<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
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 1-9634
[LOGO]
LARIZZA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1376202
(State of incorporation) (I.R.S. Employer Identification No.)
Suite 1040
201 West Big Beaver Road
Troy, Michigan 48084
(Address of principal executive offices and zip code)
(810) 689-5800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Number of shares of Common Stock, without par value, of the registrant
outstanding as of October 31, 1994: 22,088,107
<PAGE> 2
LARIZZA INDUSTRIES, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1994
INDEX
Page No.
--------
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
September 30, 1994 and December 31, 1993 . . . . . . . . 3
Consolidated Condensed Statements of Operations -
Three Months and Nine Months Ended September 30, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1994 and 1993 . . . . . 5
Notes to Consolidated Condensed Financial Statements . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 8
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
---------------- ----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 826 559
Accounts receivable, net 25,194 20,426
Inventories:
Raw materials 4,693 4,428
Work in process 1,317 1,032
Finished goods 2,227 1,808
--------- -------
Total inventories 8,237 7,268
--------- -------
Reimbursable tooling costs 2,922 2,178
Net current assets of discontinued operations 2,187 1,627
Other current assets 941 625
--------- -------
Total current assets 40,307 32,683
--------- -------
Property, plant and equipment, at cost 50,261 46,978
Less accumulated depreciation and amortization 23,022 20,862
--------- -------
Net property, plant and equipment 27,239 26,116
--------- -------
Notes receivable from principal shareholders 2,232 2,136
Goodwill and other intangibles, net 2,712 2,782
Net noncurrent assets of discontinued operations 68 137
--------- -------
$ 72,558 63,854
========= =======
Current liabilities:
Current installments of long-term debt and capitalized lease obligation $ 2,104 4,679
Accounts payable 17,568 14,267
Income taxes payable 3,675 1,008
Accrued salaries and wages 2,756 1,469
Accrual for loss on sale of discontinued operations 2,266 2,118
Other accrued expenses 6,197 4,863
--------- -------
Total current liabilities 34,566 28,404
--------- -------
Long-term debt, excluding current installments 27,300 81,460
Capitalized lease obligation, excluding current installments 593 780
Deferred gain on debt restructure - 6,097
Deferred income taxes 1,400 1,400
Accrued interest - 8,463
Other long-term liabilities 1,296 1,323
Shareholders' equity (deficit):
Common stock 76,780 17,202
Additional paid-in capital 5,551 5,551
Accumulated deficit (70,951) (83,873)
Foreign currency translation adjustment (3,977) (2,953)
--------- -------
Total shareholders' equity (deficit) 7,403 (64,073)
--------- -------
$ 72,558 63,854
========= =======
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
3
<PAGE> 4
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ----------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 37,673 31,144 $ 121,513 110,149
Cost of goods sold 30,334 25,377 95,356 86,257
---------- ------ ---------- -------
Gross profit 7,339 5,767 26,157 23,892
Selling, general and administrative expenses 3,316 2,488 10,067 8,274
---------- ------ ---------- -------
Operating income 4,023 3,279 16,090 15,618
Other income (expense):
Interest expense, net (537) (1,509) (2,275) (4,740)
Foreign exchange gain (loss) 48 (16) 156 (192)
Other, net (51) (193) 96 (202)
---------- ------ ---------- -------
(540) (1,718) (2,023) (5,134)
---------- ------ ---------- -------
Income before income tax provision and extraordinary gain 3,483 1,561 14,067 10,484
Income tax provision 735 - 3,550 -
---------- ------ ---------- -------
Income before extraordinary gain 2,748 1,561 10,517 10,484
Extraordinary gain on refinancing of debt - - 2,405 -
---------- ------ ---------- -------
Net income $ 2,748 1,561 $ 12,922 10,484
========== ====== ========== =======
Income per common share:
Primary
Income before extraordinary gain $ .12 .11 .53 .76
Extraordinary gain - - .12 -
---------- ------ ---------- -------
Net income per common share $ .12 .11 $ .65 .76
========== ====== ========== =======
Fully diluted
Income before extraordinary gain $ .51 .62
Extraordinary gain .11 -
---------- -------
Net income per common share $ .62 .62
========== =======
Weighted average number of shares of common stock outstanding
Primary 22,088 13,805 19,995 13,805
Fully diluted n/a 22,088 22,088
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
4
<PAGE> 5
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------
1994 1993
------ ------
<S> <C> <C>
Operations:
Net income $ 12,922 10,484
Noncash items:
Depreciation and amortization 3,106 3,262
Foreign exchange (gain) loss (156) 192
Amortization of deferred gain (368) (1,007)
Extraordinary gain on refinancing of debt (2,405) -
Interest accrued on long-term debt 791 3,122
Operating working capital decrease (increase) 1,406 (293)
Other, net (252) 201
------------ --------
15,044 15,961
------------ --------
Investments:
Property, plant and equipment, net (4,161) (2,474)
Other, net (96) (116)
------------ --------
(4,257) (2,590)
------------ --------
Financing:
Issuance of debt 36,000 -
Repayments of debt (45,903) (10,647)
Other, net - (1,036)
------------ --------
(9,903) (11,683)
Effect of exchange rates on cash (617) (371)
------------ --------
Net increase in cash and cash equivalents 267 1,317
Cash and cash equivalents at beginning of period 559 489
------------ --------
Cash and cash equivalents at end of period $ 826 1,806
============ ========
Noncash financing activities:
Conversion of debt to equity $ 59,578
============
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
5
<PAGE> 6
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(1) Basis of Presentation
In the opinion of management, the information furnished herein includes
all adjustments (all of which are of a normal recurring nature) necessary
for fair presentation of the results for the interim periods.
(2) Income Per Share
Primary income per common share is calculated by dividing net income by
the weighted average number of common shares outstanding during the
period.
On a fully-diluted basis, both net income and shares outstanding were
adjusted to assume the conversion of the U.S. Loan of $47,000,000 plus
accrued interest into 8,283,040 shares of common stock at the beginning of
the period. To adjust net income for the first nine months of 1994,
interest expense of $791,000 related to the U.S. Loan was added back into
income. To adjust net income for the first nine months of 1993, interest
expense of $3,122,000 related to the U.S. Loan was added back into
income. Such conversion was not dilutive during the quarter ended
September 30, 1993.
On March 11, 1994, $47,000,000 in principal and $9,254,000 of accrued
interest relating to the Term Loans under the U.S. Loan (the then
outstanding principal and accrued interest with respect to such loans)
were converted into 8,283,040 shares of common stock. The conversion
reduced long-term debt, accrued interest and deferred gain on debt
restructure on the Company's balance sheet as of March 11, 1994 by
$47,000,000, $9,254,000 and $3,324,000, respectively, and increased common
stock by $59,578,000.
(3) New Credit Facility / Extraordinary Gain
On May 6, 1994, the Company signed a new $50,000,000 credit facility
agented by Bank of America Illinois (formerly Continental Bank N.A.). The
initial borrowing of $36,000,000 consisted of $35,600,000 used to repay
existing indebtedness and $400,000 used to pay various loan fees and
expenses. This debt refinancing resulted in the recognition of the
remaining deferred gain on debt restructure which was recorded as an
extraordinary gain in the second quarter of 1994.
The new facility includes a $27,000,000 revolving line of credit for the
Company, of which $16,050,000 was outstanding on September 30, 1994, and
an $8,000,000 revolving line of credit for tooling and capital equipment
for the Company. The amount available under the $27,000,000 line of
credit is reduced by $250,000 at the end of each quarter in 1994
(beginning June 30, 1994) and $1,250,000 at the end of each subsequent
quarter during the term of the loan. Both lines of credit expire May 6,
1997. Interest on the loans is based on Eurodollar rates or the bank's
reference rate, plus a margin which can vary each quarter based on
specified financial covenants. The margins at October 1, 1994 were 1.75%
for Eurodollar Loans and 0% for reference rate loans. The line of credit
also requires the Company to pay a commitment fee of .375% a year on the
average unused amount of the facility. Interest and the commitment fee
are payable quarterly. The revolving line of credit is also available for
letters of credit in amounts not to exceed $2,000,000. The Bank issued a
$500,000 (Canadian) letter of credit securing checking account overdrafts.
Both lines of credit are secured by all of the assets of the Company
including the stock of its subsidiaries and the assets of Hughes Plastics,
Inc.
In addition, the new facility includes a $15,000,000 term loan to
Manchester Plastics, Ltd., the Company's Canadian subsidiary, secured by
all of its assets, of which $13,125,000 was outstanding on September 30,
1994. The loan is payable in four quarterly installments of $937,500
beginning June 30, 1994, with the balance due May 7, 1999. Interest on
the loan is based on Eurodollar rates or the bank's reference rate, plus a
margin which varies each quarter based on Manchester Plastics' net worth.
The margins at October 1, 1994 were 3.50% for Eurodollar loans and 1.75%
for reference rate loans. Interest is payable quarterly.
The loans to the Company and to Manchester Plastics, Ltd. contain various
covenants, the more restrictive of which include limits on the
disposition of properties, limits on capital expenditures, maintenance of
certain financial levels and ratios and restrictions on additional
indebtedness and on the payment of dividends. The Company was in
compliance with all such covenants at September 30, 1994, and expects to
be in compliance throughout 1994.
Aggregate principal payments due on long-term debt for the next five years
are as follows: 1994 - $937,500; 1995 - $937,500; 1996 - $ 0, 1997-
$16,050,000, 1998 - $0; 1999 - $11,250,000.
6
<PAGE> 7
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(4) Subsequent Event
On October 20, 1994, the Company purchased all of the outstanding stock of
LVB Industries, Inc. and then merged LVB Industries, Inc. into its
wholly-owned subsidiary Hughes Plastics, Inc. The Purchase price is
subject to post closing adjustments which have not yet been determined.
In connection with the acquisition, the Company also entered into a
seven-year lease for a 70,000 square foot facility in St. Joseph Michigan,
with an option to extend the lease for an additional seven years, for
$21,000 a month. The Company also has an option to purchase the premises
for $2,000,000 during the initial term of the lease. Also in connection
with the acquisition, Hughes Plastics, Inc. guaranteed the Company's
loans agented by Bank of America Illinois and granted a security interest
in all of its assets to secure its obligations under the guaranty.
7
<PAGE> 8
ITEM 2.
LARIZZA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Third Quarter Ended September 30, 1994 compared with
Third Quarter Ended September 30, 1993
Net sales increased $6.5 million, or 21.0%, in the quarter ended September
30, 1994 compared to the quarter ended September 30, 1993. This increase in
net sales resulted largely from increased production levels of vehicles in
which the Company's products are used. Future sales are expected to increase
as a result of the Company's acquisition of Hughes Plastics, Inc. effective
October 20, 1994. Hughes Plastics, Inc.'s sales for the three months ended
September 30, 1994 were approximately $3.7 million.
Gross profit increased $1.6 million, or 27.3%, in the quarter ended September
30, 1994 compared to the quarter ended September 30, 1993. This increase in
gross profit is a result of higher sales and higher gross profit margins. The
gross profit margin increased to 19.5% in the 1994 period from 18.5% in the
1993 period. Gross profit margins were impacted favorably by the effect of
higher sales on fixed costs.
Operating income for the quarter ended September 30, 1994 was $4.0 million
compared to operating income of $3.3 million for the quarter ended September
30, 1993. This increase in operating income resulted from increased gross
profit, partially offset by higher selling, general and administrative
expenses. Operating income as a percentage of net sales was 10.7% in the 1994
third quarter compared to 10.5% in the 1993 third quarter.
Selling, general and administrative expenses increased by $0.8 million in the
quarter ended September 30, 1994 compared to the quarter ended September 30,
1993. Selling expenses were up by $0.3 million as a result of higher sales,
and general and administrative expenses were up by $0.5 million as a result of
generally higher expenses.
Interest expense for the quarter ended September 30, 1994 decreased by $1.0
million compared to the quarter ended September 30, 1993, primarily as a
result of the conversion of $47.0 million of principal amount of debt, plus the
related accrued interest, into common stock on March 11, 1994.
During the current quarter, the Company recorded an income tax provision of
$0.7 million. The Company had no income tax provision in the prior year's
period as a result of U.S. and Canadian tax loss carryforwards. The Canadian
tax loss carryforwards were fully used during the fourth quarter of 1993. The
Company expects to use its remaining U.S. tax loss carryforwards during 1995.
Nine Months Ended September 30, 1994 compared with
Nine Months Ended September 30, 1993
Net sales for the nine months ended September 30, 1994 increased $11.4 million,
or 10.3%, compared with the net sales for the nine months ended September 30,
1993. This increase in net sales resulted largely from increased production
levels of vehicles in which the Company's products are used.
Gross profit increased $2.3 million, or 9.5%, in the nine month period ended
September 30, 1994 compared to the nine month period ended September 30, 1993.
This increase in gross profit is a result of higher sales. The gross profit
margin was 21.5% in the 1994 period and 21.7% in the 1993 period.
Operating income for the nine months ended September 30, 1994 was $16.1 million
compared to operating income of $15.6 million for the nine months ended
September 30, 1993. This increase in operating income resulted from increased
gross profit, partially offset by higher selling, general and administrative
expenses. Operating income as a percentage of net sales was 13.2% in the 1994
period compared to 14.2% in the 1993 period.
Selling, general and administrative expenses increased by $1.8 million in the
nine months ended September 30, 1994 compared to the nine months ended
September 30, 1993. Selling expenses were up by $0.6 million as a result of
higher sales and general and administrative expenses were up by $1.2 million.
The increase in general and administrative expenses resulted from costs
associated with the filing of a registration statement which was subsequently
withdrawn and a refinancing of the Company's remaining debt, as well as
generally higher expenses.
8
<PAGE> 9
LARIZZA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest expense for the nine months ended September 30, 1994 decreased $2.5
million compared to the nine months ended September 30, 1993, primarily as a
result of the conversion of $47.0 million in principal amount of debt, plus the
related accrued interest, into common stock on March 11, 1994.
During the current nine month period, the Company recorded an income tax
provision of $3.6 million. The Company had no income tax provision in the
prior year's period as a result of U.S. and Canadian tax loss carryforwards.
The Canadian tax loss carryforwards were fully used during the fourth quarter
of 1993. The Company expects to use its remaining U.S. tax loss carryforwards
during 1995.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's net cash position increased by $0.3 million during the first nine
months of 1994. Cash in the amount of $15.0 million was generated by
operations. Cash in the amount of $4.2 million was used for capital
expenditures and cash of $9.9 million was paid to reduce debt during the nine
months of 1994.
On March 11, 1994, the Company's lenders converted $47.0 million of principal
and $9.3 million of accrued interest into 8.3 million shares of common stock,
representing 37.5% of the Company's outstanding common stock after such
conversion. This conversion reduced long-term debt, accrued interest and
deferred gain on debt restructure on the Company's balance sheet as of the date
of the conversion by $47.0 million, $9.3 million and $3.3 million,
respectively, and increased shareholders' equity by $59.6 million.
The Company's primary needs for liquidity in the next twelve months will be to
support its working capital needs, debt service requirements and capital
expenditure requirements. The Company believes that cash generated by
operations plus amounts available under its new credit facility will be
adequate to fund its cash requirements for the next twelve months. At
September 30, 1994, the Company had $10.4 million available under its new
line of credit, plus, if certain conditions are met, an additional $8.0 million
available for tooling and capital expenditure loans. For a description of the
Company's new credit facilities, see Note 3 of Notes to Consolidated Condensed
Financial Statements contained in Part I of this Report.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
a) Exhibits:
10.2 Lease among Louis V. Buzzitta, Catherine F. Buzzitta and Hughes Plastics, Inc.
dated October 20, 1994.
10.10(a)(2) Second Amendment to Credit Agreement, dated as of October 19, 1994, among Larizza
Industries, Inc., various financial institutions and Bank of America Illinois.
10.10(b)(3) Note, dated as of August 31, 1994, in the principal amount of $17,375,000 from Larizza
Industries, Inc. to Continental Bank N.A.
10.10(b)(4) Note, dated as of August 31, 1994, in the principal amount of $6,950,000 from Larizza
Industries, Inc. to Sanwa Business Credit Corporation.
10.11(b)(3) Note dated as of August 31, 1994, in the principal amount of $7,031,250 from Manchester
Plastics, Ltd. to Continental Bank N.A.
10.11(b)(4) Note, dated as of August 31, 1994, in the principal amount of $2,812,500 from Manchester
Plastics, Ltd. to Sanwa Business Credit Corporation.
10.15 Stock Purchase Agreement, dated October 13, 1994, among Larizza Industries, Inc.
and Diane M. Buzzitta Trust, Phillip F. Wood, Trustee, Diane M. Buzzitta, Louis V. Buzzitta,
Joseph T. Buzzitta and James V. Buzzitta, LVB Industries, Inc. and Hughes Plastics, Inc.
10.15(a) Guarantee, dated as of October 21, 1994, by Hughes Plastics, Inc. in favor of Bank of
America Illinois and other Banks.
10.15(b) Security Agreement, dated as of October 21, 1994, between Hughes Plastics, Inc. and
Bank of America Illinois.
10.15(c) Subordinated Note, dated as of October 20, 1994, in the amount of $1,200,000 from Larizza
Industries, Inc. to Louis V. Buzzitta.
10.15(d) Subordinated Note, dated as of October 20, 1994, in the amount of $500,000 from Larizza
Industries, Inc. to Louis V. Buzzitta.
27 Financial Data Schedule
b) Reports on Form 8-K filed during the third quarter:
</TABLE>
There were no reports on form 8-K filed by the Registrant during the
quarter ended September 30, 1994.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LARIZZA INDUSTRIES, INC.
/S./Terence C. Seikel
----------------------------
Terence C. Seikel
Date: November 7, 1994 Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer of the
Registrant)
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
- - - ------- ----------- ----
<S> <C> <C>
10.2 Lease Among Louis V. Buzzitta, Catherine F. Buzzitta and Hughes Plastics, Inc.
dated October 20, 1994.
10.10(a)(2) Second Amendment to Credit Agreement, dated as of October 19, 1994, among Larizza
Industries, Inc., various financial institutions and Bank of America Illinois.
10.10(b)(3) Note, dated as of August 31, 1994, in the principal amount of $17,375,000 from Larizza
Industries, Inc. to Continental Bank N.A.
10.10(b)(4) Note, dated as of August 31, 1994, in the principal amount of $6,950,000 from Larizza
Industries, Inc. to Sanwa Business Credit Corporation.
10.11(b)(3) Note dated as of August 31, 1994, in the principal amount of $7,031,250 from Manchester
Plastics, Ltd. to Continental Bank N.A.
10.11(b)(4) Note, dated as of August 31, 1994, in the principal amount of $2,812,500 from Manchester
Plastics, Ltd. to Sanwa Business Credit Corporation.
10.15 Stock Purchase Agreement, dated October 13, 1994, among Larizza Industries, Inc.
and Diane M. Buzzitta Trust, Phillip F. Wood, Trustee, Diane M. Buzzitta, Louis V. Buzzitta,
Joseph T. Buzzitta and James V. Buzzitta, LVB Industries, Inc. and Hughes Plastics, Inc.
10.15(a) Guarantee, dated as of October 21, 1994, by Hughes Plastics, Inc. in favor of Bank of
America Illinois and other Banks.
10.15(b) Security Agreement, dated as of October 21, 1994, between Hughes Plastics, Inc. and
Bank of America Illinois.
10.15(c) Subordinated Note, dated as of October 20, 1994, in the amount of $1,200,000 from Larizza
Industries, Inc. to Louis V. Buzzitta.
10.15(d) Subordinated Note, dated as of October 20, 1994, in the amount of $500,000 from Larizza
Industries, Inc. to Louis V. Buzzitta.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.2
LEASE
THIS LEASE made and entered into as of this 20th day of October, 1994, by
and between LOUIS V. BUZZITTA and CATHERINE F. BUZZITTA, of Suite 602, 221
Michigan, N.E., Grand Rapids, Michigan 49503 ("Landlord"), and HUGHES PLASTICS,
INC., a Michigan corporation, of 211 Kerth Street, P.O. Box 86, St. Joseph,
Michigan 49085 ("Tenant").
WITNESSETH:
That Landlord, in consideration of Tenant's covenants and agreements
herein contained, has demised and leased, and by these presents does demise and
lease unto Tenant, the premises located at 211 Kerth Street, St. Joseph,
Michigan 49085, legally described as set forth on attached Exhibit A, and all
buildings and improvements located thereon, subject to restrictions, covenants,
agreements and easements of record, all laws and ordinances, to be occupied by
Tenant for any and all lawful purposes in connection with Tenant's business.
This Lease replaces and supersedes any and all previous leases, and any
amendments thereto, entered into between Landlord and Tenant with respect to
the premises located at 211 Kerth Street, St. Joseph, Michigan 49085 prior to
the date of this Lease.
The parties hereto further mutually covenant and agree as follows:
ARTICLE I
TERM
1.1 Term. This Lease shall be for a term of seven (7) years, from
the date hereof. If Tenant requests construction of additional space pursuant
to Section 2.4 below during the initial or renewal term, the length of the term
of this lease shall be extended to seven (7) years from the date Tenant takes
possession of the additional space. In the event that Tenant requests
construction of the additional space during the initial term hereunder the
renewal term as set forth in paragraph 1.3 below shall remain in effect.
1.2 Occupancy. The Leased Premises shall be available to Tenant
from and after the date hereof.
1.3 Renewal. Tenant is hereby granted one (1) option to extend the
term of this Lease for seven (7) additional years,
<PAGE> 2
exercisable in writing delivered to Landlord at least twelve (12) months prior
to expiration of the Lease term.
ARTICLE II
RENT
2.1 Rent. Tenant agrees to pay to Landlord, as rent for the Leased
Premises, $21,000 per month in advance on the first day of each month.
2.2 Late Payment. If any monthly payment due hereunder from Tenant
is not received by Landlord within ten (10) days of the date due, Tenant shall
pay to Landlord as a late charge the sum of One Hundred Dollars ($100) for each
such monthly installment not paid within ten (10) days of its due date.
Acceptance of any late charge shall not constitute a waiver of Tenant's default
with respect to the overdue amount, or prevent Landlord from exercising any of
the other rights and remedies available to Landlord for Tenant's default.
2.3 Time for Payment. All rent shall be payable in advance on the
first (1st) day of each and every month during the term of this Lease. If
this Lease commences or terminates on a day other than the first (1st) day of
the month, rent shall be prorated accordingly on the basis of a thirty (30) day
month.
2.4 Additional Space. At Tenant's request, Landlord shall
construct, at Landlord's sole cost and expense, approximately 20,000 square
feet of additional space which will be connected to the building currently
located at the Leased Premises. The plans and specifications for such
additional space shall be subject to Tenant's approval. Upon completion of
such additional space and possession by Tenant, it will become subject to all
of the terms of this Lease. Landlord and Tenant shall agree upon the rent for
the additional space in writing prior to commencement of construction. The
rent shall reflect the reasonable rental value of the additional space.
ARTICLE III
USE OF THE PREMISES
3.1 Use of the Premises. Tenant shall not use the Leased Premises
or any part thereof for any purpose other than the conduct of its usual
business without the prior written consent of the Landlord, which consent may
be withheld for any reason whatsoever, nor for any use which would violate any
of the other covenants, agreements, terms, provisions or conditions of this
Lease nor, in any event, for any unlawful purposes or in any unlawful manner.
-2-
<PAGE> 3
3.2 Licenses. If any governmental license or permit shall be
required for the proper and lawful conduct of Tenant's business, Tenant shall
duly procure and thereafter maintain such license or permit and submit the same
for inspection by Landlord. Tenant shall, at all times, comply with the terms
and conditions of each such license or permit.
ARTICLE IV
CARE OF THE PREMISES; ALTERATIONS
4.1 Care of the Premises. Subject to the Landlord's
responsibilities referenced in the last sentence of this paragraph, Tenant
shall keep the Leased Premises and all improvements made thereto during the
term hereof in good condition and repair, and shall yield and deliver up the
same at the expiration of the term in as good condition as when taken, ordinary
wear and tear excepted. Tenant shall also maintain all portions of the Leased
Premises in a clean and orderly condition, free of dirt, rubbish and unlawful
obstructions. All repairs shall be completed and maintenance performed in good
workmanlikemanner, free and clear of all liens and encumbrances arising out of
such work. Landlord shall, at its expense, keep in good condition and repair
the general structure of the building, including, but not limited to, the roof,
floors, walls (excluding glass), sidewalks and the exterior.
4.2 Right of Entry. Landlord shall have the right, upon two (2)
days' prior written notice to Tenant (or without any notice whatsoever in case
of emergency), to enter upon the Leased Premises for the purpose of making any
repairs thereto and performing any work thereon which may be necessary by
reason of Tenant's failure to make any such repairs or perform any such
maintenance work as provided herein after written notice thereof. Except in
case of emergency, the privilege and right of entry shall be exercised at
reasonable times and at reasonable hours without disruption to Tenant's
business. Tenant shall pay the reasonable cost of any such repairs and
maintenance work to Landlord upon demand therefor and upon submission of
satisfactory evidence of Landlord's incurring of such costs, which sums shall
be deemed additional rent hereunder. Except as provided in Article VII, Tenant
shall not be entitled to any abatement of rent on account of work performed
upon the Leased Premises.
4.3 Alterations. Tenant, at its expense, may make changes and
improvements to the Leased Premises, provided any such changes or improvements
shall:
(a) be made only with the prior written consent of
Landlord, which consent shall not be unreasonably withheld;
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(b) comply with all governmental requirements; and
(c) be performed by a licensed contractor first approved
by Landlord, which approval shall not be unreasonably withheld.
ARTICLE V
UTILITIES AND TAXES
5.1 Utilities. Tenant shall pay for utilities used in or about the
Leased Premises, including, without limitation, gas, electricity, light, heat,
power and water. Telephone or other communication services shall also be paid
by Tenant. Tenant shall furnish to Landlord receipts or other satisfactory
proof of payment of such charges upon demand by Landlord.
5.2 Indemnification. Landlord shall not be liable and Tenant will
hold harmless, indemnify and defend Landlord against any failure of water
supply, electric current or other utility, for injury to persons, including
death, or damage to property, or for interference with light or other
easements, however caused, except if due to the negligent acts or omissions of
Landlord (in its capacity as Landlord).
5.3 Modification or Replacement. If the Leased Premises are
required to be modified or replaced for any reason by any utility company or
authorized agency, governmental or otherwise, then Tenant shall comply with the
same at its own cost and shall hold Landlord harmless therefrom, except that
Landlord will be responsible for any such required modifications or
replacements which were requested or ordered prior to the date of this Lease.
5.4 Taxes. Tenant shall pay all property (real and personal) taxes
and the current portion of any special assessments when the same shall become
due and payable from and after the commencement of this Lease through and
including the last day of the term.
ARTICLE VI
INSURANCE
6.1 Tenant's Insurance. Tenant shall, at its sole expense, during
the term hereof, obtain and keep insurance in effect, insuring Tenant and
Landlord in accordance with the following:
(a) Fire and extended coverage insurance on all buildings
and improvements on the Leased Premises in an amount not less than the
full replacement cost adjusted annually with coverage against fire with
standard extended coverage,
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vandalism and malicious mischief, sprinkler leakage (if applicable) and
water damage, or in such other forms and amounts as reasonably required by
Landlord; and
(b) Public liability and property damage insurance
including all activities and operations conducted by Tenant and any other
person in the Leased Premises; such insurance shall be written on a
comprehensive basis in an amount not less than $1,000,000 per injury and
$1,000,000 per accident, or in such other forms and other amounts as
reasonably required by Landlord.
The policies referred to in subparagraphs (a) and (b) shall provide that
the interest of Landlord shall not be invalidated because of any breach or
violation of any warranties, representations, declarations or conditions
contained in the policies and each of such policies shall contain a provision
waiving any right for contribution by Landlord under any other insurance
available to Landlord.
Landlord hereby represents and warrants that the insurance policies
existing prior to the execution of this Lease meet the requirements of this
Article VI.
Tenant shall provide a certificate of such insurance coverage to Landlord,
during the term hereof, upon request, provide additional certificates of such
insurance coverage, each of which shall state that the coverage evidenced
thereby will not expire or be cancelled except upon thirty (30) days prior
written notice to Landlord.
6.2 Indemnification. Tenant hereby covenants and agrees to
indemnify and hold Landlord harmless from all loss, damage, liability and
expense, including reasonable attorney's fees (through appellate and
enforcement proceedings), resulting from injury to person or any loss of or
damage to any property caused by or resulting from any act, omission or
negligence of Tenant or any officer, employee, agent, contractor, invitee or
visitor of Tenant in and about the Leased Premises or the buildings or
improvements located thereon, except to the extent any loss, damage, liability
or expense results from the negligent actions or omissions of Landlord (in its
capacity as Landlord) or any officer, employee, agent, contractor, invitee or
visitor of Landlord. Landlord shall not be liable for any loss or damage to
person or property sustained by Tenant or any other person which may be caused
by the condition of the Leased Premises or the buildings or improvements
located thereon or any visitor, agent, employee, invitee or licensee in or
about the same. Landlord shall not be liable for any loss or damage to person
or property of Tenant or of others located at the Leased Premises by theft or
otherwise or resulting from fire, explosion, falling plaster, steam, gas,
electricity, water, rain or snow or leaks from any part of the Leased Premises
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or from the pipes, appliances or plumbing work or from the roof, street or
subsurface or from any other place or by dampness or for any cause whatsoever.
6.3 Waiver of Subrogation. Landlord and Tenant each hereby waive,
as to the other, all right of recovery which one might otherwise have against
the other, and its agents, employees, invitees, guests or licensees, for any
loss or damage to any property or for any personal injury which is covered by a
policy or policies of insurance, notwithstanding that such loss or damage may
result from the negligence or fault of the non-insured party, or its agents,
employees, invitees, guests or licensees. Any deductible amount included in
such policy or policies shall be treated as though it were recoverable under
the policy or policies. Landlord and Tenant shall each cause their insurance
underwriters to include waiver of subrogation endorsements in all insurance
policies underwritten with respect to this Lease, the Leased Premises or the
buildings and improvements thereon.
ARTICLE VII
DAMAGE AND CONDEMNATION
7.1 Damage. If the Leased Premises or any part thereof shall be
damaged by fire or other casualty, subject to the terms hereof, Landlord shall
proceed with reasonable diligence to repair or cause to be repaired such damage
to the condition in which the Leased Premises were delivered by Landlord to
Tenant, and if the Leased Premises, or any part thereof, shall be rendered
untenantable by reason of such damage, rent hereunder, or an amount thereof
apportioned according to the area of the Leased Premises so rendered
untenantable, if less than the entire Leased Premises, shall be abated for the
period from the date of such damage to the date when the damage shall have been
repaired as aforesaid; provided, however, that if Landlord or any mortgagee of
the Leased Premises (and buildings and improvements) shall be unable to collect
the insurance proceeds (including rent insurance proceeds) applicable to such
damage because of some action or inaction on the part of Tenant, or the
employees, licensees or invitees of Tenant, the consequential damages of
Landlord resulting from such delay shall be paid by Tenant and there shall be
no abatement of rent. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from such damage or the repair thereof. Landlord will not carry insurance of
any kind on Tenant's furniture or on any fixtures or equipment removable by
Tenant under the provisions of this Lease, nor on any improvement, alteration
or betterment made by Tenant to the Leased Premises, and Landlord shall not be
obligated to repair any damage thereto or to replace the same. Notwithstanding
the foregoing, in case the Leased Premises shall be so damaged by such fire or
other casualty that substantial alteration or
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reconstruction of the building shall be required, then Landlord may, at its
option, terminate this Lease and the term and estate hereby granted by
notifying Tenant in writing of such termination within sixty (60) days after
the date of such damage. Notwithstanding any term or provision hereof to the
contrary, Landlord shall not be liable for any damages to Tenant for delays in
commencing or completing repairs to the Leased Premises after fire or other
casualty resulting from adjustment of insurance claims, governmental
requirements or any cause beyond Landlord's reasonable control.
7.2 Condemnation. In the event of the taking or condemnation for
any reason by any public or quasi-public authority, entity or corporation
having the power of eminent domain, the following shall apply:
(a) If the entire Leased Premises is taken or condemned,
this Lease shall terminate effective as of the date of taking.
(b) If a portion of the Leased Premises is taken or
condemned and the remainder is, in Tenant's opinion, not economically
usable by Tenant, Tenant shall notify Landlord of the termination of this
Lease effective as of the date of taking.
(c) If a portion of the Leased Premises is taken or
condemned and the remainder is, in Tenant's opinion, economically usable
by Tenant, this Lease shall terminate as to the portion taken, effective
as of the date of taking, and continue as to the remainder. Landlord
shall, to the extent reasonable, using only the award from such
condemnation proceedings, repair and restore the remainder to its
condition as of the date of taking. Tenant's rent hereunder shall be
reduced by the ratio of the area taken to the area of the Leased Premises
prior to the taking. Any prepaid rent shall be applied against subsequent
rental due.
All damages awarded for any taking under the power of condemnation shall
belong to and be the property of Landlord whether such damages be awarded as
compensation for diminution in value of the leasehold or to the fee of the
Leased Premises; provided, however, that Landlord shall not be entitled to any
portion of the award specifically designated as compensation made to Tenant for
removal and reinstallation of Tenant's movable trade fixtures, moving expenses
or value of Tenant's lost profits.
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ARTICLE VIII
DEFAULT
8.1 Events of Default; Remedies. The occurrence of any of the
following is hereinafter referred to as "Event of Default":
(a) The failure, neglect or refusal of Tenant to pay any
installment of rent or to pay any other moneys, payments or additional
charges payable by Tenant when and as the same shall become due and
payable under the terms of this Lease, if any such default shall continue
for a period of more than fifteen (15) days after written notice of such
default;
(b) The failure, neglect or refusal of Tenant to keep and
perform any of the other terms, covenants, conditions, stipulations,
obligations or agreements contained in this Lease covenanted and agreed to
be kept and performed by Tenant, if any such default shall continue for a
period of more than thirty (30) days after written notice of such default;
or
(c) Tenant becoming bankrupt or insolvent, or filing any
debtor proceedings, or taking or having taken against Tenant in any court
pursuant to any statute either of the United States or of any state a
petition in bankruptcy or insolvency or for reorganization or for
appointment of a receiver or trustee of all or a portion of Tenant's
property, or Tenant making an assignment for the benefit of creditors, or
petitioning for or entering into an arrangement, or Tenant suffering any
lien, levy or encumbrance to be filed against the Leased Premises, or if
this Lease be taken under any writ of execution.
8.2 Remedies On Default. Upon the occurrence of an Event of
Default, Landlord may exercise any or all of the following remedies, in
addition to any other remedy now or subsequently permitted by law:
(a) Right of Re-Entry. Except as otherwise required by
provisions of Michigan law which cannot be waived, Tenant does hereby
authorize and fully empower Landlord or Landlord's agents to reenter and
take possession of the Leased Premises without any previous notice of
intention to re-enter or resort to legal process and to remove all persons
and property from the Leased Premises, and to use such force and
assistance in effecting and perfecting such removal of said persons and
property as may be necessary or advisable to recover exclusive possession
of all of the Leased Premises, whether in the possession of Tenant or of
third persons or otherwise, without being deemed guilty in any manner of
trespass, without becoming liable for any loss or damage occasioned
thereby, and
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without prejudice to any remedies which might otherwise be available to
Landlord. No reentry or taking possession of the Leased Premises by
Landlord shall be construed as an election on its part to terminate this
Lease unless a written notice of such intention be given to Tenant by
Landlord or unless the termination thereof be decreed by a court of
competent jurisdiction.
(b) Right to Relet. Should Landlord elect to reenter and
take possession as herein provided, or should Landlord reenter or take
possession pursuant to legal proceedings or pursuant to any notice
provided by law, Landlord may either terminate this Lease or Landlord may
continue this Lease in full force and effect, and the Lease will continue
in effect as long as Landlord does not terminate this Lease, and Landlord
shall have the right to collect rent from Tenant when due. During the
period Tenant is in default, Landlord may relet the Leased Premises or any
part of the Leased Premises to third parties for Tenant's account. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in
reletting the Leased Premises or any part of the Leased Premises,
including, without limitation, brokers' commissions, reasonable attorneys'
fees (through appellate and enforcement or collection proceedings),
expenses of repairs and remodeling the Leased Premises as may be necessary
in Landlord's judgment to relet the Leased Premises, and like costs.
Reletting can be for a period shorter or longer than the remaining term of
this Lease and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion shall deem advisable.
Tenant shall pay to Landlord the rent due under this Lease on the dates
the rent is due, less the rent Landlord receives from any reletting.
If Landlord elects to relet the Leased Premises as provided in
this subsection, rent that Landlord receives from reletting shall be
applied to the payment of: first, any indebtedness from Tenant to
Landlord other than rent due from Tenant, including all damages sustained
by Landlord as a result of the Event(s) of Default; second, all costs,
including for maintenance, incurred by Landlord in reletting; and, third,
rent due and unpaid under this Lease. After such application of the rent
received from reletting, any sum remaining from the rent Landlord receives
from reletting shall be held by Landlord and applied in payment of future
rent as rent becomes due under this Lease. In no event shall Tenant be
entitled to any excess rent received by Landlord. Landlord reserves the
right to bring any action or legal proceeding for the recovery of any
deficits remaining unpaid as Landlord may deem favorable, from time to
time, without being obliged to wait until the end of the term hereof, or
for the final determination of Tenant's account. No such reletting of the
Leased Premises by Landlord and no other act by Landlord
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allowed by this subsection shall be construed as an election on Landlord's
part to terminate this Lease unless a written notice of such intention be
given to Tenant by Landlord or unless the termination hereof be decreed by
a court of competent jurisdiction.
(c) Right to Terminate. Landlord may, at any time after
reentry and/or reletting, elect to terminate this Lease for the Event of
Default giving rise to such reentry and/or reletting, or, absent such
reentry or reletting without termination, may terminate this Lease at
anytime when there is an Event(s) of Default. No act by Landlord other
than giving written notice of termination to Tenant shall terminate this
Lease. Reentry, acts of maintenance, efforts to relet or reletting the
Leased Premises, or the appointment of a receiver on Landlord's initiative
to protect Landlord's interests under this Lease shall not constitute a
termination of this Lease. On termination of this Lease, Landlord has the
right to recover from Tenant:
(i) The unpaid rent, additional rent, and other
charges that were payable at the time of termination of this
Lease, together with interest thereon from the date due at the
lesser of the highest rate permitted by law or fifteen percent
(15%) per annum;
(ii) The amount by which the unpaid rent,
additional rent and other charges that would have been payable
after the date of termination of this Lease until the time of
award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, together with
interest on such difference as it accrued at two percent (2%)
over NBD Bank, N.A.'s applicable prime rate of interest which
is from time to time in effect;
(iii) The present value, at the time of the
award, of the amount by which the unpaid rent, additional rent
and other charges for the balance of the term after the time
of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided, with such present
value to be computed by discounting such difference at the
lesser of fifteen percent (15%) per annum or the discount rate
of the Federal Reserve Bank of Chicago at the time of the
award; and
(iv) Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant's
default.
8.3 Removal of Property. Should Landlord elect to reenter and
take possession as herein provided, or should Landlord reenter
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and take possession pursuant to legal proceedings or pursuant to any notice
provided by law, Landlord may remove all personal property from the Leased
Premises and store such property, without liability for loss or damage, such
storage to be for the account and at the expense of Tenant. In the event that
Tenant shall not pay the cost of storing any such property after it has been
stored for a period of thirty (30) days or more, Landlord may, at its option,
sell, or permit to be sold, any or all of such property at public or private
sale, in such manner and at such times and places as Landlord in its sole
discretion may deem proper, without notice to Tenant, and shall apply the
proceeds of such sale: first to the costs and expenses of such sale, including
reasonable attorneys' fees (through appellate and enforcement or collection
proceedings); second to the payment of the costs for storing such property;
third to the payment of any other money which may then be or thereafter become
due Landlord from Tenant under any of the terms of this Lease; and fourth, the
balance, if any, to Tenant.
8.4 No Release. Landlord shall in no event, whether or not
Landlord has re-entered or taken possession of the Leased Premises and whether
or not this Lease has been terminated, be obligated to or be responsible in any
way whatsoever for failure to relet the Leased Premises, or in the event that
the Leased Premises are relet, for failure to collect the rent thereof under
such reletting. The failure of Landlord to relet the Leased Premises or any
part thereof shall not release or affect Tenant's liability for rent or
damages.
8.5 Cure. Landlord, at any time after Tenant commits a default,
can cure the default at Tenant's cost. If Landlord at any time, by reason of
Tenant's default, pays any sum or does any act that requires the payment of any
sum, the sum paid by Landlord shall be due immediately from Tenant to Landlord
at the time the sum is paid, and if paid at a later date shall bear interest at
two percent (2%) over NBD Bank, N.A.'s applicable prime rate of interest which
is from time to time in effect from the date the sum is paid by Landlord until
Landlord is reimbursed by Tenant. The sum, together with interest, shall be
additional rent.
8.6 Remedies Cumulative. All rights and remedies of Landlord and
Tenant under this Lease are cumulative and none shall exclude any other rights
or remedies provided by law, specifically including, but not limited to,
summary proceedings pursuant to MCLA 600.5701, et seq.
ARTICLE IX
ACCESS TO LEASED PREMISES
9.1 Access. Landlord and Landlord's authorized representatives
shall have the right to enter upon the Leased Premises at all
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reasonable hours for the purpose of inspecting the same and, for the period of
twelve (12) months prior to termination of this Lease, for the purpose of
reletting the Leased Premises; provided, however, Landlord will not
unreasonably interfere with Tenant's business when exercising such right of
access to the Leased Premises.
ARTICLE X
HOLDING OVER
10.1 Holding Over. It is hereby agreed that, in the event Tenant
holds over after the termination of the term of this Lease, the tenancy shall
be from month-to-month in the absence of a written agreement to the contrary.
ARTICLE XI
FINANCIAL STATEMENTS
11.1 Financial Statements. Tenant shall submit a financial
statement to any proposed financier or purchaser, upon request, if Landlord is
required to have said statement for financing or sale of the Leased Premises,
said statement to be held confidential by any financier or proposed purchaser.
ARTICLE XII
MECHANICS LIENS
12.1 Mechanics Lien. Tenant shall not create or permit to be
created nor allow to remain, and will promptly discharge, at its sole cost and
expense, any lien, encumbrance or charge upon the Leased Premises or any part
thereof, except such as are created by Landlord or Landlord's mortgagee(s).
ARTICLE XIII
ASSIGNMENT AND SUBLETTING
13.1 Assignment and Subletting. Tenant shall not, without
Landlord's prior written consent, which consent will not be unreasonably
withheld, have the right to sublease the Leased Premises or assign its rights
under this Lease. Notwithstanding any such sublease or assignment, Tenant and
all assignees and sublessees shall remain liable for the performance of all of
Tenant's obligations contained in this Lease. Any assignee or sublessee will
be required to execute an instrument in writing
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assuming, along with Tenant and jointly and severally, all of Tenant's
obligations and liabilities to Landlord.
13.2 Sale or Transfer. If the Leased Premises is sold or
transferred, Landlord shall be automatically and entirely released from all of
its covenants and obligations under this Lease from and after the date of such
conveyance or transfer. The new owner or transferee shall assume all of
Landlord's obligations to Tenant under this Lease. Tenant agrees to recognize
and attorn to such new owner or transferee as Landlord.
ARTICLE XIV
ESTOPPEL AGREEMENT
14.1 Estoppel Agreement. Tenant shall, without charge and at any
time and from time to time, within ten (10) days after request by the Landlord,
certify by written instrument, duly executed, acknowledged and delivered to any
mortgagee, assignee of any mortgagee or purchaser, or any proposed mortgagee,
proposed assignee or proposed purchaser, or any other person, firm or
corporation specified by Landlord:
(a) That this Lease is unmodified and in full force and
effect (or, if there have been modifications, that the same is in full
force and effect as modified and stating the modifications);
(b) Whether or not there are then existing, to the best
of its knowledge, any setoffs or defenses against the enforcement of
any of the agreements, terms, covenants or conditions hereof upon the
part of Tenant to be performed or complied with (and, if so,
specifying the same); and
(c) The dates, if any, to which the rental(s) and other
charges hereunder have been paid in advance.
ARTICLE XV
NON-LIABILITY AND INDEMNIFICATION
15.1 Non-Liability. Neither Landlord nor its agents shall be
liable for any injury or damage to persons or the property of Tenant, its
agents, employees, visitors, invitees or licensees in, upon or about the Leased
Premises, except to the extent that such injury or damage results from the
negligence of Landlord (in its capacity as Landlord).
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15.2 Indemnification. Tenant hereby holds harmless, indemnifies
and agrees to defend Landlord and its agents against any and all liability,
damages, expenses, fees, penalties, causes of action, suits, costs, legal fees,
claims or judgments arising from injury to persons or property occasioned by
any act or acts, omission or omissions of Tenant, its agents, servants,
contractors, employees, visitors, invitees or licensees, occurring in, upon or
about the Leased Premises.
15.3 Recourse Against Landlord. In the event Landlord shall
neglect or fail to perform or observe any of the covenants, provisions or
conditions contained in this Lease on its part to be performed or observed
within thirty (30) days after written notice of default or if more than thirty
(30) days shall be required because of the nature of the default, if Landlord
shall fail to proceed diligently to cure such default after written notice,
then in that event, Landlord shall be responsible to Tenant for any and all
damages sustained by Tenant as a result of Landlord's breach.
ARTICLE XVI
SURRENDER OF PREMISES
16.1 Surrender. Upon the expiration or other termination of this
Lease, Tenant shall immediately surrender possession of the Leased Premises to
Landlord, in broom-clean condition, together with all improvements or additions
in or to the Leased Premises, by whomsoever made, in the condition as received,
or first installed, ordinary wear and tear excepted.
16.2 Fixtures. All trade fixtures, improvements and light fixtures
installed by Tenant in connection with the business conducted by it on the
Leased Premises shall remain the property of Tenant and may be removed by it
during or at the expiration of this Lease; provided, however, that Tenant is
not in default under any of the provisions of this Lease. Any damage caused by
such removal is to be repaired by Tenant if so required by Landlord.
16.3 Removable Personal Property. Upon expiration of this Lease,
Tenant, at its expense, shall remove all moveable office furnishings and
equipment installed by Tenant at its expense. Tenant agrees that it will pay
the cost of repairing any damage to the Leased Premises or to the buildings
thereon arising from the removal of any property which it is permitted or
obligated to remove from the Leased Premises. Any property left on the Leased
Premises after the expiration of this Lease shall be deemed conclusively to
have been abandoned and to be the property of Landlord to dispose of as
Landlord deems most expedient.
16.4 Indemnification. Tenant shall indemnify, defend and hold
Landlord harmless from and against any loss or liability resulting
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from delay by Tenant in surrendering the Leased Premises, including, without
limitation, any claims made by any succeeding tenant.
ARTICLE XVII
SUBORDINATION TO MORTGAGES; ATTORNMENT
17.1 Subordination. This Lease is and shall be subject and
subordinate to any mortgage or mortgages now in force or which shall at any
time hereafter be placed upon the Leased Premises or the buildings thereon, and
to each and every advance heretofore or hereafter made under and pursuant to
any such mortgage(s). Tenant agrees that it will, upon demand and without
charge, execute and deliver such instruments as shall be required by any
mortgagee or proposed mortgagee to confirm or to effect more fully
subordination of this Lease to the lien of any such mortgage or mortgages.
Notwithstanding such subordination, Tenant's right to quiet enjoyment of the
Leased Premises shall not be disturbed if Tenant is not in default hereunder
and so long as Tenant shall pay the rent, additional rent and any other charges
and observe and perform all of the provisions of this Lease, unless this Lease
is otherwise terminated pursuant to its terms.
17.2 Attornment. In the event of any sale of the Leased Premises
or in the event any proceedings are brought for the foreclosure of, or in the
event of conveyance by deed in lieu of foreclosure of, or in the event of any
exercise of the power of sale under, any mortgage made by Landlord with respect
to the Leased Premises, Tenant hereby agrees to attorn to, and agrees to
execute instruments reasonably satisfactory to, the new owner, whereby Tenant
attorns to such new owner and recognizes such new owner as Landlord under this
Lease.
ARTICLE XVIII
QUIET ENJOYMENT
18.1 Quiet Enjoyment. Landlord covenants that if, and so long as,
Tenant keeps and performs each and every covenant, agreement, term, provision
and condition herein contained on the part and on behalf of Tenant to be kept
and performed, Tenant shall quietly enjoy the Leased Premises without hindrance
or molestation by Landlord or by any other person lawfully claiming the same,
subject to the covenants, agreements, terms, provisions and conditions of this
Lease or to any mortgage to which this Lease is subject and subordinate.
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ARTICLE XIX
ENVIRONMENTAL REPRESENTATIONS; COVENANTS;
WARRANTIES AND INDEMNIFICATION
19.1 Hazardous Substance. Hazardous Substances include, without
limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et. seq.),
the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901,
et. seq.), and in the regulations adopted and publications promulgated pursuant
thereto, or any other Federal, state or local governmental law, ordinance, rule
or regulation.
19.2 Warranties. The provisions of this Article shall be in
addition to any and all other obligations and liabilities Tenant may have to
Landlord hereunder, and in common law, and shall survive after termination of
this Lease.
Tenant shall not cause or permit any Hazardous Substances to be
released, brought upon, stored, produced, emitted, disposed of or used upon,
about or beneath the Premises by Tenant, its agents, employees, contractors or
invitees.
19.3 Indemnification. Tenant shall indemnify, defend and hold
Landlord, and its employees, agents, officers and directors, harmless from and
against any and all cost, loss, liability, damage and expense, including costs
associated with administrative and judicial proceedings and attorneys' and
consultants' fees, ever suffered or incurred by Landlord on account of (i) the
presence upon, about or beneath the Premises of any Hazardous Substances or of
any chemical substance requiring remediation under any federal, state or local
statute, regulation, ordinance or policy; (ii) the breach of any of the
provisions of this Lease; or (iii) necessary for Landlord to make full economic
use of the Premises, or otherwise required under this Lease.
Notwithstanding any other obligation of Tenant to indemnify Landlord
pursuant to this Lease, Tenant shall, at its sole cost and expense, promptly
take all actions required by any federal, state or local governmental agency or
political subdivision or necessary for Landlord to make full economic use of
the Premises, which requirements or necessity arise from the presence upon,
about or beneath the Premises of any Hazardous Substances. Such actions shall
include, but not be limited to, the investigation of the environmental
condition of the Premises, the preparation of any remedial investigation and
feasibility studies or reports and the performance of any cleanup, remediation,
removal or restoration work. Tenant shall take all actions necessary to
restore the
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Premises, notwithstanding any lesser standard of remediation allowable under
applicable law or governmental policies. Tenant shall nevertheless obtain
Landlord's approval prior to undertaking any activities required by this
Section, which approval shall not be unreasonably withheld so long as such
actions would not potentially have a material adverse long-term or short-term
effect on the Premises or any other property or business owned or operated by
Landlord.
Tenant agrees to promptly provide Landlord with a copy of any letter,
inquiry, demand or complaint received by Tenant from any state or federal
agency, authority or other third party regarding the release or threatened
release of Hazardous Substances on, into, upon or from the Premises. Tenant
agrees to provide Landlord with copies of any notifications of releases of
Hazardous Substances which are given by or on behalf of Tenant to any federal,
state or local agencies or authorizes with respect to the Premises. Such
copies shall be sent to Landlord concurrently with their being mailed or
delivered to the governmental agencies or authorities.
Tenant shall conduct and complete all investigations, including a
comprehensive environmental audit, studies, sampling and testing, and all
remedial, removal and any other actions necessary to clean up and remove all
Hazardous Substances on, under, from or affecting the Premises as required by
all applicable Federal, state and local laws, ordinances, rules, regulations
and policies to the satisfaction of Landlord, and in accordance with the orders
and directives of all Federal, state and local governmental authorities.
ARTICLE XX
OPTION TO PURCHASE
20.1 Granting of Option and Price. So long as Tenant shall not be
in material default hereunder, Tenant shall have the option to purchase the
Leased Premises from Landlord at any time during the initial or renewal term
hereof in accordance with the terms and conditions of the purchase agreement
attached as Exhibit B to this Lease. The purchase price during the initial
term shall be Two Million Dollars ($2,000,000) if the additional space has not
been constructed pursuant to paragraph 2.4 above and Two Million Dollars plus
the actual cost incurred by Landlord in constructing the additional space if
the additional space has been constructed pursuant to paragraph 2.4 above. The
purchase price during the renewal term shall be Two Million Three Hundred
Thousand Dollars ($2,300,000) if the additional space has not been constructed
pursuant to paragraph 2.4 above and Two Million Three Hundred Thousand Dollars
plus the actual cost incurred by Landlord in constructing the additional space
if the additional space has been constructed pursuant to paragraph 2.4 above.
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20.2 Exercise of Option and Closing. The election of Tenant to
exercise this option must be evidenced by a written notice delivered to
Landlord. If Tenant exercises the option, Landlord shall deliver to Tenant a
current title insurance policy showing title to be merchantable, free and clear
of all liens, easements and encumbrances except such as are in existence as of
the date of this Lease. Transfer of title by Landlord to Tenant shall be
effected by warranty deed conveying merchantable title. The closing shall be
held within sixty (60) days after the exercise of the option, after which this
option shall be deemed to have expired.
ARTICLE XXI
MISCELLANEOUS
21.1 Notices. All notices permitted or required hereunder shall be
in writing and either by mail or personal delivery. If by mail, notice shall
be deposited in the United States mails, postage prepaid, registered or
certified mail, return receipt requested, and addressed to the party to whom
notice is directed. If by personal delivery, notice shall be personally
delivered to the party to whom notice is directed. Notice shall be deemed
effective on the date postmarked, if by mail, or on the date of delivery, if
personally delivered.
21.2 Severability. The invalidity or unenforceability of any
provision of this Lease shall not affect the validity or enforceability of any
remaining provisions and this Lease shall be construed in all respects as if
any invalid or unenforceable provision were omitted.
21.3 Waiver. No term, condition, covenant or provision contained
in this Lease may be waived except in a writing signed by the waiving party.
No oral statements, course of conduct or course of dealing shall be deemed a
waiver. No waiver by any party hereto of any violation or breach of this Lease
shall be deemed or construed to constitute a waiver of any other violation or
breach, or as a continuing waiver of any violation or breach.
21.4 Applicable Law. This Lease shall be interpreted, construed
and governed according to the laws of the State of Michigan.
21.5 Captions. The captions or headings to the various paragraphs
contained in this Lease are for convenience only and shall to no extent affect
the meaning, scope or interpretation hereof.
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21.6 Counterparts. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one instrument.
21.7 Binding Effect. This Lease shall be binding upon and inure to
the benefit of the parties hereto as well as their respective heirs, devisees,
executors, administrators, personal representatives, successors and assigns.
21.8 Merger and Modification. Except for the Stock Purchase
Agreement, dated October 13, 1994 among Larizza Industries, Inc., an Ohio
corporation or its appointed subsidiary, Diane M. Buzzitta, Louis V. Buzzitta,
Joseph T. Buzzitta, James V. Buzzitta, LVB Industries, Inc., a Michigan
corporation and Tenant, and any other document or agreement referenced therein,
this constitutes the entire agreement between the parties with respect to the
subject matter hereof and any prior discussions, negotiations and agreements
between the parties are merged herein. No amendment or modification of this
Lease shall be enforceable except if in writing and signed by the party against
whom enforcement is sought. Notwithstanding any term or provision in this
Lease to the contrary,
(i) the representations, warranties, covenants and
indemnifications of and by the Landlord and the other Sellers
contained in the Stock Purchase Agreement are incorporated into this
Lease and shall continue to be binding upon the Landlord and the other
Sellers, jointly and severally, after the execution of this Lease;
(ii) to the extent that there is any conflict, difference
or inconsistency between the terms of this Lease and the terms of
Stock Purchase Agreement, then the terms of the Stock Purchase
Agreement shall govern and control the rights and liabilities of the
Landlord and Tenant; and
(iii) if any breach by the Tenant of any representation,
warranty, covenant or indemnification under this Lease is caused by,
arises from, or is related to, any breach by the Landlord or any other
Seller of the terms of the Stock Purchase Agreement, the Tenant shall
have no liability or obligation with respect to such breached
representation, warranty, covenant or indemnification under this
Lease, and the Landlord and the other Sellers shall be jointly and
severally liable to Tenant with respect to such breach in accordance
with the terms of the Stock Purchase Agreement.
21.9 Payments Due on Sundays and Holidays. In any case where a
payment is due under the terms of this Lease on a Sunday or a legal holiday,
payment need not be made on such date but must be
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made on the next succeeding business day which is not a Sunday or legal
holiday.
21.10 Cumulative Remedies. The remedies provided in this Lease for
the benefit of Landlord and Tenant shall be cumulative.
21.11 Attorneys Fees and Costs. In the event of litigation for breach
or alleged breach of this Lease by either party, the prevailing party shall be
entitled to recover its reasonable attorneys fees and costs through all
appellate and enforcement or collection proceedings. [The signatures are
contained on the following page 20.]
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<PAGE> 21
The parties hereto have executed this Lease as of the day and year
first written above.
LANDLORD:
/s/ LOUIS V. BUZZITTA
Louis V. Buzzitta
/s/ CATHERINE F. BUZZITTA
Catherine F. Buzzitta
TENANT:
HUGHES PLASTICS, INC.,
a Michigan corporation
By: /s/ TERENCE C. SEIKEL
Its: CFO
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<PAGE> 22
EXHIBIT A
Legal Description
Lot 19, Assessor's Plat No. 1, City of St. Joseph, Berrien County,
Michigan, according to the plat thereof recorded October 18, 1973, in
Volume 22 of Plats, Page 34, Berrien County, Michigan Records.
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<PAGE> 23
Exhibit B
AGREEMENT
OF
PURCHASE AND SALE
THIS AGREEMENT made this _______ day of _________, _____, by and between
(i) LOUIS V. BUZZITTA and CATHERINE F. BUZZITTA, his wife (jointly, "Seller"),
with offices at Suite 602, 221 Michigan N.E., Grand Rapids, Michigan 49503;
and (ii) LARIZZA INDUSTRIES, INC., an Ohio corporation or its designated
subsidiary ("Purchaser"), with offices at 201 W. Big Beaver, Suite 1040, Troy,
Michigan 48084.
R E C I T A L S :
A. Seller is the owner of certain real estate and a manufacturing and
office facility situated thereon located in Berrien County, Michigan, legally
described as set forth in Exhibit A, together with all tenements, easements,
hereditaments, privileges and appurtenances appertaining thereto, and all items
set forth in Article I hereof.
B. Seller has agreed to sell and Purchaser has agreed to purchase the
Property (as defined below) in accordance with the terms and conditions set
forth herein.
ACCORDINGLY, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Seller and Purchaser do hereby
mutually covenant and agree as follows:
ARTICLE I
PROPERTY
As used herein, the term "Property" shall be deemed to include Seller's
entire right, title and interest in and to:
1.1 the real estate described in attached Exhibit A (the "Land"),
together with all easements, air, mineral, oil and gas rights, all tenements,
hereditaments, privileges and appurtenances thereto belonging or in any way
appertaining thereto;
1.2 all buildings and other improvements situated upon the Land (and,
together with the Land, sometimes referred to herein as the "Real Estate");
<PAGE> 24
1.3 all fixtures, equipment, furniture, supplies and other tangible
personal property of every kind and nature owned by Seller, located on or about
the Real Estate or used or useable in conjunction with the acquisition,
development, financing, leasing, maintenance and/or operation of the Real
Estate, including, but not limited to, all heating, lighting, plumbing,
electrical, air-conditioning, telephone, air filtration and treatment fixtures
and equipment, hot water heaters, security, television and cable equipment,
carpeting, furnaces, heating controls, motors, boiler pressure systems and
equipment, rest room fixtures, appliances, shelving, partitioning, ventilators,
incinerators, disposals, fire sprinkling system equipment, office equipment and
furniture, landscaping, maintenance and snow removal equipment and other
supplies and disposables, if any. A list of certain of such fixtures,
equipment, and personalty to be conveyed is attached hereto as Exhibit B and is
made a part hereof;
1.4 all right, title and interest of Seller in and to adjacent
streets, roads, alleys, or rights of way in any land lying in the bed of any
street, road or avenue, open or proposed, at the foot of or adjoining the Real
Estate to the center line thereof;
1.5 any intangible personal property located on or about or arising
out of the ownership of the Property;
1.6 any pending or future award made in condemnation or to be made in
lieu thereof, and any unpaid award for damage to the Real Estate;
1.7 the use of appurtenant easements, whether or not of record, strips
and rights-of-way abutting, adjacent, contiguous, or adjoining the Real Estate;
1.8 all licenses, permits and franchises issued by any Federal, state
or local authorities, relating to the development, use, maintenance or
operation of the Property;
1.9 all architectural and construction plans, specifications and
drawings relating to the construction of any improvements on the Real Estate
and all unexpired claims, warranties, guaranties and sureties received by
Seller in connection with the construction, improvement, equipment or repair of
or on the Property;
1.10 all logos, art work, signs, brochures, artists renderings and
other descriptive or promotional materials concerning the Property; and
1.11 all contracts relating to the Property, all of which are described
in attached Exhibit C (the "Contracts").
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<PAGE> 25
ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE
Subject to the terms and conditions herein contained, Seller agrees to
sell to Purchaser, and Purchaser agrees to purchase from Seller, the Property.
The total purchase price for the Property ("Purchase Price") shall be
determined as follows:
(a) if Purchaser exercises its option to purchase the Property
during the Initial Term (as such term is defined in that certain Lease
dated October __, 1994 between Seller, as lessor, and Purchaser, as
tenant [the "Lease"]), the Purchase Price shall be the sum of (i) Two
Million ($2,000,000) Dollars plus (ii) the out of pocket costs incurred
by Seller in constructing the additional space within the Property in
accordance with the provisions of the Lease; and
(b) if Purchaser exercises its option to purchase the Property
during the Renewal Term, as such term is defined in the Lease, the
Purchase Price shall be the sum of (i) Two Million Three Hundred Thousand
($2,300,000) Dollars plus (ii) the out of pocket cost incurred by Seller
in constructing the additional space within the Property in accordance
with the provisions of the Lease.
The Purchase Price shall be paid at closing in cash, cashier's check, or wire
transfer of immediately available federal funds, plus or minus the closing
adjustments and prorations set forth herein.
ARTICLE III
CLOSING
3.1 Consummation of the transactions described in this Agreement
("Closing") shall take place on such date ("Closing Date") as is ninety (90)
days from the Effective Date (or such earlier date as may be designated in
writing by Purchaser to Seller), unless extended pursuant to another provision
of this Agreement. If the Closing Date identified in the previous sentence is
a Saturday, Sunday or legal holiday, then Closing shall occur on the next
immediately following business day. Closing shall be held at 10:00 a.m., local
time, at the offices of Purchaser's attorney, Honigman Miller Schwartz and
Cohn, 2290 First National Building, Detroit, Michigan 48226, or at such other
time as may be mutually agreeable to the parties.
3.2 At the time and place of Closing, all of the closing items
described in Article IX, including all closing proceeds, shall be tendered to
the Title Company. The Title Company shall be authorized to consummate the
closing of the transaction contemplated hereunder at such time as the
applicable documents have been delivered to the Title Company and it is
prepared to issue the owner's policy of title insurance in accordance with the
provisions of Section 5.1 (a) below.
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ARTICLE IV
CONDUCT OF SELLER
Seller agrees that from the date of this Agreement to the Closing Date,
Seller shall:
(a) Refrain from transferring any of the Property or creating
on the Property any easements, liens, mortgages, encumbrances or other
interests which would affect the Property or Seller's ability to comply
with the terms of this Agreement;
(b) Refrain from entering into any contracts or other
commitments regarding the Property without the prior written consent of
the Purchaser, which consent shall not be unreasonably withheld; and
(c) Pay and perform all of its obligations under any mortgage
loan secured by the Property.
ARTICLE V
TITLE AND SURVEY
5.1 As evidence of title, Seller agrees, at Seller's sole cost and
expense, to furnish to Purchaser, as soon as possible, but in no event later
than fifteen (15) days following the Effective Date:
(a) A current commitment ("Commitment") from a title insurance
company approved by Purchaser (the "Title Company") to issue to
Purchaser, at Closing, its ALTA Form B Owner's title insurance policy,
without standard exceptions, and containing such endorsements as
Purchaser (or a prudent lender) may require, in the amount of the
Purchase Price, insuring title to the Property to be in good and
marketable condition, free and clear of any liens, encumbrances or
exceptions other than the Permitted Exceptions (defined below); and
(b) A current survey of the Property acceptable to Purchaser,
prepared by a registered land surveyor or engineer in the State of
Michigan satisfactory to Purchaser, certified to Seller, Purchaser, the
Title Company and Purchaser's lender (if any), and prepared in accordance
with the minimum standard detail requirements for land title surveys
established in 1986 as the Standard Detail Requirements of the American
Land Title Association and the American Congress on Surveying and
Mapping. Such survey shall contain such additional information and
certifications as Purchaser or the Title Company shall require. The
survey shall have all corners staked and shall set forth all improvements
and easements existing on the Property as of the date of this Agreement.
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<PAGE> 27
Such survey shall not disclose any encroachments, gaps, overlays or
boundary disputes. The legal description of the Property set forth in
the Commitment shall conform exactly to the legal description set forth
in such survey.
For purposes hereof, "Permitted Exceptions" shall mean those matters to
which the title to the Property shall be subject upon Seller's conveyance
thereof to Purchaser and which matters shall include only (i) such easements
and restrictions of record and applicable zoning ordinances as will not, in
Purchaser's sole judgment, interfere with the use of the Property as a
manufacturing and office facility; (ii) property taxes for the year in which
the Closing Date shall occur; and (iii) such other matters of which Purchaser
may approve in its discretion upon examining the Commitment.
5.2 Purchaser shall notify Seller within fifteen (15) days after the
date of receipt of (i) the Commitment and all legible copies of all underlying
documents disclosed in the Commitment as exceptions (including a copy of the
recorded plat and tax maps of the Property) and (ii) the survey, that the title
is not in the condition required for performance hereunder, or that the terms
of Section 5.1 have not been satisfied. Seller shall have fifteen (15) days
from the time that it is notified of the particular defect claimed to provide
Purchaser with a revised title commitment evidencing that such defect has been
remedied and/or insured over in a manner satisfactory to Purchaser, or a
revised survey, as the case may be. If Seller is unable to obtain such revised
title commitment or revised survey within said fifteen (15) day period,
Purchaser shall have the option (i) to proceed with this transaction, in which
event the warranty deed covering the Property will be executed and delivered
subject to any such defects (provided, however, that in the event any of such
defects result from liens or encumbrances having liquidated amounts which
Seller is not actively contesting through judicial or other similar
proceedings, Purchaser may, at its option, pay such amounts at any time prior
to the Closing Date and shall receive full credit for such payment(s) against
the Purchase Price) or (ii) to cancel this Agreement and be released of any and
all liability hereunder.
ARTICLE VI
SELLER'S WARRANTIES
Each of the representations, warranties, covenants and indemnifications
set forth in the Stock Purchase Agreement dated October 13, 1994 among LVB
Industries, Inc., Seller, Hughes Plastics, Inc. and Purchaser ("Stock Purchase
Agreement") is hereby incorporated herein by reference, effective as of the
Effective Date. Seller acknowledges that Purchaser has relied and shall
continue to rely on such representations, warranties, covenants and
indemnifications in connection with the consummation of the transactions
described herein. Such representations, warranties and covenants shall
continue to be true, complete and correct as of the date of Closing and shall
survive the Closing and the delivery of the Closing Documents. Notwithstanding
the foregoing, the provisions in the Stock Purchase Agreement which limit the
survival of such
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representations, warranties, covenants and indemnifications to five years after
the closing of the Stock Purchase Agreement shall continue to be operative and
binding on Seller and Purchaser under this Agreement.
ARTICLE VII
DEFAULTS
In the event of default by either party hereunder prior to or on the
Closing Date, the non-defaulting party may, at its option (i) cancel this
Agreement, (ii) specifically enforce the terms and conditions of this Agreement
or (iii) exercise any other right or remedy, all of which rights and remedies
shall be cumulative.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
Anything contained in this Agreement to the contrary notwithstanding,
Purchaser shall have no obligation to consummate this transaction unless the
conditions set forth in this Article VIII shall have either been satisfied or
waived by Purchaser in writing. If not satisfied or waived by the Closing
Date, the Closing Date may, at Purchaser's option, be extended for an
additional 20 days in order that the conditions may be satisfied. In the event
Seller fails to satisfy such conditions by the Closing Date, as extended, and
Purchaser fails to waive an unsatisfied condition, then Purchaser shall have no
obligation to consummate the sale. Such conditions are as follows:
(a) All representations, warranties and covenants of Seller
hereunder shall be true and correct on the Closing Date;
(b) At Closing, the Title Company shall be prepared to issue an
owner's title insurance policy conforming to the requirements of Section
5.1(a) above;
(c) Between the date of this Agreement and the Closing Date,
there shall have been no intervening destruction, damage to, or proposed
or actual condemnation of, the Property or any portion thereof;
(d) Seller shall have performed all of its other obligations
under this Agreement; and
(e) Seller shall not have become insolvent or filed any
petition or permitted the initiation of any judicial or other proceeding
for protection from creditors, bankruptcy,
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arrangement, reorganization, compensation or liquidation under the laws
of the United States, any state or any other jurisdiction.
In the event any of the conditions set forth in items (a), (b), (d) or
(e) above shall fail, such failure shall be treated as a default by Seller
hereunder and shall entitle Purchaser to exercise its rights and remedies
pursuant to Article VII hereof.
ARTICLE IX
CLOSING DOCUMENTS
At Closing, Seller shall execute and deliver to Purchaser (as required)
and Purchaser shall execute and deliver to Seller (as required) the following:
9.1 Seller shall deliver to Purchaser a good and sufficient warranty
deed conveying fee simple, marketable title to the Property to Purchaser,
subject only to the Permitted Exceptions, in form acceptable to Purchaser.
9.2 Seller shall execute and deliver to Purchaser an assignment of the
Contracts which Purchaser has elected to accept assignment of and the
originally executed Contracts. Seller shall indemnify and hold Purchaser
harmless from any liability which shall have accrued under the Contracts prior
to the Closing Date and Purchaser shall indemnify and hold Seller harmless from
any liability which shall accrue under the Contracts accepted by Purchaser on
or after the Closing Date.
9.3 Seller shall execute and deliver to Purchaser an assignment of all
claims, guaranties, warranties, indemnifications and all other rights, if any,
which Seller may have against suppliers, laborers, materialmen, contractors,
subcontractors, architects and engineers arising out of or in connection with
the installation, construction and maintenance of the improvements, fixtures
and personal property on or about the Property, including but not limited to
those arising under the Contracts.
9.4 Seller shall deliver to Purchaser all existing plans,
specifications and as-built drawings in Seller's possession relating to the
Property.
9.5 Seller shall deliver to Purchaser all licenses and certificates of
occupancy or such other comparable certificates or documents issued by the
appropriate governmental authority with respect to the Property or any part
thereof.
9.6 Seller shall execute and deliver a bill of sale covering all
fixtures, equipment and other personal property owned by Seller and used or
usable in connection with the operation of the Property; such bill of sale
shall include the property identified in attached Exhibit B and shall warrant
unencumbered title thereto and that such equipment is in good operating
condition.
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9.7 Seller shall provide and assign to Purchaser all other agreements,
if any, which Purchaser deems necessary for access and utilities to service the
Property.
9.8 Seller shall execute and deliver to Purchaser such affidavit as
the Title Company may require to remove its standard printed exceptions
relating, among other things, to mechanics liens and rights of parties in
possession, and will deliver such receipts, waivers of liens, sworn statements,
indemnifications and the like as may be necessary to evidence the lien free
status of the Property.
9.9 Seller and Purchaser shall execute and deliver to each other a
closing statement showing the amounts by which the Purchase Price shall have
been adjusted as of the Closing Date in the following manner to the extent that
the following are not the obligations of tenant under the Lease:
(a) Purchaser shall receive credit for the premium payable to
the Title Company in the event Seller shall not have theretofore paid
said premium and have furnished a paid receipt therefor to Purchaser.
(b) All real estate taxes and assessments which are a lien
against the Property as of the date of Closing shall be paid in full by
Seller. Current real estate taxes shall be prorated based on the basis
generally utilized in the county in which the Property is located, based
on the number of days the Property is owned by Seller and Purchaser
respectively. In the event the taxing authority has not issued a bill
for the current taxes, the parties shall base their proration on the
amount of taxes for the prior year.
(c) Seller shall pay all real estate transfer taxes and
documentary stamps.
(d) Seller shall pay all water, sewer, utility charges, and
other operating expenditures through the Closing Date. If final readings
have not been taken, estimated charges shall be prorated between the
parties and appropriate credits given, and post-closing adjustments shall
be made when the actual billings are received or an escrow shall be
established to provide for payment of utility and other maintenance
payables.
(e) Any amounts payable by or to the owner of the Property
under any of the Contracts accepted by Purchaser shall be prorated
between the parties and appropriate credits given.
(f) If Seller is a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code ("Code"), Purchaser shall
withhold the appropriate taxes required under Section 1445 of the Code.
9.10 Seller shall furnish Purchaser with an affidavit stating that
Seller is not a "foreign person" within the meaning of Section 1445(f)(3) of
the Code or any successor provision of similar content, in which event the
adjustment described in Section 9.9(f) shall not be made.
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9.11 Seller shall furnish Purchaser with a current "UCC search" of all
state and local records demonstrating the absence of any security interests or
liens on any portions of the improvements or personal property located on the
Property, which shall reasonably satisfy the Purchaser that title to such
personal property and improvements are in the condition required for
performance hereunder.
9.12 Each party shall deliver any and all other documentation
reasonably required by Purchaser, Seller, their attorneys and/or the Title
Company to consummate the transaction described herein and to cause the owner's
title insurance policy described in Section 6.1(a) hereof to be issued and
delivered to Purchaser at Closing.
At Closing, Seller shall deliver actual and complete possession of the
Property to Purchaser.
ARTICLE X
FIRE DAMAGE
In the event that any improvements located upon the Property shall be
damaged or destroyed by fire, storm or other casualty on or before the Closing
Date and the cost to repair such casualty loss shall exceed Twenty Thousand
($20,000.00) Dollars, Purchaser shall have the right to terminate its
obligations under this Agreement within fifteen (15) days after receiving
notice of such casualty. In the event Purchaser shall not be entitled to, or
shall not elect to terminate its obligations under this Agreement, Purchaser
shall be entitled to receive an absolute assignment from Seller of any interest
Seller may have otherwise had in the proceeds of any insurance on the Property
(including any rent loss insurance allocable to the period from and after the
Closing Date) and Seller shall pay to Purchaser at Closing the amount of any
deductible.
ARTICLE XI
CONDEMNATION
In the event that notice of any action, suit or proceeding shall be given
prior to the Closing Date for the purpose of condemning any part of the
Property, Purchaser shall have the right to terminate its obligations hereunder
within fifteen (15) days after receiving notice of such condemnation
proceeding, and upon such termination, the proceeds resulting from such
condemnation shall be paid to Seller. In the event Purchaser shall not elect
to terminate its obligations hereunder, the proceeds of such condemnation shall
be assigned and belong to Purchaser.
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ARTICLE XII
BROKER
Each party represents and warrants to each other that it has not dealt
with a real estate broker or salesperson in connection with the transaction.
Each party agrees to indemnify and hold the other harmless from all loss,
damage, costs and expenses (including attorneys' fees) that the other party may
suffer as a result of any claim brought by any broker or finder with whom such
party may have dealt in connection with this transaction.
ARTICLES XIII
MISCELLANEOUS
13.1 This Agreement and the exhibits attached hereto, the Stock
Purchase Agreement, the Lease and the other documents referenced therein embody
the entire agreement between the parties in connection with this transaction
and there are no oral or parole agreements existing between the parties
relating to this transaction which are not expressly set forth herein and
covered hereby. This Agreement may not be modified except in writing signed by
all parties.
13.2 Failure of either party to complain of any act or omission on the
part of the other party, no matter how long the same may continue, shall not be
deemed to be a waiver by such party of any of its rights hereunder. No waiver
by any party at any time, express or implied, of any breach of any provision of
this Agreement shall be deemed a waiver or a breach of any other provision of
this Agreement or a consent to any subsequent breach of the same or any other
provision. If any action by any party shall require the consent or approval of
another party, such consent or approval of such action on any one occasion
shall not be deemed a consent to or approval of said action on any subsequent
occasion or a consent to or approval of any action on the same or any
subsequent occasion.
13.3 The captions, section numbers and article numbers appearing in
this Agreement are inserted only as a matter of convenience, and do not define,
limit, construe or describe the scope or intent of such sections or articles of
this Agreement nor in any way affect this Agreement.
13.4 No party other than Seller and Purchaser, their heirs, personal
representatives, successors and assigns, shall have any rights to enforce or
rely upon this Agreement, which is binding upon and made solely for the benefit
of Seller and Purchaser, their heirs, personal representatives, successors and
assigns, and not for the benefit of any other party.
13.5 Notice shall be deemed as given hereunder upon personal delivery
to the addresses set forth below or, if properly addressed, two days following
depositing such notice, postage
-10-
<PAGE> 33
prepaid, in a United States mailbox or one day following depositing such notice
in the custody of a nationally recognized overnight delivery service. Notice
shall be deemed properly addressed if sent to the following addresses:
If to Seller: Louis V. Buzzitta and Catherine F. Buzzitta
Suite 602
221 Michigan N.E.
Grand Rapids, Michigan 49503
With a copy to: Richard J. Rankin, Esq.
Suite 602
221 Michigan N.E.
Grand Rapids, Michigan 49503
If to Purchaser: Larizza Industries, Inc.
201 W. Big Beaver
Suite 1040
Troy, Michigan 48084
With a copy to: Patrick T. Duerr, Esq.
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
13.6 In connection with any litigation arising out of this Agreement,
the prevailing party shall be entitled to recover all of its reasonable
attorneys fees and costs, including all fees and costs incurred prior to and at
all trial and appellate levels.
13.7 Larizza Industries, Inc. has executed this Agreement as
"Purchaser" subject to its right to assign all of its right, title and interest
in this Agreement to an existing entity, an entity to be formed or an
individual. Seller agrees to consummate this transaction with Purchaser's
assignee. Seller consents to the assignment of the Purchaser's rights
hereunder to any such person or entity on or prior to the Closing Date.
13.8 TIME IS OF THE ESSENCE TO THIS AGREEMENT.
13.9 Both parties to this Agreement have participated fully and equally
in the negotiation and preparation hereof. Therefore, this Agreement shall not
be more strictly construed or any ambiguities within this Agreement resolved
against either party hereto.
13.10 This Agreement shall be governed by the laws of the State of
Michigan.
13.11 The execution and delivery of this Agreement by the Purchaser
shall constitute Purchaser's offer to the Seller to acquire the Property upon
the terms and conditions herein set
-11-
<PAGE> 34
forth. Upon the Seller's execution hereof, it shall attach to each copy hereof
which has been executed by the Purchaser, Exhibits A through C herein
described, and shall initial each page of such Exhibits. The Exhibits shall be
subject to approval by Purchaser in the exercise of its sole discretion. This
Agreement shall be effective once the Purchaser and the Seller have executed
the Agreement, attached the Exhibits and initialed each page of the Exhibits.
The date on which the Purchaser initials the Exhibits attached hereto is
referred to as the "Effective Date".
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WITNESSES: "SELLER"
_____________________ ___________________________________
Louis V. Buzzitta
_____________________
_____________________ ___________________________________
Catherine F. Buzzitta, his wife
_____________________
Date: ________________, ____
"PURCHASER"
LARIZZA INDUSTRIES, INC.,
an Ohio corporation
_____________________ By: _____________________________
______________________
_____________________ Its: ______________________
Date: ________________, ____
-12-
<PAGE> 35
Exhibit List
A Legal Description
B Personalty List
C List of Contracts and Copies of Contracts
-13-
<PAGE> 1
EXHIBIT 10.10(a)(2)
AMENDMENT AGREEMENT
This Amendment Agreement (this "Amendment") dated as of October 19, 1994 is
among Larizza Industries, Inc., an Ohio corporation (the "Company"), the
undersigned financial institutions and Bank of America Illinois (formerly known
as Continental Bank N.A.), as agent.
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to a Credit Agreement dated as of May
6, 1994 (as previously amended, the "Credit Agreement"; terms defined in the
Credit Agreement are, unless otherwise defined herein, used herein as defined
therein);
WHEREAS, the Company has advised the Banks that it intends to acquire all of
the issued and outstanding stock of LVB Industries, Inc., a Michigan
corporation ("LVB"), for total consideration not exceeding $6,145,000,
including cash consideration of $1,263,000 and the issuance of two promissory
notes in the aggregate principal amount of $1,700,000 (the "Acquisition");
WHEREAS, promptly after the Acquisition, LVB will be merged with and into its
wholly-owned subsidiary, Hughes Plastics, Inc. ("Hughes Plastics"); and
WHEREAS, the parties desire to amend the Credit Agreement and the Pledge
Agreement to permit the Acquisition and the transactions contemplated thereby;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Certain Definitions in the Credit Agreement.
(a) The following new definitions are added to the Credit
Agreement in the proper alphabetical order:
"Hughes Plastics" means Hughes Plastics, Inc., a Michigan
corporation.
"Subordinated Debt" means (a) a $1,200,000 convertible
promissory note issued by the Company to Louis Buzzitta, as agent for
Louis V. Buzzitta, the Diane M. Buzzitta Trust,
<PAGE> 2
Joseph T. Buzzitta and James V. Buzzitta, payable in 20 quarterly
installments and providing for interest (payable quarterly) at a rate
not to exceed 7.75% per annum and (b) a $500,000 promissory note
issued by the Company to Louis Buzzitta, as agent for Louis V.
Buzzitta, the Diane M. Buzzitta Trust, Joseph T. Buzzitta and
James V. Buzzitta, providing for interest (payable quarterly) at a
rate not to exceed 7.75% per annum payable in two equal installments
on the third and fourth anniversary of the date of issuance, which
notes are subject to a subordination agreement substantially in the
form of Exhibit H hereto or such other form as may be approved by
Larizza and the Required Banks from time to time.
(b) The definition of Continental in the Credit Agreement is
deleted and the following definition is substituted therefor:
"BAI" means Bank of America Illinois, an Illinois banking
corporation.
All references in the Credit Agreement to "Continental" shall be automatically
amended to read "BAI".
1.2 Amendment to Section 10.7 of the Credit Agreement. Section
10.7 of the Credit Agreement is amended by adding a semicolon and the
following language at the end thereof:
"and (l) Subordinated Debt in a principal amount not exceeding
$1,700,000."
1.3 Amendment to Section 10.11 of the Credit Agreement. Section
10.11 of the Credit Agreement is amended as follows:
(a) clause (c) thereof is amended to read in its entirety as follows:
"(c) Investments by the Company in its Subsidiaries in the
form of contributions to capital or loans or advances not to
exceed $500,000 in the aggregate in the case of Manchester,
$6,000,000 in the aggregate in the case of Hughes Plastics and
$4,400,000 in the aggregate in the case of General Nuclear;
provided that (i) immediately before and after giving effect
to such Investment, no Unmatured Event of Default or Event of
Default shall have occurred and be continuing and (ii) any
loans or advances to Manchester are reasonably expected to be
repaid within one year;"
2
<PAGE> 3
(b) clause (g) thereof is amended by deleting the word "and" at the
end thereof:
(c) clause (h) thereof is amended by substituting a semicolon for the
period at the end thereof; and
(d) the following clauses (i) and (j) are inserted at the end thereof:
"(i) the acquisition by the Company of the stock of LVB
Industries, Inc. for a purchase price not exceeding
$6,145,000 (of which not less than $1,700,000 will
constitute Subordinated Debt); and
(j) loans or advances made by Hughes Plastics to the
Company not at any time to exceed $4,000,000 in the
aggregate."
1.4 Amendment to Schedule 9.8. From and after the date of the
Acquisition, Schedule 9.8 to the Credit Agreement is amended and restated in
its entirety by replacing it with Exhibit A to this Amendment.
1.5 Addition of Section 12.1.12. From and after the date which is
three Business Days after consummation of the Acquisition, the following
Section 12.1.12 is added to the Credit Agreement in appropriate numerical
sequence:
12.1.12 Invalidity of Certain Hughes Plastics Documents, etc.
The Guaranty (as amended or otherwise modified from time to time, the
"Hughes Guaranty") issued by Hughes Plastics pursuant to Section 2.2
of the amendment to this Agreement dated as of October 19, 1994 (the
"Amendment") or the Security Agreement (as amended or otherwise
modified from time to time, the "Hughes Security Agreement") executed
by Hughes Plastics pursuant to Section 2.2 of the Amendment shall
cease to be in full force and effect, Hughes Plastics shall fail to
comply with or to perform any applicable material provision of the
Hughes Guaranty or the Hughes Security Agreement and such failure
continues for 30 days after notice to Hughes Plastics by the Agent,
any Bank or the holder of any Note, or Hughes Plastics (or any Person
by, through or on behalf of Hughes Plastics) shall contest in any
manner the validity, binding nature or enforceability of the Hughes
Guaranty or the Hughes Security Agreement.
3
<PAGE> 4
1.6 Addition of Exhibit H. The Credit Agreement is amended by
adding thereto a new Exhibit H in the form of Exhibit B to this Amendment.
1.7 Amendment to Schedule I to Company Pledge Agreement. From and
after the date of the Acquisition, Schedule I to the Pledge Agreement is
amended and restated in its entirety by replacing it with Exhibit C to this
Amendment.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; AGREEMENTS
2.2 Representations and Warranties of the Company. In order to
induce the Banks and the Agent to execute and deliver this Amendment, the
Company represents and warrants to the Banks and the Agent that:
(a) the representations and warranties of the Company contained in
the Credit Agreement and each other Loan Document to which the Company is a
party are true and correct in all material respects on and as of the date
hereof as though made on and as of the date hereof; and
(b) no Event of Default or Unmatured Event of Default has occurred
and is continuing on and as of the date hereof or will result from the
execution and delivery of this Amendment or from the consummation of the
Acquisition or the other transactions contemplated herein.
2.2 Merger, Guaranty, Collateral, etc. In order to induce the
Banks and the Agent to execute and deliver this Amendment, the Company
covenants and agrees that, within three Business Days of consummation of the
Acquisition, (a) the Company will cause LVB to be merged with and into Hughes
Plastics, (b) the Company will deliver to the Agent all of the capital stock of
Hughes Plastics, together with a stock power executed in blank, to be held by
the Agent pursuant to the Pledge Agreement, (c) the Company shall cause Hughes
Plastics to execute and deliver a guaranty substantially in the form of Exhibit
D to this Amendment and a security agreement substantially in the form of
Exhibit E to this Amendment, together with such other documents (including,
without limitation, financing statements, mortgages, leasehold mortgages,
corporate documents and opinions of counsel) as the Agent or any Bank may
reasonably request to assure that the guaranty referred to above is the legal,
valid and binding obligation of Hughes Plastics and that such guaranty is
secured by perfected Liens on substantially all assets of Hughes Plastics.
Failure by the Company to comply with the requirements of this Section 2.2
shall be an Event of Default under the Credit Agreement.
4
<PAGE> 5
ARTICLE III
CONDITIONS TO EFFECTIVENESS
The effectiveness of this Amendment is subject to the prior
satisfaction of each of the following conditions precedent:
3.1 Resolutions, etc. The Agent shall have received from the
Company resolutions of its Board of Directors authorizing the Company's
execution and delivery and performance of this Amendment and the Acquisition
and all of the documents, instruments and agreements related hereto and
thereto.
3.2 Executed Counterparts. The Agent shall have received
counterparts of this Amendment executed by the Company and the Required Banks.
3.3 Amendment Fee. The Agent shall have received from the
Company, for distribution to the Banks pro rata according to their Percentages,
an amendment fee of $47,625.
ARTICLE IV
GENERAL
4.1 References, etc. From and after the date hereof, each
reference that appears in any other Loan Document to the Credit Agreement and
the Pledge Agreement shall be deemed to be a reference to the Credit Agreement
and the Pledge Agreement as amended hereby. This Amendment constitutes a "Loan
Document" as defined in the Credit Agreement.
4.2 Counterparts. This Amendment may be executed by the parties
hereto in any number of counterparts and by the different parties on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Amendment.
4.3 Governing Law; Entire Agreement. This Amendment shall be
deemed to be a contract made under and governed by the laws of the State of
Illinois.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers as of the day and year first above
written.
LARIZZA INDUSTRIES, INC.
By: /s/ TERENCE C. SEIKEL
Title: CFO
BANK OF AMERICA ILLINOIS,
individually and as Agent
By: /s/ STEVE K. AHRENHOLZ
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Katherine Steiger
Title: Vice President
SANWA BUSINESS CREDIT CORPORATION
By: /s/ MICHAEL J. COE
Title: Vice President
6
<PAGE> 7
Exhibit A
to Amendment
Agreement
SCHEDULE 9.8
SUBSIDIARIES
Percentage Owned
by the Company and
Subsidiary its Subsidiaries
- - - ---------- ------------------
Manchester Plastics, Ltd., 100%
an Ontario Corporation
General Nuclear Corp., 100%
a Pennsylvania Corporation
Hughes Plastics, Inc., a 100%
Michigan corporation
LVB Industries, Inc., a 100%
Michigan corporation*
* To be merged with and into Hughes Plastics not later than three
Business Days after the acquisition thereof by the Company.
<PAGE> 8
Exhibit C
to Amendment
Agreement
SCHEDULE I
TO COMPANY PLEDGE AGREEMENT
STOCK
<TABLE>
<CAPTION>
Pledged Shares
No. of as % of Total Total Shares of
Certificate Pledged Shares Issued Issuer
Issuer No. Shares and Outstanding Outstanding
- - - ------ ----------- ------- --------------- ---------------
<S> <C> <C> <C> <C>
Manchester Plastics, Ltd. C-4 56,453 65% 86,850
General Nuclear Corp. 3 7,544 Common 100% 7,544 Common
General Nuclear Corp. 3 11,316 Preferred 100% 11,316
Hughes Plastics, Inc. ---- 1,000 Common 100% 1,000
</TABLE>
<PAGE> 1
EXHIBIT 10.10(b)(3)
NOTE
$17,375,000 August 31, 1994
Chicago, Illinois
On or before the Termination Date (as defined in the Credit Agreement
referred to below), the undersigned, for value received, promises to pay to the
order of Continental Bank, at the principal office of Continental Bank (the
"Agent"), in Chicago, Illinois, Seventeen Million Three Hundred Seventy Five
Thousand Dollars ($17,375,000) or, if less, the aggregate unpaid amount of all
Loans made by the payee to the undersigned pursuant to the Credit Agreement (as
shown in the records of the payee or, at the payee's option, on the schedule
attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of May 6, 1994 (herein,
as amended or otherwise modified from time to time, called the "Credit
Agreement"), between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must
be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State
of Illinois.
LARIZZA INDUSTRIES, INC.
By /s/ TERENCE C. SEIKEL
Title CFO
<PAGE> 2
Schedule Attached to Note dated August 31, 1994 of LARIZZA INDUSTRIES, INC.,
payable to the order of Continental Bank.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
2. EURODOLLAR LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 1
EXHIBIT 10.10(b)(4)
NOTE
$6,950,000 August 31, 1994
Chicago, Illinois
On or before the Termination Date (as defined in the Credit Agreement
referred to below), the undersigned, for value received, promises to pay to the
order of Sanwa Business Credit Corporation, at the principal office of
Continental Bank (the "Agent"), in Chicago, Illinois, Six Million Nine Hundred
Fifty Thousand Dollars ($6,950,000) or, if less, the aggregate unpaid amount
of all Loans made by the payee to the undersigned pursuant to the Credit
Agreement (as shown in the records of the payee or, at the payee's option, on
the schedule attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of May 6, 1994 (herein,
as amended or otherwise modified from time to time, called the "Credit
Agreement"), between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must
be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State
of Illinois.
LARIZZA INDUSTRIES, INC.
By /s/ TERENCE C. SEIKEL
Title CFO
<PAGE> 2
Schedule Attached to Note dated August 31, 1994 of LARIZZA INDUSTRIES, INC.,
payable to the order of Sanwa Business Credit Corporation.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
2. EURODOLLAR LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 1
EXHIBIT 10.11(b)(3)
NOTE
$7,031,250 August 31, 1994
Chicago, Illinois
On or before the Stated Maturity Date (as defined in the Credit
Agreement referred to below), the undersigned, for value received, promises to
pay to the order of Continental Bank, at the principal office of Continental
Bank (the "Agent"), in Chicago, Illinois, Seven Million Thirty One Thousand Two
Hundred Fifty Dollars ($7,031,250) or, if less, the aggregate unpaid amount of
all Loans made by the payee to the undersigned pursuant to the Credit Agreement
(as shown in the records of the payee or, at the payee's option, on the
schedule attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of May 6, 1994 (herein,
as amended or otherwise modified from time to time, called the "Credit
Agreement"), between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must
be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State
of Illinois.
MANCHESTER PLASTICS, LTD.
By /s/ TERENCE C. SEIKEL
Title CFO
<PAGE> 2
Schedule Attached to Note dated August 31, 1994 of MANCHESTER PLASTICS, LTD.,
payable to the order of Continental Bank.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
2. EURODOLLAR LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 1
EXHIBIT 10.11(b)(4)
NOTE
$2,812,500 August 31, 1994
Chicago, Illinois
On or before the Stated Maturity Date (as defined in the Credit
Agreement referred to below), the undersigned, for value received, promises to
pay to the order of Sanwa Business Credit Corportaion, at the principal office
of Continental Bank N.A. (the "Agent"), in Chicago, Illinois, Two Million Eight
Hundred Twelve Thousand Five Hundred Dollars ($2,812,500) or, if less, the
aggregate unpaid amount of all Loans made by the payee to the undersigned
pursuant to the Credit Agreement (as shown in the records of the payee or, at
the payee's option, on the schedule attached hereto and any continuation
thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be made
in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of May 6, 1994 (herein,
as amended or otherwise modified from time to time, called the "Credit
Agreement"), between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must
be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State
of Illinois.
MANCHESTER PLASTICS, LTD.
By /s/ TERENCE C. SEIKEL
Title CFO
<PAGE> 2
Schedule Attached to Note dated August 31, 1994 of MANCHESTER PLASTICS, LTD.,
payable to the order of Sanwa Business Credit Corporation.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
2. EURODOLLAR LOANS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 1
EXHIBIT 10.15
STOCK PURCHASE AGREEMENT
AMONG
LARIZZA INDUSTRIES, INC.,
an Ohio corporation or its appointed subsidiary,
DIANE M. BUZZITTA TRUST, PHILIP F. WOOD, TRUSTEE,
DIANE M. BUZZITTA,
LOUIS V. BUZZITTA,
JOSEPH T. BUZZITTA,
JAMES V. BUZZITTA,
LVB INDUSTRIES, INC.,
a Michigan corporation,
AND
HUGHES PLASTICS, INC.,
a Michigan corporation.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- - - ------- ----
<S> <C> <C>
1. PURCHASE AND SALE OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Agreement to Purchase and Sell Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3.1 Payments at Closing by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3.2 Reduction of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Representation and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.2 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . 6
2.1.3 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . 6
2.1.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.5 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.6 Rights to Acquire Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.7 Real and Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.8 Miscellaneous Items Relating to Assets . . . . . . . . . . . . . . . . . . . . . 11
2.1.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.11 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.12 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . 14
2.1.14 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.15 Patents, Trademarks and Similar Rights . . . . . . . . . . . . . . . . . . . . . 18
2.1.16 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.17 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1.18 Insider and Inter-Company Transactions . . . . . . . . . . . . . . . . . . . . . 21
2.1.19 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1.20 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1.21 Environmental and Occupational Matters . . . . . . . . . . . . . . . . . . . . . 23
2.1.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1.23 Legal Proceedings, Etc. and Compliance . . . . . . . . . . . . . . . . . . . . . 28
2.1.24 Illegal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.1.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
2.2 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2.2 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . 30
2.2.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2.4 Financial Capacity and Financials . . . . . . . . . . . . . . . . . . . . . . . . 31
2.2.5 Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.2.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3. COVENANTS OF SELLER AND BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1 Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1.1 Delivery of Articles and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1.2 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1.3 Termination of Employment Agreements . . . . . . . . . . . . . . . . . . . . . . 32
3.1.4 Bank Account Authorization Cards . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1.5 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.1.6 Consulting Confidentiality and Non-Competition . . . . . . . . . . . . . . . . . 33
3.1.7 Bank Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.1.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2 Covenant of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2.1 Collection of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.1.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . 33
4.1.2 Compliance with Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1.3 Certificate of Seller and Officers . . . . . . . . . . . . . . . . . . . . . . . 34
4.1.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1.5 Lenders' Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1.7 No Material Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1.8 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1.9 No Material Change in Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1.10 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1.11 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.2 Conditions to Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.2.1 Accuracy of Buyer's Representations and Warranties . . . . . . . . . . . . . . . 35
4.2.2 Compliance with Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.2.3 Certificate of Buyer's Officers . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.2.4 Delivery of Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.2.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
5. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1 LVB's Seller's and Hughes' Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . 36
5.2 Buyer's Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.4 Survival of Indemnification and Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 40
5.5 Buyer's Right to Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.1 Transfer and Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.3 Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.4 Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.5 Governing Law and Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.11 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.12 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.13 Definition of "To the Best of Knowledge of
LVB, Hughes and/or Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
iii
<PAGE> 5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated October 13, 1994 (the
"Agreement") is made among Larizza Industries, Inc., an Ohio corporation or its
appointed subsidiary ("Buyer"), Diane M. Buzzitta Trust, Philip F. Wood,
Trustee (the "Trust"), Diane M. Buzzitta, Louis V. Buzzitta, Joseph T. Buzzitta
and James V. Buzzitta (jointly and severally, "Seller"), LVB Industries, Inc.,
a Michigan corporation ("LVB") and Hughes Plastics, Inc., a Michigan
corporation ("Hughes").
RECITALS
A. Seller is the sole owner of all of the issued and outstanding
capital stock of LVB and LVB is the sole owner of all of the issued and
outstanding capital stock of Hughes.
B. Hughes owns or leases equipment and real estate and is a party
to various contracts in connection with the businesses of designing,
manufacturing and selling plastic interior trim parts in the automobile
industry (the "Business").
C. Seller desires to sell to Buyer, and Buyer desires to buy from
Seller, all of the issued and outstanding shares of the capital stock of LVB on
the terms and conditions set forth below.
THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF STOCK
1.1 Agreement to Purchase and Sell Stock. Upon the terms and
subject to the conditions of this Agreement, at the Closing, as defined in
Section 1.4, Buyer shall buy from Seller, and Seller shall sell and deliver to
Buyer, 1,000 shares of common stock of LVB, constituting all of the issued and
outstanding capital stock of LVB (the "Shares"). The
<PAGE> 6
certificates for the Shares shall, when so delivered by Seller, be duly
endorsed for transfer to Buyer or have executed stock powers endorsed to Buyer
attached to the Shares. If a subsidiary of Larizza is the Buyer, Larizza shall
continue to be obligated to make the payments on the Promissory Notes (defined
below). Such certificates for the Shares shall also be accompanied by any
other documents that are necessary to transfer to Buyer, or to such subsidiary,
good and marketable title to the Shares (other than liens and encumbrances
placed on the Shares by Buyer), and shall also be accompanied by all of the
stock books, stock ledgers, minute books and corporate seals of LVB and Hughes.
1.2 Purchase Price. The purchase price for the Shares shall be
$2,963,000, payable as provided in Section 1.3.
1.3 Payment of Purchase Price.
1.3.1 Payments at Closing by Buyer. Upon the terms and
subject to the conditions of this Agreement, Buyer shall make the following
payments at the Closing:
(a) $1,263,000 shall be paid to Seller in immediately
available funds to the persons and in the amounts as provided in
Exhibit 1.3.1(a); and
(b) $1,200,000 by the delivery of the promissory note
which is attached as Exhibit 1.3.1(b)(I) to this Agreement and
$500,000 by the delivery of the promissory note which is attached as
Exhibit 1.3.1(b)(II) to this Agreement (collectively, the "Promissory
Notes"), subject to Buyer's offset rights as provided in Section
1.3.1(c) below. The Seller shall have the right to convert the
principal of the Promissory Notes into the common stock of Buyer in
accordance with the provisions contained in the Promissory Notes.
2
<PAGE> 7
(c) Buyer has the right to offset against the
Promissory Notes and the Consulting/Confidentiality and Non-Compete
Agreement described in Section 5.5 ("Consulting Agreement") the amount
of any claims asserted by Buyer against Seller pursuant to this
Agreement or the Consulting Agreement, including, without limitation,
pursuant to Section 5 of this Agreement. The offset remedy of Buyer
is not exclusive, but is cumulative with all other remedies of Buyer
against Seller, and this remedy does not in any way limit Seller's
liability to Buyer under this Agreement. Buyer shall notify Seller of
Buyer's exercise of its intention to offset (the "Claim"). If after
receiving the Claim, the Seller disputes the validity or the amount of
the Claim and so notifies Buyer in writing, the Buyer shall place such
disputed offset amounts in escrow in Honigman Miller Schwartz and
Cohn's ("HMS&C") client trust fund account. HMS&C shall retain the
offset monies in escrow until written direction signed by Seller and
Buyer or until otherwise directed by a final non-appealable judgment
of a court deciding such a dispute. If Seller so offsets, then the
Seller's obligations to make payments to Buyer under this Agreement or
payments under the Consulting Agreement shall be discharged to the
extent of the amount offset until final resolution of any dispute with
respect to such offset. All of the parties to this Agreement hereby,
jointly and severally, agree to indemnify, hold harmless and defend
HMS&C from any type of liability, claim and/or damage which is related
in any way to the escrow referred to in this Section 1.3.1(c) of this
Agreement, except for HMS&C's bad faith, gross negligence or willful
misconduct. The parties also agree that, notwithstanding its role as
the escrow agent, HMS&C will be permitted to represent Buyer and/or
any of Buyer's affiliates in any dispute with LVB, Seller or
3
<PAGE> 8
Hughes, including, without limitation, any dispute relating to the
escrow funds or arrangement.
(d) Seller shall execute and deliver to Buyer an
Irrevocable Durable Power of Attorney in the form attached as Exhibit
1.3.1(d), appointing Louis V. Buzzitta ("Agent") as Seller's
attorney-in-fact to act on behalf of Seller with respect to: (i)
receiving and distributing payments and/or securities under the
Promissory Notes; (ii) giving Buyer notice of any dispute with respect
to a Claim; (iii) directing HMS&C with respect to the distribution of
any escrowed funds; (iv) entering into and performing any
subordination or other agreement required by Buyer's Lenders; and (v)
performance of any term or provision of this Agreement and related
agreements on behalf of Seller. Buyer is authorized to rely on the
direction of the Agent with respect to these matters and Seller shall
indemnify Buyer from any claim or liability if Buyer so relies on the
direction of the Agent.
1.3.2 Reduction of Purchase Price. If at the Closing
Date, Hughes shareholder's equity, as determined by Buyer's accountants on a
basis consistent with Hughes' past accounting practices ("Closing Date
Equity"), is less than a negative $386,000 which is the negative equity
reflected on the July 31, 1994 pro forma balance sheet attached as Exhibit
1.3.2 ("Pro Forma Equity"), but it is greater than a negative $557,000, the
Purchase Price shall be reduced by 1/2 of the difference between the Pro Forma
Equity and the Closing Date Equity. In addition to this Purchase Price
reduction, to the extent that Closing Date Equity is less than a negative
$557,000, then the Purchase Price will be further reduced by the entire amount
of the difference between a negative $557,000 and the Closing Date Equity.
Buyer shall effect these
4
<PAGE> 9
reductions in Purchase Price by reducing the principal amount of either or both
of the Promissory Notes, in the exercise of its sole discretion.
1.4 The Closing. The Closing under this Agreement shall be held
at 10:00 a.m. at the offices of Honigman, Miller, Schwartz and Cohn, 2290 First
National Building, Detroit, Michigan 48226 on October 18, 1994, or such other
day and time as Buyer and Seller shall mutually agree upon in writing. The
consummation of the transactions contemplated by this Agreement at such place
and time are sometimes referred to in this Agreement as the "Closing", and such
date is sometimes referred to as the "Closing Date". At the Closing, Seller
shall deliver the Shares pursuant to Section 1.1, Buyer shall pay the purchase
price pursuant to Section 1.3, and Buyer and Seller shall comply with the
applicable covenants and conditions to Closing set forth in Sections 3 and 4.
2. REPRESENTATIONS AND WARRANTIES
2.1 Representation and Warranties of Seller. Seller, LVB and
Hughes, jointly and severally, hereby represent and warrant to Buyer the
following as of the date of this Agreement and as of the Closing Date.
2.1.1 Organization and Qualification.
(a) LVB and Hughes are each corporations duly
organized, validly existing and in good standing under the laws of the
state of Michigan. Seller, LVB and Hughes have all requisite power
and authority to own, lease, and operate their respective properties
and to carry on their respective business as now being conducted. LVB
and Hughes are duly qualified and are in good standing to do business
in each jurisdiction in which the nature or conduct of their
respective businesses makes such qualification a
5
<PAGE> 10
legal requirement. No other jurisdiction in which LVB and Hughes has
not qualified to do business or obtained similar authorization has
claimed that either is required to be qualified or otherwise
authorized to do business in such jurisdiction. The attached Exhibit
2.1.1(a)(I)lists, with respect to the LVB and Hughes, all the
jurisdictions in which either is qualified to do business. The Trust
is in full force and effect in accordance with the terms of the Trust
Agreement attached as Exhibit 2.1.1(a)(II) which is a true and complete
copy of the Trust Agreement.
(b) Neither LVB or Hughes have any other parent,
subsidiary or affiliated entities.
2.1.2 Authority Relative to This Agreement. Seller, LVB
and Hughes have full power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement. No other
action on the part of Seller, LVB or Hughes or any other individual, person or
entity is necessary to authorize this Agreement or the consummation of the
transactions contemplated by this Agreement. This Agreement has been duly and
validly executed and delivered by Seller, LVB and Hughes and constitutes a
valid and binding agreement of Seller, LVB and Hughes enforceable against
Seller, LVB and Hughes in accordance with its terms, except as it may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights. Diane M. Buzzitta hereby consents to the
Trustee of the Trust entering into and performing this Agreement and the
related agreements.
2.1.3 Consents and Approvals; No Violation. Except as
set forth in the attached Exhibit 2.1.3, neither the execution and delivery by
Seller, LVB or Hughes of this
6
<PAGE> 11
Agreement nor the consummation by Seller, LVB or Hughes of the transactions
contemplated by this Agreement, (a) will require any authorization, consent or
approval of any governmental or regulatory authority or of any other person or
entity; (b) will conflict with or breach any provision of the respective
Articles of Incorporation of bylaws of LVB or Hughes; (c) will violate or
breach any provision of, constitute a default under, result in the creation of
any lien or security interest under, or result in the termination of, any of
the terms or conditions of any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, registration or other authorization, lease,
contract, agreement or other instrument, commitment or obligation to which the
Seller, LVB or Hughes is a party, or by which any of them or any of their
respective properties or assets may be bound; (d) violate any order, writ,
injunction, decree, judgment, or arbitration award, or any statute, rule,
regulation or ruling of any court or governmental authority, United States or
foreign, applicable to Seller, LVB or Hughes or to any of their respective
properties or assets; or (e) require any governmental or regulatory authority
to conduct any examination, inspection or audit of Seller, LVB or Hughes.
2.1.4 Capitalization.
(a) The authorized capital stock and the outstanding
capital stock of LVB and Hughes is as listed on the attached Exhibit
2.1.4(a)(I). The shareholders and their respective interests in LVB
are listed on Exhibit 2.1.4(a)(II). All of the shares of LVB and
Hughes have identical rights, benefits, and attributes, and the
transfer of the Shares contemplated by this Agreement will effectively
transfer full and complete ownership and full and complete control of
LVB and Hughes to Buyer, including, without limitation, the power to
elect each and every member of the Board of Directors of LVB and
7
<PAGE> 12
Hughes, the power to conduct every aspect of LVB's and Hughes'
businesses, and the power to make and implement all corporate
decisions, major or minor, including, without limitation, decisions
concerning sales of assets, mergers and dissolution, without
restriction or qualification.
(c) All of the outstanding shares of LVB's and Hughes'
common stock are validly issued, fully paid, nonassessable, and free
of exercisable preemptive rights. Neither Seller, LVB nor Hughes is
obligated or has committed to purchase, redeem or otherwise acquire
any such shares.
2.1.5 Title to Stock. On the date of the Closing, Seller
shall have, and upon consummation of the transactions contemplated by this
Agreement Buyer will acquire, good and marketable title to all of the Shares,
free and clear of all pledges, warrants, calls, commitments, subscriptions,
agreements, voting trusts or agreements, proxies, unpaid taxes, claims and
options of whatever nature, other than encumbrances placed on the Shares caused
by the Buyer ("Encumbrances").
2.1.6 Rights to Acquire Stock. There is no oral or
written subscription, option, warrant, call, right, contract, agreement,
commitment, understanding or arrangement relating to the issuance, sale,
delivery, or transfer by Seller, LVB or Hughes of the capital stock of LVB or
Hughes, including any rights of conversion or exchange under any outstanding
security or any other instruments.
2.1.7 Real and Personal Property.
(a) The attached Exhibit 2.1.7(a) is a complete and
accurate list of all real property owned or leased by LVB or Hughes or
used in connection with the operation
8
<PAGE> 13
of LVB or Hughes, with a complete and accurate legal description of
each parcel of real property.
(b) The attached Exhibits 2.1.7(b)(I) and 2.1.7(b)(II)
are complete and accurate lists of all leases of real and personal
property, respectively to which LVB or Hughes is a party. Each such
lease, including, without limitation, each lease with related parties,
is in good standing and is in full force and effect in accordance with
its terms, and there is no default under any such lease nor do any
facts exist that with the giving of notice or the passage of time
would give rise to a default under any such lease by LVB or Hughes, or
by any other party to the lease. True copies of all such leases of
real property, including all modifications and amendments, and true
copies of all such personal property leases, including all
modifications and amendments, have been supplied to Buyer by Seller.
LVB and Hughes has fully paid and fully performed all of its
obligations and duties under all such leases which arise from, are on
account of, or related to, in any part, facts or events that occurred
prior to the Closing. There are no taxes, assessments or other costs,
expenses or charges which are due or paid in arrears relating to the
real or personal property leases.
(c) With respect to the real property listed on Exhibit
2.1.7(a) and to all other real property owned, leased or used by LVB
or Hughes or in connection with the Business (the "Real Property");
(i) the use of the Real Property by LVB or Hughes
does not violate any applicable zoning, building or use
statutes, rules, ordinances or regulations of any federal,
state, county or local entity, authority or agency, and
Exhibit
9
<PAGE> 14
2.1.7(c)(I) lists all such violations that were outstanding at
any time during the five-year period prior to this Agreement.
Neither Seller, LVB nor Hughes received any notice of, nor has
Seller, LVB or Hughes any knowledge of or information as to,
any existing or threatened condemnation or other legal action
of any kind involving the Real Property which may affect the
value or use of the Real Property. The Real Property is free
and clear of any violations of any building, safety and health
ordinances, statutes or regulations;
(ii) there are no contracts, leases or agreements
in effect with respect to the Real Property of any kind or
nature whatsoever, whether or not of record, except for the
items listed on the attached Exhibit 2.1.7(b)(I);
(iii) there are no building, use or deed
restrictions relating to the current use of the Real Property.
There is no threatened earth subsidence, earth movement or
infestation affecting the Real Property or any buildings or
improvements located on the Real Property and there are no
latent or patent structural defects on or in any buildings or
improvements located on the Real Property. There is a
dedicated road or right-of-way to each parcel of Real
Property;
(iv) there are no unrecorded easements relating to
the Real Property nor any special assessments or proposed
special assessments relating to the Real Property; no federal,
state or local taxing authority has asserted any tax
deficiency, lien or assessment against the Real Property which
has not been paid;
10
<PAGE> 15
and there are no third parties in possession or claiming
rights to possession of the Real Property; and
(v) there are no recorded easements which are
inconsistent with LVB or Hughes present use of the Real
Property and there are no outstanding accounts payable or
choate or inchoate mechanics' liens or rights to claim a
mechanics' lien in favor of any contractor, materialman or
laborer or any other person or entity in connection with any
portion of the Real Property and for which the underlying debt
is unpaid, except for those that will be paid in the ordinary
course of business; there has not been any work performed or
materials supplied to the Real Property in the last 90 days
which could give rise to the filing of such liens against the
Real Property and for which the underlying debt is overdue.
2.1.8 Miscellaneous Items Relating to Assets.
(a) The attached Exhibit 2.1.8(a) is a complete and
accurate list of all of the furniture, fixtures, equipment, plants,
structures and other personal property owned by LVB or Hughes and
currently being depreciated by LVB or Hughes for purposes of their
Financial Statements or Interim Statements (as defined in Section
2.1.9).
(b) Hughes has, and after giving effect to the
transactions contemplated by this Agreement, will have, good and
marketable title to, all tangible assets used by it in the operation
of the Business, free and clear of all liens, encumbrances, security
interests, mortgages, claims, demands, rights and equities of any
nature whatsoever;
(c) There are no defects or damage with respect to the
Hughes plants, structures, fixtures and equipment being used in the
Business except for normal
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maintenance, repair and replacement and they are in reasonably good
operating condition and repair. There is no violation, and no
existing event or circumstance that with the passage of time or the
giving of notice would give rise to a violation, of any building,
zoning or other law, ordinance, rule or regulation (federal, state or
local) in respect to such property, plants or structures.
2.1.9 Financial Statements.
(a) The attached Exhibit 2.1.9(a) is a copy of the
reviewed balance sheet of LVB and Hughes as at October 31, 1993 and
the related reviewed statements of income, retained earnings and cash
flows for the fiscal year then ended, in each case, including the
Notes to such financial statements. These financial statements (the
"Financial Statements") have been prepared in accordance with
generally accepted accounting principles on a basis consistent with
such statements for prior periods and with such footnotes as are
necessary to comply with generally accepted accounting principles.
The balance sheet included in the Financial Statements fairly
presents, as of that date the financial condition and assets and
liabilities of LVB and Hughes, and the related statements of income,
retained earnings and cash flows included in the Financial Statements
fairly present the results of operations of LVB and Hughes for the
fiscal year then ended. The Financial Statements contain proper
accruals of all liabilities of Hughes and such other adjustments which
are necessary to fairly present the financial condition and assets and
liabilities of the LVB and Hughes.
(b) The attached Exhibit 2.1.9(b) is a copy of the
balance sheet of LVB and Hughes as at September 30, 1994 and the
related statement of income for the 11 months
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then ended (the "Interim Statements"). The balance sheet included in
the Interim Statements fairly presents, as of its date, the financial
condition and assets and liabilities of LVB and Hughes and the related
statement of income included in the Interim Statements fairly presents
the results of operations of LVB and Hughes for the 11 months then
ended. The Interim Statements contain all proper accruals of all
liabilities of LVB and Hughes and such other adjustments which are
necessary to fairly present the financial condition and assets and
liabilities of LVB and Hughes.
2.1.10 Inventories. Since September 30, 1994, LVB and
Hughes have not acquired new inventory other than in the ordinary course of
business. All items of said inventory are the property of Hughes, except for
sales made in the ordinary course of business since September 30, 1994 and for
each of these sales either the purchaser has made full payment or its liability
to make payment is reflected on the books of LVB and Hughes, whatever the case
may be.
2.1.11 Accounts and Notes Receivable.
(a) The attached Exhibit 2.1.11(a) lists all of the
accounts and notes receivable of LVB and Hughes as of September 30,
1994. Except as otherwise noted onExhibit 2.1.11(a), all of such
accounts and notes receivable as well as all accounts and notes
receivable booked by LVB and Hughes in the ordinary course of business
subsequent to September 30, 1994 and on or before the Closing Date are
(a) valid and genuine; (b) subject to no defenses, set-offs, or
counterclaims; (c) current and collectible; and (d) shall be paid in
full.
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2.1.12 Absence of Undisclosed Liabilities.
(a) Neither LVB nor Hughes has pledged or granted a
security interest in any of its assets, or has any liabilities,
commitments, obligations, loans or indebtedness, whether as primary
obligor or guarantor or otherwise, and whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, other than
those reflected on the Interim Statements and routine accounts payable
incurred in the normal course of business after September 30, 1994 and
up to the Closing ("Liability"). LVB and Hughes have booked as
payables all obligations incurred by them in accordance with their
ordinary practices.
(b) Except for the guaranty disclosed on Exhibit
2.1.12(b) which shall be fully discharged and released prior to the
Closing, neither LVB nor Hughes has any power of attorney outstanding
or any obligations or liabilities as guarantor, surety, co- signor,
endorser, co-maker, indemnitor or otherwise in respect to the
obligations of any person, corporation, partnership, joint venture,
association, organization or other entity.
(c) There are no other bank accounts or safe deposit
boxes of LVB or Hughes, except as reflected on Exhibit 2.1.12(c) which
sets forth the names and locations of all such banks, and the names of
all persons authorized to draw on or have access to such accounts or
boxes.
2.1.13 Absence of Certain Changes or Events. Except as
set forth in the attached Exhibit 2.1.13, since July 31, 1994 there has not
been:
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(a) any material adverse change in the business,
prospects, operations, properties, assets, liabilities, earnings, or
condition (financial or otherwise), of LVB or Hughes or any failure by
LVB or Hughes to pay its debt when due;
(b) any event or condition of any character which
either individually or in the aggregate, might reasonably be expected
materially and adversely to affect the business, prospects,
operations, properties, assets, liabilities, earnings or condition
(financial or otherwise), of LVB or Hughes;
(c) any damage, destruction or loss, whether covered
by insurance or not, materially and adversely affecting the business,
prospects, operation, properties, assets, liabilities, earnings, or
condition (financial or otherwise), of LVB or Hughes;
(d) Any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock, property, or
any combination of the foregoing) with respect to the capital stock of
LVB or Hughes;
(e) Any significant increase in the compensation
outside the ordinary course of business payable or to become payable
by LVB or Hughes or other arrangements to, for or with any officers,
directors, or employees;
(f) Any entry into any agreement, commitment, or
material transaction by LVB or Hughes, including, without limitation,
any acquisition or disposition of assets or stock by LVB or Hughes not
in the ordinary course of business;
(g) Any provision for markdowns or shrinkage by LVB or
Hughes with respect to inventories other than in the ordinary course
of business and consistent with past practice;
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(h) Any notes or accounts receivable or portions of
notes or accounts receivable written off by LVB or Hughes as
uncollectible, other than as reflected on the Interim Financial
Statements;
(i) Any lien or encumbrance discharged or any
obligation or liability paid (whether absolute, accrued, contingent or
otherwise) by LVB or Hughes other than current liabilities shown on
the Financial Statements or the Interim Statements and current
liabilities incurred since their date;
(j) Any properties or assets, real, personal or mixed,
tangible or intangible, of LVB or Hughes mortgaged, pledged or
subjected to any lien or encumbrance;
(k) Any shortage of raw materials or supplies
experienced by LVB or Hughes;
(l) Any change by the LVB or Hughes in accounting
methods, principles or practices except as required by a change in
generally accepted accounting principles; or
(m) Any agreement or understanding to do any of the
foregoing by LVB or Hughes.
2.1.14 Certain Contracts. Except as set forth in the
attached Exhibit 2.1.14, LVB or Hughes is not a party to, or has any
liabilities or obligations in connection with, whether or not the subject
contract is currently in effect, any oral or written, express or implied:
(a) Employment or consulting agreement, or pension,
disability, profit sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit
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plan, policy, agreement, or arrangement. With respect to Benefit
Plans (as defined in Exhibit 2.1.14(a)), the representations and
warranties made in Exhibit 2.1.14(a) are true and accurate in all
respects;
(b) Collective bargaining or union contract or
agreement;
(c) Indenture, mortgage, note, installment obligation,
arrangement, agreement or other instrument relating to the borrowing
or money or the guarantee of any obligation for the borrowing of
money, except with respect to the National Bank of Detroit loan which
shall be discharged at Closing;
(d) Agreement, contract or other commitment that would
limit the freedom of LVB or Hughes to compete in any line of business
or with any person or in any geographical area or otherwise to conduct
its business as presently conducted and proposed to be conducted;
(e) Contract or agreement for the future sale or
acquisition, lease or purchase by LVB or Hughes of materials,
products, services or supplies, which is not in the ordinary course of
business or which is in excess of $50,000 in the aggregate or which
continues for a term of more than six months, or an exclusive contract
or agreement which continues for a term of more than six months;
(f) License agreement, including any agreement with
respect to LVB or Hughes rights, trade secrets or technology;
(g) Contract or commitment for the acquisition,
construction, purchase or sale of fixed assets;
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(h) Contract or commitment upon which the Business is
substantially dependent;
(i) Contract or agreement, the performance of which
will result in a loss or net expense to LVB or Hughes in excess of
$10,000;
(j) Any order, decree, or judgment, whether entered by
consent, stipulation, or otherwise, before, or in connection with, any
court, administrative agency, or governmental authority (federal,
state or local);
(k) Any contract, commitment, arrangement or
relationship which is violative of any federal, state or local
statute, law, rule, regulation or ordinance, including, without
limitation, any such matter that would restrain trade or restrict
competition; and
(l) Any other material contract, commitment or
agreement whether or not made in the ordinary course of business.
The contracts set forth on Exhibit 2.1.14 are valid and binding on LVB
and Hughes and on any other contracting party and there are no defaults or
events that with the giving of notice of the lapse of time could become a
default by LVB or Hughes or by any other contracting party.
2.1.15 Patents, Trademarks and Similar Rights.
(a) Except as identified on Exhibit 2.1.15(a), neither
LVB nor Hughes owns or has any rights, liabilities or obligations with
respect to any patents, trademarks, service marks, trade names or
copyrights or to any secret or proprietary licenses, processes,
designs, formulas, computer programs, inventions, proprietary
manufacturing
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or mining techniques, technology, research and development, and
know-how ("Intangibles") and there are none of these items which are
necessary for the business of LVB or Hughes as presently conducted.
Hughes is the sole owner or licensee of all of the Intangibles free
from any restriction, right, encumbrance or other burden.
(b) The attached Exhibit 2.1.15(b) contains a complete
and accurate list or description of all contracts pursuant to which
LVB or Hughes has authorized any person to use or pursuant to which
any person has the right to use any of the Intangibles owned by LVB or
Hughes and all contracts pursuant to which LVB or Hughes is authorized
by any person to use any of the Intangibles not owned by LVB or
Hughes. Failure to renew, cancellation or termination of any of the
contracts by which LVB or Hughes is authorized to use any of the
Intangibles or another party would not adversely affect the business
of LVB or Hughes.
(c) Except as set forth in the attached Exhibit
2.1.15(c):
(i) No product, license, patent, process, method,
substance, part or other material presently being sold or
employed or contemplated to be sold or employed by LVB, Hughes
or Seller infringes on any rights owned or held by any other
person;
(ii) There is no pending or threatened claim or
litigation against LVB, Hughes or Seller contesting the right
of LVB, Hughes or Seller to sell or use any such product,
license, patent, process, method, substance, part or other
material;
(iii) No product, license, patent, process, method,
substance, part or other material presently being sold or
proposed to be sold or employed by any
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person infringes on or may infringe on any rights of LVB or
Hughes, nor is there pending or proposed, any patent,
formulation, invention, device, application, or principle or
any statute, law, rule, regulation, standard, or code, that
would adversely affect any product, process, method,
substance, part or other material presently being sold or
proposed to be sold or employed by LVB or Hughes; and
(iv) No default has occurred, or will be caused by
the transaction contemplated by this Agreement, in any
contract which authorizes LVB or Hughes to use any of the
Intangibles owned by another party.
2.1.16 Licenses and Permits.
(a) The attached Exhibit 2.1.16(a) is a complete and
accurate list of all licenses, permits, registrations and other
authorizations (and all applications therefor) of federal, state,
county or local governmental, regulatory or administrative agencies or
authorities held by, necessary to, required by or used by LVB or
Hughes in the conduct of its businesses, including, without
limitation, all environmental, licenses, permits, registrations and
other authorizations.
(b) No revocation, withdrawal or inability to renew any
of such licenses, permits, registrations and other authorizations is
pending or threatened.
(c) LVB and Hughes has obtained all necessary consents
in connection with all such licenses, permits, registrations and
authorizations relating to the sale of the Shares. All of such
licenses, permits, registrations and authorizations shall be in full
force and effect on and after the Closing.
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2.1.17 Suppliers.
(a) A complete and accurate list and description of all
suppliers of products or services to LVB or Hughes aggregating more
than $25,000 annually during either of the last two (2) calendar years
is set forth in the attached Exhibit 2.1.17(a).
(b) The names of any sole source suppliers of goods or
services to LVB or Hughes, with respect to which practical alternative
sources of supply are not available on comparable terms and
conditions, are listed in the attached Exhibit 2.1.17(b).
(c) To the best of Seller's and LVB's knowledge, the
consummation of the transactions contemplated by this Agreement will
not result in the loss to Hughes of any of its suppliers or customers,
and there are no pending or threatened developments with respect to
any of Hughes' its suppliers or customers which would have a material
adverse effect on the business.
2.1.18 Insider and Inter-Company Transactions.
(a) A complete and accurate list and brief description
of all contracts or other transactions involving LVB, Hughes or Seller
with respect to which any officer, director, employee or shareholder
of either of them or any person related to any of the foregoing by
blood or marriage is a party, or is in any other way involved, or has
any obligations or liabilities with, is set forth in the
attached Exhibit 2.1.18(a).
(b) Except as disclosed on Exhibit 2.1.18(b), neither
LVB nor Hughes is indebted to any shareholder, director, officer,
employee or agent of LVB, Hughes or Seller, except for amounts due as
normal salary, wages, commissions, or reimbursements
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of ordinary business expenses, and no shareholder, director, officer,
employee, or agent of LVB, Hughes or Seller is indebted to Hughes a
Seller.
2.1.19 Tax Matters.
(a) LVB and Hughes, each partnership, joint venture in
which either is a member or participates in, have duly filed all tax
or tax information returns with respect to any taxes which either is
required to have filed on or at any time prior to the Closing Date,
including, without limitation, income tax returns for fiscal 1993 and
prior fiscal years and sales and other periodic tax returns required
to be filed on or at any time prior to the Closing Date. All such tax
or tax information returns are, or will be when filed, true and
correct in all material respects. LVB and Hughes have duly paid all
taxes (including, without limitation, estimated taxes, penalties,
interest and additions to taxes), due and payable (or claimed to be
due and payable by any federal, state, county, local, foreign or other
taxing authority) and has properly accrued its tax liabilities in the
Financial Statements and the Interim Statements.
(b) Except as disclosed in Exhibit 2.1.19, LVB's and
Hughes' federal income tax returns have not been audited in the past
ten years. All federal and state income tax deficiencies proposed as
a result of any audits or examinations of LVB and Hughes have been
paid, reserved against or settled. Neither LVB or Hughes have given
or been requested to give waivers of any statutes of limitations
relating to the payment of taxes.
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(c) All taxes which LVB or Hughes is required by law to
withhold or collect have been duly withheld or collected and, to the
extent required, have been or are being paid over to the proper
governmental authorities on a timely basis.
2.1.20 Labor Matters. Except as disclosed in Exhibit 2.1.20, there
are no unfair labor practice, equal employment opportunity or wage and hour
complaints against LVB or Hughes pending before the National Labor Relations
Board or any other governmental or regulatory board or agency performing
similar functions. There is no proceeding with respect to the LVB or Hughes
actually pending or threatened before the National Labor Relations Board or any
other governmental or regulatory board or agency performing similar functions.
There is no labor strike, dispute, slowdown, or stoppage, actually pending with
respect to LVB or Hughes or threatened against or involving LVB, Hughes or
Seller. There is no pending representation question or organizational
activities concerning the employees of LVB, Hughes or Seller.
2.1.21 Environmental and Occupational Matters.
(a) All federal, state and local permits, licenses and
authorizations required for, or used in, the construction, use and
operation of the Real Property and all other property, both real and
personal, including, but not limited to, furniture, fixtures,
equipment and plants, (all of which real and personal property shall
hereafter be referred to as "RAP Property") have been obtained and are
presently valid and in full force and effect. A list of all such
permits, licenses and authorizations is attached hereto as Exhibit
2.l.21(a). LVB and Hughes shall cooperate fully with Buyer in order
to transfer such permits, licenses or authorizations, or in order to
obtain new ones, for the construction,
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use and operation of the RAP Property and shall cooperate fully with
Buyer in preparing and executing any and all documents necessary to
obtain any of such permits, licenses or authorizations. Buyer shall
have all such permits, licenses and authorization as of the Closing
Date. No other permits, licenses or authorizations are necessary, or
required for the construction, use and operation of the RAP Property
or any other aspect of the conduct of LVB's and Hughes' businesses;
(b) None of LVB's, Hughes' or Seller's RAP property or,
to the best of LVB's, Hughes' or Seller's knowledge, any property of
their predecessors has been used to handle, treat, store or dispose of
any chemical, hazardous or toxic waste or substance and Hughes' and/or
Seller's RAP Property or, to the best of Seller's knowledge, any real
property of the predecessors or any adjacent or adjoining real
property, including, but not limited to, air, atmosphere, all soils,
groundwaters and surface waters located on, in, over or under either
Real Property or real property, is not contaminated (or ever has been
contaminated) with any chemical, hazardous or toxic waste or substance
or other substances or pollutants which contamination may give rise to
any obligation under any federal, state or local law, rule,
regulations or ordinance, including, but not limited to, the federal
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section Section 9601 et seq and the common law. Further,
no real or personal property or air or atmosphere of any sort or
description, wherever situated, has, by reason of the handling,
storage, transportation, treatment, disposal or emission of any
chemical, hazardous or toxic, waste or material or other substance or
pollutant by LVB, Hughes or Seller (their employees, agents or
contractors) been contaminated or adversely affected
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with or by such wastes, substances, materials or other substances or
pollutants which contamination or adverse effect has or may give rise
to any liability or expense under or by reason of any federal, state
or local law, rule, regulation or ordinance, the common law or any
claim;
(c) All tanks which, when considered with all
associated piping, are located either wholly or partially below the
surface of the ground and without regard to whether they are in
contact with soil, within a building or containment structure or
otherwise (all such tanks being hereafter referred to as "Underground
Tanks") located in, on or under LVB's, Hughes' or Seller's Real
Property are identified on Exhibit 2.1.21(c). All Underground Tanks
are in a state of good condition and repair and have not leaked nor
are they presently leaking any of the contents which they have held or
presently hold. All Underground Tanks have been identified,
registered, located, constructed, operated and maintained as required
by any applicable federal, state or local law, rule, regulation or
ordinance;
(d) There are no outstanding violations of or any
consent decrees pending or entered against LVB, Hughes or Seller,
regarding environmental, occupational (meaning worker- or
work-place-related), safety or land use matters, including, but not
limited to, matters affecting the emission of air pollutants, the
discharge of water pollutants, the management of hazardous or toxic
substances or wastes, or noise;
(e) There are no claimed, or, to the best of Seller's
knowledge, threatened violations affecting LVB, Hughes or Seller or,
to the best of Seller's knowledge, their predecessors or their
properties with respect to any federal, state or local environmental,
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occupational or safety law, rule, regulation, ordinance, permit,
license or authorization, and there are no present discussions with
any federal, state or local governmental agency concerning any alleged
violation of environmental, occupational or safety laws, rules,
regulations, ordinances, permits, licenses or authorizations. There
are no facts which could support any claims, allegations or threats or
any claims of environmental or occupational harm or damage caused by
or attributable to, in whole or in part, the ownership or occupancy of
the RAP Property or any of LVB's, Hughes' or Seller's activities or
businesses. Further, and without limiting the foregoing, to the best
of Seller's knowledge, no adjacent or adjoining property owner or user
has been, claimed against as a result of, alleged to have been in
violation of, or threatened with a violation of, any federal, state or
local environmental law, rule, regulation, ordinance, permit, license
or authorization and is not involved in any discussions with any
federal, state or local governmental agency regarding any of the same;
(f) All operations conducted on, in, over or under
LVB's, Hughes' or Seller's Real Property, whether by LVB, Hughes or
Seller or, to the best of Seller's knowledge, their predecessors or
others, have been and are in compliance with all federal, state and
local statutes, rules, regulations, ordinances, permits, licenses and
authorizations relating to environmental compliance and control,
including, but not limited to, occupational and safety related
matters;
(g) There are no pending threatened claims, lawsuits or
administrative proceedings against LVB, Hughes, Seller or, to the best
of Seller's knowledge, their predecessors regarding environmental,
occupational or safety compliance, control or
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<PAGE> 31
liability and no facts which could give rise to any such claim,
lawsuit or administrative proceeding; and
(h) To the best of Seller's knowledge, there has been
no environmental damage or any past or present threat of any damage to
LVB's, Hughes' or Seller's air, water or property.
2.1.22 Insurance. The attached Exhibit 2.1.22 is an
accurate and complete list of all policies of liability (including
environmental impairment liability), fire, workers' compensation, and other
forms of insurance (including self-insurance) owned or held by, or relating to
LVB or Hughes specifying any notice or other information possessed by LVB or
Hughes or Seller, regarding possible claims under, or cancellation of, or
premium increases relating to, such policies. All such policies are valid and
enforceable and in full force and effect, with current premiums and any other
obligations under such insurance paid, are underwritten by unaffiliated, and
financially sound and reputable insurers, are sufficient for all applicable
requirements of law, and provide insurance, including, without limitation,
liability and products liability insurance, in such amount and against such
risks as in the reasonable judgment of LVB, Hughes and Seller is sufficient to
protect their properties, assets, businesses and operations. All such policies
will remain in full force and effect through their respective expiration dates
and will not in any way be affected by, or terminated or lapse by reason of,
the transactions contemplated by this Agreement unless Buyer modifies or
terminates them. There are no retrospective or retroactive premiums in
connection with the insurance policies.
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2.1.23 Legal Proceedings, Etc. and Compliance
(a) Except as set forth in the attached Exhibit
2.1.23(a), there are no legal, administrative, arbitration or other
claims, actions or proceedings or governmental investigations,
including, without limitation, antitrust, personal injury, patent
infringement or property damage actions, pending or threatened
against, or brought on behalf of, or affecting LVB, Hughes or Seller
or any injunctions or decrees currently in effect and involving or
affecting LVB, Hughes or Seller.
(b) LVB, Hughes is not being owned, leased or operated,
in violation of any order, decree, judgment, law, statute, ordinance,
rule, regulation, policy or guideline of any court, administrative
agency or governmental authority, federal, state or local.
(c) Except for those noted on the attached Exhibit
2.1.23(c), there have been no official citations or notices of
violations received or threatened from any court, administrative
agency or governmental authority which relate to any aspect of the
respective businesses conducted by LVB, Hughes or Seller including,
but not limited to, any such notices or citations from the
Occupational Safety and Health Administration, the Equal Employment
Opportunity Commission, the Department of Justice, the Federal Trade
Commission, or from any environmental protection agency or similar
authority or agency (federal, state or local).
(d) There are no legal, administrative, arbitration or
other actions or proceedings or governmental investigations, by or on
behalf of any individual or any federal, state or local agency or
authority sending or threatened against LVB, Hughes or Seller relating
to any federal, state, or local antitrust or trade regulation laws,
rules or
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regulations, including, without limitation, those relating to
restraints of trade or competition; unfair trade practices; contracts,
arrangements, relationships or conspiracies in restraints of trade;
price fixing; price discrimination, boycotts; or tying arrangements.
2.1.24 Illegal Payments. Neither LVB, Hughes or Seller,
nor any director, officer, agent, employee, shareholder or other person
associated with or acting on behalf of any of LVB, Hughes or Seller have,
directly or indirectly, (a) used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns from corporate funds, (c) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (d) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets, (e) made any
false or fictitious entry on the books or records of LVB, Hughes or Seller, (f)
made any bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment, or (g) made any bribe, kickback, or other payment of a similar or
comparable nature, whether lawful or not, to any person or entity, private or
public, regardless of form, whether in money, property, or services, to obtain
favorable treatment in securing business or to obtain special concessions, or
to pay for favorable treatment for business secured or for special concessions
already obtained.
2.1.25 Disclosure. No representation or warranty by LVB,
Hughes or Seller in this Agreement and no statement contained in any document
(including, without limitation, the Financial Statements and Exhibits to this
Agreement), certificate or other writing furnished by any of them pursuant to
the provisions of this Agreement misrepresents any material fact or omits any
material fact necessary to make the statements made in this Agreement not
misleading,
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which misrepresentation or omission has an adverse effect on LVB, Hughes,
Seller or their respective businesses or assets.
2.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller the following as of the date of this Agreement and as of the
Closing Date:
2.2.1 Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Ohio.
2.2.2 Authority Relative to This Agreement. Buyer has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly and validly authorized and
approved by the Board of Directors of Buyer, and no other corporate proceeding
on the part of Buyer is necessary to authorize this Agreement or the
consummation of transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by Buyer and constitutes a
valid and binding agreement of Buyer, enforceable against it in accordance with
its terms, except as it may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights.
2.2.3 No Violation. Neither the execution and delivery
by Buyer of this Agreement nor the consummation by Buyer of the transactions
contemplated by this Agreement, (a) will require any authorization, consent or
approval of any governmental or regulatory authority or of any other person or
entity except for Buyer's Board of Directors or Lenders, (b) will conflict
with, or breach any provision of, the Articles of Incorporation or bylaws of
Buyer, (c) will violate or breach any provision of, constitute a default under,
result in the creation of
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any lien or security interest under, or result in the termination of, any of
the terms or conditions of any material note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, registration or other authorization,
lease, contract, agreement or other instrument, commitment or obligation to
which Buyer is a party, or by which it or any of its properties or assets may
be bound, which would have a material adverse financial effect on Buyer, or (d)
violate any order, writ, injunction, decree, judgment, arbitration award, or
any statute, rule, regulation or ruling of any court or governmental authority,
United States or foreign, applicable to Buyer or to any of its respective
properties or assets, which requirement, conflict or violation would have a
material adverse affect on Buyer's ability to consummate the transactions
contemplated by this Agreement.
2.2.4 Financial Capacity and Financials. Buyer has the
financial capability and has adequate net worth to undertake to pay and to pay
the purchase price set forth in Section 1.2.
2.2.5 Investment Purpose. Buyer is a sophisticated
investor and is purchasing the Shares for investment and not with a view to, or
for, sale in connection with any distribution of the Shares.
2.2.6 Disclosure. No representation or warranty by Buyer
in this Agreement and no statement contained in any document, certificate or
other writing furnished by it pursuant to the provisions of this Agreement
misrepresents any material fact or omits any material fact necessary to make
the statements made in this Agreement not misleading, which misrepresentation
or omission has an adverse effect on the Parent, and of the Subsidiaries or
their respective businesses or assets.
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3. COVENANTS OF SELLER AND BUYER.
3.1 Covenants of Seller.
3.1.1 Delivery of Articles and Bylaws. Seller shall
deliver LVB's and Hughes' Articles, bylaws, minute books and stock transfer
records to Buyer upon Closing.
3.1.2 Resignations. Seller shall obtain the
resignations of the current directors of LVB and Hughes from office in a form
reasonably satisfactory to Buyer, and Seller shall deliver such resignations to
counsel for Buyer at the Closing, which resignations shall be effective as of
the Closing. At the written request of Buyer, Seller shall obtain the
resignations of any officers of LVB and Hughes in a form reasonably
satisfactory to Buyer, and Seller shall deliver such resignations to counsel
for Buyer at the Closing, which resignations shall be effective as of the
Closing.
3.1.3 Termination of Employment Agreements. On or prior
to the Closing Date, Seller shall cause any employment contracts, agreements or
arrangements listed in Exhibit 2.1.14, other than the collective bargaining
agreement, to be terminated and released without cost, expense or contribution
by evidence of such termination shall be delivered to Buyer at Closing.
3.1.4 Bank Account Authorization Cards. Prior to the
Closing, Seller shall deliver to Buyer copies of all records, including all
signature or authorization cards, pertaining to bank accounts and safe deposit
boxes of LVB, Hughes and Seller shall cooperate with Buyer in effecting changes
in the authorization cards.
3.1.5 Title Policies. On or prior to the Closing Date,
Seller shall provide Buyer with the existing title policies and abstracts in
respect of the parcels of Real Property.
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3.1.6 Consulting, Confidentiality and Non-Competition.
Seller shall obtain the execution by Louis V. Buzzitta of the Consulting
Agreement in the form of the attached Exhibit 3.1.6, and Seller shall deliver
it to Buyer at the Closing.
3.1.7 Bank Debt. Prior to the Closing, Seller shall
notify Buyer of the precise amount of principal, interest and other charges
which are required to be paid to fully discharge all indebtedness of LVB or
Hughes to any financial institution.
3.1.8 Further Assurances. Seller, will promptly prepare,
execute and deliver to Buyer such lists, instruments and documents and
cooperate with Buyer in such other respects as Buyer may from time to time,
before or after the closing reasonably request.
3.2 Covenant of Buyer.
3.2.1 Collection of Receivables. Buyer shall cause
Hughes to use reasonable collection efforts in connection with collecting the
accounts and notes receivable incurred on or prior to the Closing Date. Buyer,
the shall retain the right to determine what efforts are prudent and shall be
undertaken in connection with the collection of such receivables, including,
without limitation, which debtors, if any, to pursue in court to collect such
receivables.
4. CONDITIONS TO CLOSING
4.1 Conditions to Buyer's Obligations. The obligations of Buyer
under this Agreement are subject to the satisfaction of the following
conditions at or prior to the Closing, provided that Buyer may waive the
satisfaction of any such condition pursuant to a writing signed by Buyer;
4.1.1 Accuracy of Representations and Warranties. All
representations and warranties made by LVB, Hughes and Seller in this
Agreement, including, without limitation,
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<PAGE> 38
the representations and warranties in Section 2.1, shall be true, accurate and
correct at and as of the Closing Date, with the same force and effect as
though such representations and warranties had been made at and as of the
Closing Date, and Buyer shall not have discovered any error, misstatement or
omission in the representations and warranties of LVB, Hughes and Seller,
contained in this Agreement.
4.1.2 Compliance with Covenants. All actions,
undertakings, covenants or agreements required to be performed by LVB, Hughes
and Seller, prior to the closing, including, without limitation, the Covenants
of Seller in Section 3.1, have been so performed or complied with in all
respects on or prior to the Closing Date;
4.1.3 Certificate of Seller and Officers. Seller shall
have delivered to Buyer a Certificate, dated as of the Closing Date, signed by
LVB, Hughes and Seller certifying as to the fulfillment of the conditions
specified in Sections 4.1.1 and 4.1.2;
4. 1.4 Consents. LVB, Hughes and Seller shall have
obtained the approvals and consents to the transactions contemplated by this
Agreement set forth on Exhibit 2.1.3.
4.1.5 Lender's Consent. Buyer shall have obtained
its Lenders' consent satisfactory to permit it to acquire and to operate LVB
and Hughes and which is otherwise on terms and conditions satisfactory to Buyer
in the exercise of its sole discretion.
4.1.6 No Material Litigation. No action or proceeding
shall have been instituted or threatened against LVB, Hughes or Seller, which
adversely affects or may adversely affect the business, business prospects, or
financial condition of LVB or Hughes and no action or proceeding shall have
been instituted or threatened by any governmental instrumentality, agency, or
other person before any court or governmental agency to restrain, prevent, or
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<PAGE> 39
condition this Agreement or the consummation of the transactions contemplated
by this Agreement, which, in the opinion of the Buyer makes it inadvisable to
consummate such transactions.
4.1.7 No Material Casualty. There shall have been no
material adverse loss, damage or casualty to LVB's or Hughes' assets between
the date of this Agreement and the Closing Date;
4.1.8 Other Documents. LVB, Hughes and Seller shall have
delivered the documents required to be delivered by Seller pursuant to this
Agreement.
4.1.9 No Material Change in Exhibits. There shall have
been no material adverse change in the information required to be contained in
the Exhibits to this Agreement.
4.1.10 Lease. Louis V. and Catherine F. Buzzitta shall
enter into a lease with Hughes of the manufacturing facility in which Hughes
currently operates, which is satisfactory in all respects to Buyer.
4.1.11 Opinion of Counsel. On the Closing Date, Clary,
Nantz, Wood, Hoffius, Rankin & Cooper as counsel to the LVB, Hughes and Seller,
shall deliver to Buyer its opinion, dated the Closing Date and addressed to
Buyer, substantially in the form of Exhibit 4.1.11 hereto.
4.2 Conditions to Seller's Obligations. The obligations of Seller
under this Agreement are subject to the satisfaction of the following
conditions at or prior to the Closing, provided that Seller may waive the
satisfaction of any such condition pursuant to a writing signed by Seller:
4.2.1 Accuracy of Buyer's Representations and Warranties.
All representations and warranties made by Buyer in this Agreement, including
without limitation, the
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<PAGE> 40
representations and warranties in Section 2.2, shall be true, accurate and
correct at and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made at and as of the Closing
Date;
4.2.2 Compliance with Covenants. All actions,
undertakings, covenants, or agreements required to be performed by Buyer prior
to the Closing, including, without limitation, the covenants of Buyer in
Section 3.2, shall have been performed or complied with on or prior to the
Closing Date;
4.2.3 Certificate of Buyer's Officers. Buyer shall have
delivered to Seller a Certificate, dated as of the Closing Date, signed by the
Vice President of Buyer, certifying as to the fulfillment of the conditions
specified in Sections 4.2.1 and 4.2.2;
4.2.4 Delivery of Other Documents. Buyer shall have
delivered the documents required to be delivered by Buyer pursuant to this
Agreement; and
4.2.5 Opinion of Counsel. On the Closing Date, Honigman,
Miller, Schwartz and Cohn, as counsel for Buyer, shall deliver to Seller its
opinion, dated the Closing Date and addressed to Seller, in the form of Exhibit
4.2.5 hereto.
5. INDEMNIFICATION.
5.1 LVB's, Seller's and Hughes' Indemnification of Buyer.
Notwithstanding whether or not the Closing occurs, and regardless of any
investigation made at any time by or on behalf of Buyer or any information
Buyer or any of Buyer's employees, representatives, agents, attorneys,
accountants, lawyers, or consultants may have, LVB, Hughes (as to LVB and
Hughes, only if the Closing does not occur) and Seller, jointly and severally,
shall indemnify, defend and hold harmless Buyer, LVB and Hughes (as to LVB and
Hughes only if the Closing occurs) and
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<PAGE> 41
any of their subsidiaries or affiliates from and against any demand, claim,
action or cause of action, damage liability, loss, claim, cost, debt, expense,
obligation, public charge, lawsuit, contract, agreement, undertaking, whether
known or unknown, fixed, actual, accrued or contingent, liquidated or
unliquidated (including, without limitation, interest, penalties, reasonable
attorney's fees and other actual reasonable costs and expenses incident to this
transaction or proceedings or investigations or the defense of any claim,
whether or not litigation has commenced, and including, without limitation, any
and all penalties, interest, or additional taxes, federal, state, or local
found to be due from Buyer) ("Buyer's Damages") arising out of, resulting from,
or relating to, and to pay Buyer, LVB and Hughes on demand the full amount of
any sum which Buyer, LVB and/or Hughes or any of their subsidiaries or
affiliates pays or become obligated to pay on account of,
(a) Any breach of any representation or warranty made
by LVB, Hughes or Seller in this Agreement or in any of the documents
executed in connection with this Agreement;
(b) Any failure of LVB, Hughes or Seller, duly to
perform or observe any term, provision, covenant or agreement to be
performed or observed by LVB, Hughes or Seller, pursuant to this
Agreement or the Consulting Agreements or pursuant to any of the
documents executed in connection with this Agreement;
(c) Any claim for warranty work or repairs or any claim
for injury in connection with the work performed, in whole or in part,
by LVB, Hughes or Seller prior to the Closing;
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(d) Seller's failure to close this transaction as
provided in this Agreement, which does not result from a failure of
one or more of the conditions to Seller's obligations contained in
Section 4.2 of this Agreement.
5.2 Buyer's Indemnification of Seller. Notwithstanding
whether or not the Closing occurs, Buyer shall indemnify, defend and
hold harmless Seller, LVB and Hughes (as to LVB and Hughes, only if
the Closing does not occur) from and against any demand, claim, action
or cause of action, damage liability, loss, claim cost, debt, expense,
obligation, tax, assessment, public charge, lawsuit, contract,
agreement, undertaking, deficiency of any kind or nature, whether
known or unknown, fixed, actual, accrued or contingent, liquidated or
unliquidated (including, without limitation, interest penalties,
reasonable attorney's fees and other actual reasonable costs and
expenses incident to this transaction to proceedings or investigations
or the defense of any claim, whether or not litigation has commenced)
("Seller's Damages") arising out of, resulting from, or relating to,
and to pay Seller on demand the full amount of any sum which Seller
pays or becomes obligated to pay on account of:
(a) Any breach of any representation or warranty made
by Buyer in this Agreement;
(b) Any failure of Buyer duly to perform or observe any
term, provision, covenant or agreement to be performed or observed by
Buyer pursuant to this Agreement; or
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<PAGE> 43
(c) Buyer's failure to close this transaction as
provided in this Agreement, which does not result from a failure of
one or more of the conditions to Buyer's obligations contained in
Section 4.1 of this Agreement.
5.3 Defense of Claims.
(a) If either party ("Indemnified Party") receives
notice of, or discovers, any claim or the commencement of any action
for which the other party ("Indemnitor") is or may be liable under
this Section 5 ("Indemnified Claim"), the Indemnified Party shall
promptly, and in any event within ten business days, notify the
Indemnitor of such claim or action in writing and shall provide copies
of any pleadings or other documents evidencing such Indemnified Claim.
The Indemnitor shall be entitled to participate in the defense of any
Indemnified Claim, and, if it so elects, to assume the defense of the
Indemnified Claim, with counsel reasonably satisfactory to the
Indemnified Party. After written notice from the Indemnitor to the
Indemnified Party of such election to assume the defense, the
Indemnitor shall not be liable to the Indemnified Party for any legal
or other expenses subsequently incurred by the Indemnified Party in
connection with the defense of the Indemnified Claim, other than costs
and expenses of the Indemnified Party incurred at the request of the
Indemnitor. The assumption of the defense of any such Indemnified
Claim shall not be deemed an admission by the Indemnitor that it is
liable for any such Indemnified Claim. The Indemnitor may, at its
election, settle or compromise any Indemnified Claim but the
Indemnified Party shall not settle or compromise any Indemnified Claim
without the prior consent of the Indemnitor, unless the Indemnitor
shall have failed or refused to assist the Indemnified Party in the
defense
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of such Indemnified Claim or shall unreasonably withhold its consent
to a proposed settlement or compromise of such claim. The parties
shall use their best efforts to agree on whether Buyer's Damages or
Seller's Damages exist, and if so, the amount. Any amounts determined
to be owed shall be paid within 30 days of such determination.
(b) The parties agree to reasonably cooperate with each
other in the defense of claims under this Agreement.
(c) The parties shall not assert any Indemnified Claim
until the aggregate of all such claims exceed $10,000 in which case
all of such claims may be asserted, including the first $10,000.
5.4 Survival of Indemnification and Other Remedies. This
indemnification provision and the obligations of the parties pursuant to this
indemnification provision shall survive the Closing and shall be binding upon,
and fully enforceable against, Buyer, LVB, Seller and Hughes and each of their
respective successors and assigns at all times for a period of five (5) years
after the Closing Date. In addition to the indemnification provisions, Buyer,
LVB, Seller, and Hughes shall have all other legal and equitable remedies
provided by law for breach of this Agreement, including specific performance
and consequential damages.
5.5 Buyer's Right to Offset. Buyer shall have the right to offset
any indemnification claims against Seller, or any of Seller's successors or
assigns, against the Promissory Notes provided in Section 1.3.2(b) or against
the payments under the Consulting Agreements. Such offset amounts shall be
treated as if they were fully paid by Buyer to Seller or to the parties to the
Consulting Agreements. Buyer shall place any disputed offset monies in escrow
in accordance with the terms of this Stock Purchase Agreement. This offset
remedy of Buyer is
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not exclusive but is cumulative with all other remedies of Buyer against Seller
or the parties to the Consulting Agreements, and this remedy does not in any
way limit their liability to Buyer under this Agreement.
6. MISCELLANEOUS PROVISIONS.
6.1 Transfer and Other Taxes. Any sales, use, stock transfer,
excise or other taxes payable in connection with the sale of the Shares to
Buyer and consummation of the transactions contemplated by the Agreement shall
be paid by Seller, and evidence of the payment of such taxes shall be furnished
to Buyer upon its request.
6.2 Finder's Fee. Buyer and Seller shall each pay or discharge
and shall indemnify and hold the other harmless from and against any and all
claims or liabilities for brokerage commissions or finder's fees incurred by
any action taken by it.
6.3 Expense. Any attorneys' fees or other expenses incurred by
LVB or Seller in connection with the preparation, negotiation, performance or
Closing of this Agreement or the exhibits to this Agreement or otherwise
attributed to the sale of the Shares will be borne by Seller and not charged,
directly or indirectly, to Hughes or LVB.
6.4 Survival of Provisions. The representations, warranties, and
covenants of Seller and Buyer contained in this Agreement shall survive for a
period of five (5) years after the Closing, and each of them shall be binding
upon Seller and Buyer at all times during this period.
6.5 Governing Law and Forum. This Agreement shall be governed by
the laws of the State of Michigan, (regardless of the laws that might otherwise
govern under applicable Michigan principles of conflicts of law) as to all
matters, including, but not limited to, matters of validity, construction,
effect, performance and remedies. Each of the parties consents to be
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subject to personal jurisdiction of the Courts of Michigan which shall be the
sole and exclusive forum for the resolution of all disputes under this
Agreement and its related documents.
6.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.7 Interpretation. The article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
6.8 Entire Agreement. This Agreement, including the exhibits,
schedules, documents, certificates and instruments referred to in this
Agreement, embodies the entire agreement and understanding of the parties to
this Agreement in respect to the subject matter of this Agreement. There are
no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to in this
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter, and any such prior
agreements or understandings are merged into this Agreement.
6.9 Severability. If any provision of this Agreement is
determined to be illegal or invalid, such illegality or invalidity shall have
no effect on the other provisions of this Agreement shall remain valid,
operative and enforceable.
6.10 Notices. Any notice required or permitted to be given
pursuant to this Agreement shall be sent by certified or registered mail, as
follows:
To Seller:
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To LVB or Hughes: LVB Industries, Inc. or Hughes Plastics, Inc.
211 Kerth Street
P.O. Box 86
St. Joseph, Michigan 49085
Attention: Louis V. Buzzitta
With Copies To: Richard J. Rankin, Esq.
221 Michigan Avenue
Grand Rapids, Michigan 49503
To Buyer: Larizza Industries, Inc.
201 W. Big Beaver Road
Suite 1040
Troy, Michigan 48084
Attention: Ronald T. Larizza
With Copies To:
Patrick T. Duerr, Esq.
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
For the purpose of this Agreement, receipt of any notice pursuant to this
Agreement shall occur two (2) business days after the mailing of such notice.
6.11 No Waiver. No waiver of any breach of any agreement or
provision contained in this Agreement shall be deemed a waiver of any preceding
or succeeding breach of this Agreement or of any other agreement or provision
contained in this Agreement. No extension of time for the performance of any
obligations or acts shall be deemed an extension of time for the performance of
any other obligations or acts.
6.12 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
permitted successors and assigns; provided
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that Seller may not assign or transfer any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of Buyer and
any purported assignment or transfer by Seller shall be void; provided,
further, that Buyer may assign its rights and delegate its duties under this
Agreement to an affiliate of Buyer.
6.13 Definition of "To the Best of Knowledge of LVB, Hughes and/or
Seller". "To the best of LVB's, Seller's and/or Hughes' knowledge" shall mean
and include in each case, all information, facts, events and circumstances that
any Seller or any officer, director, manager or shareholder of LVB or Hughes
knows or should have known upon appropriate inquiry and investigation.
IN WITNESS WHEREOF, Buyer has caused this Agreement to be signed by
its duly authorized officer or official, and LVB, Hughes and Seller have signed
this Agreement, all as of the date first above written.
LVB Industries, Inc. Larizza Industries, Inc.
By: /s/ LOUIS V. BUZZITTA By: /s/ RONALD T. LARIZZA
Its: President Its: CEO
Hughes Plastics, Inc.
/s/ JOSEPH T. BUZZITTA
Joseph T. Buzzitta
By: /s/ LOUIS V. BUZZITTA /s/ LOUIS V. BUZZITTA
Louis V. Buzzitta
Its: President /s/ JAMES V. BUZZITTA
James V. Buzzitta
/s/ DIANE M. BUZZITTA
Diane M. Buzzitta
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Notwithstanding the execution of the Stock Purchase Agreement and any other
documents relating to the transactions described herein, or contemplated
hereby, in no event shall the Buyer have any recourse to the Trustee
individually or any of the Trustee's assets or properties not constituting
property of the Trust.
/s/ PHILIP F. WOOD
Diane M. Buzzitta Trust,
Philip F. Wood Trustee
The undersigned are spouses of Joseph, Louis and James Buzzitta, and
they hereby, jointly and severally, represent and warrant to, and covenant
with, Buyer that they, (a) never had and do not presently have any ownership or
other claim, right or interest in the Shares or the proceeds of the sale of the
Shares, (b) will not assert any such claim, right or interest in the future,
(c) understand that Buyer is entering into this Stock Purchase Agreement and
purchasing the Shares in reliance upon the accuracy of these representations
and warranties, (d) desire Buyer to purchase the Shares, will benefit from such
purchase and are making these representations and warranties to induce Buyer to
purchase the Shares, and (e) will indemnify, hold harmless and defend Buyer
from any liability, cost or expense (including reasonable attorneys' fees)
which may arise from any breach of these representations, warranties or
covenants.
/s/ SUSAN BUZZITTA
Susan Buzzitta
/s/ CATHERINE F. BUZZITTA
Catherine F. Buzzitta
/s/ PATRICIA A. BUZZITTA
Patricia A. Buzzitta
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<PAGE> 50
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description Page
<S> <C> <C>
1.3.1(a) Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3.1(b)(I) $1,200,000 Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3.1(b)(II) $500,000 Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3.1(d) Irrevocable Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.2 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.1(a) Jurisdictions Qualified to do Business . . . . . . . . . . . . . . . . . . . 6
2.1.3 Exception to Consents/Approvals . . . . . . . . . . . . . . . . . . . . . . 6
2.1.4(a)(I) LVB/Hughes Outstanding Capital Stock . . . . . . . . . . . . . . . . . . . . 7
2.1.4(a)(II) Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.7(a) LVB/Hughes Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.7(b)(I) LVB Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.7(b)(II) Hughes Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.7(c)(I) Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.8(a) Miscellaneous Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.9(a) Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.9(b) Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.11(a) Accounts/Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.12(b) Outstanding Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.12(c) Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 14
2.1.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.14(a) Representations and Warranties Regarding Benefit Plans . . . . . . . . . . . 17
2.1.15(a) Patents/Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.15(b) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.15(c) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1.16(a) Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.17(a) Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.17(b) Source Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1.18(a) Insider Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1.18(b) Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1.19 Exceptions to Federal Tax Audits . . . . . . . . . . . . . . . . . . . . . . 22
2.1.20 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1.21(a) Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1.21(c) Underground Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.1.22 Policies of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1.23(a) Legal Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1.23(c) Citations/Notices of Violations . . . . . . . . . . . . . . . . . . . . . . 27
3.l.6 Consulting, Confidentiality and Non-Competition . . . . . . . . . . . . . . 33
4.1.11 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.2.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
46
<PAGE> 1
EXHIBIT 10.15(a)
GUARANTY
THIS GUARANTY dated as of October 21, 1994, is executed in favor of
BANK OF AMERICA ILLINOIS (individually and as Agent) and the other Banks which
are or hereafter become parties to the Credit Agreement referred to below.
W I T N E S E T H:
WHEREAS, Larizza Industries, Inc. (the "Company") has entered into a
Credit Agreement dated as of May 6, 1994 (as amended or otherwise modified from
time to time, the "Credit Agreement") with various financial institutions (the
"Banks") and Bank of America Illinois, individually and as agent (in its
capacity as agent, together with any successor in such capacity, the "Agent"),
pursuant to which the Banks have agreed to make loans to, and issue or
participate in letters of credit for the account of, the Company; and
WHEREAS, each of the undersigned will benefit from the making of loans
and issuing letters of credit pursuant to the Credit Agreement and is willing
to guaranty the Liabilities (as defined below) as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereby
jointly and severally unconditionally, as primary obligor and not merely as
surety, guarantees the full and prompt payment when due, whether by
acceleration or otherwise, and at all times thereafter, of all obligations
(monetary or otherwise) of the Company to each of the Banks and the Agent,
howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, now or hereafter existing, or due or to become due, including
(without limitation) all obligations which arise out of or in connection with
the Credit Agreement, the Notes (as defined in the Credit Agreement), any other
Loan Document (as defined in the Credit Agreement) or any Hedging Agreement (as
defined in the Credit Agreement), in each case as the same may be amended,
modified, extended or renewed from time to time (all such obligations being
herein collectively called the "Liabilities"); provided, however, that the
liability of each of the undersigned hereunder shall be limited to the maximum
amount of the Liabilities which such undersigned may guaranty without violating
any fraudulent conveyance or fraudulent transfer law (plus all costs and
expenses paid or incurred by the Agent or any Bank in enforcing this Guaranty
against such undersigned).
Each of the undersigned agrees that, in the event of the dissolution
or insolvency of the Company or any undersigned, or the inability or failure of
the Company or any undersigned to pay debts
<PAGE> 2
as they become due, or an assignment by the Company or any undersigned for the
benefit of creditors, or the occurrence of any other Event of Default
(as defined in the Credit Agreement) under Section 12.1.4 of the Credit
Agreement, and if such event shall occur at a time when any of the Liabilities
may not then be due and payable, such undersigned will pay to the Agent for the
account of the Banks forthwith on demand the full amount which would be payable
hereunder by such undersigned if all Liabilities were then due and payable.
To secure all obligations of each of the undersigned hereunder, the
Agent and each Bank shall have a lien on and security interest in, and may,
without demand or notice of any kind, at any time and from time to time when
any Unmatured Event of Default under Section 12.1.4 of the Credit Agreement or
any Event of Default under the Credit Agreement exists, appropriate and apply
toward the payment of such obligations, in such order of application as the
Agent or the Banks may elect, any and all balances, credits, deposits, accounts
or moneys of or in the name of such undersigned now or hereafter with the Agent
or such Bank and any and all property of every kind or description of or in the
name of such undersigned now or hereafter, for any reason or purpose
whatsoever, in the possession or control of, or in transit to, the Agent or
such Bank or any agent or bailee for the Agent or such Bank.
This Guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of any of the undersigned
or that at any time or from time to time no Liabilities are outstanding) until
all Commitments (as defined in the Credit Agreement) have terminated and all
Liabilities have been paid in full.
The undersigned further agree that if at any time all or any part of
any payment theretofore applied by the Agent or any Bank to any of the
Liabilities is or must be rescinded or returned by the Agent or such Bank for
any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Company or any of the undersigned), such
Liabilities shall, for the purposes of this Guaranty, to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by the Agent or such Bank, and this
Guaranty shall continue to be effective or be reinstated, as the case may be,
as to such Liabilities, all as though such application by the Agent or such
Bank had not been made.
The Agent or any Bank may, from time to time, at its sole discretion
and without notice to the undersigned (or any of them), take any or all of the
following actions without affecting the obligations of the undersigned (or any
of them) hereunder: (a) retain or obtain a security interest in any property to
secure any
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<PAGE> 3
of the Liabilities or any obligation hereunder, (b) retain or obtain
the primary or secondary obligation of any obligor or obligors, in addition to
the undersigned, with respect to any of the Liabilities, (c) extend or renew
any of the Liabilities for one or more periods (whether or not longer than the
original period), alter or exchange any of the Liabilities, or release or
compromise any obligation of any of the undersigned hereunder or any obligation
of any nature of any other obligor with respect to any of the Liabilities, (d)
release its security interest in, or surrender, release or permit any
substitution or exchange for, all or any part of any property securing any of
the Liabilities or any obligation hereunder, or extend or renew for one or more
periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property, and (e) resort to the undersigned (or any of
them) for payment of any of the Liabilities when due, whether or not the Agent
or such Bank shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or shall have proceeded against any
other of the undersigned or any other obligor primarily or secondarily
obligated with respect to any of the Liabilities.
Each of the undersigned hereby expressly waives: (a) notice of the
acceptance by the Agent or any Bank of this Guaranty, (b) notice of the
existence or creation or nonpayment of all or any of the Liabilities, (c)
presentment, demand, notice of dishonor, protest, and all other notices
whatsoever, (d) all diligence in collection or protection of or realization
upon any Liabilities or any security for or guaranty of any Liabilities and (e)
any claim or right which such undersigned may now have or hereafter acquire
against the Company or any other person or entity that arises from the
existence, payment, performance or enforcement of the obligations of such
undersigned under this Guaranty, including (without limitation) any right of
subrogation, reimbursement, restitution, exoneration, contribution or
indemnification.
Each of the undersigned further agrees to pay all expenses (including
attorneys' fees and legal expenses) paid or incurred by the Agent or any Bank
in endeavoring to collect the Liabilities of such undersigned, or any part
thereof, and in enforcing this Guaranty against such undersigned.
The creation or existence from time to time of additional Liabilities
to the Agent or the Banks or any of them is hereby authorized, without notice
to the undersigned (or any of them), and shall in no way affect or impair the
rights of the Agent or the Banks or the obligations of the undersigned under
this Guaranty, including each of the undersigned's guaranty of such additional
Liabilities.
The Agent and any Bank may from time to time, in accordance with
Section 14.9 of the Credit Agreement, without notice to the undersigned (or any
of them), assign or transfer any or all of the
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<PAGE> 4
Liabilities or any interest therein; and, notwithstanding any such assignment
or transfer or any subsequent assignment or transfer thereof, such Liabilities
shall be and remain Liabilities for the purposes of this Guaranty, and each and
every immediate and successive assignee or transferee of any of the Liabilities
or of any interest therein shall, to the extent of the interest of such
assignee or transferee in the Liabilities, be entitled to the benefits of this
Guaranty to the same extent as if such assignee or transferee were a Bank.
No delay on the part of the Agent or any Bank in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Agent or any Bank of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy; nor
shall any modification or waiver of any provision of this Guaranty be binding
upon the Agent or the Banks except as expressly set forth in a writing duly
signed and delivered on behalf of the Agent. No action of the Agent or any
Bank permitted hereunder shall in any way affect or impair the rights of the
Agent or any Bank or the obligations of the undersigned under this Guaranty.
For purposes of this Guaranty, Liabilities shall include all obligations of the
Company to the Agent or any Bank arising under or in connection with the Credit
Agreement, any Note, any other Loan Document or any Hedging Agreement,
notwithstanding any right or power of the Company or anyone else to assert any
claim or defense as to the invalidity or unenforceability of any obligation,
and no such claim or defense shall affect or impair the obligations of the
undersigned hereunder.
Pursuant to the Credit Agreement, (a) this Guaranty has been delivered
to the Agent and (b) the Agent has been authorized to enforce this Guaranty on
behalf of itself and each of the Banks. All payments by the undersigned
pursuant to this Guaranty shall be made to the Agent for the ratable benefit of
the Banks.
This Guaranty shall be binding upon the undersigned and the successors
and assigns of the undersigned; and to the extent that the Company or any of
the undersigned is either a partnership or a corporation, all references herein
to the Company and to the undersigned, respectively, shall be deemed to include
any successor or successors, whether immediate or remote, to such partnership
or corporation. The term "undersigned" as used herein shall mean all parties
executing this Guaranty and each of them, and all such parties shall be jointly
and severally obligated hereunder.
This Guaranty has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such
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<PAGE> 5
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Guaranty.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original but all such counterparts shall together
constitute one and the same Guaranty. At any time after the date of this
Guaranty, one or more additional persons or entities may become parties hereto
by executing and delivering to the Agent a counterpart of this Guaranty.
Immediately upon such execution and delivery (and without any further action),
each such additional person or entity will become a party to, and will be bound
by all of the terms of, this Guaranty.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE UNDERSIGNED, AND (BY
ACCEPTING THE BENEFITS HEREOF) EACH OF THE AGENT AND EACH BANK, HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
EACH OF THE UNDERSIGNED FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING
TO THE AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH OF THE UNDERSIGNED, AND (BY
ACCEPTING THE BENEFITS HEREOF) EACH OF THE AGENT AND EACH BANK, HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF THE
AGENT AND EACH BANK, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY, ANY OTHER
LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
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<PAGE> 6
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered
as of the day and year first above written.
HUGHES PLASTICS, INC.
By: /s/ TERENCE C. SEIKEL
Address: Title: Treasurer
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<PAGE> 7
The undersigned is executing a
counterpart hereof for purposes
of becoming a party hereto:
_______________________________
By:____________________________
Title:_________________________
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<PAGE> 1
EXHIBIT 10.15(b)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of October 21,
1994 is among Hughes Plastics, Inc., a Michigan corporation ("Hughes
Plastics"), and such other persons or entities which from time to time become
parties hereto as debtors (collectively, including Hughes Plastics, the
"Debtors" and individually each a "Debtor") and BANK OF AMERICA ILLINOIS in its
capacity as agent for the Banks referred to below (in such capacity, the
"Agent").
W I T N E S S E T H
WHEREAS, Larizza Industries, Inc. (the "Company") has entered into a
Credit Agreement dated as of May 6, 1994 (as amended or otherwise modified from
time to time, the "Credit Agreement") with various financial institutions
(collectively the "Banks" and individually each a "Bank") and the Agent,
pursuant to which the Banks have agreed to make loans to, and issue or
participate in letters of credit for the account of, the Company;
WHEREAS, each of the Debtors has executed and delivered a guaranty
(the "Guaranty") of the obligations of the Company under the Credit Agreement;
and
WHEREAS, the obligations of each Debtor under the Guaranty are to be
secured pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company by the
Banks or any of them, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. When used herein, (a) the terms Certificated
Security, Chattel Paper, Deposit Account, Document, Equipment, Fixture, Goods,
Inventory, Instrument, Security and Uncertificated Security shall have the
respective meanings assigned to such terms in the Uniform Commercial Code (as
defined below) and (b) the following terms have the following meanings (such
definitions to be applicable to both the singular and plural forms of such
terms):
Account Debtor means the party who is obligated on or under any
Account Receivable, Contract Right or General Intangible.
Account Receivable means, with respect to any Debtor, any right of
such Debtor to payment for goods sold or leased or for services rendered.
Agent - see the Recitals.
<PAGE> 2
Agreement- see the Preamble.
Assignee Deposit Account- see Section 4.
Bank- see the Recitals.
Collateral means, with respect to any Debtor, all property and rights
of such Debtor in which a security interest is granted hereunder.
Commitments has the meaning assigned to such term in the Credit
Agreement.
Company- see the Preamble.
Computer Hardware and Software means, with respect to any Debtor, (i)
all of such Debtor's rights (including rights as licensee and lessee) with
respect to computer and other electronic data processing hardware, whether now
owned or hereafter acquired by such Debtor, including, without limitation, all
integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators,
power equalizers, accessories and all peripheral devices and other related
computer hardware; (ii) all of such Debtor's rights (including rights as
licensee and lessee) with respect to software programs, whether now owned or
hereafter acquired by such Debtor, designed for use on the computers and
electronic data processing hardware described in clause (i) above, including,
without limitation, all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (iii) all of such
Debtor's rights (including rights as licensee and lessee) with respect to any
firmware associated with any of the foregoing, whether now owned or hereafter
acquired by such Debtor; and (iv) all of such Debtor's rights (including rights
as licensee and lessee) with respect to documentation for hardware, software
and firmware described in the preceding clauses (i), (ii) and (iii) above,
whether now owned or hereafter acquired by such Debtor, including, without
limitation, flow charts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes.
Contract Right means, with respect to any Debtor, any right of such
Debtor to payment under a contract for the sale or lease of goods or the
rendering of services, which right is at the time not yet earned by
performance.
Credit Agreement - see the Recitals.
Debtor - see the Preamble.
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<PAGE> 3
Default means the occurrence of any of the following events: (a) any
Unmatured Event of Default under Section 12.1.4 of the Credit Agreement; (b)
any Event of Default; or (c) any warranty of any Debtor herein is untrue or
misleading in any material respect and, as a result thereof, the Agent's
security interest in, or rights and remedies with respect to, any material
portion of the Collateral of such Debtor is impaired or otherwise adversely
affected.
Event of Default has the meaning assigned to such term in the Credit
Agreement.
General Intangibles means, with respect to any Debtor, all of such
Debtor's "general intangibles" as defined in Uniform Commercial Code as in
effect in Illinois on the date hereof and, in any event, includes (without
limitation) all of such Debtor's trademarks, trade names, patents, copyrights,
trade secrets, customer lists, inventions, designs, software programs, mask
works, goodwill, registrations, licenses, franchises, tax refund claims,
guarantee claims, security interests and rights to indemnification.
Guaranty - see the Recitals.
Hughes Plastics - see the Preamble.
Intellectual Property means all past, present and future: trade
secrets and other proprietary information; trademarks, service marks, business
names, designs, logos, indicia, and/or other source and/or business identifiers
and the goodwill of the business relating thereto and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights (including, without limitation,
copyrights for computer programs) and copyright registrations or applications
for registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights;
unpatented inventions (whether or not patentable); patent applications and
patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing set
forth in this definition and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, source codes,
object codes and other physical manifestations, embodiments or incorporations
of any of the foregoing set forth in this definition; the right to sue for all
past, present and future infringements of any of the foregoing set forth in
this definition; and all common law and other rights throughout the world in
and to all of the foregoing set forth in this definition.
Liabilities means, as to each Debtor, all obligations (monetary or
otherwise) of such Debtor under the Credit Agreement, any Note, the Guaranty,
any other Loan Document or any other document or instrument (including any
Hedging Agreement (as defined
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<PAGE> 4
in the Credit Agreement) entered into with any Bank or any affiliate thereof)
executed in connection therewith, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.
Loan Document has the meaning assigned to such term in the Credit
Agreement.
Non-Tangible Collateral means, with respect to any Debtor, such
Debtor's Accounts Receivable, Contract Rights and General Intangibles.
Notes has the meaning assigned to such term in the Credit Agreement.
Permitted Liens - see clause (i) of Section 3.
Subsidiary has the meaning assigned to such term in the Credit
Agreement.
Uniform Commercial Code means the Uniform Commercial Code as in effect
in the State of Illinois on the date of this Agreement; provided, however, as
used in Section 8 hereof, "Uniform Commercial Code" means the Uniform
Commercial Code as in effect from time to time in the applicable jurisdiction.
Unmatured Event of Default has the meaning assigned to such term in
the Credit Agreement.
Terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
2. Grant of Security Interest. As security for the payment of
all Liabilities, each Debtor hereby mortgages to the Agent for the benefit of
the Banks, and grants to the Agent for the benefit of the Banks a continuing
security interest in, the following, whether now or hereafter existing or
acquired:
All of such Debtor's right, title and interest in:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, without limitation, any and all licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of
any of the foregoing;
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<PAGE> 5
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) General Intangibles;
(ix) Goods (including, without limitation, all its Equipment,
Fixtures and Inventory), and all accessions, additions,
attachments, improvements, substitutions and replacements
thereto and therefor;
(x) Instruments;
(xi) Intellectual Property;
(xii) money (of every jurisdiction whatsoever);
(xiii) Uncertificated Securities; and
(xiv) to the extent not included in the foregoing, all other
personal property of any kind or description;
together with all books, records, writings, data bases,
information and other property relating to, used or useful in
connection with, evidencing, embodying, incorporating or
referring to any of the foregoing, and all proceeds, products,
offspring, rents, issues, profits and returns of and from any of
the foregoing; provided, however, that to the extent that the
provisions of any lease or license of Computer Hardware and
Software or Intellectual Property expressly prohibit (which
prohibition is enforceable under applicable law) the grant of a
security interest therein, such Debtor's rights in such lease or
license shall be excluded from the foregoing grant for so long as
such prohibition continues, it being understood that upon request
of the Agent, such Debtor will in good faith use reasonable
efforts to obtain consent for the creation of a security interest
in favor of the Agent in such Debtor's rights under such lease or
license.
3. Warranties. Each Debtor warrants that: (i) no financing
statement (other than (a) the existing financing statement filed on behalf of
Toyota Motor Credit Corp. in connection with the lease of a lift truck and (b)
any financial statement which may have been filed on behalf of the Agent or in
connection with security interests or liens expressly permitted by the Credit
Agreement ("Permitted Liens")) covering any of the Collateral is on file in any
public office in connection with the lease of a lift truck; (ii) such Debtor is
and will be the lawful owner, lessee or licensee of all Collateral, free of all
liens and claims whatsoever, other than the security interest hereunder and
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<PAGE> 6
Permitted Liens, with full power and authority to execute this Agreement and
perform such Debtor's obligations hereunder, and to subject the Collateral to
the security interest hereunder; (iii) all information with respect to
Collateral and Account Debtors set forth in any schedule, certificate or other
writing at any time heretofore or hereafter furnished by such Debtor to the
Agent or any Bank, and all other written information heretofore or hereafter
furnished by such Debtor to the Agent or any Bank, is and will be true and
correct in all material respects as of the date furnished; (iv) such Debtor's
chief executive office and principal place of business are as set forth on
Schedule I hereto (and such Debtor has not maintained its chief executive
office and principal place of business at any other location at any time after
June 1, 1994); (v) each other location where such Debtor maintains a place of
business is set forth on Schedule II hereto); (vi) such Debtor is not now known
and during the five years preceding the date hereof has not previously been
known by any trade name except as previously disclosed to the Agent and the
Banks in writing prior to the date hereof (including those set forth on
Schedule II hereto); (vii) during the five years preceding the date hereof,
such Debtor has not been known by any legal name different from the one set
forth on the signature page of this Agreement except as previously disclosed to
the Banks in writing prior to the date hereof, nor has such Debtor been the
subject of any merger or other corporate reorganization except as previously
disclosed to the Banks in writing prior to the date hereof (including those set
forth on Schedule II hereto; (viii) Schedule III hereto contains a complete
listing of all of such Debtor's Intellectual Property which is subject to
registration statutes; (ix) the execution and delivery of this Agreement and
the performance by such Debtor of its obligations hereunder are within such
Debtor's corporate or partnership powers, have been duly authorized by all
necessary corporate or partnership action, have received all necessary
governmental approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of the organizational
documents of such Debtor or of any agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon such Debtor;
(x) this Agreement is a legal, valid and binding obligation of such Debtor,
enforceable in accordance with its terms, except that the enforceability of
this Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law); and (xi) such Debtor is in compliance with the
requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would materially
adversely affect any material portion of the Collateral of such Debtor.
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<PAGE> 7
4. Collections, etc. Until such time during the existence of a
Default as the Agent shall notify such Debtor of the revocation of such power
and authority, each Debtor (a) may, in the ordinary course of its business, at
its own expense, sell, lease or furnish under contracts of service any of the
Inventory normally held by such Debtor for such purpose, use and consume, in
the ordinary course of its business, any raw materials, work in process or
materials normally held by such Debtor for such purpose, and use, in the
ordinary course of its business (but subject to the terms of the Credit
Agreement), the cash proceeds of Collateral and other money which constitutes
Collateral, (b) will, at its own expense, endeavor to collect, as and when due,
all amounts due under any of the Non-Tangible Collateral, including the taking
of such action with respect to such collection as the Agent may reasonably
request or, in the absence of such request, as such Debtor may deem advisable,
and (c) may grant, in the ordinary course of business, to any party obligated
on any of the Non-Tangible Collateral, any rebate, refund or allowance to which
such party may be lawfully entitled, and may accept, in connection therewith,
the return of Goods, the sale or lease of which shall have given rise to such
Non-Tangible Collateral. The Agent, however, may, at any time that a Default
exists, whether before or after any revocation of such power and authority or
the maturity of any of the Liabilities, notify any parties obligated on any of
the Non-Tangible Collateral to make payment to the Agent of any amounts due or
to become due thereunder and enforce collection of any of the Non-Tangible
Collateral by suit or otherwise and surrender, release or exchange all or any
part thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Agent during the existence of a Default, each
Debtor will, at its own expense, notify any parties obligated on any of the
Non-Tangible Collateral to make payment to the Agent of any amounts due or to
become due thereunder.
Upon request by the Agent during the existence of a Default, each
Debtor will forthwith, upon receipt, transmit and deliver to the Agent, in the
form received, all cash, checks, drafts and other instruments or writings for
the payment of money (properly endorsed, where required, so that such items may
be collected by the Agent) which may be received by such Debtor at any time in
full or partial payment or otherwise as proceeds of any of the Collateral.
Except as the Agent may otherwise consent in writing, any such items which may
be so received by any Debtor will not be commingled with any other of its funds
or property, but will be held separate and apart from its own funds or property
and upon express trust for the Agent until delivery is made to the Agent. Each
Debtor will comply with the terms and conditions of any consent given by the
Agent pursuant to the foregoing sentence.
During the existence of a Default, all items or amounts which are
delivered by any Debtor to the Agent on account of partial or full payment or
otherwise as proceeds of any of the Collateral
-7-
<PAGE> 8
shall be deposited to the credit of a deposit account (each an "Assignee
Deposit Account") of such Debtor with the Agent, as security for payment of the
Liabilities. No Debtor shall have any right to withdraw any funds deposited in
the applicable Assignee Deposit Account. The Agent may, from time to time, in
its discretion, and shall upon request of the applicable Debtor made not more
than once in any week, apply all or any of the then balance, representing
collected funds, in the Assignee Deposit Account, toward payment of the
Liabilities, whether or not then due, in such order of application as the Agent
may determine, and the Agent may, from time to time, in its discretion, release
all or any of such balance to the applicable Debtor.
After a Default, the Agent is authorized to endorse, in the name of
the applicable Debtor, any item, howsoever received by the Agent, representing
any payment on or other proceeds of any of the Collateral.
5. Certificates, Schedules and Reports. Each Debtor will from
time to time, as the Agent may reasonably request, deliver to the Agent such
schedules, certificates and reports respecting all or any of the Collateral at
the time subject to the security interest hereunder, and the items or amounts
received by such Debtor in full or partial payment of any of the Collateral, as
the Agent may reasonably request. Any such schedule, certificate or report
shall be executed by a duly authorized officer of such Debtor and shall be in
such form and detail as the Agent may specify. Each Debtor shall promptly
notify the Agent of the occurrence of any event causing any loss or
depreciation in the value of its Inventory or other Goods which is material to
the Company and its Subsidiaries taken as a whole, and such notice shall
specify the amount of such loss or depreciation.
6. Agreements of the Debtors. Each Debtor (a) will, upon request
of the Agent, execute such financing statements and other documents (and pay
the cost of filing or recording the same in all public offices reasonably
deemed appropriate by the Agent) and do such other acts and things (including,
without limitation, delivery to the Agent of any Instruments or Certificated
Securities which constitute Collateral), all as the Agent may from time to time
reasonably request, to establish and maintain a valid security interest in the
Collateral (free of all other liens, claims and rights of third parties
whatsoever, other than Permitted Liens) to secure the payment of the
Liabilities; (b) will keep all its Inventory at, and will not maintain any
place of business at any location other than, its address(es) shown on
Schedules I and II hereto or at such other addresses of which such Debtor shall
have given the Agent not less than 10 days' prior written notice; (c) will keep
its records concerning the Non-Tangible Collateral in such a manner as will
enable the Agent or its designees to determine at any time the status of the
Non-Tangible Collateral; (d) will furnish the Agent such information concerning
such Debtor, the Collateral and the Account Debtors as the Agent may from time
-8-
<PAGE> 9
to time reasonably request; (e) will permit the Agent and its designees, from
time to time, on reasonable notice and at reasonable times and intervals during
normal business hours (or at any time without notice during the existence of a
Default) to inspect such Debtor's Inventory and other Goods, and to inspect,
audit and make copies of and extracts from all records and all other papers in
the possession of such Debtor pertaining to the Collateral and the Account
Debtors, and will, upon request of the Agent during the existence of a Default,
deliver to the Agent all of such records and papers; (f) will, upon request of
the Agent, stamp on its records concerning the Collateral, and add on all
Chattel Paper constituting a portion of the Collateral, a notation, in form
satisfactory to the Agent, of the security interest of the Agent hereunder; (g)
without limiting the provisions of Section 10.3 of the Credit Agreement, will
at all times keep all its Inventory and other Goods insured under policies
maintained with reputable, financially sound insurance companies against loss,
damage, theft and other risks to such extent as is customarily maintained by
companies similarly situated, and cause all such policies to provide that loss
thereunder shall be payable to the Agent as its interest may appear and such
policies or certificates thereof shall, if the Agent so requests, be deposited
with or furnished to the Agent; (h) will take such actions as are reasonably
necessary to keep its Inventory in good repair and condition, ordinary wear and
tear and up to $500,000 of obsolescent Inventory excepted; (i) will take such
actions as are reasonably necessary to keep its Equipment in good repair and
condition and in good working or running order to the extent necessary to
conduct such Debtor's business in all material respects, ordinary wear and tear
excepted; (j) will promptly pay before delinquent all license fees,
registration fees, taxes, assessments and other charges which may be levied
upon or assessed against the ownership, operation, possession, maintenance or
use of its Equipment and other Goods except as permitted by Section 10.4(c) of
the Credit Agreement; (k) will, upon request of the Agent, (i) cause to be
noted on the applicable certificate, in the event any of its Equipment is
covered by a certificate of title, the security interest of the Agent in the
Equipment covered thereby, and (ii) deliver all such certificates to the Agent
or its designees; (l) will take all steps reasonably necessary to protect,
preserve and maintain all of its rights in the Collateral except as otherwise
permitted by the Loan Documents; (m) will keep all of the tangible Collateral
in the United States; and (n) will reimburse the Agent for all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the Agent
in seeking to collect or enforce any rights in respect of such Debtor's
Collateral.
Any expenses incurred without gross negligence or wilful misconduct on
the part of the Agent in protecting, preserving and maintaining any Collateral
shall be borne by the applicable Debtor. Whenever a Default shall be existing,
the Agent shall have the right to bring suit to enforce any or all of the
Intellectual Property or licenses thereunder, in which event the applicable
-9-
<PAGE> 10
Debtor shall at the request of the Agent do any and all lawful acts and execute
any and all proper documents required by the Agent in aid of such enforcement
and such Debtor shall promptly, upon demand, reimburse and indemnify the Agent
for all reasonable costs and expenses incurred by the Agent in the exercise of
its rights under this Section 6. Notwithstanding the foregoing, the Agent
shall have no obligations or liabilities regarding any of the Collateral by
reason of, or arising out of, this Agreement in the absence of its gross
negligence or willful misconduct.
7. Default. Whenever a Default shall be existing, the Agent may
exercise from time to time any rights and remedies available to it under
applicable law. Each Debtor agrees, in case of Default, (i) to assemble, at
its expense, all its Inventory and other Goods (other than Fixtures) at a
convenient place or places acceptable to the Agent, and (ii) at the Agent's
request, to execute all such documents and do all such other things which may
be necessary or desirable in order to enable the Agent or its nominee to be
registered as owner of the Intellectual Property with any competent
registration authority. Any notification of intended disposition of any of the
Collateral required by law shall be deemed reasonably and properly given if
given at least ten days before such disposition. Any proceeds of any
disposition by the Agent of any of the Collateral may be applied by the Agent
to payment of expenses in connection with the Collateral, including reasonable
attorneys' fees and legal expenses, and any balance of such proceeds may be
applied by the Agent toward the payment of such of the Liabilities, and in such
order of application, as the Agent may from time to time elect.
8. General. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as any applicable Debtor
requests in writing, but failure of the Agent to comply with any such request
shall not of itself be deemed a failure to exercise reasonable care, and no
failure of the Agent to preserve or protect any rights with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by any Debtor, shall be deemed
of itself a failure to exercise reasonable care in the custody or preservation
of such Collateral.
Any notice from the Agent to any Debtor, if mailed, shall be deemed
given three Business Days after the date mailed, postage prepaid, addressed to
such Debtor either at such Debtor's address shown on Schedule I hereto or at
such other address as such Debtor shall have specified in writing to the Agent
as its address for notices hereunder. Any notice from a Debtor to the Agent
shall be given in accordance with Section 14.3 of the Credit Agreement.
Each of the Debtors agrees to pay all expenses (including reasonable
attorney's fees and legal expenses) paid or incurred by the Agent or any Bank
in endeavoring to collect the Liabilities of
-10-
<PAGE> 11
such Debtor, or any part thereof, and in enforcing this Agreement against such
Debtor, and such obligations will themselves be Liabilities.
No delay on the part of the Agent in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Agent of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until
all Liabilities have been paid in full and all Commitments have terminated. If
at any time all or any part of any payment theretofore applied by the Agent or
any Bank to any of the Liabilities is or must be rescinded or returned by the
Agent or such Bank for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of any Debtor), such Liabilities
shall, for the purposes of this Agreement, to the extent that such payment is
or must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or such Bank, and this Agreement
shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or such Bank had not
been made.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the laws of the State of Illinois
applicable to contracts made and to be entirely performed in the State of
Illinois, subject, however, to the applicability of the Uniform Commercial Code
of any jurisdiction in which any Goods of any Debtor may be located at any
given time. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
The rights and privileges of the Agent hereunder shall inure to the
benefit of its successors and assigns.
This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement. At any time after the date of
this Agreement, one or more additional persons or entities may become parties
hereto by executing and delivering to the Agent a counterpart of this
Agreement. Immediately upon such execution and delivery (and without any
further action), each such additional person or entity will become a party to,
and will be bound by all the terms of, this Agreement.
-11-
<PAGE> 12
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF EACH DEBTOR AND THE AGENT
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
EACH OF EACH DEBTOR AND THE AGENT FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH ON
SCHEDULE I HERETO IN THE CASE OF A DEBTOR AND TO 231 SOUTH LASALLE STREET,
CHICAGO, ILLINOIS 60697 IN THE CASE OF THE AGENT (OR, IN EACH CASE, SUCH OTHER
ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE OTHER PARTIES HERETO AS
ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. EACH OF EACH DEBTOR AND THE AGENT HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF)
EACH BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
HUGHES PLASTICS, INC.
By: /s/ TERENCE C. SEIKEL
Title: Treasurer
BANK OF AMERICA ILLINOIS,
Address: as Agent for the Banks
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Anthony G. Benedetto By: /s/ STEVEN K. AHRENHOLZ
Vice President
-12-
<PAGE> 13
The undersigned is executing
a counterpart hereof for
purposes of becoming a party
hereto:
______________________________
By:___________________________
Title:________________________
-13-
<PAGE> 14
SCHEDULE I
TO SECURITY AGREEMENT
A. Hughes Plastics, Inc.
211 Kerth Street
P.O. Box 86
St. Joseph, Michigan 49085
<PAGE> 15
SCHEDULE II
TO SECURITY AGREEMENT
ADDRESSES; NAMES
Business Locations
- - - ------------------
211 Kerth Street
P.O. Box 86
St. Joseph, Michigan 48085
Other Names
- - - -----------
LVB Industries, Inc.
Mergers & Reorganizations
- - - -------------------------
LVB Industries, Inc.
<PAGE> 16
SCHEDULE III
TO SECURITY AGREEMENT
PATENTS
-------
PATENT PATENT/SERIAL NO. COUNTRY CO. NAME HELD IN ISSUE DATE
[NONE]
TRADEMARKS
----------
TRADEMARK NAME REGISTRATION/SERIAL NO. COUNTRY CO. NAME HELD IN ISSUE DATE
[NONE]
COPYRIGHTS
----------
COPYRIGHT NAME COUNTRY CO. NAME HELD IN ISSUE DATE
- - - -------------- ------- ----------------
[NONE]
<PAGE> 1
EXHIBIT 10.15(c)
SUBORDINATED NOTE
$1,200,000.00 Troy, Michigan
October 20, 1994
FOR VALUE RECEIVED, Larizza Industries, Inc., an Ohio corporation
("Payor"), promises to pay to the order of Louis V. Buzzitta, as authorized
agent for Diane M. Buzzitta Trust, Philip F. Wood, Trustee, Louis V. Buzzitta,
Joseph T. Buzzitta and James V. Buzzitta, their successors and assigns
("Payee") in accordance with the terms of the Stock Purchase Agreement of even
date herewith, the principal sum of $1,200,000 payable as follows: Beginning
on January 1, 1995 and on the first day of every quarter thereafter, Payor
shall make equal principal payments in the amount of $60,000 until the
principal amount of this Note is fully repaid. On each of these principal
repayment dates, Payor shall pay interest in arrears with respect to the unpaid
principal amount from and including the date hereof until maturity or until
repayment in full at a rate per annum which shall be 7.75%. In all events, the
entire principal and interest amount of this Note shall be fully paid on or
before October 1, 1999.
Both principal and interest shall be payable in lawful money of the United
States of America at Payee's principal office or at such other place as Payee
may designate in writing. This Note may be prepaid in whole or in part at any
time without any prepayment premium or penalty. Any partial prepayment shall
be applied first against any unpaid interest and then to the principal amount
outstanding, in reverse order of maturity, and shall not postpone the due date
or change the amount of any subsequent installments, until this Note is paid in
full or unless Payee otherwise agrees in writing.
Payor agrees to pay all costs of collection and enforcement, including
reasonable attorneys' fees and legal expenses incurred by Payee on account of
any such collection and enforcement, whether or not suit is filed with respect
thereto.
Payor has the right to offset against this Note as described in Sections
1.3(c) and 5.5 of the Stock Purchase Agreement the amount of any claims
asserted by Payor against Payee pursuant to the Stock Purchase Agreement,
including without limitation, pursuant to Section 5 of the Stock Purchase
Agreement. Payor shall deposit any disputed offset monies in escrow as
required by the Stock Purchase Agreement. The offset remedy of Payor is not
exclusive, but is cumulative with all other remedies of Payor against Payee,
and this remedy does not in any way limit Payee's liability to Payor under the
Stock Purchase Agreement. Payor shall notify Payee of Payor's exercise of its
intention to offset (the "Claim"). If Payee so offsets, then Payor's
obligations to make payments to Payee under this Note shall be discharged to
the extent of the amount of such offset until the final resolution of any
dispute with respect to such offset.
After January 1, 1995, upon prior written notice received by Payor prior to
tender of full payment under this Note, Payee may elect to convert the
remaining principal balance of this Note to the common stock of Payor on the
following terms and conditions:
<PAGE> 2
A. The conversion shall take place within 5 business days after Payor
has received approval of its application for the listing of such shares on
the American Stock Exchange.
B. The conversion price shall equal the closing price of Payor's
common stock as listed on the American Stock Exchange on the Closing Date
as defined in the Stock Purchase Agreement.
C. Payee shall make the proper representations and execute the
appropriate documents necessary to cause the issuance of the shares upon
conversion to be exempt from registration under the applicable federal and
state securities laws.
This Note shall not be transferable or assignable without the prior written
consent of Payor. This Note and the payment and performance hereunder shall be
subordinated to Payor's indebtedness to Payor's lenders in accordance with the
Subordination Agreement which has been executed by Payor and Payee.
This Note and the rights and obligations of the parties hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Michigan, excluding any such laws that direct the application of laws
of any other jurisdiction. Disputes with respect to this Note are subject to
and governed by the terms of Section 6.5 of the Stock Purchase Agreement.
Larizza Industries, Inc., an Ohio
corporation
By: /s/ TERENCE C. SEIKEL
Its: CFO
<PAGE> 1
EXHIBIT 10.15(d)
SUBORDINATED NOTE
$500,000.00 Troy, Michigan
October 20, 1994
FOR VALUE RECEIVED, Larizza Industries, Inc., an Ohio corporation
("Payor"), promises to pay to the order of Louis V. Buzzitta, as authorized
agent for Diane M. Buzzitta Trust, Philip F. Wood, Trustee, Louis V. Buzzitta,
Joseph T. Buzzitta and James V. Buzzitta, their successors and assigns
("Payee") in accordance with the terms of the Stock Purchase Agreement of even
date herewith, the principal sum of $500,000 payable as follows: $250,000 of
principal shall be paid on October 1, 1997 and $250,000 of principal shall be
paid on October 1, 1998. Beginning on January 1, 1995 and on the first day of
each quarter thereafter, Payor shall pay interest in arrears with respect to
the unpaid principal amount from and including the date hereof until maturity
or until repayment in full at a rate per annum which shall be 7.75%. In all
events, the entire principal and interest amount of this Note shall be fully
paid on or before October 1, 1998.
Both principal and interest shall be payable in lawful money of the United
States of America at Payee's principal office or at such other place as Payee
may designate in writing. This Note may be prepaid in whole or in part at any
time without any prepayment premium or penalty. Any partial prepayment shall
be applied first against any unpaid interest and then to the principal amount
outstanding, in reverse order of maturity, and shall not postpone the due date
or change the amount of any subsequent installments, until this Note is paid in
full or unless Payee otherwise agrees in writing.
Payor agrees to pay all costs of collection and enforcement, including
reasonable attorneys' fees and legal expenses incurred by Payee on account of
any such collection and enforcement, whether or not suit is filed with respect
thereto.
Payor has the right to offset against this Note as described in Sections
1.3(c) and 5.5 of the Stock Purchase Agreement the amount of any claims
asserted by Payor against Payee pursuant to the Stock Purchase Agreement,
including without limitation, pursuant to Section 5 of the Stock Purchase
Agreement. Payor shall deposit any disputed offset monies in escrow as
required by the Stock Purchase Agreement. The offset remedy of Payor is not
exclusive, but is cumulative with all other remedies of Payor against Payee,
and this remedy does not in any way limit Payee's liability to Payor under the
Stock Purchase Agreement. If Payee so offsets, then Payor's obligations to
make payments to Payee under this Note shall be discharged to the extent of the
amount of such offset until the final resolution of any dispute with respect to
such offset.
This Note shall not be transferable or assignable without the prior
written consent of Payor. This Note and the payment and performance hereunder
shall be subordinated to Payor's indebtedness to Payor's lenders in accordance
with the Subordination Agreement which has been executed by Payor and Payee.
<PAGE> 2
This Note and the rights and obligations of the parties hereunder shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Michigan, excluding any such laws that direct the application of laws
of any other jurisdiction. Disputes with respect to this Note are subject to
and governed by the terms of Section 6.5 of the Stock Purchase Agreement.
Larizza Industries, Inc., an Ohio
corporation
By: /s/ TERENCE C. SEIKEL
Its: CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE LARIZZA
INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEET - SEPTEMBER 30, 1994, AND
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30,
1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
AND ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 826
<SECURITIES> 0
<RECEIVABLES> 25,194
<ALLOWANCES> 0
<INVENTORY> 8,237
<CURRENT-ASSETS> 40,307
<PP&E> 50,261
<DEPRECIATION> 23,022
<TOTAL-ASSETS> 72,558
<CURRENT-LIABILITIES> 34,566
<BONDS> 27,893
<COMMON> 76,780
0
0
<OTHER-SE> (69,377)
<TOTAL-LIABILITY-AND-EQUITY> 72,558
<SALES> 121,513
<TOTAL-REVENUES> 121,513
<CGS> 95,356
<TOTAL-COSTS> 95,356
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,275
<INCOME-PRETAX> 14,067
<INCOME-TAX> 3,550
<INCOME-CONTINUING> 10,517
<DISCONTINUED> 0
<EXTRAORDINARY> 2,405
<CHANGES> 0
<NET-INCOME> 12,922
<EPS-PRIMARY> .53
<EPS-DILUTED> .65
</TABLE>
