Agreement.
-----------------
This Agreement is intended by the parties as a final expression of their
agreement and, with the exhibits which are attached hereto and incorporated
herein, is intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understanding between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CHECKER MOTORS CORPORATION
/s/ Jay Harris
--------------------------------
By Jay Harris
----------------------------
Its Vice President
----------------------------
WILBERT F. SCHWARTZ, THOMAS E.
ARNOLD, JR. AND KARL W. DOLK,
TRUSTEES OF THE ELIC TRUST,
UNDER AGREEMENT DATED FEBRUARY
15, 1994
/s/ Wilbert F. Schwartz
-------------------------------
Wilbert F. Schwartz, Trustee
/s/ Thomas E. Arnold, Jr.
-------------------------------
Thomas E. Arnold, Jr., Trustee
/s/ Karl W. Dolk
-------------------------------
Karl W. Dolk, Trustee
<PAGE>
<PAGE> 10.5-1
GUARANTY
This Guaranty ("Guaranty") dated as of July 3, 1996 is entered into
between South Charleston Stamping & Manufacturing Company ("Guarantor") in
favor of Wilbert F. Schwartz, Thomas E. Arnold, Jr. and Karl W. Dolk,
Trustees of the ELIC Trust (and any successors to such Trustees), under
agreement dated February 15, 1994 ("Lender").
The parties hereby agree as follows:
1. Guarantor unconditionally, absolutely and irrevocably guarantees
and promises to pay to Lender, on demand, in immediately available funds, any
and all indebtedness and obligations (hereinafter collectively, the
"Guaranteed Obligations") of Borrower to Lender under the Promissory Note now
existing or hereafter incurred or created and however arising. Guarantor
agrees that this Guaranty constitutes a guaranty of payment when due and not
of collection.
2. Guarantor agrees that it is directly and primarily liable to Lender,
that its obligations hereunder are independent of the Guaranteed Obligations
and that a separate action or actions may be brought and prosecuted against
Guarantor, whether action is brought against Borrower or whether Borrower is
joined in any such action or actions. Guarantor agrees that any releases
which may be given by Lender to Borrower or any other guarantor or endorser
shall not release it from this Guaranty.
3. Guarantor hereby authorizes Lender, without notice or demand and
without affecting Guarantor's liability hereunder, from time to time to do
any or all of the following in such manner, upon such terms, and at such
times as Lender, in its sole discretion, deems advisable without in any way
impairing, affecting, reducing or releasing Guarantor from its obligations
under this Guaranty: (i) renew, compromise, extend, refinance, accept partial
payments, accelerate or restructure the Guaranteed Obligations or otherwise
change the time for payment or the terms of any of the Guaranteed
Obligations, or any part thereof, including, without limitation, increasing
or decreasing the rate of interest thereof; (ii) waive, amend, rescind or
modify any of the terms or provisions of the Promissory Note or Stock
Purchase Agreement; (iii) settle, release, compromise, collect or otherwise
liquidate the Guaranteed Obligations, or any part thereof, and any security
or collateral therefor in any manner as Lender may determine in its sole
discretion; and (iv) assign, without notice, this Guaranty in whole or in
part and Company's rights hereunder to any one at any time.
4. Guarantor waives all presentments, demands for performance, notices
of nonperformance, protests, notices of protests, notices of dishonor,
notices of default, notice of acceptance of this Guaranty, diligence, and
notices of the existence, creation or incurrence of the Guaranteed
Obligations and all other notices or formalities to which Guarantor may be
entitled under applicable law.
5. As a condition to payment or performance by Guarantor under this
Guaranty, Lender shall not be required to, and Guarantor hereby waives any
and all rights to require Lender to, prosecute or seek to enforce any
remedies against Borrower or any other party liable to Lender on account of
the Guaranteed Obligations or to require Lender to seek to enforce or resort
to any remedies with respect to any security interests, liens or encumbrances
<PAGE>
<PAGE> 10.5-2
granted to Lender by Borrower or any other party on account of the Guaranteed
Obligations.
6. Guarantor agrees not to assert any right of subrogation,
reimbursement, exoneration, contribution or any other rights that would
result in Guarantor being deemed a creditor of Borrower under the federal
Bankruptcy Code or any other law until the Guaranteed Obligations have been
paid in full.
7. Guarantor hereby represents and warrants to Lender that: (i)
Guarantor has taken all requisite action to authorize it to enter into and
perform its obligations under this Guaranty and to consummate the
transactions contemplated hereby; (ii) this Guaranty has been duly
authorized, executed and delivered by Guarantor; and (iii) neither the
execution and delivery of this Guaranty nor the performance by Guarantor of
its obligations hereunder will (a) violate any provision of the certificate
of incorporation or by-laws of Guarantor, (b) violate any statute or law
(including federal and state securities laws) or any judgment, decree, order,
regulation or rule of any court or governmental authority to which Guarantor
or any of its assets may be bound, (c) cause the acceleration of the maturity
of any material debt or obligation of Guarantor, or (d) violate, or be in
conflict with, or constitute a default under, or permit the termination of,
or require the consent of any person under, or result in the creation of any
lien, charge, encumbrance or other similar restriction upon any assets of
Guarantor under, any material agreement to which Guarantor is a party or by
which Guarantor or its assets may be bound.
8. Neither the execution nor the delivery of this Guaranty will
require a consent, waiver, approval or authorization of, or filing,
registration or qualification with, any governmental authority.
9. All amounts required to be paid to Lender by Guarantor pursuant to
the provisions of this Guaranty shall bear interest from and including the
date upon which such amounts are due, to and excluding the date of payment
thereof, at the rate of 10 percent per annum.
10. This Guaranty shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto.
11. This Guaranty may not be amended, modified or supplemented unless
the same is in writing and signed by the parties hereto.
12. This Guaranty may be executed in any number of 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.
13. The interpretation and construction of this Guaranty, and all
matters relating hereto, shall be governed by the laws of the State of
California applicable to contracts made and to be performed entirely within
the State of California. Any disputes arising out of or relating to this
Guaranty, any document or instrument delivered pursuant to, in connection
with, or simultaneously with this Guaranty, or any breach of this Guaranty or
any such document or instrument shall be settled by arbitration to be held in
Los Angeles, California, in accordance with the rules then in effect of the
American Arbitration Association or any successor thereto. The arbitrator
("Arbitrator") shall be a party mutually acceptable to Lender and Guarantor;
<PAGE>
<PAGE> 10.5-3
PROVIDED, HOWEVER, that if they cannot agree on an arbitrator, the Regional
Director of the American Arbitration Association shall choose the Arbitrator.
The Arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the Arbitrator shall be final, conclusive, and
binding on the parties to the arbitration. Judgment may be entered on the
Arbitrator's decision in any court having jurisdiction.
Any party that prevails in an arbitration described in this Section 13
shall be entitled to reasonable attorneys' fees and other costs incurred in
such arbitration, or in enforcing a judgment entered with respect to such
arbitration or any appeal therefrom, separately from and in addition to any
other amount included in such judgment. This Section 13 shall be severable
from the other provisions of this Guaranty and shall survive and not be
merged into any such judgment.
14. In the event that any one or more of the provisions contained
herein is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in
any way impaired.
IN WITNESS WHEREOF, the parties hereto have executed this Guaranty as of
the date first above written.
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
______________________________
By: /s/ Larry D. Temple
---------------------------
Its Vice President
---------------------------
WILBERT F. SCHWARTZ, THOMAS E.
ARNOLD, JR. AND KARL W. DOLK,
TRUSTEES OF THE ELIC TRUST,
UNDER AGREEMENT DATED FEBRUARY
15, 1994
/s/ Wilbert F. Schwartz
-------------------------------
Wilbert F. Schwartz, Trustee
/s/ Thomas E. Arnold, Jr.
-------------------------------
Thomas E. Arnold, Jr., Trustee
/s/ Karl W. Dolk
-------------------------------
Karl W. Dolk, Trustee
<PAGE>
<PAGE> 10.6-1 EXECUTION COPY
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT, dated as of June 5, 1996
(this "Amendment"), is among CHECKER MOTORS CORPORATION, A Delaware
corporation (the "Company"), YELLOW CAB COMPANY, a Delaware corporation
("Yellow Cab"), CHICAGO AUTOWERKS INC., a Delaware corporation ("AutoWerks"),
CMC KALAMAZOO INC., a Delaware corporation ("CMC") and SOUTH CHARLESTON
STAMPING & MANUFACTURING COMPANY, a West Virginia corporation ("SCSM") (the
Company, Yellow Cab, AutoWerks, CMC and SCSM may each be referred to as a
"Borrower" and collectively as the "Borrowers"), the Lenders set forth on the
signature pages hereof (collectively, the "Lenders" and individually, a
"Lender") and NBD Bank, a Michigan banking corporation, as agent for the
Lenders (in such capacity, the "Agent").
RECITAL
The Borrowers, the Lenders and the Agent are parties to a Loan Agreement
dated as of January 26, 1995, as amended by a First Amendment to Loan
Agreement dated as of September 22, 1995 and a Second Amendment to Loan
Agreement dated as of December 8, 1995 (the "Loan Agreement") and desire to
amend the Loan Agreement as set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE I. AMENDMENT. The Loan Agreement shall be amended as follows:
---------
1.1 Section 3.1 is amended by adding the following new clause to the
end thereof:
(e) Upon any sale or other transfer of ACIC, the Company
shall prepay the Advances, simultaneously with the
receipt of any proceeds from such sale or other transfer
of ACIC, by an amount equal to 25% (or 100% if any
Default or Event of Default has occurred and is
continuing) of the proceeds from any sale or other
transfer of ACIC, net of any reasonable costs and
expenses directly incurred in connection with such sale
or transfer and any taxes directly incurred in connection
with such sale or transfer. If all of the proceeds of
any such sale or other transfer are not in cash, the
Company shall prepay Advances to the maximum extent of
the cash portion of such net proceeds with the remainder
of any required prepayment under the Section 3.1(e) to be
paid by the pledging of any non-cash proceeds with the
shortest maturity, with the eventual cash proceeds
thereof being applied to the Advances as required under
this Section 3.1(e), provided that at least 25% of the
proceeds of such sale are in cash. The prepayment under
<PAGE>
<PAGE> 10.6-2
this Section 3.1(e) shall be applied first to the Term Loan
until paid in full, and next to the Revolving Credit Advances
until paid in full (and any such application, if any, to the
Revolving Credit Advances shall mandatorily reduce the
Commitments by a like amount).
1.2 Section 5.2(i) is amended by adding the following to the end
thereof:
and other than any sale of ACIC, provided that ACIC shall
not be sold for less than its statutory book value and
such sale shall be subject to the prepayment requirements
described in Section 3.1(e) hereof (and notwithstanding
anything herein to the contrary, each Lender agrees that
the Agent may release any lien or security interest with
respect to the capital stock of ACIC or any assets of
ACIC in connection with any such sale).
ARTICLE II. REPRESENTATIONS. Each Borrower represents and warrants that:
2.1 The execution, delivery and performance of this Amendment is within
its powers, has been duly authorized and is not in contravention with any
law, of the terms of its articles of incorporation or by-laws, or any
undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of it,
enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Article IV of the Loan Agreement
and in the other Loan Documents are true on and as of the date hereof with
the same force and effect as if made on and as of the date hereof.
2.4 No Event of Default or Default exists or has occurred and is
continuing on the date hereof.
ARTICLE III. MISCELLANEOUS.
3.1 References in any Loan Document to the Loan Agreement shall be
deemed to be references to the Loan Agreement as amended hereby and as
further amended from time to time.
3.2 Except as expressly amended hereby, the Borrowers agree that all
Loan Documents are ratified and confirmed and shall remain in full force and
effect and that the Borrowers have no set off, counterclaim or defense with
respect to any of the foregoing. Terms used but not defined herein shall
have the respective meanings ascribed thereto in the Loan Agreement.
3.3 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
<PAGE>
<PAGE> 10.6-3
3.4 This Amendment shall not be effective until the Company shall have
paid to the Agent, for the pro rata benefit of the Lenders, an amendment fee
in the amount of $25,000.
IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed and delivered as of the day and year set forth
above.
CHECKER MOTORS CORPORATION
By: /s/ Jay Harris
------------------------------
Its: Vice President
--------------------------
YELLOW CAB COMPANY
By: /s/ Jay Harris
------------------------------
Its: Vice President
--------------------------
CHICAGO AUTOWERKS INC.
By: /s/ Jay Harris
------------------------------
Its: Vice President
--------------------------
CMC KALAMAZOO INC.
By: /s/ Jay Harris
------------------------------
Its: Vice President
--------------------------
<PAGE>
<PAGE> 10.6-4
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By: /s/ Larry D. Temple
------------------------------
Its: Vice President
--------------------------
NBD BANK, as a Lender and as Agent
By: /s/ Randy R. Balluff
------------------------------
Its: Senior Vice President
--------------------------
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: /s/ Dan Murry
------------------------------
Its: Vice President
--------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Larry Favre
------------------------------
Its: Director
--------------------------
<PAGE>
